FIRST UNION
SIGNET
(Map of Virginia, Maryland and Washington, D.C. appears here)
CAUTIONARY STATEMENT
This presentation contains certain estimates regarding each of First Union
Corporation, Signet Banking Corporation and the combined company following the
merger, including statements relating to cost savings, enhanced revenues and
accretion to reported earnings that may be realized from the merger, and certain
restructuring charges expected to be incurred in connection with the merger.
These estimates constitute forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995), which involve significant
risks and uncertainties. Actual results may differ materially from the results
discussed in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in First Union
Corporation's Current Report of Form 8-K, dated July 21, 1997, as filed with the
Securities and Exchange Commission, to which report reference is hereby made.
(First Union Logo appears here) SIGNET
THE POWER OF THE COMBINED FRANCHISE
o Establishes leading deposit share in attractive Virginia market
o Creates no. 2 deposit share in VA, MD, DC region
December 31, 1997 (pro forma; estimates)
Assets: $29 billion
Loans: $16 billion
Deposits: $20 billion
Equity: $2.6 billion
Customer Base: 2.2 million
No. 1 in Richmond (25%), Roanoke (40%)
No. 3 in D.C. MSA (13%)
No. 3 in Baltimore (12%)
(Map of Virginia, Maryland and Washington, D.C. appears here)
o Virginia, Maryland and Washington D.C. Headquarters: Richmond
(First Union Logo appears here)
SIGNET EXHIBIT 2 POWERFUL COMBINATION
CONSISTENT WITH ACQUISITION STRATEGY BURDEN OF PROOF
1. Accretive within 18 months on a cumulative basis
2. Saves time
3. Supports achievement of growing and diversifying revenue production
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SIGNET EXHIBIT 3 TRANSACTION OVERVIEW
FINANCIAL BENEFITS:
OPPORTUNITY FOR HIGHER PERFORMANCE
Financial Performance Guidelines Signet Pro Forma(1)
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ROE 18-20% 31%
EPS Growth 10-13% 13% +
ROA 1.30-1.50% 2.64%
Overhead Efficiency Ratio 53-57% 33%
Fee Income/Revenue 40% 40%(2)
Tier 1 Leverage 6.00-7.00% [check mark]
NCO/Average Loans 50-65bp [check mark]
Dividend Payout 30-35% [check mark]
Assumes Average Annual Asset Growth 4-6%
(1) Based on $2.62 1998 consensus EPS estimate, adjusted for synergies.
(2) Represents 1Q1997 (annualized) adjusted for projected revenue enhancements.
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SIGNET EXHIBIT 4 FINANCIAL OBJECTIVES
TERMS OF TRANSACTION
Fixed Exchange Ratio .55 First Union shares for each Signet share
Indicated Purchase Price
Per Share $53.59
Indicated Total Price $3.25 Billion
Accounting Method Pooling of interests
First Union Shares Issued (1) 33.3 million, representing 10.5% pro forma
Signet ownership
Stock Buybacks Authorization rescinded by First Union and
Signet Boards
Management Structure Malcolm S. McDonald, Chief Executive Officer
Benjamin P. Jenkins III, Chief Operating Officer
Expected Closing By Year-End 1997
Expected Conversion April 30, 1998
(1) Excludes re-issuance of up to 2.6 million shares, net, required to qualify
transaction for pooling-of-interest accounting treatment.
Based on closing prices as of July 18, 1997.
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SIGNET EXHIBIT 5 TRANSACTION TERMS
TRANSACTION OVERVIEW
Premium to Market 46%
Price to Book Value 3.46x
Pricing Multiples Adjusted for Synergies:(1)
1997 Estimated Earnings(2) 10.3x
1998 Estimated Earnings 9.8x
(1) First Call consensus estimates prior to June 3, 1997 redesign announcement,
adjusted to reflect full merger synergies.
(2) Excludes pre-tax and post-tax restructuring charges of $181 million and $135
million, respectively or $0.42 per share to be taken in 4th quarter of 1997,
and net of Signet pre-tax and post-tax restructuring charges of $58 million
and $38 million, respectively taken in 2nd quarter of 1997.
Note: Closing prices as of July 18, 1997.
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SIGNET EXHIBIT 6 TRANSACTION OVERVIEW
FAVORABLE TRANSACTION FOR FIRST UNION
First Signet Comparable
Union Transaction Acquisitions(1)
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Multiples Adjusted for Synergies:
Last 12 Months Earnings 14.6x 10.7x 13.4x
1997 Estimated Earnings 13.9x 10.3x 12.8x
1998 Estimated Earnings 12.5x 9.8x 11.9x
Note: Closing prices as of July 18, 1997.
(1) Represents mean multiples, adjusted for synergies on all comparable bank
transactions between $350 million and $5 billion announced since January 1,
1996.
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SIGNET EXHIBIT 7 FINANCIAL BENEFITS
FINANCIAL BENEFITS:
EARNINGS PER SHARE
1998 est. 1999 est.
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$mm EPS $mm EPS
------ ----- ------ -----
1 First Union(1) $2,222 $7.81 $2,465 $8.59
2 Signet(1) 159 2.62 176 2.88
After-tax Adjustments
3 Expense Efficiencies $108 $ .34 $155 $ .48
4 Revenue Enhancements 15 .05 19 .06
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5 Total Adjustments $123 $ .39 $174 $ .54
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6 Total Reported Earnings
on Combined Shares(2) $2,504 $7.82 $2,815 $8.72
------ ------
7 Accretion to Earnings .01 .13
8 Total Cash Earnings on Combined Shares $2,717 $8.48 $3,029 $9.38
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9 Leverage Ratio 8.21% 9.28%
(1) 1998 First Union earnings per share based on First Call Consensus estimate.
1998 Signet earnings per share based on First Call Consensus estimate prior
to 6/3/97 corporate redesign announcement. 1999 earnings per share are not
First Call estimates. Such earnings are presented for illustrative purposes
only and are based upon each company's 1998 earnings per share plus 10%.
(2) Assumes 320.4 million shares outstanding in 1998, and 322.9 million shares
outstanding in 1999.
(First Union Logo appears here)
SIGNET EXHIBIT 8 FINANCIAL BENEFITS
THE POWER OF THE COMBINATION:
EXPENSE EFFICIENCIES
o Expense Efficiencies of $242 Million (pre-tax)
- Represents less than 5% of First Union pro forma combined
expense base
- Synergies fully phased in by 1999
o Represents approximately 50% of 1996 expenses
- Improves Signet's efficiency ratio to 33%
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SIGNET EXHIBIT 9 FINANCIAL BENEFITS
THE POWER OF THE COMBINATION:
ESTIMATED EXPENSE EFFICIENCIES
($ Millions) 1998 1999
- ----------------------------------------------------
Banking Units $81 $115
Staff and Other 45 61
Automation & Operations 43 66
---- ----
Total Pre-Tax Expense Efficiencies $169 $242
Total After-Tax Expense Efficiencies $108 $155
(First Union Logo appears here)
SIGNET EXHIBIT 10 FINANCIAL BENEFITS
THE POWER OF THE COMBINATION:
ESTIMATED INCREMENTAL REVENUE ENHANCEMENTS
($ Millions) 1998 1999
- ------------------------------------------------------------
Capital Markets $13 $16
Capital Management 12 14
Other 5 7
----- ----
Total Incremental Revenue $30 $37
Incremental Revenue After Tax and Expenses $15 $19
(First Union Logo appears here)
SIGNET EXHIBIT 11 FINANCIAL BENEFITS
SCOPE OF THE OPPORTUNITY:
SIGNIFICANT UPSIDE POTENTIAL EXISTS
o Expected to be similar to First Fidelity experience:
- Small business banking Outstandings up 50%
Commitments up 60%
- Commercial banking Loan production up 27%
Cash management sales up 37%
- Consumer loan production Production up 36%
Monthly branch volume up 150%
Loan yields up 70 bps
- Investment products Opened 21,000 new CAP accounts
Brokerage commissions up 56%
(First Union Logo appears here)
SIGNET EXHIBIT 12 FINANCIAL BENEFITS
FIRST UNION AND SIGNET:
THE LOGIC OF THE MERGER
o Financially and strategically attractive transaction
- Accretive in 1998
- Low-risk in-market transaction
- Provides substantial increase in market share in key growth markets
o Synergies in key businesses
- Direct banking
- Middle-market/small business lending
- Capital Management and Capital Markets
- Cross-sell opportunities to approximately 1 million new customers
o Enhances platform for leveraging technological capability
- National direct marketing
- Powerful data-mining systems
- Year 2000 cost savings
(First Union Logo appears here)
SIGNET EXHIBIT 13 STRATEGIC RATIONALE
A POWERFUL COMBINATION:
SYNERGIES
Signet
o Attractive market position in Richmond, Baltimore, Hampton Roads
o National Direct Marketing of Consumer, Home Equity and Second Mortgage Loans
o Powerful data-mining systems
o Dynamic, affluent customer base
o Middle-market commercial banking strength
First Union
o Attractive market position in Roanoke, Washington, D.C., Baltimore
o Nationwide network of Home Equity and Mortgage Origination Offices
o 8 million customer households
o Powerful capital management products and services
o Full range of capital markets products and services targeted at middle-market
companies
(First Union Logo appears here)
SIGNET EXHIBIT 14 POWERFUL COMBINATION
MERGER EXPERTISE: SIMILAR IN-MARKET
BANK ACQUISITIONS IN VIRGINIA
Columbia All In-Market
Ameribanc First Acquisitions since 1993
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Assets ($ Millions) $1,100 $2,600 $27,000
Cost Savings 50.7% 52.3% 47%
Closing Apr-95 Nov-95 NA
Fully Integrated May-95 Dec-95 NA
Months to Integration 2 1 1.9
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SIGNET EXHIBIT 15 MERGER EXECUTION
DECISION FRAMEWORK
o Meets Burden of Proof [check mark]
o Supports Financial Performance Guidelines [check mark]
o Complementary Customer Base [check mark]
o Geographic Fit [check mark]
o Saves Time [check mark]
o First Union's Capacity to Execute [check mark]
(First Union Logo appears here)
SIGNET EXHIBIT 16 LOGIC OF THE MERGER
FIRST UNION AND SIGNET:
THE POWER OF THE COMBINED FRANCHISE
December 31, 1997 (pro forma; estimates)
Assets: $157 billion [Map of Eastern
Loans: $106 billion United States
Deposits: $101 billion appears here]
Equity: $11.4 billion
Branches: 2,200
Rankings:
6th in assets
3rd largest branch network
4th largest ATM network
No. 1 in deposits in regional footprint
Among Top 5 middle-market commercial lenders
Leadership position in media lending, mortgage
banking, commercial leasing,
direct banking, technology,
small business banking, home
equity lending
25th largest provider of mutual funds
(First Union Logo appears here)
SIGNET EXHIBIT 17 POWERFUL COMBINATION
SUPPLEMENTAL INFORMATION
(First Union and Signet Logos appear here)
First Union Today:
Long-Term Shareholder Value Creation
(Graph appears below with the following information:)
Dividend Growth
Current Dividend Annualized
In Dollars
-------------
1978 .29
1979 .31
1980 .33
1981 .36
1982 .40
1983 .45
1984 .49
1985 .58
1986 .65
1987 .77
1988 .86
1989 1.00
1990 1.08
1991 1.12
1992 1.28
1993 1.50
1994 1.72
1995 1.96
1996 2.20
Current 2.44*
* Reflects dividend increase announced June 17, 1997. Not restated for
two-for-one stock split to be paid July 31, 1997.
(First Union Logo appears here)
SIGNET 1
REVENUE STARS
GROWTH IN FEE INCOME 1996 VS. 1995
1996 vs. 1995 1Q97 vs. 1Q96
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Wells Fargo 84.34% * Wells Fargo 79.66% *
Norwest 37.97% First Union 46.86%
Bankers Trust 36.60% + Republic New York 29.20%
J.P. Morgan 31.74% + PNC Bank 28.27%
First Union 25.65% Norwest 26.11%
Bank of New York 20.84% NationsBank 25.76% *
Banc One 19.99% * Bank of New York 17.28%
NationsBank 18.45% * Bankers Trust 16.19%
Fleet Financial 18.38% * Banc One 14.79%
Mellon Bank Corp 16.71% Suntrust 14.26%
First Bank System 15.66% Citicorp 11.91%
Wachovia 13.86% Fleet Financial 11.52% *
Data from SNL Securities and corporate earnings releases.
Excludes securities gains and losses and unusual or nonrecurring gains and
losses.
* Growth rate substantially affected by accounting treatment of acquisitions.
+ Significant growth in trading income.
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SIGNET 2
ASSET QUALITY: AVERAGE CHARGE-OFFS 1987-1996
COMPARED WITH PEERS
1. 0.54 Suntrust
2. 0.56 First Union
3. 0.56 Wachovia
4. 0.63 KeyCorp
5. 0.67 Barnett Banks
6. 0.68 Republic New York
7. 0.73 National City Corp.
8. 0.81 Nationsbank
9. 0.83 J.P. Morgan
10. 0.84 PNC Bank
11. 0.98 BankAmerica
12. 1.00 Corestates
13. 1.01 Banc One
14. 1.16 Fleet Financial
15. 1.16 Wells Fargo
16. 1.17 Bank of Boston
17. 1.00 First Bank System
18. 1.20 Norwest
19. 1.45 First Chicago
20. 1.46 Bank of New York
21. 1.46 Chase Manhattan
22. 1.49 Mellon Bank Corp
23. 1.55 Citicorp
24. 1.78 Bankers Trust
Originally reported data. 1995 data reflects 1/1/96 merger with First Fidelity.
(First Union Logo appears here)
SIGNET 3
PRODUCTIVITY: FTU PERFORMANCE*
1990 1991 1992 1993 1994 1995 1996
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Overhead
Efficiency 60.8% 58.6 57.6 57.8 59.0 57.0 54.1
ROA 0.79% 0.77 1.07 1.20 1.27 1.21 1.31
ROE 12.5% 11.9 15.3 17.4 17.0 16.7 18.9
* Overhead efficiency excluding OREO and intangibles amortization. Overhead
efficiency, ROA and ROE before SAIF and merger-related charges.
(First Union Logo appears here)
SIGNET 4
CONCENTRATION OF COMPANIES WITH
ANNUAL SALES $20 MM - 250 MM +
Together, the VA, MD, D.C. region accounts for 29% of the total Southeast
middle-market companies.
(Bar Graph appears below with the following information:)
Virginia 15%
Maryland 11%
Washington, D.C. 3%
Florida 28%
Georgia 18%
North Carolina 15%
South Carolina 7%
Delaware 3%
Source: U.S. Statistical Abstract 1996.
(First Union Logo appears here)
SIGNET 5
NEW CORPORATE FACILITIES AND EXPANSIONS
1994-1996
(Bar Graph appears below with the following information:)
South Atlantic 5,123
Middle Atlantic 1,528
East North Central 5,626
West North Central 2,787
East South Central 2,165
Pacific 1,064
West South Central 920
Mountain 889
New England 290
South Atlantic: DC, DE, FL, GA, MD, NC, SC, VA, W.VA
Middle Atlantic: NJ, NY, PA
Source: Site Selection Magazine February 1997
(First Union Logo appears here)
SIGNET 6
OVER 32% OF SOUTHEAST'S GROSS STATE PRODUCT: COMBINED VA, MD, D.C. REGION
(Bar Graph appears below with the following information:)
Virginia 16
Maryland 12
Washington, D.C. 4
Florida 27
Georgia 16
North Carolina 16
South Carolina 7
Delaware 2
% of Total Southeast Gross State Product
Source: U.S. Statistical Abstract 1996.
(First Union Logo appears here)
SIGNET 7
SIGNET REGION:
HIGH, FAST-GROWING INCOMES PER CAPITA
Personal Income Per Capita and Growth
(Bar Graph appears below with the following information:)
1980 1995
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U.S. Average 9,940 12,848 (+129%) 22,788
FTU "South" 8,351 12,441 (+149%) 20,792
FTU "North" 11,001 15,668 (+142%) 26,669
Signet States 11,063 16,203 (+146%) 27,266
Source: U.S. Statistical Abstract 1996.
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SIGNET 8