Press Releases

In the first nine months of 1997, net income applicable to common stockholders was $1.5 billion, an increase of 13 percent from operating earnings of $1.3 billion in the first nine months of 1996, excluding $267 million in after-tax restructuring charges and the SAIF assessment for 1996. On a per common share basis, earnings were $2.60 in the first nine months of 1997 and $2.33 in the first nine months of 1996.

"Our third quarter results demonstrate our ability to grow revenues with b expense discipline, creating substantial operating leverage and superior shareholder value," said Edward E. Crutchfield, chairman and chief executive officer. "Our Capital Markets and Capital Management groups continue to contribute significantly to our earnings momentum and to our efforts to build a diversified source of revenue for the future. The successful integration of these two groups into our 12-state distribution network has been key to their success."

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.

Capital Markets fee income increased 41 percent and Capital Management fee income increased 46 percent in the third quarter of 1997 compared with the third quarter of 1996. Key factors in the third quarter of 1997 compared with the third quarter of 1996 included: 6 percent growth in tax-equivalent net interest income; 28 percent growth in noninterest, or fee, income (excluding securities transactions); and An improved efficiency ratio of 55.01 percent. Tax-equivalent net interest income in the third quarter of 1997 was $1.4 billion compared with $1.3 billion in the third quarter of 1996. Noninterest income excluding securities transactions increased $166 million to $764 million in the third quarter of 1997 compared with $598 million in the third quarter of 1996.

First Union's increased use of balance sheet strategies such as asset securitization was reflected in the modest loan portfolio growth. Average net loans increased 4 percent to $94.0 billion in the third quarter of 1997 compared with $90.5 billion in the third quarter of 1996. Loan growth came primarily from First Union's Capital Markets Group.

Nonperforming assets were $704 million, or 0.74 percent of net loans and foreclosed properties at September 30, 1997, compared with $825 million, or 0.89 percent of net loans and foreclosed properties, at September 30, 1996. Annualized net charge-offs were 0.66 percent in the third quarter of 1997 compared with 0.64 percent in the third quarter of 1996. Net charge-offs, excluding credit card-related charge-offs, were 0.23 percent in the third quarter of 1997 compared with 0.28 percent in the third quarter of 1996.

Other key events in the third quarter included a successful secondary offering of First Union common stock, which was oversubscribed by two-to-one. In addition, First Union announced agreements to acquire Signet Banking Corporation in Virginia, which will move First Union to the leading deposit share position in the state, and Wheat First Butcher Singer, also of Richmond, Va., which will significantly increase First Union's investment banking and asset management capabilities. Both acquisitions are expected to close in the fourth quarter this year pending regulatory and shareholder approvals. In addition, First Union agreed to acquire Covenant Bancorp of Haddonfield, N.J., which is expected to close in early 1998, pending regulatory and shareholder approvals.

At September 30, 1997, First Union (NYSE: FTU) had assets of $144 billion. Total stockholders' equity was $11 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.

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