- The Washington Times - Wednesday, August 1, 2001

CHARLOTTE, N.C. (AP) First Union Corp. shareholders gave their blessing yesterday to a proposed merger with Wachovia Corp., voting overwhelmingly to support the deal to create the nation's fourth-largest bank.

More than 95 percent of the shareholders represented at the meeting at the Adam's Mark Hotel agreed to the $14.5 billion deal, the company said. The group represented nearly 88 percent of the Charlotte bank's stock.

The support of First Union shareholders was a foregone conclusion; bank executives didn't have to answer a single question from hundreds of shareholders at the 45-minute meeting. The hardest part of the deal comes Friday when Wachovia shareholders will vote on the First Union bid, which has the backing of the Winston-Salem bank's board of directors.

Wachovia Chairman and Chief Executive Officer L.M. "Bud" Baker Jr. attended yesterday's meeting and got a warm ovation when he was introduced by First Union Chairman and Chief Executive Officer Ken Thompson.

"This is a company to be dreamed about," Mr. Thompson said after the meeting. "I wake up at night worried that this isn't going to happen.

"After three months, I am even more convinced about this than I was on the day we announced this deal," he said. "This is a blockbuster."

Wachovia shareholders also are weighing an unsolicited, competing $15.4 billion proposal from SunTrust Banks Inc. On Friday, they can vote either to accept or reject the First Union plan. No action can be taken on the SunTrust offer.

Mr. Baker said after the First Union meeting that he is looking forward to his bank's annual meeting.

"I plan to talk to shareholders by phone. We will push right to the end," he said. "We need our shareholders to understand how important it is to cast their vote. Under North Carolina law, if they fail to vote, it is counted as a 'no' vote."

In his remarks to shareholders, Mr. Thompson said the company had made significant progress toward completing the regulatory-approval process. And he went over First Union's recent financial performance.

In its most recent earnings period, First Union beat analysts' expectations with second-quarter profits from operations of $649 million, bolstering the bank's argument that it is best-suited to take over Wachovia.

First Union on Thursday reported earnings of 66 cents a share from ongoing operations, exceeding the 63 cents per share expected by analysts surveyed by Thomson Financial/First Call. Those results have bolstered the bank's stock price in recent weeks.

"Every measure that should have gone up went up," he said. "Those that should have gone down went down."

First Union and SunTrust, based in Atlanta, have waged a fierce proxy battle all summer over the right to buy Wachovia.

The First Union-Wachovia deal has gained steam in recent weeks with the endorsement of two shareholder-advisory firms and the refusal of North Carolina Business Court Judge Ben Tennille to block the marriage.

First Union shares yesterday gained 13 cents to $35.40 on the New York Stock Exchange. Wachovia was at $71.01 per share, up 30 cents, and SunTrust was at $69.41, up 27 cents.

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