EX-99.C 4 ex99c_20100.txt EARNINGS NEWS RELEASE Exhibit 99(c) [First Union Logo appears here] NEWS Monday Media Contact: April 16, 2001 Ginny Mackin 704-383-3715 Mary Eshet 704-383-7777 Investor Contact: Alice Lehman 704-374-4139 FIRST UNION REPORTS OPERATING EARNINGS OF $610 MILLION, OR 62 CENTS PER SHARE IN THE 1ST QUARTER OF 2001 -------------------------------------------------------------------------------- FIRST QUARTER 2001 OVERVIEW o Reported cash operating earnings of 69 cents per share, or 62 cents on an operating basis, in line with market expectations. o Net charge-offs declined 16 percent from the first quarter of 2000, while nonperforming assets, excluding assets held for sale, increased 5 percent. o Expenses declined 10 percent from the first quarter of 2000, and were unchanged from year-end. o Deposits grew 3 percent from the first quarter of 2000, excluding divestitures. o Loans grew 6 percent from the first quarter of 2000, excluding divested businesses and securitizations. -------------------------------------------------------------------------------- Earnings Highlights Three Months Ended March 31, 1Q01 ------------------ vs (In millions, except per share data) 2001 2000 1Q00 -------------------------------------------------------------------------------- Earnings Operating earnings $ 610 838 (27)% Diluted earnings per share (Operating earnings) 0.62 0.85 (27) Net income (As reported) 584 840 (30) Diluted earnings per share (As reported) $ 0.59 0.85 (31)% -------------------------------------------------------------------------------- Financial ratios (Operating earnings) Return on average stockholders' equity 15.64% 20.31 - Overhead efficiency ratio 65.18 62.31 - Net interest margin 3.42 3.69 - Fee income as % of total revenue 47.13 48.08 - Dividend payout ratio 38.71% 56.47 - -------------------------------------------------------------------------------- Cash operating earnings Net income $ 684 932 (27)% Diluted earnings per share $ 0.69 0.95 (27)% Return on average tangible stockholders' equity 22.91% 34.03 - Overhead efficiency ratio 62.80% 59.65 - -------------------------------------------------------------------------------- Asset quality Allowance as % of nonaccrual and restructured loans 143% 150 - Net charge-offs as % of average loans, net 0.53 0.57 - Nonperforming assets to loans, net, foreclosed properties and assets held for sale 1.30% 0.92 - -------------------------------------------------------------------------------- -more- FIRST UNION REPORTS 1ST QUARTER EARNINGS/Page 2 ---------------------------------------- CHARLOTTE, N.C. - First Union (NYSE:FTU) today reported diluted first quarter 2001 cash operating earnings of $684 million, or 69 cents per share, in a quarter highlighted by very strong expense control, loan and deposit growth (excluding divestitures), and slightly lower loan losses. First quarter 2001 operating earnings were $610 million, or 62 cents per share, and net income was $584 million, or 59 cents per share. The decline in earnings, as anticipated, reflected a decrease in principal investing revenues, the winding down of divested businesses and a difficult financial market environment. The cash operating return on average tangible stockholders' equity was 22.91 percent in the first quarter of 2001 and 34.03 percent in the first quarter of 2000. Cash operating earnings are earnings before goodwill and other intangible amortization. Based on first quarter 2001 operating earnings, First Union's return on average stockholders' equity (ROE) was 15.64 percent and 20.31 percent in the first quarter of 2000. "Our first quarter results were in line with market expectations. Beneath the numbers, what we see is some very good execution by our employees on controlling costs, managing risk and serving their customers," said Ken Thompson, First Union chairman and CEO. "The results are clear in improved customer satisfaction and retention. I'm particularly pleased with the continuing good loan and deposit growth that we're seeing in our General Bank. Given the exceptionally difficult market over the last quarter, we were satisfied with the performance in our Capital Management and Capital Markets businesses." Net Interest Income Net interest income on a tax-equivalent basis was $1.7 billion in the first quarter of 2001, a 13 percent decline from $2.0 billion in the first quarter of 2000, largely due to a reduction in earning assets related to the sale of loans and securities in connection with First Union's restructuring in 2000. The net interest margin was 3.42 percent in the first quarter of 2001 and 3.69 percent in the first quarter of 2000. Fee and Other Income On an operating basis, fee and other income in the first quarter of 2001 was $1.5 billion, down 16 percent from the first quarter of 2000, primarily attributable to declines of $93 million in commissions and $242 million in principal investing revenue. Results include a $75 million gain recorded in connection with the sale of Star Systems, Inc., an automated teller machine network in which First Union held an interest. On an operating basis, fee and other income as a percentage of total revenue was 47 percent in the first quarter of 2001 and 48 percent in the first quarter of 2000. Provision for Loan Losses The loan loss provision was $219 million in the first quarter of 2001, an increase of $27 million from the first quarter of 2000. The provision exceeded net charge-offs by $60 million. At March 31, 2001, the ratio of allowance to net loans increased to 1.43 percent from 1.30 percent at March 31, 2000. Noninterest Expense On an operating basis, noninterest expense was $2.1 billion in the first quarter of 2001, down 10 percent from the first quarter of 2000, reflecting solid expense control and lower variable compensation expense. -more- FIRST UNION REPORTS 1ST QUARTER EARNINGS/Page 3 ---------------------------------------- Divestitures Update In the first quarter of 2001, the final 26 branches were sold as part of First Union's strategic repositioning announced in June 2000. This included $617 million in deposits and $115 million in loans in the first quarter of 2001. In addition, $3 billion of The Money Store home equity portfolio was securitized and sold in the first quarter of 2001. Restructuring and Other Charges and Gains The restructuring and other charges and gains in the first quarter of 2001 amounted to a pre-tax charge of $43 million ($26 million after-tax) or 3 cents per share. This included pre-tax charges of $116 million, which were offset by $73 million in gains on the branch sales mentioned above. Net Charge-offs and Nonperforming Assets Net charge-offs amounted to $159 million in the first quarter of 2001, a decrease of $30 million from the first quarter of 2000. This represented 0.53 percent of average net loans, down 4 basis points from the first quarter of 2000. At March 31, 2001, nonperforming assets were $1.7 billion, or 1.30 percent of net loans, foreclosed properties and assets held for sale, up 29 percent from March 31, 2000. Excluding assets held for sale, nonperforming assets rose by 5 percent. In line with previous guidance, the company said that it anticipates a rise in nonperforming assets in 2001 to mirror industry trends. First quarter 2001 nonperforming assets included $344 million of nonperforming assets classified as held for sale. Lines of Business -------------------------------------------------------------------------------- General Bank Highlights Three Months Ended March 31, 1Q01 ------------------ vs (In millions) 2001 2000 1Q00 -------------------------------------------------------------------------------- Total revenue $ 1,450 1,396 4 % Provision for loan losses 101 38 - Noninterest expense 908 925 (2) Operating earnings 292 291 - Average loans, net 63,596 56,491 13 Average core deposits 98,535 97,552 1 Economic capital $ 3,586 3,766 (5)% -------------------------------------------------------------------------------- The General Bank has three major business lines: Consumer, Commercial and Small Business. Due to substantial improvement in customer service, General Bank revenue increased 4 percent from the first quarter of 2000 with strong growth in loans and in fee and other income. Fee and other income was led by improved service charge income and strong debit card revenues. The increased provision reflected a $29 million increase in Commercial and Small Business net charge-offs. The Consumer provision increased $34 million, including a $13 million market value adjustment on First Union Home Equity nonperforming loans moved to assets held for sale and other home equity charge-offs related to the normal aging of a growing loan portfolio. The impact of expense control initiatives was reflected in a 2 percent decline in noninterest expense from the first quarter of 2000. Loans increased 13 percent from the first quarter of 2000, with across-the-board strength in consumer lending, while commercial real estate and small business lending drove Commercial lending growth. Average core deposits grew 1 percent from the first quarter of 2000, excluding divestitures, primarily in interest checking, savings and money market accounts that have low funding costs. -more- FIRST UNION REPORTS 1ST QUARTER EARNINGS/Page 4 ---------------------------------------- Overall customer satisfaction scores as measured by Gallup improved for the eighth consecutive quarter. Household retention also continued to improve. Online customer growth continued to be strong, reaching 2.6 million enrollments by March 31, 2001. This included 111,000 online wholesale enrollments. -------------------------------------------------------------------------------- Capital Management Highlights Three Months Ended March 31, 1Q01 ------------------ vs (In millions) 2001 2000 1Q00 -------------------------------------------------------------------------------- Total revenue $ 831 928 (10)% Provision for loan losses - - - Noninterest expense 658 708 (7) Operating earnings 113 145 (22) Average loans, net 4,535 4,026 13 Average core deposits 8,004 7,740 3 Economic capital $ 987 1,059 (7)% -------------------------------------------------------------------------------- Capital Management includes Retail Brokerage Services, Asset Management, and Wealth and Trust Services. These businesses, with their diversified portfolio and multiple channels of distribution, performed solidly in the first quarter of 2001 despite an exceptionally difficult market environment. Capital Management's revenue declined 10 percent from a very strong first quarter of 2000, primarily reflecting lower brokerage fee income. Noninterest expense decreased 7 percent from the first quarter of 2000, primarily due to decreased incentives tied to revenue production. While fee income and transaction activity declined in a difficult market, Capital Management's balanced product mix (34 percent equity products, 28 percent fixed income products and 38 percent money market products) enabled First Union to serve client needs. In a declining market, assets under management were down 1 percent from year-end 2000 to $168 billion at March 31, 2001. Assets under management include mutual fund assets, which grew to a record $87 billion, up 2 percent from year-end 2000. Money market net fund sales in the first quarter of 2001 reached a record $5 billion. The brokerage sales force increased to nearly 7,800, mainly due to the addition of JWGenesis, a purchase acquisition that closed on January 1, 2001. This acquisition provided an additional independent distribution channel. The online brokerage channel grew 13 percent from year-end 2000, ending with 67,000 online enrollments at March 31, 2001. -------------------------------------------------------------------------------- Capital Market Highlights Three Months Ended March 31, 1Q01 ------------------ vs (In millions) 2001 2000 1Q00 -------------------------------------------------------------------------------- Total revenue $ 726 929 (22)% Provision for loan losses 70 89 (21) Noninterest expense 467 454 3 Operating earnings 150 278 (46) Average loans, net 42,642 41,560 3 Average core deposits 9,472 9,210 3 Economic capital $ 6,282 5,480 15 % -------------------------------------------------------------------------------- -more- FIRST UNION REPORTS 1ST QUARTER EARNINGS/Page 5 ---------------------------------------- Capital Markets encompasses Investment Banking and Corporate Banking businesses that offer a range of fixed income products, debt and equity products, structured products and advisory services for corporate and institutional clients. First quarter 2001 revenue declined 22 percent from the first quarter of 2000, primarily related to anticipated lower principal investing gains, which were down $242 million from an exceptionally strong first quarter of 2000. Fixed income fee and other income increased 90 percent from the first quarter of 2000, primarily driven by equity derivatives and fixed income sales and trading. The increase was offset by declines in the agency businesses, primarily loan syndications and asset securitization. Restructuring actions undertaken in 2000 to streamline and focus Capital Markets businesses showed solid results in the first quarter of 2001, with a modest 3 percent growth in noninterest expense from the first quarter of 2000. First Union (NYSE:FTU), with $253 billion in assets and stockholders' equity of $16 billion at March 31, 2001, is a leading provider of financial services to 15 million retail and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices in 11 East Coast states and Washington, D.C., and full-service brokerage offices in 47 states. Online banking products and services can be accessed through www.firstunion.com. Earnings Conference Call First Union CFO Bob Kelly will review First Union's first quarter results in a pre-recorded conference call and audio webcast that will be available beginning at 8 a.m. today. Supplemental materials relating to the first quarter results are available on the Internet at www.ftuinvestor.com, and investors are encouraged to access such materials. In addition, he will be available for a live question-and-answer session on earnings results in a teleconference call at 1 p.m. today. Webcast Instructions: To gain access to the webcast, which will be "listen-only," go to www.ftuinvestor.com and click on the link First Union First Quarter Earnings Audio Webcast. In order to listen to the webcast, you will need to download Real Player Basic 8. Pre-Recorded Teleconference Instructions: At 8 a.m. today, the telephone number for the pre-recorded conference call is 800-294-9508 for U.S. callers or 402-220-3770 outside U.S. You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: 33345. Live Teleconference Instructions: At 1 p.m. today, the telephone number for the live question-and-answer session on earnings results is 888-989-7593 for U.S. callers (or 712-257-2881 for international callers). You will be asked to tell the answering coordinator your name and the name of your firm. Mention the conference Access Code: 33345. Additional Information This news release, the pre-recorded conference call and live question-and-answer session may contain certain forward-looking statements with respect to the goals, plans, objectives, intentions, expectations, financial condition, results of operations, future performance and business of First Union, including, without limitation, (i) statements relating to certain of First Union's goals and expectations with respect to earnings, revenue, expenses, and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words "may", "could", "would", "should", "believes", "expects", "anticipates", "estimates", "intends", "plans", "targets" or similar expressions. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond First Union's control). A discussion of various factors that could cause First Union's actual results or conditions to differ materially from the goals, plans, objectives, intentions, and expectations expressed in such forward-looking statements is included in First Union's most recent annual, quarterly and current reports filed with the Securities and Exchange Commission, including its Current Report on Form 8-K dated April 16, 2001. Some of the factors described in those reports, include, without limitation, factors relating to (1) the strength of the U.S. economy in general and the strength of the local economies in which First Union conducts operations, which may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on First Union's loan portfolio and allowance for loan losses; (2) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (3) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on First Union's capital markets and capital management activities; (4) the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); and (5) the effect of corporate restructuring, acquisitions and/or dispositions on First Union. Forward-looking statements speak only as of the date they are made. First Union does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made. -more-
PAGE 6 FIRST UNION CORPORATION FINANCIAL HIGHLIGHTS (Unaudited) ---------------------------------------------------------------------------------------------------------------------------------- 2001 2000 --------- -------------------------------------------------- (Dollars in millions, except First Fourth Third Second First per share data) Quarter Quarter Quarter Quarter Quarter ---------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Operating Earnings Net interest income - tax-equivalent $ 1,734 1,757 1,860 1,930 1,989 Fee and other income 1,546 1,582 1,645 1,746 1,842 ---------------------------------------------------------------------------------------------------------------------------------- Total revenue - tax-equivalent 3,280 3,339 3,505 3,676 3,831 Provision for loan losses 219 192 142 228 192 Noninterest expense 2,138 2,132 2,328 2,366 2,387 Income taxes - tax-equivalent 313 334 333 368 414 ---------------------------------------------------------------------------------------------------------------------------------- Income before restructuring, merger- related and other charges and cumulative effect of a change in accounting principle (Operating earnings) 610 681 702 714 838 After-tax restructuring, merger-related and other charges (26) (36) 150 (2,913) 2 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) before cumulative effect of a change in accounting principle 584 645 852 (2,199) 840 Cumulative effect of a change in the accounting for beneficial interests, net of tax - (46) - - - ---------------------------------------------------------------------------------------------------------------------------------- Net income (loss) (As reported) $ 584 599 852 (2,199) 840 ---------------------------------------------------------------------------------------------------------------------------------- DILUTED EARNINGS PER SHARE Income before restructuring, merger- related and other charges and cumulative effect of a change in accounting principle $ 0.62 0.69 0.71 0.73 0.85 Income (loss) before cumulative effect of a change in accounting principle 0.59 0.65 0.86 (2.27) 0.85 Net income (loss) $ 0.59 0.60 0.86 (2.27) 0.85 ---------------------------------------------------------------------------------------------------------------------------------- PROFITABILITY (Operating earnings) Return on average stockholders' equity 15.64 % 15.36 15.76 17.74 20.31 Net interest margin 3.42 3.46 3.52 3.51 3.69 Fee and other income as % of total revenue 47.13 47.38 46.93 47.50 48.08 Overhead efficiency ratio 65.18 63.85 66.42 64.36 62.31 Effective income tax rate 31.54 % 31.21 30.43 32.45 31.81 ---------------------------------------------------------------------------------------------------------------------------------- CASH OPERATING EARNINGS Net income $ 684 753 778 807 932 Diluted earnings per share $ 0.69 0.76 0.79 0.82 0.95 Return on average tangible stockholders' equity 22.91 % 21.55 22.15 30.18 34.03 Return on average stockholders' equity 17.52 17.00 17.47 20.04 22.59 Overhead efficiency ratio 62.80 % 61.46 64.17 61.64 59.65 Operating leverage $ (67) 31 (154) (136) (13) ----------------------------------------------------------------------------------------------------------------------------------
PAGE 7 FIRST UNION CORPORATION OTHER FINANCIAL DATA (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 ------------ ------------------------------------------------- First Fourth Third Second First (Dollars in millions) Quarter Quarter Quarter Quarter Quarter ----------------------------------------------------------------------------------------------------------------------------------- CAPITAL ADEQUACY(a) Tier I capital ratio 7.16 % 7.02 7.00 6.65 6.94 Total capital ratio 11.29 11.19 11.32 10.57 10.67 Leverage ratio 5.88 % 5.92 5.73 5.34 5.94 ----------------------------------------------------------------------------------------------------------------------------------- ASSET QUALITY Allowance as % of loans, net 1.43 % 1.39 1.39 1.33 1.30 Allowance as % of nonperforming assets 132 135 181 193 139 Net charge-offs as % of average loans, net 0.53 0.64 0.46 0.69 0.57 Nonperforming assets to loans, net, foreclosed properties and assets held for sale 1.30 % 1.22 0.98 0.87 0.92 ----------------------------------------------------------------------------------------------------------------------------------- OTHER DATA Employees (FTEs) 69,368 69,971 70,533 72,890 72,016 Branches 2,164 2,193 2,253 2,258 2,305 ATMs 3,676 3,772 3,831 3,832 3,786 Shares outstanding (In thousands) 981,268 979,963 986,004 986,394 984,148 Common stock price $ 33.00 27.81 32.19 25.00 37.25 Book value per common share $ 16.39 15.66 15.00 14.14 17.16 Common stock price to book value 201 % 178 215 177 217 Market capitalization $ 32,382 27,253 31,739 24,660 36,660 Dividends paid per common share $ 0.24 0.48 0.48 0.48 0.48 --------------------------------------------------------------------------------------------------------- ------------------------ AVERAGE BALANCE SHEET DATA Commercial loans, net $ 77,270 76,253 75,380 75,951 73,939 Consumer loans, net 42,580 43,840 48,095 56,663 57,542 Loans, net 119,850 120,093 123,475 132,614 131,481 Earning assets 203,720 202,606 211,089 220,061 215,754 Total assets 245,469 239,375 246,818 255,583 248,290 Core deposits 118,192 118,944 118,074 118,256 118,072 Total deposits 137,282 138,329 143,112 141,204 140,421 Interest-bearing liabilities 183,995 181,832 190,146 196,954 191,680 Stockholders' equity $ 15,846 14,753 14,236 16,614 16,583 ----------------------------------------------------------------------------------------------------------------------------------- PERIOD END BALANCE SHEET DATA Commercial loans, net $ 80,470 80,240 79,361 78,615 78,100 Consumer loans, net 42,383 43,520 44,058 49,744 57,703 Loans, net 122,853 123,760 123,419 128,359 135,803 Total assets 252,949 254,170 246,640 257,994 253,648 Core deposits 120,786 122,383 118,317 119,352 119,928 Total deposits 140,795 142,668 138,870 144,864 139,890 Stockholders' equity $ 16,081 15,347 14,795 13,951 16,884 ----------------------------------------------------------------------------------------------------------------------------------- (a) The first quarter of 2001 is based on estimates.
PAGE 8 FIRST UNION CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) -------------------------------------------------------------------------------------------------------------------------- Three Months Ended March 31, 2001 --------------------------------------- Restructuring and Other Operating Charges/ As (In millions) Earnings Gains Reported -------------------------------------------------------------------------------------------------------------------------- Net interest income $ 1,702 - 1,702 Provision for loan losses 219 - 219 -------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1,483 - 1,483 -------------------------------------------------------------------------------------------------------------------------- Fee and other income Service charges and fees 468 - 468 Advisory, underwriting and other Capital Markets fees 198 - 198 Other income Security transactions - portfolio (16) - (16) Asset sales and securitization 12 (44) (32) Gain on sale of branches - 73 73 Other income 884 (1) 883 -------------------------------------------------------------------------------------------------------------------------- Total fee and other income 1,546 28 1,574 -------------------------------------------------------------------------------------------------------------------------- Noninterest expense Restructuring charges - 2 2 Other noninterest expense 2,138 69 2,207 -------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,138 71 2,209 -------------------------------------------------------------------------------------------------------------------------- Income before income taxes (benefits) 891 (43) 848 Income taxes (benefits) 281 (17) 264 -------------------------------------------------------------------------------------------------------------------------- Net income $ 610 (26) 584 -------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share $ 0.62 (0.03) 0.59 --------------------------------------------------------------------------------------------------------------------------
PAGE 9 FIRST UNION CORPORATION CONSOLIDATED STATEMENTS OF OPERATING EARNINGS (a) (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 ------------ ------------------------------------------------- First Fourth Third Second First (In millions, except per share data) Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------------------------------------------------------------------------------------ INTEREST INCOME Interest and fees on loans $ 2,526 2,701 2,768 2,929 2,848 Interest and dividends on securities 925 939 975 1,023 966 Trading account interest 204 199 212 218 191 Other interest income 370 425 510 322 308 ---------------------------------------------------------------------------------------------------------------------------------- Total interest income 4,025 4,264 4,465 4,492 4,313 ---------------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest on deposits 1,253 1,367 1,422 1,285 1,195 Interest on short-term borrowings 493 538 609 750 639 Interest on long-term debt 577 627 600 552 513 ---------------------------------------------------------------------------------------------------------------------------------- Total interest expense 2,323 2,532 2,631 2,587 2,347 ---------------------------------------------------------------------------------------------------------------------------------- Net interest income 1,702 1,732 1,834 1,905 1,966 Provision for loan losses 219 192 142 228 192 ---------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1,483 1,540 1,692 1,677 1,774 ---------------------------------------------------------------------------------------------------------------------------------- FEE AND OTHER INCOME Service charges and fees 468 481 508 491 486 Commissions 375 383 365 375 468 Fiduciary and asset management fees 381 387 384 374 366 Advisory, underwriting and other Capital Markets fees 198 187 148 182 209 Principal investing (43) (43) 34 205 199 Other income 167 187 206 119 114 ---------------------------------------------------------------------------------------------------------------------------------- Total fee and other income 1,546 1,582 1,645 1,746 1,842 ---------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 1,329 1,243 1,381 1,396 1,429 Occupancy 163 150 157 155 157 Equipment 205 221 213 210 214 Advertising 9 16 14 31 30 Communications and supplies 110 123 117 122 125 Professional and consulting fees 73 97 87 82 71 Goodwill and other intangible amortization 78 80 79 100 102 Sundry expense 171 202 280 270 259 ---------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,138 2,132 2,328 2,366 2,387 ---------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 891 990 1,009 1,057 1,229 Income taxes 281 309 307 343 391 ---------------------------------------------------------------------------------------------------------------------------------- Net operating earnings $ 610 681 702 714 838 ---------------------------------------------------------------------------------------------------------------------------------- Diluted earnings per share $ 0.62 0.69 0.71 0.73 0.85 ---------------------------------------------------------------------------------------------------------------------------------- (a) Operating earnings exclude restructuring, merger-related and other charges and gains and cumulative effect of a change in accounting principle.
PAGE 10 FIRST UNION CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 ------------ ------------------------------------------------- First Fourth Third Second First (In millions, except per share data) Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------------------------------------------------------------------------------------ INTEREST INCOME Interest and fees on loans $ 2,526 2,701 2,768 2,929 2,848 Interest and dividends on securities 925 939 975 1,023 966 Trading account interest 204 199 212 218 191 Other interest income 370 425 510 322 308 ----------------------------------------------------------------------------------------------------------------------------------- Total interest income 4,025 4,264 4,465 4,492 4,313 ----------------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest on deposits 1,253 1,367 1,422 1,285 1,195 Interest on short-term borrowings 493 538 609 750 639 Interest on long-term debt 577 627 600 552 513 ----------------------------------------------------------------------------------------------------------------------------------- Total interest expense 2,323 2,532 2,631 2,587 2,347 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 1,702 1,732 1,834 1,905 1,966 Provision for loan losses 219 192 322 1,030 192 ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1,483 1,540 1,512 875 1,774 ----------------------------------------------------------------------------------------------------------------------------------- FEE AND OTHER INCOME Service charges and fees 468 481 506 447 486 Commissions 375 383 365 375 468 Fiduciary and asset management fees 381 387 384 374 366 Advisory, underwriting and other Capital Markets fees 198 182 145 182 209 Principal investing (43) (43) 34 205 199 Other income 195 363 749 (649) 114 ----------------------------------------------------------------------------------------------------------------------------------- Total fee and other income 1,574 1,753 2,183 934 1,842 ----------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 1,373 1,407 1,427 1,396 1,429 Occupancy 164 150 160 155 157 Equipment 211 233 213 210 214 Advertising 14 35 18 31 30 Communications and supplies 110 130 125 123 125 Professional and consulting fees 83 104 91 82 71 Goodwill and other intangible amortization 78 80 79 100 102 Restructuring and merger-related charges 2 33 52 2,110 (5) Sundry expense 174 205 283 296 259 ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,209 2,377 2,448 4,503 2,382 ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (benefits) and cumulative effect of a change in accounting principle 848 916 1,247 (2,694) 1,234 Income taxes (benefits) 264 271 395 (495) 394 ----------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------ Income (loss) before cumulative effect of a change in accounting principle 584 645 852 (2,199) 840 Cumulative effect of a change in the accounting for beneficial interests, net of tax - (46) - - - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 584 599 852 (2,199) 840 ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA Basic Income (loss) before change in accounting principle $ 0.60 0.66 0.87 (2.27) 0.86 Net income (loss) 0.60 0.61 0.87 (2.27) 0.86 Diluted Income (loss) before change in accounting principle 0.59 0.65 0.86 (2.27) 0.85 Net income (loss) 0.59 0.60 0.86 (2.27) 0.85 Dividends paid per common share $ 0.24 0.48 0.48 0.48 0.48 AVERAGE SHARES (In thousands) Basic 967,671 969,097 971,453 969,707 972,174 Diluted 975,847 990,445 986,763 981,940 984,095 -----------------------------------------------------------------------------------------------------------------------------------
PAGE 11 FIRST UNION CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ 2001 2000 -------------- ------------------------------------------------- First Fourth Third Second First (In millions, except per share data) Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $ 7,857 9,906 7,063 8,028 7,854 Interest-bearing bank balances 2,971 3,239 4,585 1,913 1,037 Federal funds sold and securities purchased under resale agreements 11,866 11,240 5,395 9,054 8,206 ---------------------------------------------------------------------------------------------------------------------------------- Total cash and cash equivalents 22,694 24,385 17,043 18,995 17,097 ---------------------------------------------------------------------------------------------------------------------------------- Trading account assets 20,431 21,630 17,417 18,237 17,076 Securities 51,528 49,246 52,065 55,203 52,089 Loans, net of unearned income 122,853 123,760 123,419 128,359 135,803 Allowance for loan losses (1,759) (1,722) (1,720) (1,706) (1,760) ---------------------------------------------------------------------------------------------------------------------------------- Loans, net 121,094 122,038 121,699 126,653 134,043 ---------------------------------------------------------------------------------------------------------------------------------- Premises and equipment 4,968 5,024 5,090 5,211 5,171 Due from customers on acceptances 894 874 968 839 842 Goodwill and other intangible assets 3,690 3,664 3,756 3,736 5,581 Other assets 27,650 27,309 28,602 29,120 21,749 ---------------------------------------------------------------------------------------------------------------------------------- Total assets $ 252,949 254,170 246,640 257,994 253,648 ---------------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Noninterest-bearing deposits 28,582 30,315 28,501 30,229 29,885 Interest-bearing deposits 112,213 112,353 110,369 114,635 110,005 ---------------------------------------------------------------------------------------------------------------------------------- Total deposits 140,795 142,668 138,870 144,864 139,890 Short-term borrowings 39,719 39,446 39,388 50,883 49,389 Bank acceptances outstanding 902 880 976 847 847 Trading account liabilities 8,130 7,475 5,138 4,541 4,605 Other liabilities 11,230 12,545 11,215 9,768 8,990 Long-term debt 36,092 35,809 36,258 33,140 33,043 ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities 236,868 238,823 231,845 244,043 236,764 ---------------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Preferred stock - - - - - Common stock, $3.33-1/3 par value; authorized 2 billion shares 3,271 3,267 3,287 3,288 3,280 Paid-in capital 6,307 6,272 6,211 6,066 6,021 Retained earnings 6,281 6,021 6,135 5,783 8,557 Accumulated other comprehensive income, net 222 (213) (838) (1,186) (974) ---------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 16,081 15,347 14,795 13,951 16,884 ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 252,949 254,170 246,640 257,994 253,648 ----------------------------------------------------------------------------------------------------------------------------------