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 30, 2001
[Logo of SunTrust Banks, Inc.]
Contacts:
Investors Media George Sard/
Gary Peacock Barry Koling Debbie Miller/Denise DesChenes
SunTrust SunTrust Citigate Sard Verbinnen
404-658-4879 404-230-5268 212-687-8080
For Immediate Release
May 30, 2001
SUNTRUST UPDATES INVESTMENT COMMUNITY;
MOVING AHEAD WITH SUPERIOR PROPOSAL TO MERGE WITH WACHOVIA
Files Federal Reserve Application And Amended Preliminary
Proxy Statement; Will Solicit Wachovia Shareholders To
Vote Against First Union Transaction On August 3
ATLANTA, GA -- SunTrust Banks, Inc. (NYSE: STI) today told investors it is
moving ahead with its proposal to merge with Wachovia Corporation (NYSE:
WB) and that it is filing the required application with the Federal Reserve
today and has refiled its preliminary proxy statement to solicit Wachovia
shareholders to vote against the First Union/Wachovia transaction at a
special shareholder meeting on August 3, 2001. SunTrust plans to mail its
proxy statement to Wachovia shareholders as soon as it is permitted to do
so by the Securities and Exchange Commission.
In a conference call with the investment community today, Phil Humann,
SunTrust Chairman, President and Chief Executive Officer, said SunTrust
believes its proposal is superior in many ways to the First Union/Wachovia
transaction, despite the fact that First Union and Wachovia have amended
their transaction three times since SunTrust made its proposal. SunTrust's
proposal offers:
o Higher current value: SunTrust's proposal offers a current premium. At
yesterday's closing prices, SunTrust's proposal offers Wachovia
shareholders $2.08 per share more than the First Union/Wachovia
transaction, or additional total value of approximately $437 million.
o Stronger currency: SunTrust offers Wachovia shareholders a demonstrably
stronger currency than First Union. SunTrust has delivered stronger price
performance and higher total returns to shareholders than First Union over
the past 1, 5 and 10 years.
o Faster earnings growth: Based on historical results and analyst 2001
estimates, SunTrust's five-year compound annual growth rate in core
earnings per share was 12% (adjusted for stock splits and excluding
non-recurring items and merger-related restructuring charges) compared to
-4% for First Union on the same basis.
o Simpler and better dividend: SunTrust believes its proposal offers a
simpler and better dividend. In addition to increasing the per share
annual dividend on its common stock to $2.22 so Wachovia shareholders
would receive on a pro forma basis the same $2.40 annual dividend they
currently receive, the SunTrust proposal provides the opportunity to
share in its dividend growth. SunTrust has raised its dividend every
year for the past 16 years and never cut it -- and has significant
additional capacity for dividend increases. First Union proposes two
alternatives to supplement its per share annual dividend of $1.92 on a
pro forma basis - either a special dividend of $0.48 per share that
applies for only one year or a complex new preferred stock whose
workings First Union and Wachovia have not fully disclosed.
o Lower integration risk: SunTrust believes its proposal offers lower
integration risk. First Union has estimated higher cost savings of $890
million, 78% higher than SunTrust's more conservative estimate of $500
million. The First Union proposal will result in 3,000 more job losses and
125-150 more branch closures, which SunTrust believes will lead to greater
disruption for customers, employees and communities.
o Stronger capital position: SunTrust believes the tangible common ratio
is the most appropriate measure of capital strength, and on this basis
SunTrust will have a stronger capital position than First Union.
SunTrust's estimated pro forma tangible common ratio will be 5.63%,
well above First Union's 4.78%.
o Superior credit quality: SunTrust has a history of credit quality
superior to First Union and far better credit quality today. As of
March 31, 2001, the most recent statistics available, SunTrust's net
charge-off ratio was .38%, well below First Union's .53%, and a
non-performing asset ratio of .52%, far better than First Union's
1.30%.
Mr. Humann stated, "Our goal today is to set the record straight
and make sure Wachovia shareholders have facts, not promises or
projections, upon which to base their decision about which of two competing
merger proposals is superior. Wachovia shareholders do have a choice. We
have been gratified by the positive reaction to our proposal and are
strengthened in our conviction it is better for all Wachovia constituents -
shareholders, employees, customers and communities. In our view, the simple
reality remains that SunTrust is offering a higher current value, a
stronger currency, a history of faster earnings growth, a simpler and
better dividend, lower integration risk, a stronger capital position, and
superior credit quality. That is the message we will be taking to Wachovia
shareholders and we have confidence they will respond positively."
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.
This release 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 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 website
(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 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 site. 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.