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July 14, 1998
Revenue Growth Drives First Union's Quarterly Operating EPS up 24%

Solid revenue growth led to a 24 percent increase in operating earnings per share in First Union Corporation's second quarter 1998. Operating earnings were 92 cents per common share compared with 74 cents in the second quarter of 1997. Operating earnings, which represent earnings before merger-related and restructuring charges, were a record $883 million, an increase of 23 percent from $719 million in the second quarter of 1997.

Second quarter 1998 operating earnings represent a return on average stockholders' equity of 23.91 percent and a return on average assets of 1.61 percent.

For the first six months of 1998, operating earnings increased 19 percent to $1.7 billion compared with $1.4 billion in the first six months of 1997. Operating earnings per share increased 20 percent, to $1.75 compared with $1.46 in the first six months of 1997.

Merger-related and restructuring charges of $634 million after-tax were primarily associated with the acquisition of CoreStates. After merger-related and restructuring charges, earnings were 26 cents for the second quarter of 1998 and $1.07 for the first six months of 1998.

First Union's historical results have been restated to reflect the pooling acquisitions of CoreStates Financial Corp on April 28, 1998, and Signet Banking Corporation in November 1997.

"We are very pleased with the strong financial results in the second quarter of 1998. We have completed all pending acquisitions and we are focused on developing our existing businesses, including Capital Management and Capital Markets, which continue to drive revenue growth," said Edward E. Crutchfield, chairman and chief executive officer. "On the consumer side, both the Future Bank branch delivery redesign and synergies with The Money Store enhance our optimism for the future."

When compared with the second quarter of 1997, Capital Management noninterest income increased 61 percent and Capital Markets noninterest income increased 53 percent.

The Capital Management Group, with $143 billion in assets under management, provides a comprehensive selection of products such as trust and brokerage services, mutual funds and annuities primarily for retail customers. The 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 First Union's middle-market commercial customer base.

In addition to the contribution from acquisitions, key factors in the second quarter of 1998 compared with the second quarter of 1997 included:

A 49 percent increase in noninterest income to $1.5 billion. This amount excludes investment securities transactions.
Continuing solid credit quality. Nonperforming assets as a percentage of net loans and foreclosed properties improved to 0.66 percent from 0.75 percent in the second quarter of 1997. Annualized net charge-offs improved to 0.47 percent of average net loans, compared with 0.71 percent in the year-ago period.
Net interest income reflected a continued balance sheet management strategy designed to maximize return on capital by selling or securitizing certain loans, rather than holding them on the balance sheet. Average net loans were $133 billion compared with $135 billion in the year-ago period.
Expenses reflected the impact of acquisitions in 1998, increased incentives resulting from revenue growth and special initiatives such as the Future Bank implementation. The overhead efficiency ratio increased slightly from the second quarter of 1997 but declined from the first quarter of 1998.
In conjunction with the Money Store purchase acquisition, which closed on June 30, 1998, First Union made accounting adjustments amounting to $2.2 billion. The purchase accounting adjustments had no impact on First Union's second quarter operating earnings.

First Union (NYSE:FTU) is a leading provider of financial services to more than 16 million customers throughout the East Coast and the nation. At June 30, 1998, First Union had assets of $229 billion and stockholders' equity of $17 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.

This news release contains various forward-looking statements. A discussion of various factors that could cause First Union's actual results to differ materially from those expressed in such forward-looking statements is included in First Union's 1998 filings with the Securities and Exchange Commission.

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