Press Releases

For the first six months of 1999, operating earnings of $2.40 per diluted share increased 12.7 percent. Operating net income grew 10.7 percent to $496 million. Total revenue advanced 11.8 percent compared with the first half of 1998. Annualized returns on equity and assets were 18.4 percent and 1.53 percent, respectively.

"Wachovia has achieved strong earnings growth this year," said L. M. Baker Jr., chairman and chief executive officer. "Solid revenue growth from our businesses was augmented as Interstate/Johnson Lane joined the Wachovia organization. Two-thirds of the revenue expansion was from fee-income sources. Expense growth also moderated among core businesses."

Commenting on recent business developments, Baker added, "Wachovia continues to refine its strategic direction. The addition of Interstate/Johnson Lane contributes to Wachovia’s personal financial services and capital markets capabilities. This combination and the planned acquisitions of OFFITBANK and Barry, Evans, Josephs & Snipes will strengthen Wachovia’s wealth strategy advisory business as well as increase the customer base for other products and services."

Reported earnings for the second quarter of $1.19 per diluted share, including merger-related charges, were up 19 percent from $1.00 a year earlier. For the first six months of 1999, reported earnings totaled $2.37 per diluted share, increasing 23 percent compared with $1.93 in 1998. Merger-related expenses, on a pretax basis, totaled $8 million for both the second quarter and first six months of 1999, versus $31 million and $66 million for the same periods, respectively.

Total revenues rose $122 million or 13.4 percent for the three months from a year earlier and $209 million or 11.8 percent year to date. Reflecting solid loan growth and higher net yield on interest-earning assets, taxable equivalent net interest income was up $32 million or 5.4 percent for the quarter and $69 million or 5.9 percent for the first half. Loan growth averaged 6.9 percent, a $3 billion increase from second quarter last year. Year to date average loans grew slightly over last year as a first quarter 1999 credit card securitization ($896 million) reduced loan balances. Total other operating revenue, which excludes securities transactions, advanced $90 million or 28.4 percent for the quarter and $139 million or 23.2 percent year to date, with gains largely in investment fees, credit card income, deposit service charges, trust fees and capital markets income.

The provision for loan losses was $75 million for the three months and $155 million for the first six months, increasing $6 million or 8.9 percent and $13 million or 8.8 percent, respectively. Net loan losses were $74 million or .63 percent of average loans for the quarter and $155 million or .66 percent for the first half, higher by $6 million or 8.9 percent and $12 million or 8.7 percent from the respective periods in 1998. Excluding credit cards, net loan losses were .13 percent of loans for the quarter and year to date. Nonperforming assets at June 30, 1999, rose from both one year earlier and from the end of the preceding quarter as commercial credits, related to a few public companies, transferred to nonaccrual status.

Noninterest expense, excluding merger-related charges, was higher by $86 million or 17.7 percent for the second quarter and $120 million or 12.7 percent year to date, reflecting the addition of Interstate/Johnson Lane to second quarter 1999 results. Excluding Interstate/Johnson Lane, noninterest expense rose approximately 4 percent during the quarter and approximately 6 percent for the first half for equipment, outside data processing, programming and software costs.

During the quarter, the corporation completed Year 2000 testing and implementation of all its information technology systems, including those designated as nonmission critical. Year 2000 expenses totaled $5 million for the second quarter and $11 million year to date. Wachovia will continue to refine its preparations and communicate with customers and business partners to plan for a smooth date change transition.