FINANCIAL SUPPLEMENT
AND FORM 10-Q
THIRD QUARTER 1996
WACHOVIA CORPORATION DIRECTORS AND OFFICERS
DIRECTORS
L. M. BAKER, JR.
President and
Chief Executive Officer
JOHN G. MEDLIN, JR.
Chairman of the Board
RUFUS C. BARKLEY, JR.
Chairman
Cameron & Barkley Company
CRANDALL C. BOWLES
Executive Vice President
Springs Industries, Inc.
JOHN L. CLENDENIN
Chairman, President
and Chief Executive Officer
BellSouth Corporation
LAWRENCE M. GRESSETTE, JR.
Chairman and
Chief Executive Officer
SCANA Corporation
THOMAS K. HEARN, JR.
President
Wake Forest University
W. HAYNE HIPP
President and
Chief Executive Officer
The Liberty Corporation
ROBERT M. HOLDER, JR.
Chairman of the Board
Holder Corporation
DONALD R. HUGHES
Consultant and Retired
Vice Chairman of the Board
Burlington Industries, Inc.
JAMES W. JOHNSTON
Retired Vice Chairman
RJR Nabisco, Inc.
Retired Chairman of the Board
R.J. Reynolds Tobacco Company
WYNDHAM ROBERTSON
Writer and Retired
Vice President, Communications
University of North Carolina
HERMAN J. RUSSELL
Chairman and
Chief Executive Officer
H.J. Russell & Company
SHERWOOD H. SMITH, JR.
Chairman of the Board and
Chief Executive Officer
Carolina Power & Light Company
CHARLES MCKENZIE TAYLOR
Chairman of the Board
Taylor & Mathis, Inc.
Taylor & Mathis Properties
JOHN C. WHITAKER, JR.
Chairman and
Chief Executive Officer
Inmar Enterprises, Inc.
PRINCIPAL CORPORATE OFFICERS
L. M. BAKER, JR.
President and
Chief Executive Officer
MICKEY W. DRY
Executive Vice President
Chief Credit Officer
HUGH M. DURDEN
Executive Vice President
Corporate Services
WALTER E. LEONARD, JR.
Executive Vice President
Operations/Technology
KENNETH W. MCALLISTER
Executive Vice President
General Counsel/Administrative
ROBERT S. MCCOY, JR.
Executive Vice President
Chief Financial Officer
G. JOSEPH PRENDERGAST
Executive Vice President
General Banking
RICHARD B. ROBERTS
Executive Vice President
Treasurer
2
SELECTED PERIOD-END DATA
September 30 September 30
1996 1995
Banking offices:
North Carolina........................ 220 218
Georgia............................... 125 125
South Carolina........................ 145 146
Total................................ 490 489
Automated banking machines:
North Carolina........................ 344 319
Georgia............................... 221 202
South Carolina........................ 203 173
Total................................ 768 694
Employees (full-time equivalent)........ 16,185 15,843
Common stock shareholders of record..... 27,663 28,042
Common shares outstanding (thousands)... 165,213 170,326
COMMON STOCK DATA - PER SHARE
1996 1995
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
Market value:
Period-end................................... $ 49 1/2 $ 43 3/4 $ 44 3/4 $ 45 3/4 $ 43 1/8
High......................................... 49 7/8 46 1/4 48 3/8 48 1/4 45
Low.......................................... 39 5/8 40 7/8 41 1/4 43 1/8 35 3/8
Book value at period-end...................... 22.57 22.18 22.07 22.15 21.24
Dividend...................................... .40 .36 .36 .36 .36
Price/earnings ratio*......................... 13.6X 12.4x 12.6x 13.1x 12.4x
*Based on most recent twelve months net income
per primary share and period-end stock price
FINANCIAL INFORMATION
Analysts, investors and others seeking additional financial information
about Wachovia Corporation or its member companies should contact the following
either by phone or in writing.
Robert S. McCoy, Jr., Chief Financial Officer, (910) 732-5926
James C. Mabry, Investor Relations Manager, (910) 732-5788
Wachovia Corporation
P. O. Box 3099
Winston-Salem, NC 27150
Common Stock Listing - New York Stock Exchange, ticker symbol - WB
3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL SUMMARY TABLE 1
Twelve
Months
Ended 1996 1995 Nine Months Ended
September 30 Third Second First Fourth Third September 30
1996 Quarter Quarter Quarter Quarter Quarter 1996 1995
SUMMARY OF OPERATIONS
(thousands, except per share data)
Interest income - taxable equivalent ....... $3,270,760 $842,109 $810,637 $802,120 $815,894 $813,117 $2,454,866 $2,302,609
Interest expense ........................... 1,676,147 426,723 411,472 413,328 424,624 418,917 1,251,523 1,154,483
Net interest income - taxable equivalent ... 1,594,613 415,386 399,165 388,792 391,270 394,200 1,203,343 1,148,126
Taxable equivalent adjustment .............. 78,202 16,880 17,914 18,877 24,531 26,633 53,671 74,242
Net interest income ........................ 1,516,411 398,506 381,251 369,915 366,739 367,567 1,149,672 1,073,884
Provision for loan losses .................. 132,640 40,730 34,404 27,334 30,172 23,179 102,468 73,619
Net interest income after
provision for loan losses ................. 1,383,771 357,776 346,847 342,581 336,567 344,388 1,047,204 1,000,265
Other operating revenue .................... 766,767 197,778 198,595 184,105 186,289 170,415 580,478 493,812
Gain on sale of mortgage servicing
portfolio ................................. -- -- -- -- -- -- -- 79,025
Investment securities gains (losses) ...... 3,426 393 (219) 698 2,554 317 872 (26,048)
Total other income ......................... 770,193 198,171 198,376 184,803 188,843 170,732 581,350 546,789
Personnel expense .......................... 639,367 165,509 160,162 161,618 152,078 153,298 487,289 448,248
Other expense .............................. 610,509 150,970 149,925 146,627 162,987 145,584 447,522 440,283
Total other expense ........................ 1,249,876 316,479 310,087 308,245 315,065 298,882 934,811 888,531
Income before income taxes ................. 904,088 239,468 235,136 219,139 210,345 216,238 693,743 658,523
Applicable income taxes* ................... 284,061 74,872 75,773 69,269 64,147 64,958 219,914 202,178
Net income ................................. $ 620,027 $164,596 $159,363 $149,870 $146,198 $151,280 $ 473,829 $456,345
Net income per common share:
Primary ................................... $ 3.64 $ .98 $ .94 $ .87 $ .85 $ .88 $ 2.79 $ 2.65
Fully diluted ............................. $ 3.63 $ .97 $ .94 $ .87 $ .85 $ .87 $ 2.78 $ 2.64
Cash dividends paid per common share ....... $ 1.48 $ .40 $ .36 $ .36 $ .36 $ .36 $ 1.12 $ 1.02
Cash dividends paid on common stock ........ $ 249,865 $66,669 $60,684 $ 61,089 $ 61,423 $ 61,312 $ 188,442 $ 174,072
Cash dividend payout ratio ................. 40.3% 40.5% 38.1% 40.8% 42.0% 40.5% 39.8% 38.1%
Average primary shares outstanding ......... 170,415 167,966 169,861 171,467 172,372 171,793 169,758 171,993
Average fully diluted shares outstanding ... 170,670 168,354 169,972 171,653 172,705 172,512 170,251 172,882
SELECTED AVERAGE BALANCES (millions)
Total assets ............................... $ 44,661 $ 45,778 $ 44,956 $44,435 $ 43,477 $ 42,573 $ 45,059 $ 40,797
Loans - net of unearned income ............. 29,588 30,660 30,004 29,218 28,470 28,097 29,963 27,180
Investment securities** ................... 8,719 8,734 8,668 8,795 8,676 8,778 8,733 8,226
Other interest-earning assets .............. 1,571 1,611 1,519 1,594 1,562 1,210 1,574 1,014
Total interest-earning assets .............. 39,878 41,005 40,191 39,607 38,708 38,085 40,270 36,420
Interest-bearing deposits .................. 20,645 20,873 20,335 20,666 20,705 19,352 20,626 18,372
Short-term borrowed funds .................. 7,925 8,099 8,216 8,055 7,332 8,593 8,123 7,955
Long-term debt ............................. 5,821 6,454 6,129 5,487 5,213 4,851 6,025 4,797
Total interest-bearing liabilities ......... 34,391 35,426 34,680 34,208 33,250 32,796 34,774 31,124
Noninterest-bearing deposits ............... 5,392 5,408 5,426 5,372 5,361 5,212 5,402 5,282
Total deposits ............................. 26,037 26,281 25,761 26,038 26,066 24,564 26,028 23,654
Shareholders' equity ....................... 3,634 3,631 3,644 3,687 3,576 3,463 3,654 3,354
RATIOS (averages)
Annualized net loan losses to loans ........ .45% .53% .46% .37% .42% .33% .45% .35%
Annualized net yield on
interest-earning assets .................... 4.00 4.03 3.99 3.95 4.01 4.11 3.99 4.21
Shareholders' equity to:
Total assets ............................... 8.14 7.93 8.11 8.30 8.22 8.13 8.11 8.22
Net loans .................................. 12.45 12.00 12.31 12.80 12.74 12.51 12.36 12.53
Annualized return on assets ................ 1.39 1.44 1.42 1.35 1.35 1.42 1.40 1.49
Annualized return on
shareholders' equity ....................... 17.06 18.13 17.49 16.26 16.36 17.47 17.29 18.14
* Income taxes applicable to securities transactions were $1,321, $149, ($86),
$278, $980, $91, $341 and ($9,556), respectively
** Reported at amortized cost; excludes pretax unrealized gains on securities
available-for-sale of $101, $40, $74, $188, $104, $65, $100 and $11,
respectively
4
RESULTS OF OPERATIONS
OVERVIEW
Wachovia Corporation ("Wachovia") is a southeastern interstate bank holding
company with dual headquarters in Atlanta, Georgia, and Winston-Salem, North
Carolina. Principal banking subsidiaries are Wachovia Bank of Georgia, N.A.,
Wachovia Bank of North Carolina, N.A., and Wachovia Bank of South Carolina, N.A.
The First National Bank of Atlanta provides credit card services for Wachovia's
affiliated banks.
The economy appeared to slow during the third quarter of 1996 from the brisk
4.7 percent annual growth rate estimated for the second quarter. High debt
burdens contributed to an easing in consumer demand while adding to some
concerns over credit quality soundness. Within the corporation's primary
operating states of Georgia, North Carolina and South Carolina, economic growth
remained generally favorable. Seasonally adjusted unemployment rates averaged
4.4 percent in Georgia, 4.2 percent in North Carolina and 5.9 percent in South
Carolina for the three-month period versus 5.2 percent nationwide.
Wachovia's net income for the third quarter was $164.596 million or $.97 per
fully diluted share compared with $151.280 million or $.87 per fully diluted
share in the same three months of 1995. Year to date, net income totaled
$473.829 million or $2.78 per fully diluted share versus $456.345 million or
$2.64 per fully diluted share a year earlier. Annualized returns were 18.13
percent on shareholders' equity and 1.44 percent on assets for the quarter and
17.29 percent and 1.40 percent, respectively, year to date. Comparisons for the
first nine months of 1996 with a year earlier were moderated by several special
items in the second quarter of 1995, including an after-tax gain of $47.385
million or $.27 per share from the sale of the corporation's mortgage servicing
portfolio, an after-tax loss of $16.656 million or $.10 per share from
restructuring of the investment securities portfolio to improve yields and
after-tax expenses totaling $11.291 million or $.07 per share for other expenses
related to severance costs, higher consulting fees and charitable contributions.
Expanded discussion of operating results and the corporation's financial
condition is presented in the following narrative and tables. Interest income is
stated on a taxable equivalent basis which is adjusted for the tax-favored
status of earnings from certain loans and investments. References to changes in
assets and liabilities represent daily average levels unless otherwise noted.
5
COMPONENTS OF EARNINGS PER PRIMARY SHARE TABLE 2
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 Change 1996 1995 Change
Interest income - taxable equivalent ............. $ 5.01 $ 4.74 $ .27 $14.46 $13.39 $ 1.07
Interest expense ................................. 2.54 2.44 .10 7.37 6.71 .66
Net interest income - taxable equivalent ......... 2.47 2.30 .17 7.09 6.68 .41
Taxable equivalent adjustment .................... .10 .15 (.05) .32 .43 (.11)
Net interest income .............................. 2.37 2.15 .22 6.77 6.25 .52
Provision for loan losses ........................ .24 .14 .10 .60 .43 .17
Net interest income after provision
for loan losses .................................. 2.13 2.01 .12 6.17 5.82 .35
Other operating revenue .......................... 1.18 .99 .19 3.42 2.87 .55
Gain on sale of mortgage servicing portfolio ..... -- -- -- -- .46 (.46)
Investment securities gains (losses) ............ .01 -- .01 .01 (.15) .16
Total other income ............................... 1.19 .99 .20 3.43 3.18 .25
Personnel expense ................................ .99 .89 .10 2.87 2.61 .26
Other expense .................................... .90 .85 .05 2.64 2.56 .08
Total other expense .............................. 1.89 1.74 .15 5.51 5.17 .34
Income before income taxes ....................... 1.43 1.26 .17 4.09 3.83 .26
Applicable income taxes .......................... .45 .38 .07 1.30 1.18 .12
Net income ....................................... $ .98 $ .88 $.10 $2.79 $2.65 $.14
COMPUTATION OF EARNINGS PER COMMON SHARE TABLE 3
(thousands, except per share)
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
PRIMARY
Average common shares outstanding ................................................... 166,262 170,291 168,083 170,696
Dilutive common stock options - based on treasury
stock method using average market price ............................................. 1,579 1,412 1,564 1,217
Dilutive common stock awards - based on treasury
stock method using average market price ............................................. 125 90 111 80
Average primary shares outstanding ................................................... 167,966 171,793 169,758 171,993
Net income .......................................................................... $164,596 $151,280 $ 473,829 $456,345
Net income per common share - primary................................................ $ .98 $ .88 $ 2.79 $ 2.65
FULLY DILUTED
Average common shares outstanding ................................................... 166,262 170,291 168,083 170,696
Dilutive common stock options - based on treasury
stock method using higher of period-end
market price or average market price ................................................ 1,881 1,738 1,906 1,651
Dilutive common stock awards - based on treasury
stock method using higher of period-end
market price or average market price ................................................ 148 102 148 102
Convertible notes assumed converted ................................................. 63 381 114 433
Average fully diluted shares outstanding ............................................ 168,354 172,512 170,251 172,882
Net income .......................................................................... $164,596 $151,280 $473,829 $456,345
Add interest on convertible notes after taxes ....................................... 12 71 55 263
Adjusted net income ................................................................. $164,608 $151,351 $473,884 $456,608
Net income per common share - fully diluted.......................................... $ .97 $ .87 $ 2.78 $ 2.64
6
NET INTEREST INCOME
Taxable equivalent net interest income rose $21.186 million or 5.4 percent
for the third quarter in comparison with a year earlier and expanded $55.217
million or 4.8 percent for the first nine months of 1996. Good growth in
interest-earning assets, led by loans, primarily accounted for the increases in
both periods, which were moderated by a decline in the average rate earned and
by higher levels of interest-bearing liabilities to support asset growth. A
lower average rate paid also contributed to the gains, primarily benefiting the
third quarter. Compared with the second quarter of 1996, taxable equivalent net
interest income rose $16.221 million or 4.1 percent primarily on higher loan
volume and improvement in the average rate earned. The net yield on interest-
earning assets (taxable equivalent net interest income as a percentage of
average interest-earning assets) declined 8 basis points for the third period
and 22 basis points year to date but increased 4 basis points from the second
quarter.
Taxable equivalent interest income grew $28.992 million or 3.6 percent for
the quarter and $152.257 million or 6.6 percent for the first nine months.
Interest-earning assets rose $2.920 billion or 7.7 percent for the three months
and $3.850 billion or 10.6 percent year to date, offsetting the effects of a 30
basis point and 31 basis point decline, respectively, in the average rate
earned. Taxable equivalent interest income was higher by $31.472 million or 3.9
percent from the second quarter, reflecting growth of $814 million or 2 percent
in interest-earning assets and improvement of 6 basis points in the average rate
earned.
Loans increased $2.563 billion or 9.1 percent for the quarter and $2.783
billion or 10.2 percent year to date, led by the commercial portfolio. Compared
with the second quarter, loans were up $656 million or 2.2 percent, driven
largely by the retail sector, primarily credit cards and residential mortgages
including home equity loans.
Commercial loans, including related real estate categories, rose $1.809
billion or 11 percent for the third quarter in comparison with a year earlier
and $2.102 billion or 13.4 percent for the first nine months. Good growth was
achieved in both periods in all categories except tax-exempt loans, which
declined due to portfolio runoff and the reduced attractiveness of additional
tax-exempt borrowing and lending under current tax laws. Strongest volume gains
occurred in regular commercial loans, largely made to small businesses and
middle-market companies, in commercial mortgages and in lease financing. At
September 30, 1996, commercial real estate loans, based on regulatory
definitions, were $5.171 billion, representing 16.4 percent of total loans.
Commercial mortgages were $4.296 billion or 13.6 percent of total loans and
construction loans were $875 million or 2.8 percent. Regulatory definitions for
commercial real estate include loans which have real estate as the collateral
but not the primary consideration in a credit risk evaluation. At third-quarter
close 1995, commercial real estate loans were $4.476 billion, representing 15.4
percent of total loans, and at June 30, 1996 they were $4.939 billion or 16.1
percent of the loan portfolio.
Retail loans, including residential mortgages, increased $754 million or 6.4
percent for the third period and $681 million or 5.9 percent year to date, with
growth for the nine months moderated by the transfer of $500 million of credit
card receivables off the balance sheet through a securitization in the fourth
quarter of 1995. Gains were paced in both periods largely by residential
mortgages, including home equity loans. Good growth also occurred for the
quarter primarily in credit card loans and for the first nine months in indirect
retail loans, which consists of mainly automobile sales financing.
7
NET INTEREST INCOME AND AVERAGE BALANCES TABLE 4
Twelve
Months
Ended 1996 1995 Nine Months Ended
September 30 Third Second First Fourth Third September 30
1996 Quarter Quarter Quarter Quarter Quarter 1996 1995
NET INTEREST INCOME - TAXABLE
EQUIVALENT (thousands)
Interest income:
Loans ................................. $2,542,679 $661,220 $632,389 $619,722 $629,348 $630,199 $1,913,331 $1,807,001
Investment securities ................. 627,892 155,485 154,395 157,631 160,381 163,187 467,511 445,092
Interest-bearing bank balances ........ 36,047 9,329 9,258 9,018 8,442 473 27,605 679
Federal funds sold and securities
purchased under resale agreements ..... 12,990 3,275 3,155 3,250 3,310 1,959 9,680 3,924
Trading account assets ................ 51,152 12,800 11,440 12,499 14,413 17,299 36,739 45,913
Total ................................ 3,270,760 842,109 810,637 802,120 815,894 813,117 2,454,866 2,302,609
Interest expense:
Interest-bearing demand ............... 50,514 11,537 10,916 12,669 15,392 14,845 35,122 43,624
Savings and money market savings ...... 264,204 68,561 64,932 64,980 65,731 62,425 198,473 174,598
Savings certificates .................. 375,948 94,149 91,685 91,467 98,647 99,999 277,301 271,642
Large denomination certificates ....... 149,295 33,770 32,863 39,634 43,028 28,679 106,267 68,916
Time deposits in foreign offices ...... 51,377 13,676 11,033 13,101 13,567 11,299 37,810 28,309
Short-term borrowed funds ............. 439,866 109,725 110,030 110,390 109,721 129,411 330,145 357,286
Long-term debt ........................ 344,943 95,305 90,013 81,087 78,538 72,259 266,405 210,108
Total ................................ 1,676,147 426,723 411,472 413,328 424,624 418,917 1,251,523 1,154,483
Net interest income .................... $1,594,613 $415,386 $399,165 $388,792 $391,270 $394,200 $1,203,343 $1,148,126
Annualized net yield on
interest-earning assets ............... 4.00% 4.03% 3.99% 3.95% 4.01% 4.11% 3.99% 4.21%
AVERAGE BALANCES (millions)
Assets:
Loans - net of unearned income ........ $ 29,588 $30,660 $30,004 $29,218 $28,470 $ 28,097 $29,963 $27,180
Investment securities ................. 8,719 8,734 8,668 8,795 8,676 8,778 8,733 8,226
Interest-bearing bank balances ........ 454 478 462 456 421 23 465 12
Federal funds sold and securities
purchased under resale agreements ..... 234 240 232 241 225 133 237 87
Trading account assets ................ 883 893 825 897 916 1,054 872 915
Total interest-earning assets ........ 39,878 41,005 40,191 39,607 38,708 38,085 40,270 36,420
Cash and due from banks ............... 2,531 2,434 2,521 2,612 2,556 2,530 2,522 2,508
Premises and equipment ................ 631 642 643 633 606 578 640 563
Other assets .......................... 1,925 2,059 1,931 1,802 1,909 1,725 1,931 1,703
Unrealized gains (losses) on securities
available-for-sale .................... 101 40 74 188 104 65 100 11
Allowance for loan losses ............. (405) (402) (404) (407) (406) (410) (404) (408)
Total assets........................ $ 44,661 $ 45,778 $ 44,956 $44,435 $43,477 $42,573 $45,059 $40,797
Liabilities and shareholders' equity:
Interest-bearing demand ............... $ 3,289 $ 3,253 $ 3,272 $ 3,314 $ 3,317 $3,231 $ 3,279 $ 3,246
Savings and money market savings ...... 7,377 7,733 7,505 7,285 6,985 6,689 7,508 6,390
Savings certificates .................. 6,530 6,598 6,487 6,401 6,631 6,698 6,497 6,445
Large denomination certificates ....... 2,487 2,256 2,222 2,675 2,797 1,939 2,384 1,618
Time deposits in foreign offices ...... 962 1,033 849 991 975 795 958 673
Short-term borrowed funds ............. 7,925 8,099 8,216 8,055 7,332 8,593 8,123 7,955
Long-term debt ........................ 5,821 6,454 6,129 5,487 5,213 4,851 6,025 4,797
Total interest-bearing liabilities ... 34,391 35,426 34,680 34,208 33,250 32,796 34,774 31,124
Demand deposits in domestic offices ... 5,384 5,402 5,419 5,365 5,349 5,199 5,396 5,263
Demand deposits in foreign offices .... 3 1 2 4 7 8 2 7
Noninterest-bearing time deposits
in domestic offices ................... 5 5 5 3 5 5 4 12
Other liabilities ..................... 1,244 1,313 1,206 1,168 1,290 1,102 1,229 1,037
Shareholders' equity .................. 3,634 3,631 3,644 3,687 3,576 3,463 3,654 3,354
Total liabilities and
shareholders' equity ............... $44,661 $45,778 $44,956 $44,435 $43,477 $42,573 $45,059 $40,797
Total deposits ......................... $ 26,037 $ 26,281 $25,761 $26,038 $26,066 $24,564 $26,028 $23,654
8
Period-end loans by category as of September 30, 1996 and the preceding four
quarters are presented in the following table.
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
$ IN THOUSANDS 1996 1996 1996 1995 1995
Commercial .......................... $10,517,396 $10,280,931 $10,077,465 $ 9,753,450 $ 9,732,697
Tax-exempt .......................... 1,998,718 2,047,475 2,135,806 2,238,538 2,180,577
Total commercial .................. 12,516,114 12,328,406 12,213,271 11,991,988 11,913,274
Direct retail ....................... 772,947 767,154 730,804 755,375 730,523
Indirect retail ..................... 2,562,665 2,582,142 2,612,568 2,543,771 2,516,627
Credit card ......................... 4,377,293 4,180,440 3,967,603 3,917,997 4,115,406
Other revolving credit .............. 355,254 358,636 349,897 353,727 350,918
Total retail ...................... 8,068,159 7,888,372 7,660,872 7,570,870 7,713,474
Construction ........................ 874,928 808,866 731,630 745,776 750,919
Commercial mortgages ................ 4,296,306 4,130,537 3,982,332 3,855,095 3,724,937
Residential mortgages ............... 4,546,274 4,405,219 4,256,396 4,213,556 4,165,402
Total real estate ................. 9,717,508 9,344,622 8,970,358 8,814,427 8,641,258
Lease financing ..................... 745,673 644,087 583,403 493,756 421,878
Foreign ............................. 501,349 467,154 441,087 390,112 322,368
Total loans ...................... $31,548,803 $30,672,641 $29,868,991 $29,261,153 $29,012,252
Managed credit card receivables at September 30, 1996 totaled $5.002
billion, including $625 million of net securitized loans, compared with $4.240
billion, including $125 million of net securitized loans, one year earlier. At
June 30, 1996, managed credit card receivables were $4.805 billion, including
$625 million of net securitized loans.
Investment securities for the third quarter declined modestly year over
year, primarily the result of continued good expansion of the loan portfolio.
Year to date, investment securities remained higher by $507 million or 6.2
percent. Compared with the second quarter, investment securities were up $66
million or less than 1 percent. Investment securities at September 30, 1996 by
category are presented below.
$ IN THOUSANDS
Securities available-for-sale at market value:
U.S. Government and agency. . . . . . . . . . . . . . . . . $5,185,104
Mortgage backed securities. . . . . . . . . . . . . . . . . . 1,595,091
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395,889
Total securities available-for-sale. . . . . . . . . . . . 7,176,084
Securities held-to-maturity:
Mortgage backed securities. . . . . . . . . . . . . . . . . 1,149,431
State and municipal. . . . . . . . . . . . . . . . . . . . . . 252,713
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,828
Total securities held-to-maturity. . . . . . . . . . . . . 1,403,972
Total investment securities. .. . . . . . . . . . . . . . $8,580,056
The decline in held-to-maturity securities and increase in available-for-
sale securities from year-earlier levels principally reflects a reclassification
in the 1995 fourth quarter of held-to-maturity securities with a book value of
$2.720 billion to available-for-sale securities. The one-time reclassification
was made following issuance by the Financial Accounting Standards Board of "A
Guide to Implementation of Statement 115 on Accounting for Certain Investments
in Debt and Equity Securities." At September 30, 1996, securities held-to-
maturity had a market value of $1.462 billion, representing a $58 million
appreciation over book value. Securities available-for-sale marked to fair
market value under Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (FASB 115),
had an unrealized gain of $53.375 million, pretax, and $32.924 million, net of
tax, on the same date. Average securities available-for-sale had an unrealized
gain of $39.830 million, pretax, and $24.358 million, net of tax, for the third
quarter and $100.297 million, pretax, and $61.099 million, net of tax, for the
first nine months.
Interest expense rose $7.806 million or a modest 1.9 percent for the quarter
and $97.040 million or 8.4 percent year to date. Higher levels of interest-
bearing liabilities, primarily time deposits and long-term debt, accounted for
the increases in both periods, which were moderated partially by a lower average
rate paid.
9
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS - THIRD QUARTER* TABLE 5
Variance
Average Volume Average Rate Interest Attributable to
1996 1995 1996 1995 1996 1995 Variance Rate Volume
(Millions) INTEREST INCOME (Thousands)
Loans:
$ 9,974 $ 9,302 7.05 7.32 Commercial . . . . . . . . . . . . . . . . $ 176,809 $ 171,542 $ 5,267 $ (6,502) $11,769
1,991 2,117 8.82 10.50 Tax-exempt . . . . . . . . . . . . . . . . 44,127 56,008 (11,881) (8,603) (3,278)
11,965 11,419 7.35 7.91 Total commercial. . . . . . . . . . . 220,936 227,550 (6,614) (16,783) 10,169
766 732 9.41 9.32 Direct retail . . . . . . . . . . . . . . 18,115 17,195 920 156 764
2,563 2,493 8.45 8.41 Indirect retail . . . . . . . . . . . . . 54,414 52,836 1,578 224 1,354
4,270 4,064 12.30 12.28 Credit card. . . . . . . . . . . . . . . . 132,021 125,739 6,282 191 6,091
354 345 12.15 12.64 Other revolving credit . . . . . . . . . . 10,827 11,000 (173) (447) 274
7,953 7,634 10.77 10.75 Total retail. . . . . . . . . . . . . 215,377 206,770 8,607 358 8,249
831 698 8.99 9.79 Construction . . . . . . . . . . . . . . . 18,783 17,235 1,548 (1,483) 3,031
4,219 3,696 8.22 8.55 Commercial mortgages . . . . . . . . . . 87,206 79,673 7,533 (3,164) 10,697
4,526 4,091 8.39 8.53 Residential mortgages . . . . . . . . . . 95,381 87,934 7,447 (1,473) 8,920
9,576 8,485 8.37 8.64 Total real estate . . . . . . . . . . . 201,370 184,842 16,528 (5,950) 22,478
678 236 8.74 8.56 Lease financing . . . . . . . . . . . . . 14,900 5,095 9,805 106 9,699
488 323 7.04 7.29 Foreign . . . . . . . . . . . . . . . . . 8,637 5,942 2,695 (208) 2,903
30,660 28,097 8.58 8.90 Total loans . . . . . . . . . . . . .. 661,220 630,199 31,021 (23,361) 54,382
Investment securities:
Held-to-maturity:
-- 2,487 -- 6.70 U.S. Government and agency . . . . . . -- 42,029 (42,029) -- (42,029)
1,178 1,552 8.02 7.98 Mortgage backed securities . . . . . . 23,728 31,231 (7,503) 151 (7,654)
255 395 11.10 11.67 State and municipal . . . . . . . . . . 7,113 11,625 (4,512) (536) (3,976)
2 16 7.89 5.57 Other . . . . . . . . . . . . . . . . . 40 221 (181) 65 (246)
1,435 4,450 8.56 7.59 Total securities held-to-maturity . 30,881 85,106 (54,225) 9,523 (63,748)
Available-for-sale:**
5,344 3,246 6.73 7.17 U.S. Government and agency . . . 90,408 58,631 31,777 (3,743) 35,520
1,584 910 7.05 7.31 Mortgage backed securities . . . . 28,088 16,761 11,327 (606) 11,933
371 172 6.55 6.22 Other . . . . . . . . . . . . . . . . 6,108 2,689 3,419 146 3,273
7,299 4,328 6.79 7.16 Total securities available-for-sale 124,604 78,081 46,523 (4,165) 50,688
8,734 8,778 7.08 7.38 Total investment securities . . . 155,485 163,187 (7,702) (6,852) (850)
478 23 7.77 8.03 Interest-bearing bank balances . . . . . 9,329 473 8,856 (16) 8,872
Federal funds sold and
securities purchased under
240 133 5.44 5.83 resale agreements . . . . . . . . . . . . 3,275 1,959 1,316 (137) 1,453
893 1,054 5.70 6.51 Trading account assets . . . . . . . . . . . 12,800 17,299 (4,499) (1,999) (2,500)
$41,005 $38,085 8.17 8.47 Total interest-earning assets . . . . . . 842,109 813,117 28,992 (29,781) 58,773
INTEREST EXPENSE
$ 3,253 $ 3,231 1.41 1.82 Interest-bearing demand . . . . . . . . . . 11,537 14,845 (3,308) (3,401) 93
7,733 6,689 3.53 3.70 Savings and money market savings . . . . . 68,561 62,425 6,136 (2,984) 9,120
6,598 6,698 5.68 5.92 Savings certificates . . . . . . . . . . . 94,149 99,999 (5,850) (4,258) (1,592)
2,256 1,939 3.94 5.87 Large denomination certificates . . . . . . .. 33,770 28,679 5,091 429 4,662
Total time deposits in
19,840 18,557 4.17 4.40 domestic offices . . . . . . . . . . . . .. 208,017 205,948 2,069 (11,221) 13,290
1,033 795 5.27 5.64 Time deposits in foreign offices . . . . . . 13,676 11,299 2,377 (774) 3,151
20,873 19,352 4.23 4.45 Total time deposits . . . . . . . . . . . . 221,693 217,247 4,446 (11,306) 15,752
Federal funds purchased and
securities sold under
6,443 5,687 5.43 6.00 repurchase agreements . . . . . . . . . . 87,891 86,062 1,829 (8,661) 10,490
606 557 4.87 5.45 Commercial paper . . . . . . . . . . . . . .. 7,414 7,654 (240) (859) 619
1,050 2,349 5.46 6.03 Other short-term borrowed funds . . . . . . 14,420 35,695 (21,275) (3,048) (18,227)
Total short-term
8,099 8,593 5.39 5.98 borrowed funds . . . . . . . . . . . . . 109,725 129,411 (19,686) (12,345) (7,341)
4,827 3,765 5.73 5.70 Bank notes . . . . . . . . . . . . . . . . . 69,537 54,109 15,428 277 15,151
1,627 1,086 6.30 6.63 Other long-term debt . . . . . . . . . . . . 25,768 18,150 7,618 (933) 8,551
6,454 4,851 5.87 5.91 Total long-term debt . . . . . . . . . . .. 95,305 72,259 23,046 (486) 23,532
$35,426 $32,796 4.79 5.07 Total interest-bearing liabilities . . . . . 426,723 418,917 7,806 (23,908) 31,714
3.38 3.40 Interes rate spread
Net yield on interest-earning
4.03 4.11 assets and net interest income . . . . . . ..$415,386 $394,200 $21,186 (7,815) 29,001
*Interest income and yields are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable, reduced
by the nondeductible portion of interest expense
**Volume amounts are reported at amortized cost; excludes pretax unrealized
gains of $40 million in 1996 and $65 million in 1995
10
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS - NINE MONTHS* TABLE 6
Variance
Average Volume Average Rate Interest Attributable to
1996 1995 1996 1995 1996 1995 Variance Rate Volume
(Millions) INTEREST INCOME (Thousands)
Loans:
$ 9,840 $ 9,083 7.05 7.49 Commercial . . . . . . . . . . . . . . . . $ 519,182 $ 508,921 $ 10,261 ($30,702) $ 40,963
2,073 1,888 8.91 9.99 Tax-exempt . . . . . . . . . . . . . . . 138,237 141,146 (2,909) (15,991) 13,082
11,913 10,971 7.37 7.92 Total commercial . . . . . . . . . . . 657,419 650,067 7,352 (46,309) 53,661
753 732 9.40 9.18 Direct retail . . . . . . . . . . . . . .. 52,969 50,210 2,759 1,284 1,475
2,578 2,415 8.29 8.22 Indirect retail . . . . . . . . . . . . . 159,929 148,513 11,416 1,328 10,088
4,092 4,004 11.88 12.36 Credit card . . . . . . . . . . . . . . . 363,779 370,139 (6,360) (14,376) 8,016
354 342 12.22 12.64 Other revolving credit . . . . . . . . . .. 32,372 32,379 (7) (1,083) 1,076
7,777 7,493 10.46 10.73 Total retail . . . . . . . . . . . . . . 609,049 601,241 7,808 (14,605) 22,413
759 611 9.20 9.83 Construction . . . . . . . . . . . . . . 52,286 44,966 7,320 (3,012) 10,332
4,086 3,638 8.28 8.63 Commercial mortgages . . . . . . . . . . .. 253,379 234,827 18,552 (9,495) 28,047
4,365 3,968 8.44 8.32 Residential mortgages . . . . . . . . . . . 275,709 246,834 28,875 3,840 25,035
9,210 8,217 8.43 8.57 Total real estate . . . . . . . . . . . 581,374 526,627 54,747 (8,036) 62,783
608 209 9.11 8.21 Lease financing . . . . . . . . . . . . . . 41,488 12,849 28,639 1,572 27,067
455 290 7.04 7.49 Foreign . . . . . . . . . . . . . . . . . . 24,001 16,217 7,784 (998) 8,782
29,963 27,180 8.53 8.89 Total loans . . . . . . . . . . . . . . 1,913,331 1,807,001 106,330 (73,396) 179,726
Investment securities:
Held-to-maturity:
- 2,490 - 6.79 U.S. Government and agency . . . . . . - 126,533 (126,533) - (126,533)
1,221 1,437 8.07 8.03 Mortgage backed securities . . . . . .. 73,725 86,328 (12,603) 467 (13,070)
282 453 11.19 11.97 State and municipal . . . . . . . . . . 23,630 40,535 (16,905) (2,474) (14,431)
2 15 8.37 5.95 Other . . . . . . . . . . . . . . . . . 139 672 (533) 199 (732)
1,505 4,395 8.65 7.73 Total securities held-to-maturity . 97,494 254,068 (156,574) 27,538 (184,112)
Available-for-sale:**
5,438 2,782 6.80 6.79 U.S. Government and agency . . . . . . . 276,794 141,221 135,573 392 135,181
1,570 832 7.05 6.35 Mortgage backed securities . . . . . . . 82,854 39,503 43,351 4,850 38,501
220 217 6.29 6.35 Other . . . . . . . . . . . . . . . . . 10,369 10,300 69 (91) 160
7,228 3,831 6.84 6.67 Total securities available-for-sale . 370,017 191,024 178,993 5,223 173,770
8,733 8,226 7.15 7.23 Total investment securities . . . . 467,511 445,092 22,419 (4,754) 27,173
465 12 7.92 7.78 Interest-bearing bank balances . . . .. 27,605 679 26,926 14 26,912
Federal funds sold and
securities purchased under
237 87 5.45 6.01 resale agreements . . . . . . . . .. 9,680 3,924 5,756 (396) 6,152
872 915 5.63 6.71 Trading account assets . . . . . . . . 36,739 45,913 (9,174) (7,098) (2,076)
$40,270 $36,420 8.14 8.45 Total interest-earning assets . . . 2,454,866 2,302,609 152,257 (84,665) 236,922
INTEREST EXPENSE
$ 3,279 $ 3,246 1.43 1.80 Interest-bearing demand . . . . . . . . .. 35,122 43,624 (8,502) (8,949) 447
7,508 6,390 3.53 3.65 Savings and money market savings . . . . . 198,473 174,598 23,875 (5,847) 29,722
6,497 6,445 5.70 5.64 Savings certificates . . . . . . . . . . 277,301 271,642 5,659 3,502 2,157
2,384 1,618 5.96 5.69 Large denomination certificates . . . . . 106,267 68,916 37,351 3,360 33,991
Total time deposits in
19,668 17,699 4.19 4.22 domestic offices . . . . . . . .. 617,163 558,780 58,383 (3,408) 61,791
958 673 5.27 5.62 Time deposits in foreign offices . . . . . 37,810 28,309 9,501 (1,820) 11,321
20,626 18,372 4.24 4.27 Total time deposits . . . . . . . . 654,973 587,089 67,884 (3,684) 71,568
Federal funds purchased and
securities sold under
6,290 5,459 5.46 6.02 repurchase agreements . . . . . . . . 257,055 245,789 11,266 (24,015) 35,281
572 486 4.89 5.56 Commercial paper . . . . . . . . . . . . . . 20,941 20,182 759 (2,581) 3,340
1,261 2,010 5.52 6.07 Other short-term borrowed funds . . . . . . 52,149 91,315 (39,166) (7,609) (31,557)
Total short-term
8,123 7,955 5.43 6.01 borrowed funds . . . . . . . . . . .. 330,145 357,286 (27,141) (34,600) 7,459
4,594 3,855 5.73 5.63 Bank notes . . . . . . . . . . . . . . . .. .196,953 162,446 34,507 2,860 31,647
1,431 942 6.48 6.77 Other long-term debt . . . . . . . . . . ... 69,452 47,662 21,790 (2,010) 23,800
6,025 4,797 5.91 5.86 Total long-term debt . . . . . . . .. 266,405 210,108 56,297 2,015 54,282
$34,774 $31,124 4.81 4.96 Total interest-bearing liabilities . 1,251,523 1,154,483 97,040 (35,140) 132,180
3.33 3.49 Interest rate spread
Net yield on interest-earning assets
3.99 4.21 and net interest income . . . . . . . . .$1,203,343 $1,148,126 $ 55,217 (61,927) 117,144
* Interest income and yields are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable, reduced
by the nondeductible portion of interest expense
** Volume amounts are reported at amortized cost; excludes pretax unrealized
gains of $100 million in 1996 and $11 million in 1995
11
Interest-bearing liabilities increased $2.630 billion or 8 percent for the
third period and $3.650 billion or 11.7 percent for the first nine months, while
the average rate paid declined 28 basis points and 15 basis points,
respectively. Interest expense was up $15.251 million or 3.7 percent from the
second quarter, reflecting growth of $746 million or 2.2 percent in interest-
bearing liabilities and a rise of 2 basis points in the average rate paid.
Interest-bearing time deposits for the quarter and first nine months grew
$1.521 billion or 7.9 percent and $2.254 billion or 12.3 percent, respectively.
Gains in both periods occurred primarily in savings and money market savings,
which expanded $1.044 billion or 15.6 percent for the three months and $1.118
billion or 17.5 percent year to date. Growth was fueled largely by Wachovia's
Premiere account, a federally insured savings account offering money market
rates. Good increases also occurred for the quarter and first nine months in
large denomination certificates and foreign time deposits, with modest gains
recorded in interest-bearing demand deposits. Savings certificates declined
modestly for the quarter but remained largely unchanged year to date. Compared
with the second quarter, interest-bearing time deposits increased $538 million
or 2.6 percent, led by savings and money market savings, foreign time deposits
and savings certificates.
Short-term borrowings were lower by $494 million or 5.7 percent for the
third period but were up $168 million or 2.1 percent year to date. Federal funds
purchased and securities sold under repurchase agreements and commercial paper
borrowings increased in both periods, while other short-term borrowings, largely
short-term bank notes, declined. Short-term borrowings decreased modestly from
the second quarter, primarily due to a reduction of short-term bank notes. The
decline in short-term bank notes both year over year and from the second quarter
reflects the corporation's decision to lengthen maturities of its debt
instruments.
Short-term bank notes are part of Wachovia Bank of North Carolina's $16
billion global bank note program, consisting of both short- and medium-term
issues. At September 30, 1996, short-term bank notes totaled $266 million with
an average cost of 5.38 percent and an average maturity of 8.9 months compared
with $1.825 billion in outstandings with an average cost of 5.87 percent and an
average maturity of 1.4 months one year earlier. Medium-term bank notes,
classified as part of long-term debt, were $4.529 billion on the same date and
had an average cost of 5.68 percent and an average maturity of 1.38 years versus
$3.926 billion in outstandings with an average cost of 5.69 percent and an
average maturity of 1.4 years at third-quarter close 1995. Included in medium-
term bank notes at September 30, 1996 were $500 million of five-year floating
rate bank notes issued in Europe in May and $100 million of two-year fixed rate
notes issued in Europe in August. The floating rate notes were priced to yield
three-month LIBOR plus 4 basis points to the investor, and the fixed rate notes
have a coupon rate of 6.375 percent. In October 1996, an additional $250 million
of fixed rate medium-term notes was issued in Europe. The notes have a 12-year
maturity and a coupon rate of 7 percent. All of the medium-term bank notes are
rated Aa2 by Moody's and AA+ by Standard & Poor's.
Long-term debt increased $1.603 billion or 33 percent for the quarter and
$1.228 billion or 25.6 percent for the first nine months. Growth occurred both
in medium-term bank notes, up $1.062 billion or 28.2 percent for the third
period and $739 million or 19.2 percent year to date, and in other long-term
debt, which rose $541 million or 49.8 percent for the three months and $489
million or 51.9 percent for the first nine months. Other long-term debt includes
$250 million of 30-year subordinated debentures with a 10-year put option issued
in the fourth quarter of 1995. Long-term debt was higher by $325 million or 5.3
percent from the second quarter.
Gross deposits averaged $26.281 billion for the third period and $26.028
billion for the first nine months, up $1.717 billion or 7 percent and $2.374
billion or 10 percent, respectively, from the same periods in 1995. Collected
deposits, net of float, averaged $24.463 billion for the three months and
$24.206 billion year to date, higher by $1.683 billion or 7.4 percent and $2.295
billion or 10.5 percent from the same respective periods a year earlier.
ASSET AND LIABILITY MANAGEMENT AND INTEREST RATE SENSITIVITY
The corporation uses a number of tools to measure interest rate risk,
including monitoring the difference or gap between rate sensitive assets and
liabilities over various time periods, monitoring the change in present value of
the asset and liability portfolios under various rate scenarios and simulating
net interest income under the same rate scenarios. Management believes that
rate risk is best measured by simulation modeling
12
which calculates expected net interest income based on projected interest-
earning assets, interest-bearing liabilities, off-balance sheet financial
instruments and interest rates.
The corporation monitors exposure to a gradual change in rates of 200 basis
points up or down over a rolling 12-month period and an interest rate shock of
an instantaneous change in rates of 200 basis points up or down over the same
period. From time to time, the model horizon is expanded to a 24-month period.
The corporation policy limit for the maximum negative impact on net interest
income from a gradual change in interest rates of 200 basis points over 12
months is 7.5 percent. Management generally has maintained a risk position well
within the policy guideline level. As of September 30, 1996, the model indicated
the impact of a 200 basis point gradual rise in rates over 12 months would
approximate a .7 percent decrease in net interest income, while a 200 basis
point decline in rates over the same period would approximate a .7 percent
increase from an unchanged rate environment.
In addition to on-balance sheet instruments such as investment securities
and purchased funds, the corporation uses off-balance sheet derivative
instruments to manage interest rate risk, liquidity and net interest income.
Off-balance sheet instruments include interest rate swaps, futures and options
with indices that directly correlate to on-balance sheet instruments. The
corporation has used off-balance sheet financial instruments, principally
interest rate swaps, over a number of years and believes their use on a sound
basis enhances the effectiveness of asset and liability and interest rate
sensitivity management.
Off-balance sheet asset and liability derivative transactions are based on
referenced or notional amounts. At September 30, 1996, the corporation had
$1.752 billion notional amount of derivatives outstanding for asset and
liability management purposes, all of which represent interest rate swaps.
Credit risk of off-balance sheet derivative financial instruments is equal to
the fair value gain of the instrument if a counterparty fails to perform. The
credit risk is normally a small percentage of the notional amount and fluctuates
as interest rates move up or down. The corporation mitigates this risk by
subjecting the transactions to the same rigorous approval and monitoring process
as is used for on-balance sheet credit transactions, by dealing in the national
market with highly rated counterparties, by executing all transactions under
International Swaps and Derivatives Association Master Agreements and by using
collateral instruments to reduce exposure. Collateral is delivered by either
party when the fair value of a particular transaction or group of transactions
with the same counterparty on a net basis exceeds an acceptable threshold of
exposure. The threshold level is determined based on the strength of the
individual counterparty.
The fair value of all asset and liability derivative positions for which the
corporation was exposed to counterparties totaled $10 million at September 30,
1996. The fair value of all asset and liability derivative positions for which
counterparties were exposed to the corporation amounted to $18 million on the
same date. Fair value details and additional asset and liability derivative
information are included in the following tables.
Estimated Fair Value of Asset and Liability Management Derivatives by Purpose
September 30, 1996 September 30, 1995
Notional Fair Value Fair Value Net Fair Value Notional Net Fair Value
$ IN MILLIONS Value Gains (Losses) Gains (Losses) Value Gains (Losses)
Convert floating rate liabilities to fixed:
Swaps-pay fixed/receive floating .................... $ 82 $ 1 $ (3) ($ 2) $124 $ (3)
Caps purchased-pay fixed/receive floating ........... -- -- -- -- 15 --
Convert fixed rate assets to floating:
Swaps-pay fixed/receive floating .................... 370 -- (4) (4) 402 (3)
Forward starting swaps-pay fixed/receive floating ... 39 -- (2) (2) 58 (4)
Convert fixed rate liabilities to floating:
Swaps-receive fixed/pay floating .................... 400 2 (9) (7) 200 (2)
Convert term liabilities with quarterly
rate resets to monthly:
Swaps-receive floating/pay floating ................. 300 -- -- -- -- --
Convert floating rate assets to fixed:
Swaps-receive fixed/pay floating .................... 311 2 -- 2 218 --
Index amortizing swaps-receive fixed/pay floating ... 250 5 -- 5 325 12
Total derivatives .................................. $1,752 $10 ($18) ($8) $1,342 $--
13
Maturity Schedule of Asset and Liability Management Derivatives
September 30, 1996
Within Over Average
One Two Three Four Five Five Life
$ IN MILLIONS Year Years Years Years Years Years Total (Years)
Interest rate swaps:
Pay fixed/receive floating:
Notional amount ........................ $ 360 $ 14 $ 14 $ 14 $ 7 $ 43 $ 452 1.37
Weighted average rates received ........ 4.42% 5.82% 5.75% 5.72% 6.08% 5.59% 4.69%
Weighted average rates paid ............. 7.36 6.49 6.64 7.19 9.26 7.79 7.37
Receive fixed/pay floating:
Notional amount ........................ $ 101 $ 152 $ 101 $ 151 $ 104 $ 102 $ 711 4.01
Weighted average rates received ........ 6.79% 6.58% 6.59% 7.42% 6.53% 6.37% 6.75%
Weighted average rates paid ............. 5.52 5.71 5.68 5.53 5.61 5.93 5.66
Receive floating/pay floating:
Notional amount ........................ -- -- -- -- $ 300 -- $ 300 4.68
Weighted average rates received ......... -- -- -- -- 5.56% -- 5.56%
Weighted average rates paid ............. -- -- -- -- 5.44 -- 5.44
Index amortizing swaps:*
Receive fixed/pay floating:
Notional amount ........................ $ 99 $ 112 $ 11 $ 11 $ 17 -- $ 250 1.55
Weighted average rates received ........ 7.88% 8.47% 8.40% 8.07% 8.56% -- 8.22%
Weighted average rates paid ............. 5.68 5.63 5.64 5.66 5.63 -- 5.65
Total interest rate swaps:
Notional amount ......................... $ 560 $ 278 $ 126 $ 176 $ 428 $ 145 $ 1,713 3.07
Weighted average rates received ......... 5.46% 7.30% 6.65% 7.32% 5.93% 6.13% 6.21%
Weighted average rates paid .............. 6.73 5.72 5.79 5.68 5.55 6.49 6.07
Forward starting interest rate swaps:
Notional amount ......................... -- -- -- -- -- $ 39 $ 39 7.52
Weighted average rates received .......... -- -- -- -- -- 8.03% 8.03%
Total derivatives (notional amount) ... $ 560 $ 278 $ 126 $ 176 $ 428 $ 184 $ 1,752 3.17
* Maturity is based upon expected average lives rather than contractual lives.
Asset and liability transactions are accounted for following hedge
accounting rules. Accordingly, gains and losses related to the fair value of
derivative contracts used for asset and liability management purposes are not
immediately recognized in earnings. If the hedged or altered balance sheet
amounts were marked to market, the resulting unrealized balance sheet gains or
losses could be expected to offset unrealized derivatives gains and losses.
NONPERFORMING ASSETS
Nonperforming assets at September 30, 1996 were $78.150 million or .25
percent of loans and foreclosed property. The total represented an increase of
$2.701 million or 3.6 percent from one year earlier and was higher by $5.505
million or 7.6 percent from June 30, 1996.
Real estate nonperforming assets included in the September 30, 1996 total
were $61.689 million or .63 percent of real estate loans and foreclosed real
estate. This compared with $60.813 million or .70 percent one year earlier and
with $57.897 million or .62 percent at second-quarter close. Real estate
nonperforming loans were $51.002 million at the end of the 1996 third quarter,
$47.142 million one year earlier and $45.391 million at June 30, 1996.
Commercial real estate nonperforming assets were $34.932 million or .68
percent of related loans and foreclosed real estate versus $32.904 million or
.73 percent at third-quarter close 1995 and $34.498 million or .70 percent at
the end of the second quarter. Included in these amounts were commercial real
estate nonperforming loans of $29.171 million at September 30, 1996, $28.121
million one year earlier and $27.392 million at June 30, 1996.
14
NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS TABLE 7
(thousands)
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
1996 1996 1996 1995 1995
NONPERFORMING ASSETS
Cash-basis assets - domestic borrowers .............................61,283* $ 55,219 $ 57,867 $ 53,547 $ 57,524
Restructured loans - domestic ...................................... -** -- -- -- --
Total nonperforming loans .........................................61,283 55,219 57,867 53,547 57,524
Foreclosed property:
Foreclosed real estate ............................................12,852 15,162 17,209 14,468 16,651
Less valuation allowance .......................................... 2,165 2,656 2,819 2,863 2,980
Other foreclosed assets ........................................... 6,180 4,920 5,295 4,212 4,254
Total foreclosed property .........................................16,867 17,426 19,685 15,817 17,925
Total nonperforforming assets .....................................$78,150*** $72,645 $77,552 $69,364 $75,449
Nonperforming loans to period-end loans ............................ .19% .18% .19% .18% .20%
Nonperforming assets to period-end loans and foreclosed property ... .25 .24 .26 .24 .26
Period-end allowance for loan losses times nonperforming loans ..... 6.68X 7.41x 7.07x 7.63x 7.10x
Period-end allowance for loan losses times nonperforming assets .... 5.24 5.63 5.27 5.89 5.42
CONTRACTUALLY PAST DUE LOANS
(accruing loans past due 90 days or more)
Domestic borrrowers ...............................................$53,304 $63,317 $57,415 $48,970 $47,058
* Includes $20,154 of loans which have been defined as impaired per FASB
Statement No. 114, Accounting for Impairment of a Loan
** Excludes $199 of loans which have been renegotiated at market rates and
have been reclassified to performing status
*** Net of cumulative corporate and commercial real estate charge-offs and
foreclosed real estate write-downs totaling $14,415; includes $3,535 of
nonperforming assets on which interest and principal are paid current
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses was $40.730 million for the quarter and
$102.468 million for the first nine months, up $17.551 million or 75.7 percent
and $28.849 million or 39.2 percent, respectively, from year-earlier periods and
higher by $6.326 million or 18.4 percent from the 1996 second quarter. The
provision reflects management's assessment of the adequacy of the allowance for
loan losses to absorb potential write-offs in the loan portfolio due to a
deterioration in credit conditions or change in risk profile.
Net loan losses for the third period were $40.664 million or .53 percent
annualized of average loans, an increase of $17.536 million or 75.8 percent from
$23.128 million or .33 percent of average loans in the same three months of
1995. Year to date, net loan losses totaled $102.205 million or .45 percent of
average loans, up $31.138 million or 43.8 percent from $71.067 million or .35
percent of loans a year earlier. Increases in both periods reflected higher
losses primarily in consumer loans, with reduced recoveries also a factor for
the third quarter. Compared with the second quarter, net loan losses rose $6.337
million or 18.5 percent, due largely to an increase in credit card and
commercial charge-offs and to lower recoveries of real estate loan losses.
Excluding credit cards, net loan losses totaled $6.460 million or .10 percent of
average loans for the third quarter and $8.379 million or .04 percent for the
first nine months versus net recoveries of $1.089 million or .02 percent and net
losses of $7.979 million or .05 percent in the same respective periods of 1995
and net losses of $2.583 million or .04 percent in the 1996 second quarter.
Credit card net charge-offs for the third period were $34.204 million or
3.20 percent annualized of average credit card receivables, up $9.987 million or
41.2 percent from $24.217 million or 2.38 percent a year earlier. For the first
nine months, credit card net loan losses totaled $93.826 million or 3.06 percent
of average credit card loans, an increase of $30.738 million or 48.7 percent
from $63.088 million or 2.10 percent of average outstandings in the same period
of 1995. Heavy debt burdens in the consumer sector are increasingly evident
across the credit card industry as delinquencies and charge-offs continue to
rise. Other retail loan net charge-offs, associated with direct and indirect
retail loans, were $4.177 million or .50 percent of average related receivables
for the quarter and $12.322 million or .49 percent year to date, higher by
$1.624
15
million or 63.6 percent and $4.820 million or 64.2 percent, respectively,
from year-earlier periods. Real estate loans had net recoveries of $1.384
million or .06 percent for the three months and $8.323 million or .12 percent
for the first nine months versus net recoveries of $2.495 million or .12 percent
and $403 thousand or .01 percent, respectively, in 1995.
ALLOWANCE FOR LOAN LOSSES (thousands) TABLE 8
1996 1995 Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1996 1995
SUMMARY OF TRANSACTIONS
Balance at beginning of period ....................... $409,205 $408,928 $408,808 $408,684 $408,633 $408,808 $406,132
Additions from acquisitions .......................... -- 200 -- -- -- 200 --
Provision for loan losses ............................ 40,730 34,404 27,334 30,172 23,179 102,468 73,619
Deduct net loan losses:
Loans charged off:
Commercial .......................................... 2,748 324 65 1,662 431 3,137 2,621
Credit card ......................................... 38,783 36,343 31,902 29,292 27,424 107,028 72,684
Other revolving credit .............................. 1,790 1,346 1,092 1,239 1,202 4,228 3,065
Other retail ........................................ 5,556 4,840 5,495 4,747 3,609 15,891 10,549
Real estate ......................................... 191 1,371 134 1,332 526 1,696 6,416
Lease financing ..................................... 348 235 377 56 99 960 836
Foreign ............................................. -- -- -- -- -- -- --
Total .............................................. 49,416 44,459 39,065 38,328 33,291 132,940 96,171
Recoveries:
Commercial .......................................... 666 1,198 860 894 2,561 2,724 4,656
Credit card ......................................... 4,579 4,599 4,024 3,365 3,207 13,202 9,596
Other revolving credit .............................. 495 290 283 278 273 1,068 862
Other retail ........................................ 1,379 1,138 1,052 913 1,056 3,569 3,047
Real estate ......................................... 1,575 2,866 5,578 2,804 3,021 10,019 6,819
Lease financing ..................................... 58 41 54 26 45 153 116
Foreign ............................................. -- -- -- -- -- -- 8
Total .............................................. 8,752 10,132 11,851 8,280 10,163 30,735 25,104
Net loan losses ..................................... 40,664 34,327 27,214 30,048 23,128 102,205 71,067
Balance at end of period* ............................ $409,271 $409,205 $408,928 $408,808 $408,684 $409,271 $408,684
NET LOAN LOSSES (RECOVERIES) BY CATEGORY
Commercial .......................................... $ 2,082 $ (874) $ (795) $ 768 $ (2,130) $ 413 $ (2,035)
Credit card ......................................... 34,204 31,744 27,878 25,927 24,217 93,826 63,088
Other revolving credit .............................. 1,295 1,056 809 961 929 3,160 2,203
Other retail ........................................ 4,177 3,702 4,443 3,834 2,553 12,322 7,502
Real estate ......................................... (1,384) (1,495) (5,444) (1,472) (2,495) (8,323) (403)
Lease financing ..................................... 290 194 323 30 54 807 720
Foreign ............................................. -- -- -- -- -- -- (8)
Total............................................. $ 40,664 $34,327 $27,214 $ 30,048 $ 23,128 $102,205 $ 71,067
Net loan losses - excluding credit cards ............ $ 6,460 $ 2,583 $ (664) $ 4,121 $ (1,089) $ 8,379 $ 7,979
ANNUALIZED NET LOAN LOSSES (RECOVERIES)
TO AVERAGE LOANS BY CATEGORY
Commercial .......................................... .07% (.03%) (.03%) .03% (.07%) -% (.02%)
Credit card ......................................... 3.20 3.14 2.82 2.73 2.38 3.06 2.10
Other revolving credit .............................. 1.46 1.19 .92 1.10 1.08 1.19 .86
Other retail ........................................ .50 .44 .54 .47 .32 .49 .32
Real estate ......................................... (.06) (.07) (.25) (.07) (.12) (.12) (.01)
Lease financing ..................................... .17 .13 .24 .03 .09 .18 .46
Foreign ............................................. -- -- -- -- -- -- --
Total loans ......................................... .53 .46 .37 .42 .33 .45 .35
Total loans - excluding credit cards ................ .10 .04 (.01) .07 (.02) .04 .05
Period-end allowance to outstanding loans ........... 1.30 1.33 1.37 1.40 1.41 1.30 1.41
*Includes the related allowance for credit losses for impaired loans as defined
in FASB 114, "Accounting by Creditors for Impairment of a Loan," of $1,453 at
September 30, 1996, $791 at June 30, 1996, $883 at March 31, 1996, $916 at
December 31, 1995 and $916 at September 30, 1995
16
Selected data on the corporation's managed credit card portfolio, which
includes securitized loans, is presented in the following table.
Managed Credit Card Data
1996 1995 Nine Months Ended
Third Second First Fourth Third September 30
$ IN THOUSANDS Quarter Quarter Quarter Quarter Quarter 1996 1995
Average credit card outstandings ......$4,895,000 $4,670,000 $4,583,000 $4,286,000 $4,189,000 $4,717,000 $ 4,129,000
Net loan losses ....................... 39,370 36,733 32,359 29,164 24,832 108,462 64,208
Annualized net loan losses to
average loans ........................ 3.22% 3.15% 2.82% 2.72% 2.37% 3.07% 2.07%
Delinquencies (30 days or more)
to period-end loans .................. 2.26 2.01 2.30 1.93 1.74 2.26 1.74
At September 30, 1996, the allowance for loan losses was $409.271 million or
1.30 percent of period-end loans and 668 percent of nonperforming loans. This
compared with $408.684 million, 1.41 percent and 710 percent, respectively, one
year earlier and with $409.205 million, 1.33 percent and 741 percent,
respectively, at June 30, 1996.
NONINTEREST INCOME
Total other operating revenue grew $27.363 million or 16.1 percent for the
third quarter and $86.666 million or 17.6 percent year to date, reflecting
stronger sales efforts, focused technology enhancements and some new fee
pricing. Good gains were achieved in both periods in all categories except
mortgage fee income and trading account profits, with strong results
particularly in deposit account service charges, credit card fee income,
electronic banking and investment fee income. Total other operating revenue
declined a modest $817 thousand or under 1 percent from the second quarter,
which included a $9.575 million gain from the sale of the corporation's bond
trustee business to The Bank of New York. Excluding this one-time gain, total
other operating revenue increased $8.758 million or 4.6 percent from the second
quarter.
Deposit account service charge revenues rose $9.869 million or 18.8 percent
for the third period and $26.062 million or 17 percent year to date. Increases
occurred primarily in overdraft charges, commercial analysis fees and
insufficient funds charges. Improved collections largely accounted for the rise
in overdraft charges, while expanded sales contributed to the growth in
commercial analysis fees.
Credit card fee income increased $5.909 million or 19 percent and $11.468
million or 12.5 percent for the three and nine months, respectively. Gains in
both periods largely reflected good growth in interchange income, higher
overlimit charges and expanded net revenues received in the form of excess
servicing fees on securitized loans.
Electronic banking revenues, consisting of fees from debit card and ATM
usage, were up $3.948 million or 44.1 percent for the third quarter and $9.765
million or 39 percent year to date. Growth was driven primarily by new
surcharges on noncustomers for ATM usage and by higher levels of debit card
interchange income.
Investment fee income rose $1.455 million or 16.7 percent for the third
period and $11.945 million or 62 percent for the first nine months. Gains in
both periods largely reflected expanded sales of mutual funds through the
corporation's investment counselors and increased loan syndication activity.
Higher brokerage commission income also contributed to the growth year to date.
Trust service revenues increased $2.132 million or 6.7 percent and $6.893
million or 7.2 percent for the quarter and first nine months, respectively.
Gains reflected good growth in sales of personal trust services, higher fee
schedules and increased market values for trust assets under management,
including the corporation's proprietary Biltmore mutual funds. Corporate trust
fees were largely unchanged for the quarter and first nine months and were
impacted in both periods by the sale of the corporation's bond trustee business
in April 1996.
Trading account profits were up $430 thousand or 7.6 percent for the third
period but remained lower by $2.234 million or 12.8 percent year to date.
Improved bond market conditions in the third quarter expanded profits in all
categories of trading account assets except government and agency securities.
For the first nine months, profits in trading account assets were below year-
earlier levels, principally due to first quarter weakness in the bond market.
Income from foreign exchange trading decreased for the third period and year to
date.
Mortgage fee income declined modestly for the quarter and was down $6.481
million or 33.6 percent for the first nine months. The decrease year to date
primarily reflected the loss of servicing fee income due to the sale of the
corporation's mortgage servicing portfolio in June 1995. Losses on loan sales
also contributed
17
to the declines in both periods. Decreases were partially offset by higher
levels of mortgage origination fees in both periods and by stronger gains year
to date on sales of mortgage servicing rights.
Remaining combined categories of total other operating revenue were up
$3.790 million or 13.8 percent for the three months and $29.248 million or 41.1
percent for the first nine months. Insurance premiums and commissions increased
$1.622 million or 53.3 percent for the quarter and $2.704 million or 27.8
percent year to date. Bankers' acceptance and letter of credit fees were higher
by $799 thousand or 13.6 percent and $1.504 million or 8.8 percent for the third
period and first nine months, respectively. Other service charges and fees rose
$2.764 million or 49.3 percent for the quarter and $7.320 million or 41.5
percent for the nine months, principally due to contractual revenues received
for servicing the corporation's securitized loan portfolios. Other income
declined by $1.395 million or 10.7 percent for the quarter but rose $17.720
million or 66.6 percent year to date. Included in other income for the first
nine months was the $9.575 million gain from the sale of the corporation's bond
trustee business.
Including investment securities gains and losses and the sale in 1995 of the
corporation's mortgage servicing portfolio, total noninterest income was up
$27.439 million or 16.1 percent for the quarter and $34.561 million or 6.3
percent year to date. Investment securities sales had net gains of $393 thousand
for the third period and $872 thousand for the first nine months compared with
net gains of $317 thousand and net losses of $26.048 million, respectively, in
1995. Investment securities net losses for the first nine months of 1995
included net losses of $26.236 million in the second quarter due to
restructuring of the available-for-sale portfolio to improve yields. The sale of
the corporation's mortgage servicing portfolio resulted in a net gain of $79.025
million, also in the second quarter of 1995.
NONINTEREST INCOME (thousands) TABLE 9
1996 1995 Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1996 1995
Service charges on deposit accounts ...............$62,278 $ 60,928 $ 56,598 $55,371 $ 52,409 $ 179,804 $ 153,742
Fees for trust services ............................33,872 34,508 34,345 34,689 31,740 102,725 95,832
Credit card income - net of interchange payments ...37,089 33,848 32,522 32,291 31,180 103,459 91,991
Electronic banking .................................12,910 12,582 9,340 9,412 8,962 34,832 25,067
Investment fee income ............................. 10,145 10,842 10,229 7,682 8,690 31,216 19,271
Mortgage fee income ................................ 4,099 4,289 4,401 4,050 4,269 12,789 19,270
Trading account profits - excluding interest ....... 6,076 5,698 3,452 8,238 5,646 15,226 17,460
Insurance premiums and commissions ................. 4,666 4,032 3,748 3,422 3,044 12,446 9,742
Bankers' acceptance and letter of credit fees ...... 6,684 6,109 5,898 6,003 5,885 18,691 17,187
Other service charges and fees ..................... 8,373 7,985 8,590 7,054 5,609 24,948 17,628
Other income .......................................11,586 17,774 14,982 18,077 12,981 44,342 26,622
Total other operating revenue ...................197,778 198,595 184,105 186,289 170,415 580,478 493,812
Gain on sale of mortgage servicing portfolio ....... -- -- -- -- -- -- 79,025
Investment securities gains (losses) ............... 393 (219) 698 2,554 317 872 (26,048)
Total ...........................................$198,171 $198,376 $184,803 $188,843 $170,732 $581,350 $546,789
NONINTEREST EXPENSE
Total noninterest expense increased $17.597 million or 5.9 percent for the
third quarter and $46.280 million or 5.2 percent year to date. Growth in both
periods was driven primarily by personnel expense, principally salaries.
Combined net occupancy and equipment expense also rose for both the third period
and first nine months, while other combined categories of noninterest expense
edged up slightly for the three months but remained modestly lower year to date.
Compared with the second quarter, noninterest expense increased $6.392 million
or 2.1 percent, principally due to higher salaries expense. The corporation's
overhead ratio measuring noninterest expense spending as a percentage of total
adjusted revenues (taxable equivalent net interest income and total other
operating revenue) declined to 51.6 percent for the third quarter and 52.4
percent for the first nine months from 52.9 percent and 54.1 percent,
respectively, in 1995 and from 51.9 percent in the second quarter of 1996.
Total personnel expense grew $12.211 million or 8 percent for the three
months and $39.041 million or 8.7 percent year to date. Salaries expense rose
$10.475 million or 8.2 percent for the third period and
18
$32.828 million or 8.9 percent for the first nine months, reflecting
increased head count in growing business lines and the hiring of additional
salesforce personnel. Full-time equivalent employees totaled 16,185 at September
30, 1996, up from 15,843 one year earlier. Benefits expense was up $1.736
million or 6.6 percent for the quarter and $6.213 million or 7.8 percent year to
date, primarily due to higher retirement benefits costs and payroll taxes
associated with an expanded salaries base.
Combined net occupancy and equipment expense increased $4.831 million or
10.2 percent and $9.350 million or 6.5 percent for the three and nine months,
respectively. Net occupancy expense was up $1.737 million or 8.1 percent for the
quarter and $5.469 million or 8.7 percent year to date, largely due to increased
building depreciation expense. Equipment expense rose $3.094 million or 12
percent for the third period and $3.881 million or 4.7 percent for the first
nine months, driven primarily by higher depreciation and external equipment
maintenance costs.
Remaining combined categories of noninterest expense were up $555 thousand
or under 1 percent for the quarter but decreased $2.111 million or less than 1
percent year to date. Regulatory agency fees and other bank services expenses
dropped $8.057 million or 68.1 percent for the third period and $36.854 million
or 85.7 percent for the first nine months, reflecting the phaseout of FDIC
premiums for well capitalized banking institutions. Savings from the elimination
of these insurance premiums have been offset by higher spending in areas
primarily related to the corporation's growth initiatives, including outside
data processing, programming and software expense for the quarter, and
advertising and sales promotion spending and professional services expense year
to date.
On September 30, 1996, Congress enacted legislation mandating a one-time
assessment to recapitalize the Savings Association Insurance Fund. The impact of
this legislation was not material tothe corporation's noninterest expense or
results of operations.
NONINTEREST EXPENSE (thousands) TABLE 10
1996 1995 Nine Months Ended
Third Second First Fourth Third September 30
Quarter Quarter Quarter Quarter Quarter 1996 1995
Salaries ...........................................$137,627 $ 132,438 $131,820 $129,673 $127,152 $ 401,885 $ 369,057
Employee benefits ................................... 27,882 27,724 29,798 22,405 26,146 85,404 79,191
Total personnel expense ...........................165,509 160,162 161,618 152,078 153,298 487,289 448,248
Net occupancy expense ............................... 23,161 22,184 22,678 24,551 21,424 68,023 62,554
Equipment expense ................................... 28,844 28,054 28,931 27,753 25,750 85,829 81,948
Postage and delivery ................................ 9,973 9,780 10,452 9,801 9,379 30,205 28,161
Outside data processing, programming and software ... 11,339 11,179 10,704 11,966 9,959 33,222 30,520
Stationery and supplies ............................. 6,012 6,951 7,006 7,604 6,374 19,969 19,201
Advertising and sales promotion ..................... 14,442 15,502 17,071 16,869 14,334 47,015 33,493
Professional services ............................... 8,173 10,743 9,707 14,922 9,721 28,623 24,561
Travel and business promotion ....................... 4,929 5,335 4,237 6,051 4,474 14,501 13,643
Regulatory agency fees and other bank services ...... 3,781 1,320 1,053 6,576 11,838 6,154 43,008
Amortization of intangible assets ................... 1,095 1,098 1,078 1,190 1,210 3,271 7,397
Foreclosed property expense ......................... (370) 175 (126) 813 (146) (321) 107
Other expense ....................................... 39,591 37,604 33,836 34,891 31,267 111,031 95,690
Total ............................................$316,479 $310,087 $308,245 $315,065 $298,882 $934,811 $888,531
Overhead ratio ...................................... 51.6% 51.9% 53.8% 54.6% 52.9% 52.4% 54.1%
INCOME TAXES
Applicable income taxes increased $9.914 million or 15.3 percent for the
quarter and $17.736 million or 8.8 percent year to date. Income taxes computed
at the statutory rate are reduced primarily by the interest earned on state and
municipal debt securities and industrial revenue obligations. Also, within
certain limitations, one-half of the interest income earned on qualifying
employee stock ownership plan loans is exempt from federal taxes. The interest
earned on state and municipal debt instruments is exempt from federal taxes and,
except for out-of-state issues, from Georgia and North Carolina taxes as well,
and results in substantial interest savings for local governments and their
constituents.
19
INCOME TAXES (thousands) TABLE 11
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
Income before income taxes ..................................................... $239,468 $216,238 $693,743 $658,523
Federal income taxes at statutory rate ......................................... $ 83,814 $ 75,683 $242,810 $230,483
State and local income taxes - net of federal benefit .......................... 2,755 952 9,010 (864)
Effect of tax-exempt securities interest and other income ...................... (10,187) (11,799) (30,783) (33,404)
Other items .................................................................... (1,510) 122 (1,123) 5,963
Total tax expense ............................................................ $74,872 $64,958 $219,914 $202,178
Currently payable:
Federal ....................................................................... $57,031 $60,398 $170,436 $213,143
Foreign ....................................................................... 242 59 506 183
State and local ............................................................... 2,461 241 8,190 10,954
Total ........................................................................ 59,734 60,698 179,132 224,280
Deferred:
Federal ....................................................................... 13,363 3,026 35,474 (9,819)
State and local ............................................................... 1,775 1,224 5,308 (12,283)
Total ........................................................................ 15,138 4,260 40,782 (22,102)
Total tax expense ........................................................... $74,872 $64,958 $219,914 $202,178
FINANCIAL CONDITION AND CAPITAL RATIOS
Assets at September 30, 1996 totaled $47.483 billion, including interest-
earning assets of $42.036 billion and loans of $31.549 billion. Comparable
amounts one year earlier were $44.101 billion of assets, $39.483 billion of
interest-earning assets and $29.012 billion of loans. At June 30, 1996, total
assets were $46.049 billion, interest-earning assets were $41.140 billion and
loans were $30.673 billion.
Deposits at the end of the 1996 third quarter were $27.436 billion,
including $20.928 billion of time deposits, representing 76.3 percent of the
total. Deposits one year earlier were $25.283 billion with $20.066 billion of
time deposits or 79.4 percent of the total, and at June 30, 1996 they were
$25.973 billion, including $20.515 billion of time deposits or 79 percent of the
total.
Shareholders' equity at September 30, 1996 was $3.729 billion, an increase
of $111 million or 3.1 percent from $3.618 billion a year earlier and higher by
$29 million or under 1 percent from the end of the second quarter of 1996. The
total included $32.924 million, net of tax, of unrealized gains on securities
available-for-sale marked to fair market value under FASB 115 at September 30,
1996 versus $44.430 million, net of tax, one year earlier and $24.066 million,
net of tax, at June 30, 1996. At its meeting on October 25, 1996, the
corporation's board of directors declared a fourth quarter dividend of $.40 per
share, payable December 2 to shareholders of record on November 6, 1996. The
dividend is higher by 11.1 percent from $.36 per share paid in the same three
months of 1995. For the full year, the dividend will total $1.52 per share, an
increase of 10.1 percent from $1.38 per share paid in 1995.
The corporation was authorized by the board of directors on April 26, 1996
to repurchase up to 8 million shares of its common stock, replacing an earlier
action on July 28, 1995 to repurchase up to 5 million shares. Share repurchase
activity is part of the corporation's capital management strategy designed to
enhance shareholder value over the long-term. In addition, repurchased shares
will be used for various corporate purposes, including share issuance for the
corporation's employee stock plans and dividend reinvestment plan. The
corporation repurchased a total of 1,830,000 shares of its common stock in the
third quarter at an average price of $46.769 per share for a cost of $85.588
million. As of September 30, 1996, 3,770,200 shares remained available for
repurchase under the current authorization.
Intangible assets totaled $40.451 million at September 30, 1996, consisting
of $32.893 million of goodwill, $5.814 million of deposit base intangibles, $790
thousand of purchased credit card intangibles and $954 thousand of other
intangibles. Comparable amounts one year earlier were $40.283 million of
intangible assets with $29.844 million of goodwill, $7.342 million of deposit
base intangibles, $1.725 million of purchased
20
credit card intangibles and $1.372 million of other intangibles. The
increase in goodwill at September 30, 1996 from one year earlier reflected the
corporation's acquisition of First National Bankshares of Henry County, Inc., on
April 1, 1996.
Effective January 1, 1996, the corporation prospectively adopted Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed Of" (FASB 121). The
adoption of FASB 121 did not have a material impact on the corporation's
financial position or results of operations.
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" (FASB 125), which
provides new accounting and reporting standards for sales, securitization, and
servicing of receivables and other financial assets and extinguishments of
liabilities. The corporation is presently evaluating the effect of the standard
which will be adopted, as required, for transactions occurring after December
31, 1996.
Regulatory agencies divide capital into Tier I (consisting of shareholders'
equity less ineligible intangible assets) and Tier II (consisting of the
allowable portion of the reserve for loan losses and certain long-term debt) and
measure capital adequacy by applying both capital levels to a banking company's
risk-adjusted assets and off-balance sheet items. Regulatory requirements
presently specify that Tier I capital should exclude the market appreciation or
depreciation of securities available-for-sale arising from valuation adjustments
under FASB 115. In addition to these capital ratios, regulatory agencies have
established a Tier I leverage ratio which measures Tier I capital to average
assets less ineligible intangible assets.
Regulatory guidelines require a minimum of total capital to risk-adjusted
assets ratio of 8 percent with at least one-half consisting of tangible common
shareholders' equity and a minimum Tier I leverage ratio of 3 percent. Banks
which meet or exceed a Tier I ratio of 6 percent, a total capital ratio of 10
percent and a Tier I leverage ratio of 5 percent are considered well-capitalized
by regulatory standards.
At September 30, 1996, the corporation's Tier I to risk-adjusted assets
ratio was 8.92 percent with total capital 12.84 percent of risk-adjusted assets.
The Tier I leverage ratio was 8.01 percent. All the corporation's banks are
well-capitalized.
CAPITAL COMPONENTS AND RATIOS (thousands) TABLE 12
1996 1995
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
Tier I capital:
Common shareholders' equity ............... $ 3,729,194 $ 3,699,612 $ 3,729,349 $ 3,773,757 $ 3,617,642
Less ineligible intangible assets ......... 32,893 33,312 29,099 29,472 29,844
Unrealized gains on securities
available-for-sale, net of tax ............ (32,924) (24,066) (57,338) (116,113) (44,430)
Total Tier I capital ..................... 3,663,377 3,642,234 3,642,912 3,628,172 3,543,368
Tier II capital:
Allowable allowance for loan losses ....... 409,271 409,205 408,928 408,808 408,684
Allowable long-term debt .................. 1,198,177 1,198,837 1,204,191 1,208,479 1,018,003
Tier II capital additions ................ 1,607,448 1,608,042 1,613,119 1,617,287 1,426,687
Total capital ............................$ 5,270,825 $ 5,250,276 $ 5,256,031 $ 5,245,459 $ 4,970,055
Risk-adjusted assets .......................$ 41,047,310 $ 40,249,143 $ 38,803,497 $ 38,469,866 $ 38,011,712
Quarterly average assets ...................$ 45,777,699 $ 44,956,032 $ 44,434,973 $ 43,477,038 $ 42,572,976
Risk-based capital ratios:
Tier I capital ............................. 8.92% 9.05% 9.39% 9.43% 9.32%
Total capital .............................. 12.84 13.04 13.55 13.64 13.08
Tier I leverage ratio* .................... 8.01 8.12 8.22 8.36 8.34
Shareholders' equity to total assets ....... 7.85 8.03 8.21 8.39 8.20
* Ratio excludes the average unrealized gains on securities available-for-sale,
net of tax, of $24,358, $44,957, $114,386, $63,884 and $39,715, respectively
21
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
September 30 December 31 September 30
$ IN THOUSANDS 1996 1995 1995
ASSETS
Cash and due from banks ........................................ $ 3,011,456 $ 2,692,318 $ 2,516,429
Interest-bearing bank balances ................................. 479,268 451,279 419,555
Federal funds sold and securities
purchased under resale agreements ............................. 306,725 144,105 347,962
Trading account assets ......................................... 1,120,972 1,114,926 1,065,949
Securities available-for-sale .................................. 7,176,084 7,409,825 4,248,296
Securities held-to-maturity (market value of $1,461,686,
$1,721,222 and $4,513,177, respectively) ..................... 1,403,972 1,619,480 4,388,758
Loans and net leases ........................................... 31,555,623 29,269,825 29,020,208
Less unearned income on loans .................................. 6,820 8,672 7,956
Total loans .................................................. 31,548,803 29,261,153 29,012,252
Less allowance for loan losses ................................. 409,271 408,808 408,684
Net loans .................................................... 31,139,532 28,852,345 28,603,568
Premises and equipment ......................................... 633,199 628,153 591,879
Due from customers on acceptances .............................. 899,094 883,825 608,825
Other assets ................................................... 1,312,543 1,185,058 1,309,884
Total assets ................................................ $47,482,845 $44,981,314 $44,101,105
LIABILITIES
Deposits in domestic offices:
Demand ........................................................ $6,508,075 $5,855,286 $5,208,185
Interest-bearing demand ....................................... 3,311,682 3,473,607 3,278,742
Savings and money market savings .............................. 7,685,810 6,991,133 6,796,514
Savings certificates .......................................... 6,599,683 6,613,238 6,641,131
Large denomination certificates ............................... 2,264,559 2,671,759 2,401,901
Noninterest-bearing time ...................................... 5,169 3,334 5,695
Total deposits in domestic offices ........................... 26,374,978 25,608,357 24,332,168
Deposits in foreign offices:
Demand ........................................................ 7 5,766 8,522
Time .......................................................... 1,061,199 754,634 942,325
Total deposits in foreign offices ............................ 1,061,206 760,400 950,847
Total deposits ............................................... 27,436,184 26,368,757 25,283,015
Federal funds purchased and securities
sold under repurchase agreements .............................. 7,532,212 5,850,540 6,472,005
Commercial paper ............................................... 603,851 502,136 535,019
Other short-term borrowed funds ................................ 645,218 1,720,592 2,080,499
Long-term debt:
Bank notes .................................................... 4,529,212 4,088,326 3,925,550
Other long-term debt .......................................... 1,641,858 1,334,702 1,084,663
Total long-term debt ......................................... 6,171,070 5,423,028 5,010,213
Acceptances outstanding ........................................ 899,094 883,825 608,825
Other liabilities .............................................. 466,022 458,679 493,887
Total liabilities ............................................ 43,753,651 41,207,557 40,483,463
SHAREHOLDERS' EQUITY
Preferred stock, par value $5 per share:
Authorized 50,000,000 shares; none outstanding .................. -- -- --
Common stock, par value $5 per share:
Issued 165,213,326, 170,358,504 and
170,325,647, respectively ...................................... 826,067 851,793 851,628
Capital surplus ................................................. 500,613 713,120 714,051
Retained earnings ............................................... 2,369,590 2,092,731 2,007,533
Unrealized gains on securities available-for-sale, net of tax ... 32,924 116,113 44,430
Total shareholders' equity .................................... 3,729,194 3,773,757 3,617,642
Total liabilities and shareholders' equity .................. $47,482,845 $44,981,314 $44,101,105
22
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30 September 30
$ IN THOUSANDS, EXCEPT PER SHARE 1996 1995 1996 1995
INTEREST INCOME
Loans .........................................$ 650,860 $ 615,542 $1,880,491 $1,769,174
Securities available-for-sale:
Other investments ............................ 120,849 74,019 357,984 180,054
Securities held-to-maturity:
State and municipal .......................... 4,913 7,923 16,327 27,398
Other investments ............................ 23,769 70,466 73,865 204,460
Interest-bearing bank balances ................ 9,329 473 27,605 679
Federal funds sold and securities
purchased under resale agreements ............ 3,275 1,959 9,680 3,924
Trading account assets ........................ 12,234 16,102 35,243 42,678
Total interest income ....................... 825,229 786,484 2,401,195 2,228,367
INTEREST EXPENSE
Deposits:
Domestic offices ............................. 208,017 205,948 617,163 558,780
Foreign offices .............................. 13,676 11,299 37,810 28,309
Total interest on deposits .................. 221,693 217,247 654,973 587,089
Short-term borrowed funds ..................... 109,725 129,411 330,145 357,286
Long-term debt ................................ 95,305 72,259 266,405 210,108
Total interest expense ...................... 426,723 418,917 1,251,523 1,154,483
NET INTEREST INCOME ........................... 398,506 367,567 1,149,672 1,073,884
Provision for loan losses ..................... 40,730 23,179 102,468 73,619
Net interest income after
provision for loan losses .................... 357,776 344,388 1,047,204 1,000,265
OTHER INCOME
Service charges on deposit accounts ........... 62,278 52,409 179,804 153,742
Fees for trust services ....................... 33,872 31,740 102,725 95,832
Credit card income ............................ 37,089 31,180 103,459 91,991
Electronic banking ............................ 12,910 8,962 34,832 25,067
Investment fee income ......................... 10,145 8,690 31,216 19,271
Mortgage fee income ........................... 4,099 4,269 12,789 19,270
Trading account profits ....................... 6,076 5,646 15,226 17,460
Other operating income ........................ 31,309 27,519 100,427 71,179
Total other operating revenue ............... 197,778 170,415 580,478 493,812
Gain on sale of mortgage servicing portfolio .. -- -- -- 79,025
Investment securities gains (losses) ......... 393 317 872 (26,048)
Total other income .......................... 198,171 170,732 581,350 546,789
OTHER EXPENSE
Salaries ...................................... 137,627 127,152 401,885 369,057
Employee benefits ............................. 27,882 26,146 85,404 79,191
Total personnel expense ..................... 165,509 153,298 487,289 448,248
Net occupancy expense ......................... 23,161 21,424 68,023 62,554
Equipment expense ............................. 28,844 25,750 85,829 81,948
Other operating expense ....................... 98,965 98,410 293,670 295,781
Total other expense ......................... 316,479 298,882 934,811 888,531
Income before income taxes .................... 239,468 216,238 693,743 658,523
Applicable income taxes ....................... 74,872 64,958 219,914 202,178
NET INCOME ................................... $164,596 $151,280 $473,829 $456,345
Net income per common share:
Primary ...................................... $ .98 $ .88 $ 2.79 $ 2.65
Fully diluted ................................ $ .97 $ .87 $ 2.78 $ 2.64
Average shares outstanding:
Primary ...................................... 167,966 171,793 169,758 171,993
Fully diluted ................................ 168,354 172,512 170,251 172,882
23
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Unrealized
Securities
Common Stock Capital Retained Gains
$ IN THOUSANDS, EXCEPT PER SHARE Shares Amount Surplus Earnings (Losses)
PERIOD ENDED SEPTEMBER 30, 1995
Balance at beginning of year ......................... 170,933,749 $ 854,669 $ 741,946 $ 1,727,527 $(37,635)
Net income ........................................... 456,345
Cash dividends declared on common
stock - $1.02 a share ................................ (174,072)
Common stock issued pursuant to:
Stock option and employee benefit plans .............. 625,298 3,126 12,442
Dividend reinvestment plan ........................... 271,933 1,360 8,592
Conversion of debentures ............................. 165,885 829 2,355
Common stock acquired................................. (1,671,218) (8,356) (51,249)
Unrealized gains on securities
available-for-sale, net of tax ....................... 82,065
Miscellaneous ........................................ (35) (2,267)
Balance at end of period ............................. 170,325,647 $ 851,628 $ 714,051 $ 2,007,533 $ 44,430
PERIOD ENDED SEPTEMBER 30, 1996
Balance at beginning of year ......................... 170,358,504 $ 851,793 $ 713,120 $ 2,092,731 $116,113
Net income ........................................... 473,829
Cash dividends declared on common
stock - $1.12 a share ................................ (188,442)
Common stock issued pursuant to:
Stock option and employee benefit plans .............. 574,082 2,870 22,153
Dividend reinvestment plan ........................... 240,824 1,204 9,631
Conversion of debentures ............................. 278,898 1,395 3,968
Acquisition of bank .................................. 208,207 1,041 9,003
Common stock acquired ................................ (6,447,189) (32,236) (257,260)
Unrealized losses on securities
available-for-sale, net of tax ....................... (83,189)
Miscellaneous ........................................ (2) (8,528)
Balance at end of period.............................. 165,213,326 $826,067 $500,613 $2,369,590 $32,924
24
WACHOVIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30
$ IN THOUSANDS 1996 1995
OPERATING ACTIVITIES
Net income ............................................................................ $ 473,829 $ 456,345
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses ............................................................ 102,468 73,619
Depreciation and amortization ......................................................... 68,371 53,780
Deferred income taxes (benefit) ..................................................... 40,782 (22,102)
Investment securities (gains) losses .................................................. (872) 25,979
Gain on sale of noninterest-earning assets ............................................ (1,742) (1,621)
Gain on sale of mortgage servicing portfolio .......................................... -- (79,025)
Increase in accrued income taxes ...................................................... 19,540 22,047
Decrease (increase) in accrued interest receivable ................................... 13,148 (68,599)
Increase in accrued interest payable .................................................. 7,841 87,770
Net change in other accrued and deferred income and expense ........................... (4,692) 78,819
Net trading account activities ....................................................... (6,046) (175,991)
Net loans held for resale ............................................................ 271,579 (216,831)
Net cash provided by operating activities ........................................... 984,206 234,190
INVESTING ACTIVITIES
Net increase in interest-bearing bank balances ........................................ (27,989) (412,792)
Net increase in federal funds sold and securities
purchased under resale agreements .................................................... (158,120) (146,356)
Purchases of securities available-for-sale ............................................ (986,499) (3,670,330)
Purchases of securities held-to-maturity .............................................. (45,679) (555,926)
Sales of securities available-for-sale ................................................ 289,330 2,390,251
Calls, maturities and prepayments of securities available-for-sale .................... 800,032 681,106
Calls, maturities and prepayments of securities held-to-maturity ...................... 265,593 349,887
Net increase in loans made to customers ............................................... (2,645,861) (2,979,765)
Capital expenditures .................................................................. (84,996) (113,131)
Proceeds from sales of premises and equipment ......................................... 18,264 11,196
Proceeds from sale of mortgage servicing portfolio .................................... -- 142,011
Net increase in other assets .......................................................... (124,368) (81,583)
Business combinations ................................................................. 2,814 --
Net cash used by investing activities ............................................... (2,697,479) (4,385,432)
FINANCING ACTIVITIES
Net increase in demand, savings and money market accounts ............................. 1,176,186 19,595
Net (decrease) increase in certificates of deposit .................................... (137,933) 2,194,162
Net increase in federal funds purchased and securities sold under repurchase agreements 1,681,672 573,607
Net increase in commercial paper ...................................................... 101,715 128,313
Net (decrease) increase in other short-term borrowings ................................ (1,075,374) 1,073,159
Proceeds from issuance of bank notes................................................... 2,167,053 946,897
Maturities of bank notes............................................................... (1,726,242) (975,731)
Proceeds from issuance of other long-term debt ........................................ 311,410 248,012
Payments on other long-term debt....................................................... (320) (384)
Common stock issued.................................................................... 19,722 17,653
Dividend payments...................................................................... (188,442) (174,072)
Common stock repurchased............................................................... (286,332) (56,025)
Net (decrease) increase in other liabilities .......................................... (10,704) 2,370
Net cash provided by financing activities ........................................... 2,032,411 3,997,556
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................................... 319,138 (153,686)
Cash and cash equivalents at beginning of year ........................................ 2,692,318 2,670,115
Cash and cash equivalents at end of period ............................................ $ 3,011,456 $ 2,516,429
SUPPLEMENTAL DISCLOSURES
Unrealized (losses) gains on securities available-for-sale:
(Decrease) increase in securities available-for-sale ................................. $ (136,735) $ 133,840
Increase (decrease) in deferred taxes ................................................ 53,546 (51,775)
(Decrease) increase in shareholders' equity .......................................... (83,189) 82,065
25
WACHOVIA CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
Nine Months
Ended Year Ended
September 30, December 31,
1996 1995
(A) Excluding interest on deposits
Earnings:
Income before income taxes $ 693,743 $ 868,868
Less capitalized interest (1,530)
Fixed charges 606,791 768,982
--------- ---------
Earnings as adjusted $1,300,534 $1,636,320
========= =========
Fixed charges:
Interest on purchased and other
short term borrowed funds $ 330,145 $ 467,007
Interest on long-term debt 266,405 288,646
Portion of rents representative
of the interest factor (1/3) of
rental expense 10,241 13,329
--------- ---------
Fixed charges $ 606,791 $ 768,982
========= =========
Ratio of earnings to fixed charges 2.14X 2.13X
(B) Including interest on deposits:
Adjusted earnings from (A) above $1,300,534 $1,636,320
Add interest on deposits 654,973 823,454
--------- ---------
Earnings as adjusted $1,955,507 $2,459,774
========= =========
Fixed charges:
Fixed charges from (A) above $ 606,791 $ 768,982
Interest on deposits 654,973 823,454
--------- ---------
Adjusted fixed charges $1,261,764 $1,592,436
========= =========
Adjusted earnings to adjusted fixed
charges 1.55X 1.54X
1996 FORM 10-Q
United States Securities and Exchange Commission
Washington, DC 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended September 30, 1996
Commission File Number 1-9021
WACHOVIA CORPORATION
Incorporated in the State of North Carolina
IRS Employer Identification Number 56-1473727
Address and Telephone:
100 North Main Street, Winston-Salem, North Carolina 27101, (910) 770-5000
191 Peachtree Street NE, Atlanta, Georgia 30303, (404) 332-5000
Securities registered pursuant to Section 12(b) of the Act: Common Stock -
$5.00 par value, which is registered on the New York Stock Exchange.
As of September 30, 1996, Wachovia Corporation had 165,213,326 shares of
common stock outstanding.
Wachovia Corporation (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceeding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the financial supplement for the quarter ended September 30,
1996 are incorporated by reference into Parts I and II as indicated in the table
below. Except for parts of the Wachovia Corporation Financial Supplement
expressly incorporated herein by reference, this Financial Supplement is not to
be deemed filed with the Securities and Exchange Commission.
PART I FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS (UNAUDITED) PAGE
Selected Period-End Data . . . . . . . . . . . . . . . . . 3
Common Stock Data - Per Share . . . . . . . . . . . . . . . 3
Consolidated Statements of Condition. . . . . . . . . . . . 22
Consolidated Statements of Income . . . . . . . . . . . . . 23
Consolidated Statements of
Shareholders' Equity . . . . . . . . . . . . . . . . . . 24
Consolidated Statements of Cash Flows. . . . . . . . . . . 25
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . 4-21
26
1996 FORM 10-Q - CONTINUED
PART II OTHER INFORMATION
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
a)4 Indenture dated as of August 15, 1996 between Wachovia
Corporation and The Chase Manhattan Bank, as Trustee, relating to
Senior Securities (Exhibit 4 (a) of Post-Effective Amendment No. 1
to Form S-3 (Shelf) Registration Statement of Wachovia
Corporation, File No. 33-6280).
11 "Computation of Earnings per Common Share" is presented as Table 3
on page 6 of the third quarter 1996 financial supplement.
12 Statement setting forth computation of ratios of earnings to fixed
charges.
19 "Unaudited Consolidated Financial Statements," listed in Part I,
Item 1, do not include all information and footnotes required
under generally accepted accounting principles. However, in the
opinion of management, the profit and loss information presented
in the interim financial statements reflects all adjustments
necessary to present fairly the results of operations for the
periods presented. Adjustments reflected in the third quarter of
1996 figures are of a normal, recurring nature. The results of
operations shown in the interim statements are not necessarily
indicative of the results that may be expected for the entire
year.
27 Financial Data Schedule (for SEC purposes only).
b) Reports on Form 8-K: No reports on Form 8-K were filed during the three
months ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WACHOVIA CORPORATION
November 13, 1996 ROBERT S. McCOY, JR. November 13, 1996 DONALD K. TRUSLOW
Robert S. McCoy, Jr. Donald K. Truslow
Executive Vice President Comptroller
and Chief Financial Officer
27
WACHOVIA BULK RATE
U.S. POSTAGE PAID
Wachovia Corporation WACHOVIA
P.O. Box 3099 CORPORATION
Winston-Salem, NC 27150
#11-32