FIRST UNION CORPORATION $172.5 MILLION PREFERRED STOCK SHELF REGISTRATION RATED 'BBB+'
FIRST UNION CORPORATION $172.5 MILLION PREFERRED STOCK SHELF
REGISTRATION RATED 'BBB+'
CHICAGO, Dec. 26 /PRNewswire/ -- Duff & Phelps Credit Rating Co. today assigned a preliminary rating of 'BBB+' (Triple B Plus) to First Union Corporation's (NYSE: FTU) $172.5 million preferred stock shelf registration. This rating is the same as that applied to the outstanding preferred stock of First Union. Duff & Phelps rates First Union's senior debt 'A' (Single A) and subordinated debt 'A-' (Single A Minus). The lower preferred stock rating reflects the preferred stock's junior position within the capital structure relative to the senior and subordinated debt.
The rating recognizes the underlying strengths of First Union's attractive regional franchise despite recent deterioration in performance mainly as a result of weakening in local and national real estate markets. First Union's five-state, southeastern U.S. network was enhanced in September when it won the bidding for the two failed banks of Southeast Banking Corporation. The acquisition added approximately $10 billion in assets and elevated First Union to the second largest bank in Florida with a 20 percent deposit market share. The integration of these banks into First Union's existing Florida operation will produce substantial cost savings, while provisions in the agreement with the Federal Deposit Insurance Corporation will insulate First Union from loan problems in the acquired banks.
While the Southeast transaction will provide significant long-term benefits, First Union's recent performance reflects the instability in real estate markets and the sluggish economy. Third quarter earnings equaled $68 million, 0.74 percent return on assets, compared with a return of 0.75 percent in the second quarter of 1991 and 0.87 percent in the third quarter of 1990. Nonperforming assets totaled $1.27 billion at Sept. 30, 1991, or 3.84 percent of total loans and other real estate compared with $1.17 billion, 4.40 percent at mid-year 1991. Real estate-related loans represented about 69 percent of nonperforming assets at Sept. 30, 1991. The loan loss reserve was adequate at 1.93 percent of loans and 71 percent of nonaccrual and restructured loans at the close of the third quarter. Average stockholders' equity equaled 6.63 percent of average assets in the third quarter of 1991 compared with 5.86 percent at the close of the quarter, reflecting the acquisition of Southeast Banking Corporation's banks.
First Union ranks among the 15 largest U.S. bank holding companies with assets of approximately $46 billion. First Union operates banks in North Carolina, South Carolina, Georgia, Tennessee and Florida, and 273 nonbanking offices in 36 states.
/CONTACT: Charles J. Orabutt of Duff & Phelps, 312-368-3153/
(FTU) CO: First Union Corp. ST: North Carolina IN: FIN SU: RTG FC -- NY010 -- 5289 12/26/91 12:17 EST