-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JJNquI3vlYJE9bcdoLwb5wIsy5DvYvN/mfs+bDd0Y5NrBJH7duyFIUsPY6J9kX9Q 3vHKpoiIKMB+LE2TRRnKvg== 0000950168-97-003417.txt : 19971120 0000950168-97-003417.hdr.sgml : 19971120 ACCESSION NUMBER: 0000950168-97-003417 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971118 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971118 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION CORP CENTRAL INDEX KEY: 0000036995 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 560898180 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10000 FILM NUMBER: 97723795 BUSINESS ADDRESS: STREET 1: ONE FIRST UNION CTR CITY: CHARLOTTE STATE: NC ZIP: 28288-0630 BUSINESS PHONE: 7043746565 MAIL ADDRESS: STREET 1: FIRST UNION CORPORA STREET 2: ONE FIRST UNION CENTER CITY: CHARLOTTE STATE: NC ZIP: 28288-0630 FORMER COMPANY: FORMER CONFORMED NAME: CAMERON FINANCIAL CORP DATE OF NAME CHANGE: 19750522 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION NATIONAL BANCORP INC DATE OF NAME CHANGE: 19721115 8-K 1 FIRST UNION CORP. 8-K 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) November 18, 1997 ----------------------------- FIRST UNION CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) North Carolina 1-10000 56-0898180 - -------------------------------------------------------------------------------- (State of other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) One First Union Center Charlotte, North Carolina 28288-0013 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (704)374-6565 ----------------------------- ------------------------------------------------------------------------ (Former name or former address, if changed since last report.) Item 5. Other Events. On November 18, 1997, First Union Corporation (the "Corporation") entered into an Agreement and Plan of Mergers (the "Merger Agreement"), which provides, among other things, for the merger (the "Merger") of CoreStates Financial Corp ("CoreStates") into the Corporation. Pursuant to the Merger Agreement, each outstanding share of CoreStates common stock would be converted into 1.62 shares of the Corporation's common stock (the "Exchange Ratio"), subject to possible adjustment under certain circumstances. The Merger is intended to constitute a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, and to be accounted for as a pooling of interests. Consummation of the Merger is subject to various conditions, including: (i) receipt of the approval of the Merger Agreement by CoreStates' and the Corporation's stockholders, and approval by the Corporation's stockholders of an amendment to the Corporation's Articles of Incorporation to increase the number of authorized shares of the Corporation's common stock from 750,000,000 to 2,000,000,000; (ii) receipt of requisite regulatory approvals from the Board of Governors of the Federal Reserve System and other federal and state regulatory authorities; (iii) receipt of opinions as to the tax and accounting treatment of certain aspects of the Merger; (iv) listing, subject to notice of issuance, of the Corporation's common stock to be issued in the Merger; and (v) satisfaction of certain other conditions. In connection with the Merger Agreement, the Corporation and CoreStates entered into the following Stock Option Agreements: (i) a stock option agreement dated November 18, 1997 (the "CoreStates Stock Option Agreement"), pursuant to which CoreStates granted to the Corporation an option to purchase, under certain circumstances, up to 39,364,847 shares of CoreStates common stock at a price, subject to certain adjustments, of $72.00 per share (the "CoreStates Option"); and (ii) a stock option agreement dated November 18, 1997 (the "Corporation Stock Option Agreement"), pursuant to which the Corporation granted to CoreStates an option to purchase, under certain circumstances, up to 56,285,593 shares of the Corporation's common stock at a price, subject to certain adjustments, of $52.00 per share (the "Corporation Option") (collectively, the "Option Agreements" and the "Options"). The CoreStates Option, if exercised, would give the holder thereof the right to acquire, before giving effect to the exercise of the CoreStates Option, up to 19.9% of the total number of shares of CoreStates common stock outstanding. The Corporation Option, if exercised, would give the holder thereof the right to acquire, before giving effect to the exercise of the Corporation Option, up to 9.9% of the total number of shares of the Corporation's common stock outstanding. The Option Agreements were granted by the respective parties as conditions and inducements to each others' willingess to enter into the Merger Agreement. Under certain circumstances, the respective issuers of the Options may be required to repurchase the Options or the shares acquired pursuant to the exercise thereof. The Merger Agreement may be terminated under certain circumstances, including by the Board of Directors of CoreStates by giving notice to the Corporation if either (x) both (i) the average closing price of the Corporation's common stock for the ten full trading days ending on the date the Federal Reserve Board approves the Merger (the "Average Closing Price") is less than the product of the closing price of the Corporation's common stock (the "Starting Price") on the first full trading 2 day after public announcement of execution of the Merger Agreement (the "Starting Date") and 0.85, and (ii) the number obtained by dividing the Average Closing Price by the Starting Price is less than the number obtained by (a) dividing the weighted average of the closing prices of a specified group index of bank stocks during the above-mentioned ten-day period by the weighted average closing prices of such bank stocks on the Starting Date and (b) subtracting 0.15, or (y) the Average Closing Price is less than the product of the Starting Price and 0.75. In the event CoreStates gives notice of its intent to terminate the Merger Agreement pursuant to the conditions set forth in the preceding sentence, the Corporation may determine, in its sole discretion, to increase the Exchange Ratio to eliminate CoreStates' right to terminate the Merger Agreement. A copy of a news release (the "News Release") relating to the Merger is being filed as Exhibit (99)(a) to this report and is incorporated herein by reference. On November 19, 1997, the Corporation intends to hold a meeting (the "Meeting") with analysts and others with respect to the Merger. At the Meeting, certain financial and other information relating to the Merger is to be presented (the "Presentation Materials"). The News Release and certain of the Presentation Materials contain, among other things, certain forward-looking statements regarding each of the Corporation, CoreStates 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. Such forward-looking statements involve certain risks and uncertainties, including a variety of factors that may cause the Corporation's actual results to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) expected cost savings from the Merger and the Corporation's other pending acquisitions may not be fully realized or realized within the expected time frame; (2) revenues following the Merger and the other pending acquisitions may be lower than expected, or deposit attrition, operating costs or customer loss and business disruption following the Merger and the other pending acquisitions may be greater than expected; (3) competitive pressures among depository and other financial institutions may increase significantly; (4) costs or difficulties related to the integration of the business of the Corporation, CoreStates, and the other pending acquisitions may be greater than expected; (5) changes in the interest rate environment may reduce margins; (6) general economic or business conditions, either nationally or in the states or regions in which the Corporation does business, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit; (7) legislative or regulatory changes may adversely affect the businesses in which the Corporation is engaged; and (8) changes may occur in the securities markets. Additional information with respect to factors that may cause actual results to differ materially from those contemplated by such forward-looking statements is included in the Corporation's 1997 Third Quarter Report on Form 10-Q and may be included in subsequent reports filed by the Corporation with the Securities and Exchange Commission. A copy of the visual portion of the Presentation Materials is being filed as Exhibit (99)(b) to this report, substantially in the form intended to be presented at the Meeting, and such materials are incorporated herein by reference. 3 Item 7. Financial Statements and Exhibits. (c) Exhibits. (99)(a) The News Release. (99)(b) The Presentation Materials. 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. FIRST UNION CORPORATION Date: November 18, 1997 By: /s/ Kent S. Hathaway -------------------- Name: Kent S. Hathaway Title: Senior Vice President 4 EXHIBIT INDEX Exhibit No. Description ----------- ------------ (99)(a) The News Release. (99)(b) The Presentation Materials. 5 EX-99 2 EXHIBIT 99(A) Tuesday November 18, 1997 FIRST UNION AND CORESTATES ANNOUNCE MERGER AGREEMENT- $204 BILLION COMPANY TO BE THE LEADING BANK ON THE EAST COAST PHILADELPHIA - First Union Corporation (NYSE:FTU) and CoreStates Financial Corp (NYSE:CFL) have signed a definitive merger agreement that would create a $204 billion financial services company with the leading banking presence on the Eastern Seaboard. The combined company will have the largest share of retail deposits on the East Coast, including the top market share in New Jersey and Pennsylvania, and the leading share in the city of Philadelphia. With 2,766 offices serving 16 million customers, it will be the nation's sixth largest banking company. As of Sept. 30, 1997, Philadelphia-based CoreStates had assets of $47.6 billion. "While this merger is important strategically, it also meets our financial performance criteria by being cumulatively accretive within 18 months," said Edward E. Crutchfield, chairman and chief executive officer of First Union Corp. First Union expects to bring 3,000 new jobs to the Greater Philadelphia Metropolitan Area as Philadelphia becomes the headquarters for the combined five-state regional banking group, which includes Connecticut, New York, Delaware, New Jersey and Pennsylvania. Philadelphia will also become the headquarters for the combined corporate banking functions for the entire corporation and a major center for the combined bank's customer service operations. The new jobs are expected to significantly offset the impact of merger-related job reductions. In addition to expanding the Philadelphia-based operations, First Union will establish and fund a $100 million Foundation dedicated to enriching the region CoreStates serves. The majority of the directors of the Foundation will come from the CoreStates Board of Directors. The Foundation's Board of Directors will be chaired by the chief executive officer of CoreStates. --MORE-- FIRST UNION AND CORESTATES ANNOUNCE MERGER -- PAGE 2 First Union will also establish a $16 million Employee Training and Development Fund to assist any displaced employees by providing additional training for positions within First Union or other companies in the region. "We are particularly pleased that First Union is demonstrating an unwavering commitment to the growth and vitality of the region CoreStates serves. CoreStates would only consider a merger that clearly enhanced our ability to create superior long-term value for our customers, shareholders, employees and the communities we serve," said Terrence A. Larsen, chairman and chief executive officer of CoreStates. "Our combined organization will enable us to leverage our expertise, products and customer relationships in a powerful new way. Together, we will be unbeatable." "CoreStates has established leadership positions in corporate banking, international trade finance, cash management, small business banking, electronic banking, retail banking and other key areas," said Edward E. Crutchfield, chairman and chief executive officer of First Union Corp. "This merger will create the premier banking organization on the East Coast." First Union has agreed to exchange 1.62 shares of its common stock for each share of CoreStates common stock. Based on First Union's closing stock price of $51.75 on Nov. 14, 1997, the transaction would be valued at $16.6 billion and represent an exchange value of $83.84 for each share of CoreStates common stock. First Union expects the merger to be cumulatively accretive to earnings within 18 months. This estimate excludes estimated after-tax merger-related restructuring charges of approximately $795 million which are anticipated to be taken in the second quarter of 1998. As with any earnings estimates, there are factors that could cause the actual results to differ materially from such estimates, such as changes in economic conditions and other factors indicated on a Form 8-K filed with the Securities and Exchange Commission. Following the merger, the Office of the Chairman will include Crutchfield as chairman and chief executive officer, Larsen as vice chairman and First Union's John Georgius as president. Six members of the CoreStates Corporate Board of Directors will join the First Union Corporate Board. In his role as First Union Corporation's vice chairman, Larsen will have direct leadership responsibilities for the combined company's corporate banking functions which include specialized industry lending, large corporate lending, and capital markets businesses such as investment banking, merchant banking, leasing, international, funds management and other key operations. --MORE-- FIRST UNION AND CORESTATES ANNOUNCE MERGER -- PAGE 3 Larsen will also serve as Chairman of the combined five-state Regional Bank Board of Directors. As the senior officer for the regional bank, Larsen will take responsibility for overseeing the effective integration into one organization. The combined banking assets in the five-state region will total approximately $80 billion. The combined company will have the first, second or third-largest share of deposits in 21 of the 30 largest metropolitan areas on the East Coast. "First Union and CoreStates have very strong compatibility in overall values as well as in the approach taken to customers. I intend to take every opportunity to reinforce our focus on customer needs and to build on our relationships with customers and all of our stakeholders," Larsen said. The merger, which will be accounted for as a pooling of interests, is expected to be consummated by April 30, 1998, pending CoreStates and First Union shareholder approval, regulatory approval and other customary conditions of closing. In connection with the execution of the merger agreement, CoreStates granted First Union an option to purchase, under certain circumstances, up to 19.9 percent of CoreStates's outstanding shares of common stock. In addition, First Union granted CoreStates an option to purchase, under certain circumstances, up to 9.9 percent of First Union's outstanding shares of common stock. Media contacts are Tish Signet and Mary Eshet of First Union at 800-669-5855, and Gary Brooten and George Biechler of CoreStates at 215-973-3546. Investor contacts are Alice Lehman of First Union at 704-374-4139, and George Karklins of CoreStates at 215-973-4185. --END-- EX-99 3 EXHIBIT 99(B) Cautionary Statement ================================================================================ This presentation contains certain estimates and projections regarding each of First Union Corporation, CoreStates Financial Corp and the combined company following the merger, including estimates and projections relating to cost savings, enhanced revenues and accretion to illustrative earnings that may be realized from the merger, and certain restructuring charges expected to be incurred in connection with the merger. These estimates and projections 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 8K, dated November 18, 1997, as filed with the Securities and Exchange Commission, to which report reference is hereby made. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 1 Transaction Rationale ================================================================================ o Financially Attractive oo Accretive in 1999 oo Meets 18 month test o Strategically Compelling oo Leading position in Mid-Atlantic o In-Market Deal oo Low-risk transaction oo Wealthy, desirable market oo Demonstrated ability to integrate quickly o Business Leverage ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 2 Transaction Rationale Terms of Transaction ================================================================================ Fixed Exchange Ratio 1.62 First Union shares for each CoreStates share Indicated Purchase Price Per Share $83.84 Indicated Total Price $16.6 Billion Accounting Method Pooling of interests First Union Shares Issued(1) 320.1 million, representing 33% pro forma CoreStates ownership Expected Closing End of April 1998 Expected Conversion Beginning of November 1998 (1) Excludes issuance of an estimated 4.9 million shares required to qualify transaction for pooling-of-interest accounting treatment. Based on closing prices as of November 14, 1997. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 3 Transaction Terms Favorable Transaction for First Union ================================================================================ Premium to Market 18% Price to Book Value 5.3x - -------------------------------------------------------------------------------- First CoreStates Comparable Union Transaction Acquisitions(1) ----- ----------- --------------- Multiple to: - ------------ 1998 Estimated Earnings(2) 13.2x 19.8x(2) 19.5x 1998 Estimated Earnings(3) 11.5x(3) 11.4x Adjusted for Synergies - -------------------------------------------------------------------------------- (1) Comparable acquisitions represent 3 bank transactions with deal values over $3 billion announced since January 1997. (Excludes transactions involving First Union.) (2) Based on First Call consensus estimates as of November 14, 1997. Such estimates are used for illustrative purposes only and are not intended to be projections. (3) Includes run-rate synergies. Excludes pre-tax and post-tax restructuring charges of $1,195 million and $795 million, respectively, or $.81 per share, and pre-tax and post-tax gains on deposit divestitures of $70 million and $44 million, respectively, or $.04 per share expected to be taken in 2nd quarter of 1998. Note: Closing prices as of November 14, 1997. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 4 Transaction Terms Opportunity for Higher Performance ================================================================================ CoreStates + FTU 1997 Pro Forma(1) - -------------------------------------------------------------------------------- ROE 20.66% EPS Growth 11% ROA 1.50% Overhead Efficiency Ratio 54.90% Fee Income/Revenue 34.6% Tier 1 Leverage 6.87% NCO/Average Loans(2) 66bps (1) Includes only First Union and CoreStates results for nine months ended 9/30/97 and excludes restructuring charges. (2) Annualized rate. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 5 Higher Perfomance Strategically Compelling: Why First Union? ================================================================================ o First Union's technology leadership o Strength of retail products and systems o Accelerates Capital Markets capabilities o Compatible values and vision for customers, employees and communities o Value for our shareholders ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 6 Why First Union Strategically Compelling: The Power of the Combined Franchise ================================================================================ o No. 1 deposit share in Pennsylvania and New Jersey o 33% market share in Philadelphia, 4th largest MSA o Per capita income 12% higher than national average September 30, 1997 (pro forma)* | Map of PA, NJ, DE Assets: $74.6 billion | [GRAPHIC OMITTED] Loans: $53.1 billion | Deposits: $53 billion | Branches: 1,100 | ATMs 1,380 | o CoreStates Branches | oo First Union Branches * Includes Pennsylvania, New Jersey and Delaware region prior to divestitures. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 7 Powerful Combination Strategically Compelling: Regional Banking ================================================================================ o #1 Consumer lender in region oo 37% Market share oo 50% Household penetration o #1 SBA lender o 25% Small business market penetration ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 8 Regional Banking Strategically Compelling: Global and Specialized Banking ================================================================================ o #1 Middle Market and Commercial Bank o 32% Market Share o Leader in Specialized Industries o National Leader in Cash Management o Congress Financial Corporation o International ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 9 Global and Specialized Banking Strategically Compelling: Congress Financial ================================================================================ o Strong Financial Performer oo 3% ROA oo 20% CAGR in earnings since 1987 o Conservative credit culture oo .66% Net Charge-Offs (1987-1996) o Over $3 Billion in managed assets o 12 offices in North America and London o 90% of customers outside of region ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 10 Congress Financial Strategically Compelling: International ================================================================================ o Represented in 23 countries o Cash Management, Trade Finance, Foreign Exchange o 1,200 banking relationships in 80 countries o Leadership positions oo L/Cs oo International check processing oo Correspondent bank balances oo EXIM Bank programs ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 11 International Strategically Compelling: Superior Financial Performance (1)(2) ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] ROE Rank Year Percent ---- ---- ------- 5 1995 19.4% 5 1996 20.1% 1 1997 23.3% - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] ROA Rank Year Percent ---- ---- ------- 5 1995 1.6% 3 1996 1.8% 4 1997 1.8% - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] NIM Rank Year Percent ---- ---- ------- 3 1995 5.5% 4 1996 5.5% 4 1997 5.3% - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Efficiency Ratio Rank Year Percent ---- ---- ------- 5 1995 57.8% 4 1996 54.4% 5 1997 53.0% (1) 1997 data annualized for nine months ended 9/30/97. Such annualized data are not intended to be projections for the full year. (2) Ranking among the 25 largest banks as defined by SNL, excluding non-recurring items. 1995 rankings treat CoreStates as if it were among the 25 largest banks at that time. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 12 Financial Performance Financially Attractive Accretive to Earnings ================================================================================ 1998 1999 - -------------------------------------------------------------------------------- $mm EPS $mm EPS --- --- --- --- 1 First Union(1) $2,558 $3.91 $2,891 $4.34 2 CoreStates(1) 859 4.23 953 4.65 Estimated After-tax Adjustments - ------------------------------- 3 Expense Efficiencies $258 .26 $459 .46 4 Revenue Enhancements 58 .06 89 .09 5 Earnings on Excess Capital(2) 44 .04 78 .08 6 Divestitures (15) (.01) (15) (.01) ------ ----- ------ ----- 7 Total Adjustments $345 .35 $611 .62 ------ ----- ------ ----- 8 Total Earnings on Combined Shares(3) $3,762 $3.82 $4,455 $4.46 ------ ------ 9 Accretion to Earnings per share ($.09) $.12 10 Total Cash Earnings on Combined Shares(3) $4,133 $4.20 $4,826 $4.83 11 Leverage Ratio 7.48% 8.15% (1) 1998 First Union and CoreStates earnings per share are based on First Call consensus estimates and exclude restructuring charges. 1999 earnings per share are not First Call estimates. Such earnings are based on First Union's 1998 First Call consensus earnings per share plus 11% and CoreStates's 1998 First Call consensus earnings per share plus 10%. Such earnings estimates are presented for illustrative purposes only and are not intended to be projections. (2) Based on CoreStates's capital in excess of a 6% leverage ratio. (3) Assumes 985 million shares outstanding in 1998 and 999 million shares outstanding in 1999. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 13 Financial Benefits Financially Attractive: Significant Synergy Opportunities ================================================================================ o Projected expense efficiencies of $723 million (pre-tax) oo 45% of CoreStates 1997 annualized expenses oo Synergies fully phased in by 1999 o Projected fee revenue enhancements of $194 million oo 21% of CoreStates 1997 annualized fee revenues oo Synergies begin immediately o Increase CoreStates fees/revenue ratio to First Union level ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 14 Synergies Financially Attractive: Estimated Expense Reductions ================================================================================ ($ Millions) 1998 1999 - -------------------------------------------------------------------------------- Banking Units $208 $370 Staff and Other 103 184 Automation & Operations 95 169 ---- ---- Total Pre-Tax Expense Efficiencies $406 $723 % CoreStates Controllable Expense Base* 26% 45% Total After-Tax Expense Efficiencies $258 $459 *Excludes intangible amortization, Trust Preferred expense and other non-controllable expenses. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 15 Expense Efficiencies Financially Attractive: Significant Branch Overlap ================================================================================ o 55% of CoreStates Branches are within 2 miles of a First Union Branch - -------------------------------------------------------------------------------- [MAP OF PENNSYLVANIA, NEW JERSEY AND DELAWARE SHOWING THE BRANCHES OF CORESTATES AND FIRST UNION] - -------------------------------------------------------------------------------- ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 16 Branch Overlap Estimated Merger Restructuring Charges ================================================================================ ($ millions) - -------------------------------------------------------------------------------- Severance and Relocation $305 Contracts and Fixed Assets $255 Real Estate Consolidations $200 Systems Conversions $200 Charitable Support $100 Other $135 ------ Total Pre-Tax Charges $1,195 Total After-Tax Charges $795 ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 17 Restructuring Charges Financially Attractive: Estimated Revenue Opportunities ================================================================================ ($ Millions) 1998 1999 - -------------------------------------------------------------------------------- Capital Markets $90 $130 Capital Management 18 45 Other 15 19 ---- ---- Total Revenue Enhancements $123 $194 Revenue Enhancements After taxes and expenses $58 $89 Fee Income/Total Revenue 31% 34% ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 18 Revenue First Union Integration Expertise ================================================================================ All Acquisitions since 1993 FFB - -------------------------------------------------------------------------------- Assets ($ Millions) $66,000 $35,000 - -------------------------------------------------------------------------------- Cost Savings 45% 18% - -------------------------------------------------------------------------------- Months to Integration 2.7 6 Acquisitions 21 ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 19 Integration Expertise Exceeded Goals at First Fidelity ================================================================================ % Actual Goals Results vs. Goal ($ in Millions) Revenue Enhancements(1) $79 $89 +13% Expense Efficiencies(1) $106 $125 +18% ---- ---- Total $185 $214 ==== ==== (1) Pre-tax results based on internal management reporting for 1996. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 20 First Fidelity Business Leverage: Commercial Banking & Capital Markets ================================================================================ - ---------------------------------- ---------------------------------------- CoreStates First Union - ---------------------------------- ---------------------------------------- o Strong middle market & small o Full range of FTU/Wheat Capital business banking relationships Markets services available o Strong specialized industry o Strong specialized industry groups groups and Wheat First research focus o Well-developed International o Broad FTU customer base can operations leverage off CoreStates network o Nationally ranked Cash o #4 in Cash Management focused Management focused on large on middle market. Top 5 ranking corporate market in information reporting via PC and Internet o Congress Financial asset-based o Extends current asset-based leader product offerings to textile and furniture customer base - ---------------------------------- ---------------------------------------- ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 21 Business Leverage Business Leverage: Consumer Banking & Capital Management ================================================================================ - ---------------------------------- ---------------------------------------- CoreStates First Union - ---------------------------------- ---------------------------------------- o Strong home equity originator, o Increase FTU national ranking to #2 leader in region o #1 consumer bank in region, 50% o Powerful CMG products and household penetration services o Large corporate and personal o CMG products and services, money trust business management opportunities, etc. o $33 billion managed, $285 o Adds to assets under management, billion administered 8th largest - ---------------------------------- ---------------------------------------- ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 22 Business Leverage Business Leverage: Advanced Technology ================================================================================ - -------------------------------------------------------------------------------- First Union - -------------------------------------------------------------------------------- o Single systems platform, year 2000 prepared o Powerful marketing technology (SOLD, Einstein, Data Warehouse) o Direct (telephone) Banking o PC Banking - -------------------------------------------------------------------------------- ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 23 Business Leverage Conclusion ================================================================================ o Financially Attractive o Strategically Compelling o In-Market Deal o Business Leverage ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 24 Conclusion First Union and CoreStates: The Power of the Combined Franchise ===============================================================================
------------------------------ September 30, 1997(1) Map of Eastern United States [GRAPHIC OMITTED] Assets: $204 billion New Haven, CT Loans: $137 billion Bergen-Passaic Counties, NJ Deposits: $133 billion Middlesex County, NJ Equity: $15 billion Harrisburg, PA Baltimore, MD #1 in deposits on East Coast Roanoke, VA Columbus, GA Nationally Ranked: Tampa, FL #1 small-business banking Fort Meyers, FL #2 home equity lending Miami, FL #3 cash management Scranton-Wilkes Barre, PA Top 5 middle-market lending Reading, PA #16 provider of mutual funds(2) Newark, NJ #2 2,766 branches Monmouth-Ocean, NJ #5 3,570 ATMs Trenton, NJ Leadership position in specialized banking, Allentown, PA commercial leasing, Philadelphia, PA international, asset-based finance Washington, D.C. Richmond-Petersburg, VA Norfolk, VA Greensboro, NC Charlotte, NC Augusta-Aiken, GA Jacksonville, FL Daytona Beach, FL Orlando, FL West Palm Beach, FL Fort Lauderdale, FL No. 1, 2 or 3 ranking in 21 of the 30 largest MSAs on the East Coast ------------------------------
(1) Pro forma, including the pending Signet, Covenant and Wheat First acquisitions (2) Also includes conversion of $7.1 billion of common trust assets. ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 25 Powerful Combination - -------------------------------------------------------------------------------- [LOGO] FIRST UNION Map of Eastern United States [GRAPHIC OMITTED] NY PA CT NJ A Powerful MD Combination! DC DE VA TN NC SC GA FL [LOGO] CoreStates - -------------------------------------------------------------------------------- ================================================================================ [LOGO] FIRST UNION CoreStates exhibit 26 - -------------------------------------------------------------------------------- [LOGO] FIRST UNION Supplemental Information [LOGO] CoreStates - -------------------------------------------------------------------------------- Dividend Growth ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Current Dividend Annualized In Dollars Year Dollars - ---- ------- 1978 .15 1979 .16 1980 .17 1981 .18 1982 .20 1983 .23 1984 .25 1985 .29 1986 .33 1987 .39 1988 .43 1989 .50 1990 .54 1991 .56 1992 .64 1993 .75 1994 .86 1995 .98 1996 1.10 Current 1.28 ================================================================================ [LOGO] FIRST UNION CoreStates 1 Growth in Fee Income ================================================================================ 1996 vs. 1995 YTD 97 vs. YTD 96 - ------------------------------------ ------------------------------------ Wells Fargo 84.34%* First Union 37.16% Norwest 37.97% ------------------------------------ Bankers Trust 36.60%+ Barnett 31.87%* J.P. Morgan 31.74%+ NationsBank 30.28%* First Union 25.65% PNC Bank 28.74% - ------------------------------------ Wells Fargo 21.79%* Bank of New York 20.84% Bankers Trust 20.99%+ Banc One 19.99%* Republic New York 18.97% NationsBank 18.45%* Mellon 17.76% Fleet Financial 18.38%* KeyCorp 17.35% Mellon Bank Corp 16.71% Norwest 15.48% First Bank System 15.66% Suntrust 14.96% Wachovia 13.86% CoreStates 14.93% 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. ================================================================================ [LOGO] FIRST UNION CoreStates 2 Asset Quality: Average Net Charge-Offs 1987 - 1996 ================================================================================ 1. 0.54 Suntrust 13. 1.01 Banc One 2. 0.56 First Union 14. 1.16 Fleet Financial - --------------------------------------- 15. 1.16 Wells Fargo 3. 0.56 Wachovia 16. 1.17 Bank of Boston 4. 0.63 KeyCorp 17. 1.00 First Bank System 5. 0.67 Barnett Banks 18. 1.20 Norwest 6. 0.68 Republic New York 19. 1.45 First Chicago 7. 0.73 National City Corp. 20. 1.46 Bank of New York 8. 0.81 Nationsbank 21. 1.46 Chase Manhattan 9. 0.83 J.P. Morgan 22. 1.49 Mellon Bank Corp 10. 0.84 PNC Bank 23. 1.55 Citicorp 11. 0.98 BankAmerica 24. 1.78 Bankers Trust 12. 1.00 Corestates Originally reported data. 1995 data reflects 1/1/96 merger with First Fidelity. ================================================================================ [LOGO] FIRST UNION CoreStates 3 First Union: Productivity and Profitability ================================================================================ 1990 1993 1996 YTD 97 - -------------------------------------------------------------------------------- Overhead Efficiency* 60.8% 57.8 54.1 52.0 ROA 0.79% 1.20 1.31 1.41 ROE 12.5% 17.4 18.9 19.8 * Overhead efficiency excluding OREO and intangibles amortization. Overhead efficiency, ROA and ROE before SAIF and merger-related charges. ================================================================================ [LOGO] FIRST UNION CoreStates 4 First Union and CoreStates Markets: Over 36% of Nation's Gross State Product ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] New Jersey 3.7% Pennsylvania 4.5% Delaware 0.4% New York 8.3% Florida 4.5% North Carolina 2.7% Virginia 2.6% Georgia 2.6% Maryland 1.9% Tennessee 1.8% Connecticut 1.7% South Carolina 1.2% Washington, D.C. 0.7% Source: U.S. Statistical Abstract 1996. ================================================================================ [LOGO] FIRST UNION CoreStates 5 Concentration of Companies with Annual Sales $20 MM - 250 MM+ ================================================================================ Together, the First Union footprint accounts for over 36% of the total national middle-market companies. [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL] New Jersey 4.2% Pennsylvania 5.0% Delaware 0.4% New York 8.4% Florida 4.6% Georgia 2.8% North Carolina 2.4% Virginia 2.2% Tennessee 1.9% Connecticut 1.8% Maryland 1.7% South Carolina 1.0% Washington, D.C. 0.4% Source: Dun & Bradstreet ================================================================================ [LOGO] FIRST UNION CoreStates 6 New Corporate Facilities and Expansions 1994-1996 ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL] First Union States 6,651 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 First Union States: DC, DE, FL, GA, MD, NC, SC, VA, NJ, NY, PA. Excludes TN. Source: Site Selection Magazine, February 1997 ================================================================================ [LOGO] FIRST UNION CoreStates 7 -----END PRIVACY-ENHANCED MESSAGE-----