On June 17, 1997, First Union announced a two-for-one stock split payable July 31, 1997, to holders of record as of July 1, 1997. The company also increased its quarterly dividend 10 percent to 32 cents per common share (64 cents before the stock split) effective with the third quarter of 1997.
The second quarter 1997 earnings represented a return on common equity of 19.90 percent and a return on assets of 1.39 percent.
In the first half of 1997, net income applicable to common stockholders was $956 million, an increase of 12 percent from operating earnings of $856 million in the first half of 1996, excluding a $181 million after-tax merger-related restructuring charge. On a per common share basis, earnings were $1.70 ($3.40 before the stock split) in the first half of 1997 and $1.52 ($3.04 before the stock split) in the first half of 1996.
"This was a very solid quarter for First Union, with sound execution of our strategic plan to build revenue momentum and excellent expense control discipline," said Edward E. Crutchfield, chairman and chief executive officer. "Fee income growth continued to be b in the second quarter, with 148 percent growth from last year in our Capital Markets Group and 51 percent growth from last year in our Capital Management Group. With the economy continuing to show strength, we expect to maintain our momentum throughout this year."
First Union's Capital Markets Group provides a variety of sophisticated financing products and services such as asset securitizations, loan syndications and debt and equity underwriting primarily to the company's middle-market commercial customer base. The Capital Management Group provides a broad and balanced selection of products such as trust and brokerage services, mutual funds and annuities primarily for retail customers.
Key factors in the second quarter of 1997 compared with the second quarter of 1996 included: 5 percent growth in tax-equivalent net interest income; 38 percent growth in noninterest, or fee, income (excluding securities transactions); and An improved efficiency ratio of 55.64 percent. Tax-equivalent net interest income in the second quarter of 1997 was $1.4 billion compared with $1.3 billion in the second quarter of 1996. Noninterest income rose $209 million to $755 million in the second quarter of 1997 compared with $546 million in the second quarter of 1996.
Average net loans increased 6 percent to $95.3 billion in the second quarter of 1997 compared with $89.8 billion in the second quarter of 1996. Loan growth came primarily from First Union's Capital Markets Group and consumer lending.
Nonperforming assets were $708 million, or 0.73 percent of net loans and foreclosed properties at June 30, 1997, compared with $836 million, or 0.91 percent of net loans and foreclosed properties, at June 30, 1996. Annualized net charge-offs were 0.68 percent in the second quarter of 1997 compared with 0.45 percent in the second quarter of 1996. Net charge-offs, excluding credit card-related charge-offs, were 0.23 percent in the second quarter of 1997 compared with 0.17 percent in the second quarter of 1996. First Union had 561 million shares of common stock outstanding at June 30, 1997 (280 million before the stock split), compared with 564 million shares (282 million before the stock split) at June 30, 1996.
At June 30, 1997, First Union (NYSE: FTU) had assets of $143 billion. Total stockholders' equity was $10 billion. The company operates full-service banking offices in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and Washington, D.C.
-- END --
