Filed by SunTrust Banks, Inc.
Pursuant to Rule 425 under the Securities
Act of 1933 and deemed filed pursuant to
Rule 14a-12 under the Securities Exchange
Act of 1934
Subject Company: Wachovia Corporation
Commission File No. 1-9021
Date: May 14, 2001
The following is a press release and written materials presented at an
analyst conference held on Monday, May 14, 2001.
[SunTrust Banks, Inc. Logo]
Contacts:
Investors Media
Gary Peacock Barry Koling George Sard/Debbie Miller/Denise DesChenes
SunTrust SunTrust Citigate Sard Verbinnen
404-658-4879 404-230-5268 212-687-8080
SUNTRUST OFFERS TO ACQUIRE WACHOVIA FOR STOCK
CURRENTLY VALUED AT $70.06 PER WACHOVIA SHARE
Combination Would Create Premier Financial Services Franchise In The Southeast
Offers Significant Premium To Wachovia Shareholders Over First Union Agreement;
Would Avoid Substantial Job Losses In Carolinas Planned By First Union
Atlanta, GA, May 14, 2001 -- SunTrust Banks, Inc. (NYSE: STI) announced
today that it has delivered a letter to the Board of Directors of Wachovia
Corporation (NYSE: WB) proposing to acquire Wachovia in a stock transaction
currently valued at $70.06 per Wachovia share, or a total of approximately
$14.7 billion. Under SunTrust's proposal, Wachovia shareholders would receive
1.081 shares of SunTrust common stock for each Wachovia share. Based on last
Friday's closing prices, SunTrust's offer represents a 17% premium to the
implied value of Wachovia's proposed acquisition by First Union Corporation
(NYSE: FTU). SunTrust would also increase its annual dividend to $2.22 per
common share so that Wachovia shareholders would receive on a pro forma
equivalent basis the same $2.40 per share dividend that they currently receive.
The combination of SunTrust and Wachovia would create the premier
financial services franchise in the Southeast. The pro forma company, with
approximately $180 billion in combined assets, will have a strong presence in
seven contiguous, high-growth states with 20% of the U.S. population. It would
have over 7.5 million retail customers; #1 market positions in Georgia, South
Carolina, and Virginia based on deposits; and approximately 85% of its $98
billion of U.S. deposits in markets where it has a Top 3 ranking. Together,
SunTrust and Wachovia would also have a strong balance sheet; superior credit
quality; and a powerful wealth
management business with $138 billion in assets under management and $260
billion in assets under administration.
"We are delighted to propose this combination which offers superior value
to Wachovia's shareholders, and we are confident that the terms of Wachovia's
merger agreement with First Union will allow Wachovia's Board of Directors to
consider our proposal consistent with its fiduciary obligation to Wachovia
shareholders," said L. Phillip Humann, SunTrust's Chairman, President and Chief
Executive Officer. "Our interest in a transaction with Wachovia goes back many
years and makes even more sense today as our organizations have never been more
compatible or complementary. This is a compelling strategic combination for
both companies -- and a substantially better deal for Wachovia's shareholders
and other constituencies than the First Union transaction. Shareholders would
get a higher price in a better-performing security as well as a higher dividend
from a better-capitalized company. Our transaction involves a simpler
integration process which means customers should experience less disruption and
communities would face substantially fewer job losses and branch closings,
especially in the Carolinas where SunTrust does not currently operate. We would
make Winston-Salem the headquarters of our Carolinas bank and maintain a
meaningful presence there. We stand ready to meet with Wachovia as soon as
possible to fully explain our proposal and its many advantages."
SunTrust's proposal contemplates that the Board of Directors of the
combined company would include appropriate representation from Wachovia's
current Board of Directors, and that there would be leadership roles in the
combined company for numerous members of Wachovia's management. The combined
company would be headquartered in Atlanta.
The transaction is expected to be slightly accretive to SunTrust's
earnings per share in the first year, excluding one-time merger-related
charges, and increasingly accretive thereafter. SunTrust expects to achieve
approximately $500 million in annual cost savings to be fully phased in over a
carefully planned three-year integration period. This includes a staff
reduction of approximately 4,000, or 8% of the combined work force, far less
than the 7,000 jobs to be lost under the First Union transaction. Wachovia
shareholders would own approximately 44% of the combined SunTrust/Wachovia
compared to 30% of the combined First Union/Wachovia.
"One of the most attractive aspects of our proposal is our currency," said
Mr. Humann. "We have an excellent track record of earnings and dividend growth,
and SunTrust has taken a cautious approach to credit management. This has
allowed us to consistently meet our earnings targets and to largely avoid
non-merger-related restructuring charges and write-downs. As evidenced by our
successful acquisition of Crestar, SunTrust also brings a conservative and
2
disciplined approach to execution of merger transactions. By setting achievable
cost-savings targets and retaining our customer focus, we are able to minimize
revenue loss during integration. We are confident that we can integrate
SunTrust's and Wachovia's complementary and overlapping businesses without the
customer disruption and other problems that often accompany large bank
mergers."
SunTrust's proposed merger would be accounted for as a purchase and would
be subject to the receipt of shareholder and regulatory approvals and the
satisfaction of other customary conditions. It would also be subject to
Wachovia shareholders not approving Wachovia's merger agreement with First
Union, the valid termination of that agreement, and the negotiation and
execution of a definitive merger agreement between SunTrust and Wachovia.
Although SunTrust reserves the right to challenge the validity of the stock
option granted to First Union by Wachovia because it contains several excessive
and unprecedented features, in the interest of facilitating the transaction,
SunTrust's proposal assumes a payment to First Union of the "in-the-money"
value of the option, subject to the cap set forth in the option agreement.
SunTrust's proposal also assumes divestitures of up to $1.5 billion in deposits
for regulatory reasons.
In addition to delivering its proposal to the Wachovia Board of Directors,
SunTrust is filing, before its investor/analyst presentation at 9:15 a.m.
today, a preliminary proxy statement with the Securities and Exchange
Commission for the purpose of enabling SunTrust to solicit Wachovia's
shareholders to vote against the proposed First Union/Wachovia merger.
SunTrust's letter to the Wachovia Board of Directors is included in this proxy
statement.
SunTrust Banks, Inc. is the nation's ninth-largest commercial banking
organization. The Company operates through an extensive distribution network in
Alabama, Florida, Georgia, Maryland, Tennessee, Virginia, and the District of
Columbia and also serves customers in selected markets nationally. Its primary
businesses include traditional deposit and credit services as well as trust and
investment services. Through various subsidiaries the Company provides credit
cards, mortgage banking, insurance, brokerage and capital markets services.
Conference Call Information
SunTrust senior management will hold an investor/analyst presentation
today at 9:15 a.m. EDT to discuss its proposal to acquire Wachovia. The
conference call dial-in numbers are: (888) 868-9080 (domestic) and (973)
628-6885 (international). A webcast of the meeting and slide presentation can
also be accessed from the SunTrust website at www.suntrust.com. A replay will
be available beginning later today at (877) 519-4471 (domestic) or (973)
341-3080
3
(international); pass code is 2600481. An archived version of the
webcast will also be available beginning later today. The press release and
investor presentation are also available via fax on demand at (888) 861-6282.
* * *
4
This filing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, (i) statements about the benefits of a merger between
SunTrust and Wachovia, including future financial and operating results, cost
savings and accretion to reported and cash earnings that may be realized from
such merger; (ii) statements with respect to SunTrust's plans, objectives,
expectations and intentions and other statements that are not historical facts;
and (iii) other statements identified by words such as "believes", "expects",
"anticipates", "estimates", "intends", "plans", "targets", "projects" and
similar expressions. These statements are based upon the current beliefs and
expectations of SunTrust's management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) the businesses of SunTrust and Wachovia may not
be integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected revenue synergies and cost
savings from the merger may not be fully realized or realized within the
expected time frame; (3) revenues following the merger may be lower than
expected; (4) deposit attrition, operating costs, customer loss and business
disruption, including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers, may be greater
than expected following the merger; (5) the regulatory approvals required for
the merger may not be obtained on the proposed terms or on the anticipated
schedule; (6) the failure of SunTrust's and Wachovia's stockholders to approve
the merger; (7) competitive pressures among depository and other financial
institutions may increase significantly and may have an effect on pricing,
spending, third-party relationships and revenues; (8) the strength of the United
States economy in general and the strength of the local economies in which the
combined company will conduct operations may be different than expected,
resulting in, among other things, a deterioration in credit quality or a reduced
demand for credit, including the resultant effect on the combined company's loan
portfolio and allowance for loan losses; (9) changes in the U.S. and foreign
legal and regulatory framework; and (10) adverse conditions in the stock market,
the public debt market and other capital markets (including changes in interest
rate conditions) and the impact of such conditions on the combined company's
capital markets and asset management activities. Additional factors that could
cause SunTrust's results to differ materially from those described in the
forward-looking statements can be found in SunTrust's reports (such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K) filed with the Securities and Exchange Commission and available at the
SEC's Internet site (http:// www.sec.gov). All subsequent written and oral
forward-looking statements concerning the proposed transaction or other matters
attributable to SunTrust or any person acting on its behalf are expressly
qualified in their entirety by the cautionary statements above. SunTrust does
not undertake any obligation to update any forward-looking statement to reflect
circumstances or events that occur after the date the forward-looking statements
are made.
On May 14, 2001 SunTrust filed with the Securities and Exchange Commission
("SEC") a preliminary proxy statement for solicitation of proxies from Wachovia
stockholders in connection with the Wachovia 2001 annual meeting of
stockholders. Subject to future developments, SunTrust intends to file with the
SEC a registration statement at a date or dates subsequent hereto to register
the SunTrust shares to be issued in the proposed transaction. Investors and
security holders are urged to read the proxy statement and registration
statement (when available) and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because they
contain (or will contain) important information. Investors and security holders
may obtain a free copy of the proxy statement and the registration statement
(when available) and other relevant documents at the SEC's Internet web site at
www.sec.gov. The proxy statement, the registration statement (when available)
and such other documents may also be obtained free of charge from SunTrust by
directing such request to: SunTrust, 303 Peachtree Street, N.E., Atlanta, GA
30308, Attention: Gary Peacock (404-658-4753).
SunTrust, its directors and executive officers and certain other persons
may be deemed to be "participants" in SunTrust's solicitation of proxies from
Wachovia stockholders. A detailed list of the names, affiliations and interests
of the participants in the solicitation is contained in SunTrust's preliminary
proxy statement on Schedule 14A, filed with the SEC on May 14, 2001.
5
[Logo of SunTrust] [Logo of Wachovia]
A Better Deal For Shareholders
May 14, 2001
FORWARD LOOKING INFORMATION
This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, (i) statements about the benefits of a merger between
SunTrust and Wachovia, including future financial and operating results, cost
savings and accretion to reported and cash earnings that may be realized from
such merger; (ii) statements with respect to SunTrust's plans, objectives,
expectations and intentions and other statements that are not historical facts;
and (iii) other statements identified by words such as "believes", "expects",
"anticipates", "estimates", "intends", "plans", "targets", "projects" and
similar expressions. These statements are based upon the current beliefs and
expectations of SunTrust's management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) the businesses of SunTrust and Wachovia may not
be integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected revenue synergies and cost
savings from the merger may not be fully realized or realized within the
expected time frame; (3) revenues following the merger may be lower than
expected; (4) deposit attrition, operating costs, customer loss and business
disruption, including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers, may be greater
than expected following the merger; (5) the regulatory approvals required for
the merger may not be obtained on the proposed terms or on the anticipated
schedule; (6) the failure of SunTrust's and Wachovia's stockholders to approve
the merger; (7) competitive pressures among depository and other financial
institutions may increase significantly and may have an effect on pricing,
spending, third-party relationships and revenues; (8) the strength of the United
States economy in general and the strength of the local economies in which the
combined company will conduct operations may be different than expected,
resulting in, among other things, a deterioration in credit quality or a reduced
demand for credit, including the resultant effect on the combined company's loan
portfolio and allowance for loan losses; (9) changes in the U.S. and foreign
legal and regulatory framework; and (10) adverse conditions in the stock market,
the public debt market and other capital markets (including changes in interest
rate conditions) and the impact of such conditions on the combined company's
capital markets and asset management activities.
[Logo of SunTrust]
FORWARD LOOKING INFORMATION
Additional factors that could cause SunTrust's results to differ materially from
those described in the forward-looking statements can be found in SunTrust's
reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K) filed with the Securities and Exchange Commission
and available at the SEC's Internet site (http://www.sec.gov). All subsequent
written and oral forward-looking statements concerning the proposed transaction
or other matters attributable to SunTrust or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements above.
SunTrust does not undertake any obligation to update any forward-looking
statement to reflect circumstances or events that occur after the date the
forward-looking statements are made.
On May 14, 2001 SunTrust filed with the Securities and Exchange Commission
("SEC") a preliminary proxy statement for solicitation of proxies from Wachovia
stockholders in connection with the Wachovia 2001 annual meeting of
stockholders. Subject to future developments, SunTrust intends to file with the
SEC a registration statement at a date or dates subsequent hereto to register
the SunTrust shares to be issued in the proposed transaction. Investors and
security holders are urged to read the proxy statement and registration
statement (when available) and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because they
contain (or will contain) important information. Investors and security holders
may obtain a free copy of the proxy statement and the registration statement
(when available) and other relevant documents at the SEC's Internet web site at
www.sec.gov. The proxy statement, the registration statement (when available)
and such other documents may also be obtained free of charge from SunTrust by
directing such request to: SunTrust, 303 Peachtree Street, N.E., Atlanta, GA
30308, Attention: Gary Peacock (404-658-4753).
SunTrust, its directors and executive officers and certain other persons may be
deemed to be "participants" in SunTrust's solicitation of proxies from Wachovia
stockholders. A detailed list of the names, affiliations and interests of the
participants in the solicitation is contained in SunTrust's preliminary proxy
statement on Schedule 14A, filed with the SEC on May 14, 2001.
[Logo of SunTrust]
OUR STORY
|| The Transaction Phil Humann
|| A Premier Franchise Jim Wells
|| Shared Values and Growth Culture John Clay
|| Solid Credit Quality Ted Hoepner
|| Superior Shareholder Value &
|| SunTrust Offers a Stronger Currency John Spiegel
|| A Better Deal For Shareholders Phil Humann
PROPOSED TRANSACTION TERMS
Price: $70.06 (1)
Fixed Exchange Ratio: 1.081 SunTrust shares per Wachovia share
Dividends: (2) SunTrust to increase annual dividend to $2.22 per share post
closing - equal to $2.40 per Wachovia share
Cost Savings: $500MM
23% of estimated Wachovia's core expense base(3)
Divestitures: Estimated to be up to $1.5 Bn of deposits
Accounting/Structure: Purchase; tax-free exchange
Steps to Completion: Customary regulatory approvals; Valid termination of
First Union merger agreement; Entry into merger
agreement with Wachovia
Notes: (1) Based on May 11, 2001 close.
(2) All dividends on common stock subject to determination by the
combined company's Board of Directors in its discretion.
(3) Wachovia's estimated core non-interest expense base pro
forma for impact of Republic Security transaction and card sale.
[Logo of SunTrust]
A BETTER DEAL FOR SHAREHOLDERS
First Union Deal SunTrust Deal
------------------ ----------------
Price (1) $60.04 $70.06 17% higher
Premium to Current (1%) 15%
Wachovia Price (1)
Dividends $1.92 $2.40 25% higher
Cost Savings $890MM $500MM
% Estimated Wachovia's 42% 23% More achievable
Core Expense Base (2) with less customer
and employee
disruption
Wachovia Pro Forma
Ownership(3) 30% 44%
Notes: (1) Based on May 11, 2001 close; SunTrust transaction based on 1.081
exchange ratio.
(2) Wachovia's core non-interest expense base pro forma for impact
of Republic Security transaction and card sale.
(3) Based on common shares outstanding on 3/31/01.
[Logo of SunTrust]
A BETTER DEAL FOR SHAREHOLDERS
From Every Perspective
|| Better price
|| Higher dividend
|| Better currency
|| Better fit
- Management philosophy
- Customer relationship driven
- Focus on local markets and lines of business
|| Lower risk/better execution
- Clean slate - successful Crestar integration complete
- Proven large deal execution capability
- More conservative and achievable cost savings
- Less customer disruption
[Logo of SunTrust]
A LOGICAL AND COMPELLING FIT
|| Leadership position in high growth and affluent southeastern markets
|| Enhanced scale in high growth / high margin businesses
|| Superior financial strength and credit risk management
|| Crestar behind us; clean slate for this transaction
|| Complementary cultures and business strengths
|| Opportunity for reinvestment of excess capital
[Logo of SunTrust]
A LOWER RISK TRANSACTION
|| SunTrust is ready
|| Integration will be SunTrust's sole focus
- First Union still focused on completing its internal restructuring
|| More realistic cost savings and less customer disruption
- 4,000 staff reductions for SunTrust vs. 7,000 for First Union
- 150 - 175 branch closings for SunTrust vs. 300 for First Union
|| Complementary corporate cultures and business mix
[Logo of SunTrust]
A PREMIER FRANCHISE
[Logo of SunTrust]
THE BEST FOOTPRINT IN BANKING
Concentration in High Growth and Affluent Markets(1)
|| 7.5 million retail customers
|| $98Bn in U.S. deposits(2)
|| 1,842 branches
|| 3,347 ATMs
|| 85% of U.S. Deposits are in Markets with Top 3 Ranking
[Graphic Omitted]
#1 FL
#1 GA
#3 NC
#1 SC
#5 MD
#1 VA
#1 Greater Washington Area
#4 TN
Source: SNL Securities and company financials.
Notes: (1) Map does not include Alabama and Delaware. Before estimated
divestitures.
(2) As of 9/00, most recent data available.
[Logo of SunTrust]
HIGH GROWTH AND AFFLUENT MARKETS
Projected MSA Household Growth Rates (1)
Top 10 SunTrust/Wachovia
SunTrust/Wachovia Deposits Market
MSAs Growth Rates (%) ($Bn) Rank Share
-------------------- ------------------- ------------------ ------ -----------
Atlanta 13.7 $16.8 #1 31%
Greater Washington Area 7 11.6 #1 19
Richmond 5.5 5.7 #1 39
Greensboro/
Winston Salem 6.3 5.5 #2 27
Orlando 11.6 4.3 #1 27
Norfolk 2.9 3.2 #1 30
Tampa/St. Petersberg 5.8 3.0 #3 10
Miami 5.2 3.0 #3 8
West Palm Beach 11.5 2.8 #3 16
Nashville 8.6 2.8 #2 17
----- ---- ----
Weighted Average(2) 8.9
Over 60% higher than national average $58.6 Average: 22%
=====
Source: SNL Securities and U.S. Census data.
Notes: (1) Projected 5-year household growth rates (2000-2005).
(2) Based on deposits.
[Logo of SunTrust]
WE STACK UP WELL AGAINST OUR PEERS
Growth of Market is 70%+ Higher Than U.S. Average
Weighted Average Population Growth (1)
(5-Year Projected Growth Rate: 2000-2005)
SunTrust has captured benefits of its
high growth markets:
12% annualized core EPS
growth 1996 - 2001E(2)
SunTrust/Wachovia Bank of America Wells Fargo BB&T First Union/Wachovia U.S. Bancorp Bank One
7.7 7.1 6.9 5.8 5.3 4.9 4.7
Northern Trust U.S. Average Comerica JP Morgan Chase Citigroup Fifth Third Bank of New York
4.7 4.5 3.7 3.4 2.7 2.7 2.2
KeyCorp FleetBoston National City PNC Mellon
2.2 2 1 0.4 0.2
Source: SNL Securities and U.S. Census data.
Notes: (1) Weighted average based on MSA deposits. Pro forma for announced
transactions before estimated divestitures.
(2) Based on First Call estimates.
[Logo of SunTrust]
ASSET/WEALTH MANAGEMENT FRANCHISE
Proven Capability Full Product Array
Asset & Wealth Management Personal Trust Corporate
and
Institutional
Trust
$138Bn AUM Retirement Full Service Discount
$31Bn Mutual Funds Services Brokerage Brokerage
$260Bn Assets Under Administration
Private Client Investment
Advisors Management
Premier Position for
Future Growth
[Logo of SunTrust]
BUSINESS BANKING
|| TOP MARKET SHARE OF BUSINESS BANKING RELATIONSHIPS IN ITS FOOTPRINT
|| WE HAVE WHAT BUSINESS CLIENTS WANT
- High quality management
- High touch relationship management
- Best-in-class customer service and satisfaction
- Broad array of product offerings
|| MERGER WILL INCREASE OUR LEADERSHIP
- Best practices and products
- Leading Internet-based cash management products
- High margin product sales and increased penetration
- Capital available to reinvest
[Logo of SunTrust]
THE NEW SUNTRUST - BUSINESS MIX SUMMARY
|| Our businesses:
- A leading retail franchise in the highest growth markets
- Premier financial solutions provider to small and middle market
businesses
- Full complement of fee businesses including capital markets, treasury
management and insurance
- Complete wealth management platform operating in highly affluent
markets
[Logo of SunTrust]
SHARED VALUES AND GROWTH CULTURE
[Logo of SunTrust]
COMPLEMENTARY CULTURES
A COMMON VISION
|| Common values of soundness, profitability and growth
|| Holistic, integrated relationship approach
|| "Balanced" operating models
- Strong geographic ownership of sales and service
- Empowered lines of business to expedite strategic decision making
- Functional competencies supporting the business
[Logo of SunTrust]
BOTH BANKS COMMITTED TO LOCAL
OWNERSHIP AS WELL AS BUSINESS LINES
Local Banks
Line accountability for market penetration and strengthened relationship
management at the local level
Business Lines
Strong influence and ability to drive strategies, programs, and priorities
Corporate Functions
Important role in support of lines-of-business and geographic strategies
and priorities
|| Fully empowered local market CEOs
- Lead the sales and service culture
- Drive effective and timely decision making for credit, pricing
and people
- Deliver superior service quality
- Develop talent
- Execute against corporate strategy to drive superior results
[Logo of SunTrust]
BOTH ORGANIZATIONS SHARE COMMON VALUES
SERIOUS ABOUT TALENT
OBSESSED ABOUT QUALITY
RELATIONSHIP FOCUSED
PASSIONATE ABOUT GROWTH
COMMITTED TO EFFICIENCYCUSTOMER DRIVEN TECHNOLOGY
PERFORMANCE DRIVEN
[Logo of SunTrust]
SOLID CREDIT QUALITY
[Logo of SunTrust]
PRO FORMA FINANCIALS
Loan Portfolio
Comparable Loan Mix
($MM) SunTrust Wachovia(1) Pro Forma
----- -------- ----------- ---------
% of Total % of Total % of Total
Total Loans Total Loans Total Loans
----- ----- ----- ----- ----- -----
Commercial and Industrial $28,042 40% $18,831 36% $46,873 38%
Commercial Real Estate 11,325 16 13,324 25 24,649 20
Residential Real Estate 17,707 25 10,395 20 28,102 23
Consumer 10,663 15 6,948 13 17,611 14
Lease Financing 2,624 4 2,806 5 5,430 4
------- --- ------- --- -------- ---
Total Loans $70,360 100% $52,304 100% $122,664 100%
======= === ======= === ======== ===
Source: Company financials.
Note: (1) Pro forma for card sale.
[Logo of SunTrust]
PRO FORMA FINANCIALS
Loan Portfolio - Us Vs. Them (1)
Preferable Loan Mix
($MM) SunTrust/Wachovia First Union/Wachovia
--------------------------- ---------------------------------
Loans % of Total Loans Loans % of Total Loans
----- ---------------- ----- ----------------
Commercial and Industrial $46,873 38% $79,306 44%
Commercial Real Estate 24,649 20 24,717 14
Residential Real Estate 28,102 23 26,942 15
Consumer 17,611 14 31,480 17
Lease Financing 5,430 4 18,305 10
-------- --- -------- ---
Total Loans $122,664 100% $180,750 100%
======== === ======== ===
Source: Company financials. SunTrust/Wachovia as of 3/31/01.
First Union/Wachovia as of 12/31/00.
Note: (1) Pro forma for card sale.
[Logo of SunTrust]
SOLID CREDIT QUALITY
5-Year Net Charge-off Ratio(1)
SunTrust Comerica BB&T Mellon National City
0.29 0.30 0.31 0.35 0.41
U.S. Bancorp PNC Fifth Third KeyCorp First Union Bank of New York
0.43 0.44 0.47 0.55 0.57 0.57
Bank of America Wachovia FleetBoston JP Morgan Chase Bank One
0.59 0.63 0.75 0.75 0.98
Wells Fargo Citigroup
1.10 1.25
Source: SNL Securities, company financials.
Note: (1) 1996-2000 average.
[Logo of SunTrust]
SOLID CREDIT QUALITY
5-Year Net Charge-off Trend(1) - Us Vs. Them
SunTrust/Wachovia First Union/Wachovia
1996 0.14 0.3
1997 0.13 0.27
1998 0.13 0.27
1999 0.23 0.36
2000 0.25 0.49
Note: (1) Excludes credit card losses.
[Logo of SunTrust]
SOLID CREDIT QUALITY
Allowance for Loan Losses to Non-performing Loans(1)
Fifth Third BB&T Bank of New York SunTrust/Wachovia
407.13 301.46 299.03 286
Wells Fargo Bank One National City
275.59 232.96 230.12
FleetBoston PNC First Union/Wachovia U.S. Bancorp JP Morgan Chase
229.31 200.89 186 176 173
Citigroup Keycorp Comerica Mellon Bank of America
147.55 140 136.92 134.36 122.78
Source: SNL Securities, company financials.
Notes: (1) As of latest available quarter.
(2) Assumes $450MM special provision for both SunTrust/Wachovia and First
Union/Wachovia.
[Logo of SunTrust]
SUPERIOR SHAREHOLDER VALUE
[Logo of SunTrust]
CONSERVATIVE ASSUMPTIONS
|| Street estimates utilized for 2002 base case
- 10% and 9% growth rates assumed thereafter for SunTrust and Wachovia,
respectively
|| Expense savings of $500MM fully phased-in by 2004
- 23% of estimated Wachovia's expenses (1)
- 10% of combined expenses (1)
|| Restructuring charge estimated to be $1Bn pre-tax
|| Additional credit reserve of up to $450MM
|| Estimated breakup fee of $440MM (2) o No revenue enhancements assumed
Notes: (1) Wachovia's estimated core non-interest expense base pro forma for
impact of Republic Security transaction and card sale.
(2) In-the-money value of option as of 5/11/01, based on 1.081
exchange ratio.
[Logo of SunTrust]
PRO FORMA CASH RESULTS (1)
Illustrative - Based On First Call Estimates
($MM, except per share amounts) 2002 2003 2004
---- ---- ----
SunTrust Earnings $1,527 $1,631 $1,740
Wachovia Earnings(2) 1,053 1,147 1,251
----- ----- -----
Subtotal 2,580 2,778 2,991
Cost Savings 124 217 310
Other(3) (87) (84) (75)
---- ---- ----
Pro Forma Earnings 2,616 2,911 3,226
===== ===== =====
EPS $5.35 $6.06 $6.82
SunTrust Accretion 0.6% 3.6% 6.3%
Wachovia Accretion 1.9 5.7 9.3
Notes: (1) Estimated in-the-money value of option is $440MM. If in-the-money
value of option is $780MM, SunTrust accretion will be 0.5% lower
each period.
(2) Assumes 25 million share repurchase to conform with street
estimates.
(3) Includes earnings loss due to divestitures, restructuring charge,
breakup fee, reserve addition and increased dividend.
[Logo of SunTrust]
CONSERVATIVE COST SAVINGS
Phase in: 40% in Year 1, 70% in Year 2, 100% in Year 3
($MM)
Staff/Administration $250
Data Processing 60
Occupancy 30
Equipment 30
Professional Services 30
Other 100
---
Fully Phased-In Total $500
====
23% of Wachovia's
expense base
Note: (1) Wachovia's estimated core non-interest expense base pro forma for
impact of Republic Security transaction and card sale.
[Logo of SunTrust]
CONSERVATIVE COST SAVINGS TARGETS
BY ANY MEASURE
Cost Savings as a % of Target Operating Expenses
(Median 10%) (1)
How they
look at it
Chemical/Chase 16
Chemical/Manufactorers Hanover 13
First Union/Core States 12
Banc One/First Chicago NBD 10
Nations Bank/Bank America ~10
Fleet/Boston 10
Suntrust/Wachovia(2) 10
First Union/Wachovia(3) 8
Norwest/Wells 8
Firstar/US Bancorp 5
Cost Savings as a % of Target Operating Expenses
(Median 27%) (1)
How we
look at it
First Union/Core States 45
First Union/Wachovia(2) 42
Chemical/Chase 34
Chemical/Manufacturers Hanover 33
Bank One/First Chicago NBD 27
NationsBank/BankAmerica 26
SunTrust/Wachovia(2) 23
Fleet/BankBoston 19
Norwest/Wells 17
Firstar/US Bancorp 8
Notes: (1) Includes completed transactions.
(2) Wachovia's estimated core non-interest expense base pro forma for
impact of Republic Security transaction and card sale.
(3) Source: First Union/Wachovia analyst presentation.
[Logo of SunTrust]
ESTIMATED MERGER RELATED CHARGES
($MM)
Staff Development, Retention and Severance $290
Conversion Costs 310
Accounting Standardization 150
Occupancy / Equipment / Software Writedowns 75
Other 175
---
Total Pre-Tax Merger Related Charges $1,000
Estimated Breakup Fee(1) $440
Addition to Reserve Up to $450
Required purchase accounting adjustments will be made at closing.
Note: (1) In-the-money value of option as of 5/11/01 based on 1.081 exchange
ratio.
[Logo of SunTrust]
STRONG ECONOMIC RETURNS WITH
CONSERVATIVE ASSUMPTIONS
SunTrust Cost of Equity: Transaction IRR:
10 - 12% 13 - 15%
Major Assumptions:
|| 11 - 12x Terminal cash multiple (2006)
|| 10% EPS growth for SunTrust 2002 - 2006
|| 9% EPS growth for Wachovia 2002 - 2006
|| Other transaction assumptions same as used earlier
[Logo of SunTrust]
INTEGRATION RISK IS LOW
|| Thoughtful and deliberate 3-year integration plan
|| Emphasizes customer and revenue retention
- Low customer attrition rates during Crestar integration
|| Customer service quality standards not diminished during system conversions
Emphasis on customer key to seamless execution
and achievement of financial goals
[Logo of SunTrust]
THIS IS NOT WELLS FARGO/FIRST INTERSTATE
Wells Fargo/First Interstate
----------------------------
|| Dramatically different operational structure
|| Aggressive cost take-outs targeted
|| Attempted 9 month integration
|| Wells in midst of re-working distribution
|| Incentives for managers to leave
|| No due diligence
SunTrust/Wachovia
-----------------
|| Similar operational structure
|| Reasonable assumptions
|| 3 Years for integration
|| Clean slate
|| Encouraging significant
management participation
|| Strong familiarity with wachovia;
due diligence to be updated
[Logo of SunTrust]
RESULTS NOT PROMISES
SunTrust Offers a Superior Currency
[Logo of SunTrust]
RESULTS NOT PROMISES
Total Return(1)
[GRAPHIC OMITTED]
1-YEAR 31% higher 5-YEAR 81% higher
------ ------
SunTrust 29 SunTrust 100
First Union (2) First Union 19
10-YEAR 174% higher
------
SunTrust 521
First Union 347
Source: FactSet.
Note: (1) As of 5/11/01, assumes reinvestment of dividends.
[Logo of SunTrust]
RESULTS NOT PROMISES
NET REVENUE PER SHARE (1)
[Graphic Omitted]
1996 1997 1998 1999 2000 1Q '01 Ann.
(SunTrust) 11.58 13.25 14.36 14.96 16.22 17.36 8% CAGR
(First Union) 13.11(2) 14.42 13.64 14.56 14.38 13.14 0% CAGR
Notes: (1) Excludes non-recurring items.
(2) Adjusted for 1997 2-for-1 stock split.
[Logo of SunTrust]
RESULTS NOT PROMISES
Core EPS (1)
[GRAPHIC OMITTED]
1996 1997 1998 1999 2000 2001E(2)
(SunTrust) 2.72 3.13 3.31 3.92 4.39 4.74 12% CAGR
(First Union) 3.10(3) 3.25 3.21 3.42 2.97 2.58 (4%) CAGR
Whose stock would you want to own?
Notes: (1) Originally reported; excludes non-recurring items, merger-related and
restructuring charges.
(2) First Call estimates as of 5/11/01.
(3) Adjusted for 1997 2-for-1 stock split.
[Logo of SunTrust]
RESULTS NOT PROMISES
Annual Dividends Per Share(1)
[GRAPHIC OMITTED]
SunTrusT First Union(2) Wachovia
CAGR: 18% CAGR: (2%) CAGR with Sun Trust: 10%
CAGR with FirstUnion: 5%
1996 0.83 1996 1.10 1996 1.52
1997 0.93 1997 1.22 1997 1.68
1998 1.00 1998 1.58 1998 1.86
1999 1.38 1999 1.88 1999 2.06
2000 1.48 2000 1.92 2000 2.28
1Q '01 1Q '01
Ann. 1.60 Ann. 0.96 SunTrust/
SunTrust/ First Union/ Wachovia
Wachovia Wachovia Proposal 2.40
Future 2.22 Future 0.96 First Union/
Wachovia
Proposal 1.92
Notes: (1) Company financials, as originally reported.
(2) Adjusted for 1997 2-for-1 stock split. Does not reflect one time
$0.48 special dividend.
[Logo of SunTrust]
RESULTS NOT PROMISES
Restructuring Charges Since 1997
Restructuring Merger Related Provision Other Total
First Union 3471 789 1157 1658 7075
SunTrust 0 250 115 365
Source: Company financials.
[Logo of SunTrust]
RESULTS NOT PROMISES
Financial Ratios for 1Q '01(1)
ROA ROE(2)
SunTrust 1.2 SunTrust 19.5
First Union 1.0 First Union 15.6
Reported Efficiency Ratio Tangible Common Equity Ratio
SunTrust 55.4 SunTrust 6.8
First Union 65.2 First Union 5.0
Notes: (1) Excludes non-recurring items, merger-related and restructuring
charges.
(2) Excludes Coke.
[Logo of SunTrust]
RESULTS NOT PROMISES
[First Union Logo] [SunTrust Logo]
[CoreStates Logo] [Crestar Logo]
23% Shortfall 3.0% Shortfall
Promised 4.46 Promised 4.52
IBES(1) 4.35 IBES(1) 4.40
Delivered(2) 3.42 Delivered(2) 4.39
1999 EPS 2000 EPS
Source: Analyst presentation, company financials, SNL Securities.
Notes: (1) First Union IBES as of 1/1/99. SunTrust IBES as of 1/1/00.
(2) Excluding merger-related and restructuring charges and other
non-recurring items.
[Logo of SunTrust]
A BETTER DEAL FOR SHAREHOLDERS
[Logo of SunTrust]
A BETTER DEAL FOR SHAREHOLDERS
FROM EVERY PERSPECTIVE
|| Better price
|| Higher dividend
|| Better currency
|| Better fit
- Management philosophy
- Customer relationship driven
- Focus on local markets and lines of business
|| Lower risk/better execution
- Clean slate - successful crestar integration complete
- Proven large deal execution capability
- More conservative and achievable cost savings
- Less customer disruption
This deal should happen
[Logo of SunTrust]
APPENDIX
[Logo of SunTrust]
PRO FORMA FINANCIALS
Balance Sheet - Based On Purchase Accounting
As of March 31, 2001
($MM) SunTrust Wachovia (1) Pro Forma
-------- ------------ ---------
Loans $ 70,360 $52,304 $122,664
Reserves 872 851 2,173(2)
Other Interest Earning Assets 22,955 10,764 33,719
Intangibles 869 1,284 11,394
Total Assets 103,726 77,006 189,973
Deposits $ 62,723 $45,617 $106,840(3)
Short Term Borrowings 16,040 9,516 25,557
Long-Term Borrowings 12,526 10,712 23,238
Equity $ 7,830 $ 7,705 $ 22,648
Source: Company financials.
Notes: (1) Pro forma for credit card sale.
(2) Assumes $450MM of special provision.
(3) Assumes $1.5Bn of deposit divestitures.
[Logo of SunTrust]
PRO FORMA FINANCIALS
Loan Portfolio
As of March 31, 2001
($Mm) SunTrust Wachovia(1) Pro Forma(1)
---------------------- ---------------------- ----------------------
% of Total % of Total % of Total
Total Loans Total Loans Total Loans
----- ----- ----- ----- ----- -----
Commercial and Industrial $27,959 40% $18,831 36% $ 46,790 38%
Real Estate 29,032 41 23,719 45 52,750 43
Construction 3,631 5 3,747 7 7,378 6
Commercial Mortgages 7,694 11 9,577 18 17,271 14
Residential Mortgages 17,707 25 10,395 20 28,102 23
Consumer 10,663 15 6,948 13 17,611 14
Indirect Consumer 5,612 8 4,572 9 10,183 8
Direct Consumer 5,051 7 2,377 5 7,428 6
Credit - Commercial 83 0 - 0 83 0
Lease Financing 2,624 4 2,806 5 5,430 4
------- --- ------- --- -------- -
Total Loans $70,360 100% $52,304 100% $122,664 100%
======= === ======= === ======== ===
Source: Company financials.
Note: (1) Pro forma for credit card sale.
[Logo of SunTrust]
PRO FORMA FINANCIALS
Deposit Composition (1)
As of December 31, 2000
($MM) SunTrust Wachovia Pro Forma
------------------------ ------------------------ ------------------------
% of Total % of Total % of Total
Total Deposits Total Deposits Total Deposits
----- -------- ----- -------- ----- --------
Non-Interest Bearing $13,178 20% $8,428 19% $21,606 20%
Savings/NOW/MMDAs 26,563 40 17,678 40 44,241 40
Time Deposits (LESS THAN) 100k 9,936 15 9,494 22 19,430 18
Time Deposits >100k 17,016 26 8,346 19 25,362 23
------- --- ------- --- -------- ---
Total $66,692 100% $43,946 100% $110,638 100%
Note: (1) Based on average balances as of 12/31/00. Not pro forma for
divested deposits.
[Logo of SunTrust]
PRO FORMA FINANCIALS
Nonperforming Assets (1)
As of March 31, 2001
($MM) SunTrust Wachovia Pro Forma
----- -------- -------- ---------
Nonperforming Loans $349 $410 $759
Other Foreclosed Assets 21 27 48
---- ---- ----
Total Nonperforming Assets $369 $437 $806
==== ==== ====
NPLs to Loans 0.50% 0.78% 0.62%
NPAs to Loans + Foreclosed Assets 0.52% 0.84% 0.66%
Allowance to NPLs 250% 208% 286%(2)
Source: Company financials.
Notes: (1) Loans pro forma for card sale. Assumes no reserves are being
transferred with the card portfolio.
(2) Includes $450MM special provision as a result of transaction.
[Logo of SunTrust]
RESERVING FOR PORTFOLIO RISK
|| SunTrust will reserve up to to $450 MM to strengthen Wachovia's portfolio
($Bn)
SunTrust/Wachovia(1)
Loans $122.7
Loan Loss Reserves 2.2
NPAs 0.8
Reserves/Loans 1.77%
Reserves/NPAs 270%
NPAs/Assets 0.42%
Note: (1) As of 3/31/01. Pro forma for card sale except NPA figures, assumes no
reserves adjustment.
[Logo of SunTrust]
SENSITIVITY ANALYSIS
Pro Forma Cash Results - Illustrative
Suntrust Accretion/(Dilution)
--------------------------------------------
2002 2003 2004
---- ---- ----
First Call Estimates ($5.68 for 2002) 0.6% 3.6% 6.3%
What if?
Wachovia 2002 Cash Estimate:
$5.73 1.0% 4.0% 6.7%
$5.63 0.3% 3.3% 5.9%
$5.58 (0.1)% 2.9% 5.5%
$5.53 (0.4)% 2.5% 5.2%
[Logo of SunTrust]
"NEW" GAAP
|| "New" GAAP procedures not yet formally established; below is our best guess:
Estimated 2002 2003 2004
---------- ---- ---- ----
Standalone "New" GAAP EPS $5.29 $5.81 $6.39
Core deposit Intangible amortization ($MM) $215-295 $195-250 $175-210
Pro Forma "New" GAAP EPS (7-11%) (3-5%) Breakeven
Note: (1) Assumes core deposit intangibles of 5% excluding deposits greater
than $100K. Amortization between 7-10 years sum-of-the-year's digits.
[Logo of SunTrust]