First Union Corporation
1995 Summary Annual Report
(First Union logo appears here)
http://www.firstunion.com/
First Union Corporation 1995 Summary Annual Report
What is this computer disk?
We hope you are intrigued by the digital compact disk that accompanies
this year's summary annual report.
This disk may be inserted into personal computers that have CD-ROM drives
to connect to First Union's site on the
Internet WEB and to purchase banking services on-line.
The disk also includes a multimedia presentation--text, video, sound and
interactive models--
that outlines First Union's strategic vision. We believe chances are
good that you--or someone you know--will be able
to use this disk. If you cannot, please share it with someone else.
In doing so, you may well be helping us to reach another valued customer.
(CD-ROM disk is inserted here. Description of CD-ROM disk follows written
portion of the Summary Annual Report.)
The information on the accompanying digital compact disk
includes information that is provided in paper format in this year's
summary annual report
and in First Union's 1995 Annual Report on Form 10-K filed with the
Securities and Exchange Commission,
as well as other information that is supplementary in nature.
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(Photo depicting a CD ROM where it will appear, with the First Union
logo and the following:)
* 1995 Summary Annual Report
* Spread Sheet Files
* Internet Browser for PC
* Multimedia Presentation
Summary Annual Report
Our goal in presenting this 1995 Summary Annual Report is to provide
information
regarding First Union in a manner that
is meaningful and useful to the widest range of readers. The audited
financial
statements and more detailed analytical information are contained in the
First Union
Corporation 1995 Annual Report on Form 10-K, which is available free
of charge if you write to: Investor Relations, Two First Union Center,
Charlotte, North Carolina 28288-0206.
TABLE OF CONTENTS
Financial Highlights
2
Letter from the Chairman
3
Products and Services
11
Index to Special Topics
19
Performance Review
20
Financial Tables
31
Management's Statement of
Financial Responsibility and
Independent Auditors' Report
39
Supplemental Consolidated
Balance Sheets
40
Supplemental Consolidated
Statements of Income
41
Glossary
42
Corporate and Bank Boards
of Directors
43
Principal Subsidiaries
46
Stockholder Information
47
Product Catalogue
48
KEY STATISTICAL DATA
(December 31, 1995)
Assets:
$131.9 BILLION
Loans:
$90.6 BILLION
Deposits:
$92.6 BILLION
Total Stockholders' Equity:
$9.0 BILLION
Market Capitalization:
$15.5 BILLION
Customer Relationships:
11 MILLION
Corporate Headquarters:
CHARLOTTE, N.C.
Bank Holding Company National Ranking by Assets:
6TH LARGEST
INTRODUCTION
First Union's longstanding commitment to customer service means that we must
be ready to offer our customers the service and products they want -- when,
where and how they want them. More and more of our customers are demanding
quick, technological solutions to their financial service needs. Some even
say they never want to go into a branch office again. Still other customers
require, and will continue to receive, the face-to-face service they prefer,
in a traditional branch setting. Meeting the needs of both types of customers
is a key component of our corporate strategy for the rest of the '90s.
BUSINESS PROFILE
First Union Corporation is a $132 billion-asset financial services company
with a leadership position in key markets. Our 45,000 employees serve
11 million customers primarily along the East Coast. Customers from
Connecticut to Florida will have the same access to their account
information, and will be able to purchase the same products at any of nearly
2,000 retail offices systemwide. We have the nation's fourth largest
automated teller machine network. Customers also can access our services
through the Internet or toll-free phone lines -- 24 hours a day, seven days a
week. Our Internet address is http://www.firstunion.com/ and our Direct Bank
nationwide toll-free phone number is 1-800-413-7898.
First Union provides full-service retail banking, commercial banking and
trust services in 12 states and Washington, D.C. In addition, through nearly
200 diversified offices nationwide, First Union provides other financial
services including access to the capital markets, mortgage banking, home
equity lending, leasing, insurance and securities brokerage services.
1
STATISTICS
Earnings per Common Share
(Dollars per share)
(Bar graph appears with the following plot points:)
1990 1991 1992 1993 1994 1995
.97 2.34 2.53 4.30 4.72 5.04
Dividends per Common Stock
(In dollars)
(Bar graph appears with the following plot points:)
1990 1991 1992 1993 1994 1995
1.08 1.12 1.28 1.50 1.72 1.96
Book Value per Share
(In dollars)
(Bar graph appears with the following plot points:)
1990 1991 1992 1993 1994 1995
19.83 21.21 23.36 26.71 28.19 31.89
FINANCIAL HIGHLIGHTS
Percent
Years Ended December 31, Increase
(Dollars in thousands except per share data) 1995 1994 (Decrease)
NET INCOME $ 1,430,181 1,376,443 3.9%
DIVIDENDS ON PREFERRED STOCK 26,390 46,020 (42.7)
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS 1,403,791 1,330,423 5.5
(Before Redemption Premium)
REDEMPTION PREMIUM ON PREFERRED STOCK -- 41,355 --
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 1,403,791 1,289,068 8.9%
(After Redemption Premium)
PER SHARE COMMON DATA
Net income before redemption premium $ 5.04 4.72 6.8%
Net income after redemption premium 5.04 4.58 10.0
Cash dividends 1.96 1.72 14.0
Book value 31.89 28.19 13.1
Year-end price $ 55.625 41.375 34.4%
YEAR-END BALANCE SHEET ITEMS
Assets $131,879,873 113,529,201 16.2%
Securities available for sale 18,193,699 11,533,642 57.7
Investment securities 3,139,616 7,916,729 (60.3)
Loans, net of unearned income 90,562,880 77,830,993 16.4
Deposits 92,555,218 87,865,125 5.3
Common stockholders' equity 8,859,921 8,044,785 10.1
Total stockholders' equity $ 9,043,144 8,274,492 9.3
Common shares outstanding 277,846 285,361 (2.6)%
FINANCIAL RATIOS
Return on average assets 1.21% 1.29
Return on average common stockholders' 16.69 16.91
equity before redemption premium
Net interest margin 4.46 4.75
Net charge-offs to average loans, net .41 .40
Allowance as % of loans, net 1.66 2.03
Allowance as % of nonaccrual and restructured loans 233 248
Allowance as % of nonperforming assets 182 178
Nonperforming assets to loans, net and foreclosed properties .91 1.14
Dividend payout ratio on common shares 35.82% 34.16
The information in this Summary Annual Report reflects the pooling of interests
acquisition of First Fidelity Bancorporation on January 1, 1996, as if First
Union and First Fidelity had been combined for all periods presented.
2
LETTER FROM THE CHAIRMAN
A NEW STRATEGY FOR A NEW CENTURY
By almost any measure, First Union expanded rapidly in 1995 with significant
contributions from new and expanded lines of business such as capital
markets, mutual funds and card products, as well as solid growth in our
traditional lending operations. In addition, with First Fidelity
Bancorporation and other acquisitions, we created a unique East Coast
presence with $132 billion in assets--the nation's sixth largest banking
company--and 45,000 employees serving 11 million customers from Florida to
Connecticut.
In 1995 we rewarded longtime stockholders and new stockholders with the 18th
year of increased dividends, as well as earnings growth of 9 percent and book
value growth of 17 percent from 1994. We also welcomed our newest customers
with a broader product selection--everything from financial planning guidance
for individuals to sophisticated financial problem-solving partnerships with
commercial customers.
The individuals who have joined together in the Office of the Chairman--Tony
Terracciano, former chairman and chief executive officer of First Fidelity as
president; John Georgius as vice chairman; and myself continuing as chairman
and chief executive officer--are action-oriented, and we are committed to a
single vision for our new company as the premier retail/middle-market
organization in the country. We are equally committed to enhancing
stockholder value in the years ahead.
Our growth has given us the size, sophistication and scale to compete with
anyone--bank or nonbank--even as new competitors appear on the horizon.
The southern portion of our company--from Maryland to Florida--is in a dynamic,
fast-growing market with people and new businesses moving in at a rapid pace.
The Commerce Department projects that this region will continue to outpace
the nation in population, job and income growth for the rest of this decade.
GEOGRAPHIC REACH
(Photo of map depicting the states of New York, Connecticut,
Pennsylvania, New Jersey, Maryland, Delaware, Washington DC, Virginia,
North Carolina, Tennessee, South Carolina, Georgia and Florida)
Total Return on Common Stock
Compound Annual Growth Rate
(Assumes Dividends Reinvested)
(In dollars)
(A bar graph appears here with the following plot points:)
3 year 13% 5 year 35% 10 year 15%
91 95 89 95 84 95
1,000 1,430 1,000 4,406 1,000 3,876
Asset Growth
(Dollars in billions)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
83.7 89.5 95.3 104.5 113.5 131.9
3
Greatest Concentration of Companies
with Annual Sales $20mm-$250mm+
The combined First Fidelity and First Union
region accounts for 37% of the nation's
middle-market companies.
(A bar graph appears here with the following plot points:)
First Fidelity Region 21,100
First Union Region 19,825
East North Central 19,361
Pacific 16,243
West South Central 11,041
West North Central 7,985
New England 6,880
East South Central 6,119
Mountain 5,314
First Union's region includes: Washington, D.C., Florida,
Georgia, Maryland, North Carolina, South Carolina,
Virginia and Tennessee. First Fidelity's region includes:
New Jersey, Pennsylvania, New York,
Connecticut and Delaware.
Source: Dun & Bradstreet
New Corporate
Facilities and Expansions
(1993-1995)
(A bar graph appears here with the following plot points:)
South Atlantic 4,099
East North Central 4,358
West South Central 2,457
East South Central 1,838
Pacific 956
West North Central 916
Middle Atlantic 790
Mountain 731
New England 182
Source: Site Selection Magazine
First Union is located primarily in the South Atlantic
and Middle Atlantic regions.
Per Capita Income by
Metropolitan Area
Four of the five metro areas with highest per
capita income are in the combined
First Union-First Fidelity market
Per Capita
Personal U.S.
Income Average
West Palm Beach
Boca Raton, FL MSA $30,901 154%
New York, Northern
New Jersey-Long
Island, NY-NJ-CT-
PA CMSA 27,259 136
San Francisco-Oakland-
San Jose, CA CMSA 26,019 129
Hartford,
CT NECMA 25,461 127
Washington-
Baltimore-MD-
VA-WVA CMSA 25,087 125%
U.S. Average $20,105
LETTER FROM THE CHAIRMAN
(Photo of Anthony P. Terracciano) (Photo of Edward E. Crutchfield) (Photo of John R. Georgius)
Anthony P. Terracciano Edward E. Crutchfield John R. Georgius
PRESIDENT, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, VICE CHAIRMAN,
FIRST UNION CORPORATION FIRST UNION CORPORATION FIRST UNION CORPORATION
The northern part of the company is home to the nation's greatest
concentration of affluent individuals and of middle-market companies. It is a
perfect market for expanding First Union's retail and commercial investment
products and capital markets initiatives.
The new First Union has solid market share and customer relationships in a
region that comprises nearly 40 percent of the nation's middle-market
companies and that includes four of the nation's five metropolitan areas with
the highest per capita income.
Combined, the new First Union offers technological advances that yield
efficient processing. That means faster responses to loan requests, more
products from which to choose, and a commitment to delighting customers with
our efforts to help them reach their financial goals--whatever, wherever and
whenever the customer needs.
STRATEGIC RETROSPECTIVE
Ten years ago, our 1985 annual report described our outlook and strategy for
a dramatically changing banking industry and made several assumptions about
how to survive in the future. We said:
* Banks had to build the scope and scale to face new market forces--including
competitors from outside the banking industry;
* Bankers needed to become more entrepreneurial--more visionary and more
strategic in their thinking;
* Banks had to diversify their sources of earnings; and
* Asset quality needed to be tightly controlled, with lending criteria that
emphasized quality, service and pricing over "growth for growth's sake."
4
LETTER FROM THE CHAIRMAN
A CONSOLIDATING INDUSTRY
As the banking industry's ranks thinned considerably during the past decade,
the truth of those assumptions has become even more clear--and is still valid.
Today, 25 of the companies that were among the 50 largest banking companies
ten years ago have disappeared--through bankruptcy or acquisition by other
banking companies. Industrywide, 6,800 bank mergers took place between 1980
and 1994. In 1995 alone, 420 acquisitions valued at more than $73 billion
were announced.
Many of those companies were unable to attain economies of scale, or generate
new sources of earnings, or they stretched too far on credit quality. But the
banking industry's biggest blunder was its failure to embrace change. For too
long, the banking industry defined itself too narrowly and allowed the limits
of regulation or imagination to drive customers away. Today the leaders of
the industry have redefined themselves as being in the "financial services
industry" with a more complete selection of innovative financial products and
services.
Ten years ago, most banking companies did not offer investment products for
individuals or access to the capital markets for commercial customers. You
could not buy a share of stock, or an insurance annuity, or other such "new
products" through your bank. But the free market, as always, had its way--and
in this case, customers voted with their feet, walking down the street to
brokerage firms to buy more sophisticated products to maximize their earnings
potential. The banking industry, in effect, trained its customers to go
elsewhere by not offering the products--or the returns--customers needed.
COMPETITIVE CHALLENGES
Over the past ten years, the nation's commercial banks have seen their share
of financial assets drop dramatically to 36 percent from 45 percent. Mutual
funds, a product that banks did not offer a generation ago, grew 121 percent
over the past five years while bank deposits grew 9 percent.
The same comparison could be made in other areas that the banking industry
once dominated. Four of the nation's ten largest mortgage loan servicers,
including the two largest, are unaffiliated with banks. The credit card
industry has been called the bank card industry, but today six nonbanks are
among the ten fastest-growing issuers in the country, and they accounted for
nearly 83 percent of the industry dollar growth in receivables from 1991 to
1994.
The leaders in the banking industry today are those companies that have
amassed the scope and scale to provide the resources, to afford the
technology and to attain a sizable customer base that enables them to spread
costs and keep unit prices competitive. The "winners" in the industry have
redefined themselves as financial services companies, able to compete with
bank and nonbank competitors alike.
Mutual Fund/Bank Deposit Growth
(Dollars in billions)
(A graph appears here with the following plot points:)
1980 1990 1992 1995
Mutual Funds 138.2 1,100.5 1,585.7 2,431.2
Commercial Banks 1,100.0 2,315.5 2,436.4 2,512.4
Share of Business Credit
(Percent)
(A graph appears here with the following plot points:)
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
Nonbanks 53.15 52.39 52.22 52.58 53.17 55.17 56.00 58.10 58.75 59.02 60.52 62.13 63.14 64.55 64.10 63.57
Commercial Banks 46.85 47.61 47.78 47.42 46.83 44.83 44.00 41.90 41.25 40.98 39.48 37.87 36.86 35.45 35.90 36.43
Average ROA and ROE
10 Largest Banks (1985 vs. 1995)
(Percent)
(A graph appears here with the following plot points:)
ROA 85 ROA 95 ROE 85 ROE 95
.59 1.08 11.67 15.63
5
Stock Price Performance
Since Year-End 1994
(A graph appears here with the following plot points:)
12/94 5/95 9/95 12/95
41-3/8 49 51 55-5/8
Stock Price Performance
5-year Trend
(A graph appears here with the following plot points:)
12/90 12/91 12/92 12/93 12/94 12/95
15-3/8 30 43-5/8 41-1/4 41-3/8 55-5/8
LETTER FROM THE CHAIRMAN
This point is underscored by performance, as the survivors of the shakeout in
the industry are increasingly more profitable, and they are providing better
returns for their stockholders. Ten years ago, the ten largest banking
companies in the United States had an average return on equity of 11.67
percent and an average return on assets of .59 percent. In 1995 those
averages were 15.63 percent and 1.08 percent.
A COMPETITIVE FIRST UNION
Ten years ago, before regional interstate banking was allowed, First Union was a
$7 billion-asset company--the 50th largest in the nation. We had 5,600 employees
and bank branches only in North Carolina. But we saw that we would not remain
profitable or competitive for long as the industry began to consolidate and as
we began to face challenges from outside competitors with lower cost structures.
We embarked on an acquisition program to gain the size and economies of scale we
believed necessary to compete. Today we can marshal the depth of resources of a
$132 billion-asset company to provide a full line of financial products that
customers want throughout the stages and needs of their lives.
In other words, we have achieved much of what we set out to do in 1985. In
addition, our January 1, 1996, acquisition of First Fidelity Bancorporation
has given us the ability to leverage our products over a broader customer
base and to increase the overall efficiency of our branch network.
We have built a company with the resources, the operating structure and the
customer base to compete today and in the future. We have done it through
more than 60 acquisitions of banking and nonbanking companies, and we have
done it while continuing to provide our stockholders with growth in earnings,
dividends, book value and share price that is among the best in the industry.
Since 1985 (on an originally reported basis), earnings per share have grown
at a 9 percent compound annual growth rate; dividends have grown at a 14
percent rate; and book value at a 9 percent rate.
RECORD 1995 RESULTS
In 1995, the newly combined First Union/First Fidelity earned a record $1.48
billion in net income applicable to common stockholders before merger-related
restructuring charges. Including the merger-related restructuring charges of
26 cents per share, or $73 million (after tax), the newly combined First
Union/First Fidelity earned $1.40 billion, or $5.04 per common share in 1995.
Earnings of $5.30 before the restructuring charges exceeded the company's
previously announced projection of $5.29 per share in 1995. These results
compare with a restated $1.33 billion in net income applicable to common
stockholders before a preferred stock redemption premium, or $4.72 per share,
in 1994. (The 1995 restructuring charges, principally severance contracts,
are part of the previously announced $270 million restructuring charges
related to the First Fidelity acquisition, the balance of which is expected
to be incurred primarily in the first and second quarters of 1996.)
6
LETTER FROM THE CHAIRMAN
Results in 1995, before the restructuring charges, represent a return on
average assets of 1.27 percent and a return on average common stockholders'
equity of 17.55 percent. After the restructuring charges, the combined
company's return on average assets was 1.21 percent and the return on average
common stockholders' equity was 16.69 percent.
We entered 1996 with great momentum, and we are enthusiastic about the steps
we have taken as we begin to serve new customers with new products in our
northern markets. While we are proud of these achievements, this is no time
to rest on our laurels, and of course we have no intention of doing so. The
competitive factors cited earlier in this letter are even more fierce today.
But the toughest competition for the next five years will be for the hearts
and minds of customers who may choose from among an increasing number of
financial services and financial service providers. Our challenge is to meet
our customers' demand to provide better service and better access to our
services--24 hours a day, seven days a week.
A STRATEGIC SHIFT IN DIRECTION
This calls for a new strategy and a new sense of urgency to build a company
that will prosper as we enter the 21st century. Our focus for the next few
years will be primarily on increasing our existing businesses and on
attracting customers nationally through better electronic product delivery
channels.
Many observers have long prophesied the demise of bank branches. Some
industry observers have projected a 50 percent reduction in bank branches by
the turn of the century. First Union has worked hard to integrate and
consolidate branches along the way as we have acquired banks and thrifts. In
fact, if First Union and First Fidelity had kept all the branches acquired
since 1985, we would have 3,350 bank branches today. Instead, combined, we
have 1,964--a 40 percent reduction.
While the move to better product delivery channels will not happen overnight,
it is taking place faster than we would have predicted even a year or two
ago. For proof, we need look no further than the success of the
fastest-growing bank in Britain--First Direct--which has gained a half million
customers in just five years with no branches at all. Or, we could look at
the success of our own credit card portfolio, which has more than doubled in
the past two years through narrowly targeted, national, direct mail
solicitations. In other words, customers are redefining what convenience and
service looks like to them--and increasingly, that definition does not include
brick-and-mortar branches.
Over the next five years, we intend to lead the industry's transition from
traditional banking into financial services delivered through better channels
for the new century, whether that involves computers, television screens,
card products, display phones or other remote devices. We believe this will
be a technology- and a marketing-driven exercise, and thus we will be largely
focused internally over the next few years. You might even say that if,
theoretically, First Union's senior management
Stock Performance
(First Union compared to S&P 500, 1990-1995)
(A Graph appears here with the following plot points:)
12/90 12/91 12/92 12/93 12/94 12/95
FTU Return -- 104.09 206.83 199.71 212.83 337.79
S&P Index Return -- 30.34 40.25 54.33 56.42 114.99
First Union Stock Price vs. Book Value
(In dollars)
(A graph appears here with the following plot points:)
12/90 12/91 12/92 12/93 12/94 12/95
Stock Price 15.375 30.00 43.625 41.25 41.375 55.625
Book Value 20.72 22.54 26.08 28.90 29.71 31.89
7
AVERAGE RETAIL BANKING TRANSACTION COST
(A bar graph appears here with the following plot points:)
Teller Trans. 1.07
Mail-In .73
Check .68
Smart Phone .35
ATM .27
Preauth. Debit .14
Source: Gemini Consulting
The majority of customers
over age 50 prefer to do their bank-
ing business at a branch.
Only 20 percent of customers under
age 25 prefer to use a branch.
LETTER FROM THE CHAIRMAN
has spent 80 percent of its time over the past ten years focused on
acquisitions and 20 percent of its time on internal growth, in the next five
years, those numbers will likely be reversed.
There are many reasons for this strategic shift in direction. One of our
objectives is to serve customers more efficiently and conveniently. Clearly,
the cost to serve customers in new ways may be far less than through the
traditional branch system. For example, industrywide, the cost of automated
teller machine transactions averages about 25 cents, while the same
transaction done through a teller costs about $1.
Even though you cannot force a change in customer preferences, you can
encourage customers to change if you give them something that is superior to
what is already available. That is what we intend to do--or we will have no
customers left.
In other words, we believe customers are rational and discriminating, and
they will change how they do business if we offer a truly better way or a
better value. They have proven that by moving their business from banks to
financial service venues that provide more value in terms of speed,
convenience, simplicity, price and quality of service.
Our goal is to provide what customers want, when they want it and where they
want it. More and more of our customers--particularly those under age 50--are
demanding quick, technological solutions to their financial service needs.
Some say they never want to go to a branch again. Still other customers
require, and will continue to receive, the face-to-face service they prefer,
in a traditional branch setting. Meeting the needs of both kinds of
customers--and providing the facilities and the technologies to support those
needs--are key components of our corporate strategy for the rest of the '90s.
THE TRANSITIONAL BANK
For that reason, our five-year strategic planning currently focuses on
building what we are calling the "transitional bank"--the bridge to the
financial services delivery channels of the future.
The truth is, it is not yet clear which direction our customers intend to go:
Will they want to bank by touch-tone or display telephone? By plastic cards
or by computer? At a video kiosk or with a hand-held remote device? The
possibilities are limitless--some not even yet imagined. We face a similar
dilemma to the one videocassette-recorder makers faced 15 years ago, trying
to determine whether customers would prefer a Beta or a VHS format. So we
must be ready to deliver individual service that is as easy to use as a
remote control device is for a television set--better service as defined by
the customer.
What we do know is that today's customers, and the generation behind them,
demand service that is better, faster and cheaper. Already, they conduct half
of their retail banking outside the branch;
8
LETTER FROM THE CHAIRMAN
they prefer to use automated teller machines, and they want "one-stop
shopping"--one place where they can buy mutual funds, make deposits and move
money easily among accounts.
In addition, we are seeing an explosion in the acceptance of information
technology. In 1994 Americans spent $8 billion on personal computers, nearly
matching the $8.3 billion they spent for television sets.
Personal computer prices have declined rapidly, making them more accessible
for households at all income levels. Thirty-five million U.S. households have
a personal computer. This mass market acceptance has significant implications
for banks that do not change the way they conduct business.
A CHANGING FINANCIAL LANDSCAPE
This litany of changing trends is not intended to imply that we believe the
sky is falling. It is merely changing, and changing the way we view the
financial services landscape.
In this time of dramatic change, we believe First Union has some key
competitive advantages:
* We have built the nation's sixth largest banking company while
working hard to stay entrepreneurial by streamlining our operations to
remain closer to our customers and to keep unit costs low;
* We have built a strong company that has maintained growth through
good years and bad, as evidenced by our long-term growth in dividends and
book value; and
* We have built a company with 45,000 carefully recruited, talented
employees who have demonstrated adaptability in the face of rapid change
that took place while increasing from $7 billion to $132 billion in
assets in eleven years.
These advantages enable First Union to be in the position today to invest in
enhanced technology and in revenue initiatives to keep us competitive as we
approach the 21st century.
BANKING ON THE FUTURE
We believe the industry leaders of the future will be those institutions that
invest in the people, the technological solutions, the new products, the
sales and marketing methodology, and the better delivery channels that
customers demand.
First Union intends to remain in the forefront of the technology revolution
in financial service companies so we can serve our customers better and keep
our costs competitive. We believe that this, ultimately, is the best way to
serve our stockholders as well.
While we are focused on the future, let me assure you we will continue to
keep our eyes on the fundamentals. We will take advantage of opportunities to
increase operating efficiency, to improve
Bank Branch Consolidation
First Union/First Fidelity Consolidation History
(A bar graph appears with the following plot points:)
1985 1995
3,350* 1,964
40% Reduction
*Represents the number of branches
First Union/First Fidelity would have had if each
had kept all branches acquired since 1985.
"By the year 2000, $46.2 billion
of assets will be managed on-line
($29.9 billion of mutual funds
and $16.3 billion of deposits). In
addition, $6.9 billion in retail sales
[will be conducted] on-line by
2000." -- Forrester Research, in
PC Banking Revival
23 million personal computers were
sold in the United States in 1995.
9
30 million to 40 million people
worldwide are "on-line" to
the Internet global computer
Information Superhighway.
It takes three seconds
to conduct a "smart" card
transaction compared
with 20 seconds for a
cash transaction.
LETTER FROM THE CHAIRMAN
credit quality and to further strengthen our company, particularly through
expanding lines of business such as mutual funds and with acquisitions that
complement our current businesses.
But our primary strategic focus is on internal growth, and on developing the
technology and marketing to create additional access for customers now and
for the new century. Today First Union serves customers through 2,000 retail
centers; through the nation's fourth largest automated teller machine
network; by telephone through centralized customer relationship centers
(encompassing our Direct Bank, which can be reached in all 50 states);
through the Internet global information network; and through 5 million
"smart" cards, debit cards and credit cards.
We are pleased that Tony Terracciano has joined us in the Office of the
Chairman as president of the corporation, and we appreciate the opportunity
that our entry into new markets gives us to serve customers in New Jersey,
New York, Connecticut, Pennsylvania, Maryland and Delaware. We would like to
welcome these new customers along with our new stockholders, our new
employees, and our new directors, Edward E. Barr, Arthur M. Goldberg, Frank
M. Henry, Juan Rodriguez Inciarte, Joseph Neubauer and Mr. Terracciano.
We believe we have put together a team whose performance in increasing
stockholder value at both First Fidelity and First Union speaks for itself.
I began this letter by talking about our strategy over the past ten years. We
have achieved the goals of that strategy largely because of the support of
our longtime stockholders, the guidance from our directors and the dedication
of our employees. Our success in 1995 was a direct result of that support.
Sincerely,
(Signature of Edward E. Crutchfield)
Edward E. Crutchfield
Chairman and Chief Executive Officer
First Union Corporation
February 24, 1996
10
PRODUCTS AND SERVICES
First Union is reinventing the way we do business by continuing to focus on
efficiency and convenience--from the viewpoint of our customers. We
understand that customer satisfaction is a race with no fixed finish line--the
line keeps inching forward--and First Union intends to remain in the race for
the long haul.
We are building the bank of the future by listening to what customers want
and then refining the way we deliver our products and services to match their
preferences--while at the same time increasing our client base.
That base has its roots in North Carolina, our home region, where we have
built a model company based on sound fundamentals and a clear vision of what
a service orientation should accomplish. We recognized early on that a
"traditional" bank would not survive unless it evolved into a financial
services company that offered a full range of products and services.
Today the North Carolina bank is among the largest in First Union's system of
full-service banking units with assets of $27.4 billion and a proven record
of productivity and profitability. It ranks first with 20 percent of the
deposits in North Carolina. Consumer loan production per branch in the state
grew from an average $241,000 per month in 1993 to $336,000 per month in
1995.
Once regional interstate banking became possible in 1985, we built on our
strengths by exporting our brand of business in neighboring markets around
the Southeast.
Example: Florida, with a booming economy, offered us access to a strong
deposit base and a natural market for our growing family of capital
management products as well as trust services. Now, First Union National Bank
of Florida is the second largest bank in the state and the largest in the
First Union family. It holds a 17 percent deposit share in Florida, up from
less than 3 percent in 1985. Consumer loan production per branch increased
from $238,000 per month in 1993 to $309,000 per month in 1995.
Florida customers now can choose from more financial products and services
than ever before. With our primarily middle-market commercial focus, the
state's commercial customers benefit from our trade finance expertise and
access to capital markets products and services.
FULL-SERVICE BANKING UNITS
Florida
Assets: $36.6 billion
Loans, Net: $24.0 billion
Deposits: $29.8 billion
North Carolina
Assets: $27.4 billion
Loans, Net: $19.4 billion
Deposits: $15.8 billion
Georgia
Assets: $12.1 billion
Loans, Net: $9.3 billion
Deposits: $7.9 billion
Virginia
Assets: $11.0 billion
Loans, Net: $7.3 billion
Deposits: $7.2 billion
South Carolina
Assets: $3.2 billion
Loans, Net: $2.3 billion
Deposits: $2.6 billion
Washington, D.C.
Assets: $2.4 billion
Loans, Net: $586 million
Deposits: $1.7 billion
Tennessee
Assets: $2.3 billion
Loans, Net: $1.2 billion
Deposits: $1.7 billion
Maryland
Assets: $2.2 billion
Loans, Net: $1.1 billion
Deposits: $1.2 billion
New Jersey, New York and Pennsylvania
Assets: $32.7 billion
Loans, Net: $23.0 billion
Deposits: $25.8 billion
Delaware
Assets: $30 million
Loans, Net: $20 million
Deposits: $22 million
Connecticut
Assets: $2.9 billion
Loans, Net: $1.9 billion
Deposits: $2.1 billion
Asset and loan information
for Specialty Businesses is included in the Full-
Service Banking Units.
Their operations are integrated in our
banking states.
Assets and deposits are based on
December 31, 1995 regulatory reports.
11
DEPOSIT SHARE IN KEY MARKETS
Florida
Deposit Share: 17%; Rank: 2nd
New Jersey
Deposit Share: 23%; Rank: 1st
North Carolina
Deposit Share: 20%; Rank: 1st
Georgia
Deposit Share: 10%; Rank: 4th
Virginia
Deposit Share: 12%; Rank: 3rd
South Carolina
Deposit Share: 7%; Rank: 4th
Washington, D.C.
Deposit Share: 18%; Rank: 3rd
Tennessee
Deposit Share: 3%; Rank: 7th
Maryland
Deposit Share: 5%; Rank: 5th
Northeast Pennsylvania
Deposit Share: 14%; Rank: 4th
Hudson Valley, New York
Deposit Share: 7%; Rank: 2nd
Fairfield County, Connecticut
Deposit Share: 4%; Rank: 5th
Deposit share and rank are based on all insured
deposits in domestic offices on June 30, 1995.
Contributions to Profitability by State
(A pie chart appears here with the following plot points:)
31% Florida
28% New Jersey, New York, Pennsylvania
14% North Carolina
9% Georgia
7% Virginia
3% South Carolina
2% Maryland
2% Tennessee
2% Washington, D.C.
Based on regulatory profits filed December 31, 1995.
Includes contributions embedded in our state banks from
Capital Markets Group, Capital Management Group and
Card Products. Excludes other nonbank subsidiaries.
PRODUCTS AND SERVICES
The story is similar in Virginia, a market we entered in 1992-93. The
Virginia bank now ranks third in deposit share in the state, and its assets
grew 22 percent between 1993 and 1995. Consumer loan production per branch in
the Virginia market improved from an average of $111,000 per month in 1993 to
$243,000 per month in 1995. In Georgia, First Union has a 10 percent deposit
share, ranking fourth in the state, and stands to gain from the state's
strong economy in this Olympic year. Our banks in South Carolina, Tennessee,
Maryland and Washington, D.C., also are poised for continued growth.
Our experiences in the Southeast are typical of First Union's approach to
business--and point to the substantial potential of our newest partner in the
Northeast.
We expect to convert First Fidelity's operations to our automated systems
quickly and with relative ease. Unlike many of our competitors who did not
continue to invest in technology as they grew, First Union integrates each
new acquisition into our single operating systems. Our customers will be able
to walk into a branch in New Haven, Connecticut; Naples, Florida; Roanoke,
Virginia; or anywhere in our marketplace--which now includes 12 states and
Washington, D.C.--and have the same access to their accounts as if they were
in their home branches.
That was not possible before interstate banking became permissible in
September 1995. Because of the groundwork we laid in creating single systems,
virtually all we had to do was "flip a switch" and interstate banking was
introduced in all of our existing markets on October 16, 1995.
Given the pace of change these days, we cannot predict what will capture our
customers' attention in the future or how they will prefer to do their
banking. Some may want to bank at home by computer or display phone. Others
may elect to use plastic cards at their local branches, or touch-screens on
their television sets, or automated teller machines (ATMs) at convenience
stores and service stations.
Our strategy, then, is to build a transitional bank that will bridge the
movement to better delivery channels in the future--when cards, telephones and
cyberspace will create banking without walls and without geographic
limitations. Our challenge is to do this while still meeting the needs of
customers who prefer dealing with a familiar person at the teller window.
THE TRANSITIONAL BANK
We are looking at new ways for customers to access our consumer bank--ways
that will be completely integrated. Customers soon will use the same
processes, see the same account information and receive the same good service
whether they use ATMs, traditional branches, home computers or interactive
video kiosks.
High-tech solutions are featured in the transitional bank because they offer
unprecedented flexibility--and we want our customers to be able to bank
anywhere, anytime. This ultimately will provide better service and help us
keep our costs low.
We have a variety of projects under way to ensure that we are ready with new,
technologically sophisticated delivery channels when our customers are ready
for them. These initiatives include advanced customer relationships in the
12
PRODUCTS AND SERVICES
new consumer bank; the toll-free telephone Direct Bank; debit, stored value
and "smart" cards; and "remote" banking through the global computer network
known as the Internet.
CONSUMER BANK REDESIGN
Based on direct customer input, we are designing a new consumer bank
organized into four integrated areas:
* Retail centers (housed in traditional branches) to focus on
current customers by helping them select the tools they need to meet
their financial goals--whether that involves a certificate of deposit (CD)
or a mutual fund or some other instrument;
* Customer relationship centers to attract new customers and offer
existing customers operational, informational and account servicing
support through toll-free telephone lines;
* An external sales force to focus on prospecting for new business
among small-business and consumer clients; and
* Advanced self-service options to let customers use technology to
conduct the business they once did at the teller window.
We expect this redesign to pay off in a more efficient delivery channel. An
important part of this effort involves shifting the account "housekeeping"
burden from our current branches to customer relationship centers, which will
be dispersed throughout our region. For customers using a toll-free number to
call a center, conducting their personal banking will feel a lot like
ordering a product through a service-oriented catalogue retailer such as L.L.
Bean.
Our personal service representatives will sit at relationship screens where
they will be able to view the customer's complete banking profile--and be able
to provide seamless service for the entire time the customer is on the line.
The representatives also will be prompted to cross-sell based on customer
needs.
Selling also becomes important in branches, which will be set up as "retail
sales centers" that market directly to customers.
DIRECT BANK
Closely linked to the consumer bank effort is the Direct Bank, opened in 1995
and available by toll-free telephone to all 50 states. Customers of this
"branch without walls" either live outside First Union's franchise area or
prefer to do the lion's share of their banking without entering a branch.
They are assigned a permanent personal banker who conducts business--such as
taking consumer loan applications--over the phone. In 1995 the Direct Bank
opened more than 10,000 new accounts.
CARD PRODUCTS
As consumers have adopted card products not just as a credit vehicle but also
as a convenient way to pay for consumer goods and services, volume and
outstandings for the card industry have increased substantially.
Since 1993 we have more than doubled the size of our managed credit card
portfolio. This growth was achieved through targeted, national market
solicitations aimed at providing geographic diversity and attracting high
quality, revolving credit customers. First Union is one of the few banking
companies to increase its market share
SPECIALTY BUSINESSES
Capital Management Group*
Assets Under Care:
$51.2 billion
Assets Under Management:
$45.5 billion
Personal Trust Locations: 73
Full-Service Brokerage
Locations: 107
Capital Markets Group*
Assets: $16.7 billion
Loans, Net: $8.0 billion
Offices: 7
Card Products
Loan Receivables:**
$5.7 billion
Mortgage Lending
Loans Serviced: $51.5 billion
Origination Volume:
$3.8 billion
Locations: 26
States: 6
Home Equity Lending
Loans, Net: $10.9 billion
Locations: 143, plus 1,964
full-service banking locations
States: 35
*Asset and loan information for these Specialty
Businesses is included in the Full-Service Banking
Units listed on page II because their operations are
integrated in our franchise states. Assets and
deposits are based on December 31, 1995,
regulatory reports.
** Includes $2.0 billion of credit card receivables
managed by the Card Products Division. These
assets were securitized and sold in
September 1995.
(Photo of a phone appears here)
* First Union's Direct Bank can be
reached at 1-800-413-7898
13
(Photo of a computer appears here)
* 35 million U.S. households
have computers
* First Union's Internet
address is
http://www.firstunion.com/
PRODUCTS AND SERVICES
in this business in 1995. In addition to direct mail solicitations, we are
one of the first banks to offer on-line credit card applications over the
Internet.
Managed credit card receivables increased 30 percent in 1995. Credit quality
is performing in line with our expectations as the portfolios continue to
season.
In addition to credit cards, our Card Products unit includes checkcards, ATM
cards and stored value cards. First Union had nearly 5 million actively used
card products in customers' hands nationwide at the end of 1995, an increase
of 75 percent since the card initiative began in 1993, including 27 percent
growth in 1995.
* Checkcards are plastic cards that can be used in place of checks
at participating merchant locations. We are among the nation's 10 largest
issuers of debit cards, including ATM cards. Monthly debit card purchase
transactions increased nearly 600 percent from 395,000 in 1993 to almost
3 million per month in 1995.
* Stored value cards are plastic cards embedded with computer chip
technology and used in place of cash. Some are disposable once the cash
allotment has been expended; others are "rechargeable" with cash at ATMs.
We envision a time when customers may "download" cash into their cards
directly from their homes through a remote device perhaps linked to their
telephones or computers.
* In 1995 First Union established the first stored value system ever
used at a major sports venue with the introduction of the "Spot Card" at
home games of the Jacksonville Jaguars NFL expansion team in Florida. The
cards were used to make purchases at concession stands and from vendors
carrying hand-held terminals. More than 20,000 cards in denominations of
$20, $50 and $100 were distributed during the inaugural season of 1995
and were used for 10 percent of all concessions and novelty sales during
the year.
* The Jaguars "Spot Card" is an example of a stored value card that
was used for one venue, or a "closed system." More significant in the
long term is the "open system" stored value card, which we introduced in
early 1996 in advance of the summer Olympics. We plan to issue at least 1
million cards before the games begin, and we have agreements with
national and regional merchants that will create more than 5,000 points
of sale. The cards will continue to be used at merchant locations in
Atlanta after the Olympics, and the open system also will be expanded to
other major metropolitan areas.
The Internet
We have been "on-line" since January 1995. By the second quarter of 1996,
customers will be able to open checking and savings accounts, verify balances
and review statements over the Internet. By the end of the year, we will
have a robust selection of functioning applications, including funds transfer
and bill paying.
We intend to be a driver of this technology, not a passenger. So we have
customized our own 'Net browser, which is included in the digital compact
disk you received with this report.
14
PRODUCTS AND SERVICES
You also may order the browser on floppy computer disk by calling
1-800-WWW-FUNB.
The browser takes the customer directly to the First Union home page on the
World Wide Web. Through the browser, customers will be able to apply for a
credit card or access account information, or use it as a window to surf the
'Net.
First Union averages more than 10,000 visits to our Internet home page a day.
First Union's home page can be accessed over the Internet at http:
//www.firstunion.com/ or through the electronic mail address of
comments@firstunion.com.
LINES OF BUSINESS
First Union's traditional banking functions are carried out by our network of
state banks, which have full authority to match the market and meet customer
needs, and to focus on geographic and product specialty areas. First Union
has been proactive in investing in new or expanded product areas that provide
added benefits to customers and more sources of revenue for our company.
These products and services also are sold through the state banks, which
leverage the existing branch system for new customers and additional business
for our current customers.
Capital Management
First Union's Capital Management Group is a collection of businesses that
focus on helping customers manage their assets and achieve their financial
goals. Although separate entities, the businesses share a common thread--they
primarily generate fee income. Included are personal trust, CAP Accounts,
IRAs, mutual funds, full and discount brokerage services, financial planning
services, corporate trust, private banking, insurance, investment services,
pension management and 401(k) plans.
* Our distinctive CAP Accounts (centralized investment management
accounts) have increased from $6.8 billion in assets under management in
1994 to $11.7 billion at the end of 1995, making them one of our most
successful and popular products. These accounts let customers combine
banking and investment activity and see their entire financial
relationship reported on a consolidated statement. A commercial CAP
Account also is available. We expect the number of CAP Accounts to
increase in 1996 as customers in the Northeast take advantage of this
account, which is a relatively new banking product for this market.
* First Union Brokerage Services in 1995 had $83.5 million in
revenues, 374 full-service brokers, 2,331 employees licensed to sell
mutual funds in our branches, and 531,000 brokerage accounts.
* First Union-managed mutual fund assets increased 89 percent in
1995, from $7.0 billion in 1994 to $13.2 billion at year-end 1995,
including our Evergreen Funds and the First Fidelity-managed mutual
funds. First Union now is the seventh largest bank-affiliated mutual fund
manager in the United States. We expect this upward trend to continue as
brokerage employees in our branches in the northern region of the company
become licensed to sell mutual funds (training for then-First Fidelity
employees began in August 1995). Eleven Evergreen mutual funds are rated
either four- or five-star by Morningstar, an independent ranking service.
(Picture of a First Union credit card)
* First Union has the nation's
fourth largest automated teller
machine network
(Picture of a First Union monthly statement)
* Check your IRA
balance on-line
* Combine your check-writing
ability and brokerage accounts in
one statement
15
(Photo of a laptop computer appears here)
* First Union's Home Page
on the Internet goes live
January 1995
* First Union receives
credit card applications over the
Internet in July 1995
* First Union and MCI
offer an Internet browser in
November 1995
* Cash management customers
gain access to
WebInvisionSM on-line
in November 1995
PRODUCTS AND SERVICES
* We are among the country's largest bank managers of Individual
Retirement Accounts (IRAs), with $7.6 billion in assets
and 627,000 customers at year-end 1995. Unlike most banks, we align IRAs
with our capital management capabilities, which makes it easier for
customers to remain with First Union and adjust their IRAs to keep pace
with changing investment objectives over the long term.
* In 1995 annuity sales increased to $166 million from $113 million
in 1994. During 1996 we will introduce our first proprietary insurance
annuities, which bridge a gap between the security of a CD and the return
of a mutual fund. First Union has more than 1,000 branch employees in the
Southeast who are licensed to sell these products, and an additional 634
in the Northeast have been trained to sell them.
* Our business in third-party employee 401(k) and other
defined-benefit plans has $7.0 billion in assets, 829 corporate plans
and 235,000 plan participants.
Commercial Banking
During 1995 we realized the rewards of re-designing our lending process for
small businesses, which are companies with annual revenues under $5 million.
Since the redesign, First Union has originated an average of $53 million in
small-business loans monthly.
We ended 1995 with $640 million in outstandings, more than three times what
we had before the redesign.
In our new process, branches generate referrals to three centralized
small-business lending units, and customers receive an answer to their loan
requests within 24 hours. In fact, initial credit decisions in 1995 were made
in an average of 13 hours.
For our larger customers, the commercial bank assigns a three-part team to
each client--relationship managers, commercial underwriters and portfolio
managers. These team members are backed by customer service representatives
at two regional customer service centers whose goal is to handle telephone
inquiries in three minutes or less. Ninety-seven percent of calls were
answered within 20 seconds during 1995 as call volume increased from 52,000
per month at the beginning of the year to 63,000 per month by the end of the
year, when we began serving customers in the northern region. This support
allowed the relationship managers to spend more time helping their customers
grow their businesses--and nearly doubled the amount of revenue generated by
managers: $480,000 per relationship manager in 1995 compared with $250,000 in
1994.
With a successful track record in the southern First Union franchise, full
implementation of the new commercial bank system took place in the northern
area of the company on February 15, 1996. During 1996 we will teach all our
commercial bankers to become even more productive by acting as financial
consultants, anticipating customer needs and leveraging their expertise to
find appropriate solutions to customer problems.
16
PRODUCTS AND SERVICES
Capital Markets
First Union's Capital Markets Group provides services including investment
banking, risk management, merchant banking, leveraged finance, leasing, real
estate financing and investment products. Teams of industry specialists and
product specialists as well as experienced corporate bankers offer customers
the advantages of First Union's relationship orientation, national presence
and long-term commitment. We continue our drive to offer sophisticated
financial services to our mid-sized commercial customer base through access
to the capital markets. Our goal is to provide these clients with access to
cost-efficient capital and financial services customized to their individual
needs.
The Capital Markets Group received a boost on May 30, 1995, when the Federal
Reserve Board approved our application to underwrite and distribute corporate
and public debt through our First Union Capital Markets Corp. subsidiary.
The announcement is important to our expansion into capital markets
activities, which began in January 1994.
In 1995 First Union Capital Markets Corp. acted as lead or co-manager in more
than 20 transactions with volume in excess of $4.5 billion. Our loan
syndications unit now ranks 12th in the nation.
Our merchant banking affiliate, First Union Capital Partners Inc., provides
equity and subordinated debt investments for large transactions--such as
buyouts and corporate expansion efforts. We ended 1995 with approximately
$400 million in capital deployed.
In addition:
* Equity commitments to affordable housing programs amounted to $121
million, more than double the commitments made in the previous five
years.
* We structured, arranged and acted as agent for the syndication of
a $175 million facility for a leader in the long-term health care and
institutional pharmaceutical services industry. The facility provided the
company flexibility in financing future acquisitions.
* We completed our first transaction for a client of First Fidelity,
an $80 million private placement.
Our International Group processed more than $5.7 billion in trade
transactions in 1995 through our growing network of 1,300 correspondent banks
in 140 countries. We opened a representative office in South Africa and
established a joint venture with Hong Kong Chinese Bank. We also formed a
partnership with First Factors Corp. to offer export factoring and financing
services. As the result of our merger with First Fidelity, First Union now
has a branch office in London, which should open the doors to even more
opportunities for trade finance customers and other customers in the
international arena in the future.
The Capital Markets Group ended 1995 with noninterest income equal to 54
percent of the group's total revenue, compared with 39 percent in 1994. In
addition to fee income, the Capital Markets Group also generates loans in
conjunction with our state banks. In 1995 loans booked on the Capital
Markets Group's balance sheet increased 44 percent from 1994.
(Photo of an automobile appears here)
* Use the First Union browser to
visit our "virtual shopping center"
to look for a new car, purchase
tickets or buy other products
17
(Photo of house appears here)
* Apply for a home equity
loan or other consumer
loans on-line
PRODUCTS AND SERVICES
Home Equity Lending
At First Union Home Equity Bank (FUHEB), loan volume in 1995 increased to
$1.2 billion from $940 million in 1994, and loans increased by $627 million
to $3.0 billion--a 27 percent increase from 1994. For the fifth consecutive
year, delinquent loans accounted for less than 1 percent of loans in FUHEB's
portfolio. Average loan production in each branch was $605,000 at year-end
1995. FUHEB operates 143 locations in 35 states, offering fixed- and
variable-rate loans as well as home equity lines of credit. The bank has a
centralized processing unit that provides home equity loans in 13 additional
states.
Customers also may obtain home equity loans at First Union's full-service
banking locations. Home equity loans generated through the full-service
banking branches amounted to $7.9 billion in receivables in 1995.
FUHEB's wholesale unit, created in 1994, buys whole loans from groups of
mortgage correspondents, such as mortgage bankers, banks, mortgage companies
and credit unions. These wholesale loans increased from $62 million of "A"
credit loans in 1994 to $179 million in 1995. Loans at December 31, 1995,
amounted to $257 million. The unit also leverages the capability of FUHEB's
branch office network for origination of "B" and "C" credit loans, which can
be securitized and sold through First Union's Capital Markets Group.
FUHEB's strategy in a needs-driven market is to offer personal sales
relationships, efficient service and competitive rates, while maintaining
high credit quality.
Mortgage Lending
In 1995 the First Union Mortgage Corp. benefitted from its redesign effort,
which began in 1993. Customers may obtain mortgages through professional
retail originators, branch employees, telemarketing and a growing national
relocation program. Customers may select from various mortgage products
tailored to serve specific market niches and customer needs. Through our
branch system and a toll-free phone line, the mortgage bank is capitalizing
on a lower cost method of delivering mortgage products directly to our
customers.
In 1995 the cost per unit of loan origination fell by half, as volume
increased and costs were reduced. Plans in 1996 include a further lowering of
the cost of origination and expanding our market share. Our national
relocation group achieved a record year in loan production and added 12
corporations to the existing customer base.
First Union Mortgage Corp. provides servicing for originated and acquired
mortgages with a servicing portfolio that increased to $51.5 billion and
665,000 mortgages by December 31, 1995. Loans serviced per employee increased
27 percent between 1994 and 1995 to 1,100.
THE FUTURE
In pursuing growth through customer satisfaction, First Union will continue
to:
* Embrace both innovation and change by offering the most advanced
product selection in the financial services industry;
* Leverage our internal systems and people to create new business;
and
* Look for new distribution channels, as well as new products and
services to generate loan, deposit and fee income growth.
18
LONG-TERM TRENDS
Dividend Growth
Current Dividend Annualized
(In dollars)
(A bar graph apears here with the following plot points:)
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 Current
.28 .29 .31 .33 .36 .40 .45 .49 .58 .65 .77 .86 1.00 1.08 1.12 1.28 1.50 1.72 1.96 2.08
Book Value per Share
Originally reported (adjusted for stock splits), not restated for
pooling of interests acquisitions.
(In dollars)
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
6.02 6.63 7.39 8.30 8.19 9.20 10.66 12.51 12.96 14.55 16.25 17.98 19.37 20.72 22.54 26.08 28.90 30.66 31.89
INDEX TO SPECIAL TOPICS
GENERAL INFORMATION:
Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 33
Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4, 12
CAPITAL RESOURCES:
Regulatory Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 31
Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 27, 32, 33, 40
COMMON STOCK:
Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 7, 19, 32
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 3, 19, 28, 32, 41
Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 32
Shares, Number Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 41
Stockholders, Number of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
LIQUIDITY:
Debt Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
LOANS:
Average Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 34
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 25, 34, 37
Consumer, or Retail, Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . .24, 25, 34, 37
Geographic Concentrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Industry Concentrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25, 26
Loan Loss Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 26, 31, 40
Loan Loss Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26, 32, 34, 41
Mix at Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Net Charge-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 25, 27, 31, 34, 42
Nonperforming Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 25, 26, 31, 34, 42
Project Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26
PROFITABILITY:
Earnings Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 6, 20, 31, 32, 41
Income Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 6, 20, 31, 32, 41
Net Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21, 32, 41
Net Interest Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 21, 31
Noninterest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23, 32, 41
Noninterest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 32, 34, 41
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6, 20, 32, 41
Return on Average Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 21, 31
Return on Average Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . .2, 20, 32
RISK MANAGEMENT:
Asset Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29, 35, 42
Interest Rate Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Interest Rate Sensitivity Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECURITIES:
Available For Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 24, 32, 35, 40
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 24, 32, 36, 40
Trading Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
19
Net Income
(Dollars in billions)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
.26 .57 .70 1.22 1.38 1.43
Return on Average Common Equity
(Percent)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
4.86 11.38 11.28 17.26 16.91 16.69
PERFORMANCE REVIEW
The following review is a discussion of the performance and financial condition
of First Union Corporation and First Fidelity
Bancorporation on a combined basis. All First Union historical financial data
have been restated for the pooling of interests acquisition of First
Fidelity, which was consummated on January 1, 1996.
The objective in this discussion is to provide the reader with a clear and
concise understanding of our performance and financial condition in 1995.
Audited financial statements and more detailed analytical information are
contained in the First Union Corporation 1995 Report on Form 10-K, which is
available free of charge from Investor Relations, Two First Union Center,
Charlotte, North Carolina 28288-0206.
EARNINGS HIGHLIGHTS
First Union's earnings in 1995, before merger-related restructuring charges,
increased to a record $1.48 billion, or $5.30 per common share. Including the
restructuring charges, earnings were $1.40 billion, or $5.04 per common
share. The merger-related restructuring charges in 1995 amounted to $73
million after tax, or 26 cents per common share. These results compare with
1994 results of $1.33 billion, or $4.72 per share, in net income applicable
to common stockholders before a preferred stock redemption premium. The 1995
merger-related restructuring charges, principally existing severance
contracts associated with the First Fidelity stockholder vote approving the
merger, are part of the previously announced $270 million after-tax
restructuring charges related to the First Fidelity merger. The balance of
the charges will be taken in 1996.
In the fourth quarter of 1995, earnings were $404 million before the
merger-related restructuring charges, or $1.45 per common share. After the
restructuring charges, the company earned $331 million, or $1.19 per common
share. These results compare with $335 million, or $1.17, in the fourth
quarter of 1994, before the preferred stock redemption premium.
Additional factors in the company's 1995 results compared with 1994 included:
* Noninterest income growth of 18 percent, to $1.8 billion,
excluding securities transactions.
* Tax-equivalent net interest income growth of 4 percent, to $4.7
billion.
* Loan growth of 16 percent, to $90.6 billion.
Virtually every fee income category experienced growth in 1995, with key
contributions from the Capital Markets Group, including merchant banking,
loan syndication and asset securitization volume, and from the Capital
Management Group, including mutual funds, trust and brokerage services.
Net loans were $90.6 billion at December 31, 1995, compared with $77.8
billion at year-end 1994. Net loans at year-end 1995 included $7.5 billion
from purchase acquisitions that closed during the year. Net loans do not
include $2.0 billion in credit card receivables that were securitized and
sold in September 1995. Loan growth was particularly strong in the consumer
portfolio, largely reflecting growth in direct consumer lending through the
retail branch system, home equity lending and through purchase accounting
acquisitions. Residential mortgage loans also increased, primarily through
purchase accounting acquisitions.
20
PERFORMANCE REVIEW
Net charge-offs were .41 percent of average net loans in 1995, compared with
.40 percent in 1994. Nonperforming assets were $826 million, or .91 percent
of loans and foreclosed properties, at December 31, 1995, compared with $887
million, or 1.14 percent, at December 31, 1994.
Outlook
First Union now serves 11 million customers in the Eastern United States from
Connecticut to Florida. We are well on the way to integrating First
Fidelity's operations with First Union's, a process we expect to complete by
midyear 1996.
In addition, we are enthusiastic about the steps we have taken to serve new
customers with new products in our recently acquired northeastern markets and
to continue serving customers in our southeastern markets. The strong fee
income growth in 1995 helps validate our expectations for renewed earnings
momentum as we begin to offer First Union's broader product selection,
install expanded sales support systems and integrate our two companies. In
addition, 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 the future growth of these businesses.
In 1995 First Union completed eight bank and thrift purchase accounting
acquisitions. These acquired institutions had combined assets of $10.3
billion, net loans of $7.5 billion and deposits of $7.3 billion. The acquired
institutions were primarily in Virginia and Florida, further enhancing our
customer base in those states.
In the first quarter of 1996, we completed two additional bank and thrift
purchase accounting acquisitions in North Carolina and Tennessee. We expect
to complete a third purchase accounting acquisition of a Florida thrift
during the second quarter of 1996. At year-end 1995, these three completed or
pending acquisitions had combined assets, net loans and deposits of $2.2
billion, $1.6 billion and $1.8 billion, respectively.
We continue to be alert to opportunities to enhance stockholder value through
acquisitions. With the completion of the First Fidelity acquisition, however,
our focus has shifted more to a strategy of internal growth and acquisitions
to expand existing lines of business. The significant
investments we have made in acquisitions, in technology and in expanded
products and services help position us to serve our 11 million customers in a
dynamic and diverse geographic marketplace.
However, we continue to evaluate acquisition opportunities that will provide
access to customers and markets that we believe complement our long-term
goals. Acquisition discussions and in some cases negotiations take place, and
future acquisitions involving cash, debt or equity securities may be
expected. Acquisitions typically involve the payment of a premium over book
and market values. Some dilution of First Union's book value and net income
per common share may occur in connection with some future acquisitions.
INCOME STATEMENT REVIEW
Net Interest Income
Tax-equivalent net interest income increased 4 percent compared with
1994, to $4.7 billion in 1995. The increase primarily reflected loan
growth, the repricing of variable rate assets, and purchase
acquisitions. The increase was tempered somewhat by reduced net yields.
Nonperforming loans reduce interest income because the contribution from
these loans is eliminated or sharply reduced. In 1995, $69 million in
gross interest income would have been recorded if all nonaccrual and
restructured loans had been current in accordance with their original
terms and had been outstanding throughout the period, or since
origination if held for part of the period. The amount of interest
income related to these assets and included in income in 1995 was $17
million.
Net Interest Margin
The net interest margin, which is the difference between the tax-equivalent
yield on earning assets and the rate paid on funds to support those assets,
was 4.46 percent in 1995, compared with 4.75 percent in 1994.
The margin decline in 1995 was primarily related to the addition of acquired
banks and thrifts with lower margins; the addition of short-term securities;
and the competitiveness of loan pricing. We also anticipate a further
contraction in the margin in future periods as a result of the $2.0 billion
credit card securitization, the impact of acquisitions and the generation of
lower-spread assets
Net Interest Income
(Tax-equivalent)
(Dollars in billions)
(A bar graph appears with the following plot points:)
1990 1991 1992 1993 1994 1995
2.9 3.1 3.8 4.3 4.6 4.7
Return on Average Assets
(Percent)
(A bar graph appears with the following plot points:)
1990 1991 1992 1993 1994 1995
.31 .68 .77 1.22 1.29 1.21
21
Noninterest Income
(Dollars in billions)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
1.06 1.46 1.40 1.58 1.58 1.90
Components of Noninterest Income
(In millions) .................................. 1995 1994
Trading account profits ........................ $ 69 52
Service charges on
deposit accounts ............................. 616 580
Mortgage banking income ........................ 150 88
Capital management
income ....................................... 397 330
Securities available for
sale transactions ............................ 44 6
Investment security
transactions ................................. 5 4
Fees for other banking
services ..................................... 160 131
Merchant discounts ............................. 100 90
Insurance commissions .......................... 54 48
Sundry income .................................. $302 246
PERFORMANCE REVIEW
related to capital markets activities. It should be noted that the margin is
not our primary management focus or goal. Our goal is to continue increasing
net interest income.
The $2.0 billion credit card securitization is expected to have a minimal
financial impact on the results of operations. The securitization results in
a reclassification of interest income to fee income. Securitization
transactions are used as a management tool to increase liquidity and to
utilize capital more effectively.
Average interest-earning assets increased by $10.5 billion in 1995, resulting
in an increase in tax-equivalent interest income of $1.4 billion.
The average rate earned on earning assets was 8.27 percent in 1995, compared
with 7.67 percent in 1994. The average rate paid on interest-bearing
liabilities was 4.43 percent in 1995 and 3.46 percent in 1994.
We use securities and off-balance sheet transactions to manage interest rate
sensitivity. More information on these transactions is included in the Interest
Rate Risk Management section.
Noninterest Income
We are meeting the challenges of increasing competition and changing customer
demands and demographics by making discretionary investments designed to
enhance our prospects for future fee income growth. During the past few
years, we have significantly broadened our product lines, particularly in the
capital markets, capital management and card products areas, to provide
additional sources of fee income that complement our longstanding banking
products and services. These investments were reflected in the 18 percent
growth in noninterest income, excluding securities transactions, to $1.8
billion in 1995, compared with $1.6 billion in 1994.
Virtually all categories of noninterest income increased in 1995. Key
contributions came from capital markets activities, including merchant
banking, loan syndication and asset securitization volume. Noninterest income
related to capital markets activities was $265 million in 1995, compared
with $176 million in 1994. Additionally, capital management fee income,
including mutual funds, personal and corporate trust and brokerage
services, increased 20 percent in 1995 to $397 million from $330 million
in 1994. Assets under management, which include mutual funds and trust
services, increased in 1995 to $45.5 billion from an unrestated $23.2
billion in 1994. The growth in assets under management was primarily the
result of internal and external marketing and distribution strategies.
The First Union-advised Evergreen and First Fidelity family of mutual
funds has increased to $13.2 billion in assets under management, from an
unrestated $7.0 billion in 1994.
We anticipate continued growth in fee income as capital markets and capital
management products and services are marketed to a larger customer base.
Mortgage banking operations added $150 million to noninterest income in 1995
compared with $88 million in 1994. The increase was primarily driven by an
increase in the servicing portfolio as a result of purchase accounting
acquisitions. The mortgage loan servicing portfolio increased to $51.5
billion in 1995, compared with $34.2 billion in 1994. As a result of an
industrywide contraction of nearly 15 percent and a strategic decision to
exit certain loan origination facilities, total originations were $3.8
billion in 1995, compared with $4.9 billion in 1994. Mortgage banking has
traditionally been a cyclical, interest rate sensitive business. The ability
to generate substantial fee and other income in the future is somewhat
dependent on the level and direction of interest rates. We carefully monitor
sensitivity to the cyclical changes in our mortgage banking operations.
Securities gains were $49 million in 1995, compared with $10 million in 1996.
Other significant sources of noninterest income include service charges on
deposit accounts, which increased 6 percent in 1995. Insurance commissions
and fees for other banking services also increased in 1995 compared with
1994.
Trading Activities
Our Capital Markets Group also made a key contribution to noninterest income
through trading profits. Trading profits increased in 1995 to $69 million,
compared with $52 million in 1994. The increase was the result of general
market conditions and expanded trading volume. Trading activities are
undertaken to satisfy customers' risk management and investment needs and for
the corporation's own proprietary
22
PERFORMANCE REVIEW
account. All trading activities are conducted within risk limits established
by the corporation's Funds Management Committee, and
all trading positions are marked to market daily.
Trading activities include fixed income securities, money market instruments,
foreign exchange, options, futures, forward rate agreements and swaps. With
the Federal Reserve Board's approval of expanded powers for First Union
Capital Markets Corp., our activities also include the trading and
underwriting of corporate debt securities.
At December 31, 1995, trading account assets were $1.9 billion, compared with
$1.3 billion at year-end 1994.
Noninterest Expense
Noninterest expense increased in 1995 to
$4.1 billion, compared with $3.7 billion in 1994. Our overhead efficiency
ratio in 1995 was 62 percent, compared with 61 percent in 1994. The overhead
efficiency ratio was adversely affected by merger-related charges of $94
million in 1995 and intangibles amortization expense of $229 million and $163
million in 1995 and 1994, respectively. Without the merger-related charges
and intangibles amortization expense, our overhead efficiency ratio would
have been 57 percent in 1995, compared with 58 percent in 1994. The overhead
efficiency ratio is affected by the significant investments and initiatives
under way in capital markets, capital management and other areas. These
investments and initiatives are designed to enhance noninterest income in
future periods.
Merger-related expenses of $94 million, or $73 million after-tax, were
recorded in the fourth quarter of 1995. These charges primarily reflect
existing severance contract obligations that were associated with the
First Fidelity stockholder approval of the First Union/First Fidelity
merger on October 3, 1995, and other direct costs related to the merger
that were incurred in 1995. The charges are part of the estimated $270
million after-tax merger-related charges, the remainder of which are
expected to be incurred primarily in the first and second quarters
of 1996.
The FDIC significantly reduced the insurance premiums it charges on federally
insured bank deposits in the third quarter of 1995, and in the fourth quarter
of 1995, reduced the premiums again, including a reduction to the statutory
minimum of $2,000.00 for "well capitalized" banks, effective January 1, 1996.
Premiums related to savings and loan association deposits held by banks will
continue to be assessed at the rate of 23 cents to 31 cents per $100.00 until
legislation pending before Congress to merge the Bank Insurance Fund and the
Savings Association Insurance Fund (SAIF) is enacted. The pending
legislation also includes a provision to recapitalize SAIF through a one-time
assessment. At December 31, 1995, we had $19.8 billion in SAIF deposits that
were subject to the potential one-time assessment. Based on the pending
legislation, the one-time assessment could be as high as $87 million after
tax.
The FDIC premium expense decreased from $184 million in 1994 to $120 million
in 1995. The expense savings in 1995 was largely offset by discretionary
investments in areas such as the company's retail delivery channels, capital
markets and capital management. We currently expect to invest the expected
savings that result from the FDIC premium reduction in 1996 in various
current and future discretionary investments, business initiatives and
technology programs.
BALANCE SHEET REVIEW
Earning Assets
In banking the primary types of earning assets are securities and loans. The
earnings from these assets are subject to two principal kinds of risks,
interest rate risk and credit risk.
Interest rate risk could result if rate indices related to sources and uses
of funds were mismatched. Our Funds Management Committee manages interest
rate risk, as well as credit risk associated with securities, under specific
policy standards, which are discussed in more detail in the Interest Rate
Risk Management section. In addition to certain securities, off-balance sheet
transactions such as interest rate swaps have been used to maintain interest
rate risk at acceptable levels in accordance with our policy standards.
The loan portfolio carries the potential credit risk of past due,
nonperforming or, ultimately, charged-off loans. We manage this risk
primarily through credit approval standards, which are discussed in more
detail in the Loans section.
Average earning assets in 1995 were $106.3 billion, an 11 percent increase
from $95.8 billion in 1994.
Noninterest Expense
(Dollars in billions)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
2.56 2.78 3.44 3.54 3.75 4.09
Year-End Earning Assets
(Dollars in billions)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
Earning Assets 74.6 79.1 84.5 93.5 101.0 118.0
Loans, net 54.6 58.7 60.3 68.3 77.8 90.6
Investment Securities 17.0 13.6 12.2 7.9 7.9 3.1
Securities Available for Sale -- 1.3 6.0 14.4 11.5 18.2
Other 3.0 5.5 6.0 2.9 3.7 6.1
23
Year-End Securities Available for Sale
(A pie chart appears here with the following plot points:)
47% U.S. Government Agencies
26% Collateralized Mortgage Obligations
16% U.S. Treasury securities
11% Other
Year-End Investment Securities
(A pie chart appears here with the following plot points:)
40% U.S. Government Agencies
38% Municipals
19% Collateralized
Mortgage Obligations
3% Other
Year-End Loans
(A pie chart appears here with the following plot points:)
29% Real Estate - Mortgage
27% Commercial,
Financial and Agricultural
22% Installment Loans - Other
11% Commercial
Real Estate - Mortgage
4% Installment Loans - Bankcard
4% Other
3% Commercial Construction
PERFORMANCE REVIEW
Securities Available For Sale
Securities available for sale are used as a part of the corporation's
interest rate risk management strategy, and they may be sold in response to
changes in interest rates, changes in prepayment risk, liquidity needs, the
need to increase regulatory capital ratios and other factors. These
securities are carried at estimated fair value. Unrealized changes in fair
value are recognized as a separate component of stockholders' equity, net of
tax. Realized gains and losses are recognized in income at the time the
securities are sold. The available for sale portfolio consists of U.S.
Treasury, municipal, mortgage-backed and asset-backed securities as well as
collateralized mortgage obligations, corporate, foreign and equity
securities.
At December 31, 1995, we had securities available for sale with a market
value of $18.2 billion, compared with $11.5 billion at year-end 1994. The
market value of securities available for sale was $201 million above
amortized cost at the end of 1995. A $111 million after-tax unrealized gain
was included in stockholders' equity at December 31, 1995. In 1995 we took
advantage of market conditions to add $7.3 billion of securities to the
available for sale portfolio, which we believe will enhance earnings and
reduce exposure to falling interest rates indicated by our current outlook
for 1996. We also took advantage of a one-time exemption in the accounting
rules and transferred $5.9 billion of investment securities to the available
for sale portfolio. We believe the transfer will provide us with a greater
degree of flexibility in managing the overall balance sheet.
The average rate earned on securities available for sale in 1995 was 6.41
percent, compared with 5.54 percent in 1994. The average maturity of the
portfolio was 3.03 years at December 31, 1995.
Investment Securities
Investment securities are those securities that we intend to hold to
maturity. Sales of these securities are rare. These securities are carried at
amortized cost. The portfolio consists of U.S. Goverment agency, corporate,
municipal and mortgage-backed securities, and collateralized mortgage
obligations.
First Union's investment securities amounted to $3.1 billion at December 31,
1995, compared with $7.9 billion at year-end 1994. As part of the strategy to
reduce exposure to falling interest rates, we added $3.6 billion to the
investment securities portfolio. Additionally, the $5.9 billion of investment
securities was transferred to the available for sale portfolio.
The average rate earned on investment securities in 1995 was 7.54 percent,
compared with 7.23 percent in 1994. The average maturity of the portfolio was
5.15 years at December 31, 1995.
Loans
The loan portfolio represents our largest asset balance, and it is a
significant source of interest and fee income. The loan portfolio is subject
to both credit and interest rate risk. Our lending strategy stresses quality
growth, diversified by product, geography and industry. A common credit
underwriting structure is in place throughout the company.
The loan portfolio at December 31, 1995, was composed of 44 percent in
commercial loans and 56 percent in consumer loans. The portfolio mix did not
change significantly from year-end 1994. The commercial loan portfolio
includes general commercial loans, both secured and unsecured, and commercial
real estate loans. General commercial loans are typically working capital
loans to finance the inventory, receivables and other working capital needs
of commercial borrowers, and term loans to finance fixed assets or
acquisitions. Commercial real estate loans typically finance the construction
or purchase of commercial real estate. Consumer loans include mortgage,
credit card and installment loans. Consumer mortgage lending includes both
first and second mortgage loans.
Consistent with our longtime standard, we generally look for two repayment
sources for commercial real estate loans: cash flows from the project and
other resources of the borrower. Our commercial lenders focus principally on
middle-market companies, which we believe reduces the risk of credit loss
from any single borrower or group of borrowers. A majority of our commercial
loans are for less than $10 million.
Our consumer lenders emphasize credit judgments that focus on a customer's
debt obligations, ability and willingness to repay, and general economic
trends.
Net loans at December 31, 1995, were $90.6 billion, compared with $77.8
billion at year-end
24
PERFORMANCE REVIEW
1994. Of this increase, $7.5 billion was related to purchase acquisitions,
with the rest coming from growth in all of our banking states and in
virtually all loan categories. Consumer loan growth was particularly strong
in 1995, primarily in direct lending and home equity lending. Net loans do
not include the $2.0 billion in credit card receivables that were securitized
and sold in September 1995. The financial impact of the securitization on the
results of operations is expected to be minimal, as discussed above.
The average rate earned on loans in 1995 was 8.71 percent, compared with 8.28
percent in 1994. The average prime rate in 1995 was 8.44 percent, compared
with 6.81 percent in 1994. Factors affecting loan rates between 1994 and 1995
included several increases in the prime rate throughout 1994; an increased
portion of the loan portfolio tied to rate indices other than the prime rate;
a larger portfolio of fixed and adjustable rate mortgages; and the repricing
of credit card portfolio introductory rates.
The Asset Quality section provides information about geographic exposure in
the loan portfolio.
Commercial Real Estate Loans
Commercial real estate loans amounted to 14 percent of the total portfolio at
December 31, 1995, compared with 15 percent at December 31, 1994. This
portfolio included commercial real estate mortgage loans of $10.0 billion at
December 31, 1995, and $9.5 billion at December 31, 1994.
ASSET QUALITY
Nonperforming Assets
Most of our assets are interest-bearing loans and investment securities. The
credit quality of these assets is crucial to the profitability of the
corporation.
Nonperforming assets are those assets that are not paying principal and/or
interest as contractually required. These assets reduce our income through
lower amounts of interest income and higher provisions for losses.
Asset quality is typically measured by the levels of nonperforming and past
due assets; the amount of charge-offs and provisions; and certain
credit-related ratios such as charge-offs to net loans; and nonperforming
assets to net loans and foreclosed properties.
At December 31, 1995, nonperforming assets were $826 million, or .91 percent
of net loans and foreclosed properties, compared with $887 million, or 1.14
percent, at December 31, 1994. The reduction in nonperforming assets was
primarily due to continued collection efforts and prudent management of the
nonperforming assets portfolio.
Loans or properties of less than $5 million each made up 73 percent, or $601
million, of nonperforming assets at December 31, 1995. Of the rest:
* Six loans or properties between $5 million and $10 million each
accounted for $46 million; and
* Eight loans or properties over $10 million each accounted for $179
million.
Fifty-nine percent of nonperforming assets were collateralized by real estate
at year-end 1995, compared with 66 percent at year-end 1994.
Past Due Loans
In addition to these nonperforming assets, at December 31, 1995, accruing
loans 90 days past due were $290 million, compared with $272 million at
December 31, 1994. Of these, $15 million were related to commercial and
commercial real estate loans, compared with $30 million at December 31, 1994.
Net Charge-Offs
Net charge-offs as a percentage of average net loans were .41 percent in
1995, compared with .40 percent in 1994. The increase in net charge-offs was
principally related to the maturing credit card portfolio. In 1996 we
anticipate an increase in the dollar level of charge-offs as credit card
receivables continue to increase and the portfolio seasons to a charge-off
ratio that is expected to be aligned with industry averages. We do not
believe the higher levels of net charge-offs are indicative of any
significant deterioration in the credit quality of the loan portfolio. We are
carefully monitoring trends in both the commercial and consumer loan
portfolios for signs of credit weakness. Additionally, we have evaluated our
credit policies in light of changing economic trends. All of these steps have
been taken with the goals of minimizing future credit losses and
deterioration, while allowing for maximum profitability.
Year-End Commercial Loans
Industry Classification Dollars in millions
Manufacturing ............................................... $ 4,920
Retail trade ................................................ 1,968
Wholesale trade ............................................. 1,574
Services .................................................... 5,308
Financial services .......................................... 3,073
Insurance ................................................... 435
Real estate-related ......................................... 1,593
Communication ............................................... 1,376
Transportation .............................................. 1,796
Public utilities ............................................ 619
Agriculture ................................................. 503
Construction ................................................ 424
Mining ...................................................... 368
Individuals ................................................. 848
Public administration ....................................... 483
Other ....................................................... 2,025
Total ....................................................... $27,313
(A pie chart appears here with the plot points listed above.)
Year-End Consumer Loans
45% Mortgage Loans to Individuals
23% Consumer Credit
9% Second Mortgages
9% Sales Finance
7% Bankcards
7% Mortgage Warehouse
and Securitized Mortgages
Commercial Real Estate Loans
Number
Project Type In millions of loans
Apartments ................................. $ 1,747 1,806
Condominiums ............................... 181 226
Land-improved .............................. 572 1,006
Land-unimproved ............................ 352 662
Lodging .................................... 272 218
Office buildings ........................... 3,186 5,393
Industrial buildings ....................... 1,082 1,799
Retail sales buildings ..................... 1,706 1,642
Single family .............................. 707 3,722
Other ...................................... 2,255 3,448
Total ...................................... $12,060 19,922
25
Nonperforming Assets
(Dollars in billions)
(A bar graph appears here with the following plot points:)
1990 1991 1992 1993 1994 1995
2.2 2.6 2.0 1.4 .89 .83
Percentage of net loans
and foreclosed properties 3.91 4.45 3.36 2.06 1.14 .91
Year-End Nonperforming
Commercial Loans
Industry Classification Dollars in millions
Manufacturing ................................................. $121
Retail trade .................................................. 13
Wholesale trade ............................................... 7
Services ...................................................... 80
Financial services ............................................ 6
Real estate-related ........................................... 33
Transportation ................................................ 4
Agriculture ................................................... 28
Construction .................................................. 15
Mining ........................................................ 0
Individuals ................................................... 17
Other ......................................................... 11
Total ......................................................... $335
Year-End Nonaccrual Real Estate
Includes foreclosed properties.
Project Type Dollars in millions
Apartments .................................................... $ 24
Condominiums .................................................. 1
Industrial .................................................... 16
Land-improved ................................................. 15
Land-unimproved ............................................... 34
Lodging ....................................................... 3
Office buildings .............................................. 97
Retail ........................................................ 18
Single family ................................................. 162
Other ......................................................... 117
Total ......................................................... $487
PERFORMANCE REVIEW
Provision and Allowance for Loan Losses
The loan loss provision was $220 million in 1995, compared with $179 million
in 1994. The increase in the loan loss provision was based primarily on
current economic conditions, on the maturity and level of nonperforming
assets, and on projected levels of charge-offs.
We establish reserves based upon various other factors, including the results
of quantitative analyses of the quality of commercial loans and commercial
real estate loans. Reserves for commercial and commercial real estate loans
are based principally on loan grades, historical loss rates, borrowers'
creditworthiness, underlying cash flows from the project and from borrowers,
and analysis of other less quantifiable factors that might influence the
portfolio. Reserves for consumer loans are based principally on delinquencies
and historical loss rates. We analyze all loans in excess of $1 million that
are being monitored as potential credit problems to determine whether
supplemental, specific reserves are necessary.
The allowance for loan losses was $1.5 billion at December 31, 1995, compared
with $1.6 billion in 1994. The ratio of the allowance to nonperforming assets
was 182 percent and 178 percent at December 31, 1995 and 1994, respectively.
The ratio of the allowance to net loans was 1.66 percent at December 31,
1995, compared with 2.03 percent in 1994.
Geographic Exposure
The loan portfolio in the East Coast region of
the United States is spread primarily across 82 metropolitan statistical
areas with diverse economies. Atlanta, Georgia; Charlotte, North Carolina;
Miami, Jacksonville, West Palm Beach and Tampa, Florida; Newark, New Jersey;
Philadelphia, Pennsylvania; Westchester County, New York; and Washington,
D.C., are our largest markets. Substantially all of the $12.5 billion
commercial real estate portfolio at December 31, 1995, was located in our
banking region.
LIQUIDITY AND FUNDING SOURCES
Liquidity planning and management are necessary to ensure we maintain the
ability to fund operations cost-effectively and to meet current and future
obligations such as loan commitments and deposit outflows. In this process,
we focus on both assets and liabilities and on the manner in which they
combine to provide adequate liquidity to meet the corporation's needs.
Funding sources primarily include customer-based core deposits but also
include purchased funds and cash flows from operations. First Union is one of
the nation's largest core deposit-funded banking institutions. Our large
consumer deposit base, which is spread across the economically strong South
Atlantic region and high per-capita income Northeast region, creates considera
ble funding diversity and stability. Further, our acquisitions of bank and
thrift deposits have enhanced liquidity.
Asset liquidity is maintained through maturity management and through our
ability to liquidate assets, primarily assets held for sale. Another
significant source of asset liquidity is the potential to securitize assets
such as credit card receivables and auto, home equity, commercial and
mortgage loans. The securitization and sale of $2.0 billion in credit card
receivables at the end of the third quarter of 1995 had a significant,
positive effect on our liquidity position. Other off-balance sheet sources of
liquidity exist as well, such as a mortgage servicing portfolio for which the
estimated fair value exceeded book value by $186 million at December 31,
1995.
Cash Flows
Cash flows from operations are a significant source of liquidity. Net cash
provided from operations primarily results from net income adjusted for the
following noncash accounting items: the provisions for loan losses and
foreclosed properties; depreciation and amortization; and deferred income
taxes or benefits. This cash was available in 1995 to increase earning assets
or to reduce borrowings.
Core Deposits
Core deposits are a fundamental and cost-effective funding source for any
banking institution. Core deposits were $86.4 billion at December 31, 1995,
compared with $81.0 billion at December 31, 1994. Core deposits include
savings, negotiable order of withdrawal (NOW), money market,
noninterest-bearing and other consumer time deposits.
26
PERFORMANCE REVIEW
The portion of core deposits in higher-rate, other consumer time deposits was
37 percent at December 31, 1995, and 34 percent at year-end 1994. Other
consumer time and other noncore deposits usually pay higher rates than
savings and transaction accounts, but they generally are not available for
immediate withdrawal and are less expensive to process.
Average core deposit balances were $81.6 billion in 1995, an increase of $4.8
billion from 1994. Average balances in savings and NOW, other consumer time
deposits and noninterest-bearing deposits were higher when compared with the
previous year, while money market deposits were lower. Deposits were
primarily affected by the purchase acquisitions. They can also be affected by
branch closings or consolidations, seasonal factors and the rates being
offered for deposits compared to other investment opportunities.
Purchased Funds
Purchased funds at December 31, 1995, were $25.7 billion, compared with $17.2
billion at year-end 1994. Purchased funds are acquired primarily through (i)
our large branch network, consisting principally of $100,000 and over
certificates of deposit, public funds and treasury deposits, and (ii)
national market sources, consisting of relatively short-term funding sources
such as federal funds, securities sold under repurchase agreements,
eurodollar time deposits, short-term bank notes and commercial paper, and
longer-term funding sources such as term bank notes, Federal Home Loan Bank
borrowings and corporate notes. In 1995 we began utilizing a newly
established $10 billion shelf as part of our ongoing bank note program, which
we will continue to use as a source of liquidity.
Average purchased funds in 1995 were $19.7 billion, an increase of 30 percent
from $15.1 billion in 1994. The increase was used primarily to fund loan
growth.
Long-Term Debt
Long-term debt was 79 percent of total stockholders' equity at December 31,
1995, compared with 51 percent at December 31, 1994. The increase in
long-term debt compared with year-end 1994 was primarily related to $1.2
billion of bank notes with varying rates and terms that mature by 1997.
Additionally, in 1995 we issued $300 million of three-year floating rate
senior notes and $1.0 billion of subordinated debentures and notes with rates
ranging from 6.55 percent to 7.50 percent and maturities of either 10 years
or 40 years. Proceeds from these debt issues have been used for general
corporate purposes.
Under a shelf registration statement filed with the Securities and Exchange
Commission, we currently have available for issuance $1.5 billion of senior
or subordinated debt securities. The sale of any additional debt securities
will depend on future market conditions, funding needs and other factors.
Debt Obligations
We have a $350 million, committed back-up line of credit that expires in
December 1998. This credit facility contains financial covenants that require
First Union to maintain a minimum level of tangible net worth, restrict
double leverage ratios and require capital levels at subsidiary banks to meet
regulatory standards. First Union has not used this line of credit. During
1996, $1.7 billion of long-term debt will mature, including bank notes
discussed above of $865 million. Funds for the payment of long-term debt will
come from operations or, if necessary, additional borrowings.
Stockholders' Equity
The management of capital in a regulated banking environment requires a
balance between maximizing leverage and return on equity to our stockholders
while maintaining sufficient capital levels and related ratios to satisfy
regulatory requirements. We have historically generated attractive returns on
equity to stockholders while maintaining sufficient regulatory capital
ratios.
At December 31, 1995, total stockholders' equity was $9.0 billion, compared
with $8.3 billion at December 31, 1994, and 278 million common shares were
outstanding compared with 285 million shares at December 31, 1994. In 1995 we
paid $965 million for the repurchase of 20 million shares of First Union
common stock principally related to business combinations. In February 1996,
the board of directors renewed its authorization for the purchase in the open
market from time to time of up to 15 million shares of First Union common stoc
k. The timing of any such repurchases would be based on our assessment of
First Union's capital structure and liquidity, the market price of our common
stock compared to our assessment of its underlying value, regulatory,
accounting and other factors. Repurchases would be made primarily in
Net Charge-Offs
(Percent)
(A bar graph appears here with the following plot points:)
1991 1995
Industry Average 1.62 .59
First Union 1.53 .41
*Average of the nation's 25 largest banking companies.
Net Charge-Offs by Loan Type
As a percentage of average net loans.
Industry Classification 1995 1994
Commercial,
financial and
agricultural .05 .12
Real estate .07 .11
Installment
loans-Bankcard .20 .09
Installment
loans-Other .09 .08
Total .41 .40
Comparison of Funding Sources
(Percent)
(A bar graph appears here with the following plot points:)
1993 1994 1995
Long-Term Debt 4% 4% 6%
Short-Term Borrowings 9% 10% 16%
Deposits 87% 86% 78%
27
Core Deposits
(Dollars in billions)
(A bar graph appears with the following plot points:)
1990 1991 1992 1993 1994 1995
55.5 68.2 73.3 78.4 81.0 86.4
Regulatory Capital to Assets
(Percent)
(A bar graph appears with the following plot points:)
1995 Regulatory
Minimum-Well Capitalized First Union
Tier I 6.00 6.62
Total Capital 10.00 11.33
PERFORMANCE REVIEW
connection with future acquisitions and stock-based employee benefit plans.
In 1995 we announced a dividend increase for the 18th consecutive year,
resulting in dividends of $1.96 per common share. The current annualized
dividend rate is $2.08 per common share. The corporation paid $343
million in dividends to preferred and common stockholders in 1995.
At December 31, 1995, stockholders' equity reflected an $111 million
unrealized after-tax gain related to debt and equity securities. The
Securities Available for Sale section provides additional information
about debt and equity securities.
Regulatory Capital
Federal banking regulations require that bank holding companies and their
subsidiary banks maintain minimum levels of capital. These banking
regulations measure capital using three formulas relating to tier 1 capital,
total capital and leverage capital. The minimum level for the ratio of total
capital to risk-weighted assets (including certain off-balance sheet
financial instruments, such as standby letters of credit and interest rate
swaps) is currently 8 percent. At least half of total capital is to be
composed of common equity, retained earnings and a limited amount of
qualifying preferred stock, less certain intangible assets (tier 1 capital).
The rest may consist of a limited amount of subordinated debt, nonqualifying
preferred stock and a limited amount of the loan loss allowance (together
with tier 1 capital, total capital).
At December 31, 1995, the tier 1 and total capital ratios were 6.62 percent
and 11.33 percent, respectively, compared with 7.76 percent and 12.94 percent
at December 31, 1994. The reduction in the tier 1 and total capital ratios in
1995 was due primarily to the common stock repurchase program, the preferred
stock redemption and the increase in total assets and intangible assets.
In addition, the Federal Reserve Board has established minimum leverage ratio
requirements for bank holding companies. These requirements provide for a
minimum leverage ratio of tier 1 capital to adjusted average quarterly assets
equal to 3 percent for bank holding companies that meet specified criteria,
including having the highest regulatory rating. All other bank holding
companies are generally required to maintain a leverage ratio of at least 4
to 5 percent. The leverage ratio at December 31, 1995, was 5.49 percent,
compared with 6.12 percent at December 31, 1994.
The requirements also provide that bank holding companies experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. The Federal Reserve Board also has
indicated it will continue to consider a tangible tier 1 leverage ratio
(deducting all intangibles) in evaluating proposals for expansion or new
activity. The Federal Reserve Board has not advised us of any specific
minimum leverage ratio applicable to us.
INTEREST RATE RISK MANAGEMENT
Managing interest rate risk is fundamental to banking. Banking institutions
manage the inherently different maturity and repricing characteristics of the
lending and deposit-taking lines of business to achieve a desired interest
rate sensitivity position and to limit exposure to interest rate risk. The
inherent maturity and repricing characteristics of our lending and deposit
activities create a naturally asset-sensitive structure. By using a
combination of on- and off-balance sheet financial instruments, we manage the
sensitivity of earnings to changes in interest rates within our established
policy guidelines.
The Financial Management Committee of the corporation's board of directors
reviews overall interest rate risk management activity. The corporation's
Funds Management Committee, which includes the three members of the Office of
the Chairman and senior executives from our Capital Markets Group, credit and
finance areas, oversees the interest rate risk management process and
approves policy guidelines. Balance sheet management and finance personnel
monitor the day-to-day exposure to changes in interest rates in response to
loan and deposit flows, and they make adjustments within established policy
guidelines.
We use three standard scenarios in analyzing interest rate sensitivity for
policy measurement: base-line, high rate and low rate. The base-line
scenario is our estimated most likely path for short-term interest rates over
the next 24 months. The high rate and low rate scenarios assume 100 basis
point shifts from the base-line scenario in the federal funds rate by the
fourth succeeding month and that rates remain 100
28
PERFORMANCE REVIEW
basis points higher or lower throughout the rest of the 24-month period.
We determine interest rate sensitivity by the change in earnings per share
between the three scenarios over a 12-month policy measurement period.
Earnings per share as calculated by the earnings simulation model under the
base-line scenario becomes the standard. The measurement of interest rate
sensitivity is the percentage change in earnings per share calculated by the
model under high rate versus base-line and under low rate versus base-line.
The policy measurement period begins with the fourth month forward and ends
with the 15th month (i.e., a 12-month period). Our policy limit for maximum
negative impact on earnings per share resulting from either the high rate or
low rate scenario is 5 percent.
The model, updated at least monthly and more often as appropriate, captures
rate of change differentials such as federal funds rates versus savings
account rates; maturity effects such as calls on securities; and rate barrier
effects such as caps and floors on loans. It also captures changing balance
sheet levels, such as commercial and consumer loans (both floating and fixed
rate), noninterest-bearing deposits and investment securities. In addition,
it considers leads and lags that occur in long-term rates as short-term rates
move away from current levels; the elasticity in the repricing
characteristics of savings and money market deposits; and the effects of
prepayment volatility on various fixed rate assets such as residential
mortgages, mortgage-backed securities and consumer loans. These and certain
other effects are evaluated in developing the scenarios from which
sensitivity of earnings to changes in interest rates is determined.
Our estimate in January 1996 of future short-term interest rates was that the
federal funds rate would decline to 4.92 percent by December 1996 and then
rise gradually to 5.40 percent by December 1997. Based on the January 1996
outlook, if interest rates were to decline 100 basis points below the
estimated short-term rate scenario, i.e., follow the low rate scenario, the
model indicates that earnings during the policy measurement period would be
negatively affected by 1.6 percent. Our model indicates that earnings would
also be immaterially affected in our high rate scenario, i.e., a 100 point
increase in estimated short-term interest rates.
Interest Rate Sensitivity Assumptions
(A line graph appears here with the following plot points:)
1/96 4/96 12/96 3/97 12/97
High Rate 6.25 5.92 5.98 6.40
Base-Line 5.25 4.92 4.98 5.40
Low Rate 4.25 3.92 3.98 4.40
Policy Period
4/96-3/97
In addition to the three standard scenarios used to analyze rate sensitivity
over the policy measurement period, we also analyze the potential impact of
other, more extreme, interest rate scenarios. These alternate scenarios may
include interest rate paths higher, lower and more volatile than those used
for policy measurement. Because the interest rate sensitivity model is based
on numerous interest rate assumptions, projected changes in growth in balance
sheet categories and changes in other basic assumptions, actual results may
differ from our current simulated outlook.
While our interest rate sensitivity modeling assumes that management takes no
action, we regularly assess the viability of strategies to reduce
unacceptable risk to earnings and implement such strategies when we believe
those actions are prudent. We took actions in 1995 to mitigate the negative
effect on earnings of adverse changes in interest rates beyond the policy
measurement period. For example, in the fourth quarter of 1995, we
implemented a strategy to add off-balance sheet positions that we believe
will significantly reduce our potential asset sensitivity in 1997.
Off-Balance Sheet Derivatives
For Interest Rate Risk Management
As part of our overall interest rate risk management strategy, for many years
we have used off-balance sheet derivatives as a cost- and capital-efficient
way to modify the repricing or maturity characteristics of on-balance sheet
assets and liabilities. Our off-balance sheet derivative transactions used
for interest rate sensitivity management include interest rate swaps, futures
and options with indices that relate to the pricing of
29
PERFORMANCE REVIEW
specific core assets and liabilities of the corporation. We believe we have
appropriately controlled the risk so that the derivatives used for rate
sensitivity management will not have any significant unintended effect on
corporate earnings. As a matter of policy we do not use highly leveraged
derivative instruments for interest rate risk management. The impact of
derivative products on our earnings and rate sensitivity is fully
incorporated in the earnings simulation model in the same manner as for on-bal
ance sheet instruments.
Our overall goal is to manage our rate sensitivity in ways that earnings are
not adversely affected materially whether rates go up or down. As a result of
interest rate fluctuations, off-balance sheet transactions (and securities)
will from time to time develop unrealized appreciation or depreciation in
market value when compared with their cost. The impact on net interest income
attributable to these off-balance sheet transactions, all of which are linked
to specific assets and liabilities as part of our overall interest rate risk
management strategy, will generally be offset by net interest income from
on-balance sheet assets and liabilities. The important consideration is
not the shifting of unrealized appreciation or depreciation between and
among on- and off-balance sheet instruments, but the prudent management
of interest rate sensitivity so that corporate earnings are not unduly
at risk as interest rates move up or down.
There was significant interest rate volatility between year-end 1993 and
year-end 1995, which was reflected in the dramatic change in the
market value of our securities portfolio and off-balance sheet positions. The
combined market value of those positions moved from an unrealized gain of
$903 million at December 31, 1993, to an unrealized loss of $1.1 billion at
December 31, 1994, and then back to an unrealized gain of $771 million at
December 31, 1995. Despite the large year-to-year fluctuations in market
value and related fluctuations in the net interest
income contribution from these positions, total net interest income continued
to increase. This is the outcome we strive to achieve in using portfolio
securities and off-balance sheet products in the conduct of asset and
liability management.
The fair value appreciation of off-balance sheet derivative financial
instruments used to manage our interest rate sensitivity was $390 million at
December 31, 1995, compared with fair value depreciation of $623 million at
December 31, 1994.
Although off-balance sheet derivative financial instruments do not expose the
corporation to credit risk equal to the notional amount, we are exposed to
credit risk equal to the extent of the fair value gain in an off-balance
sheet derivative financial instrument if the counterparty fails to perform.
We minimize the credit risk in these instruments by dealing only with high
quality counterparties. Each transaction is specifically approved for
applicable credit exposure.
In addition, our policy is to require that all swaps and options be governed
by an International Swaps and Derivatives Association Master Agreement.
Bilateral collateral arrangements are in place for substantially all dealer
counterparties.
Derivative collateral arrangements for dealer transactions and trading
activities are based on established thresholds of acceptable credit risks by
counterparty. Thresholds are determined based on the strength of the
individual counterparty and are bilateral. As of December 31, 1995, the total
credit risk in excess of thresholds was $275 million. The fair value of
collateral held was 100 percent of the total credit risk in excess of
thresholds. For nondealer transactions, the need for collateral is evaluated
on an individual transaction basis and is primarily dependent on the
financial strength of the counterparty.
30
FINANCIAL TABLES
Table 1
Selected Statistical Data
Years Ended December 31, 1995 1994 1993 1992 1991 1990
PROFITABILITY
Net interest margin 4.46% 4.75 4.82 4.73 4.12 3.95
Net income per common share before 1994
redemption premium $ 5.04 4.72 4.30 2.53 2.34 .97
Return on common stockholders' equity
before 1994 redemption premium* 16.69% 16.91 17.26 11.28 11.38 4.86
Return on assets* 1.21 1.29 1.22 .77 .68 .31
Overhead efficiency ratio** 61.67 61.07 60.60 66.13 60.49 64.18
Dividend payout ratio on common shares 35.82 34.16 30.25 40.61 41.91 103.06
CAPITAL ADEQUACY***
Tier 1 capital to risk-weighted assets 6.62 7.76 9.14 9.22 7.56 6.53
ASSET QUALITY
Net charge-offs to loans, net* .41 .40 .78 1.03 1.53 1.05
Allowance for loan losses to loans, net 1.66 2.03 2.38 2.57 2.49 2.31
Allowance for loan losses to nonaccrual and
restructured loans 233 248 151 105 77 76
Allowance for loan losses to
nonperforming assets 182 178 115 76 55 58
Nonperforming assets to loans, net and
foreclosed properties .91% 1.14 2.06 3.36 4.45 3.91
* Based on average balances.
** The overhead efficiency ratio is equal to noninterest expense divided by net
operating revenue. Net operating revenue is equal to the sum of
tax-equivalent net interest income and noninterest income.
*** Capital ratios for 1990-1994 are not restated for pooling of interests
acquisitions.
31
FINANCIAL TABLES
Table 2
Consolidated Summaries of Income and Per Share Data
(In thousands except per share data)
Years Ended December 31, 1995 1994 1993 1992 1991 1990
CONSOLIDATED SUMMARIES OF INCOME
Interest income* $ 8,791,826 7,352,023 6,736,036 6,752,660 7,199,405 7,740,412
Interest expense 4,051,815 2,792,982 2,481,952 2,941,680 4,070,885 4,806,471
Net interest income* 4,740,011 4,559,041 4,254,084 3,810,980 3,128,520 2,933,941
Provision for loan losses 220,000 179,000 369,753 642,708 946,284 923,409
Net interest income after provision for
loan losses* 4,520,011 4,380,041 3,884,331 3,168,272 2,182,236 2,010,532
Securities available for sale transactions 44,340 6,213 32,784 39,227 53,566 24,387
Investment security transactions 4,818 4,006 7,435 (2,881) 155,048 7,884
Noninterest income 1,847,350 1,565,694 1,541,569 1,360,202 1,254,635 1,028,755
Noninterest expense** 4,092,469 3,746,857 3,536,346 3,443,524 2,777,665 2,564,124
Income before income taxes* 2,324,050 2,209,097 1,929,773 1,121,296 867,820 507,434
Income taxes 788,420 711,444 578,912 278,514 129,843 59,868
Tax-equivalent adjustment 105,449 121,210 134,508 143,994 168,005 191,324
Net income 1,430,181 1,376,443 1,216,353 698,788 569,972 256,242
Dividends on preferred stock 26,390 46,020 45,553 53,040 51,746 47,151
Net income applicable to common
stockholders before redemption premium 1,403,791 1,330,423 1,170,800 645,748 518,226 209,091
Redemption premium on preferred stock -- 41,355 -- -- -- --
Net income applicable to common
stockholders after redemption premium $ 1,403,791 1,289,068 1,170,800 645,748 518,226 209,091
PER COMMON SHARE DATA
Net income before redemption premium $ 5.04 4.72 4.30 2.53 2.34 .97
Net income after redemption premium $ 5.04 4.58 4.30 2.53 2.34 .97
Average common shares 278,677,119 281,662,617 272,438,239 255,384,145 221,469,355 215,503,124
Average common stockholders' equity*** $ 8,412,020 7,869,710 6,781,863 5,723,532 4,554,234 4,301,110
Common stock price
High 58 7/8 47 5/8 51 1/2 44 7/8 30 7/8 21 3/4
Low 41 3/8 39 3/8 37 7/8 29 1/2 13 3/4 13 7/8
Year-end $ 55 5/8 41 3/8 41 1/4 43 5/8 30 15 3/8
To earnings ratio**** 11.04X 8.76 9.60 17.25 12.82 15.85
To book value 174% 147 154 187 141 78
Cash dividends $ 1.96 1.72 1.50 1.28 1.12 1.08
Book value $ 31.89 28.19 26.71 23.36 21.21 19.83
*Tax-equivalent.
**Includes merger-related restructuring charges of $94,446,000 ($72,826,000
after tax) in 1995.
***Average common stockholders' equity excludes average net unrealized gains
or losses on debt and equity securities.
****Based on net income applicable to common stockholders before redemption
premium.
32
FINANCIAL TABLES
Table 3
Six-Year Summary of Selected Financial Data
(Dollars in thousands)
Years Ended December 31, 1995 1994 1993 1992 1991 1990
AVERAGE BALANCES
Assets $ 118,142,086 106,413,103 99,610,438 90,620,843 83,822,199 81,932,407
Loans, net 83,265,397 70,725,906 62,996,378 58,700,311 54,844,025 54,912,823
Earning assets 106,271,199 95,804,496 88,318,927 80,719,367 75,836,666 74,358,421
Noninterest-bearing deposits 15,518,337 15,206,362 14,388,027 12,240,490 9,982,548 9,519,621
Interest-bearing deposits 71,756,304 65,553,721 62,442,362 59,706,209 54,620,072 49,349,973
Total stockholders' equity 8,545,238 8,273,139 7,302,152 6,280,407 5,083,574 4,765,413
YEAR-END BALANCES
Assets 131,879,873 113,529,201 104,549,554 95,308,328 89,488,406 83,698,754
Loans, net 90,562,880 77,830,993 68,263,088 60,301,462 58,725,097 54,581,023
Earning assets 118,009,250 101,000,926 93,460,247 84,464,149 79,139,634 74,642,201
Noninterest-bearing deposits 17,043,223 15,917,287 16,208,214 14,583,331 12,463,681 10,705,416
Interest-bearing deposits 75,511,995 71,947,838 65,677,219 61,572,469 59,931,092 50,568,962
Total stockholders' equity $ 9,043,144 8,274,492 7,946,053 6,716,813 5,805,579 4,782,825
INTERNAL CAPITAL GROWTH 10.45% 10.45 11.18 6.11 5.92 (.13)
Table 4
Other Selected Six-Year Data*
(Dollars in thousands)
Years Ended December 31, 1995 1994 1993 1992 1991 1990
MORTGAGE LOAN PORTFOLIO
Permanent Loan Originations
Residential
Direct $ 2,879,420 3,569,451 6,276,720 4,549,392 2,206,796 1,832,758
Wholesale 428,071 933,214 2,431,455 2,641,656 2,657,534 2,092,646
Total 3,307,491 4,502,665 8,708,175 7,191,048 4,864,330 3,925,404
Income property 493,177 443,356 238,199 263,749 266,518 237,980
Total $ 3,800,668 4,946,021 8,946,374 7,454,797 5,130,848 4,163,384
Volume of Loans Serviced
Residential $ 50,047,000 32,677,000 32,786,000 22,528,000 22,161,000 17,878,000
Income property 1,458,000 1,537,000 1,972,000 1,848,000 1,951,000 1,534,000
Total $ 51,505,000 34,214,000 34,758,000 24,376,000 24,112,000 19,412,000
other data
Domestic banking offices 1,959 1,338 1,302 897 1,002 767
Foreign banking offices 5 2 1 1 2 1
ATMs 2,123 1,242 1,189 847 943 707
Employees 44,536 31,858 32,861 23,459 24,203 20,521
Common stockholders 89,257 54,236 58,670 37,955 33,456 34,951
* 1990-1994 not restated for pooling of interests acquisitions.
33
FINANCIAL TABLES
Table 5
Selected Lines of Business*
(Dollars in thousands)
December 31, 1995
First Union Other
Card Home Equity Consumer Capital Capital Mortgage
Products Bank Banking Markets Management Banking
INCOME STATEMENT DATA
Interest income** $ 708,778 278,857 1,126,471 922,941 22,842 1,094,653
Interest expense 281,195 159,361 601,220 671,690 1,220 808,680
Provision for loan losses 212,708 6,361 62,166 29,354 124 25,137
Noninterest income 107,994 30,035 26,352 265,428 397,191 149,585
OTHER DATA
Net charge-offs 171,977 3,569 49,152 8,153 -- 5,439
Average loans, net 4,827,681 2,664,311 10,988,757 7,442,955 110,277 13,798,477
Nonperforming assets 13,066 10,640 82,414 118,177 -- 101,581
Average deposits -- -- -- 2,317,510 579,173 --
Assets under care -- -- -- -- 51,226,399 --
Assets under management -- -- -- -- 45,500,000 --
Loans serviced -- -- -- -- -- 51,505,000
Origination volume $ 6,397,661 1,224,558 6,162,978 -- -- 3,800,668
Locations 1,290 143 1,296 1,304 1,485 1,311
* The information contained herein represents selected lines of business data
other than commercial lending and branch operations. Certain information is
prepared from internal management reports.
** Tax-equivalent.
34
FINANCIAL TABLES
Table 6
Securities Available For Sale
(In thousands)
December 31, 1995
Average
1 Year 1-5 5-10 After 10 Gross Unrealized Amortized Maturity
or Less Years Years Years Total Gains Losses Cost in Years
MARKET VALUE
U.S. Treasury $ 1,507,112 1,443,582 4,440 3,799 2,958,933 (6,415) 7,036 2,959,554 1.58
U.S. Government agencies 795,915 5,978,720 1,724,404 4,925 8,503,964 (110,206) 8,318 8,402,076 3.75
Collateralized mortgage
obligations 847,785 3,727,165 179,355 940 4,755,245 (34,593) 18,082 4,738,734 2.49
State, county and municipal -- 2,149 1,384 9,375 12,908 -- 201 13,109 14.50
Other 241,536 951,782 96,173 673,158 1,962,649 (97,253) 14,029 1,879,425 3.50
Total $ 3,392,348 12,103,398 2,005,756 692,197 18,193,699 (248,467) 47,666 17,992,898 3.03
MARKET VALUE
Debt securities $ 3,392,348 12,103,398 2,005,756 104,120 17,605,622 (174,872) 46,818 17,477,568
Sundry securities -- -- -- 588,077 588,077 (73,595) 848 515,330
Total $ 3,392,348 12,103,398 2,005,756 692,197 18,193,699 (248,467) 47,666 17,992,898
AMORTIZED COST
Debt securities $ 3,374,168 12,014,119 1,984,974 104,307 17,477,568
Sundry securities -- -- -- 515,330 515,330
Total $ 3,374,168 12,014,119 1,984,974 619,637 17,992,898
WEIGHTED AVERAGE YIELD
U.S. Treasury 6.66% 5.39 7.67 8.02 6.06
U.S. Government agencies 6.69 6.67 6.57 6.82 6.67
Collateralized mortgage
obligations 7.19 6.97 7.27 6.18 6.59
State, county and municipal -- 8.80 10.24 10.28 10.03
Other 7.85 5.26 10.92 4.15 5.39
Consolidated 6.80% 6.40 6.81 6.09 6.42
35
FINANCIAL TABLES
Table 7
Investment Securities
(In thousands)
December 31, 1995
Average
1 Year 1-5 5-10 After 10 Gross Unrealized Market Maturity
or Less Years Years Years Total Gains Losses Value in Years
CARRYING VALUE
U.S. Government agencies $ 80,287 950,270 236,183 -- 1,266,740 32,411 (1,157) 1,297,994 3.59
Collateralized mortgage
obligations 59,410 546,111 -- -- 605,521 12,443 (1) 617,963 2.95
State, county and municipal 286,591 273,754 170,614 446,052 1,177,011 131,805 (3,226) 1,305,590 7.54
Other 3,825 2,600 16,821 67,098 90,344 7,713 (2) 98,055 11.54
Total $ 430,113 1,772,735 423,618 513,150 3,139,616 184,372 (4,386) 3,319,602 5.15
CARRYING VALUE
Debt securities $ 430,113 1,772,735 423,618 497,309 3,123,775 184,372 (4,386) 3,303,761
Sundry securities -- -- -- 15,841 15,841 -- -- 15,841
Total $ 430,113 1,772,735 423,618 513,150 3,139,616 184,372 (4,386) 3,319,602
MARKET VALUE
Debt securities $ 438,097 1,828,457 453,150 584,057 3,303,761
Sundry securities -- -- -- 15,841 15,841
Total $ 438,097 1,828,457 453,150 599,898 3,319,602
WEIGHTED AVERAGE YIELD
U.S. Government agencies 7.29% 7.71 7.87 -- 7.71
Collateralized mortgage
obligations 7.37 7.20 -- -- 7.22
State, county and municipal 9.55 10.84 11.25 11.80 10.95
Other 6.81 7.80 7.50 9.21 8.75
Consolidated 8.81% 8.03 9.22 11.46 8.86
36
FINANCIAL TABLES
Table 8
Loans
(In thousands)
Years Ended December 31, 1995 1994 1993 1992 1991 1990
COMMERCIAL
Commercial, financial and agricultural
Taxable $ 23,897,326 21,272,227 18,899,874 15,876,374 17,131,471 17,224,533
Nontaxable 750,958 781,257 791,194 874,284 1,078,161 1,447,655
Total commercial, financial
and agricultural 24,648,284 22,053,484 19,691,068 16,750,658 18,209,632 18,672,188
Real estate - construction and other 2,505,627 2,052,054 2,138,128 2,489,451 3,729,288 4,310,470
Real estate - mortgage 9,991,640 9,472,695 9,282,448 8,699,155 7,757,915 6,182,383
Lease financing 3,169,698 1,921,302 1,286,560 1,442,320 1,665,305 1,808,942
Foreign 649,760 526,325 416,664 391,791 368,287 356,190
Total commercial 40,965,009 36,025,860 32,814,868 29,773,375 31,730,427 31,330,173
RETAIL
Real estate - mortgage 27,273,991 21,061,449 18,206,600 14,322,721 11,873,683 9,212,001
Installment loans - Bankcard* 3,657,619 4,345,069 2,154,799 -- -- --
Installment loans - other 20,212,216 17,381,379 15,658,181 16,819,822 15,865,430 14,868,815
Total retail 51,143,826 42,787,897 36,019,580 31,142,543 27,739,113 24,080,816
Total loans 92,108,835 78,813,757 68,834,448 60,915,918 59,469,540 55,410,989
UNEARNED INCOME
Loans 476,591 419,429 335,081 383,895 467,288 545,305
Lease financing 1,069,364 563,335 236,279 230,561 277,155 284,661
Total unearned income 1,545,955 982,764 571,360 614,456 744,443 829,966
Loans, net $90,562,880 77,830,993 68,263,088 60,301,462 58,725,097 54,581,023
* Information not available prior to 1993.
Table 9
Deposits
(In thousands)
Years Ended December 31, 1995 1994 1993 1992 1991 1990
CORE DEPOSITS
Noninterest-bearing $ 17,043,223 15,917,287 16,208,214 14,583,331 12,463,681 10,705,416
Savings and NOW accounts 24,297,270 23,263,322 21,661,410 17,652,860 14,021,445 10,061,707
Money market accounts 13,112,918 14,376,098 15,024,464 13,835,528 12,833,961 11,115,590
Other consumer time 31,945,313 27,402,767 25,534,358 27,211,878 28,925,361 23,576,212
Total core deposits 86,398,724 80,959,474 78,428,446 73,283,597 68,244,448 55,458,925
Foreign 3,526,771 4,802,719 1,456,828 512,793 362,477 972,439
Other time 2,629,723 2,102,932 2,000,159 2,359,410 3,787,848 4,843,014
Total deposits $92,555,218 87,865,125 81,885,433 76,155,800 72,394,773 61,274,378
37
FINANCIAL TABLES
Table 10
Off-Balance Sheet Derivative Financial Instruments
(In thousands)
December 31, 1995
Weighted
Average Rate
Notional Maturity
Amount Receive Pay In Years Comments
ASSET RATE CONVERSIONS
Interest rate swaps $11,282,355 6.35% 5.83% 1.27 Converts floating rate loans to fixed
rate. Adds to liability sensitivity.
Similar characteristics to a fixed
income security funded with variable
rate liabilities.
Forward bullet interest rate swaps 6,120,000 5.97 -- 1.96 Converts floating rates on loans to
fixed rates at higher than current
yields in future periods.
LIABILITY RATE CONVERSIONS
Interest rate swaps 5,127,000 6.89 5.76 5.83 Converts fixed rate long-term debt to
floating rate by matching the maturity
of the swap to the debt issue. Rate
sensitivity remains unchanged due to the
direct linkage of the swap to the debt
issue.
Other financial instruments 180,000 -- -- 6.33 Miscellaneous purchased option-based
products for liability management
purposes.
ASSET HEDGES
Short eurodollar futures 1,016,000 -- 5.81 .29 Hedges market values of U.S. Treasury
notes in the available for sale
portfolio.
RATE SENSITIVITY HEDGES
Put options on eurodollar futures 4,252,000 -- 7.87 .33 Paid a premium for the right to lock in
the 3 month LIBOR reset rates on pay
variable rate swaps and short-term
liabilities.
Interest rate caps 67,200 -- -- .43 Purchased LIBOR caps to convert floating
rate liabilities to fixed rate if
short-term rates rise above 8 percent.
Short eurodollar futures 2,000,000 -- 5.60 .22 Locks in the 3 month LIBOR
reset rates on pay variable rate swaps.
Long eurodollar futures 23,355,000 5.56 -- 1.40 Converts floating rate, LIBOR-based
loans to fixed rate. Adds to liability
sensitivity. Similar characteristics to
fixed income security funded with
variable rate liabilities.
OFFSETTING POSITIONS
Interest rate floors 800,000 6.16 6.16 .45 Locks in gains which will be amortized
over the remaining life of the
contracts.
Prime/federal funds cap $ 4,000,000 5.90% 5.90% .27 Locks in losses which will be amortized
over the remaining life of the
contracts.
38
MANAGEMENT'S STATEMENT
OF FINANCIAL RESPONSIBILITY
Management of First Union Corporation and its subsidiaries (the Corporation) is
committed to the highest standards of quality customer service and the
enhancement of stockholder value. Management expects the Corporation's employees
to respect its customers and to assign the highest priority to customer needs.
The accompanying supplemental consolidated financial statements were prepared in
conformity with generally accepted accounting principles and include, as
necessary, best estimates and judgments by management. Other financial
information contained in this summary annual report is presented on a basis
consistent with the supplemental consolidated financial statements unless
otherwise indicated.
To ensure the integrity, objectivity and fairness of data in these supplemental
consolidated financial statements, management of the Corporation has established
and maintains an internal control structure that is supplemented by a program of
internal audits. The internal control structure is designed to provide
reasonable assurance that assets are safeguarded and transactions are executed,
recorded and reported in accordance with management's intentions and
authorizations and to comply with applicable laws and regulations. To enhance
the reliability of the internal control structure, management recruits and
trains highly qualified personnel, and maintains sound risk management practices
and efficient operations.
The supplemental consolidated financial statements have been audited by KPMG
Peat Marwick LLP, independent auditors, in accordance with generally accepted
auditing standards. KPMG Peat Marwick LLP reviews the results of its audit with
both management and the Audit Committee of the Board of Directors of the
Corporation. The Audit Committee, composed entirely of outside directors, meets
periodically with management, internal auditors and KPMG Peat Marwick LLP to
determine that each is fulfilling its responsibilities and to support actions to
identify, measure and control risks, augment internal controls and enhance
operational efficiency.
(Signature of Edward E. Crutchfield)
Edward E. Crutchfield
Chairman and Chief Executive Officer
(Signature of Robert T. Atwood)
Robert T. Atwood
Executive Vice President and
Chief Financial Officer
January 11, 1996
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
First Union Corporation
We have audited the supplemental consolidated balance sheets of First Union
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
supplemental consolidated statements of income, changes in stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1995. Such supplemental consolidated financial statements and our report thereon
dated January 11, 1996, expressing an unqualified opinion (which are not
presented herein), are included in the First Union Corporation 1995 Report on
Form 10-K (Form 10-K). The accompanying condensed supplemental consolidated
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on such condensed supplemental
consolidated financial statements in relation to the complete supplemental
consolidated financial statements. The pre-combination consolidated financial
statements for First Union Corporation are included in the Form 10-K.
The supplemental consolidated financial statements give retroactive effect to
the merger of First Union Corporation and First Fidelity Bancorporation on
January 1, 1996, which has been accounted for as a pooling of interests as
described in Note 2 to the supplemental consolidated financial statements.
Generally accepted accounting principles proscribe giving effect to a
consummated business combination accounted for by the pooling of interests
method in financial statements that do not include the date of consummation. The
supplemental consolidated financial statements do not extend through the date of
consummation. However, they will become the historical consolidated financial
statements of First Union Corporation and subsidiaries after financial
statements covering the date of consummation of the business combination are
issued.
In our opinion, the information set forth in the accompanying condensed
supplemental consolidated balance sheets as of December 31, 1995 and 1994, and
the related condensed supplemental consolidated statements of income for each of
the years in the three-year period ended December 31, 1995, is fairly stated in
all material respects in relation to the basic supplemental consolidated
financial statements from which it has been derived.
As discussed in Note 3 to the supplemental consolidated financial statements,
the Corporation adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities."
KPMG Peat Marwick LLP
(Signature of KPMG PEAT MARWICK LLP)
Charlotte, North Carolina
January 11, 1996
39
FINANCIAL TABLES
Supplemental Consolidated Balance Sheets
December 31,
(In thousands except per share data) 1995 1994
ASSETS
Cash and due from banks $ 6,312,076 5,822,693
Interest-bearing bank balances 79,235 980,693
Federal funds sold and securities purchased under resale agreements 4,152,754 1,421,700
Total cash and cash equivalents 10,544,065 8,225,086
Trading account assets 1,881,066 1,317,169
Securities available for sale (amortized cost $17,992,898 in 1995; $11,929,691 in 1994) 18,193,699 11,533,642
Investment securities (market value $3,319,602 in 1995; $7,791,991 in 1994) 3,139,616 7,916,729
Loans, net of unearned income ($1,545,955 in 1995; $982,764 in 1994) 90,562,880 77,830,993
Allowance for loan losses (1,507,798) (1,578,128)
Loans, net 89,055,082 76,252,865
Premises and equipment 2,553,170 2,193,974
Due from customers on acceptances 616,301 437,474
Mortgage servicing rights 148,933 134,421
Credit card premium 43,894 58,494
Other intangible assets 2,431,667 1,936,840
Other assets 3,272,380 3,522,507
Total assets $ 131,879,873 113,529,201
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits 17,043,223 15,917,287
Interest-bearing deposits 75,511,995 71,947,838
Total deposits 92,555,218 87,865,125
Short-term borrowings 19,500,127 10,249,265
Bank acceptances outstanding 616,301 437,474
Other liabilities 3,044,136 2,460,708
Long-term debt 7,120,947 4,242,137
Total liabilities 122,836,729 105,254,709
Stockholders' equity
Preferred stock 183,223 229,707
Common stock, $3.33-1/3 par value; authorized 750,000,000 shares,
outstanding 277,845,768 shares in 1995; 285,360,745 shares in 1994 926,152 951,202
Paid-in capital 1,974,833 2,361,350
Retained earnings 5,847,922 5,021,730
Unrealized gain (loss) on debt and equity securities 111,014 (289,497)
Total stockholders' equity 9,043,144 8,274,492
Total liabilities and stockholders' equity $ 131,879,873 113,529,201
40
FINANCIAL TABLES
Supplemental Consolidated Statements of Income
Years Ended December 31,
(In thousands except per share data) 1995 1994 1993
INTEREST INCOME
Interest and fees on loans $ 7,222,842 5,824,217 5,215,845
Interest and dividends on securities available for sale 705,565 734,091 390,689
Interest and dividends on investment securities
Taxable income 401,145 352,689 697,084
Nontaxable income 109,111 134,178 132,801
Trading account interest 91,009 63,707 44,534
Other interest income 156,705 121,931 120,575
Total interest income 8,686,377 7,230,813 6,601,528
INTEREST EXPENSE
Interest on deposits 2,853,328 2,046,044 1,943,988
Interest on short-term borrowings 816,650 495,931 339,551
Interest on long-term debt 381,837 251,007 198,413
Total interest expense 4,051,815 2,792,982 2,481,952
Net interest income 4,634,562 4,437,831 4,119,576
Provision for loan losses 220,000 179,000 369,753
Net interest income after provision for loan losses 4,414,562 4,258,831 3,749,823
NONINTEREST INCOME
Trading account profits 69,407 51,672 59,939
Service charges on deposit accounts 615,552 580,271 572,625
Mortgage banking income 149,585 88,436 150,896
Capital management income 397,191 330,416 306,392
Securities available for sale transactions 44,340 6,213 32,784
Investment security transactions 4,818 4,006 7,435
Fees for other banking services 159,571 130,992 100,122
Merchant discounts 100,580 89,508 79,452
Insurance commissions 53,843 48,076 46,717
Sundry income 301,621 246,323 225,426
Total noninterest income 1,896,508 1,575,913 1,581,788
NONINTEREST EXPENSE
Personnel expense 1,962,152 1,772,842 1,623,949
Occupancy 352,551 352,721 341,847
Equipment rentals, depreciation and maintenance 320,036 270,157 233,572
Postage, printing and supplies 139,277 123,500 124,608
FDIC insurance 120,489 183,580 181,593
Professional fees 176,359 169,461 95,267
Owned real estate expense 13,981 34,544 69,050
Amortization 253,700 186,134 237,911
Merger-related restructuring charges 94,446 -- --
Sundry 659,478 653,918 628,549
Total noninterest expense 4,092,469 3,746,857 3,536,346
Income before income taxes 2,218,601 2,087,887 1,795,265
Income taxes 788,420 711,444 578,912
Net income 1,430,181 1,376,443 1,216,353
Dividends on preferred stock 26,390 46,020 45,553
Net income applicable to common stockholders
before redemption premium 1,403,791 1,330,423 1,170,800
Redemption premium on preferred stock -- 41,355 --
Net income applicable to common stockholders after
redemption premium $ 1,403,791 1,289,068 1,170,800
PER COMMON SHARE DATA
Net income before redemption premium $ 5.04 4.72 4.30
Net income after redemption premium 5.04 4.58 4.30
Cash dividends $ 1.96 1.72 1.50
Average common shares 278,677,119 281,662,617 272,438,239
41
GLOSSARY
ASSET SENSITIVITY:
When a company's asset, liability and off-balance sheet financial instruments
mix leans toward assets that would diminish net interest income in a flat or
declining interest rate environment.
COLLATERALIZED MORTGAGE
OBLIGATIONS (CMOS):
A group of mortgage pass-through securities that have been bundled, with the
cash flows paid out in a specific order or preference to different buyers.
DEBIT CARDS:
A method of payment that is tied to a customer's checking account. When used to
make a purchase, the bank-issued debit card (which looks like a credit card)
acts as a "plastic check," and money is deducted directly from the customer's
checking account.
DERIVATIVES:
A term used to include a broad base of financial instruments
that are, for the most part, "derived" from underlying securities traded in the
cash markets. Common examples include interest rate swaps, options and futures
contracts.
EARNINGS PER COMMON SHARE:
Net income, adjusted for preferred stock dividends, divided by the average
number of common shares outstanding.
FUTURES CONTRACT:
A contract to buy or sell a particular type of security or commodity to (or
from) the futures exchange at a specified future time. It is used to, in effect,
"lock in" net interest income over quarterly future periods.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA):
A U.S. Government-owned corporation that guarantees timely payment of principal
and interest on specified mortgage-backed certificates.
INDEX AMORTIZING INTEREST
RATE SWAP:
An interest rate swap in which the maturity date may extend, and the notional
amount may decrease based upon changes in certain interest rate indices.
INTEREST RATE SWAP:
A contractual transaction between two parties in the over-the-counter markets in
which each agrees to exchange interest rate payments for a specified period of
time. These payments are calculated on a "notional amount", and no exchange of
principal occurs. Such a transaction is commonly used to manage the asset or
liability sensitivity of a balance sheet by converting fixed rate assets or
liabilities to floating rates, or vice versa.
INTERNET:
A global network of computers providing access to the Information Superhighway.
LIABILITY SENSITIVITY:
When a company's asset, liability and off-balance sheet financial instruments
mix leans toward liabilities that would diminish net interest income in a rising
interest rate environment.
MANAGED CARD RECEIVABLES:
Include owned and securitized credit card receivables.
MARK-TO-MARKET:
A method of accounting for a corporation's assets or liabilities by recording
them at their current market values, rather than at their historical costs.
MORTGAGE BANKING INCOME:
Noninterest income related to mortgage banking activity.
MORTGAGE SERVICING PORTFOLIO:
Mortgage loans owned by others for which a company provides mortgage servicing.
NET CHARGE-OFFS:
The amount of loans written off as uncollectible, net of the recovery of loans
previously written off as uncollectible.
NET INTEREST MARGIN:
The difference between the tax-equivalent yield on earning assets and the rate
paid on funds to support those assets, divided by average earning assets.
NET OPERATING REVENUE:
The sum of tax-equivalent net interest income and noninterest income.
NONINTEREST EXPENSE:
All expenses other than interest.
NONINTEREST INCOME:
All income other than interest and dividend income.
NONPERFORMING ASSETS:
Assets on which income is not being accrued for financial reporting purposes;
restructured loans on which interest rates or terms of repayment have been
materially revised; and other real estate that has been acquired through loan
foreclosures, in-substance foreclosures or deeds received in lieu of loan
payments.
NOTIONAL AMOUNT:
The principal amount of a financial instrument on which a derivative transaction
is based. In an interest rate swap, for example, the "notional amount" is used
to calculate the interest rate cash flows to be exchanged. No exchange of
principal occurs.
OPTIONS:
A contractual agreement that allows but does not require a holder to buy (or
sell) a financial instrument at a predetermined price before a specified time.
Options may be traded through the exchanges or over-the-counter.
OVERHEAD EFFICIENCY RATIO:
Noninterest expense divided by net operating revenue.
POOLING OF INTERESTS:
An accounting method that restates historical financial information of the
surviving company in a merger as if the two entities were always one.
PURCHASE ACCOUNTING:
An accounting method that adds the fair market value of assets and liabilities
acquired to those of the acquiror at the time of acquisition. Historical
financial information of the acquiror is not restated.
RETURN ON ASSETS (ROA):
Net income as a percentage of average assets.
RETURN ON COMMON EQUITY (ROE):
Net income applicable to common stockholders as a percentage of average common
stockholders' equity, excluding unrealized gains or losses on securities.
SECURITY GAIN OR LOSS:
A gain or loss resulting from
the sale of a security at a price above or below the security's
carrying value.
SMART CARDS:
A plastic card containing microchips that store data. Although many kinds of
information can be embedded on a smart card (which looks like a credit card),
banks are primarily interested in storing cash value.
STOCKHOLDERS' EQUITY:
A balance sheet amount that represents the total investment in the corporation
by holders of preferred and common stock.
STORED VALUE CARDS:
Plastic cards embedded with computer chip technology and used in place of cash
or checks.
SWAPTIONS:
Options on swaps.
42
FIRST UNION CORPORATION AND FULL-SERVICE BANKING SUBSIDIARIES
CORPORATION BOARD OF DIRECTORS AND COMMITTEES
FIRST UNION CORPORATION
EDWARD E. BARR*
Chairman, President and Chief
Executive Officer, Sun Chemical
Corporation
Fort Lee, New Jersey
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 and
Foundry Company
Charlotte, North Carolina
JOHN R. GEORGIUS
Vice Chairman, First Union Corporation
Charlotte, North Carolina
ARTHUR M. GOLDBERG*
Chairman, Chief Executive Officer and
President, Bally Entertainment
Corporation
Chicago, Illinois
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
FRANK M. HENRY*
Chairman, Frank Martz
Coach Company
Wilkes-Barre, Pennsylvania
LEONARD G. HERRING
President and Chief Executive Officer,
Lowe's Companies, Inc.
North Wilkesboro, North Carolina
JUAN RODRIGUEZ INCIARTE*
Director and Executive Vice President,
Banco Santander, S.A.
Madrid, Spain
JACK A. LAUGHERY
Chairman, The Bagel Group, Inc.
Rocky Mount, North Carolina
MAX LENNON
President, Mars Hill College
Mars Hill, North Carolina
RADFORD D. LOVETT
Chairman, Commodores
Point Terminal Corporation
Jacksonville, Florida
JOSEPH NEUBAUER*
Chairman, President
and Chief Executive Officer,
ARAMARK Corporation
Philadelphia, Pennsylvania
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
ANTHONY P. TERRACCIANO*
President, First Union
Corporation
Newark, New Jersey
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
COMMITTEES OF THE CORPORATE
BOARD OF DIRECTORS***
Executive Committee
B.F. DOLAN, CHAIRMAN
EDWARD E. CRUTCHFIELD
ROBERT D. DAVIS
R. STUART DICKSON
ARTHUR M. GOLDBERG
WILLIAM H. GOODWIN JR.
LEONARD G. HERRING
RADFORD D. LOVETT
JOSEPH NEUBAUER
LANTY L. SMITH
ANTHONY P. TERRACCIANO
B.J. WALKER
Audit Committee
G. ALEX BERNHARDT, CHAIRMAN
HOWARD H. HAWORTH,
VICE CHAIRMAN
ROBERT J. BROWN
FRANK M. HENRY
HENRY D. PERRY JR.
RANDOLPH N. REYNOLDS
PETER J. SCHILD (STAFF)
Financial Management Committee
ROBERT D. DAVIS, CHAIRMAN
LANTY L. SMITH, VICE CHAIRMAN
RODDEY DOWD SR.
JOHN R. GEORGIUS
ARTHUR M. GOLDBERG
WILLIAM H. GOODWIN JR.
BRENTON S. HALSEY
JUAN RODRIGUEZ INCIARTE
JACK A. LAUGHERY
MAX LENNON
JOSEPH NEUBAUER
RUTH G. SHAW
JOHN D. UIBLE
MALCOLM T. MURRAY JR. (STAFF)
LOUIS A. SCHMITT JR. (STAFF)
Human Resources Committee
R. STUART DICKSON, CHAIRMAN
LEONARD G. HERRING,
VICE CHAIRMAN
EDWARD E. BARR
W. WALDO BRADLEY
B.F. DOLAN
TORRENCE E. HEMBY, JR.
RADFORD D. LOVETT
DEWEY L. TROGDON
DON R. JOHNSON (STAFF)
Nominating Committee
B.F. DOLAN, CHAIRMAN
R. STUART DICKSON,
VICE CHAIRMAN
EDWARD E. CRUTCHFIELD
WILLIAM H. GOODWIN JR.
LEONARD G. HERRING
RADFORD D. LOVETT
ANTHONY P. TERRACCIANO
FIRST UNION CORPORATION
EXECUTIVE OFFICERS
EDWARD E. CRUTCHFIELD
Chairman and Chief Executive Officer,
First Union Corporation
ANTHONY P. TERRACCIANO
President, First Union Corporation
JOHN R. GEORGIUS
Vice Chairman, First Union Corporation
B.J. WALKER
Vice Chairman, First Union Corporation
ROBERT T. ATWOOD
Executive Vice President
and Chief Financial Officer,
First Union Corporation
MARION A. COWELL JR.
Executive Vice President,
Secretary and General Counsel,
First Union Corporation
* Director as of January 1, 1996.
** Retiring director.
*** As of January 1, 1996.
43
BANK BOARDS OF DIRECTORS
FIRST UNION NATIONAL BANK
OF FLORIDA
BOB D. ALLEN
President and Chief Executive Officer,
Consolidated-Tomoka Land Company
Daytona Beach, Florida
WILLIAM B. BOND
Investor
Jacksonville, Florida
E. BRUCE BOWER
President, The Florida Stock
and Land Company
Jacksonville, Florida
A. DANO DAVIS
Chairman and Principal Executive
Officer, Winn-Dixie Stores, Inc.
Jacksonville, Florida
ALEXANDER W. DREYFOOS JR.
Chairman and Owner,
Photo Electronics Corporation
West Palm Beach, Florida
J. NELSON FAIRBANKS
President and Chief Executive Officer,
United States Sugar Corporation
Clewiston, Florida
BYRON E. HODNETT
Chief Executive Officer,
First Union National Bank of Florida
Jacksonville, Florida
EDWARD W. LANE III
Attorney, Ulmer, Murchison,
Ashby & Taylor, P.A.
Jacksonville, Florida
JOHN F. LOWNDES
Attorney, Lowndes, Drosdick,
Doster, Kantor & Reed, P.A.
Orlando, Florida
W.A. MCGRIFF III
Investor
Jacksonville, Florida
JORGE MASCANOSA
Chairman, MasTec, Inc.
Miami Springs, Florida
JOHN A. MITCHELL III
Chairman, First Union National
Bank of Florida
Jacksonville, Florida
ORRIN D. MITCHELL
Orthodontist
Jacksonville, Florida
RAY C. OSBORNE
Attorney, Osborne,
Osborne & deClaire, P.A.
Boca Raton, Florida
HERBERT H. PEYTON
President, Gate Petroleum Company
Jacksonville, Florida
WILLIAM J. SCHOEN
Chairman, President and Chief
Executive Officer, Health
Management Associates, Inc.
Naples, Florida
MEL SEMBLER
Chairman, The Sembler Company
St. Petersburg, Florida
G. KENNEDY THOMPSON
President, First Union National
Bank of Florida
Jacksonville, Florida
B.J. WALKER
Vice Chairman, First Union Corporation
Jacksonville, Florida
J. WAYNE WEAVER
Chairman and Chief Executive Officer,
Jacksonville Jaguars, Ltd.
Jacksonville, Florida
CAROL GRAHAM WYLLIE
Executive Vice President,
The Graham Companies
Miami Lakes, Florida
FIRST FIDELITY BANK, N.A.*
(NOW FIRST UNION NATIONAL BANK)
LOUIS E. AZZATO
Director and Retired Chairman,
President and Chief Executive Officer,
Foster Wheeler Corporation
Clinton, New Jersey
EDWARD E. BARR
Chairman, President and
Chief Executive Officer,
Sun Chemical Corporation
Fort Lee, New Jersey
ROLAND K. BULLARD II
Senior Executive Vice President,
First Fidelity Bancorporation
Newark, New Jersey/Philadelphia,
Pennsylvania
LEE A. BUTZ
President, Alvin H. Butz, Inc.
Allentown, Pennsylvania
LUTHER R. CAMPBELL JR.
Partner, Campbell, Rappold &
Yurasits, LLP
Allentown, Pennsylvania
JOHN GILRAY CHRISTY
Chairman,
Chestnut Capital Corporation
Flourtown, Pennsylvania
JAMES G. CULLEN
Vice Chairman,
Bell Atlantic Corporation
Arlington, Virginia
E. JAMES FERLAND
Chairman, President and Chief
Executive Officer, Public Service
Enterprise Group Incorporated
Newark, New Jersey
ARTHUR M. GOLDBERG
Chairman, President and Chief
Executive Officer, Bally Entertainment
Corporation
Chicago, Illinois
LESLIE E. GOODMAN
Senior Executive Vice President,
First Fidelity Bancorporation
Newark, New Jersey/Philadelphia, Pennsylvania
FRANK M. HENRY
Chairman, Frank Martz
Coach Company
Wilkes-Barre, Pennsylvania
JOHN R. KENNEDY
President and Chief Executive Officer,
Federal Paper Board Company Inc.
Montvale, New Jersey
ROCCO J. MARANO
Director and Retired Chairman,
Blue Cross and Blue Shield of
New Jersey Inc.
Chatham, New Jersey
JAMES D. MORRISSEY JR.
President and Chief Operating Officer,
James D. Morrissey Inc.
Philadelphia, Pennsylvania
JOSEPH NEUBAUER
Chairman, President and
Chief Executive Officer,
ARAMARK Corporation
Philadelphia, Pennsylvania
PETER C. PALMIERI
Vice Chairman and Chief Credit Officer,
First Fidelity Bancorporation
Newark, New Jersey/Philadelphia,
Pennsylvania
DONALD C. PARCELLS
Senior Executive Vice President,
First Fidelity Bancorporation
Newark, New Jersey/Philadelphia, Pennsylvania
WOLFGANG SCHOELLKOPF
Vice Chairman and Chief Financial
Officer, First Fidelity Bancorporation
Newark, New Jersey/Philadelphia,
Pennsylvania
ROBERT MONTGOMERY SCOTT
President and Chief Executive Officer,
Philadelphia Museum of Art
Philadelphia, Pennsylvania
REBECCA STAFFORD
President, Monmouth University
West Long Branch, New Jersey
SEFTON STALLARD
General Partner, North American
Venture Capital Fund L.P.
New Vernon, New Jersey
ANTHONY P. TERRACCIANO
Chairman, President and Chief
Executive Officer, First
Fidelity Bancorporation
Newark, New Jersey/Philadelphia,
Pennsylvania
BERNARD C. WATSON
Chairman, The HMA Foundation, Inc.
Philadelphia, Pennsylvania
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
GEORGE E. BATTLE JR.
President of the Board of Bishops
of the AME Zion Church,
Charlotte, North Carolina
DANIEL T. BLUE JR.
Attorney, Thigpen, Blue,
Stephens and Fellers
Raleigh, North Carolina
B. MAYO BODDIE SR.
Chairman and Chief Executive Officer,
Boddie-Noell Enterprises, Inc.
Rocky Mount, North Carolina
RAYMOND A. BRYAN JR.
Chairman and Chief Executive Officer,
T.A. Loving Company
Goldsboro, North Carolina
JOHN F.A.V. CECIL
President, Biltmore Farms, Inc.
Biltmore, North Carolina
JOHN W. COPELAND
President, Ruddick Corporation
Charlotte, North Carolina
JOHN CROSLAND JR.
Chairman and President,
The Crosland Group, Inc.
Charlotte, North Carolina
J. WILLIAM DISHER
Chairman, Lance, Inc.
Charlotte, North Carolina
MALCOLM E. EVERETT III
Chairman, President and Chief
Executive Officer, First Union National
Bank of North Carolina
Charlotte, North Carolina
JAMES F. GOODMON
President and Chief Executive Officer,
Capitol Broadcasting Company, Inc.
Raleigh, North Carolina
SHELTON GORELICK
President, SGIC, Inc.
Charlotte, North Carolina
44
BANK BOARDS OF DIRECTORS
CHARLES L. GRACE
President, Cummins Atlantic, Inc.
Charlotte, North Carolina
JAMES E.S. HYNES
Chairman, Hynes Sales Company
Charlotte, North Carolina
MACKEY J. MCDONALD
President and Chief Executive Officer,
VF Corporation
Wyomissing, Pennsylvania
EARL N. PHILLIPS JR.
President and Chief Executive Officer,
First Factors Corporation
High Point, North Carolina
J.G. POOLE JR.
Chairman and President,
Gregory Poole Equipment Company
Raleigh, North Carolina
JOHN P. ROSTAN III
General Partner,
Heritage Investments, LLP
Valdese, North Carolina
NELSON SCHWAB III
Managing Director, Carousel
Capital Company
Charlotte, North Carolina
CHARLES M. SHELTON
General Partner,
The Shelton Companies
Charlotte, North Carolina
GEORGE SHINN
Chairman, Shinn Enterprises Inc.
Charlotte, North Carolina
HARLEY F. SHUFORD JR.
Chairman, Shuford Industries
Hickory, North Carolina
STANLEY E. WRIGHT**
Retired President and Chief Executive
Officer, Raleigh Federal Savings Bank
Raleigh, North Carolina
FIRST UNION NATIONAL BANK
OF GEORGIA
JUANITA P. BARANCO
Executive Vice President,
Baranco Automotive, Inc.
Decatur, Georgia
W. FRANK BLOUNT
Chief Executive Officer,
Telstra Communications Inc.
Sydney, Australia
OTIS A. BRUMBY JR.
Publisher and Chief Executive Officer,
The Marietta Daily Journal
and Neighbor Newspapers Inc.
Marietta, Georgia
DAVID M. CARROLL
President and Chief Executive Officer,
First Union National Bank of Georgia
Atlanta, Georgia
JOHN E. CAY III
President and Chief Executive Officer,
Palmer & Cay/Carswell, Inc.
Savannah, Georgia
THOMAS W. COLE JR.
President, Clark Atlanta University
Atlanta, Georgia
EDWIN M. CRAWFORD
Chairman, President and Chief
Executive Officer, Charter
Medical Corporation
Atlanta, Georgia
JERE A. DRUMMOND
President and Chief Executive Officer,
BellSouth Telecommunications Inc.
Atlanta, Georgia
HARALD R. HANSEN
Chairman, First Union National
Bank of Georgia
Atlanta, Georgia
J. MADDEN HATCHER JR.
Attorney, Bradley & Hatcher
Columbus, Georgia
JAMES W. KEY
Investor
Columbus, Georgia
WYCK A. KNOX JR.
Attorney, Kilpatrick and Cody
Augusta, Georgia
DAVID L. KOLB
Chairman and Chief Executive Officer,
Mohawk Industries, Inc.
Atlanta, Georgia
J. ROBERT LOGAN
Partner, Georgia Ear Institute
Savannah, Georgia
ROBERT C. MCMAHAN
President and Chief Executive Officer,
Golden Point Group, Inc.
Tucker, Georgia
C.V. NALLEY III
President and Chief Executive Officer,
The Nalley Companies
Atlanta, Georgia
WALTON K. NUSSBAUM
Investor
Savannah, Georgia
THOMAS H. PACER
Executive Vice President and Head of
General Banking Group, First Union
National Bank of Georgia
Atlanta, Georgia
CARL E. SANDERS
Attorney, Troutman, Sanders
Atlanta, Georgia
HENRY C. SCHWOB
President, Schwob Realty Company
Columbus, Georgia
ARNOLD M. TENENBAUM
President, Chatham Steel Corporation
Savannah, Georgia
DAN M. VADEN JR.
President, Dan Vaden
Chevrolet-Geo, Inc.
Savannah, Georgia
FIRST UNION NATIONAL BANK
OF VIRGINIA
GEORGE R. ALDHIZER JR.
Attorney, Wharton, Aldhizer &
Weaver, P.L.C.
Harrisonburg, Virginia
DONALD S. BEYER JR.***
Vice President, Don Beyer Volvo
Falls Church, Virginia
J. RICHARD CARLING
Vice Chairman,
First Union National Bank of Virginia
Roanoke, Virginia
JAMES B. CRAWFORD
Chairman and Chief Executive Officer,
James River Coal Co., Inc.
Richmond, Virginia
WARNER N. DALHOUSE
Chairman, First Union National
Bank of Virginia
Roanoke, Virginia
ALICE W. HANDY
Treasurer, University of Virginia
Charlottesville, Virginia
ROBERT W. HELMS
Vice Chairman, First Union
National Bank of Virginia
Roanoke, Virginia
JAMES T. HOLLAND
President and Chief Executive Officer,
O'Sullivan Corporation
Winchester, Virginia
GLENN A. HUNSUCKER
President and Chief Operating Officer,
Bassett Furniture Industries Inc.
Bassett, Virginia
BENJAMIN P. JENKINS III
Chief Executive Officer and President,
First Union National Bank of Virginia
Roanoke, Virginia
WILLIAM E. LAVERY
President Emeritus, Virginia Polytechnic
Institute and State University
Blacksburg, Virginia
THOMAS L. ROBERTSON
President and Chief Executive Officer,
Carilion Health System
Roanoke, Virginia
WILLIAM G. SHENKIR
Professor, University of Virginia
Charlottesville, Virginia
DONALD G. SMITH
Chairman and Chief Executive Officer,
Roanoke Electric Steel Corporation
Roanoke, Virginia
GLENN O. THORNHILL JR.
Chairman and Chief Executive Officer,
Maid Bess Corporation
Salem, Virginia
PAUL E. TORGERSEN
President, Virginia Polytechnic Institute
and State University
Blacksburg, Virginia
FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA
LOUIS P. BATSON JR.**
Chairman and Chief Executive Officer,
Louis P. Batson Company
Greenville, South Carolina
PETER C. BROWNING
President and Chief Operating Officer,
Sonoco Products Company
Hartsville, South Carolina
GEORGE C. FANT JR.
Investor
Columbia, South Carolina
KESTER S. FREEMAN
President and Chief Executive Officer,
Richland Memorial Hospital
Columbia, South Carolina
LYNN W. HODGE
Executive Vice President, First Union
National Bank of South Carolina
Greenwood, South Carolina
WILLIAM M. HULL JR.
President, Rock Hill Eye Clinic
Rock Hill, South Carolina
I.S. LEEVY JOHNSON
Attorney, Johnson, Toal &
Battiste, P.A.
Columbia, South Carolina
HARRY M. LIGHTSEY JR.
Attorney, McNair Law Firm
Columbia, South Carolina
* Directors of First Fidelity
at December 31, 1995
** As of January 11, 1996.
*** Retiring directors.
45
BANK BOARDS OF DIRECTORS AND PRINCIPAL SUBSIDIARIES
STEVEN R. MCCLELLAN
Executive Vice President, First Union
National Bank of South Carolina
Greenville, South Carolina
JAMES E. MCDONALD
Attorney, Burns, McDonald,
Bradford, Patrick and Tinsley
Greenwood, South Carolina
PATRICK W. MCKINNEY
President, Kiawah Island
Real Estate Inc.
Charleston, South Carolina
F. CREIGHTON MCMASTER
Chief Executive Officer,
Winnsboro Petroleum Company Inc.
Winnsboro, South Carolina
RALPH L. OGDEN
Investor
Greenville, South Carolina
JOHN D. ORR
President, Orr Company
Florence, South Carolina
WILLIAM L. OTIS JR.
Chairman and Chief Executive Officer,
Columbia Lumber and
Manufacturing Co.
Columbia, South Carolina
JOSEPH P. RILEY JR.
Mayor, City of Charleston
Charleston, South Carolina
ALFRED B. ROBINSON
President, Robinson Company, Inc.
Easley, South Carolina
SUE A. SOMMER-KRESSE
Vice President for Enrollment
Management, College of Charleston
Charleston, South Carolina
SIDNEY B. TATE
Chairman, President and Chief
Executive Officer, First Union National
Bank of South Carolina
Greenville, South Carolina
FIRST UNION NATIONAL BANK
OF TENNESSEE
T.B. BOYD III
President and Chief Executive Officer,
National Baptist Publishing Board
Nashville, Tennessee
FRANK M. BUMSTEAD*
Chairman, Flood, Bumstead,
McCready & Sales Financial Inc.
Nashville, Tennessee
DAVIS H. CARR
Attorney, Boult, Cummings,
Conners and Berry
Nashville, Tennessee
HAYWOOD D. COCHRANE JR.**
President and Chief Executive Officer,
Allied Clinical Laboratories, Inc.
Nashville, Tennessee
COLLEEN CONWAY-WELCH
Dean, School of Nursing,
Vanderbilt University
Nashville, Tennessee
JOHN P. COOPER
Investor
Nashville, Tennessee
J. WILLIAM DENNY
President, Nashville Gas Division
of Piedmont Natural Gas Inc.
Nashville, Tennessee
LLOYD C. ELAM
Mental Health
Associates of Nashville
Nashville, Tennessee
WILLIAM M. JOHNSON
Investor
Sparta, Tennessee
DONALD M. MACLEOD
Executive Vice President, First Union
National Bank of Tennessee
Nashville, Tennessee
GAIL O. NEUMAN
Vice President and General Counsel,
Nissan Motor Manufacturing
Corporation, U.S.A.
Smyrna, Tennessee
RICHARD W. OLIVER
Professor, Owen Graduate School of
Management, Vanderbilt University
Nashville, Tennessee
ROBERT L. REID
Chairman, President and Chief
Executive Officer, First Union National
Bank of Tennessee
Nashville, Tennessee
JAMES E. ROBINSON
Chairman, Hodge-Hardy Agency, Inc.
Newport, Tennessee
THOMAS J. SHERRARD
Attorney, Sherrard & Roe
Nashville, Tennessee
REESE L. SMITH III*
President, Haury Smith Contractors Inc.
Nashville, Tennessee
JACK B. TURNER
President, Jack B. Turner &
Associates Inc.
Clarksville, Tennessee
GEORGE L. YOWELL
President, Tennessee Tomorrow, Inc.
Nashville, Tennessee
* As of February 20, 1996.
** Retiring directors.
FIRST UNION NATIONAL BANK
OF FLORIDA
A full-service commercial bank
with 555 offices.
225 Water Street
Jacksonville, Florida 32202
904-361-2265
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
A full-service commercial bank
with 250 offices.
One First Union Center
Charlotte, North Carolina 28288
704-374-6161
FIRST UNION NATIONAL BANK
OF GEORGIA
A full-service commercial bank
with 140 offices.
999 Peachtree Street, Suite 1200
Atlanta, Georgia 30309
404-827-7100
FIRST UNION NATIONAL BANK
OF VIRGINIA
A full-service commercial bank
with 163 offices.
213 South Jefferson Street
Roanoke, Virginia 24040
540-563-7000
FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA
A full-service commercial bank
with 70 offices.
Insignia Financial Plaza,
One Insignia Place
Greenville, South Carolina 29601
864-255-8000
FIRST UNION NATIONAL BANK
OF TENNESSEE
A full-service commercial bank
with 52 offices.
150 Fourth Avenue North
Nashville, Tennessee 37219
615-251-9200
FIRST UNION NATIONAL BANK
OF WASHINGTON, D.C.
A full-service commercial bank
with 28 offices.
740 15th Street NW
Washington, D.C. 20005
703-821-7777
FIRST UNION NATIONAL BANK
OF MARYLAND
A full-service commercial bank
with 24 offices.
Congressional Plaza Branch
110 Congressional Lane
Rockville, Maryland 20852
301-650-1046
FIRST UNION NATIONAL BANK
(FORMERLY FIRST FIDELITY BANK, N.A.)
A full-service commercial bank
operating 610 offices in Maryland, New
Jersey, New York and Pennsylvania.
202A South Bridge Street
Elkton, Maryland 21921
410-392-2347
FIRST UNION BANK OF CONNECTICUT
(FORMERLY FIRST FIDELITY BANK)
A full-service commercial bank
with 65 offices.
300 Main Street
Stamford, Connecticut 06904
203-348-6211
FIRST UNION BANK OF DELAWARE
(FORMERLY FIRST FIDELITY BANK
OF DELAWARE)
A full-service commercial bank
with 2 offices.
One Rodney Square
920 King Street
Wilmington, Delaware 19801
302-888-7500
FIRST UNION BROKERAGE
SERVICES INC.
Securities brokerage firm.
One First Union Center
Charlotte, North Carolina 28288
704-374-6927
FIRST UNION CAPITAL MARKETS CORP.
Provides a wide range of securities
services in accordance with Federal Reserve
Board powers granted to subsidiaries of
bank holding companies.
One First Union Center
Charlotte, North Carolina 28288
704-383-8757
FIRST UNION HOME EQUITY BANK, N.A.
Offers home equity loans through
143 offices in 35 states.
1000 Louis Rose Place
Charlotte, North Carolina 28262
704-593-9300
FIRST UNION MORTGAGE CORPORATION
Offers a variety of mortgage banking
and insurance services through 26 offices
in 6 states.
Two First Union Center
Charlotte, North Carolina 28288
704-374-6161
FOREIGN OFFICES
NASSAU BRANCH
First Union National Bank
of North Carolina
Nassau, Bahamas
FIRST UNION BANK AND TRUST
(CAYMAN) LTD.
Cayman Islands
FIRST UNION NATIONAL BANK
London, England
46
STOCKHOLDER INFORMATION
FINANCIAL INFORMATION
Analysts, stockholders and other investors seeking financial information about
First Union Corporation should contact Barbara Massa, senior vice president for
Corporate Communications and Investor Relations, at 704-374-2555 or Sean Fox,
vice president for Investor Relations, at 704-374-7060.
FAX-ON-DEMAND
Call 1-800-283-6214 for the latest news announcements through FAX-On-Demand.
INVESTOR RELATIONS
Our Investor Relations staff at 704-374-6782 also can provide information about
our dividend reinvestment program and direct deposit of dividends. Copies of our
1995 Form 10-K may be obtained from Investor Relations, Two First Union Center,
Charlotte, North Carolina 28288-0206.
STOCKHOLDER ACCOUNTS
If you have questions concerning your stockholder account, please call our
transfer agent, First Union National Bank of North Carolina, at 1-800-347-1246.
MEDIA CONTACT
News media seeking general information should contact R. Jeep Bryant, senior
vice president for Media Relations, at 704-374-2957.
FINANCIAL REPORT MAILING
PROCEDURES
Our goal is to reduce the expense associated with mailing financial reports to
stockholders by receiving authorization to mail only one per address. This
authorization is strictly voluntary.
ANNUAL MEETING
The annual meeting of stockholders will be held at 9:30 a.m. on Tuesday, April
16, 1996, in the auditorium on the 12th floor of Two First Union Center,
Charlotte, North Carolina.
STOCK LISTING
First Union Corporation common stock is traded on the New York Stock Exchange
under the symbol FTU; preferred stock is listed as FTU prB and FTU prF; and
depositary shares are listed as FTU prD.
EQUAL OPPORTUNITY EMPLOYER
First Union Corporation is an equal opportunity employer. All matters regarding
recruiting, hiring, training, compensation, benefits, promotions, transfers and
all other personnel policies will continue to be free from discriminatory
practices.
NAIC
First Union Corporation is a corporate sponsor of NAIC (National Association of
Investment Clubs) and participates in the Low-Cost Investment Plan.
INTERNET ADDRESS
Our Internet global computer address is: http://www.firstunion.com/ or via
electronic mail: comments@firstunion.com.
FIRST UNION TOLL-FREE NUMBER
Customers nationwide who wish to open a First Union checking or savings account,
transfer funds, apply for mortgage, home equity or car loans, request credit
cards and conduct other banking transactions may call: 1-800-413-7898.
SECURITIES AND DEBT RATINGS
First Union Corporation's senior long-term debt is rated A by Standard & Poor's;
A1 by Moody's; and A+ by Thomson BankWatch. Subordinated debt is rated A- by
S&P; A2 by Moody's; and A by Thomson BankWatch. Commercial paper is rated A-1
by S&P; P-1 by Moody's; and TWB-1 by Thomson BankWatch.
First Union Corporation's subsidiary banks' ratings for short-term letters
of credit and certificates of deposit are P-1, A-1 and TBW-1 for Moody's,
S&P and Thomson BankWatch, respectively. Long-term senior debt and certificates
of deposit are rated A1 and A+ for Moody's and S&P, respectively, except
First Union National Bank of North Carolina, which Moody's rates Aa3.
47
PRODUCT CATALOGUE
Buy financial products at your convenience with First Union through the Internet
or toll-free phone lines--24 hours a day, seven days a week. Internet address:
http://www.firstunion.com/ Nationwide toll-free phone number: 1-800-413-7898.
First Union's longstanding commitment to customer service means that we must be
ready to offer our customers the service and products they want--when, where and
how they want them. We are rapidly developing a variety of new tools and
delivery channels to allow us to be wherever customers want us, with whatever
products they desire. But we already offer the majority of products and services
that customers want through direct sales by personal computer or--like a
catalogue sales company--through toll-free phone lines.
The computer disk that accompanies this summary annual report allows customers
to connect to First Union's site on the Internet global computer network and,
throughout the course of 1996, to purchase an increasing selection of products
or services. Most of those products and services are already available through
one toll-free call to First Union's Direct Bank.
BANK VIA THE INTERNET
TODAY
Apply for a credit card; Apply for a consumer loan; Apply for a home equity
loan; Manage your commercial cash accounts; Check your IRA balance.
(Picture of Credit Card)
APRIL 1996
Check deposit account balance; Check savings account balance; Check credit card
balance; Check consumer loan status; Order checks; Get an interim account
statement.
(Picture of House)
DECEMBER 1996
Pay bills on-line; Transfer money between accounts.
(Picture of a Letter)
BANK VIA THE PHONE
TODAY
Apply for a mortgage; Apply for a home equity loan or prime equity line;
(Picture of a CheckBook)
Open a checking account; Apply for a car loan; Purchase a certificate of
deposit; Transfer money between accounts;
(Picture of a Car)
Open an IRA account; Open automated bill pay accounts; Purchase mutual funds.
(Picture of a Certificate of Deposit)
48
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Windows and MS-DOS are registered marks of Microsoft Corporation.
QuickTime and the QuickTime Logo are trademarks under license.
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First Union Corporation and its licensors.
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First Union Corporation
1995 Summary Annual Report
Two First Union Center
Charlotte, NC 28288-0570
(First Union Logo appears in upper right corner, four pictures appear
on front cover: one of a tree, one of a man at a computer, another of
a building with people walking toward it and last one of two hands
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DESCRIPTION OF FIRST UNION CD-ROM CONTENT
The following material is from a CD-ROM (the "First Union CD-ROM"),
which is enclosed in the written portion of the First Union Corporation
("First Union") 1995 Summary Annual Report. The information on the First Union
CD-ROM is, except as noted herein, a part of the 1995 Summary Annual Report.
As such, the First Union CD-ROM is not deemed "filed" with the Securities
and Exchange Commission. The First Union CD-Rom allows users to explore
detailed information about First Union by utilizing several mediums contained
on the disk. The First Union CD-Rom contains an electronic version of the
written portion of First Union's 1995 Summary Annual Report, spreadsheet files
with certain financial data from the 1995 Annual Report on Form 10-K, an
overview of First Union presented in an interactive multimedia format, and an
Internet Browser for accessing First Union's home pages from a PC.
The four sections contained on the First Union CD-ROM are:
1. 1995 Summary Annual Report - This electronic version of the written portion
of First Union's 1995 Summary Annual Report provides readers with the option
of viewing and storing the report on their PC or Macintosh computer. Enhanced
features like word search and bookmarking make this version more functional
than the traditional paper version.
2. Spread Sheet Files - The spread sheet files for certain financial tables
contained in First Union's 1995 Annual Report on Form 10-K. Shareholders
and analysts will find this feature useful as they can now easily integrate
First Union financials into their models. The Spread Sheet Files have been
extracted from financial statements filed with the Securities and Exchange
Commission as Exhibits (13)(b) and (13)(c) to the 1995 Annual Report on
Form 10-K.
3. Internet Browser for PC - This Internet browser connects users directly with
First Union's home pages and provides access to the Internet, as well as
electronic mail, through service provided by MCI. The First Union Internet
home page which is connected via the Internet Browser for PC contains
information relating to First Union products and services and neither the
contents of such home page nor the Internet Browser computer program is
deemed a part of the 1995 Summary Annual Report and therefore is not being
filed herewith.
4. Multimedia Presentation - This interactive presentation focuses on various
aspects of First Union, including First Union's history, management
philosophy, technology, business lines, and shareholder value through the use
of video, animation, graphics, charts, and text. The text of such Multimedia
Presentation is presented on the following pages.
(Background drawing of tree, First Union logo upper right)
The History Of First Union
A Track Record of Strategic Growth
HISTORY
THE EARLY YEARS
THE EXPANSION YEARS
1995 OVERVIEW
Although we have enjoyed steady expansion for nearly nine decades,
First Union has never believed in growth solely for the sake of growth.
Our history proves that we take time necessary to examine the basics
before we expand, targeting those areas where our special strengths,
expand, targeting those areas where our special strengths, market presence
and proprietary innovations make the most difference.
(Background photo of building, tree drawing upper left,
First Union logo upper right)
The Early Years:
Growth as A Bank
HISTORY
THE EARLY YEARS
Building A Foundation For The Future
First Union has grown from a roll top desk in a hotel lobby to one of the
most accessible banking organizations in the United States. We did not
achieve this type of success by accident. We achieved it by following the
basic principles set forth by our founder over 90 years ago.
(Background photo of H.M. Victor, tree drawing upper left, First
Union logo upper right)
The Beginning
HISTORY
THE EARLY YEARS
A Well-Grounded Business Approach From The Start
First Union was founded in 1908 as Union National Bank by H.M. Victor in
Charlotte, N.C. Victor raised funds selling 1,000 shares of stock at $100
each. Known for his conservative lending approach, legend has it that when
he agreed to finance an auto loan, he held the keys until the loan was paid
off.
Victor believed in high credit quality, strong financial performance and
excellent customer service. This responsible approach brought Union National
successfully through several difficult economic eras, including the Great
Depression of the 1930s. These same principles guide present-day First Union
as we position ourselves for a future of continued growth.
(Background photo of First National Bank, tree drawing upper left, First
Union logo upper right)
Post WWII
HISTORY
THE EARLY YEARS
Meeting The Needs Of A Growing Consumer And Corporate Base
Modern finance and technology revolutionized the world after World War II,
opening up borders, encouraging trade and triggering the largest cross-country
flows of currency in history. Union National met the challenges of these new
demands and its rapidly growing client base by merging with First National
Bank of Asheville, N.C. in 1958.
Not only did this merger form the basis for a modern-day First Union, it
also signaled the beginning of a new strategy that would prove increasingly
successful as the years went by. The strategy: identify a strong merger
partner with complementing strengths and unite to form an even stronger
organization focused on common goals.
(Tree drawing upper left, First Union logo upper right,
background drawing of communication, technology, & agricultural symbols)
Early Innovations
HISTORY
THE EARLY YEARS
Responding To Market Needs With New Products And Technology
First Union became the first bank to open a branch office in Charlotte, N.C.
It later became the first bank in the region to offer a flat-fee checking
account and the first to offer a charge card - well before the advent of Visa
and MasterCard.
In 1986, First Union became the first bank in the nation to link its branches
by satellite for data transmission purposes. This innovative spirit endures
today in the form of our superior technological edge.
(Background photo of C.C. Cameron & drawing of house, tree drawing upper
left, First Union logo upper right)
Focused On Growth
HISTORY
THE EARLY YEARS
C.C. Cameron
First Union
Chief Executive Officer
1968-1985
A $50 Billion Dollar Business Begins With Innovative Expansion
In 1964, First Union acquired Raleigh-based Cameron-Brown Company, a
national mortgage banking and insurance firm grandfathered by the
Bank Holding Company Act of 1956 to sell non-credit insurance and
mortgages on a national basis. With this acquisition, we became one of
the few banks in the nation to offer its customers a full line of insurance
and mortgage products.
Renamed First Union Mortgage Corporation in 1986, our mortgage banking
company now ranks among the nation's top 10 servicers of residential
loans with a portfolio exceeding $50 billion.
(Tree drawing upper left, First Union logo upper right
The Expansion Years
HISTORY
EXPANSION YEARS
An Acceleration Of Planned Growth Creates A Regional Leader
Customer demands guided our growth efforts in the 1980s and beyond.
Through strategic mergers and well-chosen acquisitions, we expanded our
market base, consumer credit product lines, brokerage and mutual fund
products, and corporate lending and investment services.
(Tree drawing upper left, First Union logo upper right)
The Expansion Years
HISTORY
EXPANSION YEARS
An Acceleration Of Planned Growth Creates A Regional Leader
(Area graph bottom center plotting asset growth data)
Asset Growth
(in billions)
1985 20.1
1986 26.8
1987 38.5
1988 41.4
1989 45.5
1990 54.6
1991 59.3
1992 63.8
1993 70.8
1994 77.3
1995 131.9
(Tree drawing upper left, First Union logo upper right)
Our Vision
HISTORY
EXPANSION YEARS
There Will Always Be A Need For Better Ways Of Doing Business
More than ten years ago, First Union determined what it would take to
survive in the future: we needed to build our scope and scale; to become
more entrepreneurial and visionary; to diversify our sources of earnings;
and to manage our asset quality. Most important, we needed to maintain our
priorities on customer service and innovative investments for the future.
The remarkable decade of growth that followed this determination strengthened
our position as a regional financial services leader and brought us closer
to our main goal: becoming the prototype financial services company of
the future.
(Tree drawing upper left, First Union logo upper right, background photo
of Edward Crutchfield, Northwestern Financial logo lower right)
Our Strategy
HISTORY
EXPANSION YEARS
Edward E. Crutchfield
Chairman and Chief Executive Officer
1985-present
Realizing A Vision Requires Leaders And Resources
In 1985, Ed Crutchfield became Chairman of First Union and launched the
interstate expansion program that has served the company so well. Heading
this initiative was an unprecedented merger with Northwestern Financial
Corporation of Greensboro, N.C. This event was the largest banking merger
in the history of North Carolina. It created the state's second largest bank
as well as First Union's flagship banking operation for the future.
(Tree drawing upper left, First Union logo upper right, background -
The logos of six of the largest financial institutions which First Union has
acquired over the years move one by one to merge into the First Union logo
which then expands, filling the screen.)
1995: The Culmination Of Our Growth
HISTORY
1995 OVERVIEW
A Decade of Strategic Expansion Ends With A Historic Merger
1995 may well be remembered as the single most important year in First Union's
history, highlighted by our historic merger with First Fidelity that not only
dramatically increased our retail customer base, but also expanded our
geographic reach north to key high net worth retail and mid-size business
markets - catapulting First Union from a regional leader to a national
presence.
(Tree drawing upper left, First Union logo upper right and center page)
1995: The Culmination Of Our Growth
HISTORY
1995 OVERVIEW
A Decade of Strategic Expansion Ends With A Historic Merger
(Tree drawing upper left, First Union logo upper right, background map of
eastern seaboard. Interactive Map - When the user clicks on "First Fidelity
Region" or "First Union Region" the corresponding states on map are
highlighted.)
Combining Our Strengths
HISTORY
1995 OVERVIEW
The Financial Services Company Of The Future
First Union and First Fidelity have the combined market strength to take
full advantage of the technological developments, consolidation opportunities
and the changing financial services landscape to produce superior shareholder
returns both now and into the next century.
(Tree drawing upper left, First Union logo upper right, shaded map of
eastern seaboard)
Combining Our Strengths
HISTORY
1995 OVERVIEW
The Financial Services Company Of The Future
FIRST FIDELITY REGION
FIRST UNION REGION
(Tree drawing upper left, First Union logo upper right, background photo
of State Bank of Newark)
A Proven Partner
HISTORY
1995 OVERVIEW
First Fidelity's Own History And Approach Proves It a Worthy Partner
First Fidelity was founded in 1813 as the State Bank of Newark by
William S. Pennington, a revolutionary war veteran and a future
governor of New Jersey. Rapid growth followed the Civil War and by the 1930's,
First Fidelity was well-capitalized enough to ride out the Great Depression
without ever halting customer withdrawals. 1949 began a series of mergers
responsible for its present-day scope and strength. In the 1970's, it
expanded throughout New Jersey as First National Bancorporation. A 1984
merger with Fidelity Union created the name First Fidelity. In 1988, a
merger with Fidelcor of Philadelphia transformed First Fidelity into a
well-positioned, super-regional interstate banking company, setting the stage
for its future merger with First Union.
(Tree drawing upper left, First Union logo upper right)
True Synergy
HISTORY
1995 OVERVIEW
Combining Forces - And Resources - For The Future
By combining forces, First Union and First Fidelity capitalized on their
common strategies of aggressive but carefully managed growth; their
similar focus on retail and middle-market customers; their complementing
technologies; and compatible management styles.
These consensus strengths will help First Union to effectively leverage its
expanded product and technological advantages over a larger customer base,
realizing economies of scale in the process.
(Tree drawing upper left, First Union logo upper right)
True Synergy
HISTORY
1995 OVERVIEW
Combining Forces - And Resources - For The Future
First Union & First Fidelity's regions produce
35% of the nation's gross national product
(Pie chart bottom center plotting gross domestic product data)
(total $ in billions)
__ First Fidelity Region $901
__ First Union Region 815
__ E.N. Central 798
__ Pacific 854
__ W.S. Central 489
__ W.N. Central 326
__ New England (exlud.CT) 207
__ E.S. Central 243
__ Mountain 242
Total $4,875
(Tree drawing upper left, First Union logo upper right)
The Future
HISTORY
1995 OVERVIEW
Shared Fundamentals Will Fuel Our Future Success
An important element of our future success will be the fundamental priorities
that our new management team shares. We intend to implement our ambitious
vision for continual growth through a prudent management strategy that
preserves the elements of our common value system: superior shareholder
returns and superior customer service.
Today, First Union, one of the nation's most accessible banks, is
well-prepared to take advantage of the competitive edge it has created.
We are ready and able to reap the rewards of nearly a century of strategic
growth, while carefully nurturing our strengths and resources.
(Tree drawing upper left, First Union logo upper right)
The Future
HISTORY
1995 OVERVIEW
Shared Fundamentals Will Fuel Our Future Success
First Union & First Fidelity's regions account
for 37% of the nation's middle-class companies
(Pie chart bottom center plotting middle-class company data)
(total $ in billions)
__ First Fidelity Region 21,100
__ First Union Region 19,825
__ E.N. Central 19,361
__ Pacific 16,243
__ W.S. Central 11,041
__ W.N. Central 7,985
__ New England 6,880
__ E.S. Central 6,119
__ Mountain 5,214
Total 115,773
(Background drawing of man standing by window in bank, First Union logo
upper right)
First Union Today
We Are Among The Most Accessible Banks In The Nation
FIRST UNION TODAY
TECHNOLOGY LEADER
MGMT PHILOSOPHY
BUSINESS REACH
COMMUNITY ACTION
With nearly 2,000 branches stretching from New York
to Key West and nearly 200 offices in 37 states, First Union
is clearly one of the most accessible banks in the U.S.
Altogether, our more than 44,000 employees provide a full
range of financial services to a total of 11 million
customers nationwide.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, computer keyboard, photo
of John R. Georgius, Vice Chairman, First Union Corporation)
Technological Strengths
A Philosophy Of Disciplined Re-Investment In Technology
FIRST UNION TODAY
TECHNOLOGY LEADER
SINGLE SYSTEM
PROJECT EMERALD
CUSTOMER CENTERS
DELIVERY CHANNELS
First Union is committed to innovations in tech-
nology. Our priorities are guided by three primary
concerns: long-term shareholder interests, benefits to
customers and business unit needs. Each project is
screened according to a cost/benefit analysis, and we
have the discipline to terminate initiatives if objectives
are not being met.
"Success, for us, is going to come from unparalleled execution, day in
and day out, with every single transaction, in the area of sales, service and
efficiency, and giving customers what they want. And our success is also going
to come from understanding and adapting to the changing service delivery and
product requirements of our customer base."
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, computer keyboard,
photo of Austin Adams bottom left)
Single Operating Platform
The Benefits Of A Single Operating Platform
FIRST UNION TODAY
TECHNOLOGY LEADER
SINGLE SYSTEM
Ten years ago, First Union began investing
in a single system and common products
and software. This effort to streamline and
consolidate operations has saved us several
hundred million dollars of annual operating
expenses since 1985.
"First Union has this competitive advantage:
Everyone in the company supports the idea that
operating systems must be built and maintained
through synergistic, cooperative effort."
Austin A. Adams
Executive Vice President for
Automation and Operations
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, woman sitting at computer)
Single Operating Platform
Providing First Union With A Competitive Advantage In Speed
FIRST UNION TODAY
TECHNOLOGY LEADER
SINGLE SYSTEM
Speed is the most important advantage to our single
system platform. These systems let us introduce new
products faster, provide more rapid service and more
easily access management information. This technology
also expedites bids for acquisitions and allows for quick
conversion to our platform. The average conversion time for
the eight bank-related acquisitions we completed in 1995 was
an impressive two months.
By July 1996, the entire combined company will be on our single
operating platform.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, woman sitting at computer)
Single Operating Platform
Providing First Union With A Competitive Advantage In Speed
FIRST UNION TODAY
TECHNOLOGY LEADER
SINGLE SYSTEM
CT NY NJ PA DE MD DC VA TN NC SC GA FL
Deposit Systems X X X X X X X X X X X X X
Branch Systems/ATMs X X X X X X X X X X X X X
Consumer Loans X X X X X X X X X X X X X
General Ledger X X X X X X X X X X X X X
Capital Management X X X X X X X X X X X X X
Mortgage Loans X X X X X X X X X X X X X
Human Resources X X X X X X X X X X X X X
(chart)
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, woman sitting at computer)
Single Operating Platform
Technological Savings Support Revenue-Building Initiatives
FIRST UNION TODAY
TECHNOLOGY LEADER
SINGLE SYSTEM
Our investment in single systems is paying off significantly. We
have been able to commit more dollars to revenue-building efforts:
$200 million in technology savings was redeployed into revenue
enhancements for our branch system in 1995.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union bank, Project Emerald logo bottom right)
Project Emerald
Our Premier Deposit System Is One Of The Largest In The U.S.
FIRST UNION TODAY
TECHNOLOGY LEADER
PROJECT EMERALD
Project Emerald is First Union's premier deposit system and the second
largest in the U.S. based on number of customers. It allows pricing of
up to 999 different products, with 10 tier price levels per product down
to the branch level.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union bank, Project Emerald logo bottom right)
Project Emerald
Product Flexibility Gives Us A Competitive Edge
FIRST UNION TODAY
TECHNOLOGY LEADER
PROJECT EMERALD
Project Emerald's flexibility allows us to quickly tailor products to
meet current consumer demand and distribute them to our 2,000 plus
branches instantly. This means we can maintain a competitive edge in
pricing and products while providing product line consistency across
our growing region.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union bank, Project Emerald logo bottom)
Project Emerald
Rapid Conversion Makes Banking History
FIRST UNION TODAY
TECHNOLOGY LEADER
PROJECT EMERALD
Project Emerald was completed in early 1994 and will go down in banking
history as the largest and fastest such conversion of its kind. Its
timeliness paid off, helping to dramatically reduce conversion times
for subsequent acquisitions. This same speed is evident in the conversion
schedule for our merger with the First Fidelity system: current plans
call for completion by July 1996.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of First Union building and parking lot)
Customer Relationship Center
Our Innovative Direct Bank Provides Consumers With Comprehensive
24-Hour Services
FIRST UNION TODAY
TECHNOLOGY LEADER
CUSTOMER CENTERS
As part of First Union's commitment to being the most helpful and convenient
customer service provider, we have put our technology to use in establishing
an innovative Customer Relationship Center we call the Direct Bank. The
Direct Bank can be reached via a toll-free 800 number 24 hours a day
throughout all 50 states.
(Drawing of man at computer upper left, First Union logo upper right,
background drawings of house and car)
Customer Relationship Center
Offering Customers A Full Range Of Banking And Investment Services
FIRST UNION TODAY
TECHNOLOGY LEADER
CUSTOMER CENTERS
When a customer calls in to the Direct Bank, Customer Service Representatives
can access the customer's complete profile on a computer screen and answer
questions about the customer's account while the customer remains on the
phone.
Customer Service Representatives can also help anyone in the U.S. open a
checking or savings account; transfer funds; apply for a mortgage, home
equity or car loan; request a credit card and conduct other banking
transactions. New services to be added to the Direct Bank will allow
customers to purchase a wide variety of investment products, including
mutual funds and annuities.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of woman in bank)
Customer Relationship Center
Enthusiastic Response Shows Strong Consumer Acceptance Of
The Direct Bank Concept
FIRST UNION TODAY
TECHNOLOGY LEADER
CUSTOMER CENTERS
In the first 3 months of operation, the Direct Bank established
relationships with 1,300 customers, providing them with more than
2,000 products - including 109 mortgage loans worth more than $8 million -
while attracting nearly $5 million in deposits.
In a self-conducted survey, 98% of the Direct Bank's customers said they
would recommend us to others; on a 5.0 scale, the sales staff was rated 4.93
for courtesy and 4.98 for knowledge. When asked to compare their Direct
Bank experience to experiences at branch banking, customers gave the
Direct Bank a 4.6 rating.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of woman standing at First Union ATM)
Alternative Delivery Channels
First Union Leads The Way In Developing New Ways To Access Services
FIRST UNION TODAY
TECHNOLOGY LEADER
DELIVERY CHANNELS
The most visible indication of First Union's leadership position in
technology is our ability to create and capitalize on alternative
delivery channels. We have pioneered a number of popular products and services
such as smart cards, Internet banking and enhanced ATMs. We currently
have 18 pilot projects in development or scheduled for implementation.
(Drawing of man at computer upper left, First Union logo upper right, photo
of keyboard bottom right)
Alternative Delivery Channels
First Union Was One Of The First Major Banks To Establish An Internet Presence
FIRST UNION TODAY
TECHNOLOGY LEADER
DELIVERY CHANNELS
In January 1995, First Union became one of the first major U.S. banks
to open a web page on the Internet. Today, our Website averages 25 credit
card applications and over 15,000 visits daily. We have also service
marked many of the everyday words used on the Internet, including
"Cyberbanking", "First Access Network", "CommunityCommerce" and several
others.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of telephone keypad)
Alternative Delivery Channels
We Intend To Maintain This Competitive Edge In The Years To Come
FIRST UNION TODAY
TECHNOLOGY LEADER
DELIVERY CHANNELS
In November 1995, through a combined effort with MCI, we began
distributing Internet browsers that open on the First Union web page.
By the end of 1996, we expect to have a diverse mix of Internet applications
operating. A cash management system called WebInVision has already made its
debut. Our goal is to maintain our competitive edge through enhanced
technology.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union bank branch)
Alternative Delivery Channels
Alternative Delivery Channels Fuel Customer Expansion
FIRST UNION TODAY
TECHNOLOGY LEADER
DELIVERY CHANNELS
Other alternative delivery channels now under development include two-way,
interactive videos in our branches which will be used to sell mutual funds,
mortgages and other products; home banking; stored value cards; debit cards;
and many other outlets. First Union will leverage the use of this new
technology as we expand our customer base through the next century.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of satellite dish)
Alternative Delivery Channels
Satellite System Streamlines Operations
FIRST UNION TODAY
TECHNOLOGY LEADER
DELIVERY CHANNELS
Our commitment to alternative delivery channels extends to management operations
as well. First Union was the first major U.S. bank to complete a satellite data
network between all branch banking locations. Consequently, we are the only
bank in the nation doing live, interactive broadcasts by satellite, including
training, sales and other informational programs.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Management Philosophy
Building On Our Strengths Through Internal Growth
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
STRATEGIC VISION
After a decade of strategic expansion, First Union is focusing primarily
on generating growth internally by expanding our new and existing lines
of business. While focused on internal growth, we also will be alert to
acquisition opportunities to expand these businesses. It is a time to
profit from, and to maximize, the strengths we have so carefully built.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building, photos of Anthony Terracciano,
Edward Crutchfield, & John Georgius across bottom)
Management Philosophy
Building On Our Strengths Through Internal Growth
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
STRATEGIC VISION
Anthony P. Terracciano
President,
First Union Corporation
"Now from the point of view of First Union, they have been making
significant investments in what I called `strategic infrastructure.' Not only
upgrading what they have now but getting ready for the changes that are coming
in this industry. CUT TO: And if you look at the performance of First Union as
we did in the '89 to '92 period, which was probably one of the most painful
periods of my life and one of the most painful periods in the life of this
industry, you've got to be impressed with the way these folks have blended
growth with prudence."
Edward E. Crutchfield
Chairman and Chief
Executive Officer,
First Union Corporation
"So the best thing you can do, I think, is to keep the organization
chart as-- as flat as you can. Stay in touch with what's happening on the
sidewalk out there. And simply -- try to pull bureaucratic behavior up by the
roots wherever you find it. CUT TO: The biggest concern I have about a big
company that we have become, is that we do not get bureaucratic, and that we do
not become a cold, impersonal type of company, like so many big companies have.
CUT TO: We'll go with-- with what the customer wants, rather than try to tell
the customer what we want him to do."
John R. Georgius
Vice Chairman,
First Union Corporation
"So you can't just put technology in and expect customers to come. You
have to put technology in and offer it to them in a way that will be appealing;
that will make them feel comfortable using those vehicles. And if we do that
right-- all of this technology will blend very nicely with our strategies. CUT
TO: So what we really want to do is have this technology serve the customer, so
that they can receive services from First Union, when they want it, where they
want it, and how they want it."
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building & people in meeting)
Mission Statement
First Union's Goal: To Become The Premier Financial Services Provider
Of The Future
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
MGMT APPROACH
VALUE STATEMENT
First Union intends to be a leader in the rapidly changing financial services
industry. We believe the key to success in this rapidly changing environment
is to provide customers what they want, where they want it and when they want
it.
We intend to reach our financial goals by enhancing earnings growth through
geographic and product diversity; by providing innovative financial solutions
and a broad selection of products; and by increasing the production and
profitability of our specialty businesses.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Management Approach
A Decade Of Product, Geographic And Services Expansion Has Prepared Us
For Success
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
MGMT APPROACH
In the years ahead, we plan to maximize the competitive advantages our decade
of expansion has created:
* An extensive and diversified customer base.
* Multiple sources of earnings as a result of our geographic and
product diversity.
* A flexible operating structure and a single operating system that
helps us introduce new products faster and serve customers better.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Management Approach
Technology And Knowledge-Based Marketing Fuel Internal Growth
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
MGMT APPROACH
For at least the next five years, First Union intends to focus primarily on
generating growth internally, by maximizing and maintaining our competitive
advantages in technology and by further developing the marketing tools
necessary to secure a future industry leadership position.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Management Approach
We Will Maintain Our Personal Customer Interactions
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
MGMT APPROACH
First Union is now able to offer products and services traditionally
provided only by Wall Street investment banking firms. But this does not
mean we have changed our focus on Main Street and the needs of our customers.
Our management approach includes the delegation of significant authority to
geographic and product specialty areas, which ensures that our local
bankers always have both the means and the authority to provide
complete customer satisfaction.
The only real difference is that customers no longer have a need to go
elsewhere to have all of their financial needs met.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Management Approach
We Use Technology To Increase - Not Replace - Personal Attention To
Customer Needs
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
MGMT APPROACH
Our technological endeavors support better analysis of customer needs and
better distribution of our services to customers. For example, First Union
now provides services ranging from financial planning for individuals to
sophisticated financial problem-solving solutions for commercial customers.
Staff at local branches have technological tools at their fingertips that allow
them to quickly identify the customers' needs and pinpoint the areas within
First Union best equipped to meet these needs.
This capability means we can meet client needs faster and more efficiently -
while freeing up the time of our representatives to provide personal attention
and customer service.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Management Approach
Closing In On A Position As The Industry Leader Of The Future
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
MGMT APPROACH
Our management approach will transform First Union into the industry
prototype of the future:
* A full-service financial organization capable of providing virtually
any service anywhere, delivered to the doorstep of the customer
and tailored to the customer's individual needs.
Our size, our scope and our resources put us in a strong position to become
the leading financial services company of the 21st century.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of 4 people in meeting)
Statement Of Values
We Put Our Commitment To Strong Relationships In Writing
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
VALUE STATEMENT
First Union places the highest priority on its relationships - with
customers, shareholders, employees and the communities we serve. To this end,
we have developed a formal Statement of Values that applies to everything
we do.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of 4 people in meeting)
Statement Of Values
Our Commitment To Customers Is Based On Absolute Satisfaction
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
VALUE STATEMENT
Our primary mission is to provide total customer satisfaction. We seek to
achieve this by always exceeding the customer's expectations and by enhancing
our customers' financial well-being.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of 4 people in meeting)
Statement Of Values
Our Commitment To Shareholders Is Based On Maintaining Financial Strength
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
VALUE STATEMENT
Our goal is to maintain a strong, mutually beneficial relationship with our
shareholders by outperforming our peers in building long-term shareholder
value. The other key aspect of maintaining this bond is to be a sound,
well-managed and innovative corporation.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of 4 people in meeting)
Statement Of Values
Our Commitment to Employees Is Absolute: They Are Our Most Important Asset
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
VALUE STATEMENT
First Union's employees are our most important asset. We believe in being
candid, open and honest in all of our interactions. We strive to ensure
that all employees understand our corporate vision as well as the strategies
and individual roles that support it. We foster and reward teamwork at all
levels and create a cooperative environment for setting goals, seeking input,
meeting personal objectives and encouraging individual responsibility.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of 4 people in meeting)
Statement Of Values
We Strive To Contribute to the Communities We Serve
FIRST UNION TODAY
MGMT PHILOSOPHY
MISSION STATEMENT
VALUE STATEMENT
First Union believes we have a responsibility to give back to the communities
we serve. We conduct our business with dedication to the highest ethical
standards. We provide financial support that stimulates development while
improving the quality of life in all our communities. We also encourage
employee participation in community improvement activities.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of person holding compact disc, ground view of
First Union building, photo of Edward Crutchfield)
Strategic Vision
In An Increasingly Competitive Marketplace, Only The Swift Will Survive
FIRST UNION
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
INDUSTRY CONSOL
TECHNOLOGY
CHNG DEMOGRAPHICS
KEY MKT SEGMENTS
Innovation, flexibility and financial strength are crucial to survival in the
increasingly competitive financial services industry. First Union is committed
to staying at the forefront of the financial services industry by monitoring
industry trends and customer preferences and responding rapidly to them.
In other words, we are not content with today's success. We continually
question what the marketplace will need tomorrow and then marshal our
resources to quickly provide it.
"We've got 2,000 branches. That's more branches than any bank in the
United States. We'll have a lot of branches for a long time. But we've gotta
give the customer an alternative to those branches. And if he likes the
alternative, we'll reduce the branches, if he doesn't, we won't."
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Industry Consolidation
We Are Ahead Of The Curve And Are Well-Prepared To Compete
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
INDUSTRY CONSOL
Today, the banking industry is undergoing tremendous consolidation - a trend
that is likely to continue into the next decade. We believe that First Union
will emerge as a winner from this period because we have redefined ourselves
as a total financial services company, able to compete with banks and
nonbanks alike.
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Industry Consolidation
First Union's Goal: Emerge As An Industry Leader
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
INDUSTRY CONSOL
Of the 50 largest banking companies in business ten years ago, 26
have disappeared through bankruptcy or acquisition by other banking companies.
Industry-wide, 6,800 bank mergers took place between 1980 and 1994. In 1995
alone, 420 acquisitions valued at more than $73 billion were announced.
Only a few companies will be able to survive this trend. First Union intends
not only to survive, but to lead the industry as it moves away from the
confines of traditional banking toward the full-service prototype of financial
services companies.
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Industry Consolidation
By Combining A Depth Of Resources And Knowledge With A Local Focus, We Are
In A Position To Succeed
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
INDUSTRY CONSOL
We have amassed the scope and scale to provide a full range of financial
products and services, to afford the technology required for fast, efficient
service, and to attain a sizable customer base that enables us to keep unit
costs low.
Just as important, we can leverage the depth of knowledge and resources
of a $132 billion asset company to support long-term customer relationships
at the local level.
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Industry Consolidation
Meeting A Lifetime Of Financial Needs
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
INDUSTRY CONSOL
Today, First Union has built the depth and breadth of services required to
support a long-term approach to customer relationships. We can now form
partnerships with clients that allow us to provide a lifetime of services and
products. We can serve our personal customers throughout their lives as their
needs change, and corporate customers through all stages of their business
development.
In short, we have already achieved what many other banks are still attempting
to develop.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, photo of John Georgius)
Technology
We Make Technology Work For Us, Not Against Us
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
TECHNOLOGY
As we look ahead to the future, First Union has technology firmly on our
side. We have developed systems that enable us to create better products,
provide multiple delivery channels and keep unit prices competitive. In
addition, because we invested early in conversion to single systems, First
Union is ahead of most of its competitors in acquiring the technology that
will determine future success in this industry - and our largest investments
in technology are behind us.
"If you study customers very carefully, you'll find that they are very
rational in their decision making. And they're also very discriminating. And
what that means is, that if somebody offers them a better way to do business,
that they'll take it."
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, computer chips)
Technology
Using Technology Gives Our Branch System A Competitive Advantage
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
TECHNOLOGY
As bank consolidation continues, a likely outcome will be fewer bank branches.
Industry projections predict a 50% reduction in bank branches over the next
decade.
If First Union had kept every branch it acquired over the last 10 years, it
would have nearly twice the number of branches it has today. While reducing
the number of branches, we recognize the value of the local presence that our
branch system affords us. By using technology wisely in the years ahead, we
will continue to promote the efficiency and profitability of this strong
local-based asset.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, computer chips)
Technology
A Unified Branch System Will Mean Better Service And Greater Market
Penetration
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
TECHNOLOGY
Technology is unifying our branch system so that it can operate with optimum
efficiency and accuracy. Because of our single operating platform, we can
introduce new products, information and systems to all of our branches at
the same time. This allows us to respond quickly and uniformly to industry
changes and maximize product sales throughout our branch network.
In addition, streamlining and centralizing branch support functions allows our
branch personnel to spend more time focusing on customers rather than on
performing administrative tasks.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of person holding compact disc, computer chips)
Technology
We Will Continue To Lead In Providing Better Delivery Channels
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
TECHNOLOGY
First Union's present leadership position in technology gives us a competitive
advantage as banking seeks out alternative delivery channels. In addition
to the many innovative telephone and computer-based services available today,
we now have nearly 20 technology pilot projects in various stages of
development, including neural net artificial intelligence - a technology that
learns from previous experience. This will allow us to make more accurate
predictions about customer behavior and product demand.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of senior citizens & two families)
Changing Demographics
We Are Well-Positioned To Capitalize On The Changing Face Of America
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
CHNG DEMOGRAPHICS
Changing demographics are rapidly altering the future of financial services.
At First Union, we anticipated this trend and have moved quickly to expand
our product lines and delivery channels. We intend to carefully monitor
demographics in the years ahead and to use our strengths and resources to
stay at the forefront of meeting our customer needs.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of three families)
Changing Demographics
A Growing Demand For Long-Term Financial Planning Creates Opportunity
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
CHNG DEMOGRAPHICS
As the nation's population ages and the baby boomer generation approaches
retirement age, there is a growing demand for day-to-day financial planning
as well as long-term investment opportunities. In fact, there are now 77
million baby boomers moving toward age 50 with a common need - how to
accumulate enough capital to last for years after retirement.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of senior citizens & two families)
Changing Demographics
We Are Responding With Long-Term Investment Products And Convenient
Retirement Plan Vehicles
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
CHNG DEMOGRAPHICS
This large demographic segment is demanding higher yielding instruments than
traditional bank deposits. Fortunately, we anticipated this development. By
the year 2000, our goal is to have $100 billion in mutual fund assets under
management.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of senior citizens & two families)
Changing Demographics
Another Key Component Of Our Approach: Better Delivery Of Services
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
CHNG DEMOGRAPHICS
The large baby boomer generation of consumers expects instant, easy access to
information and high-quality customer service - while even younger consumers
prefer to use alternative channels to the traditional branch delivery system.
Fortunately, our focus on these alternative delivery channels means we are
well-positioned to capture the loyalty of both of these key markets of the
future.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Key Market Segments
As We Move Into The Future, We Will Continue Doing What We Do Best
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
KEY MKT SEGMENTS
Despite a decade of change and expansion in our product and service lines,
we have no intention of abandoning the customer focus that has served us
so well in the past. We will continue to make the most of our competitive
advantages in such key market segments as middle-market companies and retail
customers.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Key Market Segments
The Need For Middle-Market Services Is Strong
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
KEY MKT SEGMENTS
First Union is located throughout the nation's fastest-growing geographic
region - one that is home to new industries and technologies, specialized
businesses and key segments of our population. Each of these market sectors
requires a special understanding - the kind gained only through one-on-one
contact and a strong, ongoing local presence.
We will make the most of these strengths by focusing primarily on financial
opportunities within our geographic region. We will also continue to make
selected investments in certain businesses to maintain scope and scale and
competitive pricing.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Key Market Segments
We Intend To Serve Middle-Market Companies Better Than Anyone Else In The
Nation
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
KEY MKT SEGMENTS
Our middle-market focus supports another key element of our strategic vision:
a commitment to building long-term relationships with our commercial and
corporate customers and a determination to meet their changing financial needs
in the years ahead. We intend to deliver a sophisticated and complete product
mix to this important client segment, backing it with personal attention
and a good understanding of their businesses and their markets.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union building)
Key Market Segments
We Will Offer Our Clients The Finest Financial Services
FIRST UNION TODAY
MGMT PHILOSOPHY
STRATEGIC VISION
KEY MKT SEGMENTS
As we grow our internal business lines and expand our customer base, First
Union intends to attract ever-increasing numbers of customers by offering
the finest services, the most tailored products and the highest level of
personal attention available from any financial service company.
Business Reach
(First Union Logo appears in upper right corner, Interactive Map - Users
can choose to see First Union branch locations or office locations for
selected subsidiaries. Clicking on a specific state opens a box which lists
complete addresses of the locations in that state.)
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
CORP DEMOGRAPHICS
CONS DEMOGRAPHICS
First Union bank branch locations appear on this map
Business Reach
(First Union Logo appears in upper right corner, Interactive Map - Users can
choose to see First Union branch locations or office locations for
selected subsidiaries. Clicking on a specific state opens a box which lists
complete addresses of the locations in that state.)
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
CORP DEMOGRAPHICS
CONS DEMOGRAPHICS
First Union Mortgage Corporation locations appear on this map
Business Reach
(First Union Logo appears in upper right corner, Interactive Map - Users
can choose to see First Union branch locations or office locations for
selected subsidiaries. Clicking on a specific state opens a box which lists
complete addresses of the locations in that state.)
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
CORP DEMOGRAPHICS
CONS DEMOGRAPHICS
First Union Capital Markets Corp. locations appear on this map
Business Reach
(First Union Logo appears in upper right corner, Interactive Map - Users can
choose to see First Union branch locations or office locations for
selected subsidiaries. Clicking on a specific state opens a box which lists
complete addresses of the locations in that state.)
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
CORP DEMOGRAPHICS
CONS DEMOGRAPHICS
First Union Home Equity Bank, N.A. locations appear on this map
(Drawing of man at computer upper left, First Union logo upper right,
background photos of Statue of Liberty, White House, 2-story house)
State Profiles
A Leading Presence In America's Fastest-Growing And Wealthiest Regions
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTHEAST
NORTH CENTRAL
SOUTH CENTRAL
SOUTHEAST
If First Union's southeastern corporate base were a nation unto itself, it
would rank as the world's 4th largest industrialized economy based on gross
state product. It outpaces the nation in population, personal income and
employment growth. The economic health and diversity of our combined 12
states and the District of Columbia provide great potential for continuing
growth in investment and banking services for individual and corporate
customers.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of Statue of Liberty)
Northeast Region
Growing Corporate And Consumer Markets
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTHEAST
Our Northeast Region incudes New York, New Jersey, Connecticut, Pennsylvania
and Delaware. Our merger with First Fidelity has created an impressive
presence for First Union in this established corporate and consumer market.
The Northeast Region is home to more middle-market companies and high
net-worth individuals than any other region in the country.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of Statue of Liberty)
Northeast Region
Concentration Of Wealth And Middle-Market Companies
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTHEAST
Connecticut, New Jersey and New York rank first, second and third respectively
as states having the highest per capita income in the U.S. Connecticut's per
capita income is $29,402 - 35% more than the national average. New Jersey's
per capita income is $28,038 - 29% more than the national average. New
York's per capita income is $25,999 - 19% more than the national average.
Delaware's per capita income ranks 11th in the nation and is 5% higher than
the nation as a whole. Pennsylvania's per capita income ranks 18th in the
nation and is 2% higher than the nation as a whole.
These five states represent over 19% of the total gross state product of the
U.S. This compares with 18% for First Union's seven other primary banking
states. 20% of all manufacturers, 16% of all retail and 18% of all wholesale
establishments are located in five northeastern states. 18% of all middle-
market companies are headquartered in these five states.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of White House)
North Central Region
The Commercial Center Of The Eastern Seaboard
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTH CENTRAL
Our strong presence in Virginia, Maryland and Washington, D.C. allows us to
serve a thriving high net-worth population. First Union is well-positioned
at the center of commerce along the Eastern Seaboard. This allows us to
better serve our import/export clients, taking advantage of the region's
many ports.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of countryside)
North Central Region
New Industrial Growth Is Fueling Virginia's Economy
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTH CENTRAL
Virginia continues to enjoy above average economic growth, with gross state
product rising 2.7% in 1995. The state has recruited new industries,
landing two huge semiconductor plants in Northern Virginia and Richmond and
a host of new firms in Hampton Roads. Defense and shipbuilding cutbacks
have proved less than anticipated. Norfolk has actually gained service
personnel over the near term and cutbacks in the region's industry have not
been severe. Overall employment growth in 1995 was 1.5%, or a gain of
45,000 jobs. Personal income grew 5.6% during the past year.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of riverside town)
North Central Region
New Job Gains Help Offset Government Cut-Backs In Maryland
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTH CENTRAL
Maryland's economy posted modest gains last year. Gross state product grew
0.8% in 1995, as businesses created 8,000 new jobs. Much of that increase,
however, was offset by federal government cutbacks. Despite this past year's
modest gains, unemployment remains low at 5% and personal income grew 5% in
1995.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of White House)
North Central Region
Washington's Unemployment Remains Below The National Average
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
NORTH CENTRAL
The Washington, D.C. area economy grew 1% in 1995. Private business created
more than 30,000 jobs, with particularly strong gains in the Northern
Virginia suburbs. The District of Columbia continues to struggle with
federal government cutbacks, which have eliminated more than 9,300 jobs
during the past year. Despite layoffs, the metro area's unemployment of 4%
is more than a full percentage point below the national average.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of downtown Nashville, Charlotte & Charleston)
South Central Region
Growing Population And Thriving Business Support Growth In Our Home Region
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTH CENTRAL
The South Central Region is home base for First Union and the site of strong
growth in our consumer and corporate services. This expansion is part of an
overall trend: North Carolina, South Carolina and Tennessee have all
experienced rapid growth in recent years. Individuals and corporations are
flocking to this region because of its high standard of living and favorable
business climate.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of downtown Charlotte)
South Central Region
North Carolina's Economy Continues To Grow
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTH CENTRAL
North Carolina's economy grew 4.5% during 1995, as businesses and local
governments created close to 75,000 new jobs. North Carolina has attracted
more new businesses and expansions of existing facilities during the 1990s
than any other state except Ohio and Texas. New arrivals include leading
companies in the electronics, communications and distribution industries.
Personal income grew 7% and the state's unemployment rate averaged just
4.3% in 1995.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of downtown Charleston)
South Central Region
South Carolina Recruits $5 Billion In New Business Projects During 1995
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTH CENTRAL
South Carolina overcame federal government cutbacks at the Charleston Naval
Base and Savannah River nuclear weapons plant during the past year, posting
gross state product growth of 5%. One reason for this success is that the
state has been one of the most prolific recruiters of new business during the
1990s, including over $5 billion in new projects during 1995. The influx
of new industry is helping to lessen the state's traditional dependence on
textiles and apparel. New industries include leading producers of automobiles,
steel, electronics and chemicals. Tourism is another business avenue, with
resorts in Hilton Head, Charleston and Myrtle Beach all reporting strong
gains. A total of 17,000 jobs were created in 1995, and personal income grew
6.5% over the past year.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of downtown Nashville)
South Central Region
New Industry And Strong Population Growth Lend Economic Strength To
Tennessee
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTH CENTRAL
Tennessee's economy decelerated to a modest pace during 1995, with gross
state product increasing 4%. Growth was much stronger in previous years,
led by rapid gains in the state's important motor vehicles industry. Such
growth helped drive the unemployment rate in Nashville down below 3%. The
state continues to attract new industry and is experiencing strong population
growth. Employment increased nearly 2.4% during 1995, and the unemployment
rate averaged just 4.8%. Personal income grew 6.4% over the past year.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of Atlanta & Florida)
Southeast Region
Visitors And New Business Bring Economic Growth To Our Southeast Region
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTHEAST
Between the 1996 Olympic Games in Atlanta and a renewed tourism boom in
Florida, the Southeast Region is undergoing strong economic growth. This
situation is opening up significant new banking and investment opportunities
for First Union, thanks to our impressive branch and office network throughout
this region.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of Atlanta)
Southeast Region
Georgia Prepares For The 1996 Olympic Games
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTHEAST
Georgia's economy experienced exceptional growth during 1995, mainly tied to
preparations for this summer's Olympic Games. The state's economy grew
4.5% and added just over 115,000 jobs. More than three-quarters of this
gain was in the Metro Atlanta area, which has added close to 100,000 jobs
during each of the previous three years. Personal income grew 7.1% over the
past year, and 7,500 new businesses were started. Georgia's robust economy
and overall favorable job prospects have led to rapid population growth in
recent years. The state's population has grown by over 700,000 since 1990,
making Georgia the nation's 10th most populous state.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of Florida)
Southeast Region
Tourism And Migration Bring Smiles To The Sunshine State
FIRST UNION TODAY
BUSINESS REACH
REGIONAL PROFILES
SOUTHEAST
Florida's gross state product grew 5% during 1995, as tourism rebounded to
record levels and in-migration accelerated. The Sunshine State hosted over
42 million visitors in 1995, and the state added nearly 200,000 new residents.
Most people moving to Florida are attracted by the state's favorable job
market, which saw nearly 200,000 jobs created during 1995. Personal income
grew 7.6% during the past year, and more than 30,000 new businesses were
started.
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Corporate Demographics
Home To The Greatest Concentration Of Middle-Market Companies In America
FIRST UNION TODAY
BUSINESS REACH
CORP DEMOGRAPHICS
First Union's geographic base produces 35% of the nation's gross state product.
Together, First Union's regions account for 37% of the nation's middle-
market companies. We also have a strong presence in eight of the ten major
Atlantic Coast ports.
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building, pie chart bottom center)
Corporate Demographics
Home To The Greatest Concentration Of Middle-Market Companies In America
FIRST UNION TODAY
BUSINESS REACH
CORP DEMOGRAPHICS
Concentration of Companies with
Annual Sales $20MM-$250MM+
($ in billions)
First Fidelity Region 21,100
First Union Region 19,825
East North Central 19,361
Pacific 16,243
West South Central 11,041
West North Central 7,985
East South Central 6,119
New England 6,880
Mountain 5,214
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Corporate Demographics
First Union Enjoys A Significant Home Court Advantage In Business-Rich Regions
FIRST UNION TODAY
BUSINESS REACH
CORP DEMOGRAPHICS
Our business reach within our geographic base is significant: First Union
enjoys relationships with 25% of the more than 100,000 corporations in the
South Atlantic region. First Fidelity has established business ties with
one of every three middle-market companies with sales up to $250 million in
New Jersey, Maryland, Pennsylvania, New York and Connecticut.
(Drawing of man at computer upper left, First Union logo upper right,
background photo ground view of First Union building)
Corporate Demographics
Other Factors Affecting First Union Corporate Prospects
FIRST UNION TODAY
BUSINESS REACH
CORP DEMOGRAPHICS
* During the 1990s, the Southeast * N.C., FL, VA and N.Y. were among
accounted for the bulk of foreign the top 10 states for new corporate
investment in new plants. facilities and expansion in 1995.
* A recent survey of international * The South Atlantic region outpaced
real estate investors identified all other regions over the past
Atlanta, Washington, D.C., and three years in attracting new or
Charlotte as three of the world's expanded corporate facilities.
top five cities for investment in
all types of commercial real estate.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of three families)
Consumer Demographics
Our Region Is Home To The Largest Concentration Of High Net Worth Individuals
In The Nation
FIRST UNION TODAY
BUSINESS REACH
CONS DEMOGRAPHICS
35% of the nation's population is located in our home region. Four of the
five metropolitan areas with the highest per capita income are located in
First Union states.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of three families)
Consumer Demographics
Our Region Is Home To The Largest Concentration Of High Net Worth Individuals
In The Nation
FIRST UNION TODAY
BUSINESS REACH
CONS DEMOGRAPHICS
Per Capita
Personal Income U.S. Average
Per Capita Income West Palm Beach/
by Metropolitan Boca Raton, Fl MSA $32,230 155%
Area
New York, Northern
New Jersey-Long
Island, NY-NJ-CT,
PA CMSA $28,122 135%
San Francisco-
Oakland-San Jose,
CA CMSA $27,293 131%
Hartford, CT MRCMA $26,147 126%
Washington-Baltimore
D.C.-MD-VA-W.V. CSMA $25,956 125%
U.S. Average $20,800
(graph)
(Drawing of man at computer upper left, First Union logo upper right,
background photos of three families)
Consumer Demographics
Excellent Regional Outlook For Growth In Personal Income And Consumer Demand
FIRST UNION TODAY
BUSINESS REACH
CONS DEMOGRAPHICS
* The average income for households in the First Fidelity region is 20% above
national average.
* FL, GA and N.C. were among the top five states to gain population from other
states in 1994.
* N.C., S.C. and GA were among the top 10 states over the past three years to
gain the most new jobs per one million population, with N.C. ranking #1.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of 3 families)
Consumer Demographics
We Will Mine Our Rich Sources For Potential Customers
FIRST UNION TODAY
BUSINESS REACH
CONS DEMOGRAPHICS
This year, our customers will be able to access First Union through nearly
2,000 retail centers; through the nation's third largest automated machine
network; through the Direct Bank, accessible in all 50 states; through
telephone banking; through the Internet; and through "smart" and debit cards.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of teacher and school children)
Community Involvement
Partnering With Communities
FIRST UNION TODAY
COMMUNITY ACTION
LENDING EFFORT
OUTREACH PROGRAMS
First Union has grown quickly in a very short time, and we are committed to
serving the needs of our communities. We support numerous national and
local charitable groups; our employees contribute many volunteer hours to
non-profit and educational programs; and through programs like Excellence in
Education and Matching Gifts, we provide financial support at all educational
levels. Our Community Reinvestment program also provides specific products
and services for low to moderate income customers.
Michael Floyd, an employee in First Union's Collections Department in Miami
Springs, FL, works with students at Holmes Elementary School in Dade County.
(Drawing of man at computer upper left, First Union logo upper right)
Community Reinvestment
Helping Our Communities Prosper
FIRST UNION TODAY
COMMUNITY ACTION
LENDING EFFORT
At First Union we realize that when our communities prosper, we prosper. Our
desire to be a good corporate citizen includes special concern for those who
do not share in general economic prosperity. Serving these customers requires
programs and products tailored to meet their specific needs. A few of these
programs include:
* Affordable Home Mortgages
* Home Improvement Loans
* Small Business Loans
* Capital Markets Specialty Unit Programs
* Home Ownership Seminars
* Financial Management Programs
(Drawing of man at computer upper left, First Union logo upper right,
background photo of woman)
Community Reinvestment
Affordable Housing Makes Dream Home Possible In Tampa, FL
FIRST UNION TODAY
COMMUNITY ACTION
LENDING EFFORT
First Union was among the first banks in the country to create an Affordable
Home Mortgage product in 1989. The product has been modified and revised
several times in response to customer needs, helping customers throughout our
banking region make their dream of home ownership a reality.
First Union partnered with the city of Tampa and several non-profit agencies
to save 70 houses planned for demolition. The homes were moved to empty lots
owned by the city and made available at a reduced cost to lower income
families. First Union provided interim financing for the relocation and
renovation efforts as well as over $2 million in affordable home mortgage
loans. Vivian Wilson holds the deed to the house of her dreams.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of man and child)
Community Reinvestment
Safe, Affordable Housing In Downtown Atlanta, GA
FIRST UNION TODAY
COMMUNITY ACTION
LENDING EFFORT
The site on which the Courtyard at Maple affordable housing complex currently
sits was once an empty field, devoid of anything but a few rocks, an
occasional tree and litter. Today, with the help of First Union, it offers
people like Oria Keeby and his son, Tucari, a secure home with security
lights, attractive landscaping, a playground, clubhouse, swimming pool,
burglar alarms and other features not often found in affordable housing. A
complex financing package that included bond financing, tax credits and
property-tax abatement helped get this complex, near the Georgia Dome in
downtown Atlanta, off the ground.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of business owner and First Union executive)
Community Reinvestment
Building Businesses And A Winning Reputation in Asheville, N.C.
FIRST UNION TODAY
COMMUNITY ACTION
LENDING EFFORT
First Union has won the Asheville, North Carolina Minority Lender of the
Year award the last four years in a row. Ronald J. Blythe, Chairman of the
Minority Enterprise Development Committee, says "... over the years, First
Union has always gone the extra mile, bent over backwards and taken the
extra step to make loans to help minority businesses."
Before Roger Edgerton visited First Union's office, a large Southeastern
bank had already denied a loan request to expand his construction company.
With the help of Rick Hoyle and other First Union executives willing to take
the risk, Edgerton was granted a $60,000 line of credit that helped him
build the company that recently won him Asheville's Minority Business Owner
of the Year award.
(Drawing of man at computer upper left, First Union logo upper right,
background photos of woman/child & man/child)
Community Reinvestment
Young Family Buys First Home In The Bronx, New York
FIRST UNION TODAY
COMMUNITY ACTION
LENDING EFFORT
First Fidelity provided a low-cost mortgage to the Santana family which
enabled them to purchase their first home in the Bronx, New York. First
Fidelity's Urban Bankers make home ownership a reality by helping prospective
first-time home buyers obtain low-cost mortgages in partnership with a
variety of nonprofit agencies.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of First Union banker and school children)
Community Outreach
Contributing Time And Money To Communities
FIRST UNION TODAY
COMMUNITY ACTION
OUTREACH PROGRAMS
First Union recognizes and welcomes its responsibility as a good corporate
citizen. Our goal is to enhance the quality of life for citizens in the
communities we serve. Outreach efforts include Corporate Contributions and
the Excellence in Education programs. These programs provide time as well as
many volunteer hours to our schools and charitable organizations.
First Union banker Joan Corcoran accompanies students from Park Elementary
School in Chesapeake, VA, on a field trip to a Christmas pageant.
(Drawing of man at computer upper left, First Union logo upper right and
bottom right)
Corporate Contributions
Giving Back To Communities
FIRST UNION TODAY
COMMUNITY ACTION
OUTREACH PROGRAMS
First Union's charitable contributions are made through the First Union
Foundation. We contribute to charitable organizations in our full-service
banking markets in the areas of education, health and human services, culture
and the arts, and civic and community improvement. Organizations must be
recognized by the IRS as eligible to receive gifts that can be deducted as
charitable contributions on the donor's federal income tax.
Special consideration is given to innovative programs that help youth as well
as disadvantaged people become more productive and self-sufficient.
For more information Corporate Contributions Director
please contact: First Union Corporation
301 S. College Street
Charlotte, NC 28288-0143
The First Union Foundation
(Drawing of man at computer upper left, First Union logo upper right,
pencil icon at bottom right)
Excellence in Education
First Union's Commitment To Excellence In Education
FIRST UNION TODAY
COMMUNITY ACTION
OUTREACH PROGRAMS
First Union recognizes the importance of excellence in education and commits
corporate resources and employee talents to improving pre-school, elementary
and secondary education as well as adult literacy in the communities we serve.
In 1989, First Union Vice Chairman, John Georgius commissioned an internal
task force to develop a company program and long-term commitment to support
education. The team developed a "Time Away From Work" policy, which allows
employees up to four hours a month with pay to participate in school
activities as parents or volunteers. During the 1994 school year, more than
5,000 employees spent over 161,000 hours volunteering in schools and
educational organizations.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of teacher)
Excellence in Education
Employee Contributions To Education
FIRST UNION TODAY
COMMUNITY ACTION
OUTREACH PROGRAMS
The Educational Matching Gifts Program recognizes and encourages the
involvement of First Union employees in their communities. First Union
matches employee contributions to public and accredited private elementary
and secondary schools, as well as colleges and universities. In 1995,
First Union supported 523 schools through this program.
The First Union Excellence in Education Grants Program was created to foster
innovative and positive change in the educational system and to support
employees in their volunteer efforts for education. First Union employees who
are involved as parents or volunteers are encouraged to collaborate with local
educators in applying for grant funds.
First Union volunteer Peter Roulhac, Director of Community Programs in Dade
County, FL, talks with students at Holmes Elementary.
(Drawing of man at computer upper left, First Union logo upper right,
background photo of coworkers)
Excellence in Education
First Union And Education - A Lifetime Commitment
FIRST UNION TODAY
COMMUNITY ACTION
OUTREACH PROGRAMS
"Nothing is more important to our well-being as a society than helping our
local schools educate today's children and tomorrow's employees. This is not
a short-term project. This is a lifetime commitment."
John Georgius, Vice Chairman, First Union Corporation
John Georgius talks with student anchors as part of a live satellite broad-
cast during Kids' Day at Work. The show, produced by students in Charlotte,
N.C., was shown company-wide to the more than 3,500 students who came to work
with their parents or mentors on August 9, 1995.
(Background drawing of stocks, First Union logo upper right)
Shareholder Value
We Are Proud Of Our Performance Record - And Optimistic About Our Future
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
FINANCIAL STRENGTH
First Union has provided steady growth in shareholder returns and places a
premium on earning the support and respect of the investment community. Our
growth in dividends and book value ranks among the best in the industry.
(Background drawing of handshake, First Union logo upper right, background
photo of bank)
Shareholder Returns
First Union:
Producing Value
For Shareholders
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
DIVIDENDS
BOOK VALUE
EARNINGS
TOTAL RETURN
MARKET ACTIVITY
Five-Year Total
Return vs S&P 500
(graph appears here with the following plot points:)
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
FTU 0 104 207 200 213 338
S&P 0 30 40 54 56 115
Note: Past performance is no guarantee of future results. Stock price
appreciation plus reinvested dividends.
(Background drawing of handshake, First Union logo upper right, background
photo of bank)
Shareholder Returns
First Union:
Producing Value
For Shareholders
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
DIVIDENDS
BOOK VALUE
EARNINGS
TOTAL RETURN
MARKET ACTIVITY
Since the earliest decades of this century, First Union has prided itself on
a strong partnership with its shareholders. Our fundamental business
approach emphasizes protection of assets and growth of our income and
operations. This focus may be particularly attractive to investors seeking
a company that offers a history of rising dividends in addition to capital
appreciation potential.
(Background drawing of handshake, First Union logo upper right,
background photo of stocks)
Dividends
First Union Has Increased Its
Dividend For 18
Consecutive Years
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
DIVIDENDS
Dividend History
(in dollars per share)
(Column chart)
(graph appears here with the following plot points:)
1978 $ 0.29 1988 $ 0.86
1979 0.31 1989 1.00
1980 0.33 1990 1.08
1981 0.36 1991 1.12
1982 0.40 1992 1.28
1983 0.45 1993 1.50
1984 0.49 1994 1.72
1985 0.58 1995 1.96
1986 0.65 Current 2.08
1987 0.77
Note: Originally reported, adjusted for splits. Past performance is no
guarantee of future results.
(Background drawing of handshake, First Union logo upper right, background
photo of stocks)
Dividends
First Union Has
Increased Its
Dividend For 18
Consecutive Years
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
DIVIDENDS
First Union's consistent record of rising dividends supports our prudent
management approach aimed at long-term growth of income. When
compounded, our dividends also contribute to our long-term total return
performance for our shareholders.
(Background drawing of handshake, First Union logo upper right, background
photo of business center)
Book Value
First Union's Book
Value Has
Increased 20 Of
The Last 21 Years
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
BOOK VALUE
Book Value Per
Share Growth
(in dollars)
(graph appears here with the following plot points:)
1974 $ 5.23 1985 $12.96
1975 5.48 1986 14.55
1976 5.82 1987 16.25
1977 6.02 1988 17.98
1978 6.63 1989 19.37
1979 7.39 1990 20.72
1980 8.30 1991 22.54
1981 8.19 1992 26.08
1982 9.20 1993 28.90
1983 10.66 1994 30.66
1984 12.51 1995 31.89
Note: Originally reported, except that 1995 reflects the consummation of the
First Fidelity merger, adjusted for splits. Past performance is no
guarantee of future results.
(Background drawing of handshake, First Union logo upper right, background
photo of business center)
Book Value
First Union's Book
Value Has Increased 20 Of
The Last 21 Years
SHAREHOLDER VALUE
SHAREHOLDER VALUE
BOOK VALUE
First Union has posted steadily rising book values during the past two
decades of growth. This strength illustrates our success in protecting
capital while simultaneously preparing First Union to take the lead in
the financial services industry of the future.
(Background drawing of handshake, First Union logo upper right, background
photo of dollar bill)
Earnings
First Union Has
Increased Its
Earnings Per Share
In 9 Of The
Last 10 Years
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
EARNINGS
Earnings per
Share History
(in dollars per share)
(graph appears here with the following plot points:)
85 86 87 88 89 90 91 92 93 94 95
2.16 2.53 2.55 2.76 2.40 2.52 2.55 3.72 4.73 5.22 5.30
Note: Originally reported, except that 1995 reflects the consummation of the
First Fidelity merger, adjusted for splits. Past performance is no
guarantee of future results.
(Background drawing of handshake, First Union logo upper right, background
photo of dollar bill)
Earnings
First Union Has
Increased Its
Earnings Per Share
In 9 Of The
Last 10 Years
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
EARNINGS
First Union prides itself on long-term earnings per share growth and
considers it a key barometer of our management ability. Our earnings
growth supports our positive trends in book value and dividend
growth and is a further indication of our sound financial standing.
(Background drawing of handshake, First Union logo upper right, background
photo of adding machine on Wall Street Journal)
Total Return
A 5-Year Average
Compounded Annual Growth
Rate of 34.4%
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
TOTAL RETURN
First Union has provided strong total return of 338% over the past five
years while simultaneously following an ambitious growth strategy.
In the years ahead, as we capitalize on a decade of growth, we believe
investors will share in our success as we take advantage of new business
lines and expanded market outlets.
(Background drawing of handshake, First Union logo upper right,
background photo of adding machine on Wall Street Journal)
Total Return
A 5-Year Average
Compounded Annual Growth
Rate of 34.4%
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
TOTAL RETURN
(graph appears here with the following plot points:)
The Growth of a
$1,000 Investment
in First Union
Common Stock Total $ Value % Change Compound Annual
(12/31/95) (in dollar value) Growth Rate
$1,428 $4,385 $3,839 43% 338% 284% 12.6% 34.4% 14.4%
3 5 10 3 5 10 3 5 10
Years Ago Years Ago Years Ago
Note: Assumes dividends reinvested. All time ranges are through 12/31/95.
(Background drawing of handshake, First Union logo upper right, background
photo of adding machine on Wall Street Journal)
Total Return
A 5-Year Average
Compounded
Annual Growth
Rate of 34.4%
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
TOTAL RETURN
(Column chart)
First Union
S&P Tracking The Growth Of A $1,000 Investment in
First Union Common Stock vs. S&P 500
Interactive Chart - Clicking on a date on the left side of the chart
displays the compound annual return and the value (on 12/31/95) of a $1000
investment made on the selected date. The chart displays returns for both First
Union common stock and the S&P 500.
FIRST UNION TOTAL RETURN S&P 500 TOTAL RETURN
DATE VALUE CMPD ANN RET VALUE CMPD ANN RET
31-Dec-85 $3,839 14.4% $3,976 14.8%
31-Mar-86 $2,967 11.8% $3,497 13.7%
30-Jun-86 $2,861 11.7% $3,302 13.4%
30-Sep-86 $3,226 13.5% $3,558 14.7%
31-Dec-86 $3,330 14.3% $3,356 14.4%
31-Mar-87 $2,847 12.7% $2,759 12.3%
30-Jun-87 $3,138 14.4% $2,636 12.1%
30-Sep-87 $3,307 15.6% $2,473 11.6%
31-Dec-87 $3,994 18.9% $3,189 15.6%
31-Mar-88 $3,977 19.5% $3,014 15.3%
30-Jun-88 $3,267 17.1% $2,834 14.9%
30-Sep-88 $3,361 18.2% $2,825 15.4%
31-Dec-88 $3,379 19.0% $2,742 15.5%
31-Mar-89 $3,385 19.8% $2,554 14.9%
30-Jun-89 $2,884 17.7% $2,357 14.1%
30-Sep-89 $2,950 18.9% $2,123 12.8%
31-Dec-89 $3,480 23.1% $2,082 13.0%
31-Mar-90 $3,952 27.0% $2,146 14.2%
30-Jun-90 $3,691 26.8% $2,016 13.6%
30-Sep-90 $4,522 33.3% $2,342 17.6%
31-Dec-90 $4,385 34.4% $2,146 16.5%
31-Mar-91 $2,998 26.0% $1,879 14.2%
30-Jun-91 $2,942 27.1% $1,883 15.1%
30-Sep-91 $2,461 23.6% $1,785 14.6%
31-Dec-91 $2,144 21.0% $1,648 13.3%
31-Mar-92 $1,784 16.7% $1,694 15.1%
30-Jun-92 $1,671 15.8% $1,661 15.6%
30-Sep-92 $1,731 18.4% $1,611 15.8%
31-Dec-92 $1,428 12.6% $1,533 15.3%
31-Mar-93 $1,293 9.8% $1,469 15.0%
30-Jun-93 $1,266 9.9% $1,462 16.4%
30-Sep-93 $1,265 11.0% $1,426 17.1%
31-Dec-93 $1,440 20.0% $1,395 18.1%
31-Mar-94 $1,435 22.9% $1,439 23.1%
30-Jun-94 $1,283 18.1% $1,441 27.6%
30-Sep-94 $1,355 27.5% $1,375 29.0%
31-Dec-94 $1,401 40.1% $1,376 37.6%
31-Mar-95 $1,322 45.1% $1,254 35.2%
30-Jun-95 $1,254 57.3% $1,145 31.0%
30-Sep-95 $1,101 47.0% $1,060 26.3%
Note: Includes dividends and price appreciation. Past performance is no
guarantee of future results.
(Background drawing of handshake, First Union logo upper right, background
photo of Edward Crutchfield)
Market Activity
A Highly Liquid
Common Stock
With A History Of
Long-Term Price
Appreciation
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
MARKET ACTIVITY
(Combination column and line chart)
Quarter End Price Stock Price & Volume, Quarter End Volume
(in dollars) Dec. 1990 to Dec. 1995 (in millions)
Volume
(graph appears here with the following plot points:)
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
Volume 13.14 19.35 20.40 40.42 16.11 30.76
Price 15.375 30 43.625 41.25 41.375 55.625
(Background drawing of handshake, First Union logo upper right, background
photo of Edward Crutchfield)
Market Activity
A Highly Liquid
Common Stock
With A History Of
Long-Term Price
Appreciation
SHAREHOLDER VALUE
SHAREHOLDER RETURNS
MARKET ACTIVITY
There were 278 million shares outstanding as of December 31, 1995,
giving First Union a market capitalization of $15.5 billion. Average daily
volume of shares traded was 440,000.
(Background drawing of handshake, First Union logo upper right, background
ground view photo of First Union building)
Financial Strength
First Union: The
Sixth Largest Bank
Holding Company
In The U.S.
SHAREHOLDER VALUE
FINANCIAL STRENGTH
HIGHLIGHTS
BALANCE SHEET
BRANCH PRODUCTIVITY
CREDIT QUALITY
DEBT RATINGS
CAPITAL RATIOS
First Union Corporation has assets of $132 billion and over 11 million
customers. Our 1,964 branches constitute the nation's largest banking
network, serving customers from New York to Key West, Florida.
Through 190 offices in 36 states, we also provide other financial services,
ranging from mortgage banking and home equity lending to securities
brokerage, insurance products, investment management and investment banking
services.
(Background drawing of handshake, First Union logo upper right, background
photo of computer printout)
Highlights
1995 Results
Confirmed The
Strength Of Our
Financial Standing
SHAREHOLDER VALUE
FINANCIAL STRENGTH
HIGHLIGHTS
REVENUE GROWTH
RETURN ON ASSETS
RETURN/COMMON EQUITY
1995 was a landmark year for First Union, not only because of the merger
with First Fidelity, but also because of our strong financial performance.
(Background drawing of handshake, First Union logo upper right, background
photo of computer printout)
Revenue Growth
First Union's Net
Interest Income
Results From A
Diversified Earning
Asset Base
SHAREHOLDER VALUE
FINANCIAL STRENGTH
HIGHLIGHTS
REVENUE GROWTH
(graph appears here with the following plot points:)
Tax-Equivalent
Net Interest Income
($ in millions)
85 86 87 88 89 90 91 92 93 94 95
699 1,104 1,162 1,173 1,159 1,398 1,582 2,100 2,867 3,126 4,740
Note: Originally reported, not restated for mergers except that 1995 reflects
the consummation of the First Fidelity merger.
(Background drawing of handshake, First Union logo upper right, background
photo of computer printout)
Revenue Growth
First Union's
Noninterest Income
Has Grown And
Diversified Over
The Last Ten Years
SHAREHOLDER VALUE
FINANCIAL STRENGTH
HIGHLIGHTS
REVENUE GROWTH
(graph appears here with the following plot points:)
Noninterest
Income 1995
($ in millions)
85 86 87 88 89 90 91 92 93 94 95
239 477 447 445 410 551 859 845 1,165 1,166 1,897
Note: Originally reported, not restated for mergers except that 1995 reflects
the consummation of the First Fidelity merger.
(Background drawing of handshake, First Union logo upper right, background
photo of computer printout)
Return On Assets
First Union
Achieved A Return
On Assets Of
1.27% In 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
HIGHLIGHTS
RETURN ON ASSETS
(graph appears here with the following plot points:)
Return On Assets
10-Year History
(%)
85 86 87 88 89 90 91 92 93 94 95
1.18 1.22 1.10 1.06 0.84 0.79 0.77 1.07 1.20 1.27 1.27
Note: Originally reported not restated for mergers except that 1995 reflects
the consummation of the First Fidelity merger. 1995 ROA excludes the
impact of the $73 million after-tax, merger-related restructuring
charge.
(Background drawing of handshake, First Union logo upper right, background
photo of computer printout)
Return On
Common Equity
First Union
Achieved A Return
On Common Equity
Of 17.55% In 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
HIGHLIGHTS
RETURN/COMMON EQUITY
(graph appears here with the following plot points:)
Return On Common
Equity 10-Year History
(%)
85 86 87 88 89 90 91 92 93 94 95
18.03 18.68 16.54 16.16 12.77 12.50 11.85 15.26 17.42 17.04 17.55
Note: Originally reported, not restated for mergers except that 1995 reflects
consummation of the First Fidelity merger. 1995 ROCE excludes the
impact of the $73 million after-tax merger-related restructuring charge.
(Background drawing of handshake, First Union logo upper right, background
photo of building facade)
Balance Sheet
Composition
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BALANCE SHEET
SECURITIES FOR SALE
INVESTMENT SECURITIES
LOANS
DEPOSITS
As of December 31, 1995, the combined First Union and First Fidelity had:
Securities available for sale of $18.2 billion.
Investment securities of $3.1 billion.
Loans of $90.6 billion.
Deposits of $92.6 billion - 93% of which are "core deposits."
(Background drawing of handshake, First Union logo upper right, background
photo of building facade)
Securities
Available For Sale
$18.0 Billion In
Securities Available
For Sale As Of
December 31, 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BALANCE SHEET
SECURITIES FOR SALE
(Pie chart appears here with the following plot points:)
Securities
Available for Sale
($ in millions)
U.S. Treasury 2,960
U.S. Government 8,402
Securities
Collateralized 4,739
Mortgage Obligations
State, County 13
and Municipal
Other 1,879
Total Book Value 17,993
Unrealized Gain 201
Total Market Value 18,194
(Background drawing of handshake, First Union logo upper right, background
photo of building facade)
Investment
Securities
$3.1 Billion In
Investment
Securities As Of
December 31, 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BALANCE SHEET
INVESTMENT SECURITIES
(pie chart appears here with the following plot points)
Investment Securities
($ in millions)
U.S. Government
Securities 1,267
Collateralized
Mortgage Obligations 606
State, County
and Municipal 1,177
Other 90
Total Book Value 3,140
Unrealized Gain 180
Total Market Value 3,320
Note: Reflects the consummation of the First Fidelity merger.
(Background drawing of handshake, First Union logo upper right, background
photo of building facade)
Loans
Our $90.6 Billion
Loan Portfolio Is
Diversified Both By
Product And By
Geography
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BALANCE SHEET
LOANS
(pie chart appears here with the following plot points:)
Loans ($ in millions)
Commercial 24,648
Real Estate Const. 2,506
Real Estate Mortgage 9,992
Leasing 3,170
Foreign 650
Total Commercial: 40,965
Real Estate Mort. 27,274
Bank Card 3,658
Other Installment 20,212
Total Consumer: 51,144
(Background drawing of handshake, First Union logo upper right, background
photo of building facade)
Deposits
93% "Core Deposits"
As Of
December 31, 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BALANCE SHEET
DEPOSITS
(pie chart appears here with the following plot points:)
Deposits ($ in millions)
Noninterest Bearing 17,043
Savings and NOW 24,297
Money Market Accts. 13,113
Other Consumer time 31,945
Total Core Deposits: 86,399
Foreign 3,527
Other Time 2,630
Non Core Deposits: 6,156
(Background drawing of handshake, First Union logo upper right, background
mezzotint of house)
Branch
Productivity
A History Of
Increasing Branch
Efficiency and
Productivity
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BRANCH PRODUCTIVITY
LOANS PER BRANCH
DEPOSITS PER BRANCH
First Union has more than doubled its loans and deposits per branch over the
last ten years.
(Background drawing of handshake, First Union logo upper right, background
mezzotint of house)
Loans
Per Branch
First Union Has A Track
Record Of Increasing
Branch Lending Activity,
Efficiency and Productivity
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BRANCH PRODUCTIVITY
LOANS PER BRANCH
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Loans Per Branch
($ in millions)
85 86 87 88 89 90 91 92 93 94 95
18.8 19.4 21.3 27.0 32.8 34.2 32.0 35.4 36.0 40.3 46.1
Note: Originally reported, not restated for mergers except that 1995 reflects
the consummation of the First Fidelity merger.
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mezzotint of house)
Deposits
Per Branch
First Union Has A Track
Record Of Increasing
Deposits Gathered Through
Our Branch Network
SHAREHOLDER VALUE
FINANCIAL STRENGTH
BRANCH PRODUCTIVITY
DEPOSITS PER BRANCH
(graph appears here with the following plot points:)
Deposits Per Branch
($ in millions)
85 86 87 88 89 90 91 92 93 94 95
20.2 23.5 24.1 28.6 32.3 36.0 36.5 41.8 41.3 44.0 47.1
Note: Originally reported, not restated for mergers except that 1995 reflects
the consummation of the First Fidelity merger.
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Loan Portfolio
Quality
First Union
Consistently Ranks
Among The Top Bank
Holding Companies
In Portfolio Quality
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CREDIT QUALITY
NET CHARGE-OFFS
NON-PERFORMING ASSETS
As of December 31, 1995, First Union's Net Charge-Off Rate of
0.41% ranked it 10th among the 25 largest bank holding companies.
In addition, our already low Nonperforming Assets ratio has dropped
every year for five years in a row.
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Net Charge-Offs
Ten Year Average Net
Charge-Offs As A
Percentage Of Average
Net Loans Were 0.58%
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CREDIT QUALITY
NET CHARGE-OFFS
At 0.58%, First Union's Ten-Year Average Net Charge-Off rate ranks among the
best in the industry.
Ten Year Average Rank Bank Holding Company 1986-1995
Net Charge-Off 1 WACHOVIA 0.56
2 FIRST UNION 0.58
3 SUNTRUST 0.61
4 KEYCORP 0.66
5 BARNETT BANKS 0.69
Note: Originally reported, not restated for mergers, expect that 1995 reflects
the consummation of the First Fidelity merger.
(Background drawing of handshake, First Union logo upper right)
Nonperforming
Assets
First Union Has
Steadily Improved
Asset Quality Over
The Last Five Years
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CREDIT QUALITY
NON-PERFORMING ASSETS
(graph appears here with the following plot points:)
First Union NPAs
As A Percentage Of
Net Loans And
Foreclosed Properties
(%)
91 92 93 94 95
3.71 2.87 1.95 1.03 0.91
Note: Originally reported, not restated for mergers except that 1995 reflects
the consummation of the First Fidelity Merger.
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Debt Ratings
First Union's Merger
With First Fidelity
Has Strengthened
First Union's Credit
Standing
SHAREHOLDER VALUE
FINANCIAL STRENGTH
DEBT RATINGS
First Union's senior debt, subordinated debt and commercial paper all are
investment grade obligations according to Moody's, Standard & Poors,
Thomson Bankwatch and Fitch rating services.
Moody's S&P Thomson Bankwatch Fitch
Senior Debt A1 A A+ A+
Subordinated Debt A2 A- A+ --
Commercial Paper P-1 A-1 TWB-1 F1+
<Paper>
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photo of government building)
Capital Ratios
Our Risk-Based
Capital Ratios As Of
December 31, 1995,
Were Strong
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CAPITAL RATIOS
TIER 1 RATIO
TOTAL CAPITAL RATIOS
LEVERAGE RATIO
First Union has Capital Ratios that exceed regulatory minimums,
evidence of our strong financial foundation.
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photo of government building)
Tier 1 Ratio
First Union And First Fidelity
Posted A Combined Tier 1
Capital Ratio Of 6.62%
As Of December 31, 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CAPITAL RATIOS
TIER 1 RATIO
(graph appears with the following points:)
Tier 1
Capital Ratio
(%)
Tier 1 Regulatory
Ratio Minimum
6.62 4
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photo of government building)
Total Capital Ratio
First Union And First Fidelity
Posted A Combined Total
Capital Ratio Of 11.33%
As Of December 31, 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CAPITAL RATIOS
TOTAL CAPITAL RATIOS
(graph appears here with the following plot points:)
Total
Capital Ratio
(%)
Total Capital Regulatory
Ratio Minimum
11.33 8
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photo of government building)
Leverage Ratio
First Union And First Fidelity
Posted A Combined
Leverage Ratio Of 5.49%
As Of December 31, 1995
SHAREHOLDER VALUE
FINANCIAL STRENGTH
CAPITAL RATIOS
LEVERAGE RATIO
(graph appears here with the following plot points:)
Leverage Ratio
(%)
Leverage Regulatory
Ratio Minimum
5.49 5
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Business Lines
A Full Range of Financial Services For Corporations & Individuals
BUSINESS LINES
CAPITAL MARKETS
CAPITAL MANAGEMENT
CREDIT CARD PRODUCTS
MORTGAGE LENDING
BANKING
First Union offers individuals and corporations a full range of banking and
investment services. We specialize in providing tailored and well-coordinated
services combined with superior personal attention. We are deeply committed
to innovation, particularly in the areas of services and alternative delivery
channels.
(Drawing of building steps upper left, background photo of columns,
First Union logo upper right, drawing of
columns upper left, photo of Jerry Schmitt & Dan Mathis)
Capital Markets Group
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
CAPITAL FORMATION
CORPORATE LENDING
INVESTMENT BANKING
CAPITAL PARTNERS
RISK MANAGEMENT
INT'L TRADE FINANCE
The Ability To Satisfy A Full Range Of Corporate Financing And Risk Management
Needs
"We have taken our commitment to servicing clients' needs to the next level by
building capital markets capabilities in house-with some of the most talented
resources in the industry. These capital markets solutions were needed by many
of our corporate customers. We have put ourselves in a position to meet those
needs which will benefit both our customers and First Union."
Jerry Schmitt
"We have been gratified with the level of client interest and acceptance of our
capital markets products and services over the past two years. Deal volume
since 1994 and a full pipeline for first quarter 1996 confirmed our
expectations of pent-up demand within our corporate customer base."
Dan Mathis
Jerry Schmitt & Dan Mathis
Executive Vice Presidents,
Managing Directors,
Capital Markets Group
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background photo of columns)
Capital Markets Group
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
CAPITAL FORMATION
CORPORATE LENDING
INVESTMENT BANKING
CAPITAL PARTNERS
RISK MANAGEMENT
INT'L TRADE FINANCE
The Ability To Satisfy A Full Range Of Corporate Financing And Risk Management
Needs
In 1994, First Union committed to a major initiative designed to build our
resources in the capital markets area. This commitment was in direct response
to the demands of our corporate banking clients seeking capital market
solutions from a relationship-based financial services provider.
Today, our Capital Markets Group includes over 1,100 experienced professionals
with the ability to structure and execute financing solutions in all public and
private markets. We specialize in serving middle- to upper middle-market
companies across the U.S.
Our responsive solutions are as individual as our clients and are implemented
under the direction of experienced relationship managers and industry
specialists.
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background photo of columns)
Capital Markets Group
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
CAPITAL FORMATION
CORPORATE LENDING
INVESTMENT BANKING
CAPITAL PARTNERS
RISK MANAGEMENT
INT'L TRADE FINANCE
The Ability To Satisfy A Full Range Of Corporate Financing And Risk Management
Needs
(graph appears here with the following plot points:)
Capital Markets
Net Income History Pre-Tax Fee Income As
Net Income % Of Revenue
155 243 39 54
1994 1995 1994 1995
($ in millions) (%)
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background photo of suburbs)
Real Estate Financing
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
COMM. REAL ESTATE
CONSUMER MORTGAGE
AFFORDABLE HOUSING
Our Thorough Understanding Of The Industry Contributes To Effective
Financing Solutions
First Union offers a complete range of integrated investment banking
and financing services for companies engaged in real estate-related
activities. By calling on the expertise of our Capital Markets Group, we
can create customized financing solutions that include securitization of
both commercial real-estate and consumer mortgage products.
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background photo of suburbs)
Commercial Real Estate
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
COMM. REAL ESTATE
Serving A Wide Range Of Commercial Real Estate Clients
First Union specializes in commercial real estate lending and
securitization. Our client base includes public and private development
companies, financial services institutions holding real estate portfolios
and operating businesses active in real estate-intensive areas.
Thanks to our familiarity with the industry, we have been able to build
a rapid presence in this field. For example, during our start-up year of
1995, First Union participated in conduit financing of more than $650
million, more than any other conduit on Wall Street. 35 percent of that
commercial real estate business came from within our own franchise.
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background photo of suburbs)
Commercial Real Estate
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
COMM. REAL ESTATE
Securing Equity Capital For An Industry Leader
Recently, Merry Land & Investment Company, a leader in the real
estate investment trust industry, engaged First Union to secure equity
capital for its operations. First Union successfully placed $100 million
in cumulative convertible preferred stock in the market, providing
the company with the financing it needed to pursue new opportunities.
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background photo of suburbs)
Consumer Mortgages
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
CONSUMER MORTGAGE
Origination, Securitization And Placement
Working together, First Union Home Equity Bank and First Union
Capital Markets prove that synergy exists between consumer bankers
and investment bankers.
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background photo of suburbs)
Consumer Mortgages
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
CONSUMER MORTGAGE
Co-Managing A $130 Million Home Equity Offering
In November of 1995, First Union joined Lehman Brothers in
co-managing a $130 million home equity securities offering.
The deal marked First Union's first public offering involving home
equity loan asset-backed securities. This was First Union Capital
Markets Corporation's third major home equity securitization
transaction in 1995. Earlier in 1995, we had privately placed two
other home equity portfolios.
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background photo of house)
Affordable Housing
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
AFFORDABLE HOUSING
Committed To The Financial Health Of Our Communities
First Union has joined forces with local organizations in numerous
communities within our operating region to provide the financing for
affordable housing programs. We are proud to be an industry leader
in contributing to home ownership opportunities for qualifying
individuals and families with incomes less than their area's medians.
During 1995, First Union made Affordable Housing equity investments
totalling $121 million, representing 3,431 housing units.
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background photo of house)
Affordable Housing
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
AFFORDABLE HOUSING
Our Affordable Housing Activities Take Place In Communities Across The U.S.
Recently, The Resource Foundation (TRF) in Nashville turned to First
Union for help in purchasing 59 condominiums from the Resolution
Trust Corporation for sale to families and individuals with incomes of
80% or less than Nashville's median income.
First Union provided the financing needed as well as affordable
mortgages to qualified buyers that featured flexible terms and minimal
down payment requirements. For these people, the classic American
dream, once an unlikely wish, is now a reality.
(Drawing of building steps upper left, First Union logo upper right,
background photo of house)
Affordable Housing
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
AFFORDABLE HOUSING
Saving 70 Homes In Tampa, Florida
Recently, a partnership formed by First Union, the City of Tampa
and several non-profit agencies was able to preserve houses originally
planned for demolition during the construction of Tampa's Veteran
Expressway.
A total of 70 homes were moved from the expressway site to empty lots
owned by the city and made available at a reduced cost to qualifying
lower income Tampa residents.
First Union provided over $2 million in affordable home mortgage loans
for the new owners.
(Drawing of building steps upper left, First Union logo upper right,
background photo of house)
Affordable Housing
BUSINESS LINES
CAPITAL MARKETS
REAL ESTATE FINANCE
AFFORDABLE HOUSING
Building Homes For The Elderly
First Union is providing a $2.9 million construction loan and is structuring
the $3.0 million equity investment in Philadelphia's Yorktown Arms
Apartments. The 56 unit complex for the low and moderate income
elderly is a cooperation effort involving First Union and the
City of Philadelphia.
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background photo of columns)
Capital Formation
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
HIGH YIELD
INVESTMENT GRADE
PUBLIC FINANCE
Offering Access To Public Markets Under The Direction Of Experienced
Professionals
In June of 1995, First Union received final approval from the Federal
Reserve Board to underwrite debt and equity securities, making us one
of only ten U.S. bank holding companies capable of underwriting
corporate debt securities. In response, we have built a professional staff
including individuals from virtually every major investment bank on
Wall Street. Investment services are provided through our subsidiary,
First Union Capital Markets Corporation.
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background photo of columns)
High Yield Activity
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
HIGH YIELD
Client-Focused Solutions That Meet Capital Structure Requirements
Our High Yield area provides clients with origination and research
services coupled with sales and trading designed to help them raise
financing efficiently while meeting their particular capital structure
requirements.
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background photo of columns)
High Yield Activity
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
HIGH YIELD
Offering Demonstrated Expertise In Key Industries
In October 1995, First Union co-managed a $100 million offering for
GranCare Inc., a diversified health care company that operates nursing
homes and institutional pharmacies in addition to providing home and
hospice care, rehabilitative therapies, and laboratory and
radiological services.
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background photo of columns)
Investment Grade
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
INVESTMENT GRADE
Offering Our Corporate Clients Fixed-Income Expertise
First Union offers its corporate clients a full range of investment-grade
fixed-income expertise, including medium- and long-term traditional
taxable bond issues as well as tailored structures involving fixed- and
variable-rate preferred features. In 1995, First Union participated
in 29 investment-grade fixed-income offerings totaling more than
$4.25 billion.
Our services in this area are significantly enhanced by our industry
specialty groups, who contribute knowledge of company and market
requirements within their particular areas of expertise.
(Drawing of building steps upper left, First Union logo upper right,
background photo of columns)
Investment Grade
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
INVESTMENT GRADE
Over $100 Million In Debt Issued For TransLeasing International
In October 1995, First Union participated in the underwriting and
placement of $89.7 million in senior notes and $10.8 million in
subordinated notes for TransLeasing International.
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background photos of columns, highways)
Public Finance
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
PUBLIC FINANCE
First Union Provides All Tax-Exempt Financing Services For Public Clients
First Union provides tax-exempt bond underwriting and financial
advisory services for municipalities, state and local governments,
universities, hospital authorities and other public entities seeking
financing for a variety of projects. In addition, First Union provides
municipal leasing for public entities.
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background photos of columns, highways)
Public Finance
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
PUBLIC FINANCE
First Union Provides All Tax-Exempt Financing Services For Public Clients
(graph appears here with the following plot points:)
Senior Manager
Assignments
($ in millions) 325 495
1994 1995
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background photos of columns, highways)
Public Finance
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
PUBLIC FINANCE
Leveraging A Strong Regional Presence With Municipal Expertise
Our strong regional presence and relationship-based service style
contributed to our success for this key area of capital financing.
(Drawing of building steps upper left, First Union logo upper right,
background photos of columns, highways)
Public Finance
BUSINESS LINES
CAPITAL MARKETS
CAPITAL FORMATION
PUBLIC FINANCE
Over $150 Million In General Obligation Bonds For Charlotte
In September 1995, First Union acted as senior manager in bringing
$151.5 million in General Obligation Bonds to market for the City of
Charlotte, N.C.
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background photo of business meeting)
Corporate Lending
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
SPECIALIZED LENDING
LEVERAGED FINANCE
U.S. BANKING
LEASE FINANCING
Tailored Solutions That Respect Client Financial Abilities & Needs
Our Corporate Lending Group helps the customer use traditional loans
and capital markets solutions to achieve their financial goals. We offer
customized solutions and tailored programs that fit our clients' balance
sheet and financing requirements.
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background photo of business meeting)
Specialized Lending
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
SPECIALIZED LENDING
Helping Companies In Selected Industry Segments Maximize Their Potential
First Union has developed the special expertise to become the valued
financial partner to companies in selected industries.
We're proud to offer a full range of lending and investment banking
services to growing companies in such industries as Health Care,
Media/Communications, Financial Institutions, Mortgage Banking
and Sports Finance.
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background photo of business meeting, baseball lower left)
Specialized Lending
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
SPECIALIZED LENDING
Proven Ability In The Past Means Promise For Tomorrow
In July of 1995, First Union arranged $75 million in revolving credit for
the Tampa Bay Devil Rays - a major league baseball franchise.
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background photo of business meeting)
Leveraged Finance
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
LEVERAGED FINANCE
Cost-Efficient Financing For Companies On The Move
First Union specializes in structuring and issuing cash-flow-based
senior debt to facilitate transactions such as leveraged buyouts,
recapitalizations, mergers and acquisitions, stock repurchases and
business expansions.
First Union's leveraged finance activity is characterized by strong credit
quality, low charge-offs, better than average margins and strong
contributions to fee income.
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background photo of business meeting)
Leveraged Finance
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
LEVERAGED FINANCE
Cost-Efficient Financing For Expanding Companies
Typically less expensive than other sources of capital, leveraged
financing requires a detailed knowledge of the borrower's corporate
financial structure and special industry considerations that may apply.
First Union's focus on key industries and highly personalized approach
to client relationships provide the expertise needed to structure effective
leveraged solutions.
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background photo of business meeting, Lason Systems logo lower left)
Leveraged Finance
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
LEVERAGED FINANCE
First Union's Leveraged Finance Group
Lason Systems:
Agent for $25 million senior debt facility in January of 1995
Playtex Products Inc.:
Commitment for $25 million Senior Credit Facility
Clayton, Dubbier & Rice:
Co-agented and committed $75 million in the $2.7 billion acquisition of
Riverwood International Corporation
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background photos of business meeting, First Union building)
U.S. Banking
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
U.S. BANKING
Integrated Financial Services For U.S.-Based Corporations
First Union's U.S. Banking Group provides lending and capital markets
solutions to companies outside our geographic franchise. Our highly
skilled staff of professionals is capable of presenting our capital and
risk management products to our select clients.
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background photo of business meeting)
Lease Financing
BUSINESS LINES
CAPITAL MARKETS
CORPORATE LENDING
LEASE FINANCING
Capital Equipment Financing Customized To Client Needs
First Union can provide lease financing services to our corporate clients,
helping them gain access to the capital equipment they need for
immediate expansion without impairing their balance sheets.
Our creativity often results in greater capital flexibility and lower costs
while our leasing structures and terms can be customized to the client's
individual requirements.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man & woman)
Investment Banking
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
ASSET SECURITIZATION
M&A
PRIVATE PLACEMENTS
LOAN SYNDICATION
Capital Formation & Advice For A Diverse Clientele
First Union assists companies in attaining their optimum financial structures
through a variety of services. We offer asset securitization, private
placement and loan syndication, public debt underwriting and distribution
services as well as a full range of corporate finance advice involving mergers
and acquisitions and business unit analysis.
Our Investment Banking specialists work with Relationship Managers to help
them identify the services and products that will best benefit their clients
and augment this expertise with input from a wide range of industry specialists.
This team approach provides a superior understanding of company- and
industry-specific needs, resulting in more effective investment banking
solutions.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man & woman)
Asset Securitization
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
ASSET SECURITIZATION
Innovative Financing To Preserve Balance Sheet Strength
First Union serves companies with large pools of financial assets such as
receivables or consumer loans by providing asset securitization services.
The structured sale of securitized pools of assets provides our clients
with off-balance sheet financing, which in turn improves leverage and
return-on-assets ratios.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man & woman)
Asset Securitization
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
ASSET SECURITIZATION
Securitized Funding Success In Both Lead And Co-Managed Deals
First Union's primary asset securitization activity in 1995 was
generated through securitized funding, with several lead and
co-managed deals also providing significant contributions to total
production. First Union was awarded competitive mandates from 15
clients for distribution value exceeding $1 billion over the next 5
quarters. Other key deals included:
* A $138 million securitization with Canadian-based Newcourt Receivables.
* A lead-managed public underwriting for Trans Leasing International's
issuance of $100 million in asset-backed securities.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man and woman)
Asset Securitization
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
ASSET SECURITIZATION
Securitized Funding Success In Both Lead And Co-Managed Deals
(graph appears here with the following plot points:)
1995 Asset Securitization Securitized Lead- Co- Total
Funding* Managed Managed
Amount
($ in millions) 2,800 142 200 3,142
Deals
Closed 15 2 1 18
*Includes $2 billion of First Union credit cards structured
by Asset Securitization.
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background photo of man and woman)
Mergers and Acquisitions
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
M&A
Making The Most Of Our Middle-Market Expertise
First Union is pleased to be able to offer its middle-market clients
mergers and acquisitions services as well as on-going corporate
structuring advice or transactional assistance with divestitures and
corporate reorganizations.
Our focus on middle-market companies makes us a good match for
closely- or privately-held companies seeking to free up liquidity for
shareholders or implement expansion plans. We are also skilled in a
number of key middle-market industries, lending an added measure of
expertise in these areas.
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background photo of man and woman)
Private Placements
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
PRIVATE PLACEMENTS
First Union Offers An Outstanding Private Placement Track Record
First Union has an outstanding track record in structuring and
arranging the placement of corporate senior and subordinated debt,
preferred and common stock and other hybrid securities with institutional
investors. Our placements are customized transactions with negotiated
restrictions and covenants as well as flexible security provisions.
Our ability in this area is enhanced by our access to multiple resources,
a widespread potential investor base, our ability to structure flexible
debt terms and our experience.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man & woman)
Private Placements
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
PRIVATE PLACEMENTS
We Offer Our Clients Comprehensive Private Placement Expertise
Our recently expanded capabilities in the Capital Markets area has
increased the range of our Private Placement products and increased our
ability to offer coordinated services. This comprehensive expertise can result
in faster and more convenient Private Placements for First Union clients.
In addition, First Union has amassed a wide network of institutional
investors with interest in long-term financings and can access a broad
market base. This puts us in an advantageous position to match a company's
financial needs with market preferences. We also have the ability and
experience needed to expand market appetite and increase competition among
investors to achieve the most favorable rates for our clients.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man and woman)
Private Placements
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
PRIVATE PLACEMENTS
We Have Successfully Served Clients In A Number Of Industries
First Union's Private Placement expertise spans a wide spectrum of
industry lines. Recently, we have completed transactions for:
*$80 million in Senior Notes for Conair Corporation. Conair is an
international consumer products company.
*$60 million in Senior Secured Notes for Vancouver Basketball Limited
Partnership.
*$22 million in Senior Notes for WLR Foods. WRL is a Roanoke, Virginia
based food company.
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background photo of man & woman)
Loan Syndications
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
LOAN SYNDICATION
Offering Clients Experience & Market Access
First Union offers clients Loan Syndication services through the efforts
of a specialized team with years of experience structuring and placing
transactions. To our clients, this means the proven ability to create the
best structure at an appropriate price.
During 1995, First Union ranked 12th in "Agent Only" transactions
underwriting 58 deals worth $9.3 billion.
First Union was "Agent" or "Co-Agent" on 95 deals totalling $37 billion.
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background photo of man and woman)
Loan Syndications
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
LOAN SYNDICATION
Offering Clients A Broad Array Of Financing Alternatives
First Union's Loan Syndication capabilities offer customers a broad
array of possibilities. For example, we can originate large-dollar loans,
then distribute them to other banks, opening a window to a larger pool of
liquidity than an individual bank commitment could provide while offering
the identical terms and conditions contained in a single credit agreement.
First Union's size and industry standing is an advantage in this field.
It allows our clients to benefit from larger transactions and attracts a
greater pool of co-lenders.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man and woman, photo of Bob Healy, Managing Director,
Loan Syndications)
Loan Syndications
BUSINESS LINES
CAPITAL MARKETS
INVESTMENT BANKING
LOAN SYNDICATION
First Union Is A Highly Active Syndications Agent
First Union's Loan Syndication experience includes the following sample
transactions completed in 1995:
*$600 million for Conseco Inc. in March of 1995. Conseco owns, operates and
provides services to companies primarily in the life insurance industry.
*$100 million syndicated for Rural/Metro Corporation in October of 1995.
*$500 million credit facility arranged for Darden Restaurants in May of 1995.
Darden is the largest casual-dining company in the U.S. and operator of the
Red Lobster and Olive Garden restaurant chains.
*$200 million syndicated for Insignia, completed in December of 1995.
"That call was on a Friday. And on Monday, we gave them a commitment
letter for a $500 million underwritten transaction. And they called us Monday
afternoon and said, `You're our new agent.' CUT TO: It's really teamwork, which
can sound cliche, but the investment banking business is very much a
team game."
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Capital Partners
BUSINESS LINES
CAPITAL MARKETS
CAPITAL PARTNERS
Innovative Financing Solutions For Leveraged Transactions
First Union Capital Partners is a merchant banking affiliate offering
equity and subordinated debt investment capital to finance leveraged
transactions. These transactions include management buyouts and
recapitalizations and other special situations.
Capital Partners works with management teams as a strong financial
partner by providing strategic advice and capital to build their
businesses and create long-term equity value for all shareholders.
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Capital Partners
BUSINESS LINES
CAPITAL MARKETS
CAPITAL PARTNERS
Capital For Growing Companies
Capital Partners makes equity investments in companies that require capital for
internal expansion or to complete strategic acquisitions. Capital Partners
acts as a supportive, long-term investor for superior management teams with
the vision to identify industry opportunities and the operating expertise to
successfully grow their businesses.
As of the end of 1995, Capital Partners had deployed over $400 million in
capital and had unrealized portfolio gains of $90 million.
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Capital Partners
BUSINESS LINES
CAPITAL MARKETS
CAPITAL PARTNERS
A Vital Component Of Our Client-Focused Services
Capital Partners often works with other areas of First Union Capital
Markets such as Leveraged Finance, Specialized Industries and Private
Placements in structuring comprehensive financing strategies that provide
optimum flexibility for our clients.
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Risk Management Products
BUSINESS LINES
CAPITAL MARKETS
RISK MANAGEMENT
High-Quality, Effective Risk Management Products
Today's business environment is volatile with many different risks.
Risks to corporate balance sheets and income statements from interest
rate or currency movements can be reduced or eliminated with the help
of First Union risk management professionals. We provide our clients
with a full range of risk management products including: swaps, floors,
caps, currency forwards and options.
Our services are designed to help clients hedge their exposure to interest
rate changes as well as currency movements.
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Risk Management Products
BUSINESS LINES
CAPITAL MARKETS
RISK MANAGEMENT
High-Quality, Effective Risk Management Products
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Derivatives Activity 31 38
Revenues
($ in millions)
1994 1995
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Risk Management Products
BUSINESS LINES
CAPITAL MARKETS
RISK MANAGEMENT
A Leading Market Maker In Derivatives Products
First Union is among a small group of market makers in such derivatives
as swaps, swaptions, caps and collars. To the customer, this results in
direct market pricing which can translate into significant savings.
We offer exceptional experience in helping mid-sized companies control
their exposure to a variety of risks. Our products are typically tailored
to each client's specific needs.
Our superior experience in evaluating and off-setting risk as a bank
gives us an advantage in the structuring of derivatives for our
client base.
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Risk Management Products
BUSINESS LINES
CAPITAL MARKETS
RISK MANAGEMENT
Our Growing Foreign Exchange Capability Adds Value To Our Services
As increasing numbers of firms conduct business off-shore, it is critical
to maximize return on capital despite fluctuating currency values. First
Union's foreign exchange capability helps companies with currency
exposure manage their foreign currency risk. First Union trades in all
major markets and most emerging markets.
Companies with foreign operations will be able to take advantage of
our multi-currency deposit and lending capabilities, currency hedging
capabilities as well as around-the-clock foreign exchange services.
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International Trade Finance
BUSINESS LINES
CAPITAL MARKETS
INT'L TRADE FINANCE
One Of Our Most Vital Areas Of Expertise
Global expertise, superior technology and a far-reaching correspondent
network allow First Union to offer a comprehensive array of international
banking services. Trade services, correspondent banking services,
structured trade finance and international corporate banking services are
all available to U.S. companies that do business globally, as well as to
foreign companies with U.S. subsidiaries.
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Risk Management Products
BUSINESS LINES
CAPITAL MARKETS
RISK MANAGEMENT
One of Our Most Vital Areas of Expertise
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First Union's
International Trade
Transaction Volume 4.0 5.7
($ in billions)
1994 1995
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International Trade Finance
BUSINESS LINES
CAPITAL MARKETS
INT'L TRADE FINANCE
Over 1,300 Correspondent Banking Partnerships In 140 Countries
First Union is constantly expanding its presence in the international
banking arena to keep pace with growing client demand. We have
now developed over 1,300 correspondent banking partnerships with
established banks to facilitate trade in 140 countries throughout
the world.
Our trade services include loans, cash management services, bankers'
acceptances, trade and standby Letters of Credit, foreign exchange,
international funds transfers, drafts and collections.
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International Trade Finance
BUSINESS LINES
CAPITAL MARKETS
INT'L TRADE FINANCE
Offering Expertise In All Areas Of Trade Finance
Our structured trade finance area can provide U.S. Government
guarantee and insurance programs, private finance programs for
transactions and risk-mitigation structuring.
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International Trade Finance
BUSINESS LINES
CAPITAL MARKETS
INT'L TRADE FINANCE
An Historic Partnership Is Formed With South Africa
First Union pioneered the first major global partnership with South
Africa. When trade sanctions were lifted, we were the first U.S. banking
company to sign a credit facility agreement with a South African bank,
in conjunction with the Export-Import Bank of the United States. This
facility is being used to support U.S. companies in exporting capital
goods to South Africa.
As a result, since year-end 1993, our International Division has handled
more than $200 million in trade transactions from South African banks,
as well as transactions for more than 250 U.S. exporters.
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International Trade Finance
BUSINESS LINES
CAPITAL MARKETS
INT'L TRADE FINANCE
Forging Ties With A Newly-Opened China
First Union's second historic global partnership is with The Hongkong
Chinese Bank Ltd. We have begun a joint venture that will support U.S.
companies with their trade in Asia.
The company - FUN HKCB Asia, Ltd. - is expected to process $1.0
billion in annual trade transactions by the end of the decade.
In November of 1995, First Union announced an alliance with First
Factors Corporation to facilitate factoring service to Asian exporters for
their sales to U.S. and Europe.
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Capital Management Group
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
INDIVIDUAL SERVICES
MUTUAL FUNDS
INSURANCE PRODUCTS
INVESTMENT MGMT
BROKERAGE
INSTITUTIONAL SVCS
A Conglomerate of
Asset-Management
Businesses Allied With One
Of The Nation's Strongest
Banking Companies
* Investment Services * Insurance
* Financial Planning * Corporate Trust
* Personal Trust * Brokerage
* IRAs * Private Banking
* CAP Accounts * Pension Management
* Mutual Funds * 401(k)
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Capital Management Group
A Conglomerate Of Asset-Management Businesses Allied With One Of The
Nation's Strongest Banking Companies
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
INDIVIDUAL SERVICES
MUTUAL FUNDS
INSURANCE PRODUCTS
INVESTMENT MGMT
BROKERAGE
INSTITUTIONAL SVCS
(PIE CHART APPEARS HERE WITH THE FOLLOWING PLOT POINTS:)
Assets Under Management
as of 12/31/95
($ in billions)
Employee Benefit Trust 9.9
Personal Trust, Endowments,
Foundations and Estates 15.9
Investment Agent 6.5
Mutual Funds 13.2
TOTAL 45.5
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An Integrated Service Approach
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Team Power Ensures Consistent, Appropriate Services
By approaching the needs of our clients from every angle rather than from
the vantage point of one business unit or representative, we provide clients
with well-coordinated investment and trust strategies.
"Our strategy in CMG is simple: to bring customers on board and then provide
so thoroughly for their financial needs - all through life - that they never
leave."
Don McMullen
Executive Vice President and
Head of Capital Management Group
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CMG Strategy
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Helping Customers Meet Their Goals
Banks traditionally offer customers checking and saving accounts, auto loans
and mortgages. Commercially, they offer lockbox services and small-business
loans. These are valuable services - but they are aimed at only a few of the
many financial goals customers set for themselves.
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CMG Strategy
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Beyond The Basics
In addition to the basics, customers on the retail side also need help
with: educating their children, investing their money, planning for
retirement and managing their growing assets.
Commercial customers need help such as: investment management, trusteeship
and record-keeping for pension plans, 401(k)s and their own stock and bond
offerings.
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CMG Strategy
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Don't Get Sidetracked!
We don't want customers to get sidetracked - going somewhere besides
First Union to purchase the financial products and services they need.
CMG'S goal is to bring customers on board to First Union and provide for
their financial needs so thoroughly that they never leave.
CMG Aims To...
* Help customers achieve their financial goals by anticipating
their needs.
* Offer a full range of value-added products and individualized
services.
* Build customer satisfaction and loyalty along the way.
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CMG Market Potential
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Aging Baby Boomers
77 million baby boomers are hurtling toward age 50. They want to live
comfortably for 20 years after retiring, so they need to maximize their
earnings potential now - and single-digit returns don't cut it. In
addition, between $8 trillion and $12 trillion will transfer across
generations in the next 15 years - making the baby boomers the first
generation to inherit substantial wealth.
This segment of the market will need investment products, financial
planning, and trust and estate planning services over the next four decades.
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CMG Market Potential
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Poised To Take Advantage Of Opportunities
CMG has:
* An array of financial products as complete as any in the industry.
* A distribution network stretching from Connecticut to the
Florida Keys - the nation's most accessible.
* A large sales force that is both knowledgeable and motivated.
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CMG Market Potential
BUSINESS LINES
CAPITAL MANAGEMENT
INTEGRATED APPROACH
Facts And Possibilities
Fact: First Union has 11 million customers...
... If 5% choose to open a CAP Account, we will have
210,000 customers.
... If 20% purchase a First Union IRA, we will have
2 million customers.
... If 30% use our Brokerage services, we will be serving
more than 3 million customers.
Fact: Investors in the U.S. have placed $3 trillion in mutual funds...
... If 3% of that money is invested in First Union funds,
our mutual fund assets will top $90 billion.
Fact: Employees in the U.S. currently have invested $1.2 trillion in
401(k) plans...
... If 2% of that money is invested in a First Union plan,
our 401(k) assets will top $24 billion.
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Individual Services
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
PRIVATE BANKING
FINANCIAL PLANNING
PERSONAL TRUST
IRAs
CAP ACCOUNT
A Variety Of Individual Services
First Union offers customers an array of products and
individualized services to help them meet their
long-term financial goals. These include Private
Banking, Financial Planning, Personal Trust,
Individual Retirement Accounts (IRAs) and
CAP Accounts (Centralized Asset Management Accounts).
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Private Banking
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
PRIVATE BANKING
A Relationship Orientation
First Union's relationship-based orientation puts us in a good position to
serve these clients who tend to value regular personal contact. Private
bankers can leverage the power of other First Union products and services,
such as mutual funds, trust services and insurance.
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Private Banking
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
PRIVATE BANKING
Targeting The First Union "Frequent Flier"
Private banking services are aimed at the frequent users of all First Union
products and services - individuals, families, corporations, partnerships,
professional groups or foundations with a common financial focus.
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Private Banking
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
PRIVATE BANKING
Our Strong Local Presence Equals Quality And Convenience
First Union's Private Banking arm provides its services through a
powerful distribution network that includes nearly 2,000 First Union branches
along the eastern seaboard.
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Financial Planning
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
FINANCIAL PLANNING
A Brand-New, Value-Added Service For Customers
Every Capital Management area within First Union is moving toward a financial
planning approach. A pilot program is scheduled for spring 1996.
Market Potential: Baby boomers, twenty-somethings and soon-to-be
retirees - all of whom require guidance in setting and meeting their
financial goals.
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Financial Planning
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
FINANCIAL PLANNING
Offering Every Customer A Solid Financial Plan
First Union offers a complete array of products to help implement the changing
needs of individuals as they move through the various stages of their lives.
These products include traditional loans, checking and savings accounts
tailored to a client's individual needs, certificates of deposit, mutual
funds, credit cards and other loan products.
These products are backed by customized strategies in such areas as tax and
trust planning and investment management.
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Personal Trust
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
PERSONAL TRUST
More Than 50 Years Of Expertise In Investment Management And Trustee Services
We help individuals with a full range of wealth management needs such as
estate planning, trusteeship and investment management through 55 locations
with 275 officers, administrators and salespeople servicing personal trusts.
Our wide-ranging presence allows us to provide the personal attention so
necessary to discreet and effective trust services. Our merger with
First Fidelity establishes a strong presence for personal trust administration
in the Northeast.
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Personal Trust
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
PERSONAL TRUST
Personal Trust Potential
With the coming wealth transfer of between $8 trillion and $12 trillion across
generations in the next 15 years, there is great potential in this business.
With the aging of the population, there is an increasing need for the tax-wise
estate planning we provide.
First Union is well-positioned to serve these customers, as we are in four of
the top five wealth markets in the U.S. - the New York City area, the
Washington, D.C. area, the West Palm Beach/Boca Raton area and the
Hartford, Conn. area.
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IRA Products
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
IRAs
First Union Is A National Leader In Providing IRA Products
First Union is the nation's Number 1 bank-based provider of Individual
Retirement Account (IRA) products. We have nearly $9.6 billion in IRA
assets under management.
We have 650,000 IRA customers and more than 1.2 million accounts.
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IRA Products
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
IRAs
Impressive IRA Asset Growth
We have averaged 20% annual asset growth in IRAs in the past decade.
Historical Growth of IRA Assets, 1985-1995
(GRAPH)
($ in millions)
85 230
86 458
87 622
88 791
89 941
90 1,593
91 2,048
92 2,603
93 5,099
94 5,393
95 9,600
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IRA Products
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
IRAs
IRA Potential: Total Choice In Self-Directed IRAs
First Union ties IRAs to our capital management capability, making it easy
for customers to have all their IRAs in one place, whether they want their
IRAs in CDs, mutual funds, brokerage or other investment products.
The market for this product is likely to expand with the aging of the
population along with the anticipated lifting of the federal caps and limits
from IRAs. We are well positioned to make the most of this potential.
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
A Complete Range Of Financial Service In A Single Account
First Union's CAP Account is an exciting asset management product that
combines checking, money market and brokerage functions into one account.
This centralized investment management approach offers customers simplicity,
convenience and greater earnings power on their liquid assets.
If 5% of our 11 million customers chose to open a CAP Account, we will have
210,000 customers.
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
A Complete Range Of Financial Service In A Single Account
Growth of CAP Accounts
(GRAPH)
89 3,119
90 3,443
91 4,158
92 14,586
93 18,868
94 81,167
95 147,000
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
Consumer Demand Is Fueling Strong Growth In CAP Assets
First Union currently has more than 147,000 CAP Accounts under management,
representing more than $11.7 billion in assets - more than the total asset
value of our company 10 years ago. These numbers grow daily as new customers
bring assets to First Union in search of a better banking and investment
product.
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
Consumer Demand Is Fueling Strong Growth In CAP Assets
Growth of CAP Account Assets
(GRAPH)
($ in billions)
89 .4
90 .5
91 .7
92 2.0
93 2.4
94 6.5
95 11.7
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
Consumer Demand Is Fueling Strong Growth In CAP Assets
Breakdown of CAP Account Assets Outstandings
(PIE CHART)
as of 12/31/95
($ in millions)
Insured Deposits 5,763
Tax-Exempt 406
Treasury 1,046
Money Market 615
Securities 3,828
Mutual Funds 53
Total Outstandings 11,713
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
A Quality Program For Our Priority Customers
To qualify for a CAP Account, a minimum balance of $15,000 in any combination
of cash, stocks, bonds, mutual funds, and/or other securities must be
maintained at First Union. In return, customers receive a variety of
advantages over traditional bank and investment accounts.
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CAP Accounts
BUSINESS LINES
CAPITAL MANAGEMENT
INDIVIDUAL SERVICES
CAP ACCOUNTS
A Quality Program For Our Priority Customers
CAP Account Features:
* Automatic daily sweep of * Special CD rates
assets
* Unlimited check writing * Free safe deposit box
* Single, consolidated * Personal Investment
monthly statement Counselor
* Overdraft protection * 24-hour toll-free telephone
assistance and information
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Mutual Funds
BUSINESS LINES
CAPITAL MANAGEMENT
MUTUAL FUNDS
First Union Offers Mutual Funds To Match Virtually Every Investment Goal
Since First Union introduced its proprietary mutual fund in 1985, we have
seen strong growth in consumer demand for these products, with mutual fund
assets growing to over $10 billion in 1995. First Union now offers its
customers access to a complete range of mutual funds through our family of
Evergreen Funds.
The Evergreen Funds include 31 proprietary mutual fund offerings covering the
entire risk-to-reward spectrum, allowing our clients to augment their personal
account investment strategies or build comprehensive investment portfolios by
strategically combining appropriate funds.
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Mutual Funds
BUSINESS LINES
CAPITAL MANAGEMENT
MUTUAL FUNDS
First Union Offers Mutual Funds To Match Virtually Every Investment Goal
Breakdown of Evergreen Funds Assets Under Management by Market Sector
as of 12/31/95
($ in millions)
International Growth 148
Domestic Growth 928
Growth & Income 4,569
Income 779
Tax-Free Income 519
Money Market 3,539
Total Assets 10,482
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Mutual Funds
BUSINESS LINES
CAPITAL MANAGEMENT
MUTUAL FUNDS
All Of Our Evergreen Funds Share A Focus On Quality
The well-respected Lieber & Co. serves as investment adviser for the
Evergreen Funds. Of the 31 funds in the Funds family, eleven currently
enjoy Morningstar ratings of 4 or 5 stars. And the entire family of funds
made it to the top ten of Barron's first-ever ranking of America's
mutual-fund groups, in February 1996.
All funds, regardless of objective, share a focus on quality and preservation
of shareholder capital. Careful attention is paid to risk management,
and all funds are managed within the stated risk-to-reward parameters outlined
in each prospectus.
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Mutual Funds
BUSINESS LINES
CAPITAL MANAGEMENT
MUTUAL FUNDS
All of Our Evergreen Funds Share a Focus on Quality
Fund Star Rating
The Evergreen Funds: Evergreen Fund ****
Morningstar Ratings Evergreen American Retirement Fund ****
as of 12/31/95 First Union Balanced Fund ****
First Union Fixed Income Fund ****
Evergreen Florida High Yield Muni Fund *****
Evergreen Foundation Fund *****
Evergreen Growth & Income Fund ****
First Union Managed Bond Fund ****
Evergreen Short-Intermediate Municipal Fund ****
Evergreen Short-Intermediate Municipal Fund (CA) ****
First Union Value Fund ****
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Mutual Funds
BUSINESS LINES
CAPITAL MANAGEMENT
MUTUAL FUNDS
A Superior Distribution Network Delivers Our Funds To A Wide Client Base
Mutual funds offer individual investors a number of financial benefits
useful in protecting their assets and growing their capital for the long-term.
First Union is committed to bringing these advantages to our broader customer
base. As a result, we have become experts at training branch personnel in
mutual funds sales. Since the beginning of 1994, over 2,700 branch employees
have been licensed to sell mutual funds.
A new Systematic Investment Plan lets customers automatically invest a set
amount in selected Evergreen Funds at regular intervals. No initial
investment is required.
Investors in the U.S. have placed $3 trillion in mutual funds. If 3% of that
money is invested in First Union's Evergreen Funds, our mutual funds assets
will top $90 billion.
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Insurance Products
BUSINESS LINES
CAPITAL MANAGEMENT
INSURANCE PRODUCTS
We Carry A Complete Range Of Credit And Supplemental Life Products
At First Union, we carry a complete range of credit and supplemental
life insurance products to meet the diverse needs of our clients. We are
able to provide a variety of competitive fixed and variable annuity plans
for tax-deferred savings and an array of life insurance products to satisfy
business, personal and estate planning objectives.
We are one of a few financial institutions allowed to establish our own agency
and help customers with insurance needs. This was made possible through
our acquisition of a licensed insurance company more than 30 years ago and we
were "grandfathered" when laws changed to restrict bank involvement in the
industry.
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Insurance Products
BUSINESS LINES
CAPITAL MANAGEMENT
INSURANCE PRODUCTS
New Products Open New Horizons For First Union And Our Clients
Annuities bridge a gap by offering customers an investment option between
the security of a certificate of deposit and the yield of a mutual fund.
The appeal of annuities to our client base caused us to mount a major
initiative to increase our product line in this area. Today, we offer
consumers a choice of insurance-based investment products and have more
under development for introduction within the next two years.
First Union has nearly 1,700 bank branch employees who are licensed to sell
annuity products.
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Insurance Products
BUSINESS LINES
CAPITAL MANAGEMENT
INSURANCE PRODUCTS
Pioneering New Products To Meet Growing Consumer Demand
Our momentum in the insurance area recently culminated in the introduction
of a proprietary fixed annuity product in the first quarter of 1996. This
new product provides investors with access to potentially higher market
returns backed by the safety net of a guaranteed minimum yield.
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Investment Management
BUSINESS LINES
CAPITAL MANAGEMENT
INVESTMENT MGMT
Investment Services Meet The Needs Of Today's Investors
First Union offers a full range of investment services through our
Capital Management Group, which currently oversees more than $45 billion
in assets under management.
These services are available to individuals seeking private account management
of their equity and fixed income assets as well as to corporations and
institutions seeking management of their capital and cash accounts. A
special unit provides pension fund management to our corporate and
institutional clients.
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Investment Management
BUSINESS LINES
CAPITAL MANAGEMENT
INVESTMENT MGMT
Our Equity Value Orientation Is Well-Suited For Long-Term Investors
First Union takes an equity value orientation approach to stock market
investing. We search out companies with strong fundamentals that are
currently undervalued in the marketplace as measured by a variety of
quantitative factors.
This conservative philosophy is well-suited for companies and institutions
seeking responsible management of their long-term assets. It is also a good
match for individuals looking to protect and grow their wealth over time in
order to reach such important goals as a secure retirement or funding a
child's college education.
(Drawing of building steps upper left, First Union logo upper right,
background photo of graduation ceremony)
Investment Management
BUSINESS LINES
CAPITAL MANAGEMENT
INVESTMENT MGMT
Our Fixed Income Services Take Advantage Of First Union's Strong
Market Presence
First Union is a market maker in a number of fixed income securities as well
as a highly active participant in all bond markets. These activities provide
us with a window on market conditions and contribute to our effectiveness as
a fixed income money manager.
Our investment professionals are proficient in a variety of investment styles.
We offer management of both taxable and tax-exempt portfolios. Fixed income
strategies are tailored to each client's individual needs, including specific
yield curve or risk-to-return requirements.
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background photo of man at computer)
Brokerage
BUSINESS LINES
CAPITAL MANAGEMENT
BROKERAGE
Able To Serve Customers From Main Street To Wall Street
First Union has the 8th largest broker sales force in the nation. We have
101 full-service brokerage locations, with over 2,700 licensed employees.
Our success comes from our focus on individuals and middle-market companies
in America's fastest-growing regions. We back this focus with a strong
emphasis on lower costs and customer service.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man at computer)
Brokerage
BUSINESS LINES
CAPITAL MANAGEMENT
BROKERAGE
Serving Our Investment Management And Self-Managed Clients
First Union provides brokerage services to its Investment Management clients
as well as individuals and companies trading on their own behalf.
Our direct access to traders on the floors of all major exchanges allows us
to quickly implement client orders, enhancing our ability to complete trades
within the requested terms.
If 30% of our 11 million customers use our Brokerage services, we will be
serving more than 3 million customers.
(Drawing of building steps upper left, First Union logo upper right,
background photo of man at computer)
Brokerage
BUSINESS LINES
CAPITAL MANAGEMENT
BROKERAGE
Service Can Make A Difference - We Know Because We Make A Difference
Every Day
First Union offers investors of all sizes an economical way to complete
their investment trades. Volume discounts are available for frequent
investors, as are other pricing plans.
Regardless of order size, all customers benefit from outstanding customer
service made possible by our relationship-based approach. Trade orders can
be placed over the phone or by computer, and confirmations are sent out
promptly - providing our clients with the information they need to maintain
control over their trading strategies.
(Drawing of building steps upper left, First Union logo upper right,
background photo of business meeting)
Institutional Services
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
PENSION FUND MGMT
CORPORATE TRUST
401(k)
A Variety Of Institutional Services
First Union offers its corporate and institutional clients a variety of
pension fund and trust services. These include Pension Fund Management,
Corporate Trust and 401(k) Services.
Our capabilities in this area are significantly enhanced by superior
technology. Years of development effort and investment have paid off in
state-of-the-art hardware and advanced proprietary software systems that
facilitate portfolio and account management, date processing and reporting
services.
(Drawing of building steps upper left, First Union logo upper right,
background photo of business meeting)
Pension Fund Management
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
PENSION FUND MGMT
We Specialize In Managing Retirement Assets For Midsize Organizations
First Union offers pension and fund investment management services to
its corporate and institutional clients. We specialize in providing
midsize companies, practices and partnerships of all sizes with the
highest-quality, institutional-caliber investment expertise combined
with a high-degree of personal attention and tailored portfolio terms.
We are particularly experienced in the growing field of 401(k) management
and can assist clients in planning and implementing a plan of their own.
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background photo of business meeting)
Pension Fund Management
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
PENSION FUND MGMT
We Can Accommodate The Needs Of Qualified Or Self-Directed Plans
First Union offers investment services for all types of plans, including
qualified and self-directed pension and profit-sharing programs. We
take a proactive approach to plan structure and asset management to ensure
full compliance with all applicable regulations. Our value-oriented equity
approach is designed to promote long-term performance and is well-suited
to the management of retirement assets.
Clients enjoy an unusual degree of direct contact with our portfolio
managers, remaining in command of their pension fund strategies without
worrying about daily management or administrative responsibilities.
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background photo of business meeting)
Pension Fund Management
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
PENSION FUND MGMT
First Union Also Provides All Services Related To Plan Design
And Administration
First Union offers its pension fund clients the choice of selecting services
on a consulting basis or choosing a bundled approach.
We can assist in the structuring of pension profit-sharing plans as well
as administration, recordkeeping and reporting.
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background photo of business meeting)
Corporate Trust
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
CORPORATE TRUST
Premier Provider Of Transfer Agent Services
* First Union's Corporate Trust area had more than $90 billion in
outstandings in 1995.
* We are one of the top ten Corporate Trust divisions in the U.S.,
with more than 7,000 bond issues (paying agent or trustees).
* We provide shareholder services for 250 corporate clients.
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background photo of business meeting)
Corporate Trust
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
CORPORATE TRUST
Complete Fiduciary Services For A Variety Of Corporate Needs
First Union provides a full range of fiduciary services to corporations,
including administrative, trustee and investment expertise pertaining
to corporate escrow and custody accounts and deferred compensation plans.
We are also a premier provider of transfer agents services for public
companies.
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background photo of business meeting)
Corporate Trust
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
CORPORATE TRUST
Our Personalized Approach Results In More Effective Corporate Strategies
First Union's regionally focused approach is a good fit with middle-market
companies seeking a proactive adviser as well as an administrator.
We can assist companies in managing their shareholder communications and
recordkeeping, as well as help set up and implement compensation, bonus
and profit sharing plans that maximize tax savings and create incentives
for long-term service among valued employees.
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background photo of business meeting)
401(k) Services
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
401(k)
First Union Specializes in Trust Services for 401(k)s and other
Pension Plans
First Union's Institutional Trust area offers a complete range of trust and
administrative services to employee benefit plans, including defined
benefit, profit sharing and 401(k) plans.
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background photo of business meeting)
401(k) Services
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
401(k)
We Specialize In Managing Retirement Assets For Midsize Organizations
401(k) Asset Growth,
1990-1995
Asset Base (GRAPH)
($ in millions) Number of Plan
Year Participants
1990 20
1991 105 90 1,200
1992 295 91 13,506
1993 710 92 24,757
1994 907 93 68,842
1995 2,163 94 87,321
95 120,000
(Drawing of building steps upper left, First Union logo upper right,
background photo of business meeting)
401(k) Services
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
401(k)
We Offer A Complete Range Of Customized Services
When it comes to trustee and recordkeeping services, First Union offers
its clients clearly superior technological capabilities that enhance our
ability to track plan data and account information. Using our technological
prowess, we provide services that satisfy the information needs of
participants at an affordable rate for the sponsor.
(Drawing of building steps upper left, First Union logo upper right,
background photo of business meeting)
401(k) Services
BUSINESS LINES
CAPITAL MANAGEMENT
INSTITUTIONAL SVCS
401(k)
Protecting The Long-Term Interests Of Sponsors And Participants
In line with our relationship-based approach to financial services, we
view our role as plan administrator in very proactive terms. We have
developed a daily valuation product that has received good customer
rating scores from participants as well as outside, third-party vendors.
Employees in the U.S. have invested $1.2 trillion in 401(k) plans. If 2%
of that money is invested in a First Union plan, our 401 (k) assets will
top $24 billion.
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Visa Card, First Union logo upper right)
Credit Card Products
First Union's Credit Card
Business Is Growing And Is
Well-Positioned For The Future
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
DEBIT CARDS
SMART CARDS
Superior technology, outstanding service and innovative products
have combined with rising consumer demand to support strong
growth in First Union's credit card business. In fact, managed card
receivables increased 36% in 1995 alone, with the number of card
accounts rising by 20%.
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Visa Card, First Union logo upper right)
Credit Card Products
First Union's Credit Card
Business Is Growing And Is
Well-Positioned For The Future
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
DEBIT CARDS
SMART CARDS
"Card products hold the key to customer relationships and have the potential to
offer unparalleled convenience and access to First Union customers. By
committing resources and talent to the development of new technology, we are
building a premier financial services organization without geographic limits
or boundaries."
Fred Winkler
Executive Vice President
Card Products Division
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Visa Card, First Union logo upper right)
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National Solicitation
Our Growth Has Been
Accompanied By Better-Than-
Average Credit Quality
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
MARKET STRATEGY
LOOKING AHEAD
At the end of 1993, First Union was ranked the 21st largest issuer in the
country; by the end of 1995, we had risen to 17th. Our cost to acquire
new accounts and our credit quality are better than national averages:
First Union posted a VISA and MasterCard charge-off rate of 3.5% as
of December 31, 1995.
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Visa Card, First Union logo upper right)
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National Solicitation
Our Growth Has Been
Accompanied By Better-Than-
Average Credit Quality
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
MARKET STRATEGY
LOOKING AHEAD
Top 20
Bank Card Issuers
By Outstandings
December 31, 1995
($ in billions)
13 BancOne 9.7
14 Bank Of America 9.2
15 Bank of New York 8.6
16 NationsBank 7.4
17 First Union 5.4
18 Wells Fargo 4.9
19 Wachovia 4.5
Source: The Nilson Report
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Visa Card, First Union logo upper right)
Overview
Our Goal:
Increased Market Share In
The Credit Card Industry
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
First Union is committed to becoming a major player in the credit card
industry by 1) providing the best in features and service; 2) offering
competitive prices and a wide array of products; and 3) developing the
most advanced systems in the industry for targeted marketing and
application processing. Growth in our card receivables tells us that this
strategy is working.
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Visa Card, First Union logo upper right)
Overview
Our Goal:
Increased Market Share In
The Credit Card Industry
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
First Union's
Credit Card Portfolio
Growth of
Managed Receivables
($ in millions)
(line graph appears here with the following plot points:)
12/93 3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95
2,160 2,061 2,836 3,237 3,988 4,078 4,529 4,875 5,444
Note: Managed Card Receivables include $2 billion of receivables that First
Union securitized and sold.
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Visa Card, First Union logo upper right)
Overview
Our Strengths: Superior
Products & Service
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
First Union issues Visa and MasterCards - the most popular card
brands in the world - to consumers across the nation. Competitive
rates and fees and ATM access are among the features valued by
our customers.
24-hour account information is provided through our Customer
Relationship Center, which can handle virtually any request within
minutes. Superior technological systems retrieve complete account
information at the start of each phone call and transfer it intact, if
needed, to speciality areas for immediate response.
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Visa Card, First Union logo upper right)
(background photo on entire page)
Overview
Our Strengths: Superior
Products & Service
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
First Union's
Credit Card Portfolio
Chart shows growth in
the number of accounts
(in millions)
(line graph appears here with the following plot points:)
12/93 3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95
2,171 2,250 2,718 2,987 3,157 3,329 3,384 3,717 3,794
(drawing of building steps upper left, background picture of First Union
Visa Card, First Union logo upper right)
(NOVA logo center, background photo on entire page)
Looking Ahead
The NOVA Partnership:
A Strategic Alliance
For The Future
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
OVERVIEW
We are augmenting our consumer card efforts with merchant processing
initiatives. First Union now holds a significant equity position in NOVA
Information Systems, Inc., a leading merchant processing company. The
NOVA alliance creates the 8th largest merchant processor in the nation,
with approximately $12 billion in bank card sales processed annually
and more than 90,000 participating merchants.
This partnership will allow us to increase our returns from merchant
processing while keeping processing costs down.
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Visa Card, First Union logo upper right)
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Market Strategy
High Quality Portfolio
*Strong Retention
*Momentum
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
MARKET STRATEGY
The credit card industry has become fiercely competitive in the 1990s.
Though millions of Visa cards & MasterCards have been issued worldwide,
credit cards still account for only a small percentage of consumer spending -
leaving plenty of room for expansion. To take advantage of this opportunity,
however, companies must offer value and target their markets carefully.
First Union focuses its solicitation efforts on high credit quality consumers
with revolving balances. These consumers recognize the value of the
competitive rates and the special features and promotions we offer. We retain
cardholders by providing the highest quality customer service - a trait
identified by consumers as the single most important reason to choose a
credit card company.
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Visa Card, First Union logo upper right)
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Market Strategy
High Quality Portfolio
*Strong Retention
*Momentum
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
MARKET STRATEGY
Components of Total
Consumer Installment Debt
($ in billions)
(graph appears here with the following plot points:)
68 70 72 74 76 78 80 82 84 86 88 90 92 94
auto 34,034 36,515 47,261 54,492 65,880 97,373 111,674 123,549 171,061 246,394 284,189 287,011 257,072 322,001
revolving 1,955 4,804 9,263 13,204 16,313 44,273 54,484 65,870 98,273 134,943 172,363 223,811 255,884 333,414
other 53,227 62,225 73,237 94,664 102,915 116,737 130,780 133,312 166,888 190,148 200,936 229,759 218,124 247,142
total 89,216 103,544 129,761 162,360 185,107 258,382 296,937 322,731 436,221 571,486 657,488 740,581 731,080 902,557
Source: Federal Reserve
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Visa Card, First Union logo upper right)
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Market Strategy
Innovative Features Attract
New Cardholders -
And Lock In The Loyalty
Of Existing Customers
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
MARKET STRATEGY
First Union offers highly competitive card features and relies on
innovations in this area to gain attention and sustain new account
momentum. For example, we recently rolled out a unique "Time
Is Money" plan that allows consumers to earn their finance charges
back over time as a reward for account longevity.
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Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union MasterCard)
Market Strategy
Lifestyle Marketing
Efforts Create
Enthusiasm and Loyalty
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
MARKET STRATEGY
First Union also relies on lifestyle marketing to attract new accounts.
In the affinity card area, our partners include colleges and professional
sports teams from across our market.
We also recently unveiled a highly successful "Pick Your Picture Card"
campaign that allows consumers to choose from hundreds of specially
designed theme cards featuring striking graphics of animals, sports and
other interests.
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Visa Card, First Union logo upper right)
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Looking Ahead
A New Century
Offers Opportunity
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
LOOKING AHEAD
As we approach the turn of the century, the use of stored value, debit
and credit cards is expected to grow and provide a convenient
alternative to cash. To take advantage of this growth, First Union will
continue to invest resources in card products over the next decade.
We intend to take the lead in developing alternative delivery channels
and are always searching for new talent, technology, and possible
outsourcing partnerships to achieve our objectives.
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Visa Card, First Union logo upper right)
(background photo on entire page)
Looking Ahead
A New Century
Offers Opportunity
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
LOOKING AHEAD
Growth Rates
Of Consumer
Installment Credit
(%)
(Base Year 1978)
(graph appears here with the following plot points:)
78 80 82 84 86 88 90 92 94
Auto 100% 134% 148% 205% 296% 341% 345% 309% 387%
Revolving 100% 144% 174% 260% 357% 456% 592% 677% 882%
Other 100% 124% 126% 158% 180% 191% 218% 207% 234%
Source: Federal Reserve Data
(First Union Logo appears in upper right corner, picture of building with
people walking towards it appears in upper left corner along with a First
Union Visa Card, and a First Union Visa Card appears in the lower center part
of page)
Looking Ahead
Alternative Delivery
Channels Provide Increasing
Points Of Access
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
LOOKING AHEAD
Bank Via The Internet
Internet Address: URL:http://www.firstunion.com
TODAY
Apply for a credit card; Apply for a consumer loan;
Apply for a home equity loan; Manage your
commercial cash accounts; Check your IRA balance.
(First Union Logo appears in upper right corner, picture of building with
people walking towards it appears in upper left corner along with a First
Union Visa Card, and a picture of a house appears in the lower left corner)
Looking Ahead
Alternative Delivery
Channels Provide Increasing
Points Of Access
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
LOOKING AHEAD
Bank Via The Internet
Internet Address: URL:http://www.firstunion.com
APRIL 1996
Check deposit account balance; Check savings account balance;
Check credit card balance; Check consumer loan status;
Order Checks; Get an interim account statement.
(First Union Logo appears in upper right corner, picture of building with
people walking towards it appears in upper left corner along with a First
Union Visa Card, and a picture of a bill appears in the lower middle of page)
Looking Ahead
Alternative Delivery
Channels Provide Increasing
Points Of Access
BUSINESS LINES
CREDIT CARD PRODUCTS
NATIONAL SOLICITATION
LOOKING AHEAD
Bank Via The Internet
Internet Address: URL:http://www.firstunion.com
DECEMBER 1996
Pay bills on-line; Transfer money between accounts.
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Visa Card, First Union logo upper right)
(background photo of a Visa CheckCard on entire page)
Debit Cards
Responding
To Strong
Consumer Demand
BUSINESS LINES
CREDIT CARD PRODUCTS
DEBIT CARDS
OVERVIEW
MARKET STRATEGY
LOOKING AHEAD
First Union is a leader in the dramatically growing field of debit cards.
Unlike credit cards, debit cards deduct the cost of each purchase directly
from the cardholder's checking account, functioning much like a plastic
check. 70% of all debit card owners report using the card as a frequent
replacement for cash or checks.
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Visa Card, First Union logo upper right)
(background photo of a Visa CheckCard on entire page)
Overview
First Union CheckCard:
An Idea Whose
Time Has Come
BUSINESS LINES
CREDIT CARD PRODUCTS
DEBIT CARDS
OVERVIEW
The popularity of debit cards is fueled in part by the public's widespread
acceptance of ATM cards. By expanding the concept of direct debits from
a cardholder's checking account beyond ATM, First Union's CheckCard
helps contribute to growing acceptance of debit cards.
As an indication of their popularity, between October 1, 1994, and
September 30, 1995, Visa added 9.3 million debit card accounts while
MasterCard added 2.5 million.
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Visa Card, First Union logo upper right)
(background photo of a Visa CheckCard on entire page)
Overview
First Union CheckCard:
An Idea Whose
Time Has Come
BUSINESS LINES
CREDIT CARD PRODUCTS
DEBIT CARDS
OVERVIEW
(line graph)
ATM Volume At First Union Growth Of
ATMs by FUNB Cardholders FUNB Check Cards
($ in millions) (%)
70 109 112 50 100
93 94 95 93-94 94-95
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Visa Card, First Union logo upper right)
(background photo of a Visa CheckCard on entire page)
Market Strategy
Debit Cards: A Key
Financial Tool For
Today's Mobile Society
BUSINESS LINES
CREDIT CARD PRODUCTS
DEBIT CARDS
MARKET STRATEGY
The extraordinary acceptance by consumers is an indication that
debit cards are considered a useful financial tool regardless of other
card holdings.
We intend to capitalize on this demand by marketing CheckCard
to existing credit card customers. Our extensive branch and ATM
network gives us a significant competitive advantage.
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Visa Card, First Union logo upper right)
(background photo of a Visa CheckCard on entire page)
Looking Ahead
A More Convenient
Alternative To Cash
BUSINESS LINES
CREDIT CARD PRODUCTS
DEBIT CARDS
LOOKING AHEAD
Because debit cards are convenient and cost effective, they are destined
to play a major role in society going forward.
Since cash and checks still account for 92% of U.S. point-of-sale dollar
volume, the potential for debit card growth is great. In addition, the
two primary outlets for debit card use today are gas stations and super-
markets, leaving plenty of room for expansion in terms of merchant
acceptance and use.
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Visa Card, First Union logo upper right)
(background photo of a Visa CheckCard on entire page)
Looking Ahead
Increasing
Access Points
BUSINESS LINES
CREDIT CARD PRODUCTS
DEBIT CARDS
LOOKING AHEAD
We expect a significant increase in debit card access points over the next
few years. Partly through strategic alliances with other companies, we
intend to integrate the use of our debit card products with other
traditional and smart card uses.
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Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union "Smart" Card)
Smart Cards
The Most Promising
Card Product
Of The Future
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
OVERVIEW
MARKET STRATEGY
LOOKING AHEAD
First Union is an industry pioneer in the development of "smart" cards
because we believe they offer consumers unequaled convenience and control.
"Smart" cards, also known as stored value cards, look like a credit
card but contain an embedded microchip that can hold cash value.
Value is automatically deducted from the card at point of sale. When
a disposable stored value card has been exhausted, it can be kept as
a collector's item or thrown away. With a rechargeable "smart" card,
value can be added or deducted from a First Union customer's
account at bank branches or at special ATMs.
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Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union stored value card)
Overview
Stored-Value Cards:
Offering Unequaled
Convenience & Control
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
OVERVIEW
Stored value cards allow consumers to carry spending power without
carrying a lot of cash and enable merchants to accept cards without
worrying about credit approval or handling cash in the store.
Disposable stored value cards can be purchased by anyone, regardless of
bank affiliation or credit history. Convenience stores, gas stations, fast
food restaurants and vending machines are among the merchants best
suited for stored value acceptance.
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Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union stored value card)
Overview
A Major Effort
Is Well Under Way
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
OVERVIEW
In March 1995, First Union spearheaded the first ever widespread
stored value card program when it announced its First Union VisaCash
program targeting Atlanta's Olympic games and beyond. We have
partnered with major national merchants to advance the convenience
and acceptance of stored value cards in Atlanta and expect to issue
up to 1 million cards by the summer of 1996.
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Visa Card, First Union logo upper right)
(background eight First Union Smart Cards move around the screen, joining
together to form the image of a jaguar, picture of First Union stored
value card)
Market Strategy
Capitalizing On
Strong Merchant &
Consumer Affinity
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
MARKET STRATEGY
First Union's marketing efforts in this area capitalize on bringing
together two key market segments: 1) consumers seeking the safety and
convenience of stored value cards, and 2) merchants who welcome the
credit certainty and lower transaction costs.
Sporting events have proved ideal for unrolling the technology as they
bring together receptive consumers and merchants in a contained
environment.
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Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union stored value card)
Market Strategy
The Spot Card:
A Successful Stored
Value Card In Jacksonville
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
MARKET STRATEGY
August 18, 1995, was a day of firsts for fans of the Jacksonville Jaguars
National Football League team. They witnessed the first home game of the
Jaguars in their newly renovated stadium and participated in the
first stored value card program ever to be introduced at a major sports
event. Using their aptly named "Spot Card," participating fans could
purchase food and other merchandise throughout the complex.
This achievement capped a 2-year effort by First Union. We provided all
services, including program and card design, marketing, merchant procedures,
and terminal and technical system design. Stadium outlets included pedestal
terminals as well as special belts linked to hand-held terminals that enabled
mobile vendors to accept the Spot Card.
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Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union stored value card)
Market Strategy
A Successful First
Season That Exceeded
All Expectations
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
MARKET STRATEGY
By the end of the football season, the "Spot Card" program was a
proven success. Over 600 different pieces of equipment were installed to
handle the activity from the more than 20,000 Spot Cards issued.
All together, First Union's Spot Card program generated more than
$700,000 in sales and comprised nearly 10% of all concession and novelty
sales for the year. These sales totals were double all previous estimates.
(drawing of building steps upper left, background picture of First Union
Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union stored value card)
Looking Ahead
Capitalizing On A
Clear Competitive Edge
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
LOOKING AHEAD
The success of the Spot Card program in Jacksonville and the First
Union VisaCash effort in Atlanta have both focused tremendous
attention on our stored value capabilities and created opportunities for
First Union in this area.
In addition, we have embarked on strategic alliances with other
companies to encourage the widespread acceptance of stored value
cards across the U.S. For example, First Union has formed a
partnership with Diebold to retrofit all First Union ATMs for use in
restoring value on our smart cards, the first step in a campaign to
make stored value cards a viable, convenient alternative for everyone.
(drawing of building steps upper left, background picture of First Union
Visa Card, First Union logo upper right)
(background photo on entire page, picture of First Union stored value card)
Looking Ahead
A New Concept Debuts
Before The Eyes Of The World
BUSINESS LINES
CREDIT CARD PRODUCTS
SMART CARDS
LOOKING AHEAD
First Union has scheduled a massive stored value roll-out of First Union
VisaCash in the Atlanta area to coincide with the opening of the 1996
Olympics. Our stored value program will enable attendees to purchase
food, mementos and services throughout the Olympic complex as well
as at area merchants that display the VisaCash logo.
Following the Olympics, we intend to introduce stored value cards
in major metropolitan areas around the Southeast, with and eye toward
distribution throughout the South by 1998. The priority we place
on these efforts is an indication of our conviction that stored value cards
are the premier cash alternative of the future.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
First Union Mortgage Lending
First Union Mortgage
Lending Services Build
Foundations For Living
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP
HOME EQUITY BANK
First Union Mortgage Services includes First Union Mortgage
Corporation (FUMC) and First Union Home Equity Bank, N.A.
(FUHEB). Both organizations are dedicated to providing quality service
and solid loan products to customers throughout the United States.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
(Photo of Jim Maynor Lower left)
First Union Mortgage Lending
First Union Mortgage
Lending Services Build
Foundations For Living
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP
HOME EQUITY BANK
"First Union Mortgage Lending is focused on fulfilling
the dream of home ownership and enriching that
experience through lifetime partnerships with our
customers. Pursuant to this vision, we offer a product
selection as complete as any in the mortgage industry.
We intend to leverage our internal systems and people
to create new business relationships and to continue
to search for new means to fuel loan and service fee
income growth."
Jim Maynor
President, First Union
Mortgage Corporation
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
First Union Mortgage Corporation
Nationwide Marketing
Strategy Keeps
First Union Mortgage
Corporation In The Lead
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP
First Union Mortgage Corporation offers various first mortgage programs
marketed through our branch network and 83 additional mortgage
origination offices. First Union continues to pursue partnerships with
Fortune 1000 companies and maintains relationships with Northern Telecom,
PepsiCo, General Mills, GTE and Kraft, to name a few.
At December 31, 1995, First Union is ranked as the 9th largest servicer
of mortgage loans in the United States with a servicing portfolio of
$51.5 billion.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
First Union Mortgage Corporation
Nationwide Marketing
Strategy Keeps
First Union Mortgage
Corporation In The Lead
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP
Ranking of the
top 10 mortgage
servicing companies
12/31/95
($in billions)
Rank Servicer Dec. 95 Volume
1 Norwest/Prudential Mortgage 147.00
2 Countrywide Funding 132.14
3 Chase Manhattan/Chemical 128.36
4 GE Capital Mortgage Corp. 109.50
5 Fleet Mortgage Group 103.61
6 NationsBank & Affiliates 81.43
7 GMAC Mortgage Group 65.22
8 BankAmerica 63.12
9 First Union Mortgage Corp. 51.50
10 Home Savings of America 49.56
Source: Inside Mortgage Finance, 1/26/96
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
Recent Activity
Production And
Loan Servicing
Continue To Grow
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP
1995 was a great year for profitability, servicing, and overall improvements
at First Union Mortgage Corporation. Accomplishments for the year included:
-Total residential origination volume of $2.7 billion.
-Service portfolio up to $51.5 billion, nearly 51% growth
from 1994, with ten-year annual growth rate at 22%.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
Recent Activity
Production And
Loan Servicing
Continue To Grow
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP.
Mortgage Loan
Servicing Portfolio
Volume of
Loans Serviced
12/31/95
($ in billions)
(chart graph)
8.2 9.8 10.8 10.6 15.3 19.4 24.1 24.4 34.8 34.2 51.5
85 86 87 88 89 90 91 92 93 94 95
Note: 22.6% annual rate of return over this ten year period.
*Includes $10.7 billion from First Fidelity portfolio.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
Future Growth
Product Diversity And
Quality Service Are The Keys
To Long-Term Growth
BUSINESS LINES
MORTGAGE LENDING
MORTGAGE CORP
The focus of First Union's Residential Lending Team in 1996 is to lower
origination cost and increase market share within our banking
region. During 1995, the cost per unit of origination fell by over 50% as
volume increased and costs were reduced. Future growth will depend
on FUMC's ability to reach out to new customers with a variety of products
while continuing to maintain and grow its mortgage servicing
portfolio with quality loans.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
First Union Home Equity Bank, N.A.
BUSINESS LINES
MORTGAGE LENDING
HOME EQUITY BANK
An Extensive Branch Network,
Active Wholesale Unit And
Prominent Affinity Relations
Help Increase Our Second
Mortgage Business
First Union Home Equity Bank provides equity financing to more than
100,000 homeowners throughout the nation. FUHEB operates 141
locations in 35 states and a central processing unit that provides home
equity loans in 13 additional states. FUHEB also purchases and sells
loans anywhere in the U.S. through its Wholesale Unit.
FUHEB offers second mortgage loans with fixed or adjustable rates as well
as lines of credit. FUHEB has established affinity relationships with
USAA, AFBA and two credit unions.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
Recent Activity
Growth In Loan Outstandings
Continues To Increase As
Consumers Seek Alternative
BUSINESS LINES
MORTGAGE LENDING
HOME EQUITY BANK
FUHEB recently concluded one of its best years. Record-breaking
financial performance in 1995 included $1.228 billion in loan volume
and a loan growth rate of 25% or $600 million. Since 1987, loans have
increased from $727 million to $3 billion. FUHEB's goal is to increase
loans to $5 billion by 2000, indicating a 13.7% compound annual
growth rate.
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
Recent Activity
Growth In Loan Outstandings
Continues To Increase As
Consumers Seek Alternative
BUSINESS LINES
MORTGAGE LENDING
HOME EQUITY BANK
First Union Home
Equity Bank
Total Loans
Outstanding
Period End
Outstandings
($ in billions)
Percentage
Growth
Since 1990
(line graph starts)
1.4 1.6 1.8 2.0 2.3 3.0
14.3 28.6 42.9 64.3 114.3
90 91 92 93 94 95
(drawing of building steps upper left, background picture of house center,
First Union Logo upper right)
Future Growth
Tremendous Market Potential
For Second Mortgages
Leads Strategic Planning
BUSINESS LINES
MORTGAGE LENDING
HOME EQUITY BANK
Less than 25% of the population has a second mortgage, and there is an
estimated $3.8 trillion in homeowner's equity in the national housing
market. FUHEB's potential, if it captures 0.5% of the national market,
is $19 billion in loan growth.
(drawing of people climbing stairs in upper left, a picture of three
business people along right hand side, First Union logo in upper right
hand corner)
Banking Services
BUSINESS LINES
BANKING
COMMERCIAL BANK
CONSUMER BANK
STATE BANKS
First Union Is One Of America's Strongest Banking Organizations
Banking has long been a core service of First Union. Today, through
a far-reaching branch network, our state banks offer a full range of
banking products to both consumers and corporate clients. We are
known for our innovative banking services, convenient delivery
channels and a high level of personal attention to client needs.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner, picture of Ben C. Maffitt III in the bottom left hand corner)
Commercial Bank
BUSINESS LINES
BANKING
COMMERCIAL BANK
RELATIONSHIP BASED
MIDDLE MRKT FOCUS
MARKET SEGMENTS
SMALL BUSINESS BNKG
CAP MKT SUPPORT
Leveraging Our Expertise To Find Appropriate Solutions To Customers' Needs
1995 marked the commercial bank's first full year of operation under our
redesigned lending systems. The new bank places renewed emphasis on
relationship-based selling, streamlined lending and approval processes, and a
commitment to superior customer service. Our approach is to provide seamless
service to every commercial customer, from the small-business client and our
traditional middle-market business to large corporate customers.
"We successfully redesigned our commercial bank with one thought in mind:
We want all of First Union's commercial customers to benefit from the
efficiency of our processes and the expertise of our relationship teams."
Ben C. Maffitt III
Senior Vice President
Commercial Banking Group
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner, picture of Malcolm T. Murray Jr. in the bottom left hand corner)
Commercial Bank
BUSINESS LINES
BANKING
COMMERCIAL BANK
RELATIONSHIP BASED
MIDDLE MRKT FOCUS
MARKET SEGMENTS
SMALL BUSINESS BNKG
CAP MKT SUPPORT
Leveraging Our Expertise To Find Appropriate Solutions To Customers' Needs
The success of re-engineering is reflected in the bottom line.
In 1995, we nearly doubled the amount of revenue generated per relationship
manager: $480,000 per manager in 1995, compared with $250,000 per manager
in 1994.
On February 15, 1996, full implementation of the new commercial bank took
place in First Union's northeastern region. We anticipate that customers
in this region will also benefit from our enhanced product and service
resources.
"First Union places a premium on quality loan growth diversified by product,
geography and industry. And our strategy works: We can point with pride to
a long record of high credit quality and low levels of credit loss."
Malcolm T. Murray, Jr.
Executive Vice President
and Chief Credit Officer
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
A Relationship-Based Business
BUSINESS LINES
BANKING
COMMERCIAL BANK
RELATIONSHIP BASED
Adding Value Through Consultation and Advice
Our commercial bank is founded on the principle of relationship-based
business. Rather than viewing customers in transactional terms, our
professionals are devoted to adding value to clients' businesses through
consulting and advisory relationships.
In the past, customers often interacted with a single member of the commercial
bank, who had to be such a generalist that it was difficult to meet all
of a client's diverse financial needs. The new commercial bank enhances our
commitment to forming partnerships with our customers.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
A Relationship-Based Business
BUSINESS LINES
BANKING
COMMERCIAL BANK
RELATIONSHIP BASED
A Three-Part Team Approach
The new organization brings the specialized expertise of three professionals
to every customer relationship.
The Relationship Manager drives the sales function, identifies customer
needs and serves as quarterback for the lending process.
The Underwriter structures solutions to our customers' needs and ensures that
our bank's credit policies are appropriately reflected.
The Portfolio Manager addresses the ongoing credit and financial needs
of our customers, monitors existing credits and identifies opportunities
for cross-selling other products.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Middle Market Focus
BUSINESS LINES
BANKING
COMMERCIAL BANK
MIDDLE MRKT FOCUS
Northeast: The Nation's Highest Concentration Of Middle Market Companies
First Union's northeastern region represents the highest concentration of
middle market companies in the United States, a market advantage that fits
well with the middle market focus of our commercial bank.
In defining market segments and dedicating resources throughout our new
organization, a primary goal was to ensure that our new product
and service capabilities are readily accessible to our largest and most
lucrative commercial market. The middle market segment will receive
the dedicated attention of Relationship Team members who specialize
in addressing the specific financial needs of mid-sized companies.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Market Segments
BUSINESS LINES
BANKING
COMMERCIAL BANK
MARKET SEGMENTS
Realigning The Market Segment Focus
Before we began the process of redesigning our commercial bank, First
Union removed all prior assumptions from the equation. Chief among
these was the traditional market segment structure of the bank. By
carefully asking the customers themselves what they want, we learned
from our research that serving our customers best meant completely
realigning our market-segment focus. We were able to clearly identify
four distinct market segments, based on a company's annual revenue -
each with a specific set of financial and service needs.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Market Segments
BUSINESS LINES
BANKING
COMMERCIAL BANK
MARKET SEGMENTS
Four Distinct Market Segments
Company Revenue First Union Banking Area
<$5 million Small Business/
Community Banking
$5 million-$20 million Commercial Banking
$20 million-$100 million Middle Market Banking
>$100 million Corporate Banking
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Market Segments
BUSINESS LINES
BANKING
COMMERCIAL BANK
MARKET SEGMENTS
A More Efficient Banking Process
By focusing our resources to meet the specific needs of customers in each
market segment, we will bring our customers a more efficient banking
process, while allowing us to better and more appropriately deploy our
product and marketing resources.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Small Business Banking
BUSINESS LINES
BANKING
COMMERCIAL BANK
SMALL BUSINESS BNKG
Reaping The Rewards Of A Streamlined Loan Process
First Union has redesigned our lending process for small businesses -
companies with revenues under $5 million. Customers now benefit from
the increased efficiency of a streamlined lending process.
Loan applications are taken over the phone in a single interview lasting
30-45 minutes, and applications are guaranteed a 24-hour turnaround.
In 1995, initial credit decisions averaged 13 hours, and customers had money
in hand in an average of 23 days.
The unit is staffed by professionals who quickly determine customer
lending needs and documentation requirements, allowing us to turn
initial requests into "on-the-books" loans quickly.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Small Business Banking
BUSINESS LINES
BANKING
COMMERCIAL BANK
SMALL BUSINESS BNKG
Loans To Small Businesses Soar
In the new commercial bank, First Union has originated an average
of $53 million in small-business loans per month. We ended 1995 with $640
million in outstandings, more than three times the total outstandings prior
to the commercial bank redesign.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Small Business Banking
BUSINESS LINES
BANKING
COMMERCIAL BANK
SMALL BUSINESS BNKG
Loans To Small Businesses Soar
(Here appears a graph of growth in Loans Outstanding 1995 of Small Business
Banking Division. Below are plot points)
Small Business
Banking Division
Growth In Loans
Outstanding, 1995
($ in millions) 117 251 370 640
1Q95 2Q95 3Q95 4Q95
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Small Business Banking
BUSINESS LINES
BANKING
COMMERCIAL BANK
SMALL BUSINESS BNKG
Potential In The Northern Region
The new small-business process has been introduced in First Union's northern
region. More than 50 experienced lending professionals are now
headquartered in Philadelphia, devoted to serving the financial needs
of small businesses throughout our northern franchise. Early results
indicate a high level of customer demand.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Capital Markets Support
BUSINESS LINES
BANKING
COMMERCIAL BANK
CAP MKT SUPPORT
Training To Become Financial Consultants
A primary goal of re-engineering the commercial bank is to better serve
our commercial customers by offering the industry's broadest array
of financial products.
In 1996, all commercial bankers are taking part in a comprehensive
training initiative - known as Project XXIV - designed to bring our
professionals the product knowledge and consulting expertise needed
to meet all of our customers' financial needs. Training focuses on the
importance of viewing financial needs from a customer's perspective.
(drawing of people climbing stairs in upper left, a picture of two
business people along right hand side, First Union logo in upper right
hand corner)
Capital Markets Support
BUSINESS LINES
BANKING
COMMERCIAL BANK
CAP MKT SUPPORT
Project XXIV
Project XXIV will expand First Union's ability to cross-sell capital
markets products to the traditional commercial bank customer. Those
customers who in the past sought the expertise of Wall Street firms for their
non-traditional financial needs will now be aware of our extensive Capital
Markets resources and capabilities.
In short, Project XXIV will allow our commercial bankers to anticipate
customer needs and offer unsurpassed expertise in determining appropriate
financial solutions.
(First Union Logo in upper right corner, drawing of people climbing stairs
in upper left, photo of H. Burt Melton, Executive Vice President for Consumer
Credit and Bank Related Services, background photo is of a woman reading
a paper)
Consumer Bank
BUSINESS LINES
BANKING
CONSUMER BANK
CONS BANK REDESIGN
CONSUMER ACCESS
BRANCH SYSTEM
First Point Of Access
First Union's full-service banking network includes nearly 2,000 offices--our
customers' traditional point of first access. Our strategies focus on providing
outstanding service and on expanding the number and variety of products
available through our branches.
"At First Union, we are focusing on finding new and better ways to deliver
our products and services. Whether it's technologically sophisticated `remote
banking' or enhanced customer relationship centers, we want to offer
customers added value."
H. Burt Melton
Executive Vice President
for Consumer Credit and
Bank Related Services
(drawing of people climbing the stairs in left hand corner,
background picture of business
woman in center of page, First Union logo in upper right hand corner)
Consumer Bank Redesign
BUSINESS LINES
BANKING
CONSUMER BANK
CONS BANK REDESIGN
Redefining Retail
We are designing a new, customer-driven consumer bank organized into four
integrated areas:
(1) retail centers to focus on helping current customers meet their
financial goals,
(2) customer relationship centers to find new customers and service accounts
over the telephone,
(3) an external sales force, to develop new business with small-business
and consumer clients and
(4) advanced self service options, to let customers use technology to
conduct the business they once did at the teller window.
(drawing of people climbing the stairs in left hand corner, background
picture of business woman in center of page, First Union logo
in upper right hand corner)
Consumer Bank Redesign
BUSINESS LINES
BANKING
CONSUMER BANK
CONS BANK REDESIGN
Retooling For Customer Satisfaction
Pilot sites for the new retail centers in two North Carolina communities will
be operating in 1996. All aspects of the operations will be studied with an
eye toward efficiency and customer satisfaction. Once refinements occur,
implementation of the new bank will begin during 1996.
(drawing of people climbing the stairs in left hand corner, picture of John R.
Georgius at bottom left hand corner,background picture of business
woman in center of page, First Union logo in upper right hand corner)
Consumer Bank Redesign
BUSINESS LINES
BANKING
CONSUMER BANK
CONS BANK REDESIGN
John Georgius, First Union Vice Chairman:
"The primary goal is to position the consumer bank so that we are acting from
a position of strength in the face of unprecedented change in the banking
industry. We want to make constructive changes in the way we serve customers -
at our customers' direction and in our customers' best interests."
John R. Georgius
Vice Chairman,
First Union Corporation
(drawing of people climbing the stairs in left hand corner, background
picture in bottom left hand corner, background picture of business
woman in center of page, First Union logo in upper right hand corner)
Integrated Consumer Access
BUSINESS LINES
BANKING
CONSUMER BANK
CONSUMER ACCESS
Expanded Points Of Access
First Union intends to gain an increased share of the customer base
nationally through better electronic delivery channels. Our expanded
points of access include enhanced ATMs (we have the nation's third largest
ATM network), redesigned retail centers, centralized customer
relationship centers, the "direct" telephone bank and the Internet.
(drawing of people climbing the stairs in left hand corner, background
picture of business woman in center of page, First Union logo in
upper right hand corner)
Integrated Consumer Access
BUSINESS LINES
BANKING
CONSUMER BANK
CONSUMER ACCESS
Banking Anywhere, Anytime
Customers will be able to walk into a branch anywhere in our marketplace
- - which includes 12 states and Washington, D.C. - and have the same access
to account information, the same products, and the same policies as if they
were in their home branches.
(drawing of people climbing the stairs in left hand corner, background
picture of business woman in center of page, First Union logo in
upper right hand corner)
Integrated Consumer Access
BUSINESS LINES
BANKING
CONSUMER BANK
CONSUMER ACCESS
Bridging The Move to Future Delivery Channels
We can't predict how customers will prefer to do their banking in the
future. Some may want to bank at home by computer; others may elect
to use plastic cards at their local branches, or touch-screens on their
televisions, or ATMs at convenience stores.
Our strategy is to build a transitional bank that will bridge the movement to
better delivery channels in the future while meeting the needs of customers
who prefer dealing with a person at the teller window.
(drawing of people climbing the stairs in left hand corner, background
picture of building in bottom left hand corner, background
picture of business woman in center of page, First Union logo in
upper right hand corner)
Branch System
BUSINESS LINES
BANKING
CONSUMER BANK
BRANCH SYSTEM
Leveraging Our Branches For Product Sales
First Union has the nation's most convenient and accessible branch system,
and we leverage that base for product sales among our 11 million customers.
Our bankers work to build long-term relationships with customers.
(drawing of people climbing the stairs in left hand corner, background
picture of building in bottom left hand corner, background
picture of business woman in center of page, First Union logo in
upper right hand corner)
Branch System
BUSINESS LINES
BANKING
CONSUMER BANK
BRANCH SYSTEM
Benefits To Customers, Sources Of Revenue For Our Company
Our branches carry out not only traditional banking functions - deposit
services, lending - but also sales of new or expanded product areas we have
invested in to provide added benefits to customers and more sources of
revenue for our company. These include products and services from our
Capital Management Group and our Card Products Group.
(drawing of people climbing the stairs in left hand corner, background
picture of building in bottom left hand corner, background
picture of business woman in center of page, First Union logo in
upper right hand corner)
Branch System
BUSINESS LINES
BANKING
CONSUMER BANK
BRANCH SYSTEM
Branches: Fertile Fields
Leveraging the capability of our existing branches isn't just focused on
increasing product sales. Branches also are fertile fields from which to
harvest credit cards, auto loans and mortgages, which can be retained or
securitized and sold to investors. We also are building a reliable
investor network for these products.
(drawing of people climbing stairs in upper left hand corner, drawing of
a map of eastern seaboard along the right side, First Union logo in
upper right hand corner)
Geographic Reach
BUSINESS LINES
BANKING
STATE BANKS
NORTHERN REGION
VA, MD & WASH. D.C.
NORTH CAROLINA
SOUTH CAROLINA
TENNESSEE
GEORGIA
FLORIDA
Local And Interstate Banking: The Payoff For Our Customers
First Union believes that communities are best served by placing appropriate
decision making authority in the hands of our local bankers. Even though First
Union's network now spans from Florida to Connecticut, each banking office
retains a local focus.
First Union realizes the added value to customers of being able to bank across
state lines - which became possible on September 27, 1995. This capability is
our customers' big payoff for the investments we made in single operating
systems. Because of this, we were prepared for interstate banking far ahead of
most other banks.
First Union now offers seamless service to all customers no matter where they
are - making our array of products and services available to all customers in
every region.
(drawing of people climbing stairs in upper left hand corner, bottom left
hand corner picture of Donald C. Parcells, map drawing of Northern region
toward upper right, First Union logo in upper right hand corner.)
Northern Region
BUSINESS LINES
BANKING
STATE BANKS
NORTHERN REGION
Leadership
"I can't think of an organization that's better positioned to be successful.
We have geographic coverage and can make the kind of investments smaller
companies can't afford. First Union is well focused and is pushing hard to be
more than just a traditional bank."
Donald C. Parcells
President And General Banking Executive
First Union North
(drawing of people climbing stairs in upper left hand corner, drawing
of map of Northern region towards upper right hand side, First Union logo
in upper right hand corner)
Northern Region
BUSINESS LINES
BANKING
STATE BANKS
NORTHERN REGION
The Market And Its Potential
Serves New Jersey, New York, Connecticut, Pennsylvania and Delaware
* Assets, $36 billion
* Loans, $25 billion
* Deposits, $28 billion
* Deposit Share for Key Markets:
- New Jersey, 12.8%; Rank, 1st
- Hudson Valley, N.Y., 7.4%; Rank, 2nd
- N.E. Pennsylvania, 14%; Rank, 4th
- Fairfield County, Conn., 4.0%; Rank, 5th
(drawing of people climbing stairs in upper left hand corner, drawing of
map of Northern region towards upper right side, First Union logo in upper
right hand corner)
Northern Region
BUSINESS LINES
BANKING
STATE BANKS
NORTHERN REGION
The Market And Its Potential
Strategies:
* Bring First Union's products, services and capital resources to bear
on operations in the former First Fidelity region
* Serve our customers while increasing revenue through more efficient
processing, an expanded sales focus and a comprehensive approach
to serving our customers' individual financial needs
(drawing of people climbing stairs in upper left hand corner, picture of
Ben Jenkins in bottom left hand corner, map drawing of VA, MD, DC towards
upper right, First Union logo in upper right hand side)
Virginia, Maryland And Washington, D.C.
BUSINESS LINES
BANKING
STATE BANKS
VA, MD & WASH. D.C.
Leadership
"Banks must be flexible and creative, remaking themselves as they go,
in order to thrive in tomorrow's marketplace."
Ben Jenkins
President And CEO
First Union National Bank Of Virginia
(drawing of people climbing stairs in upper left hand side, map drawing
of VA, MD, DC towards upper right, First Union logo in upper right hand corner)
Virginia, Maryland And Washington, D.C.
BUSINESS LINES
BANKING
STATE BANKS
VA, MD & WASH. D.C.
The Market And Its Potential
Serves every major market in Virginia and Maryland - Richmond, Norfolk, Roanoke
and Baltimore - as well as the Washington, D.C., metropolitan area.
($ in billions) Virginia Maryland Wash., D.C.
Assets $11.0 $2.2 $2.4
Loans $7.3 $1.1 $0.6
Deposits $7.2 $1.2 $1.7
Deposit Share 12% 5% 18%
Rank 3rd 5th 3rd
(chart)
(drawing of people climbing stairs in upper left, map drawing of VA, MD, DC
towards upper right, First Union logo in upper right hand corner)
Virginia, Maryland And Washington, D.C.
BUSINESS LINES
BANKING
STATE BANKS
VA, MD & WASH. D.C.
The Market And Its Potential
Strategies:
* Increase fee income by aggressively selling investment, cash
management and capital markets products
* Consolidate First Fidelity's Maryland franchise into First Union's
Maryland franchise and increase sales
* Make 1996 "the year of the customer" by encouraging employees to
seek innovative ways to serve our customers' financial needs
(drawing of people climbing stairs in upper left corner, picture of Mac Everett
in bottom left hand corner, map drawing of NC towards upper right, First Union
logo in upper right hand corner)
North Carolina
BUSINESS LINES
BANKING
STATE BANKS
NORTH CAROLINA
Leadership
"Our willingness to embrace change in a way that responds to the needs of
the marketplace is the key to our success."
Mac Everett
Chairman, CEO And President
First Union National Bank Of North Carolina
(drawing of people climbing stairs in upper left, map drawing of NC towards
upper right, First Union logo in upper right hand corner)
North Carolina
BUSINESS LINES
BANKING
STATE BANKS
NORTH CAROLINA
The Market And Its Potential
Serves entire state.
* Assets, $27.4 billion
* Loans, $19.4 billion
* Deposits, $15.8 billion
* Deposit Share, 20%; Rank, 1st
(drawing of people climbing stairs in upper left, map drawing of NC towards
upper right, First Union logo in upper right hand corner)
North Carolina
BUSINESS LINES
BANKING
STATE BANKS
NORTH CAROLINA
The Market And Its Potential
Strategies:
* Position our bank in fast-growing markets in the state; the 1996
purchase of Raleigh Federal strengthens our market share in Raleigh
and gives us entry into other markets in eastern North Carolina
* Increase retail investment market share
* Differentiate ourselves from our competition by developing creative
solutions that meet the financial needs of our customers
* Raise the level of our relationship service and selling skills.
(drawing of people climbing stairs in upper left, picture of Sid Tate in
in bottom left hand corner,
map drawing of SC towards upper right, First Union logo in upper right
hand corner)
South Carolina
BUSINESS LINES
BANKING
STATE BANKS
SOUTH CAROLINA
Leadership
"We're gaining momentum in the market. We're going to continue to deliver
superior products, unparalleled service and exceptional performance as we
become the bank of choice - and the employer of choice - in the state."
Sid Tate
Chairman And CEO
First Union Bank Of South Carolina
(drawing of people climbing stairs in upper left, map drawing of SC towards
upper right, First Union logo in upper right hand corner)
South Carolina
BUSINESS LINES
BANKING
STATE BANKS
SOUTH CAROLINA
The Market And Its Potential
Serves South Carolina's major markets: Greenville, Columbia, Charleston, Rock
Hill and Greenwood.
* Assets, $3.2 billion
* Loans, $2.3 billion
* Deposits, $2.6 billion
* Deposit Share, 7%; Rank, 4th
(drawing of people climbing stairs in upper left, map drawing of SC towards
upper right, First Union logo in upper right hand corner)
South Carolina
BUSINESS LINES
BANKING
STATE BANKS
SOUTH CAROLINA
The Market And Its Potential
Strategies:
* Increase annual earnings by 10% or greater
* Increase services to 3.5 services per household
* Increase ROE to 21%
(drawing of people climbing stairs in upper left, map drawing of TN towards
upper right, picture of Bob Reid in bottom left hand corner,
First Union logo in upper right hand corner)
Tennessee
BUSINESS LINES
BANKING
STATE BANKS
TENNESSEE
Leadership
"We will deliver superior sales and service in order to delight each customer,
create pride in every employee, achieve our financial objectives for
shareholders, and add value to our communities."
Bob Reid
Chairman, President And CEO
First Union National Bank of Tennessee
(drawing of people climbing stairs in upper left, map drawing of TN towards
upper right, First Union logo in upper right hand corner)
Tennessee
BUSINESS LINES
BANKING
STATE BANKS
TENNESSEE
The Market And Its Potential
Serves markets in eastern and middle Tennessee, including the Nashville
metropolitan area.
* Assets, $2.3 billion
* Loans, $1.2 billion
* Deposits, $1.7 billion
* Deposit Share, 3%; Rank, 7th
(drawing of people climbing stairs in upper left, map drawing of TN towards
upper right, First Union logo in upper right hand corner)
Tennessee
BUSINESS LINES
BANKING
STATE BANKS
TENNESSEE
The Market And Its Potential
Strategies:
* Use customer feedback to measure how well we are meeting our
customers' financial needs
* Provide customers the opportunity to use alternative delivery
systems for financial products and services
* Ensure a smooth transition for recently acquired Brentwood National
customers to First Union
* Cross-sell First Union products services to existing customers to
better meet their financial needs
(drawing of people climbing stairs in upper left, map drawing of GA towards
upper right, picture of David Carroll in bottom left hand corner,
First Union logo in upper right hand corner)
Georgia
BUSINESS LINES
BANKING
STATE BANKS
GEORGIA
Leadership
"Everything we do must be with the customer in mind. We must treat our
customers the way we want to be treated and ensure that every encounter is
first rate."
David Carroll
President And CEO
First Union National Bank of Georgia
(drawing of people climbing stairs in upper left, map drawing of GA towards
upper right, First Union logo in upper right hand corner)
Georgia
BUSINESS LINES
BANKING
STATE BANKS
GEORGIA
The Market And Its Potential
Serves Georgia's six major markets: Atlanta, Augusta, Columbus, Macon/Albany/
Valdosta,Dalton/Rome/Newnan/Griffin and Savannah.
* Assets, $12.1 billion
* Loans, $9.3 billion
* Deposits, $7.9 billion
* Deposit Share, 10%; Rank, 4th
(drawing of people climbing stairs in upper left, map drawing of GA towards
upper right, First Union logo in upper right hand corner)
Georgia
BUSINESS LINES
BANKING
STATE BANKS
GEORGIA
The Market And Its Potential
Strategies:
* Continue to grow the bank's key business segments: commercial
bank, consumer bank, affluent market, government banking and
commercial finance
* Focus on boosting deposit share in top 30 growth counties in the
state while maximizing profitability
* Increase noninterest income by bringing Capital Markets and Capital
Management capabilities to this growing market.
(drawing of people climbing stairs in upper left, map drawing of FL towards
upper right, picture of Byron Hodnett in bottom left hand corner,
First Union logo in upper right hand corner)
Florida
BUSINESS LINES
BANKING
STATE BANKS
FLORIDA
Leadership
"Our growing base of traditional commercial and consumer banking services
gives us the strength to embrace and lead the change facing our industry.
Expansion of remote, terminal-based banking services will further enable
us to reach our customers in ways most convenient to them."
Byron Hodnett
CEO
First Union National Bank Of Florida
(drawing of people climbing stairs in upper left, map drawing of FL towards
upper right, First Union logo in upper right hand corner)
Florida
BUSINESS LINES
BANKING
STATE BANKS
FLORIDA
The Market And Its Potential
Second largest bank in the state, reaching 95% of Florida's population
through 555 branches.
* Assets, $36.6 billion
* Loans, $24.0 billion
* Deposits, $29.8 billion
* Deposit Share, 19%; Rank, 2nd
(drawing of people climbing stairs in upper left, map drawing of FL towards
upper right, First Union logo in upper right hand corner)
Florida
BUSINESS LINES
BANKING
STATE BANKS
FLORIDA
The Market And Its Potential
Strategies:
* Emphasize continued growth in commercial and consumer lending as
well as consumer deposits
* Expand Capital Markets products for commercial customers
* Expand the sale of investment products and annuities to customers