SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 15, 1997
WACHOVIA CORPORATION
---------------------------------------------------
(Exact Name of Registrant as specified in its charter)
NORTH CAROLINA No. 1-9021 No. 56-1473727
- ----------------------------------- -------------- ------------------
(State or other jurisdiction of (Commission (IRS employer
incorporation) File Number) Identification No.)
100 NORTH MAIN STREET, WINSTON-SALEM, NC 27101
191 PEACHTREE STREET NE, ATLANTA, GA 30303
- ------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
WINSTON-SALEM 336-770-5000
ATLANTA 404-332-5000
Not applicable
(Registrant's former address of principal executive offices)
Item 2. Acquisition or Disposition of Assets.
On December 15, 1997, Wachovia Corporation, a North Carolina
corporation (the "Registrant"), consummated a tax-free merger by and between the
Registrant and Central Fidelity Banks, Inc., a Virginia corporation ("Central"),
pursuant to which each outstanding share of common stock, par value $5.00 per
share, of Central was converted into 0.63 shares of common stock, par value
$5.00 per share, of the Registrant (the "Merger").
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Consolidated Financial Statements of Central at September 30, 1997
(unaudited) and December 31, 1996 and for the three and nine month
periods ended September 30, 1997 and 1996 are included with this
report. Audited Consolidated Financial Statements of Central at
December 31, 1996 and 1995 and for the three years ended December
31, 1996, were filed by the Registrant on Form 8-K dated September
8, 1997.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Financial Information for the
Registrant and Central are included with this report. The pro forma
financial information includes the Combined Statement of Condition
at September 30, 1997, and the Combined Statements of Income for
the nine months ended September 30, 1997 and for the years ended
December 31, 1996, 1995 and 1994. Such pro forma financial
information is not necessarily indicative of the future financial
condition or results of operations of the Registrant.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of June 23, 1997, by
and between the Registrant and Central.
99.1 Press release dated December 15, 1997, announcing the
consummation of the Merger.
-2-
FINANCIAL INFORMATION
-----------------------------------------
CENTRAL FIDELITY BANKS, INC.
FINANCIAL STATEMENTS
THE CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997, THE STATEMENT OF
CONSOLIDATED INCOME, THE STATEMENT OF CONSOLIDATED CASH FLOWS AND THE STATEMENT
OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1997 AND 1996 ARE UNAUDITED AND DO NOT INCLUDE ALL OF THE
INFORMATION INCLUDED IN THE CENTRAL'S ANNUAL FINANCIAL STATEMENTS. IN THE
OPINION OF MANAGEMENT, ALL ADJUSTMENTS (CONSISTING ONLY OF NORMAL RECURRING
ACCRUALS) CONSIDERED NECESSARY FOR A FAIR PRESENTATION HAVE BEEN INCLUDED.
OPERATING RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30,
1997 AND 1996 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED
FOR THE ENTIRE YEAR. FOR FURTHER INFORMATION, REFER TO THE CONSOLIDATED
FINANCIAL STATEMENTS AND FOOTNOTES INCLUDED IN THE CENTRAL'S ANNUAL REPORT FOR
THE YEAR ENDED DECEMBER 31, 1996 WHICH IS THE SOURCE OF THE COMPANY'S BALANCE
SHEET AS OF THAT DATE.
3
CONSOLIDATED BALANCE SHEET
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
1997 1996
- ------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------
CASH AND DUE FROM BANKS $298,752 $304,661
TEMPORARY INVESTMENTS:
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED
UNDER AGREEMENTS TO RESELL 39,377 96,515
OTHER MONEY MARKET INVESTMENTS 50,000 50,000
TRADING ACCOUNT SECURITIES 6,538 4,061
- ------------------------------------------------------------------
TOTAL TEMPORARY INVESTMENTS 95,915 150,576
- ------------------------------------------------------------------
ASSETS AVAILABLE FOR SALE:
SECURITIES 2,725,064 3,069,624
LOANS 28,226 26,085
- ------------------------------------------------------------------
TOTAL ASSETS AVAILABLE FOR SALE 2,753,290 3,095,709
- ------------------------------------------------------------------
LOANS 6,964,541 6,690,751
ALLOWANCE FOR LOAN LOSSES (110,000) (110,000)
- ------------------------------------------------------------------
NET LOANS 6,854,541 6,580,751
- ------------------------------------------------------------------
ACCRUED INTEREST RECEIVABLE 62,268 61,819
PREMISES AND EQUIPMENT, NET 165,390 157,119
DUE FROM CUSTOMERS ON ACCEPTANCES 15,032 11,009
OTHER ASSETS 205,479 178,716
- ------------------------------------------------------------------
TOTAL ASSETS $10,450,667 $10,540,360
- ------------------------------------------ ========== ==========
4
SEPTEMBER 30, DECEMBER 31,
LIABILITIES 1997 1996
- ------------------------------------------------------------------
DEPOSITS:
DEMAND $1,211,889 $1,189,808
SAVINGS AND OTHER TIME 6,209,603 6,393,420
CERTIFICATES OF DEPOSIT $100,000 AND OVER 397,813 488,226
- ------------------------------------------------------------------
TOTAL DEPOSITS 7,819,305 8,071,454
- ------------------------------------------------------------------
BORROWINGS:
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD
UNDER AGREEMENTS TO REPURCHASE 1,073,794 907,875
OTHER SHORT-TERM BORROWINGS 58,823 72,274
FEDERAL HOME LOAN BANK BORROWINGS 309,686 400,080
LONG-TERM DEBT 249,418 150,324
CAPITALIZED LEASE OBLIGATIONS 6,994 7,334
- ------------------------------------------------------------------
TOTAL BORROWINGS 1,698,715 1,537,887
- ------------------------------------------------------------------
DIVIDENDS PAYABLE 13,715 13,059
ACCRUED INTEREST PAYABLE 31,529 29,160
BANK ACCEPTANCES OUTSTANDING 15,032 11,009
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 32,385 31,292
- ------------------------------------------------------------------
TOTAL LIABILITIES 9,610,681 9,693,861
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SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------
PREFERRED STOCK, NONE ISSUED -- --
COMMON STOCK, PAR VALUE $5 PER SHARE, AUTHORIZED
100,000,000 SHARES, SHARES ISSUED: 57,245,209
AND 59,378,319, RESPECTIVELY 286,226 296,892
CAPITAL SURPLUS 119,933 171,926
UNAMORTIZED DEFERRED COMPENSATION (614) --
RETAINED EARNINGS 421,478 368,457
UNREALIZED GAINS ON SECURITIES AVAILABLE
FOR SALE, NET OF INCOME TAXES 12,963 9,224
- ------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 839,986 846,499
- ------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $10,450,667 $10,540,360
- ------------------------------------------ ========== ==========
- ------------------------------------------------------------------
5
STATEMENT OF CONSOLIDATED INCOME
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
- -----------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
- -----------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA) 1997 1996 1997 1996
- -----------------------------------------------------------------------------------
INCOME FROM EARNING ASSETS
- -----------------------------------------------------------------------------------
INTEREST AND FEES ON LOANS $156,644 $144,103 $457,020 $422,638
INTEREST ON SECURITIES AVAILABLE FOR SALE:
U.S. GOVERNMENT AND AGENCIES 28,155 32,753 88,035 102,770
STATES AND POLITICAL SUBDIVISIONS 1,152 1,386 3,752 4,284
OTHER 16,874 17,599 49,697 55,076
INTEREST ON LOANS AVAILABLE FOR SALE 331 135 879 677
INTEREST ON MONEY MARKET INVESTMENTS 1,840 996 4,121 3,876
INTEREST ON TRADING ACCOUNT SECURITIES 109 63 243 97
- -----------------------------------------------------------------------------------
TOTAL INCOME FROM EARNING ASSETS 205,105 197,035 603,747 589,418
- -----------------------------------------------------------------------------------
INTEREST EXPENSE
- -----------------------------------------------------------------------------------
INTEREST ON DEPOSITS 77,573 80,754 233,441 241,488
INTEREST ON FEDERAL FUNDS PURCHASED AND SECURITIES
SOLD UNDER AGREEMENTS TO REPURCHASE 15,108 11,815 38,431 36,686
INTEREST ON OTHER SHORT-TERM BORROWINGS 786 842 2,317 2,774
INTEREST ON MEDIUM-TERM NOTES -- 91 -- 3,932
INTEREST ON FEDERAL HOME LOAN BANK
BORROWINGS 4,694 6,386 16,434 18,815
INTEREST ON LONG-TERM DEBT 4,398 2,559 10,803 7,594
INTEREST ON CAPITALIZED LEASE OBLIGATIONS 157 166 475 504
- -----------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 102,716 102,613 301,901 311,793
- -----------------------------------------------------------------------------------
NET INTEREST INCOME 102,389 94,422 301,846 277,625
PROVISION FOR LOAN LOSSES 12,412 11,062 39,977 32,013
- -----------------------------------------------------------------------------------
NET INCOME FROM EARNING ASSETS 89,977 83,360 261,869 245,612
- -----------------------------------------------------------------------------------
NONINTEREST INCOME
- -----------------------------------------------------------------------------------
TRUST INCOME 4,819 4,181 14,111 12,949
DEPOSIT FEES AND CHARGES 10,641 9,349 31,332 28,170
PROFITS (LOSSES) ON SECURITIES AVAILABLE FOR SALE AND
TRADING ACCOUNT SECURITIES 939 (196) 2,820 (197)
OTHER INCOME 10,012 7,959 27,916 21,950
- -----------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 26,411 21,293 76,179 62,872
- -----------------------------------------------------------------------------------
NONINTEREST EXPENSE
- -----------------------------------------------------------------------------------
PERSONNEL EXPENSE 39,316 35,211 114,240 104,050
OCCUPANCY AND EQUIPMENT EXPENSE 12,730 11,504 37,402 34,370
FDIC INSURANCE EXPENSE 385 729 1,179 2,063
OTHER REAL ESTATE EXPENSE 731 403 1,361 1,711
SPECIAL SAIF ASSESSMENT -- 6,412 -- 6,412
OTHER EXPENSE 16,143 13,797 45,493 39,984
- -----------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 69,305 68,056 199,675 188,590
- -----------------------------------------------------------------------------------
EARNINGS
- -----------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 47,083 36,597 138,373 119,894
INCOME TAX EXPENSE 15,417 11,465 45,132 37,972
- -----------------------------------------------------------------------------------
NET INCOME $31,666 $25,132 $93,241 $81,922
- ----------------------------------------- ======= ======= ======= =======
EARNINGS PER SHARE
- -----------------------------------------------------------------------------------
NET INCOME $0.56 $0.42 $1.62 $1.37
AVERAGE SHARES OUTSTANDING 56,951,984 59,586,194 57,692,069 59,888,903
- -----------------------------------------------------------------------------------
6
STATEMENT OF CONSOLIDATED CASH FLOWS
- -----------------------------------------------------------------------
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
(IN THOUSANDS) FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
- -----------------------------------------------------------------------
OPERATING ACTIVITIES
- -----------------------------------------------------------------------
NET INCOME $93,241 $81,922
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
PROVISION FOR LOAN LOSSES 39,977 32,013
DEPRECIATION OF PREMISES AND EQUIPMENT 13,395 12,140
NET AMORTIZATION OF PREMIUM AND ACCRETION OF DISCOUNT
ON SECURITIES AVAILABLE FOR SALE (1,131) (632)
GAINS ON SECURITIES AVAILABLE FOR SALE (2,065) (398)
DEFERRED INCOME TAXES (2,828) (1,517)
INCREASE IN TRADING ACCOUNT SECURITIES (2,477) (7,154)
ORIGINATIONS OF LOANS AVAILABLE FOR SALE (100,208) (90,079)
PURCHASES OF LOANS AVAILABLE FOR SALE (66,901) (69,866)
PROCEEDS FROM SALES OF LOANS AVAILABLE FOR SALE 165,040 167,952
(INCREASE) DECREASE IN ACCRUED INTEREST
RECEIVABLE (449) 5,348
INCREASE (DECREASE) IN ACCRUED INTEREST PAYABLE 2,369 (7,606)
OTHER, NET (26,504) (6,765)
- -----------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 111,459 115,358
- -----------------------------------------------------------------------
INVESTING ACTIVITIES
- -----------------------------------------------------------------------
PURCHASES OF SECURITIES AVAILABLE FOR SALE (472,748) (281,782)
PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR
SALE 270,848 194,067
PROCEEDS FROM MATURITIES AND REPAYMENTS OF SECURITIES
AVAILABLE FOR SALE 555,408 524,209
NET INCREASE IN LOANS (321,085) (347,512)
PURCHASES OF PREMISES AND EQUIPMENT (22,647) (15,395)
PROCEEDS FROM THE DISPOSITION OF PREMISES AND
EQUIPMENT 1,212 1,519
PROCEEDS FROM THE DISPOSITION OF FORECLOSED
PROPERTIES 8,957 7,917
- -----------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 19,945 83,023
- -----------------------------------------------------------------------
FINANCING ACTIVITIES
- -----------------------------------------------------------------------
NET INCREASE (DECREASE) IN DEMAND, INTEREST CHECKING
AND REGULAR SAVINGS DEPOSITS (15,079) 114,892
NET INCREASE (DECREASE) IN MONEY MARKET ACCOUNTS 60,118 (6,087)
NET DECREASE IN CONSUMER CERTIFICATES (206,775) (159,218)
NET INCREASE (DECREASE) IN CERTIFICATES OF DEPOSIT
$100,000 AND OVER (90,413) 31,274
NET INCREASE (DECREASE) IN SHORT-TERM BORROWINGS 152,468 (74,749)
PROCEEDS FROM MEDIUM-TERM NOTES AND FHLB BORROWINGS 80,506 101,000
PAYMENTS ON MEDIUM-TERM NOTES AND FHLB BORROWINGS (170,900) (299,950)
PROCEEDS FROM LONG-TERM DEBT 99,134 --
PAYMENTS ON LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATIONS (469) (355)
PROCEEDS FROM ISSUANCE OF COMMON STOCK 20,077 9,213
COMMON STOCK PURCHASED (83,554) (38,283)
CASH IN LIEU OF FRACTIONAL SHARES FOR STOCK SPLIT -- (78)
CASH DIVIDENDS (39,564) (37,150)
- -----------------------------------------------------------------------
NET CASH USED BY FINANCING ACTIVITIES (194,451) (359,491)
- -----------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (63,047) (161,110)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 451,176 571,314
- -----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $388,129 $410,204
- --------------------------------------------------- ======== ========
- -----------------------------------------------------------------------
7
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------------------------------------------------------
UNREALIZED
GAINS (LOSSES)
UNAMORTIZED ON SECURITIES TOTAL
(IN THOUSANDS) COMMON COMMON CAPITAL DEFERRED RETAINED AVAILABLE SHAREHOLDERS'
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 SHARES STOCK SURPLUS COMPENSATION EARNINGS FOR SALE EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD 40,193 $200,964 $195,151 $-- $406,567 $23,865 $826,547
NET INCOME -- -- -- -- 81,922 -- 81,922
COMMON STOCK ISSUED UNDER PLANS 406 2,034 7,179 -- -- -- 9,213
COMMON STOCK PURCHASED (1,296) (6,484) (31,799) -- -- -- (38,283)
CASH DIVIDENDS DECLARED ON COMMON STOCK -- -- -- -- (38,221) -- (38,221)
COMMON STOCK ISSUED FOR 3-FOR-2 STOCK
SPLIT 19,890 99,452 -- -- (99,530) -- (78)
CHANGE IN UNREALIZED LOSSES ON SECURITIES AVAILABLE
FOR SALE, NET OF INCOME TAXES OF $14,05 -- -- -- -- -- (26,101) (26,101)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD 59,193 $295,966 $170,531 $-- $350,738 ($2,236) $814,999
- ----------------------------------------- ====== ======== ======== ======= ======== ======== ========
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD 59,378 $296,892 $171,926 $-- $368,457 $9,224 $846,499
NET INCOME -- -- -- -- 93,241 -- 93,241
COMMON STOCK ISSUED UNDER PLANS 824 4,122 15,955 -- -- -- 20,077
GRANT OF SHARES OF RESTRICTED STOCK AWARDS 32 158 660 (818) -- -- --
AMORTIZATION OF DEFERRED COMPENSATION -- -- -- 204 -- -- 204
COMMON STOCK PURCHASED (2,989) (14,946) (68,608) -- -- -- (83,554)
CASH DIVIDENDS DECLARED ON COMMON STOCK -- -- -- -- (40,220) -- (40,220)
CHANGE IN UNREALIZED GAINS ON SECURITIES AVAILABLE
FOR SALE, NET OF INCOME TAXES OF $2,013 -- -- -- -- -- 3,739 3,739
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD 57,245 $286,226 $119,933 ($614)$421,478 $12,963 $839,986
- ----------------------------------------- ====== ======== ======== ======= ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
8
WACHOVIA AND CENTRAL FIDELITY UNAUDITED
PRO FORMA COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Combined Financial Information
combines the historical Consolidated Financial Statements of Wachovia and
Central Fidelity, giving effect to the Central Fidelity Merger as if it had been
effective on September 30, 1997, with respect to the Unaudited Pro Forma
Combined Statement of Condition, and as of the beginning of the periods
indicated herein, with respect to the Unaudited Pro Forma Combined Statements of
Income. The Central Fidelity Merger will be accounted for as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
historical book values of the assets, liabilities and shareholders' equity of
Central Fidelity as reported on its consolidated Statement of Condition will be
carried over onto the consolidated Statement of Condition of Wachovia after
addressing conformity issues, and no goodwill or other intangible assets will be
created. Wachovia will include in its consolidated statement of income the
consolidated results of operations of Central Fidelity for the entire fiscal
year in which the Central Fidelity Merger occurs after addressing conformity
issues and will combine and restate its results of operations for prior periods
to include the reported consolidated results of operations of Central Fidelity
for prior periods after addressing conformity issues. This information should be
read in conjunction with the historical Consolidated Financial Statements of
Wachovia and Central Fidelity. The effect of estimated merger and restructuring
costs expected to be incurred in connection with the Central Fidelity Merger has
been reflected in the Unaudited Pro Forma Combined Statement of Condition;
however, since the estimated costs are nonrecurring, they have not been
reflected in the Unaudited Pro Forma Combined Statements of Income. The
Unaudited Pro Forma Combined Financial Information does not give effect to any
anticipated cost savings in connection with the Central Fidelity Merger. The
Unaudited Pro Forma Combined Statement of Condition is not necessarily
indicative of the actual financial position that would have existed had the
Central Fidelity Merger been consummated on the dates indicated, or that may
exist in the future. The Unaudited Pro Forma Combined Statements of Income are
not necessarily indicative of the results that would have occurred had the
Central Fidelity Merger been consummated on the dates indicated or that may be
achieved in the future.
UNAUDITED PRO FORMA COMBINED STATEMENT OF CONDITION
AS OF SEPTEMBER 30, 1997
(IN THOUSANDS)
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
----------------- ----------------- ----------------- -----------------
ASSETS
Cash and due from banks..............................$ 3,209,780 $ 298,752 $ - $ 3,508,532
Federal funds sold and other money market
investments..................................... 1,391,178 95,915 - 1,487,093
Securities available for sale........................ 5,808,714 2,725,064 - 8,533,778
Securities held to maturity.......................... 1,217,798 - - 1,217,798
Loans................................................ 33,753,558 6,992,767 - 40,746,325
Allowance for loan losses....................... (409,356) (110,000) - (519,356)
----------------- ----------------- ----------------- -----------------
Net loans............................................ 33,344,202 6,882,767 - 40,226,969
Premises and equipment............................... 652,180 165,390 - 817,570
Other assets......................................... 2,046,110 282,779 89,950(2) 2,418,839
----------------- ----------------- ----------------- -----------------
TOTAL ASSETS..............................$ 47,669,962 $ 10,450,667 $ 89,950 $ 58,210,579
================= ================= ================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand...............................................$ 9,561,291 $ 1,211,889 $ - $ 10,773,180
Large denomination certificates...................... 2,504,976 397,813 - 2,902,789
Other................................................ 17,024,811 6,209,603 - 23,234,414
----------------- ----------------- ----------------- -----------------
Total deposits............................ 29,091,078 7,819,305 - 36,910,383
Federal funds purchased and securities sold
under repurchase agreements..................... 6,144,033 1,073,794 - 7,217,827
Other liabilities.................................... 8,757,884 717,582 257,000(2) 9,732,466
----------------- ----------------- ----------------- -----------------
Total liabilities......................... 43,992,995 9,610,681 257,000 53,860,676
Shareholders' Equity:
Preferred stock...................................... - - - -
Common stock......................................... 788,863 286,226 (105,903)(1) 969,186
Capital surplus...................................... 72,742 119,933 105,903 (1) 298,578
Retained earnings.................................... 2,759,668 420,864 (167,050)(2) 3,013,482
Unrealized gains (losses) on securities available
for sale, net of tax............................ 55,694 12,963 - 68,657
----------------- ----------------- ----------------- -----------------
Total shareholders' equity...................... 3,676,967 839,986 (167,050) 4,349,903
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......$ 47,669,962 $ 10,450,667 $ 89,950 $ 58,210,579
================= ================= ================= =================
See "Notes to Unaudited Pro Forma Combined Financial Information."
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------------
INTEREST INCOME
Interest and fees on loans...........................$ 2,081,427 $ 457,899 $ - $ 2,539,326
Securities available for sale........................ 336,195 141,484 - 477,679
Securities held to maturity.......................... 76,901 - - 76,901
Other interest income................................ 50,393 4,364 - 54,757
---------------- ---------------- ---------------- ----------------
Total interest income...................... 2,544,916 603,747 - 3,148,663
INTEREST EXPENSE
Total deposits....................................... 728,527 233,441 - 961,968
Short-term borrowings................................ 310,256 40,748 - 351,004
Other................................................ 264,186 27,712 - 291,898
---------------- ---------------- ---------------- ----------------
Total interest expense..................... 1,302,969 301,901 - 1,604,870
Net interest income.................................. 1,241,947 301,846 - 1,543,793
Provision for loan losses............................ 148,057 39,977 - 188,034
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses.. 1,093,890 261,869 - 1,355,759
OTHER INCOME
Fees for trust services.............................. 114,059 14,111 - 128,170
Service charges on deposit accounts.................. 193,295 31,332 - 224,627
Investment securities gains (losses)................. 1,082 2,820 - 3,902
Other income......................................... 355,679 27,916 - 383,595
---------------- ---------------- ---------------- ----------------
Total non-interest income.................. 664,115 76,179 - 740,294
OTHER EXPENSE
Salaries and employee benefits....................... 545,853 114,240 - 660,093
Net occupancy and equipment expense.................. 157,518 37,402 - 194,920
Other expense........................................ 331,592 48,033 - 379,625
---------------- ---------------- ---------------- ----------------
Total non-interest expense................. 1,034,963 199,675 - 1,234,638
Income before income taxes........................... 723,042 138,373 - 861,415
Income taxes......................................... 227,081 45,132 - 272,213
---------------- ---------------- ---------------- ----------------
NET INCOME...........................................$ 495,961 $ 93,241 $ - $ 589,202
================ ================ ================ ================
Net income per primary share.........................$ 3.04 $ 1.62 $ 2.95
Weighted average primary shares outstanding.......... 163,327 57,692 199,673
Net income per fully diluted share...................$ 3.03 $ 1.57 $ 2.93
Weighted average fully diluted shares outstanding.... 163,876 59,216 201,182
See "Notes to Unaudited Pro Forma Combined Financial Information."
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------------
INTEREST INCOME
Interest and fees on loans...........................$ 2,544,658 $ 570,615 $ - $ 3,115,273
Securities available for sale........................ 472,108 212,875 - 684,983
Securities held to maturity.......................... 117,548 - - 117,548
Other interest income................................ 93,000 5,130 - 98,130
---------------- ---------------- ---------------- ----------------
Total interest income...................... 3,227,314 788,620 - 4,015,934
INTEREST EXPENSE
Total deposits....................................... 881,562 322,187 - 1,203,749
Short-term borrowings................................ 431,094 51,250 - 482,344
Other................................................ 359,946 39,916 - 399,862
---------------- ---------------- ---------------- ----------------
Total interest expense..................... 1,672,602 413,353 - 2,085,955
Net interest income.................................. 1,554,712 375,267 - 1,929,979
Provision for loan losses............................ 149,911 43,865 - 193,776
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses.. 1,404,801 331,402 - 1,736,203
OTHER INCOME
Fees for trust services.............................. 242,368 37,832 - 280,200
Service charges on deposit accounts.................. 137,841 16,780 - 154,621
Investment securities gains (losses)................. 3,736 99 - 3,835
Other income......................................... 403,705 31,204 - 434,909
---------------- ---------------- ---------------- ----------------
Total non-interest income.................. 787,650 85,915 - 873,565
OTHER EXPENSE
Salaries and employee benefits....................... 654,525 142,347 - 796,872
Net occupancy and equipment expense.................. 204,443 46,147 - 250,590
Other expense........................................ 398,581 63,447 - 462,028
---------------- ---------------- ---------------- ----------------
Total non-interest expense................. 1,257,549 251,941 - 1,509,490
Income before income taxes........................... 934,902 165,376 - 1,100,278
Income taxes......................................... 290,345 52,674 - 343,019
---------------- ---------------- ---------------- ----------------
NET INCOME...........................................$ 644,557 $ 112,702 $ - $ 757,259
================ ================ ================ ================
Net income per primary share.........................$ 3.81 $ 1.89 $ 3.66
Weighted average primary shares outstanding.......... 169,094 59,737 206,728
Net income per fully diluted share...................$ 3.80 $ 1.85 $ 3.64
Weighted average fully diluted shares outstanding.... 169,827 60,758 208,105
See "Notes to Unaudited Pro Forma Combined Financial Information."
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------------
INTEREST INCOME
Interest and fees on loans.............................$ 2,384,919 $ 526,896 $ - $ 2,911,815
Securities available for sale.......................... 268,106 239,010 - 507,116
Securities held to maturity............................ 294,241 - - 294,241
Other interest income.................................. 72,464 6,014 - 78,478
---------------- ---------------- ---------------- ----------------
Total interest income........................ 3,019,730 771,920 - 3,791,650
INTEREST EXPENSE
Total deposits......................................... 823,454 319,725 - 1,143,179
Short-term borrowings.................................. 467,007 61,037 - 528,044
Other.................................................. 288,646 51,533 - 340,179
---------------- ---------------- ---------------- ----------------
Total interest expense....................... 1,579,107 432,295 - 2,011,402
Net interest income.................................... 1,440,623 339,625 - 1,780,248
Provision for loan losses.............................. 103,791 26,713 - 130,504
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses.... 1,336,832 312,912 - 1,649,744
OTHER INCOME
Fees for trust services................................ 209,113 35,150 - 244,263
Service charges on deposit accounts.................... 130,521 14,943 - 145,464
Gain on sale of mortgage servicing portfolio........... 79,025 - - 79,025
Investment securities gains (losses)................... (23,494) 3,253 - (20,241)
Other income........................................... 340,467 26,329 - 366,796
---------------- ---------------- ---------------- ----------------
Total non-interest income.................... 735,632 79,675 - 815,307
OTHER EXPENSE
Salaries and employee benefits......................... 600,326 133,186 - 733,512
Net occupancy and equipment expense.................... 196,806 42,979 - 239,785
Other expense.......................................... 406,464 62,000 - 468,464
---------------- ---------------- ---------------- ----------------
Total non-interest expense................... 1,203,596 238,165 - 1,441,761
Income before income taxes............................. 868,868 154,422 - 1,023,290
Income taxes........................................... 266,325 49,052 - 315,377
---------------- ---------------- ---------------- ----------------
NET INCOME.............................................$ 602,543 $ 105,370 $ - $ 707,913
================ ================ ================ ================
Net income per primary share...........................$ 3.50 $ 1.77 $ 3.38
Weighted average primary shares outstanding............ 172,089 59,674 209,684
Net income per fully diluted share.....................$ 3.49 $ 1.74 $ 3.35
Weighted average fully diluted shares outstanding...... 172,957 60,573 211,118
See "Notes to Unaudited Pro Forma Combined Financial Information."
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CENTRAL PRO FORMA PRO FORMA
WACHOVIA FIDELITY ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------------
INTEREST INCOME
Interest and fees on loans...........................$ 1,864,082 $ 440,691 $ - $ 2,304,773
Securities available for sale........................ 182,440 217,945 - 400,385
Securities held to maturity.......................... 273,813 - - 273,813
Other interest income................................ 41,959 6,161 - 48,120
---------------- ---------------- ---------------- ----------------
Total interest income...................... 2,362,294 664,797 - 3,027,091
INTEREST EXPENSE
Total deposits....................................... 539,232 243,632 - 782,864
Short-term borrowings................................ 272,572 45,834 - 318,406
Other................................................ 226,584 41,225 - 267,809
---------------- ---------------- ---------------- ----------------
Total interest expense..................... 1,038,388 330,691 - 1,369,079
Net interest income.................................. 1,323,906 334,106 - 1,658,012
Provision for loan losses............................ 71,763 24,359 - 96,122
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses.. 1,252,143 309,747 - 1,561,890
OTHER INCOME
Fees for trust services.............................. 196,149 34,557 - 230,706
Service charges on deposit accounts.................. 128,100 13,926 - 142,026
Investment securities gains (losses)................. 3,320 (25,984) - (22,664)
Other income......................................... 280,183 36,739 - 316,922
---------------- ---------------- ---------------- ----------------
Total non-interest income.................. 607,752 59,238 - 666,990
OTHER EXPENSE
Salaries and employee benefits....................... 563,507 127,683 - 691,190
Net occupancy and equipment expense.................. 187,419 41,653 - 229,072
Other expense........................................ 347,487 75,729 - 423,216
---------------- ---------------- ---------------- ----------------
Total non-interest expense................. 1,098,413 245,065 - 1,343,478
Income before income taxes........................... 761,482 123,920 - 885,402
Income taxes......................................... 222,424 39,056 - 261,480
---------------- ---------------- ---------------- ----------------
NET INCOME...........................................$ 539,058 $ 84,864 $ - $ 623,922
================ ================ ================ ================
Net income per primary share.........................$ 3.13 $ 1.45 $ 2.98
Weighted average primary shares outstanding.......... 172,339 58,742 209,346
Net income per fully diluted share...................$ 3.12 $ 1.42 $ 2.96
Weighted average fully diluted shares outstanding.... 172,951 59,861 210,663
See "Notes to Unaudited Pro Forma Combined Financial Information."
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(1) Pursuant to the Central Fidelity Merger Agreement, each outstanding share of
the Central Fidelity Common Stock (57,245,209 shares at September 30, 1997)
will be converted into 0.63 of a share of Wachovia Common Stock (36,064,482
at September 30, 1997), subject to adjustment in the event of stock
dividends, stock splits or similar changes in Wachovia's capitalization.
(2) Reflects Wachovia management's current estimate, for purposes of pro forma
presentation, of the aggregate estimated merger and restructuring costs of
$257 million ($167 million net of taxes) expected to be incurred in
connection with the Central Fidelity Merger. While a portion of these costs
may be required to be recognized over time, the current estimate of these
costs has been recorded in the Pro Forma Combined Statement of Condition in
order to disclose the aggregate effect of these activities on Wachovia's pro
forma combined financial position. The estimated aggregate costs, primarily
comprised of anticipated cash charges, include the following:
(in millions)
Personnel........................................... $ 115
Systems and operations.............................. 70
Business unit integration and branch conversions.... 41
Other............................................... 31
----
$257
The personnel costs include costs of staff reductions, comprising employee
severance costs, termination of certain employee benefit plans and employee
assistance costs for separated employees resulting from reorganizations in
connection with the Central Fidelity Merger. Systems and operations costs
include costs associated with the elimination of redundant systems, including
service contract terminations and other related costs of computer equipment and
software write-offs due to duplication or incompatibility, and costs of
transitioning customer accounts to a common system. Business unit integration
and branch conversion costs consist of business unit consolidation expenses,
lease termination and other costs associated with the closing and disposition of
redundant branches and marketing and communications costs. Other expense
includes transaction costs and other expenses directly associated with
completing the Central Fidelity Merger. Wachovia anticipates that the majority
of these costs, primarily comprised of cash charges, will be paid in 1997 and
1998.
Management's cost estimates are forward looking. While the costs represent
management's current estimate of merger and restructuring costs that will be
incurred, the ultimate level and timing of recognition of such costs will be
based on the final merger and integration plan to be completed prior to
consummation of the Central Fidelity Merger, which is currently being developed
by various Wachovia and Central Fidelity task forces and integration committees.
Readers are cautioned that the completion of the Central Fidelity Merger and
integration plan and the resulting management plans detailing actions to be
undertaken to effect the Central Fidelity Merger will impact these estimates;
the type and amount of actual costs incurred could vary materially from these
estimates in future developments differ from the underlying assumptions used by
management in determining its current estimate of these costs.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date December 30, 1997
WACHOVIA CORPORATION
By: /s/ Kenneth W. McAllister
Name: Kenneth W. McAllister
---------------------------
Title: Senior Executive Vice President
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Exhibit Index
2.1 Agreeement and Plan of Merger, dated as of June 23, 1997, by and between
the Registrant and Central.
99.1 Press release dated December 15, 1997, announcing the consummation of the
Merger.
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