First Union Reports 1999 Operating Earnings of $3.60 Per Share ($3.40 Excluding Special Gains)
CHARLOTTE, N.C., Jan. 14 /PRNewswire/ -- First Union reported 1999 operating earnings of $3.5 billion, or $3.60 per share, including previously disclosed nonrecurring gains of 20 cents per share related to the sale of First Union's interest in Electronic Payment Services, Inc., and the sale of factoring assets. Excluding these one-time gains, earnings amounted to $3.3 billion, or $3.40. Operating earnings of $3.5 billion, or $3.60, compare with operating earnings of $3.7 billion, or $3.77, in 1998. Operating earnings exclude merger-related and restructuring charges of $263 million after-tax, or 27 cents per share, in 1999 and $805 million after-tax, or 82 cents, in 1998.
At December 31, 1999, First Union had assets of $253 billion and stockholders' equity of $17 billion.
In the fourth quarter of 1999, operating earnings were $846 million, or 86 cents per share, compared with $993 million, or $1.00, in the fourth quarter of 1998. The fourth quarter of 1999 excluded merger-related and restructuring charges of $4 million after tax, with no impact to earnings per share, compared with $136 million, or 13 cents per share, in the fourth quarter of 1998.
Operating earnings in 1999 represent a return on average stockholders' equity of 21.60 percent and a return on average assets of 1.51 percent. Fourth quarter 1999 operating earnings represent a return on average stockholders' equity of 19.78 percent and a return on average assets of 1.38 percent.
"1999 ended with strong fee and net interest income growth, coupled with stable credit quality and net charge-offs of 0.52 percent of loans. Our return on equity and net charge-off ratios rank among the best in the industry," said Edward E. Crutchfield, First Union's chairman and chief executive officer. "In addition, customer service issues experienced in connection with the CoreStates merger have essentially been resolved.
"We are in the strongest position ever to deliver value for clients and customers," he added. "The strength of our transformational business model is clear in the contribution to fee and other income from First Union Securities and the strong sales performance in our General Bank."
Fee income as a percent of total revenue, excluding securities transactions, was 48 percent in 1999 compared with 45 percent in 1998.
First Union President Ken Thompson added, "We continue to see a growing number of customers who choose to aggregate all of their assets - investments as well as deposits - with First Union. We're particularly pleased with the growth in investment products sold through the General Bank in 1999, with commission income up 27 percent from 1998. Consumer loans and prime equity lines sold through our financial centers and First Union Direct also were a bright spot. Loan production in our three key focus areas - direct installment, prime equity and small business loans - rose 43 percent from $10.1 billion last year to $14.5 billion this year.
"We continue to be enthusiastic about the progress of our online banking initiatives," Thompson said. "We ended the year with more than 1.2 million online retail customers, 20,000 online brokerage customers and 29,000 online business customers."
In 1999 First Union Securities (encompassing Capital Markets and Capital Management) generated a 37 percent increase in fee income to $4.1 billion compared with $3.0 billion in 1998. In addition to very strong internal growth, these results include $190 million in brokerage fee income from EVEREN Capital Corporation. This acquisition, which was accounted for as a purchase, was completed on October 1, 1999, and created the nation's sixth largest retail brokerage company (which is part of First Union Securities). First Union has more than 6,600 registered representatives in 2,700 retail offices in 41 states.
Capital Markets revenue growth was primarily driven by strong merchant banking gains and trading revenue. In addition, M&A, loan syndications, high yield and third-party asset securitizations continued to show market share gains and increasing contributions to financial results.
Capital Management revenue growth was strong across all business lines, with exceptional growth in retail brokerage and CAP accounts. Assets under management increased 11 percent to $170 billion, which included mutual fund assets that reached a record $80 billion. CAP accounts increased from 430,000 in 1998 to 603,000 in 1999, and CAP assets increased from $38 billion in 1998 to $56 billion in 1999.
Corporate-wide expenses, excluding merger-related and restructuring charges, amounted to $8.5 billion in 1999. Expenses in 1999 include approximately $200 million from the purchase of EVEREN Capital Corporation.
Credit quality continued to be stable. Net charge-offs were 0.52 percent of average net loans, compared with 0.48 percent in the year-ago period. Nonperforming assets as a percentage of net loans and foreclosed properties were 0.79 percent in 1999 compared with 0.63 percent in 1998.
First Union paid a dividend of $1.88 per share in 1999, a 19 percent increase from $1.58 in 1998.
Also highlighting the year-end was superior execution on Y2K projects, leading to very high customer service quality levels in all delivery channels. The cost associated with this effort was substantially below reported Y2K expenses among banking industry peers.
First Union (NYSE: FTU), with $253 billion in assets at December 31, 1999, is a leading provider of financial services to 16 million retail and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices in 12 East Coast states and the District of Columbia and full-service brokerage offices in 41 states. Online banking products and services can be accessed through www.firstunion.com .
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 1999 filings with the SEC. |
