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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994 -- Commission File Number 1-6523
NATIONSBANK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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North Carolina
56-0906609
(STATE OF INCORPORATION) (IRS
EMPLOYER IDENTIFICATION NO.)
NationsBank Corporate Center
Charlotte, North
Carolina 28255
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
704 / 386-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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TITLE OF EACH CLASS NAME OF
EACH EXCHANGE ON WHICH REGISTERED
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Common Stock
New York Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
8 3/8% Sinking Fund Debentures, due 1999
New York Stock Exchange
7 3/4% Debentures, due 2002
American Stock Exchange
8 1/2% Notes, due 1996
New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or in any amendment to
this Form
10-K.
Aggregate market value of shares of voting stock held by all persons, other than
shares beneficially owned by persons who may be deemed to be affiliates (as
defined in SEC Rule 405), is approximately $13,934,641,000 computed by reference
to the closing price of Common Stock of $50.00 per share on March 15, 1995, on
the Composite Tape, as reported in published financial sources, and a stated
price of $42.50 for the ESOP Convertible Preferred Stock, Series C.
Of the registrant's only class of Common Stock, there were 276,477,155 shares
outstanding as of February 28, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
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DOCUMENT OF THE
REGISTRANT FORM 10-K REFERENCE LOCATIONS
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1994 Annual Report to
Shareholders PARTS I, II
and IV
1995 Proxy
Statement
PART III
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PART I
ITEM 1. BUSINESS
GENERAL
The registrant is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "Act"), with its principal assets being the
stock of its subsidiaries. Through its banking subsidiaries (the "Banks") and
its various non-banking subsidiaries, the registrant provides banking and
banking-related services, primarily throughout the Southeast and Mid-Atlantic
states and Texas. The principal executive offices of the registrant are located
at NationsBank Corporate Center in Charlotte, North Carolina 28255.
ACQUISITIONS
On February 28, 1994, the registrant merged with Corpus Christi National
Bank ("CCNB") of Corpus Christi, Texas, which had assets at the closing date of
$687 million. The registrant acquired all the outstanding capital stock of CCNB
by exchanging 2.5 shares of its common stock for each share of CCNB common stock
outstanding. As a result, the registrant issued 2.6 million shares of common
stock, for a total consideration of approximately $62 million.
On August 4, 1994, the registrant completed an acquisition from California
Federal Savings Bank of 43 banking centers in Florida and one banking center in
Georgia, including their deposits, at a purchase price of approximately $160
million. Deposits acquired approximated $3.9 billion.
On September 30, 1994, the registrant's mortgage banking subsidiary
completed the acquisition of Express America Holdings Corporation's mortgage
servicing operations based in Scottsdale, Arizona, including rights to service
approximately $6.4 billion of mortgage loans. The purchase price approximated
$85 million.
On October 31, 1994, the registrant's mortgage banking subsidiary acquired
Cypress Financial Corporation, Rancho Santa Margarita Mortgage Corporation and
RSM Funding Corporation, which combined had 22 offices in California and
Arizona. The combined servicing portfolios were approximately $1.3 billion. The
purchase price approximated $28 million.
On November 4, 1994, the registrant completed the acquisition of
Consolidated Bank, a Miami, Florida-based banking company with 12 banking
centers. As of October 31, 1994, Consolidated Bank had assets of approximately
$570 million.
On November 7, 1994, the registrant and Gartmore Capital Management, a
subsidiary of Gartmore plc, entered a joint venture agreement to provide
international investment management and advisory services to United States
customers. The joint venture is expected to begin operations in the second
quarter of 1995.
On November 9, 1994, the registrant completed the acquisition of South
Carolina based RHNB Corporation ("RHNB"), the parent company of Rock Hill
National Bank. As of October 31, 1994, RHNB and its subsidiary had assets of
approximately $256 million. The registrant issued 881,000 shares of common stock
in exchange for all of the outstanding shares of RHNB, for a total consideration
of approximately $43 million.
On November 15, 1994, the registrant purchased Dean Witter, Discover &
Co.'s partnership interest in NationsSecurities. As of such date,
NationsSecurities became wholly-owned and managed by the registrant.
On February 22, 1995, the registrant's mortgage banking subsidiary entered
into an agreement with Source One Mortgage Services Corporation to purchase a
$10 billion residential mortgage servicing portfolio at a purchase price of
approximately $190 million. This transaction is subject to certain regulatory
conditions and other customary closing conditions and is expected to be
completed on March 31, 1995.
On February 23, 1995, the registrant's mortgage banking subsidiary entered
into an agreement with KeyCorp and Key Bank of New York to purchase the
residential mortgage servicing business of KeyCorp Mortgage Inc. The acquired
assets will include primarily a $25 billion residential mortgage servicing
portfolio, for which the registrant's subsidiary will pay approximately $350
million, a mortgage servicing operation employing about 500 people and other
servicing-related assets, for which this subsidiary will pay approximately $150
million. This transaction is subject to certain regulatory conditions and other
customary closing conditions and is expected to be completed on March 31, 1995.
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As part of its operations, the registrant regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, the registrant regularly analyzes the values of, and submits bids for,
the acquisition of customer-based funds and other liabilities and assets of such
financial institutions and other businesses. As a general rule, the registrant
publicly announces such material acquisitions when a definitive agreement has
been reached.
OPERATIONS
The registrant provides a diversified range of banking and certain
non-banking financial services and products through its various subsidiaries.
The registrant manages its business activities through three major groups: the
General Bank, the Global Finance Group (formerly named the Institutional Group)
and the Financial Services Group. Table 2 (page 26) and the narrative comments
under the caption "Customer Group Review" (pages 27 and 30) in the registrant's
1994 Annual Report to Shareholders are hereby incorporated by reference.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including trust and private banking operations, the
origination and servicing of home mortgage loans, the issuance and servicing of
credit cards (through a Delaware subsidiary) and certain insurance services. The
General Bank also offers full service brokerage services and discount brokerage
services for its customers through subsidiaries of the registrant. As of
December 31, 1994, the General Bank had approximately 1,929 banking offices
located in the States of Florida, Georgia, Kentucky, Maryland, North Carolina,
South Carolina, Tennessee, Texas and Virginia and the District of Columbia. The
registrant had average deposits in 1994 of approximately $94 billion, of which
$78 billion related to the General Bank. Average deposits of the General Bank by
state jurisdictions were approximately: Maryland, Virginia and D.C. ($19
billion); Texas ($18 billion); Florida ($15 billion); North and South Carolina
($11 billion); Georgia ($7 billion); and Tennessee and Kentucky ($4 billion).
The financial products and trust and private banking segments of the General
Bank had $4 billion of average deposits in 1994. The General Bank also provides
fully automated, 24-hour cash dispensing and depositing services throughout the
states in which it is located, through approximately 2,100 automated teller
machines.
The Global Finance Group provides to domestic and international customers
comprehensive corporate banking and investment banking services, including loan
syndication, treasury management and leasing; underwriting, trading or
distributing a wide range of securities (including bank-eligible securities and,
to a limited extent, bank-ineligible securities as authorized by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") under
Section 20 of the Glass-Steagall Act); and options, futures, forwards and swaps
on certain interest rate and commodity products, and spot and forward foreign
exchange contracts. The Global Finance Group provides its services through
various domestic offices as well as offices located in London, Frankfurt,
Singapore, Mexico City, Grand Cayman, Nassau, Tokyo, Osaka, Paris and Hong Kong.
In addition to these offices, the Global Finance Group has loan production
offices located in New York City, Chicago, Los Angeles, Denver and Birmingham.
The Financial Services Group consists of NationsCredit Corporation,
primarily a consumer finance subsidiary, and Greyrock Capital Group Inc.
(formerly named Nations Financial Capital Corporation), primarily a commercial
finance subsidiary. NationsCredit Corporation, which has approximately 300
offices located in 32 states, provides consumer and retail loan programs and
also offers inventory financing to manufacturers, importers and distributors.
Greyrock Capital Group Inc., which has approximately 79 offices located in 24
states, engages in commercial equipment leasing and makes commercial loans for
debt restructuring, merger and acquisition, real estate financing, equipment
acquisition and working capital purposes; it also acquires consumer loans
secured by automobiles and real estate.
GOVERNMENT SUPERVISION AND REGULATION
GENERAL
As a registered bank holding company, the registrant is subject to the
supervision of, and to regular inspection by, the Federal Reserve Board. The
Banks are organized as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller"). The Banks are also subject to regulation by the
Federal Deposit Insurance Corporation (the
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"FDIC") and other federal regulatory agencies. In addition to banking laws,
regulations and regulatory agencies, the registrant and its subsidiaries and
affiliates are subject to various other laws and regulations and supervision and
examination by other regulatory agencies, all of which directly or indirectly
affect the operations and management of the registrant and its ability to make
distributions. The following discussion summarizes certain aspects of those laws
and regulations that affect the registrant.
Under the Act, the activities of the registrant, and those of companies
which it controls or in which it holds more than 5% of the voting stock, are
limited to banking or managing or controlling banks or furnishing services to or
performing services for its subsidiaries, or any other activity which the
Federal Reserve Board determines to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. In making such
determinations, the Federal Reserve Board is required to consider whether the
performance of such activities by a bank holding company or its subsidiaries can
reasonably be expected to produce benefits to the public such as greater
convenience, increased competition or gains in efficiency that outweigh possible
adverse effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. Generally, bank
holding companies, such as the registrant, are required to obtain prior approval
of the Federal Reserve Board to engage in any new activity not previously
approved by the Federal Reserve Board or to acquire more than 5% of any class of
voting stock of any company.
The Act also requires bank holding companies to obtain the prior approval
of the Federal Reserve Board before acquiring more than 5% of any class of
voting stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking and Branching Act"), a bank holding company
will be able to acquire banks in states other than its home state beginning
September 29, 1995. Until such provisions are effective, interstate acquisitions
by bank holding companies will be subject to current Federal law, which provides
that no application to acquire shares of a bank located outside of North
Carolina (the state in which the operations of the Banks were principally
conducted on the date the registrant became subject to the Act) may be approved
by the Federal Reserve Board unless such acquisition is specifically authorized
by the laws of the state in which the bank whose shares are to be acquired is
located.
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, thereby creating interstate branches, beginning June 1,
1997. Under such legislation, each state has the opportunity either to "opt out"
of this provision, thereby prohibiting interstate branching in such states, or
to "opt in" at an earlier time, thereby allowing interstate branching within
that state prior to June 1, 1997. Furthermore, pursuant to the Interstate
Banking and Branching Act, a bank is now able to open new branches in a state in
which it does not already have banking operations, if such state enacts a law
permitting such DE NOVO branching.
As previously described, the registrant regularly evaluates merger and
acquisition opportunities, and it anticipates that it will continue to evaluate
such opportunities in light of the new legislation.
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies. In 1995, several bills have been introduced in
Congress that would have the effect of broadening the securities underwriting
powers of bank holding companies and, possibly, permitting bank holding
companies to engage in nonfinancial activities. The likelihood and timing of any
such proposals or bills and the impact they might have on the registrant and its
subsidiaries, however, cannot be determined at this time.
CAPITAL AND OPERATIONAL REQUIREMENTS
The Federal Reserve Board, the Comptroller and the FDIC have issued
substantially similar risk-based and leverage capital guidelines applicable to
United States banking organizations. In addition, those regulatory agencies may
from time to time require that a banking organization maintain capital above the
minimum levels, whether because of its financial condition or actual or
anticipated growth. The narrative comments under the caption "Capital Resources
and Capital Management" (page 48) set forth in the 1994 Annual Report to
Shareholders of the registrant are hereby incorporated by reference.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
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undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-capital standards for
safety and soundness relating generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 capital ratio of at least 6 percent, a total capital ratio of at
least 10 percent and a leverage ratio of at least 5 percent and not be subject
to a capital directive order. An "adequately capitalized" institution must have
a Tier 1 capital ratio of at least 4 percent, a total capital ratio of at least
8 percent and a leverage ratio of at least 4 percent, or 3 percent in some
cases. Under these guidelines, each of the Banks is considered adequately or
well capitalized.
Banking agencies have recently adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. That
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have proposed amendments to
existing risk-based capital regulations to provide for the consideration of
interest rate risk (when the interest rate sensitivity of an institution's
assets does not match the sensitivity of its liabilities or its
off-balance-sheet position) in the determination of a bank's minimum capital
requirements. Those proposals, while still under consideration, would require
banks with interest rate risk in excess of defined thresholds to maintain
additional capital beyond that generally required.
DISTRIBUTIONS
The registrant's funds for cash distributions to its shareholders are
derived from a variety of sources, including cash and temporary investments. The
primary source of such funds, however, is dividends received from its banking
subsidiaries. The amount of dividends that each Bank may declare in a calendar
year without approval of the Comptroller is the Bank's net profits for that
year, as defined by statute, combined with its net retained profits, as defined,
for the preceding two years. In addition, from time to time the registrant
applies for, and may receive, permission from the Comptroller for one or more of
the Banks to declare special dividends. In 1995, the Banks can initiate dividend
payments, without prior regulatory approval, of up to $1.0 billion plus an
additional amount equal to their net profits for 1995 up to the date of any such
dividend declaration.
In addition to the foregoing, the ability of the registrant and the Banks
to pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under FDICIA as described
above. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of the registrant, its shareholders and its
creditors to participate in any distribution of the assets or earnings of its
subsidiaries is further subject to the prior claims of creditors of the
respective subsidiaries.
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SOURCE OF STRENGTH
According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to each subsidiary bank and to
commit resources to support each such subsidiary. This support may be required
at times when a bank holding company may not be able to provide such support. In
the event of a loss suffered or anticipated by the FDIC -- either as a result of
default of a banking or thrift subsidiary of the registrant or related to FDIC
assistance provided to a subsidiary in danger of default -- the other banking
subsidiaries of the registrant may be assessed for the FDIC's loss, subject to
certain exceptions.
ADDITIONAL INFORMATION
The following information set forth in the 1994 Annual Report to
Shareholders of the registrant is hereby incorporated by reference:
Table 3 (pages 28 and 29) for average balance sheet amounts, related
taxable-equivalent interest earned or paid, and related average yields
earned and rates paid.
Tables 3 (pages 28 and 29) and 4 (page 31) and the narrative comments
under the caption "Net Interest Income" (pages 30 to 32) for changes in
taxable-equivalent interest income and expense for each major category of
interest-earning assets and interest-bearing liabilities.
The narrative comments under the caption "Securities" (pages 37 and
38) and Note 3 (pages 64 and 65) of the Notes to Consolidated Financial
Statements for information on the book values, maturities and weighted
average yields of the securities (by category) of the registrant.
Tables 8 (page 36), 9 (page 37) and 20 (page 47) for distribution of
loans and leases, selected loan maturity data and interest-rate risk.
Table 14 (page 42), the narrative comments under the caption
"Nonperforming Assets" (pages 43 and 44), and Note 1 (pages 62 and 63) of
the Notes to Consolidated Financial Statements for information on the
nonperforming assets of the registrant. The narrative comments under the
captions "Concentrations of Credit Risk" (pages 44 and 45) and "Loans and
Leases" (page 38) and Tables 15, 16 and 17 (pages 43 and 44) for a
discussion of the characteristics of the loan and lease portfolio.
Tables 12 (page 40) and 13 (page 41), the narrative comments under the
captions "Provision for Credit Losses" (page 32) and "Allowance for Credit
Losses" (pages 42 and 43) and Note 1 (page 62) of the Notes to Consolidated
Financial Statements for information on the credit loss experience of the
registrant.
Tables 3 and 10 (pages 28 and 29 and page 38, respectively) and the
narrative comments under the caption "Deposits" (page 38) for deposit
information.
"Six-Year Consolidated Statistical Summary" (page 79) for return on
assets, return on equity and dividend payout ratio for 1989 through 1994,
inclusive.
Table 11 (page 39) and Note 7 (pages 68 and 69) of the Notes to
Consolidated Financial Statements for information on the short-term
borrowings of the registrant.
All tables, graphs, charts, summaries and narrative on pages 1, 25
through 55, and 78 through 79 for additional data on the consolidated
operations of the registrant and its majority-owned subsidiaries.
COMPETITION
The activities in which the registrant, its non-banking subsidiaries and
the Banks engage are highly competitive. Generally, the lines of activity and
markets served involve competition with other banks and non-bank financial
institutions, such as investment banking firms, brokerage firms, mutual funds
and insurance companies, as well as other entities which offer financial
services, located both within and without the United States. The methods of
competition center around various factors, such as customer services, interest
rates on loans and deposits, lending limits and location of offices.
The commercial banking business in the various local markets served by the
registrant's non-banking subsidiaries and the Banks is highly competitive. The
non-banking subsidiaries and the Banks compete with
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other commercial banks, savings and loan associations, finance companies and
other businesses which provide similar services. The non-banking subsidiaries
and the Banks actively compete in commercial lending activities with local,
regional and international banks and non-bank financial organizations, some of
which are larger than certain of the non-banking subsidiaries and the Banks. In
its consumer lending operations, the non-banking subsidiaries and the Banks'
competitors include other banks, savings and loan associations, credit unions,
regulated small loan companies and other non-bank organizations offering
financial services. In the investment banking and brokerage business, the
registrant's non-banking subsidiaries compete with other banking and investment
banking firms, brokerage firms and mutual funds. The registrant's mortgage
banking subsidiary competes with commercial banks, savings and loan
associations, government agencies, mortgage brokers and other non-bank
organizations offering mortgage banking services. In the trust business, the
Banks compete with other banks, investment counselors and insurance companies in
national markets for institutional funds and corporate pension and profit
sharing accounts. The Banks also compete with other banks, insurance agents,
financial counselors and other fiduciaries for personal trust business. The
non-banking subsidiaries and the Banks also actively compete for funds. A
primary source of funds for the Banks is deposits, and competition for deposits
includes other deposit taking organizations, such as commercial banks, savings
and loan associations and credit unions, as well as money market mutual funds.
The non-banking subsidiaries and the Banks also actively compete for funds in
the open market.
The registrant's ability to expand into additional states remains subject
to various federal and state laws. See "Government Supervision and
Regulation -- General" for a more detailed discussion of interstate branching
legislation and certain state legislation.
EMPLOYEES
At December 31, 1994, the registrant and its subsidiaries had 61,484 full
time equivalent employees. Of the foregoing employees, 35,401 were employed by
the General Bank, 5,199 were employed by the Global Finance Group, 2,643 were
employed by the Financial Services Group, 13,860 were employed by NationsBanc
Services, Inc. (a subsidiary providing operational support services to the
registrant and its subsidiaries) and the remainder were employed by the
registrant holding company and the registrant's other banking and operating
subsidiaries.
ITEM 2. PROPERTIES
The principal offices of the registrant are located in the 60-story
NationsBank Corporate which is Center in Charlotte, North Carolina which is
owned by a subsidiary of the registrant. The registrant occupies approximately
512,000 square feet at market rates under a lease which expires in 2002, and
approximately 593,000 square feet of office space is available for lease to
third parties at market rates. At December 31, 1994, approximately 96 percent
was occupied by the registrant or subject to existing third party leases or
letters of intention to lease.
On January 3, 1995, NationsBank of North Carolina, N.A. merged with
NationsBank of South Carolina, N.A. to form NationsBank, N.A. (Carolinas)
("NationsBank Carolinas"). The principal offices of NationsBank Carolinas are
located in leased space in the 40-story NationsBank Plaza, Charlotte, North
Carolina. NationsBank Carolinas is the major tenant of the building with
approximately 648,000 square feet of the net rentable space, of which
approximately 459,000 square feet of space is under a lease which expires in
2009 and the remaining space is under leases of shorter duration.
The principal South Carolina offices of NationsBank Carolinas are located
in approximately 93,000 square feet of leased space in the NationsBank Tower in
Columbia, under a lease which expires in 1995 and is in the process of being
renewed. NationsBank Carolinas, through subsidiaries, owns partnership interests
in the building and the underlying land. In addition, NationsBank Carolinas
maintains offices in approximately 81,000 square feet of leased space in
NationsBank Plaza in Columbia under a lease that expires in 1999. NationsBank
Carolinas has four five-year renewal options on this space.
The principal offices of NationsBank of Texas, N.A. ("NationsBank Texas")
are located in approximately 667,000 square feet of leased space in the 72-story
NationsBank Plaza in Dallas. NationsBank Texas is the major tenant of the
building under a lease which expires in 2001 with renewal options through 2011.
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The principal offices of NationsBank of Florida, N.A. ("NationsBank
Florida") are located in approximately 273,000 square feet of leased space in
the NationsBank Plaza in downtown Tampa. The lease is on a staggered schedule
such that the upper floors expire in 1996 while the lower floors and branch bank
expire in 2000. NationsBank Florida has four five-year renewal options on this
space.
The principal offices of NationsBank of Georgia, N.A. ("NationsBank
Georgia") are located in leased space in the 55-story NationsBank Plaza in
Atlanta. The registrant, through a subsidiary, is a partner in CSC Associates,
L.P., a partnership that was formed with Cousins Properties Incorporated for the
development and ownership of the office tower. NationsBank Georgia is the major
tenant of the building with approximately 579,000 square feet of the net
rentable space, under a lease that expires in 2012. NationsBank Georgia has
three ten-year renewal options on this space. Of the approximately 656,000
remaining square feet, 417,000 square feet has been leased to third parties,
with 239,000 remaining square feet available for lease to third parties at
market rates.
On March 8, 1995, NationsBank of Virginia, N.A. merged with NationsBank,
N.A. to form NationsBank, N.A. The principal offices of NationsBank, N.A. are
located in approximately 383,000 square feet of space in NationsBank Center in
Richmond, Virginia, a facility that is owned by NationsBank, N.A. The remaining
approximately 152,000 square feet are leased to a third party tenant.
The principal Maryland offices of NationsBank, N.A. are located in
approximately 145,000 square feet of leased space in the Rockledge Executive
Center in Bethesda under a lease that expires in 2002. NationsBank, N.A. has two
five-year renewal options on this space. The approximately 6,500 square feet of
space remaining is occupied by a third party under a sub-lease with NationsBank,
N.A. The sub-lease, which is at market rates, expires in April 1997 with one
five-year renewal option.
The principal offices of NationsBank of Tennessee, N.A. ("NationsBank
Tennessee") are located in approximately 220,000 square feet of leased space in
NationsBank Plaza in Nashville under a lease that expires in 2012. NationsBank
Tennessee has two ten-year and one five-year renewal options on this space.
The principal offices of NationsCredit are located in approximately 136,000
square feet of space in Allentown, Pennsylvania in a facility that is owned by
NationsCredit. In addition, NationsCredit has approximately 300 leased premises
around the country.
The principal offices of Greyrock Capital Group Inc. are located in
approximately 42,880 square feet of leased space in Canterbury Green in
Stamford, Connecticut, under a lease which expires in 1997. Greyrock Capital
Group Inc., through subsidiaries or branch offices, leases space in the
following states: Alabama, Arizona, California, Florida, Georgia, Hawaii,
Illinois, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Nevada,
New Jersey, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas,
Virginia, Washington and Wisconsin.
As of December 31, 1994, the registrant and its subsidiaries conducted
their banking and bank-related activities in both leased and owned facilities
throughout the jurisdictions in which the Banks are located, as follows:
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APPROXIMATE APPROXIMATE
LEASED OWNED
FACILITIES FACILITIES
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North Carolina and South Carolina 365 166
Texas 180 150
Florida 249 251
Virginia, Maryland and D.C. 423 234
Georgia 113 155
Tennessee 98 76
Delaware 2 0
Kentucky 7 3
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ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, the registrant and its subsidiaries are
routinely defendants in or parties to a number of pending and threatened legal
actions and proceedings, including several actions brought on behalf of various
classes of claimants. In certain of these actions and proceedings substantial
money damages are asserted against the registrant and its subsidiaries and
certain of these actions and proceedings are based on alleged violations of
consumer protection, securities, banking and other laws. Management believes,
based upon the advice of counsel, that these actions and proceedings and losses,
if any, resulting from the final outcome thereof, will not be material in the
aggregate to the registrant's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders in the fourth quarter
of the registrant's fiscal year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The principal market on which the registrant's Common Stock (the "Common
Stock") is traded is the New York Stock Exchange. The registrant also listed
certain of its shares of Common Stock for trading on the Pacific Stock Exchange
and on the Tokyo Stock Exchange. The high and low sales prices of Common Stock
on the Composite Tape, as reported in published financial sources, for each
quarterly period indicated below are as follows:
<TABLE>
<CAPTION>
QUARTER HIGH LOW
<S> <C> <C> <C>
1993 first $ 58 $ 49 1/2
second 57 7/8 45
third 53 5/8 48 1/4
fourth 53 1/4 44 1/2
1994 first 50 7/8 44 3/8
second 57 3/8 44 1/2
third 56 47 1/8
fourth 50 3/4 43 3/8
</TABLE>
As of December 31, 1994, there were 105,774 record holders of Common Stock.
During 1993 and 1994, the registrant paid dividends on the Common Stock on a
quarterly basis, which aggregated $1.64 per share in 1993 and $1.88 per share in
1994. For additional information regarding the registrant's ability to pay
dividends, see "Government Supervision and Regulation -- Distributions." The
seventh paragraph of Note 7 (page 69) and Note 10 (page 70) of the Notes to
Consolidated Financial Statements in the registrant's 1994 Annual Report to
Shareholders are hereby incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in Table 1 (page 25) in the registrant's 1994
Annual Report to Shareholders is hereby incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All of the information set forth under the captions "Management's
Discussion and Analysis -- 1994 Compared to 1993" (pages 25 through 53),
"Management's Discussion and Analysis -- 1993 Compared to 1992" (pages 54 and
55), "Report of Management" (page 56) and all tables, graphs and charts
presented under the foregoing captions, in the 1994 Annual Report to
Shareholders of the registrant is hereby incorporated by reference.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the 1994 Annual Report to
Shareholders of the registrant is hereby incorporated by reference:
The Consolidated Financial Statements and Notes to Consolidated Financial
Statements of NationsBank Corporation and Subsidiaries, together with the report
thereon of Price Waterhouse LLP dated January 13, 1995 (pages 57 through 77);
the unaudited information presented in Table 22 (page 50); and the narrative
comments under the caption "Fourth Quarter Review" (page 51).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting
and financial disclosure as defined by Item 304 of Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information set forth under the caption "Election of Directors" on pages 3
through 11 of the definitive 1995 Proxy Statement of the registrant furnished to
shareholders in connection with its Annual Meeting to be held on April 26, 1995
(the "1995 Proxy Statement") with respect to the name of each nominee or
director, that person's age, positions and offices with the registrant, business
experience, directorships in other public companies, service on the registrant's
Board and certain family relationships, and information set forth under the
caption "Compliance with Section 16(a) of the Securities Exchange Act of 1934"
on page 14 of the 1995 Proxy Statement with respect to Section 16 matters, is
hereby incorporated by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to the Instructions to Form 10-K and Item 401(b) of Regulation
S-K, the name, age and position of each executive officer of the registrant are
listed below along with such officer's business experience during the past five
years. Officers are appointed annually by the Board of Directors at the meeting
of directors immediately following the annual meeting of shareholders. There are
no arrangements or understandings between any officer and any other person
pursuant to which any officer was selected.
Fredric J. Figge, II, age 58, Chairman, Corporate Risk Policy of the
registrant and of the Banks. Mr. Figge was named Chairman, Corporate Risk Policy
in October, 1993 and prior to that time served as Chairman, Credit Policy of the
registrant and of the Banks. He first became an officer in 1987.
James H. Hance, Jr., age 50, Vice Chairman and Chief Financial Officer of
the registrant. Mr. Hance was named Chief Financial Officer in August, 1988,
also served as Executive Vice President from March, 1987 to December 31, 1991
and was named Vice Chairman in October, 1993. He first became an officer in
1987. He also serves as a director of NationsBank, N.A., NationsBank Carolinas,
NationsBank Tennessee and various other subsidiaries of the registrant.
Kenneth D. Lewis, age 47, President of the registrant. Mr. Lewis was named
to his present position in October, 1993. Prior to that time, from June, 1990 to
October, 1993 he served as President of the registrant's General Bank and from
August, 1988 to June, 1990, he served as President of NationsBank Texas. He
first became an officer in 1971. Mr. Lewis also serves as a director of
NationsBank, N.A., NationsBank Florida, NationsBank Georgia and NationsBank
Texas.
Hugh L. McColl, Jr., age 59, Chairman of the Board and Chief Executive
Officer of the registrant and Chief Executive Officer of the Banks. He first
became an officer in 1962. Mr. McColl was Chairman of the registrant from
September, 1983 until December 31, 1991, and was re-appointed Chairman on
December 31, 1992. He also serves as a director of the registrant and
NationsBank Texas.
Marc D. Oken, age 48, Executive Vice President and Principal Accounting
Officer of the registrant. He first became an officer in 1989.
James W. Thompson, age 55, Vice Chairman of the registrant and Chairman of
NationsBank East. Mr. Thompson was named Vice Chairman in October, 1993, and as
Chairman of NationsBank East on
9
<PAGE>
December 31, 1991. He first became an officer in 1963. He also serves as
chairman of the boards of directors of NationsBank, N.A. and NationsBank
Carolinas.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to current remuneration of executive officers,
certain proposed remuneration to them, their options and certain indebtedness
and other transactions set forth in the 1995 Proxy Statement (i) under the
caption "Board of Directors' Compensation" on pages 16 and 17 thereof, (ii)
under the caption "Executive Compensation" on pages 18 and 19 thereof, (iii)
under the caption "Retirement Plans" on pages 19 and 20 thereof, (iv) under the
caption "Deferred Compensation Plan" on pages 20 and 21 thereof, (v) under the
caption "Benefit Security Trust" on page 21 thereof, (vi) under the caption
"Stock Options" on page 22 thereof, (vii) under the caption "Compensation
Committee Interlocks and Insider Participation" on page 29 thereof, and (viii)
under the caption "Certain Transactions" on pages 29 through page 32 thereof,
is, to the extent such information is required by Item 402 of Regulation S-K,
hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The security ownership information required by Item 403 of Regulation S-K
relating to persons who beneficially own more than 5% of the outstanding shares
of Common Stock or ESOP Preferred Stock, as well as security ownership
information relating to directors, nominees and named executive officers
individually and directors and executive officers as a group, is hereby
incorporated by reference to the ownership information set forth under the
caption "Security Ownership of Certain Beneficial Owners and Management" on
pages 12 through 14 of the 1995 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to relationships and related transactions between
the registrant and any director, nominee for director, executive officer,
security holder owning 5% or more of the registrant's voting securities or any
member of the immediate family of any of the above, as set forth in the 1995
Proxy Statement under the caption "Compensation Committee Interlocks and Insider
Participation" on page 29 and under the caption "Certain Transactions" on pages
29 through 32 thereof, is, to the extent such information is required by Item
404 of Regulation S-K, hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
a. The following documents are filed as part of this report:
<TABLE>
<CAPTION>
PAGE IN
ANNUAL
REPORT*
<S>
<C>
<C>
(1) Financial Statements:
Report of Independent
Accountants....................................................... 57
Consolidated Statement of Income for the three years ended
December 31,
1994..................................................................... 58
Consolidated Balance Sheet at December 31, 1994 and
1993................................ 59
Consolidated Statement of Cash Flows for the three years ended
December 31,
1994..................................................................... 60
Consolidated Statement of Changes in Shareholders' Equity for
the three years ended
December 31,
1994..................................................................... 61
Notes to Consolidated Financial
Statements.............................................. 62-77
* Incorporated by reference from the indicated pages of the 1994
Annual Report to
Shareholders.
(2) All schedules are omitted because they are not applicable or the
required
</TABLE>
10
<PAGE>
<TABLE>
<S>
<C>
<C>
information is shown in the financial statements or notes thereto.
</TABLE>
b. The following reports on Form 8-K have been filed by the registrant
during the quarter ended December 31, 1994:
Current Report on Form 8-K dated September 28, 1994 and filed
October 3, 1994, Item 5.
Current Report on Form 8-K dated December 20, 1994 and filed
December 22, 1994, Items 5 and 7.
c. The exhibits filed as part of this report and exhibits incorporated
herein by reference to other documents are listed in the Index to
Exhibits to this Annual Report on Form 10-K (pages E-1 through E-5,
including executive compensation plans and arrangements which are
identified separately by asterisk).
With the exception of the information herein expressly incorporated by
reference, the 1994 Annual Report to Shareholders and the 1995 Proxy Statement
are not to be deemed filed as part of this Annual Report on Form 10-K.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NATIONSBANK CORPORATION
Date: March 30, 1995 By: */s/ JAMES H. HANCE, JR.
JAMES H. HANCE, JR.
VICE CHAIRMAN AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE
TITLE DATE
<C>
<S> <C>
*/s/ HUGH L. MCCOLL, JR. Chairman of the Board
and March 30, 1995
Chief Executive Officer
(HUGH L. MCCOLL, JR.)
*/s/ JAMES H. HANCE, JR. Vice Chairman
and March 30, 1995
Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
*/s/ MARC D. OKEN Executive Vice
President March 30, 1995
(Principal Accounting
Officer)
(MARC D. OKEN)
*/s/ RONALD W. ALLEN
Director March 30, 1995
(RONALD W. ALLEN)
*/s/ WILLIAM M. BARNHARDT
Director March 30, 1995
(WILLIAM M. BARNHARDT)
*/s/ THOMAS M. BELK
Director March 30, 1995
(THOMAS M. BELK)
*/s/ THOMAS E. CAPPS
Director March 30, 1995
(THOMAS E. CAPPS)
*/s/ R. EUGENE CARTLEDGE
Director March 30, 1995
(R. EUGENE CARTLEDGE)
*/s/ CHARLES W. COKER
Director March 30, 1995
(CHARLES W. COKER)
*/s/ THOMAS G. COUSINS
Director March 30, 1995
(THOMAS G. COUSINS)
*/s/ ALAN T. DICKSON
Director March 30, 1995
(ALAN T. DICKSON)
*/s/ W. FRANK DOWD, JR.
Director March 30, 1995
(W. FRANK DOWD, JR.)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE
TITLE DATE
<C>
<S> <C>
*/s/ A. L. ELLIS
Director March 30, 1995
(A. L. ELLIS)
*/s/ PAUL FULTON
Director March 30, 1995
(PAUL FULTON)
*/s/ L. L. GELLERSTEDT, JR.
Director March 30, 1995
(L. L. GELLERSTEDT, JR.)
*/s/ TIMOTHY L. GUZZLE
Director March 30, 1995
(TIMOTHY L. GUZZLE)
*/s/ E. BRONSON INGRAM
Director March 30, 1995
(E. BRONSON INGRAM)
*/s/ W. W. JOHNSON
Director March 30, 1995
(W. W. JOHNSON)
*/s/ BUCK MICKEL
Director March 30, 1995
(BUCK MICKEL)
*/s/ JOHN J. MURPHY
Director March 30, 1995
(JOHN J. MURPHY)
Director March , 1995
(JOHN C. SLANE)
*/s/ JOHN W. SNOW
Director March 30, 1995
(JOHN W. SNOW)
Director March , 1995
(MEREDITH R. SPANGLER)
Director March , 1995
(ROBERT H. SPILMAN)
*/s/ WILLIAM W. SPRAGUE, JR.
Director March 30, 1995
(WILLIAM W. SPRAGUE, JR.)
*/s/ RONALD TOWNSEND
Director March 30, 1995
(RONALD TOWNSEND)
*/s/ JACKIE M. WARD
Director March 30, 1995
(JACKIE M. WARD)
*/s/ MICHAEL WEINTRAUB
Director March 30, 1995
(MICHAEL WEINTRAUB)
*By: /S/ CHARLES M. BERGER
CHARLES M. BERGER, ATTORNEY-IN-FACT
</TABLE>
II-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
<C>
<C>
1. Not Applicable.
2. Not Applicable.
3. (a) Restated Articles of Incorporation of registrant, as in
effect on the date hereof,
incorporated by reference to Exhibit 3(i) of registrant's
Quarterly Report on Form
10-Q dated August 12, 1994.
(b) Amended and Restated Bylaws of registrant, as in effect
on the date hereof,
incorporated by reference to Exhibit 3(b) of registrant's
Annual Report on Form 10-K
dated March 25, 1992.
4. (a) Specimen certificate of registrant's Common Stock,
incorporated by reference to
Exhibit 4.1 of registrant's Registration No. 33-45542.
(b) Specimen certificate of registrant's ESOP Convertible
Preferred Stock, Series C,
incorporated by reference to Exhibit 4(c) of registrant's
Annual Report on Form 10-K
dated March 25, 1992.
(c) Indenture dated as of March 1, 1974 between registrant
and Manufacturers Hanover
Trust Company, including the form of the Debenture,
pursuant to which registrant
issued its 8 3/8% Sinking Fund Debentures, due 1999,
incorporated by reference to
Exhibit 2 of registrant's Registration No. 2-50151.
(d) Indenture dated as of August 1, 1982 between registrant
and Morgan Guaranty Trust
Company of New York, pursuant to which registrant issued
its 7 3/4% Debentures, due
2002, incorporated by reference to Exhibit 4.2 of
registrant's Registration No.
2-78530.
(e) Indenture dated as of October 1, 1986 between registrant
and Security Pacific
National Trust Company (New York), pursuant to which
registrant issued its 8 1/2%
Notes, due 1996, incorporated by reference to Exhibit 4.1
of registrant's
Registration No. 33-7221.
(f) Indenture dated as of March 30, 1989 between registrant
and The Bank of New York,
including the form of Notes, pursuant to which registrant
issued its 10 1/2%
Subordinated Notes, due 1999, incorporated by reference
to Exhibit 4.2 of
registrant's Registration No. 33-27918.
(g) Indenture dated as of September 1, 1989 between
registrant and The Bank of New York,
pursuant to which registrant issued its 9 3/8%
Subordinated Notes, due 2009; its
10.20% Subordinated Notes, due 2015; its 9 1/8%
Subordinated Notes, due 2001; and its
8 1/8% Subordinated Notes, due 2002, incorporated by
reference to Exhibit 4.1 of
registrant's Registration No. 33-30717.
(h) Indenture dated as of January 1, 1992 between registrant
and BankAmerica Trust
Company of New York, pursuant to which registrant issued
its 6 5/8% Senior Notes, due
1998; and its 5 3/8% Senior Notes, due 1995, incorporated
by reference to Exhibit 4.1
of registrant's Registration No. 33-54784.
(i) Indenture dated as of November 1, 1992 between registrant
and The Bank of New York,
pursuant to which registrant issued its 6 7/8%
Subordinated Notes, due 2005,
incorporated by reference to Exhibit 4.1 of registrant's
Amendment to Application or
Report on Form 8 dated March 1, 1993.
(j) First Supplemental Indenture dated as of July 1, 1993 to
the Indenture dated as of
January 1, 1992 between registrant and BankAmerica
National Trust company (formerly
BankAmerica Trust Company of New York), pursuant to which
registrant issued its
Senior Medium-Term Notes, Series A, B and C; its 4 3/4%
Senior Notes, due 1996; its
5 1/8% Senior Notes, due 1998; its 5 3/8% Senior Notes,
due 2000; and its 7 1/2%
Senior Notes, due 1997, incorporated by reference to
Exhibit 4.1 of registrant's
Report on Form 8-K dated July 6, 1993.
(k) First Supplemental Indenture dated as of July 1, 1993 to
the Indenture dated as of
November 1, 1992 between registrant and The Bank of New
York, pursuant to which
registrant issued its Subordinated Medium-Term Notes,
Series A and B; its 6 1/2%
Subordinated Notes, due 2003; and its 7 3/4% Subordinated
Notes, due 2004,
incorporated by reference to Exhibit 4.4 of registrant's
Report on Form 8-K dated
July 6, 1993.
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
<C>
<C>
(l) Indenture dated as of January 1, 1995 between registrant
and BankAmerica National
Trust Company, pursuant to which registrant issued its
Floating Rate Senior Notes,
due 1998, incorporated by reference to Exhibit 4.1 of
registrant's Registration No.
33-57533.
(m) The registrant has other long-term debt agreements, but
these are not material in
amount. Copies of these agreements will be furnished to
the Commission on request.
5. Not Applicable.
6. Not Applicable.
7. Not Applicable.
8. Not Applicable.
9. None.
10. (a) Limited Partnership Agreement of CSC Associates, L. P.,
between The Citizens and
Southern Corporation and Cousins Properties Incorporated
dated as of September 29,
1989, including Transfer of Partnership Interest between
The Citizens and Southern
Corporation and C&S Premises, Inc. and First Amendment
thereto, both of which are
incorporated by reference to Exhibit 10(ss) of
registrant's Annual Report on Form
10-K dated March 25, 1992; and Second Amendment thereto
dated as of December 31,
1990.
(b) Employment Agreement between registrant and A. L. Ellis,
incorporated by reference to *
Exhibit 2 of registrant's Registration No. 2-88129.
(c) The NationsBank Retirement Savings Plan, as effective
January 1, 1993, incorporated *
by reference to Exhibit 10(d) of registrant's Annual
Report on Form 10-K dated March
30, 1994; and Amendment thereto dated as of December 31,
1993.
(d) Investment Trust Agreement Under The NationsBank
Retirement Savings Plan, as *
effective January 1, 1993, incorporated by reference to
Exhibit 10(e) of registrant's
Annual Report on Form 10-K dated March 30, 1994.
(e) ESOP Trust Agreement Under The NationsBank Retirement
Savings Plan, as effective *
January 1, 1993, incorporated by reference to Exhibit
10(f) of registrant's Annual
Report on Form 10-K dated March 30, 1994.
(f) Ancillary Trust Agreement for the Investment Trust of The
NationsBank Retirement *
Savings Plan, as effective January 1, 1993, incorporated
by reference to Exhibit
10(g) of registrant's Annual Report on Form 10-K dated
March 30, 1994.
(g) Independent Agency Agreement for the Investment Trust of
The NationsBank Retirement *
Savings Plan, as effective January 1, 1993, incorporated
by reference to Exhibit
10(h) of registrant's Annual Report on Form 10-K dated
March 30, 1994.
(h) Description of the 1994 NationsBank Corporate Management
Incentive Plan. *
(i) NationsBank Corporation and Designated Subsidiaries
Directors' Retirement Plan, *
incorporated by reference to Exhibit 10(f) of
registrant's Annual Report on Form 10-K
dated March 27, 1991; and Amendment thereto dated as of
September 28, 1994.
(j) NationsBank Corporation and Designated Subsidiaries
Supplemental Executive Retirement *
Plan; Amendment thereto dated as of June 28, 1989,
incorporated by reference to
Exhibit 10(g) of registrant's Annual Report on Form 10-K
dated March 28, 1990;
Amendment thereto dated as of June 27, 1990, incorporated
by reference to Exhibit
10(g) of registrant's Annual Report on Form 10-K dated
March 27, 1991; Amendment
thereto dated as of July 21, 1991, incorporated by
reference to Exhibit 10(bb) of
registrant's Annual Report on Form 10-K dated March 25,
1992; Amendment thereto dated
as of December 3, 1992 and Amendment thereto dated as of
December 15, 1992, both of
which are incorporated by reference to Exhibit 10(l) of
registrant's Annual Report on
Form 10-K dated March 24, 1993; and Amendment thereto
dated as of September 28, 1994.
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
<C>
<C>
(k) NationsBank Corporation and Designated Subsidiaries
Deferred Compensation Plan for *
Key Employees; Amendment thereto dated as of June 28,
1989, incorporated by reference
to Exhibit 10(h) of registrant's Annual Report on Form
10-K dated March 28, 1990;
Amendment thereto dated as of June 27, 1990, incorporated
by reference to Exhibit
10(h) of registrant's Annual Report on Form 10-K dated
March 27, 1991; Amendment
thereto dated as of July 21, 1991, incorporated by
reference to Exhibit 10(bb) of
registrant's Annual Report on Form 10-K dated March 25,
1992; and Amendment thereto
dated as of December 3, 1992, incorporated by reference
to Exhibit 10(m) of
registrant's Annual Report on Form 10-K dated March 24,
1993.
(l) 1986 Restricted Stock Award Plan of NationsBank
Corporation, as amended, incorporated *
by reference to Exhibit 10(n) of registrant's Annual
Report on Form 10-K dated March
24, 1993.
(m) The NationsBank Pension Plan, as effective January 1,
1993, incorporated by reference *
to Exhibit 10(n) of registrant's Annual Report on Form
10-K dated March 30, 1994; and
Amendments thereto dated as of September 28, 1994,
December 15, 1994 and December 28,
1994.
(n) NationsBank Corporation and Designated Subsidiaries
Supplemental Retirement Plan, *
incorporated by reference to Exhibit 10(o) of
registrant's Annual Report on Form 10-K
dated March 30, 1994; Amendment thereto dated as of June
28, 1989, incorporated by
reference to Exhibit 10(k) of registrant's Annual Report
on Form 10-K dated March 28,
1990; Amendment thereto dated as of June 27, 1990,
incorporated by reference to
Exhibit 10(k) of registrant's Annual Report on Form 10-K
dated March 27, 1991;
Amendment thereto dated as of July 21, 1991, incorporated
by reference to Exhibit
10(bb) of registrant's Annual Report on Form 10-K dated
March 25, 1992; Amendment
thereto dated as of December 3, 1992 and Amendment
thereto dated as of December 4,
1992, both of which are incorporated by reference to
Exhibit 10(p) of registrant's
Annual Report on Form 10-K dated March 24, 1993.
(o) NationsBank Corporation and Designated Subsidiaries
Supplemental Executive Retirement *
Plan for Senior Management Employees; Amendment thereto
dated as of June 28, 1989,
incorporated by reference to Exhibit 10(1) of
registrant's Annual Report on Form 10-K
dated March 28, 1990; Amendment thereto dated as of June
27, 1990, incorporated by
reference to Exhibit 10(1) of registrant's Annual Report
on Form 10-K dated March 27,
1991; Amendment thereto dated as of July 21, 1991,
incorporated by reference to
Exhibit 10(bb) of registrant's Annual Report on Form 10-K
dated March 25, 1992;
Amendment thereto dated as of December 3, 1992 and
Amendment thereto dated as of
December 15, 1992, both of which are incorporated by
reference to Exhibit 10(q) of
registrant's Annual Report on Form 10-K dated March 24,
1993; and Amendment thereto
dated as of September 28, 1994.
(p) Split Dollar Agreement dated as of February 1, 1990
between registrant and Hugh L. *
McColl III, as Trustee for the benefit of Hugh L. McColl,
Jr. and Jane S. McColl,
incorporated by reference to Exhibit 10(s) of
registrant's Annual Report on Form 10-K
dated March 27, 1991.
(q) NationsBank Corporation Benefit Security Trust dated as
of June 27, 1990, *
incorporated by reference to Exhibit 10(t) of
registrant's Annual Report on Form 10-K
dated March 27, 1991; and First Supplement thereto dated
as of November 30, 1992,
incorporated by reference to Exhibit 10(v) of
registrant's Annual Report on Form 10-K
dated March 24, 1993.
(r) The NationsBank Retirement Savings Restoration Plan, as
effective January 1, 1994, *
incorporated by reference to Exhibit 10(t) of
registrant's Annual Report on Form 10-K
dated March 30, 1994.
(s) Employment Arrangement with Fredric J. Figge, II dated
July 27, 1987, incorporated by *
reference to Exhibit 10(tt) of registrant's Annual Report
on Form 10-K dated March
25, 1992.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
<C>
<C>
(t) Business Asset Purchase Agreement dated November 17, 1992
among NationsBanc Financial
Services and the other Purchasers named or to be named
therein and Chrysler First,
Inc. and the other sellers named therein, incorporated by
reference to Exhibit 28.2
of registrant's Report on Form 8-K dated December 2, 1992.
(u) Agreement and Plan of Consolidation between registrant
and MNC Financial, Inc.,
incorporated by reference to Exhibit 28.4 of registrant's
Quarterly Report on Form
10-Q dated August 11, 1992; Amendment thereto dated as of
September 28, 1992,
incorporated by reference to Exhibit 28.1 of registrant's
Report on Form 8-K dated
October 2, 1992; and Amendment thereto dated as of
November 30, 1992, incorporated by
reference to Exhibit 28.6 of registrant's Report on Form
8-K dated December 2, 1992.
(v) NationsBank Corporation Executive Incentive Compensation
Plan, as effective January *
1, 1994; and Amendment thereto dated as of September 28,
1994.
(w) NationsBank Corporation Key Employee Deferral Plan, as
effective October 1, 1994. *
(x) NationsBank Corporation Director Deferral Plan, as
effective January 1, 1995. *
(y) Special Trust Agreement under The NationsBank Pension
Plan, as effective December 31, *
1994.
11. Earnings per share computation.
12. (a) Ratio of Earnings to Fixed Charges.
(b) Ratio of Earnings to Fixed Charges and Preferred Dividends.
13. 1994 Annual Report to Shareholders. This exhibit filed via EDGAR
contains only those
portions of the Annual Report that are incorporated by reference.
14. Not Applicable.
15. Not Applicable.
16. None.
17. Not Applicable.
18. None.
19. Not Applicable.
20. Not Applicable.
21. List of Subsidiaries of Registrant.
22. None.
23. Consent of Price Waterhouse LLP.
24. (a) Power of Attorney.
(b) Corporate Resolution.
25. Not Applicable.
26. Not Applicable.
27. Financial Data Schedule.
28. None.
99. None.
</TABLE>
* Denotes executive compensation plan or arrangements.
E-4
<PAGE>
EXHIBIT 10(a)
SECOND AMENDMENT TO LIMITED PARTNERSHIP AGREEMENT
OF CSC ASSOCIATES, L.P.
THIS SECOND AMENDMENT TO LIMITED PARTNERSHIP AGREEMENT OF CSC ASSOCIATES,
L.P. (the "Second Amendment") is made and entered into as of the 31st day of
December, 1990, by and between COUSINS PROPERTIES INCORPORATED, a Georgia
corporation ("CPI"), as a general partner and as a limited partner, and C&S
PREMISES, INC., a Georgia corporation ("C&S"), as a general partner and as a
limited partner.
WITNESSETH:
WHEREAS, CPI and The Citizens and Southern Corporation ("Parent") entered
into that certain Limited Partnership Agreement of CSC Associates, L.P. (the
"Agreement") on September 29, 1989; and
WHEREAS, Parent transferred its entire interest as a limited partner and as
a general partner to C&S by Transfer of Partnership Interest dated as of
November 30, 1989, and C&S thereby succeeded to all rights of Parent as "C&S"
under the Agreement; and
WHEREAS, CPI and C&S amended the aforesaid Limited Partnershp Agreement by
that certain First Amendment to Limited Partnerhip Agreement of CSC Associates,
L.P. dated August 20, 1990 (said Limited Partnership Agreement, as amended,
being herein referred to as the "Agreement"); and
WHEREAS, CPI and C&S wish to further amend the Agreement in certain
respects as provided herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, obligations and agreements contained herein and in the Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CPI and C&S, intending to be legally bound, do hereby agree
as follows:
1. The terms and words of art used but not specifically defined herein
shall have the meanings ascribed to such terms and words of art in the
Agreement.
2. CPI and C&S acknowledge that a portion of the Tower Site has
already been conveyed to the Partnership and that, as of the date hereof,
the remaining Tower Site is comprised of that portion of the Land more
particularly described on EXHIBIT "A" attached hereto and by reference made
a part hereof.
3. Section 3.2.7 of the Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:
"3.2.7 CALL ON TOWER SITE. C&S shall contribute, or cause to be
contributed, the Tower Site and the Tower to the Partnership by limited
warranty deed, free and clear of all liens, security deeds, claims and
encumbrances other than the Permitted Encumbrances and the deed to
secure debt and security agreement from The Citizens and Southern
National Bank to The First National Bank of Chicago, et al., given to
secure the indebtedness of the Partnership, if same is still
outstanding. Such conveyance of the Tower Site and the Tower to the
Partnership shall be consummated at the office of the Partnership at two
o'clock p.m. on the earlier to occur of (i) December 31, 1992, or (ii)
the date designated by the Managing Partner of the Partnership to C&S,
which notice may be given by the Managing Partner at any time (but not
earlier than fifteen (15) days prior to the Completion Date) and at
least thirty (30) days prior to the designated date for closing set
forth in such notice. In the event the Managing Partner fails to give
written notice of the specific date for the closing, the closing shall
occur at the office of the Partnership at two o"clock p.m. on December
31, 1992, regardless of whether or not the Completion Date has occurred.
The Gross Asset Value of the Tower and the net fair market value of the
Tower shall each be considered to be zero, and C&S shall not be entitled
to any debit or credit to its capital account with respect to its
contribution of the Tower."
4. Exhibit "B" which is currently attached to the Agreement is hereby
deleted in its entirety and the list of Permitted Encumbrances which is
attached as EXHIBIT "B" to this Second Amendment is hereby substituted in
lieu thereof.
<PAGE>
5. Except as expressly amended hereby, the Agreement shall remain in
full force and effect.
6. This Second Amendment shall be binding upon and shall inure to the
benefit of CPI and C&S and their respective legal representatives,
succesors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed under seal by their duly authorized corporate officers, each on the
day, month and year first above written.
"CPI":
COUSINS PROPERTIES INCORPORATED,
a Georgia corporation, as general
partner and as limited partner
By:
Its:
(CORPORATE SEAL)
"C&S":
C&S PREMISES INC.,
a Georgia corporation, as general
partner and as limited partner
By:
Its:
(CORPORATE SEAL)
<PAGE>
CONSENT TO SECOND AMENDMENT TO
LIMITED PARTNERSHIP AGREEMENT OF
CSC ASSOCIATES, L.P.
The undersigned Parent does hereby consent to all of the terms of the
foregoing Second Amendment to Limited Partnership Agreement of CSC Associates,
L.P. (the "Second Amendment") between CPI and C&S and does hereby confirm to and
agree with CPI that the Second Amendment shall not affect or reduce Parent's
continuing liability under the Agreement, as amended, and that Parent shall be
and remain fully liable for all obligations of C&S under the Agreement, as
amended, and under the Transfer of Partnership Interest between Parent and C&S
dated as of November 30, 1989. All terms and words of art used herein as
indicated by the initial capitalization thereof, and not otherwise defined
herein, shall have the same respective meanings designated for such terms and
words of art in the Second Amendment.
Dated as of December 31, 1990.
"PARENT"
THE CITIZENS AND SOUTHERN
CORPORATION,
a Georgia corporation
By: W.T. BAGGETT
Its: SVP
Attest FRANKIE S. HUNTER
Its: ASST. SECRETARY
(Corporate Seal)
FIRST AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT, is executed as of the 31st day of December, 1993 by
NATIONSBANK CORPORATION, a North Carolina corporation with its principal
office and place of business in Charlotte, North Carolina, hereinafter
referred to as "NationsBank";
Statement of Purpose
By Instrument dated December 31, 1992, NationsBank amended and
restated The NationsBank Retirement Savings Plan (the "Plan") effective
January 1, 1993. By this Instrument, NationsBank is amending the Plan to
reflect (i) the Revenue Reconciliation Act of 1993, (ii) the termination of
employment of Participants affected by the sale of certain branch offices
and (iii) the merger of four defined contribution plans into the Plan
effective January 1, 1994. These amendments have been authorized by the
Compensation Committee of the Board of Directors of NationsBank, which
Compensation Committee has the authority to amend the Plan on behalf of all
Participating Employers.
NOW, THEREFORE, for the purposes aforesaid, the Plan, as set forth in
said Instrument dated December 31, 1992, is amended as follows:
1. Section 5.6 of the Plan is amended effective as of January 1, 1993
to read as follows:
"SECTION 5.6. COMPENSATION LIMITATION. In no event shall the amount
of a Participant's compensation taken into account under the Plan for any
Plan Year exceed the limitation of Section 401(a)(17) of the Code. That
limitation is two hundred thousand dollars ($200,000) for Plan Years
beginning before 1994 and one hundred fifty thousand dollars ($150,000) for
Plan Years beginning after 1993.
In applying the limitation of this Section 5.4, the following rules
apply:
(i) The limitation shall be adjusted for cost-of-living adjustments
under Section 401(a)(17) when and as provided by Section 401(a)(17). In
such regard, a Section 401(a)(17)
<PAGE>
cost-of-living adjustment that is in effect for a calendar year applies
to the Plan Year that begins during such calendar year.
(ii) If the Plan Year is changed, then to the extent required by
Section 401(a)(17) the limitation for any resulting Plan Year that is
shorter than twelve (12) months shall be the product obtained by
multiplying the limitation that would otherwise apply by a fraction, the
numerator of which is the number of months in the short Plan Year and the
denominator of which is twelve (12).
(iii) The following rule applies to a Highly Compensated Participant
who is a five percent owner described in Section 15.1(b)(5)(C) of the Plan
or is among the ten (10) Highly Compensated Participants receiving the
greatest Affiliated Group Compensation during the Plan Year: if any family
members of the Highly Compensated Participant also participate in the Plan,
the limitation shall be prorated among the Highly Compensated Participant
and participating family members in proportion to their respective
compensation determined without regard to the limitation. A "family
member" means the Highly Compensated Participant's spouse or any lineal
descendant of the Highly Compensated Participant who has not attained
nineteen (19) years of age before the end of the Plan Year."
2. The following Section 16.5 and Schedule 16.5 attached to this
Instrument are added to the Plan effective as of May 1, 1993:
"SECTION 16.5. SOUTH CAROLINA BRANCH EMPLOYEES: 1993.
(a) General. Effective May 1, 1993 (the "1993 SC Termination Date"),
certain Participants located in certain South Carolina branch offices of
the Participating Employers set forth on Schedule 16.5 that were sold to
various purchasers terminated their employment with the Participating
Employers as the result of such sales (the "1993 SC Affected
Participants"). Notwithstanding any provisions of the Plan to the
contrary, the provisions of this Section 16.5 shall control with respect to
the 1993 SC Affected Participants.
2
<PAGE>
(b) Pre-Tax Employee Contributions. No Pre-Tax Employee Contri-
butions shall be made for the 1993 SC Affected Participants with respect to
any payroll periods that begin after the 1993 SC Termination Date.
(c) Matching Contribution Accounts of 1993 SC Affected Participants.
The Matching Contribution Accounts of the 1993 SC Affected Participants
shall be fully vested and nonforfeitable as of the 1993 SC Termination
Date. The 1993 SC Affected Participants shall not be Participants Eligible
for Matching Contributions for the Plan Year ending December 31, 1993, and
in such regard, no Matching Contributions shall be allocated to their
Matching Contribution Accounts for that Plan Year.
(d) Distribution of Accounts. The 1993 SC Affected Participants
shall be treated as having separated from Service as of the 1993 SC
Termination Date for purposes of determining the time and method of the
Distribution of the Accounts pursuant to the Plan."
3. The following Section 16.6 and Schedule 16.6 attached to this
Instrument are added to the Plan effective as of June 1, 1993:
"SECTION 16.6. NORTH CAROLINA BRANCH EMPLOYEES: 1993.
(a) General. Effective June 1, 1993 (the "1993 NC Termination
Date"), certain Participants located in certain North Carolina branch
offices of the Participating Employers set forth on Schedule 16.6 that were
sold to various purchasers terminated their employment with the Participat-
ing Employers as the result of such sales (the "1993 NC Affected
Participants"). Notwithstanding any provisions of the Plan to the
contrary, the provisions of this Section 16.6 shall control with respect to
the 1993 NC Affected Participants.
(b) Pre-Tax Employee Contributions. No Pre-Tax Employee Contri-
butions shall be made for the 1993 NC Affected Participants with respect to
any payroll periods that begin after the 1993 NC Termination Date.
(c) Matching Contribution Accounts of 1993 NC Affected Participants.
The Matching Contribution Accounts of the 1993 NC Affected Participants
shall be fully vested and nonforfeitable as of the 1993 NC Termination
Date. The 1993 NC Affected Participants
3
<PAGE>
shall not be Participants Eligible for Matching Contributions for the Plan
Year ending December 31, 1993, and in such regard, no Matching Contributions
shall be allocated to their Matching Contribution Accounts for that Plan Year.
(d) Distribution of Accounts. The 1993 NC Affected Participants
shall be treated as having separated from Service as of the 1993 NC
Termination Date for purposes of determining the time and method of the
Distribution of the Accounts pursuant to the Plan."
4. The following Section 16.7 is added to the Plan effective as of
August 1, 1993:
"SECTION 16.7. BLUE RIDGE EMPLOYEES.
(a) General. Effective August 1, 1993 (the "Blue Ridge Termination
Date"), NationsBank of Georgia, N.A. sold to Century South the business
unit known as "Blue Ridge." Certain Participants located at the Blue Ridge
unit terminated their employment with the Participating Employers as a
result of such sale (the "Blue Ridge Affected Participants").
Notwithstanding any provisions of the Plan to the contrary, the provisions
of this Section 16.7 shall control with respect to the Blue Ridge Affected
Participants.
(b) Pre-Tax Employee Contributions. No Pre-Tax Employee Contri-
butions shall be made for the Blue Ridge Affected Participants with respect
to any payroll periods that begin after the Blue Ridge Termination Date.
(c) Matching Contribution Accounts of Blue Ridge Affected
Participants. The Matching Contribution Accounts of the Blue Ridge
Affected Participants shall be fully vested and nonforfeitable as of the
Blue Ridge Termination Date. The Blue Ridge Affected Participants shall
not be Participants Eligible for Matching Contributions for the Plan Year
ending December 31, 1993, and in such regard, no Matching Contributions
shall be allocated to their Matching Contribution Accounts for that Plan
Year.
(d) Distribution of Accounts. The Blue Ridge Affected Participants
shall be treated as having separated from Service as of the Blue Ridge
Termination Date for purposes of determining the time and method of the
Distribution of the Accounts pursuant to the Plan."
4
<PAGE>
5. The following Section 16.8 is added to the Plan effective as of
January 1, 1994:
"SECTION 16.8. MERGER OF THE MNC PLAN.
(a) Merger of the MNC Plan. The MNC Financial 401(k) Plus Savings
Plan (the "MNC Plan") shall merge with and into the Plan effective as of
January 1, 1994. In connection therewith and effective as of that date,
the Trust under the MNC Plan shall merge with and into the Investment Trust
for the Plan, and the assets of the Trust under the MNC Plan shall become
assets of the Plan. The Committee shall have the duty and authority to
direct the Investment Trustee with respect to the merger and consolidation
of the assets of the various investment funds maintained under the Trust of
the MNC Plan on December 31, 1993 with and into the Funds being maintained
by the Investment Trustee under the Investment Trust on January 1, 1994
pursuant to Article XII of the Plan.
(b) Establishment and Investment of Former MNC Plan Accounts.
(1) Establishment of Former MNC Plan Accounts. Effective as of
January 1, 1994, the accounts being maintained for Participants in the MNC
Plan on December 31, 1993 shall be combined with other accounts, or
maintained as separate accounts, under the Plan as follows:
(i) Before-tax Contributions Accounts. A Participant's "Before-tax
Contributions Account" under the MNC Plan shall become the Participant's
Pre-Tax Employee Contribution Account under the Plan effective January 1,
1994.
(ii) Creation of Former MNC Plan Accounts. Effective January 1, 1994,
an Account shall be established under the Plan for each of the accounts
maintained for a Participant under the MNC Plan other than the
Participant's "Before-tax Contributions Account." These Accounts, which
are referred to in the Plan as "Former MNC Plan Accounts," correspond to
the following named accounts under the MNC Plan: After-tax Contributions
Account, Automatic Contributions Account, Company Matching Contributions
Account, Profit Sharing Investment Account and Rollover Account. (See
Section 5.2 of the MNC Plan.) The Committee shall cause to be maintained
such sub-accounts within Former MNC Plan Accounts as
5
<PAGE>
are necessary to limit or restrict in-Service distributions as required by the
Code.
The Committee, however, may from time to time after January 1, 1994 combine
a Participant's Former MNC Plan Accounts with one another or with other
Accounts of the Participant to the extent that the Committee determines
that the combination of Accounts is administratively feasible and permitted
by the Act and the Code.
(2) Investments of Accounts. Except for promissory notes evidencing
Participant loans (see the next paragraph), the Accounts representing a
Participant's interest in the MNC Plan (see Section 16.8(b)(1) of the Plan)
shall be held and invested from time to time in the Funds in accordance
with Participant investment designations pursuant to Section 12.5 of the
Plan.
(3) Investment in Participant Loans. If a loan made to a Participant
under the MNC Plan (or any of its predecessors in interest) is outstanding
on January 1, 1994, the promissory note evidencing such loan shall be held
by the Investment Trustee as a segregated investment allocated to and made
solely for the benefit of the Participant's Account(s) that correspond to
the Participant's account(s) under the MNC Plan that were invested in such
note. The Investment Trustee shall become the successor lender of all such
"earmarked" loans outstanding on January 1, 1994 for all purposes, and the
merger of the MNC Plan into the Plan shall not affect the terms of the
promissory note or the security for the repayment of the promissory note
evidencing such loan. No new loans shall be made to any Participants on or
after January 1, 1994.
(c) Active Participation in the Plan. The following rules shall
apply for the purpose of determining when persons with "Hours of Service"
under the MNC Plan (or any of its predecessor plans) before January 1, 1994
for employment with any participating employer in the MNC Plan (or
predecessor plan) become Participants in the Plan on or after January 1,
1994:
(i) Prior Participants. With respect to persons who had become
"Participants" in the MNC Plan by December 31, 1993 (or had become
participants in any of its predecessor plans):
Covered Employee on January 1, 1994. If the person is a Covered Employee
on January 1,
6
<PAGE>
1994, the person shall become a Participant on that date.
Non-Covered Employee on January 1, 1994. If the person is not a covered
Employee on January 1, 1994 but one or more Accounts are established for
the person pursuant to Section 16.8(b)(1) of the Plan because of the
person's prior plan participation, the person shall become a Participant on
that date for purposes of the investment, administration and distribution
of the Account(s) in accordance with the provisions of the Plan, but the
person shall not be entitled to otherwise participate in the Plan unless
and until the person subsequently becomes a Covered Employee.
Non-Employee on January 1, 1994. In any other case, the person shall
become a Participant if and when the person becomes a Covered Employee
after January 1, 1994.
(ii) Other Employees. With respect to persons who had not become
"Participants" in the MNC Plan by December 31, 1993 (or in any of its
predecessor plans):
Eligible Covered Employee on January 1, 1994. If the person is a Covered
Employee on January 1, 1994 and would have commenced participation in the
MNC Plan on January 1, 1994 had it not merged into the Plan, the person
shall become a Participant on January 1, 1994.
Other situations. Otherwise, the person shall become a Participant when
and as provided in Section 3.2(c) of the Plan (but in no event before
January 1, 1994). For purposes of Section 3.2(c), the person's Periods of
Service and Qualifying Periods of Severance shall include (without
duplication) the following: the person shall be credited with Months of
Service for time prior to January 1, 1994 determined as if MNC Corporation
and its affiliates and predecessor companies had been Participating
Employers in the Plan.
(d) Vesting in Former MNC Plan Accounts and Matching Contribution
Accounts. The Former MNC Plan
7
<PAGE>
Accounts established for a Participant shall be fully Vested. If a
Participant (i) had become a "Participant" in the MNC Plan by December
31, 1993 or (ii) otherwise had any "Hours of Service" under the MNC Plan
(or any of its predecessor plans) before January 1, 1994 for employment
with any participating employer in the MNC Plan (or predecessor plan),
then the Participant's Matching Contribution Account shall be fully Vested.
(e) Distribution of Former MNC Plan Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former MNC Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the MNC
Plan had remained in effect.
Following separation from Service of a Participant, Distributions from
the Participant's Former MNC Plan Accounts shall be made when and as
provided in Section 7.3 and 7.4 of the Plan. Generally, Sections 7.3 and
7.4 require a single lump sum (of cash and/or shares of NationsBank Common
Stock) as a method of payment to Participants and Beneficiaries and require
an immediate commencement for Distributions to Beneficiaries. The
following additional payment rules, however, shall apply with respect to
Participants who participated in the MNC Plan:
(i) Installment method for MNC Plan Participants and their
Beneficiaries. The Participant, or the Participant's Beneficiary if the
Beneficiary is the initial recipient of the Participant's Accounts, may
elect in accordance with procedures established by the Committee for such
purpose to have the Participant's Accounts (including Accounts that are not
Former MNC Plan Accounts) paid by the installment method of Distribution
described in Section 8.4 or Section 8.6 of the MNC Plan (as the case may
be) in lieu of a lump sum. The installment method shall be available only
if the total Vested interest in the Participant's Accounts at the time of
Distribution exceeds three thousand five hundred dollars ($3,500).
(ii) Deferral Election for Certain Beneficiaries. A Beneficiary of a
deceased Participant with Former MNC Plan Accounts may elect, in accordance
with procedures established
8
<PAGE>
by the Committee for such purpose, to defer Distribution from the deceased
Participant's Accounts that are payable to such Beneficiary (including
Accounts that are not Former MNC Plan Accounts) until such later date (if
any) provided in Section 8.6 of the MNC Plan, if the requirements and
conditions of said Section 8.6 are satisfied. In such regard, the
Participant must have died before the commencement of benefits
in order for the Beneficiary to elect a deferral.
(2) Benefit Payments and Progress. The merger of the MNC Plan into
the Plan shall not revoke or suspend any MNC Plan methods of payment
elected before or in progress on January 1, 1994, and any method of payment
in progress under the MNC Plan on January 1, 1994 with respect to a
Participant's accounts thereunder shall continue in effect with respect to
the Participant's resulting Former MNC Plan Accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under the MNC Plan with respect to the Participant's
accounts thereunder shall not be revoked by reason of the merger of the MNC
Plan into the Plan. Such designation shall be effective under the Plan
from and after January 1, 1994 as designating the Beneficiary of all of the
Participant's Accounts, including any resulting Former MNC Plan Accounts,
unless and until the Participant revokes or changes the designation or the
designation otherwise becomes ineffective, in accordance with the terms and
provisions of the Plan."
6. The following Section 16.9 is added to the Plan effective as of
January 1, 1994:
"SECTION 16.9. MERGER OF THE PAC PLAN.
(a) Merger of the PAC Plan. The Portfolio Acceptance Corporation
401(k) Savings Plan (the "PAC Plan") shall merge with and into the Plan
effective as of January 1, 1994. In connection therewith and effective as
of that date, the Trust under the PAC Plan shall merge with and into the
Investment Trust for the Plan, and the assets of the Trust under the PAC
Plan shall become assets of the Plan. The Committee shall have the duty
and authority to direct the Investment Trustee with respect to the merger
and consolidation of the assets of the various investment funds maintained
under the Trust of the PAC Plan on December 31, 1993 with and into the
Funds being maintained by
9
<PAGE>
the Investment Trustee under the Investment Trust on January 1, 1994
pursuant to Article XII of the Plan.
(b) Establishment and Investment of Former PAC Plan Accounts.
(1) Establishment of Former PAC Plan Accounts. Effective as of
January 1, 1994, the accounts being maintained for Participants in the PAC
Plan on December 31, 1993 shall be combined with other accounts, or
maintained as separate accounts, under the Plan as follows:
(i) Employee Elective Accounts. A Participant's "Employee Elective
Account" under the PAC Plan shall become the Participant's Pre-Tax Employee
Contribution Account under the Plan effective January 1, 1994.
(ii) Creation of Former PAC Plan Accounts. Effective January 1, 1994,
an Account shall be established under the Plan for each of the accounts
maintained for a Participant under the PAC Plan other than the
Participant's "Employee Elective Account." These Accounts, which are
referred to in the Plan as "Former PAC Plan Accounts," correspond to the
following named accounts under the PAC Plan: Employer Matching Account and
Rollover Account. (See Section 5.1 of the PAC Plan.) The Committee shall
cause to be maintained such sub-accounts within Former PAC Plan Accounts as
are necessary to limit or restrict in-Service distributions as required by
the Code.
The Committee, however, may from time to time after January 1, 1994 combine
a Participant's Former PAC Plan Accounts with one another or with other
Accounts of the Participant to the extent that the Committee determines
that the combination of Accounts is administratively feasible and permitted
by the Act and the Code.
(2) Investments of Accounts. Except for promissory notes evidencing
Participant loans (see the next paragraph), the Accounts representing a
Participant's interest in the PAC Plan (see Section 16.9(b)(1) of the Plan)
shall be held and invested from time to time in the Funds in accordance
with Participant investment designations pursuant to Section 12.5 of the
Plan.
10
<PAGE>
(3) Investment in Participant Loans. If a loan made to a Participant
under the PAC Plan is outstanding on January 1, 1994, the promissory note
evidencing such loan shall be held by the Investment Trustee as a
segregated investment allocated to and made solely for the benefit of the
Participant's Account(s) that correspond to the Participant's account(s)
under the PAC Plan that were invested in such note. The Investment Trustee
shall become the successor lender of all such "earmarked" loans outstanding
on January 1, 1994 for all purposes, and the merger of the PAC Plan into
the Plan shall not affect the terms of the promissory note or the security
for the repayment of the promissory note evidencing such loan. No new
loans shall be made to any Participants on or after January 1, 1994.
(c) Active Participation in the Plan. The following rules shall
apply for the purpose of determining when persons with "Hours of Service"
under the PAC Plan before January 1, 1994 for employment with any
participating employer in the PAC Plan become Participants in the Plan on
or after January 1, 1994:
(i) Prior Participants. With respect to persons who have become
"Participants" in the PAC Plan by December 31, 1993:
Covered Employee on January 1, 1994. If a person is a Covered Employee on
January 1, 1994, the person shall become a Participant on that date.
Non-Covered Employee on January 1, 1994. If the person is not a Covered
Employee on January 1, 1994 but one or more Accounts are established for
the person pursuant to Section 16.9(b)(1) of the Plan because of the
person's prior plan participation, the person shall become a Participant on
that date for purposes of the investment, administration and distribution
of the Account(s) in accordance with the provisions of the Plan, but the
person shall not be entitled to otherwise participate in the Plan unless
and until the person subsequently becomes a Covered Employee.
Non-Employee on January 1, 1994. In any other case, the person shall
become a Participant if and when the person becomes a Covered Employee
after January 1, 1994.
11
<PAGE>
(ii) Other Employees. With respect to persons who had not become
"Participants" in the PAC Plan by December 31, 1993:
Eligible Covered Employee on January 1, 1994. If the person is a Covered
Employee on January 1, 1994 and would have commenced participation in the
PAC Plan on January 1, 1994 had it not merged into the Plan, the person
shall become a Participant on January 1, 1994.
Other situations. Otherwise, the person shall become a Participant when
and as provided in Section 3.2(c) of the Plan (but in no event before
January 1, 1994). For purposes of Section 3.2(c), the person's Periods of
Service and Qualifying Periods of Severance shall include (without
duplication) the following:
The person shall be credited with Months of Service for time prior to
January 1, 1994 determined as if Portfolio Acceptance Corporation and
its affiliates and predecessor companies had been Participating
Employers in the Plan.
The person shall be credited with twelve (12) Months of Service for
each completed "Eligibility Computation Period" (with 1,000 Hours of
Service) the person had under the PAC Plan as of December 31, 1993.
If the person had in progress on December 31, 1993 a twelve-month
computation period that would be an "Eligibility Computation Period"
under the PAC Plan if the person completed a Year of Service within
it, the person shall be credited with twelve (12) Months of Service
upon the completion of such computation period during 1994 if the
person had completed 1,000 "Hours of Service" under the PAC Plan
during the portion of the computation period that had elapsed by
December 31, 1993.
(d) Vesting in Former PAC Plan Accounts; Vesting Service. A
Participant's Former PAC Plan Account
12
<PAGE>
corresponding to the Participant's "Rollover Account" in the PAC Plan shall
be fully Vested and nonforfeitable. A Participant's Former PAC Plan Account
corresponding to the Participant's "Employer Matching Account" in the PAC
Plan shall be subject to the vesting schedule set forth in Section 6.4(b)(iii)
of the Plan. For purposes of determining the Vesting Service of a Participant
who had become a "Participant" in the PAC Plan by December 31, 1993, the
Participant's Vesting Service shall be the greater of Amount A or Amount B,
where:
Amount A is the Participant's Vesting Service determined under the
applicable provisions of the Plan other than this Section, except that the
person shall be credited with Months of Service for time prior to
January 1, 1994 determined as if Portfolio Acceptance Corporation and its
affiliates and predecessor companies had been Participating Employers in
the Plan.
Amount B is the Participant's "Years of Service" for vesting purposes under
the PAC Plan, determined as if the PAC Plan had remained in effect and
expressed as calendar months.
(e) Distribution of Former PAC Plan Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former PAC Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the PAC
Plan had remained in effect.
Following separation from Service of a Participant, Distributions from
the Participant's Former PAC Plan Accounts shall be made when and as
provided in Section 7.3 and 7.4 of the Plan. Generally, Sections 7.3 and
7.4 require a single lump sum (of cash and/or shares of NationsBank Common
Stock) as a method of payment to Participants and Beneficiaries and require
an immediate commencement for Distributions to Beneficiaries. The
following additional payment rules, however, shall apply with respect to
Participants who participated in the PAC Plan:
(i) Installment and annuity methods for PAC Plan Participants and
their Beneficiaries. The Participant, or the Participant's Beneficiary if
the Beneficiary is the initial recipient of the Participant's Accounts, may
elect in accordance
13
<PAGE>
with procedures established by the Committee for such purpose to have the
Participant's Accounts (including Accounts that are not Former PAC Plan
Accounts) paid by any one of the installment or annuity alternative methods
of Distribution described in Section 9.2 or 9.3 of the PAC Plan (as the case
may be) in lieu of a lump sum. An alternative method shall be available only
if the total Vested interest in the Participant's Accounts at the time of
Distribution exceeds three thousand five hundred dollars ($3,500).
(ii) Deferral Election for Certain Beneficiaries. A Beneficiary of a
deceased Participant with Former PAC Plan Accounts may elect, in accordance
with procedures established by the Committee for such purpose, to defer
Distribution from the deceased Participant's Accounts that are payable to
such Beneficiary (including Accounts that are not Former PAC Plan Accounts)
until such later date (if any) provided in Section 9.3(a) of the PAC Plan,
if the requirements and conditions of said Section 9.3(a) are satisfied.
In such regard, the Participant must have died before the Participant's
"Required Beginning Date" (within the meaning of the PAC Plan) in order for
the Beneficiary to elect a deferral.
(2) Benefit Payments and Progress. The merger of the PAC Plan into
the Plan shall not revoke or suspend any PAC Plan methods of payment
elected before or in progress on January 1, 1994, and any method of payment
in progress under the PAC Plan on January 1, 1994 with respect to a
Participant's accounts thereunder shall continue in effect with respect to
the Participant's resulting Former PAC Plan Accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under the PAC Plan with respect to the Participant's
accounts thereunder shall not be revoked by reason of the merger of the PAC
Plan into the Plan. Such designation shall be effective under the Plan
from and after January 1, 1994 as designating the Beneficiary of all of the
Participant's Accounts, including any resulting Former PAC Plan Accounts,
unless and until the Participant revokes or changes the designation or the
designation otherwise becomes ineffective, in accordance with the terms and
provisions of the Plan."
14
<PAGE>
7. The following Section 16.10 is added to the Plan effective as of
January 1, 1994:
"SECTION 16.10. MERGER OF THE CRT PLANS.
(a) Merger of the CRT Plan. The CRT-MTBC Capital Markets Group
401(k) Savings Plan and the 401(k) Savings Plan of CRT Services, Inc.
(individually a "CRT Plan" and collectively the "CRT Plans") shall merge
with and into the Plan effective as of January 1, 1994. In connection
therewith and effective as of that date, the Trusts under the CRT Plans
shall merge with and into the Investment Trust for the Plan, and the assets
of the Trusts under the CRT Plans shall become assets of the Plan. The
Committee shall have the duty and authority to direct the Investment
Trustee with respect to the merger and consolidation of the assets of the
various investment funds maintained under the Trusts of the CRT Plans on
December 31, 1993 with and into the Funds being maintained by the
Investment Trustee under the Investment Trust on January 1, 1994 pursuant
to Article XII of the Plan.
(b) Establishment and Investment of Former CRT Plan Accounts.
(1) Establishment of Former CRT Plan Accounts. Effective as of
January 1, 1994, the accounts being maintained for Participants in the CRT
Plans on December 31, 1993 shall be combined with other accounts, or
maintained as separate accounts, under the Plan as follows:
(i) Elective Contribution Accounts. A Participant's "Elective
Contribution Account" under a CRT Plan shall become the Participant's
Pre-Tax Employee Contribution Account under a Plan effective January 1,
1994.
(ii) Creation of Former CRT Plan Accounts. Effective January 1, 1994,
an Account shall be established under the Plan for each of the accounts
maintained for a Participant under a CRT Plan other than the Participant's
"Elective Contribution Account." These Accounts, which are referred to in
the Plan as "Former CRT Plan Accounts," correspond to the following named
accounts under the CRT Plan: Rollover Account and Transferred Amount
Account. The Committee shall cause to be maintained such sub-accounts
within Former CRT Plan Accounts as are necessary to limit
15
<PAGE>
or restrict in-Service distributions as required by the Code.
The Committee, however, may from time to time after January 1, 1994 combine
a Participant's Former CRT Plan Accounts with one another or with other
Accounts of the Participant to the extent that the Committee determines
that the combination of Accounts is administratively feasible and permitted
by the Act and the Code.
(2) Investments of Accounts. Except for promissory notes evidencing
Participant loans (see the next paragraph), the Accounts representing a
Participant's interest in a CRT Plan (see Section 16.10(b)(1) of the Plan)
shall be held and invested from time to time in the Funds in accordance
with Participant investment designations pursuant to Section 12.5 of the
Plan.
(3) Investment in Participant Loans. If a loan made to a Participant
under CRT Plan is outstanding on January 1, 1994, the promissory note
evidencing such loan shall be held by the Investment Trustee as a
segregated investment allocated to and made solely for the benefit of the
Participant's Account(s) that correspond to the Participant's account(s)
under the CRT Plan that were invested in such note. The Investment Trustee
shall become the successor lender of all such "earmarked" loans outstanding
on January 1, 1994 for all purposes, and the merger of the CRT Plans into
the Plan shall not affect the terms of the promissory note or the security
for the repayment of the promissory note evidencing such loan. No new
loans shall be made to any Participants on or after January 1, 1994.
(c) Active Participation in the Plan. The following rules shall
apply for the purpose of determining when persons with any "Service" under
the CRT Plans before January 1, 1994 for employment with any participating
employer in a CRT Plan become participants in the Plan on or after
January 1, 1994:
(i) Prior Participants. With respect to persons who had become
"Participants" in a CRT Plan by December 31, 1993:
Covered Employee on January 1, 1994. If a person is a Covered Employee on
January 1, 1994, the person shall become a Participant on that date.
16
<PAGE>
Non-Covered Employee on January 1, 1994. If the person is not a covered
Employee on January 1, 1994 but one or more Accounts are established for
the person pursuant to Section 16.10(b)(1) of the Plan because of the
person's prior plan participation, the person shall become a Participant on
that date for purposes of the investment, administration and distribution
of the Account(s) in accordance with the provisions of the Plan, but the
person shall not be entitled to otherwise participate in the Plan unless
and until the person subsequently becomes a Covered Employee.
Non-Employee on January 1, 1994. In any other case, the person shall
become a Participant if and when the person becomes a Covered Employee
after January 1, 1994.
(ii) Other Employees. With respect to persons who had not become
"Participants" in a CRT Plan by December 31, 1993:
Eligible Covered Employee on January 1, 1994. If the person is a Covered
Employee on January 1, 1994 and would have commenced participation in a CRT
Plan on January 1, 1994 had the CRT Plans not merged into the Plan, the
person shall become a Participant on January 1, 1994.
Other situations. Otherwise, the person shall become a Participant when
and as provided in Section 3.2(c) of the Plan (but in no event before
January 1, 1994). For purposes of Section 3.2(c), the person's Periods of
Service and Qualifying Periods of Severance shall include (without
duplication) the following: the person shall be credited with Months of
Service for time prior to NationsBank's acquisition of the participating
employers in the CRT Plans determined as if those participating employers
had been Participating Employers in the Plan.
(d) Vesting in Former CRT Plan Accounts; Vesting Service. The Former
CRT Plan Accounts established for a Participant shall be fully Vested and
nonforfeitable. For purposes of determining the Vesting Service of a
Participant who had become a "Participant" in a PAC
17
<PAGE>
Plan by December 31, 1993 or who is described in Section 16.10(c)(ii) of the
Plan, the person's Periods of Service and Qualifying Periods of Severance
shall include (without duplication) the following: the person shall be
credited with Months of Service for time prior to NationsBank's acquisition of
the participating employers in the CRT Plans determined as if those
participating employers had been Participating Employers in the Plan.
(e) Distribution of Former CRT Plan Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former CRT Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the CRT
Plans had remained in effect.
Following separation from Service of a Participant, Distributions from
the Participant's Former CRT Plan Accounts shall be made when and as
provided in Section 7.3 and 7.4 of the Plan. Generally, Sections 7.3 and
7.4 require a single lump sum (of cash and/or shares of NationsBank Common
Stock) as a method of payment to Participants and Beneficiaries and require
an immediate commencement for Distributions to Beneficiaries. The
following additional payment rules, however, shall apply with respect to
Participants who participated in the CRT Plan:
(i) Installment and annuity methods for CRT Plan Participants and
their Beneficiaries. The Participant, or the Participant's Beneficiary if
the Beneficiary is the initial recipient of the Participant's Accounts, may
elect in accordance with procedures established by the Committee for such
purpose to have the Participant's Accounts (including Accounts that are not
Former CRT Plan Accounts) paid by any one of the installment or annuity
methods of Distribution described in the CRT Plan in lieu of a lump sum.
An installment or annuity method of payment shall be available only if the
total Vested interest in the Participant's Accounts at the time of
Distribution exceeds three thousand five hundred dollars ($3,500) and only
in the circumstances, and subject to the limitations and restrictions,
provided in the CRT Plan.
(ii) Deferral Election for Certain Beneficiaries. A Beneficiary of a
deceased Participant with Former CRT Plan Accounts may
18
<PAGE>
elect, in accordance with procedures established by the Committee for such
purpose, to defer Distribution from the deceased Participant's Accounts that
are payable to such Beneficiary (including Accounts that are not Former CRT
Plan Accounts) until such later date (if any) provided in the CRT Plan, if the
requirements and conditions of the CRT Plan for delayed distribution are
satisfied. In such regard, the Participant must have died before the
Participant's "required beginning date" under Section 401(a)(9) of the Code
in order for the Beneficiary to elect a deferral.
(2) Benefit Payments and Progress. The merger of the CRT Plans into
the Plan shall not revoke or suspend any CRT Plan methods of payment
elected before or in progress on January 1, 1994, and any method of payment
in progress under a CRT Plan on January 1, 1994 with respect to a
Participant's accounts thereunder shall continue in effect with respect to
the Participant's resulting Former CRT Plan Accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under a CRT Plan with respect to the Participant's
accounts thereunder shall not be revoked by reason of the merger of the CRT
Plan into the Plan. Such designation shall be effective under the Plan
from and after January 1, 1994 as designating the Beneficiary of all of the
Participant's Accounts, including any resulting Former CRT Plan Accounts,
unless and until the Participant revokes or changes the designation or the
designation otherwise becomes ineffective, in accordance with the terms and
provisions of the Plan."
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, has caused this Agreement to be executed by its
duly authorized officer, as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ Mary E. Preslar
Name: Mary E. Preslar
Title: Vice President
19
<PAGE>
SCHEDULE 16.5
South Carolina Branch Offices Covered by Section 16.5
Clearwater
Graniteville
Langley
Wagner
Six Mile
Westminister
Calhoun Falls
<PAGE>
SCHEDULE 16.6
North Carolina Branch Offices Covered by Section 16.6
Benson
Lillington
Stoneville
Wentworth
Pollocksville
1994
NationsBank
Corporate Management Incentive Plan
Description
I. Objective of the Plan
The purpose of this plan is to retain key management of the Corporation
to motivate them to increase shareholders' wealth.
II. Participants
Participants are approved by the Management Compensation Committee.
Participants whose employment is terminated (either by NationsBank
or the participant) prior to receipt of payment will not be eligible
to receive the award. This rule does not apply in cases related to
death, retirement or disability.
III. Determination of the Annual Fund
Funding will be based on a percentage of participants' eligible base
salaries, and the achievement of goals or objectives as determined
at the beginning of the year. Preliminary funding of the pool will be
based on the Corporation's achievement of Return on Equity goals.
(Bullet) If the Corporation achieves a minimum performance level, a pool
will be funded based on a percentage of salaries of all
participants in the plan. If this minimum level of performance
is not achieved, a pool will not be funded. The minimum
performance level is 80% of the Return on Equity goal established
each year.
(Bullet) Upon achievement of the target performance level, a pool will
be funded based on a percentage of salaries of all participants
in the plan.
(Bullet) Performance between the minimum and target levels will be
determined by a mathematical formula.
(Bullet) The pool funding for achievement above target performance will
be determined by the Management Compensation Committee.
The pool as determined above may be adjusted up or down based on the
Corporation's Return on Equity performance and achievement of goals or
objectives as determined by the Management Compensation Committee.
<PAGE>
IV. Funding allocation/Award Determination
Participants will be evaluated on the achievement of specific performance
goals. The Management Compensation Committee has the authority to:
A. Determine the award amount, if any, to eligible participants based
on guidelines or rules deemed appropriate.
B. Allocate among the eligible participants all or any portion of the
pool funded.
C. Reduce or eliminate awards based on a less than acceptable level
of performance.
The participant's award, if any, will be communicated and paid generally
as soon as practical thereafter.
AMENDMENT TO THE
NATIONSBANK CORPORATION AND DESIGNATED SUBSIDIARIES
DIRECTORS' RETIREMENT PLAN
WHEREAS, NationsBank Corporation ("NationsBank") sponsors the
NationsBank Corporation and Designated Subsidiaries Directors' Retirement
Plan (the "Plan") for the benefit of non-employee directors of NationsBank,
NationsBank of North Carolina, N.A. and NationsBank of Florida, N.A.; and
WHEREAS, NationsBank desires to amend the Plan to "freeze" the
eligibility requirements of the Plan with respect to NationsBank of North
Carolina, N.A. and NationsBank of Florida, N.A. to limit eligibility to
those directors of NationsBank of North Carolina, N.A. and NationsBank of
Florida, N.A. who are directors on October 31, 1994; and
WHEREAS, such amendment to the Plan has been authorized and approved
by the Board of Directors of NationsBank pursuant to Article IV of the
Plan;
NOW, THEREFORE, NationsBank does hereby declare that the Plan is
hereby amended effective as of the date hereof as follows:
1. Section 2.1(b) of the Plan is hereby amended to add the following
sentence at the end of Section 2.1(b):
"Notwithstanding any provision in the Plan to the contrary, a
Director of NationsBank of North Carolina, N.A. or NationsBank of
Florida, N.A. who first becomes a Director after October 31, 1994
shall be ineligible for any benefits under this Plan."
2. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, NationsBank, on behalf of the Participating
Employers, has caused this instrument to be executed by its duly authorized
officer as of the 28th day of September, 1994.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley
Executive Vice President
"NationsBank"
2
NCNB CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(as amended and restated effective November 1, 1987)
<PAGE>
TABLE OF CONTENTS
ARTICLE I NAME AND PURPOSE
Section 1.1 Name................................. 2
Section 1.2. Purpose.............................. 2
ARTICLE II CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW
Section 2.1. Construction and Definitions......... 2
Section 2.2. Applicable Law....................... 15
ARTICLE III PARTICIPATION
Section 3.1. General............................. 15
Section 3.2. Eligibility......................... 16
ARTICLE IV BENEFITS
Section 4.1. General.............................. 16
Section 4.2. Normal Retirement.................... 17
Section 4.3. Early Retirement..................... 17
Section 4.4. Delayed Retirement................... 18
Section 4.5. Disability........................... 19
Section 4.6. Death................................ 21
Section 4.7. Adjustment in Benefits............... 25
Section 4.8. Special Benefit...................... 27
Section 4.9. Beneficiary or Beneficiaries......... 28
ARTICLE V PLAN COMMITTEE
Section 5.1. Appointment, Term of Office and
Vacancy........................... 30
Section 5.2. Organization of Plan Committee...... 30
Section 5.3. Powers of the Plan Committee........ 30
Section 5.4. Expenses of Plan Committee.......... 31
ARTICLE VI AMENDMENT AND TERMINATION
Section 6.1. Amendment of the Plan............... 31
Section 6.2. Termination of Plan................. 31
Section 6.3. Effective Date and Procedure for
Amendment or Termination.......... 32
Section 6.4. Effect of Amendment or Termination
on Certain Benefits............... 32
ARTICLE VII MISCELLANEOUS
Section 7.1 Adoption by a Subsidiary
Corporation....................... 33
Section 7.2 Authorization and Delegation to
the Compensation Committee........ 33
<PAGE>
Section 7.3. Spendthrift Clause.................. 34
Section 7.4. Benefits Payable From General
Assets of the Participating
Employers......................... 34
Section 7.5. Allocation of Costs of Benefits
Among the Participating Employers. 35
Section 7.6. Benefits Limited to the Plan........ 35
ARTICLE VIII CLAIMS PROCEDURE
Section 8.1. Claims Procedure.................... 35
<PAGE>
NCNB CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(as amended and restated effective November 1, 1987)
WHEREAS, the NCNB Corporation and Designated Subsidiaries
Supplemental Executive Retirement Plan (the "Plan") is currently
set forth in an instrument of NCNB Corporation and certain of its
subsidiaries (the "Participating Employers") dated October 23,
1985; and
WHEREAS, in the opinion of the Participating Employers, the
Plan should be amended to (i) provide effective January 1, 1989
the full target benefit under the Plan upon a Participant's
attaining age sixty (60) and completing twenty (20) years of
"Creditable Service" under the Plan and (ii) revise and clarify
effective November 1, 1987 certain provisions of the Plan related
to "Disability Retirement" to reflect the adoption of the NCNB
Corporation Long Term Disability Plan; and
WHEREAS, such amendments can best be made by restating the
Plan in its entirety; and
WHEREAS, in Section 6.1 of the Plan the Participating
Employers under the Plan have reserved the right to amend the
Plan at any time by resolution of the Compensation Committee of
the Board of Directors of NCNB Corporation; and
WHEREAS, the execution of this instrument has been
authorized and approved by the Compensation Committee and the
Board of Directors of NCNB Corporation;
<PAGE>
NOW, THEREFORE, NCNB Corporation does hereby declare that
the NCNB Corporation and Designated Subsidiaries Supplemental
Executive Retirement Plan is amended and restated effective as of
November 1, 1987 to read as follows:
ARTICLE I
NAME AND PURPOSE
Section 1.1. Name. The Plan shall be known as the "NCNB
Corporation and Designated Subsidiaries Supplemental Executive
Retirement Plan."
Section 1.2. Purpose. The purpose of the Plan is to
provide certain Employees of the Participating Employers who are
designated as Participants in this Plan with certain benefits in
accordance with the provisions of the Plan.
ARTICLE II
CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW
Section 2.1. Construction and Definitions.
(a) Construction. Article, section and paragraph headings
have been inserted for convenience of reference only in the Plan
and are to be ignored in any construction of the provisions
hereof. If any provision of the Plan shall for any reason be
invalid or unenforceable, the remaining provisions shall
nevertheless be valid, enforceable and fully effective.
(b) Definitions. Whenever used in the Plan, unless the
context clearly indicates otherwise, the following terms shall
have the following meanings:
(1) Assumed Retirement Benefit means, with
respect to a Participant as of any date, the sum of
annual benefits, if any, which would have been payable
to such Participant as of such date under the
<PAGE>
Retirement Plan and the ERISA Supplemental Plan
assuming for such purpose
(A) in the case of a married Participant,
that the Participant had elected to receive such
benefits in the form of a "modified joint and
survivor annuity" with the survivor annuity for
such Participant's spouse being equal to seventy-
five (75%) of the benefit payable during the joint
lives of the Participant and such spouse; and
(B) in the case of an unmarried Participant,
that the Participant had elected to receive such
benefits in the form of a "ten-year certain and
life annuity."
The foregoing assumptions are made solely for the
purpose of determining the benefits, if any, payable
under this Plan, and such assumptions shall be applied
regardless of the actual method of payment used to
provide such Participant's benefits under the
Retirement Plan or the ERISA Supplemental Plan.
(2) Base Salary means, with respect to a Partici-
pant, the "base salary" payable to such Participant
from time to time as remuneration for hours of
employment by a Participating Employer determined
without regard to (i) any deferrals pursuant to the
Deferred Compensation Plan, (ii) any salary reduction
pursuant to the Flexible Benefits Plan, and (iii) any
salary reduction pursuant to the Thrift Plan.
<PAGE>
(3) Beneficiary means the person(s) or
entity(ies) designated by a Participant or the
provisions of the Plan to receive such benefits as may
become payable to such person(s) or entity(ies) in
accordance with the provisions of the Plan.
(4) Bonus(es) means, with respect to a Partici-
pant, any bonus(es) payable to such Participant
pursuant to
(A) the Management Incentive Compensation
Plan, and
(B) any other similar incentive compensation
plan of the Participating Employers approved for
purposes of this Plan by the Compensation
Committee
determined without regard to any deferrals pursuant to
the Deferred Compensation Plan.
(5) Child or Children means, with respect to a
Participant, each child born to or "adopted" by such
Participant. A person shall be considered "adopted" if
adopted for life and either (i) the final order of
adoption has been entered or (ii) the adoption proceed-
ing has been instituted and the adopted person is in
the custody and possession of the adoptive parent(s)
and final decree is entered within a period not to
exceed three (3) years after the date of the
institution of said adoption proceeding.
<PAGE>
(6) Claim means a claim for benefits under the
Plan.
(7) Claimant means a person making a Claim.
(8) Compensation means, with respect to a
Participant, the Base Salary and Bonus(es), if any,
payable to such Participant from time to time by a
Participating Employer. Compensation shall not include
(A) awards, overtime pay, shift premium, or
other incentive compensation or extra or special
remuneration of any kind which is not a Bonus;
(B) any other sums paid by the Participating
Employers on account of any health, welfare or
group insurance benefits (exclusive of sick pay),
including "Basic Employer Contributions" under the
Flexible Benefits Plan, or on account of reim-
bursement of relocation expenses, regardless of
whether such sums are taxable income to the
Participant; or
(C) any compensation pursuant to any other
employee benefit plan, including without
limitation any sums selected to be received in
cash pursuant to any such plan.
Amounts of Base Salary or Bonus(es) which are deferred
pursuant to the Deferred Compensation Plan or the
subject of salary reduction pursuant to the Flexible
Benefits Plan or the Thrift Plan shall be treated as
Compensation for purposes of this Plan for the calendar
<PAGE>
year in which such amount would have been otherwise
paid to a Participant by a Participating Employer but
for such deferral or salary reduction.
(9) Compensation Committee means the Compensation
Committee of the Board of Directors of NCNB
Corporation.
(10) Creditable Service means, with respect to a
Participant as of any date, the sum of (A) and (B)
where
(A) is such Participant's months of "Credit-
able Service" as of such date determined in accor-
dance with the provisions of the Retirement Plan;
and
(B) is such additional number of months, if
any, determined in the sole and exclusive discre-
tion of the Compensation Committee at the time
such Participant commences participation in the
Plan.
(11) Deferred Compensation Plan means the NCNB
Corporation and Designated Subsidiaries Deferred
Compensation Plan for Key Employees, as amended from
time to time.
(12) Delayed Retirement means, with respect to a
Participant, such Participant's separation from Service
after the Plan Year in which such Participant attains
the Normal Retirement Age.
<PAGE>
(13) Delayed Retirement Benefit means, with
respect to a Participant, an annual amount equal to (A)
minus (B) where
(A) is such Participant's Target Retirement
Benefit (computed on the basis of such Partici-
pant's Final Average Compensation at the time such
Participant attained the Normal Retirement Age);
and
(B) is the sum of such Participant's (i)
Assumed Retirement Benefit and (ii) Social
Security Benefit.
(14) Disability means, with respect to a Partici-
pant, "Disability" as defined in the Long Term
Disability Plan.
(15) Disabled means, with respect to a
Participant, "Disabled" as defined in the Long Term
Disability Plan.
(16) Early Retirement means:
(A) from and after the Effective Date and
prior to January 1, 1989, a Participant's separa-
tion from Service (i) after having attained age
fifty-five (55) and having completed at least one
hundred eighty (180) months of Creditable Service,
or (ii) after having attained age sixty-two (62);
and
(B) from and after January 1, 1989, a
Participant's separation from Service (i) after
<PAGE>
having attained age fifty-five (55) and having
completed at least one hundred eighty (180) months
of Creditable Service, (ii) after having attained
age sixty (60) and having completed at least two
hundred forty (240) months of Creditable Service,
or (iii) after having attained age sixty-two (62).
(17) Early Retirement Benefit means:
(A) from and after the Effective Date and
prior to January 1, 1989 with respect to a
Participant eligible for Early Retirement, an
annual amount equal to (i) minus (ii) where
(i) is such Participant's Target
Retirement Benefit reduced by one-three
hundred sixtieth (1/360) for each of the
first twenty-four (24) months and one-
one hundred eightieth (1/180) for each
additional month in excess of twenty-
four (24) months that the date such
Participant commences receiving such
Participant's Early Retirement Benefit
precedes the month in which such
Participant would have attained age
sixty-two (62); and
(ii) is the sum of such Partici-
pant's (1) Assumed Retirement Benefit
and (2) Social Security Benefit; and
(B) from and after January 1, 1989 with respect
to a Participant eligible for Early Retirement
(i) who has attained age sixty-two
(62) or who has attained age sixty (60)
and completed at least two hundred forty
(240) months of Creditable Service, an
annual amount equal to (aa) minus (bb)
where
(aa) is such Participant's Target
Retirement Benefit; and
<PAGE>
(bb) is the sum of such Partici-
pant's (1) Assumed Retirement Benefit
and (2) Social Security Benefit; and
(ii) who has not attained age sixty-two
(62) or who has not attained age sixty (60)
and completed at least two hundred forty
(240) months of Creditable Service, an annual
amount equal to (aa) minus (bb) where
(aa) is such Participant's Target
Retirement Benefit reduced by one-three
hundred sixtieth (1/360) for each of the
first twenty-four (24) months and one-
one hundred eightieth (1/180) for each
additional month in excess of twenty-
four (24) months that the date such
Participant commences receiving such
Participant's Early Retirement Benefit
precedes the month in which such
Participant would have attained age
sixty-two (62); and
(bb) is the sum of such Partici-
pant's (1) Assumed Retirement Benefit
and (2) Social Security Benefit.
(18) Effective Date means, with respect to the Plan,
October 23, 1985.
(19) Eligible Spouse means, with respect to a deceased
Participant, the person, if any, who was married to such
deceased Participant throughout the entire one (1) year
period ending on the date of such deceased Participant's
death.
(20) Employee means a person employed by any of the
Participating Employers.
(21) ERISA Supplemental Plan means the NCNB Corporation
and Designated Subsidiaries Supplemental Retirement Plan, as
amended from time to time.
<PAGE>
(22) Family Death Benefit means, with respect to a
deceased Participant, an annual amount equal to (A) minus
(B) where
(A) is thirty percent (30%) of such deceased
Participant's Final Average Compensation, and
(B) is the sum of such Participant's (i) Retire-
ment Plan Death Benefit and (ii) Social Security
Benefit.
(23) Family Death Benefit Termination Date means, with
respect to a deceased Participant, the date determined as
follows:
(A) if the deceased Participant is survived by an
Eligible Spouse, the date of the last to occur of the
following
(i) the death of such surviving
Eligible Spouse, or
(ii) the attainment of age twenty-one
(21) by the last Child of such deceased
Participant to attain such age or, if
earlier, the death of the last Child of such
deceased Participant; or
(B) if the deceased Participant is not
survived by an Eligible Spouse, the date of the
attainment of age twenty-one (21) by the last
Child of such deceased Participant to attain such
age or, if earlier, the date of the death of the
last Child of such deceased Participant.
(24) Final Average Compensation means, with
respect to a Participant as of any determination date,
the average of the annual Compensation paid to such
<PAGE>
Participant during the five (5) calendar years of
highest Compensation (which calendar years need not be
consecutive) during the ten (10) calendar years next
preceding the earlier to occur of
(A) the calendar year in which such
Participant attains the Normal Retirement Age; or
(B) such Participant's separation from
Service,
to be determined by dividing the aggregate Compensation
received by the Participant during the appropriate five
(5) calendar years by five (5). If a Participant has
completed less than five (5) calendar years of Service
as hereinabove provided, such Participant's Final
Average Compensation shall be determined by dividing
the aggregate Compensation received by the Participant
during said calendar years by the number of such calen-
dar years.
(25) Flexible Benefits Plan means the NCNB
Corporation and Designated Subsidiaries Flexible
Benefits Plan, as amended from time to time.
(26) Joint and Seventy-Five Percent (75%) Annuity
means an annuity for the life of a Participant with a
survivor annuity for the life of such Participant's
spouse which is seventy-five percent (75%) of the
amount of the annuity payable during the joint lives of
the Participant and such Participant's spouse.
<PAGE>
(27) Long Term Disability Plan means the NCNB
Corporation Long Term Disability Plan, as amended from
time to time.
(28) Long Term Disability Plan Benefit means, with
respect to a Participant, the annual amount of benefits
payable to a Disabled Participant from time to time
pursuant to the provisions of the Long Term Disability
Plan.
(29) Management Incentive Compensation Plan means
the NCNB Corporation Management Incentive Compensation
Plan, as amended from time to time.
(30) Normal Retirement means, with respect to a
Participant, such Participant's separation from Service
after attainment of the Normal Retirement Age.
(31) Normal Retirement Age means, with respect to
a Participant, the attainment of age sixty-five (65).
(32) Normal Retirement Benefit means, with respect
to a Participant, an annual amount equal to (A) minus
(B) where
(A) is such Participant's Target Retirement
Benefit; and
(B) is the sum of such Participant's (i)
Assumed Retirement Benefit and (ii) Social
Security Benefit.
(33) Participant means an Employee who has been
designated a Participant in the Plan as provided in
Section 3.2 of the Plan.
<PAGE>
(34) Participating Employers means:
(A) NCNB Corporation, a North Carolina
corporation;
(B) the following Subsidiary Corporations of
NCNB Corporation:
(i) NCNB National Bank of North
Carolina, a national banking association;
(ii) NCNB South Carolina, a South
Carolina corporation; and
(C) those Subsidiary Corporations of NCNB
Corporation which in the future adopt the Plan pursuant
to the provisions of Section 7.1 hereof.
(35) Plan means the NCNB Corporation and Designated
Subsidiaries Supplemental Executive Retirement Plan, as
amended from time to time.
(36) Plan Committee means the committee described in
Article V hereof.
(37) Retirement means, with respect to a Participant,
such Participant's separation from Service on account of
such Participant's Normal Retirement, Early Retirement or
Delayed Retirement.
(38) Retirement Plan means the NCNB Corporation and
Designated Subsidiaries Retirement Plan and Trust, as
amended from time to time.
(39) Retirement Plan Death Benefit means, with respect
to a deceased Participant, the sum of the annual amount of
death benefits, if any, payable from time to time to such
deceased Participant's surviving spouse pursuant to the
<PAGE>
provisions of the Retirement Plan and the ERISA Supplemental
Plan.
(40) Service means "Service" as defined in the Retire-
ment Plan.
(41) Social Security Benefit means, with respect to a
Participant as of any date, such Participant's "Social
Security Benefit" (expressed as an annual amount) determined
as of such date in accordance with the provisions of the
Retirement Plan (whether or not such Social Security Benefit
is used for purposes of determining such Participant's
benefits under the Retirement Plan).
(42) Subsidiary Corporation means
(A) any corporation more than fifty percent (50%)
of whose outstanding voting capital stock is owned by
NCNB Corporation,
(B) any corporation at least eighty percent (80%)
of whose outstanding voting capital stock and at least
eighty percent (80%) of each class of whose outstanding
non-voting capital stock is owned by a corporation more
than fifty percent (50%) of whose outstanding voting
capital stock is owned by NCNB Corporation; or
(C) any corporation at least eighty percent (80%)
of whose outstanding voting capital stock and at least
eighty percent (80%) of each class of whose outstanding
non-voting capital stock is owned by a corporation
described in subparagraph (B) above.
<PAGE>
(43) Target Retirement Benefit means, with respect to a
Participant as of any date, an annual amount equal to the
product of (A) multiplied by (B) where
(A) is sixty percent (60%) of such Participant's
Final Average Compensation; and
(B) is a fraction [not exceeding one (1)], the
numerator of which is the Participant's months of
Creditable Service as of such date, and the denominator
of which is one hundred eighty (180).
(44) Ten-Year Certain and Life Annuity means a monthly
amount payable to a Participant beginning on the date bene-
fits are to commence under the Plan and continuing on the
last day of each calendar month thereafter for one hundred
twenty (120) consecutive calendar months certain and
thereafter on the last day of each calendar month until the
death of such Participant and providing that in the event
that such Participant shall die prior to the expiration of
the one hundred twenty (120) month-certain period, payments
for the remainder of such period shall be made to such
Participant's Beneficiary.
(45) Thrift Plan means the NCNB Corporation and Desig-
nated Subsidiaries Stock/Thrift Plan and Trust, as amended
from time to time.
Section 2.2 Applicable Law. The Plan shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States to the extent applicable, and to
<PAGE>
the extent such laws are not applicable, by the laws of the State
of North Carolina.
ARTICLE III
PARTICIPATION
Section 3.1. General. No person shall become a Participant
unless or until such person is or becomes an Employee. In
addition, in no event shall any Employee be eligible to partici-
pate in the Plan prior to the Effective Date of the Plan.
Section 3.2. Eligibility. The Compensation Committee, in
its sole and exclusive discretion, shall determine which
Employees shall become Participants. Designation of Employees as
Participants shall be made in such manner as the Compensation
Committee shall determine from time to time.
ARTICLE IV
BENEFITS
Section 4.1. General. In the event a Participant separates
from Service on account of Retirement, such Participant shall
become entitled to the applicable retirement benefit provided for
in Section 4.2, Section 4.3 or Section 4.4. In addition, such
Participant shall become entitled to such Participant's special
benefit, if any, provided for in Section 4.8. In the event a
Participant becomes Disabled prior to the attainment of the
Normal Retirement Age, such Participant shall become entitled to
the benefits, if any, provided for in Section 4.5 and the special
benefit, if any, provided for in Section 4.8. In the event a
Participant separates from Service on account of death while in
Service, (i) the benefits, if any, provided for in Section 4.6(c)
<PAGE>
and (ii) the special benefit, if any, provided for in Section 4.8
shall be paid to the persons or entities entitled to such bene-
fits. In the event a Participant separates from Service for a
reason other than Retirement or death, then the only benefit
payable to such Participant under the Plan shall be the special
benefit, if any, provided for in Section 4.8.
Section 4.2. Normal Retirement. Subject to the provisions
of Section 4.7 and Article VI, a Participant who separates from
Service for a reason other than death following the attainment of
the Normal Retirement Age and prior to the end of the Plan Year
in which such Participant attains the Normal Retirement Age shall
become entitled to such Participant's Normal Retirement Benefit.
If such Participant is unmarried at the time of such
Participant's separation from Service, such Participant's Normal
Retirement Benefit shall be payable in the form of a Ten-Year
Certain and Life Annuity in a monthly amount equal to one-twelfth
(1/12) of the annual amount of such Participant's Normal
Retirement Benefit. If such Participant is married at the time
of such Participant's separation from Service, such Participant's
Normal Retirement Benefit shall be payable in the form of a Joint
and Seventy-Five Percent (75%) Annuity in a monthly amount equal
to one-twelfth (1/12) of the annual amount of such Participant's
Normal Retirement Benefit. A Participant's Normal Retirement
Benefit shall commence and thereafter be paid at the same time as
such Participant's benefits under the Retirement Plan.
Section 4.3. Early Retirement. Subject to the provisions
of Section 4.7 and Article VI, a Participant who separates from
<PAGE>
Service for a reason other than death prior to attaining the
Normal Retirement Age and who is eligible for Early Retirement at
the time of such separation from Service shall become entitled to
such Participant's Early Retirement Benefit. If such Participant
is unmarried at the time of such Participant's separation from
Service, such Participant's Early Retirement Benefit shall be
payable in the form of a Ten-Year Certain and Life Annuity in a
monthly amount equal to one-twelfth (1/12) of the annual amount
of such Participant's Early Retirement Benefit. If such
Participant is married at the time of such Participant's
separation from Service, such Participant's Early Retirement
Benefit shall be payable in the form of a Joint and Seventy-Five
Percent (75%) Annuity in a monthly amount equal to one-twelfth
(1/12) of the annual amount of such Participant's Early
Retirement Benefit. A Participant's Early Retirement Benefit
shall commence and thereafter be paid at the same time as such
Participant's benefits under the Retirement Plan.
Section 4.4. Delayed Retirement. Subject to the provisions
of Section 4.7 and Article VI, a Participant who separates from
Service for a reason other than death after the Plan Year in
which such Participant attains the Normal Retirement Age shall
become entitled to such Participant's Delayed Retirement Benefit.
If such Participant is unmarried at the time of such
Participant's separation from Service, such Participant's Delayed
Retirement Benefit shall be payable in the form of a Ten-Year
Certain and Life Annuity in a monthly amount equal to one-twelfth
(1/12) of the annual amount of such Participant's Delayed
<PAGE>
Retirement Benefit. If such Participant is married at the time
of such Participant's separation from Service, such Participant's
Delayed Retirement Benefit shall be payable in the form of a
Joint and Seventy-Five Percent (75%) Annuity in a monthly amount
equal to one-twelfth (1/12) of the annual amount of such
Participant's Delayed Retirement Benefit. A Participant's
Delayed Retirement Benefit shall commence and thereafter be paid
at the same time as such Participant's benefits under the
Retirement Plan.
Section 4.5. Disability. In the event a Participant
becomes Disabled prior to the attainment of the Normal Retirement
Age, the following provisions shall apply:
(a) Such Participant shall be entitled to receive such
Participant's Long Term Disability Plan Benefit, if any,
provided for under the Long Term Disability Plan and the
special benefit provided for in Section 4.8, if any.
(b) For purposes of determining such Participant's
benefits under this Plan, such Participant's Creditable
Service shall include such Participant's period of Dis-
ability to the extent provided in the Retirement Plan and
such Participant's Final Average Compensation shall be
determined as of the date such Participant became Disabled.
(c) In the event such Participant remains Disabled
until such Participant attains the Normal Retirement Age,
then subject to the provisions of Section 4.7 and Article VI
such Participant shall be entitled to receive such
Participant's Normal Retirement Benefit determined in
<PAGE>
accordance with the provisions of Section 4.2 and Section
4.5(b); provided, however, the amount of such Participant's
Normal Retirement Benefit otherwise payable as determined in
accordance with Section 4.2 and Section 4.5(b) shall be
reduced by such Participant's Long Term Disability Plan
Benefit, if any, payable after such Participant attains the
Normal Retirement Age.
(d) In the event such Participant ceases to be
Disabled for a reason other than death prior to the
attainment of the Normal Retirement Age and such Participant
does not reenter active Service upon the cessation of such
Participant's Disability, then such Participant shall be
deemed to have separated from Service as of the date of the
cessation of such Participant's Disability. If such
Participant is eligible for Early Retirement on the date
such Participant is deemed to have separated from Service,
then subject to the provisions of Section 4.7 and Article VI
such Participant shall become entitled to such Participant's
Early Retirement Benefit determined in accordance with the
provisions of Section 4.3 and Section 4.5(b). If such
Participant is not eligible for Early Retirement on the date
such Participant is deemed to have separated from Service,
then no benefits shall be payable to such Participant under
this Plan except the special benefit, if any, provided for
in Section 4.8.
(e) In the event such Participant ceases to be
Disabled for a reason other than death prior to the
<PAGE>
attainment of the Normal Retirement Age and such Participant
reenters active Service upon the cessation of such
Participant's Disability, then such Participant's Creditable
Service shall include such Participant's period of
Disability to the extent provided in the Retirement Plan and
such Participant shall resume active participation in the
Plan on the date such Participant reenters active Service.
(f) A Participant who is eligible for Early Retirement
at the time such Participant becomes Disabled or who becomes
eligible for Early Retirement while still Disabled in accor-
dance with the provisions of this Section 4.5 shall be
entitled to elect at any time prior to attainment of such
Participant's Normal Retirement Age to receive such Partici-
pant's Early Retirement Benefit determined in accordance
with the provisions of Section 4.3 and Section 4.5(b) as of
the date of such election; provided, however, the amount of
such Participant's Early Retirement Benefit otherwise
payable as determined in accordance with Section 4.3 and
Section 4.5(b) shall be reduced by such Participant's Long
Term Disability Plan Benefit, if any, payable after such
Participant makes such election.
Section 4.6. Death.
(a) Death After Commencement of Benefits. In the event a
Participant dies following the commencement of such Participant's
benefits under the Plan, the benefits, if any, payable after such
Participant's death shall be determined in accordance with the
provisions of such Joint and Seventy-Five Percent (75%) Annuity
<PAGE>
or Ten-Year Certain and Life Annuity, as applicable, pursuant to
which such Participant was receiving or entitled to receive
benefits at the time of such Participant's death.
(b) Death of a Disabled Participant. Except as provided in
Section 4.6(d), in the event (i) a Participant becomes Disabled
prior to the attainment of the Normal Retirement Age and prior to
being eligible for Early Retirement, (ii) such Participant dies
prior to the Normal Retirement Age without recovering from such
Disability, and (iii) such Participant is survived by an Eligible
Spouse or one (1) or more Children under age twenty-one (21) at
the time of the Participant's death, the Eligible Spouse of such
Participant, or such Participant's Beneficiary, as applicable,
shall be entitled to the death benefit provided for in Section
4.6(c)(1). Except as provided in Section 4.6(d), in the event
(i) a Participant becomes Disabled prior to the attainment of the
Normal Retirement Age, but after being eligible for Early Retire-
ment, (ii) such Participant does not elect pursuant to Section
4.5(f) to receive such Participant's Early Retirement Benefit,
(iii) such Participant dies prior to the Normal Retirement Age
without recovering from such Disability, and (iv) such
Participant is survived by an Eligible Spouse or one (1) or more
Children under age twenty-one (21) at the time of the
Participant's death, the Eligible Spouse of such Participant, or
such Participant's Beneficiary, if applicable, shall be entitled
to the death benefit provided for in Section 4.6(c)(2).
(c) Death While in Service. In the event a Participant
dies while in Service, the death benefits, if any, payable
<PAGE>
following such Participant's death, shall be determined in
accordance with the provisions of this Section 4.6(c).
(1) Death Prior to Eligibility for Early Retirement.
Except as provided in Section 4.6(d), in the event a
Participant dies while in Service [or, to the extent
provided in Section 4.6(b), while Disabled] and prior to
such Participant becoming eligible for Early Retirement, the
following provisions shall apply:
(A) In the event the deceased Participant is
survived by an Eligible Spouse, such Eligible
Spouse shall become entitled to such Participant's
Family Death Benefit in a monthly amount equal to
one-twelfth (1/12) of the annual amount of such
Family Death Benefit. Such monthly benefit shall
commence on the last day of the month following
the month in which the Participant dies and
continue through the last day of the month in
which the Family Death Benefit Termination Date
occurs. In the event such Eligible Spouse dies
prior to the Family Death Benefit Termination
Date, such monthly benefit shall be paid to the
estate of such deceased Eligible Spouse through
the last day of the month in which the Family
Death Benefit Termination Date occurs.
(B) In the event the deceased Participant is
not survived by an Eligible Spouse but the
deceased Participant is survived by one (1) or
more Children under age twenty-one (21) at the
time of the Participant's death, the Beneficiary
of the deceased Participant shall become entitled
to such Participant's Family Death Benefit in a
monthly amount equal to one-twelfth (1/12) of the
annual amount of such Family Death Benefit. Such
monthly benefit shall commence on the last day of
the month following the month in which the
Participant dies and continue through the last day
of the month in which the Family Death Benefit
Termination Date occurs.
(C) In the event the deceased Participant is
survived neither by an Eligible Spouse nor by one
(1) or more Children under age twenty-one (21) at
the time of the Participant's death, no death
benefit shall be payable under Section 4.6(c).
<PAGE>
The benefits under this Section 4.6(c)(1) shall be subject
to the provisions of Section 4.7(a).
(2) Death After Eligibility for Early Retirement.
Except as provided in Section 4.6(d), in the event a
Participant dies while in Service [or, to the extent
provided in Section 4.6(b), while Disabled] and after
becoming eligible for Early Retirement, the following
provisions shall apply:
(A) In the event the deceased Participant is
survived by an Eligible Spouse, such Eligible
Spouse shall have the right to irrevocably elect
on or before the last day of the month following
the month in which such Participant dies to
receive
(i) such Participant's Family Death
Benefit in accordance with the provisions of
Section 4.6(c)(1)(A), or
(ii) a monthly annuity for the life of
such Eligible Spouse commencing on the last
day of the month following the month in which
such Participant dies in an amount equal to
the amount which such Eligible Spouse would
have been entitled to receive if the deceased
Participant had separated from Service and
commenced receiving as of the last day of the
month in which death occurred the retirement
benefit to which such Participant was
entitled pursuant to a Joint and Seventy-Five
Percent (75%) Annuity and then the
Participant had died.
The election of the Eligible Spouse pursuant to
this Section 4.6(c)(2)(A) shall be made in such
manner as shall be prescribed by the Plan Commit-
tee. In the event the Eligible Spouse fails to
make the election pursuant to this Section
4.6(c)(2)(A) on or before the last day of the
month following the month in which the Participant
dies, the benefits provided for in Section
4.6(c)(2)(A)(ii) shall apply.
(B) In the event the deceased Participant is
not survived by an Eligible Spouse, but the de-
ceased Participant is survived by one (1) or more
<PAGE>
Children under age twenty-one (21) at the time of
the Participant's death, the Beneficiary of the
deceased Participant shall become entitled to such
Participant's Family Death Benefit in accordance
with the provisions of Section 4.6(c)(1)(B).
(C) In the event the deceased Participant is
survived neither by an Eligible Spouse nor by one
(1) or more Children under age twenty-one (21) at
the time of the Participant's death, no death
benefits shall be payable under this Section
4.6(c).
The benefits under this Section 4.6(c)(2) shall be subject
to the provisions of Section 4.7(a).
(d) Suicide. Notwithstanding the provisions of Section
4.6(b) and Section 4.6(c), in the event a Participant dies as a
result of suicide within twenty-five (25) calendar months of the
calendar month as of which such Participant was designated as a
Participant under Section 3.2, no death benefits shall be payable
pursuant to Section 4.6(c) of the Plan.
(e) Article VI Controlling. The provisions of this Section
4.6 shall be subject to the provisions of Article VI.
Section 4.7. Adjustment in Benefits.
(a) Reduction in Benefits Based on Spouse's Age. In the
event (i) a married Participant's spouse is more than ten (10)
years younger than such Participant at the time such Participant
becomes entitled to commence receiving such Participant's Normal
Retirement Benefit provided for in Section 4.2, Early Retirement
Benefit provided for in Section 4.3 or Delayed Retirement Benefit
provided for in Section 4.4, as applicable, or (ii) an Eligible
Spouse entitled to receive a Family Death Benefit provided for in
Section 4.6(c) is more than ten (10) years younger than the
deceased Participant at the time of such deceased Participant's
<PAGE>
death, the benefit which such Participant is otherwise entitled
to receive (and the survivor annuity of such Participant's
spouse), or the benefit to which such Eligible Spouse is
entitled, as applicable, shall be reduced to an amount determined
by multiplying such benefit by the percentage amount determined
from the table attached hereto as Exhibit A based on the age
difference between such Participant and such Participant's
spouse.
(b) Recalculation of Benefits. A Participant's Assumed
Retirement Benefit, Retirement Plan Death Benefit and Long Term
Disability Plan Benefit can vary from time to time under the
terms of the Retirement Plan, ERISA Supplemental Plan and Long
Term Disability Plan or because of possible future amendments to
such Plans at the election of the Participating Employers or as
may be required by applicable law. As of each date on which any
benefit payable to a Participant (or his spouse or Beneficiary)
under the Retirement Plan, ERISA Supplemental Plan or Long Term
Disability Plan changes for any reason, there shall be a
recalculation of the benefits, if any, payable under this Plan
(based on the assumptions contained herein) to such Participant
(or his spouse or Beneficiary) using the benefits then payable
under the Retirement Plan, ERISA Supplemental Plan and Long Term
Disability Plan as a result of such changes. Such increased or
decreased benefits payable under this Plan shall become effective
at the same time as the change in benefits under the Retirement
Plan, the ERISA Supplemental Plan and the Long Term Disability
Plan. Notwithstanding the provisions of this Section 4.7(b),
<PAGE>
once a Participant's Social Security Benefit is determined for
purposes of determining benefits payable under this Plan, such
benefits shall not be subject to recalculation after benefits
commence under the terms of this Plan due to increases or
decreases in benefits payable from time to time under the Federal
Social Security Act.
Section 4.8. Special Benefit. The Participating Employers
sponsor the Deferred Compensation Plan for the benefit of their
key employees. In the event an Employee of the Participating
Employers who has been designated as eligible to participate in
the Deferred Compensation Plan elects to participate in the
Deferred Compensation Plan by deferring Compensation pursuant to
the terms of the Deferred Compensation Plan, any Compensation
which is deferred pursuant to the Deferred Compensation Plan is
ineligible to be taken into consideration as "compensation" under
the terms of the Thrift Plan for purposes of determining the
maximum amount of a Participant's salary reduction contributions
under the terms of the Thrift Plan. Under the terms of the
Thrift Plan, salary reduction contributions up to six percent
(6%) of "compensation" as defined in the Thrift Plan are eligible
for a fifty percent (50%) "matching contribution" by the
Participating Employers, that is, a "matching contribution" of
three percent (3%) of such Participant's "compensation." To the
extent (i) a Participant in this Plan also participates in the
Deferred Compensation Plan and the Thrift Plan and (ii) such
Participant is contributing at least six percent (6%) of
"compensation" as a salary reduction contribution to the Thrift
<PAGE>
Plan, then any "matching contribution" by the Participating
Employers which such Participant would have received under the
terms of the Thrift Plan (after applying the terms of the Thrift
Plan related to limitations on salary reduction and matching
contributions under Sections 402(g) and 415 of the Internal
Revenue Code of 1986) had such Participant contributed six
percent (6%) of the "Compensation" deferred pursuant to the
Deferred Compensation Plan to the Thrift Plan shall be credited
to a reserve account on the books and records of the
Participating Employers as of the last day of the calendar year
in which such "matching contribution" would have been made by the
Participating Employers under the Thrift Plan. The amount
credited to such account each year shall bear interest from the
first day of such calendar year at the rate of thirteen percent
(13%) compounded annually. Upon a Participant's separation from
Service for any reason or upon a Participant becoming Disabled,
the amount of such reserve account (including any addition for
the year in which separation from Service or Disability occurs)
shall be paid to such Participant (or in the event of such
Participant's death, to such Participant's Beneficiary) in such
manner as the Plan Committee shall determine in its sole and
exclusive discretion over a period of five (5) years following
such Participant's separation from Service or such Participant
becoming Disabled. Interest shall accrue with respect to the
unpaid balance of such reserve account during such payment period
through the last day of the month preceding the month in which
the unpaid balance is paid in full.
<PAGE>
Section 4.9. Beneficiary or Beneficiaries.
(a) Designation or Change of Beneficiary by a Participant.
Each Participant may from time to time designate the person(s) or
entity(ies) to whom the death benefits provided for in Section
4.6(c)(1)(B), Section 4.6(c)(2)(B) and Section 4.8 are to be
paid. A Participant may from time to time change such
Participant's said designation of Beneficiary and upon any such
change, any previously designated Beneficiary's right to receive
any benefits under the Plan shall terminate. In order to be
effective, any designation or change of designation of a
Beneficiary must be made on a form furnished by the Plan
Committee and signed by the Participant and received by the Plan
Committee while the Participant is alive. If a Beneficiary of a
deceased Participant shall survive the deceased Participant but
die prior to the receipt of all benefits payable to said
Beneficiary under the Plan, then such benefits as would have been
payable to said deceased Beneficiary shall be paid to such
Beneficiary's estate at the same time and in the same manner as
such benefits would have been payable to said deceased
Beneficiary.
(b) Beneficiary Designated by the Plan. In the event that
a Participant shall die without having designated a Beneficiary,
or in the event that a Participant shall die having revoked an
earlier Beneficiary Designation without having effectively desig-
nated another Beneficiary, or in the event that a Participant
shall die but the Beneficiary designated by such Participant
shall fail to survive such Participant, then and in any such
<PAGE>
event, the person(s) who shall constitute the Beneficiary of such
deceased Participant shall be determined as follows:
(i) In the event said deceased Participant is
survived by a Child, Children or by issue of a deceased
Child or Children, such surviving Children and
surviving issue of such deceased Children shall share
as Beneficiaries on a per stirpes basis, the issue of a
deceased Child of the deceased Participant to take per
stirpes the same share their parent would have taken if
living.
(ii) In the event said deceased Participant is not
survived by any person described in subparagraph (i),
then said deceased Participant's estate shall be such
deceased Participant's Beneficiary.
ARTICLE V
PLAN COMMITTEE
Section 5.1. Appointment, Term of Office and Vacancy. The
Plan Committee shall consist of one or more individuals appointed
by the Management Compensation Committee who shall serve at the
pleasure of the Management Compensation Committee. The
Management Compensation Committee shall have the absolute right
to remove any member of the Plan Committee at any time, with or
without cause, and any member of the Plan Committee shall have
the right to resign at any time. If a vacancy in the Plan
Committee should occur, from death, resignation, removal or
otherwise, a successor shall be appointed by the Management
Compensation Committee.
Section 5.2. Organization of Plan Committee. The
Management Compensation Committee shall designate one of the
members of the Plan Committee to serve as its Chairman, one
member as its Vice-Chairman and one member as its Secretary. One
person may hold more than one office. The Plan Committee may
<PAGE>
appoint such agents, who need not be members of the Plan
Committee, as it may deem necessary for the effective performance
of its duties, and may delegate to such agent such powers and
duties, whether ministerial or discretionary, as the Plan
Committee may deem expedient or appropriate. The Plan Committee
shall act by majority vote and may adopt such bylaws, rules and
regulations as it deems desirable for the conduct of its affairs.
The members of the Plan Committee shall serve as such without
compensation.
Section 5.3. Powers of the Plan Committee. The Plan
Committee shall administer the Plan. The Plan Committee shall
have all the powers to enable it to carry out its duties under
the Plan properly. Not in limitation of the foregoing, the Plan
Committee shall have the power to construe and interpret the Plan
and determine all questions that shall arise thereunder. It
shall decide all questions relating to eligibility to receive
benefits under the Plan. The Plan Committee shall have such
other and further specified duties, powers, authority and
discretion as are elsewhere in the Plan either expressly or by
necessary implication conferred upon it. The decision of the
Plan Committee upon all matters within the scope of its authority
shall be final and conclusive on all persons, except to the
extent otherwise provided by law.
Section 5.4. Expenses of Plan Committee. The reasonable
expenses of the Plan Committee incurred by the Plan Committee in
the performance of its duties under the Plan, including without
<PAGE>
limitation, reasonable counsel fees and expenses of other agents,
shall be paid by the Participating Employers.
ARTICLE VI
AMENDMENT AND TERMINATION
Section 6.1. Amendment of Plan. Subject to the provisions
of Section 6.4 of the Plan, the Participating Employers expressly
reserve the right, at any time and from time to time, to amend in
whole or in part any of the terms and provisions of the Plan for
whatever reason(s) the Participating Employers may deem
appropriate.
Section 6.2. Termination of Plan. Subject to the
provisions of Section 6.4 of the Plan, the Participating
Employers expressly reserve the right, at any time and for
whatever reason they may deem appropriate, to terminate the Plan.
Section 6.3. Effective Date and Procedure for Amendment or
Termination. Subject to the provisions of Section 6.4 of the
Plan, any amendment to the Plan or termination of the Plan may be
retroactive to the extent not prohibited by applicable law. Any
amendment to the Plan or termination of the Plan shall be made by
the Participating Employers by resolution of the Compensation
Committee and shall not require the approval or consent of any
Participant or Beneficiary in order to be effective.
Section 6.4. Effect of Amendment or Termination on Certain
Benefits. No amendment or termination of the Plan may reduce or
eliminate the benefits (if any) payable under the Plan (without
regard to such amendment or termination) to:
<PAGE>
(a) any Participant who commenced receiving
benefits under the Plan prior to the amendment or
termination date and is alive on the amendment or
termination date and the spouse or Beneficiary of such
Participant; or
(b) any spouse or Beneficiary who commenced
receiving benefits under the Plan prior to the
amendment and termination date.
In addition, with respect to all other Participants in the Plan
on such amendment or termination who have not commenced receiving
benefits under the Plan prior to the amendment or termination
date, any such amendment or termination shall not result in such
Participant receiving benefits under the Plan upon such
Participant's separation from Service which are less than the
benefits such Participant would have received under the Plan but
for such amendment or termination multiplied by a fraction, the
numerator of which is such Participant's Creditable Service at
the time of such amendment or termination and the denominator of
which is the Creditable Service such Participant would have
accumulated as a Participant if such Participant had continued as
a Participant until such Participant had attained age sixty-two
(62). Except as hereinabove expressly provided to the contrary
in this Section 6.4, the Plan may be amended or terminated so
that no benefits or (if such amendment or termination so
provides) reduced benefits shall be payable to any Participant,
spouse or Beneficiary after the effective date of such amendment
or termination.
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.1. Adoption by a Subsidiary Corporation. A
Subsidiary Corporation may, with the approval of the Compensation
Committee and the Board of Directors of such Subsidiary Corpora-
tion, elect to adopt the Plan as of the date mutually agreeable
to the Compensation Committee and the Board of Directors of such
Subsidiary Corporation. Any such adoption of the Plan by a
Subsidiary Corporation shall be evidenced by an appropriate
instrument of adoption executed by such Subsidiary Corporation.
Section 7.2. Authorization and Delegation to the Compensa-
tion Committee. Each Subsidiary Corporation which is or
hereafter becomes a Participating Employer authorizes and
empowers the Compensation Committee (i) to amend or terminate the
Plan without further action by said Subsidiary Corporation as
provided in Article VI and (ii) to perform such other acts and do
such other things as the Compensation Committee is expressly
directed, authorized or permitted to perform or do as provided
herein.
Section 7.3. Spendthrift Clause. To the extent permitted
by law, no benefits payable under the Plan shall be subject to
the claim of any creditor of any Participant or to any legal
process by any creditor of any Participant and no Participant
entitled to benefits hereunder shall have any right whatsoever to
alienate, commute, anticipate or assign any benefits under the
Plan.
<PAGE>
Section 7.4. Benefits Payable From General Assets of the
Participating Employers. All benefits payable hereunder shall be
paid from the general assets of the Participating Employers. No
assets of the Participating Employers shall be segregated or
placed in trust pursuant to the Plan in a manner which would put
such asset beyond the reach of the general creditors of any of
the Participating Employers, and the rights of any Participant
(or Beneficiary) to receive any benefits hereunder shall be no
greater than the right of any general, unsecured creditor of the
Participating Employers. Nothing contained in the Plan shall
create or be construed as creating a trust of any kind or any
other fiduciary relationship between the Participating Employers
and a Participant. In the event the Participating Employers
purchase any insurance policies insuring the life of any
Participant hereunder, no Participant shall have any rights
whatsoever therein and the Participating Employers shall be the
sole owner and beneficiary thereof and shall possess and exercise
all incidents of ownership therein.
Section 7.5. Allocation of Costs of Benefits Among the
Participating Employers. The cost of benefits to be provided a
Participant (or spouse or Beneficiary, if applicable) pursuant to
this Plan shall be paid by the Participating Employer which
employs the Participant. In the case of a Participant employed
by more than one Participating Employer the cost of benefits
provided pursuant to the Plan shall be allocated among the
Participating Employers in proportion to the Compensation payable
<PAGE>
by each such Participating Employer during the period such
Participant participates in the Plan.
Section 7.6. Benefits Limited to the Plan. Participation
in the Plan shall not give a Participant any right to be retained
in the employ of any one or more of the Participating Employers
nor, upon dismissal, any right or interest in the Plan except as
expressly provided herein.
ARTICLE VIII
CLAIMS PROCEDURE
Section 8.1. Claims Procedure.
(a) General. In the event that a Claimant has a Claim
under the Plan, such Claim shall be made by the Claimant's filing
a notice thereof with the Plan Committee within ninety (90) days
after such Claimant first has knowledge of such Claim. Each
Claimant who has submitted a Claim to the Plan Committee shall be
afforded a reasonable opportunity to state such Claimant's posi-
tion and to present evidence and other material relevant to the
Claim to the Plan Committee for its consideration in rendering
its decision with respect thereto. The Plan Committee shall
render its decision in writing within sixty (60) days after the
Claim is referred to it, and a copy of such written decision
shall be furnished to the Claimant.
(b) Notice of Decision of Committee. Each Claimant whose
Claim has been denied by the Plan Committee shall be provided
written notice thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s)
of the Plan upon which such denial is based;
<PAGE>
(iii) a description of any additional material
or information necessary for the Claimant to perfect
such Claim and an explanation of why such material or
information is necessary; and
(iv) an explanation of the procedure hereunder for
review of such Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Committee. Each such Claim-
ant shall be afforded a reasonable opportunity for a full and
fair review of the decision of the Plan Committee denying the
Claim. Such review shall be by the Compensation Committee. Such
appeal shall be made within ninety (90) days after the Claimant
received the written decision of the Plan Committee and shall be
made by the written request of the Claimant or such Claimant's
duly authorized representative of the Compensation Committee. In
the event of appeal, the Claimant or such Claimant's duly
authorized representative may review pertinent documents and
submit issues and comments in writing to the Compensation
Committee. The Compensation Committee shall review the
following:
(i) the initial proceedings of the Plan Committee
with respect to such Claim;
(ii) such issues and comments as were submitted in
writing by the Claimant or the Claimant's duly author-
ized representative; and
(iii) such other material and information as
the Compensation Committee, in its sole discretion,
deems advisable for a full and fair review of the
decision of the Plan Committee.
The Compensation Committee may approve, disapprove or modify the
decision of the Plan Committee, in whole or in part, or may take
such other action with respect to such appeal as it deems appro-
<PAGE>
priate. The decision of the Compensation Committee with respect
to such appeal shall be made promptly, and in no event later than
sixty (60) days after receipt of such appeal, unless special
circumstances require an extension of such time within which to
render such decision, in which event such decision shall be
rendered as soon as possible and in no event later than one
hundred twenty (120) days following receipt of such appeal. The
decision of the Compensation Committee shall be in writing and in
a manner calculated to be understood by the Claimant and shall
include specific reasons for such decision and set forth specific
references to the pertinent provisions of the Plan upon which
such decision is based. The Claimant shall be furnished a copy
of the written decision of the Compensation Committee. Such
decision shall be final and conclusive upon all persons
interested therein, except to the extent otherwise provided by
applicable law.
IN WITNESS WHEREOF, NCNB Corporation has caused this instru-
ment to be executed by its duly authorized officers all as of the
22nd day of June, 1988.
NCNB CORPORATION
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ J. W. Kiser
Secretary
<PAGE>
AMENDMENT TO THE
NATIONSBANK CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, NationsBank Corporation ("NationsBank") and certain of its
subsidiary corporations (collectively with NationsBank, the "Participating
Employers") maintain the NationsBank Corporation and Designated
Subsidiaries Supplemental Executive Retirement Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to (i) change the
discount rate used in calculating a participant's "commuted payment amount"
under the Plan from a fixed rate of ten percent (10%) to a variable rate
equal to the rate in effect as of the last day of the calendar year
immediately preceding the calendar year of a participant's retirement for
valuing liabilities under the NationsBank Pension Plan for financial
accounting and reporting purposes and (ii) change the basis for calculating
the pre-retirement death benefit payable with respect to a deceased
participant so that such pre-retirement death benefit will be approximately
equal to the death benefit that would have been payable if the participant
had died after retirement from NationsBank; and
WHEREAS, the Compensation Committee of the Board of Directors of
NationsBank has authorized and approved said amendment to the Plan in
accordance with the provisions of Article VI of the Plan;
NOW, THEREFORE, NationsBank does hereby declare that the Plan is
hereby amended effective as of the date hereof as follows:
1. Section I.A.(5) of Exhibit B to the Plan is amended to read as
follows:
"5. Determine the AESSV by discounting the projected AESSV
obtained in A.(4) above at the "FAS Rate" (as hereinafter
defined) compounded annually from the date the Participant
would have attained age 55 to the Determination Date. For
purposes of this Exhibit B, the "FAS Rate" means a variable
rate equal to the rate in effect as of the last day of the
calendar year immediately preceding the
<PAGE>
calendar year of a Determination Date for valuing liabilities
under the Retirement Plan for financial accounting and reporting
purposes."
2. The first sentence of Section III. of Exhibit B to the Plan is
amended to read as follows:
"All AESSVs shall be determined on the basis of the FAS Rate (as
defined in I.A.(5) above) compounded annually."
3. Section 4.6(c)(2)(A)(ii) of the Plan is amended to read as
follows:
"(ii) seventy-five percent (75%) of the deceased
Participant's Target Retirement Benefit, reduced in accordance
with the provisions of Section 2.1(b)(17)(B) as though the
Participant had retired on the date of the Participant's death,
minus the sum of (A) the monthly life annuity that is the
actuarial equivalent of the benefits payable to such Eligible
Spouse from the Retirement Plan and the ERISA Supplemental Plan
and (B) seventy-five percent (75%) of the deceased Participant's
Social Security Benefit."
4. The parenthetical in Section 4.10(iii) of the Plan ("plus
interest . . . date of payment") is amended to read as follows:
". . . (plus interest on such amount at that FAS Rate (as defined
in Exhibit B hereto) compounded annually from the date of the
Change in Control to the date of payment) . . ."
5. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank has caused this instrument to be
executed by its duly authorized officer as of the 28th day of September,
1994.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley
Executive Vice President
"NationsBank"
2
NCNB CORPORATION AND DESIGNATED SUBSIDIARIES
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
(as amended and restated effective November 1, 1987)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I NAME AND PURPOSE . . . . . . . . . . . . . . . . 2
Section 1.1. Name . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Purpose . . . . . . . . . . . . . . . . . . 2
ARTICLE II CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW . . 2
Section 2.1. Construction and Definitions . . . . . . . 2
Section 2.2. Applicable Law . . . . . . . . . . . . . 12
ARTICLE III PARTICIPATION . . . . . . . . . . . . . . . . 12
Section 3.1. General . . . . . . . . . . . . . . . . . 12
Section 3.2. Eligibility . . . . . . . . . . . . . . . 12
Section 3.3. Election by an Eligible Employee to
Become a Participant in the Plan . . . . 13
Section 3.4. Compensation Subject to Deferral . . . . 14
Section 3.5. Selection of Type of Compensation to be
Deferred . . . . . . . . . . . . . . . . 15
Section 3.6. Redesignation of Eligible Employees . . . 15
Section 3.7. Changes to the Schedule of Benefits . . . 16
ARTICLE IV BENEFITS . . . . . . . . . . . . . . . . . . . 16
Section 4.1. General . . . . . . . . . . . . . . . . . 16
Section 4.2. Normal Retirement . . . . . . . . . . . . 17
Section 4.3. Early Retirement . . . . . . . . . . . . 18
Section 4.4. Delayed Retirement . . . . . . . . . . . 19
Section 4.5. Disability . . . . . . . . . . . . . . . 19
Section 4.6. Other Separation From Service . . . . . . 21
Section 4.7. Death . . . . . . . . . . . . . . . . . . 22
Section 4.8. Accrual of Benefits . . . . . . . . . . . 26
Section 4.9. Withdrawals on Account of an Un-
foreseeable Emergency . . . . . . . . . . 27
Section 4.10. Beneficiary or Beneficiaries . . . . . . 29
ARTICLE V PLAN COMMITTEE . . . . . . . . . . . . . . . . 30
Section 5.1. Appointment, Term of Office and Vacancy . 30
Section 5.2. Organization of Plan Committee . . . . . 31
Section 5.3. Powers of the Plan Committee . . . . . . 31
Section 5.4. Expenses of Plan Committee . . . . . . . 32
i
<PAGE>
ARTICLE VI AMENDMENT AND TERMINATION . . . . . . . . . . 32
Section 6.1. Amendment and Termination of the Plan . . 32
Section 6.2. Amendment and Termination of Previously
Executed Deferred Compensation Agree-
ments . . . . . . . . . . . . . . . . . . 33
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . 34
Section 7.1. Adoption by a Subsidiary Corporation . . 34
Section 7.2. Authorization and Delegation to the
Compensation Committee . . . . . . . . . 35
Section 7.3. Spendthrift Clause . . . . . . . . . . . 35
Section 7.4. Benefits Payable From General Assets of
the Participating Employers . . . . . . . 35
Section 7.5. Allocation of Costs of Benefits Among
the Participating Employers . . . . . . . 36
Section 7.6. Benefits Limited to the Plan . . . . . . 37
ARTICLE VIII CLAIMS PROCEDURE . . . . . . . . . . . . . . . 37
Section 8.1. Claims Procedure . . . . . . . . . . . . 37
ii
<PAGE>
NCNB CORPORATION AND DESIGNATED SUBSIDIARIES
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
(as amended and restated effective November 1, 1987)
WHEREAS, the NCNB Corporation and Designated Subsidiaries
Deferred Compensation Plan for Key Employees (the "Plan") is
currently set forth in an instrument of NCNB Corporation and
certain of its subsidiaries (the "Participating Employers") dated
November 1, 1985, as amended by an instrument dated March 26,
1986; and
WHEREAS, in the opinion of the Compensation Committee of the
Board of Directors of NCNB Corporation, the Plan should be
further amended effective as of November 1, 1987 to revise and
clarify certain provisions of the Plan related to "Disability
Retirement" to reflect the adoption of the NCNB Corporation Long
Term Disability Plan; and
WHEREAS, such amendments can best be made by restating the
Plan in its entirety; and
WHEREAS, in Section 6.1 of the Plan the Participating
Employers under the Plan have reserved the right to amend the
Plan at any time by instrument executed by NCNB Corporation and
have delegated to the Compensation Committee the right to amend
the Plan on behalf of all Participating Employers; and
WHEREAS, the execution of this instrument has been autho-
rized and approved by the Compensation Committee;
iii
<PAGE>
NOW, THEREFORE, NCNB Corporation does hereby declare that
the NCNB Corporation and Designated Subsidiaries Deferred Compen-
sation Plan for Key Employees, as heretofore amended, is amended
and restated effective as of November 1, 1987 to read as follows:
ARTICLE I
NAME AND PURPOSE
Section 1.1. Name. The Plan shall be known as the "NCNB
Corporation and Designated Subsidiaries Deferred Compensation
Plan for Key Employees."
Section 1.2. Purpose. The purpose of the Plan is to
provide Eligible Employees of the Participating Employers who
elect to become Participants in this Plan with certain benefits
based upon Compensation deferred by such Participant in accor-
dance with the provisions of the Plan.
ARTICLE II
CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW
Section 2.1. Construction and Definitions.
(a) Construction. Article, section and paragraph headings
have been inserted for convenience of reference only in the Plan
and are to be ignored in any construction of the provisions
hereof. If any provision of the Plan shall for any reason be
invalid or unenforceable, the remaining provisions shall never-
theless be valid, enforceable and fully effective.
(b) Definitions. Whenever used in the Plan, unless the
context clearly indicates otherwise, the following terms shall
have the following meanings:
iv
<PAGE>
(1) Age at Deferral means, with respect to a Partici-
pant, such Participant's age on December 31 of the Plan Year
immediately preceding the Plan Year during which Compensa-
tion is first deferred by a Participant pursuant to such
Participant's Deferred Compensation Agreement.
(2) Annual Deferral Amount means, with respect to a
Participant, the amount of Compensation that a Participant
elects to defer each Plan Year during such Participant's
Deferral Period pursuant to such Participant's Deferred
Compensation Agreement.
(3) Base Salary means, with respect to a Participant,
the "base salary" payable to such Participant from time to
time as remuneration for hours of employment by a Partici-
pating Employer determined without regard to (i) any defer-
rals pursuant to this Plan, (ii) any salary reduction pursu-
ant to the Flexible Benefits Plan, and (iii) any salary
reduction pursuant to the Thrift Plan. In addition, in the
case of a Participant who participates in an incentive
compensation plan providing for interim "draws" payable at
the same time as the "base salary" of such Participant, such
"draws" shall be considered as part of Base Salary for
purposes of this Plan.
(4) Beneficiary means the person(s) or entity(ies)
designated by a Participant or the provisions of the Plan to
receive such benefits as may become payable to such per-
v
<PAGE>
son(s) or entity(ies) in accordance with the provisions of
the Plan.
(5) Benefit Commencement Date means,
(A) with respect to a Participant who separates
from Service after becoming eligible for Normal Retire-
ment, Early Retirement, or Delayed Retirement, the
January 31 of the Plan Year following such
Participant's separation from Service, and
(B) with respect to a Participant who becomes
Disabled and who (i) is not eligible for Early Retire-
ment at the time of such Disability or (ii) does not
elect pursuant to Section 4.5 to receive such Partici-
pant's Early Retirement Benefit, the January 31 of the
Plan Year following the Plan Year in which such Partic-
ipant would have attained such Participant's Normal
Retirement Age.
(6) Bonus(es) means, with respect to a Participant,
any bonus(es) payable to such Participant pursuant to (i)
the Management Incentive Compensation Plan and (ii) any
other similar incentive compensation plan of the Participat-
ing Employers approved for purposes of this Plan by the
Management Compensation Committee in the case of incentive
compensation plans in which Employees other than Executive
Officers participate or the Compensation Committee in the
case of incentive compensation plans in which Executive
Officers participate.
(7) Claim means a claim for benefits under the Plan.
(8) Claimant means a person making a Claim.
(9) Code means the Internal Revenue Code of 1986, and
references thereto shall include the valid Treasury regula-
tions thereunder.
vi
<PAGE>
(10) Compensation means, with respect to a Participant,
the Base Salary and Bonus, if any, payable to such
Participant from time to time by a Participating Employer.
Compensation shall not include
(A) awards, overtime pay, shift premium, or
other incentive compensation or extra or special
remuneration of any kind which is not a Bonus;
(B) any other sums paid by the Participating
Employers on account of any health, welfare or
group insurance benefits (exclusive of sick pay),
including without limitation "Basic Employer Con-
tributions" under (and as defined in) the Flexible
Benefits Plan, or on account of reimbursement of
relocation expenses, regardless of whether such
sums are taxable income to the Participant; or
(C) any compensation pursuant to any other
employee benefit plan, including without limita-
tion any sums selected to be received in cash
pursuant to any such plan.
(11) Compensation Committee means the Compensation
Committee of the Board of Directors of NCNB Corporation.
(12) Creditable Service means, with respect to a Par-
ticipant as of any date, such Participant's "Creditable
Service" as of such date determined in accordance with the
provisions of the Retirement Plan.
(13) Deferral Period means, with respect to a Partici-
pant, the consecutive Plan Years specified in such Partici-
pant's Deferred Compensation Agreement.
(14) Deferred Compensation Agreement(s) means the
form(s) of written agreement(s) as shall be approved from
time to time by the Management Compensation Committee for
use by a Participant and such Participant's Participating
vii
<PAGE>
Employer pursuant to which a Participant may defer Compensa-
tion pursuant to the Plan.
(15) Delayed Commencement Adjustment Factor means, with
respect to a Participant eligible to receive Delayed Retire-
ment Benefits, the factor determined in accordance with the
Schedule of Benefits attached to such Participant's Deferred
Compensation Agreement.
(16) Delayed Retirement means, with respect to a Par-
ticipant, such Participant's separation from Service after
the Plan Year in which such Participant attains the Normal
Retirement Age.
(17) Delayed Retirement Benefit means, with respect to
a Participant eligible for Delayed Retirement, such Partici-
pant's "Delayed Retirement Benefit" determined in accordance
with the Plan and such Participant's Deferred Compensation
Agreement.
(18) Disability means, with respect to a Participant,
"Disability" as defined in the Long Term Disability Plan.
(19) Disabled means, with respect to a Participant,
"Disabled" as defined in the Long Term Disability Plan.
(20) Early Commencement Adjustment Factor means, with
respect to a Participant eligible to receive Early Retire-
ment Benefits, the factor determined in accordance with the
Schedule of Benefits attached to such Participant's Deferred
Compensation Agreement.
viii
<PAGE>
(21) Early Retirement means, with respect to a Partici-
pant, such Participant's separation from Service after
having attained age fifty (50) and having completed at least
one hundred eighty (180) months of Creditable Service.
(22) Early Retirement Benefit means, with respect to a
Participant eligible for Early Retirement, such
Participant's "Regular Early Retirement Benefit" or "Special
Early Retirement Benefit," as applicable, determined in
accordance with the Plan and such Participant's Deferred
Compensation Agreement.
(23) Effective Date means, with respect to the Plan,
November 1, 1985.
(24) Eligible Employee means an Employee who has been
designated as eligible to become a Participant in the Plan
by the Compensation Committee or the Management Compensation
Committee, as applicable, as provided in Section 3.2.
(25) Employee means a person employed by any of the
Participating Employers.
(26) Executive Officer means an officer of NCNB Corpo-
ration serving in one or more of the following positions:
(A) Chairman of the Board and Chief Executive
Officer,
(B) Vice Chairman of the Board,
(C) President, or
(D) Corporate Executive Vice President.
ix
<PAGE>
(27) Flexible Benefits Plan means the NCNB Corporation
and Designated Subsidiaries Flexible Benefits Plan, as
amended from time to time.
(28) Long Term Disability Plan means the NCNB Corpora-
tion Long Term Disability Plan, as amended from time to
time.
(29) Management Compensation Committee means the Man-
agement Compensation Committee of NCNB Corporation appointed
by the Board of Directors of NCNB Corporation.
(30) Management Incentive Compensation Plan means the
NCNB Corporation Management Incentive Compensation Plan, as
amended from time to time.
(31) Normal Retirement means, with respect to a Partic-
ipant, such Participant's separation from Service after
attainment of such Participant's Normal Retirement Age.
(32) Normal Retirement Age means, with respect to a
Participant, the attainment of age sixty-two (62) or such
later age as is specified in such Participant's Deferred
Compensation Agreement.
(33) Normal Retirement Benefit means, with respect to a
Participant eligible for Normal Retirement, such Partici-
pant's "Normal Retirement Benefit" determined in accordance
with the Plan and such Participant's Deferred Compensation
Agreement.
x
<PAGE>
(34) Participant means an Eligible Employee who has
elected to participate in the Plan as provided in Section
3.3 of the Plan.
(35) Participating Employers means:
(A) NCNB Corporation, a North Carolina corpora-
tion;
(B) the following Subsidiary Corporations of NCNB
Corporation:
(i) NCNB National Bank of North Carolina, a
national banking association;
(ii) NCNB National Bank of Florida, a nation-
al banking association;
(iii) NCNB South Carolina, a South Carolina
corporation;
(iv) NCNB National Bank, Atlanta, Georgia, a
national banking association;
(v) NCNB Leasing Corporation, a North Caro-
lina corporation;
(vi) NCNB Operations, Inc., a North Carolina
corporation;
(vii) NCNB Securities, Inc., a North Carolina
corporation; and
(C) those Subsidiary Corporations of NCNB Corpo-
ration which in the future adopt the Plan pursuant to
the provisions of Section 7.1 hereof.
(36) Plan means the NCNB Corporation and Designated
Subsidiaries Deferred Compensation Plan for Key Employees,
as amended from time to time.
(37) Plan Committee means the committee described in
Article V hereof.
(38) Plan Year means the twelve (12) month period
beginning January 1 and ending December 31; provided, howev-
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er, the initial Plan Year of the Plan shall be the two (2)
month period beginning November 1, 1985 and ending Decem-
ber 31, 1985.
(39) Regular Early Retirement Benefit means, with
respect to a Participant eligible for Early Retirement, the
"Regular Early Retirement Benefit" determined in accordance
with the Plan and such Participant's Deferred Compensation
Agreement.
(40) Regular Early Retirement Benefit Payable at Normal
Retirement Age means, with respect to a Participant, the
"Regular Early Retirement Benefit Payable at Normal Retire-
ment Age" of such Participant determined in accordance with
the provisions of the Plan and such Participant's Deferred
Compensation Agreement.
(41) Retirement means, with respect to a Participant,
such Participant's separation from Service on account of
such Participant's Normal Retirement, Early Retirement or
Delayed Retirement.
(42) Retirement Plan means the NCNB Corporation and
Designated Subsidiaries Retirement Plan and Trust, as amend-
ed from time to time.
(43) Schedule of Benefits means, with respect to a
Participant, the exhibit attached to such Participant's
Deferred Compensation Agreement to be used in connection
with the computation of benefits to be provided to such
Participant by the Plan and also containing the Early Com-
xii
<PAGE>
mencement Adjustment Factor and the Delayed Commencement
Adjustment Factor.
(44) Service means "Service" as defined in the Retire-
ment Plan.
(45) Special Early Retirement Benefit means, with
respect to a Participant eligible for Early Retirement who
has attained age fifty-five (55) and completed at least two
hundred forty (240) months of Creditable Service, the "Spe-
cial Early Retirement Benefit" determined in accordance with
the Plan and such Participant's Deferred Compensation Agree-
ment.
(46) Special Early Retirement Benefit Payable at Normal
Retirement Age means, with respect to a Participant, the
"Special Early Retirement Benefit Payable at Normal Retire-
ment Age" of such Participant determined in accordance with
the provisions of the Plan and such Participant's Deferred
Compensation Agreement.
(47) Subsidiary Corporation means
(A) any corporation more than fifty percent (50%)
of whose outstanding voting capital stock is owned by
NCNB Corporation,
(B) any corporation at least eighty percent (80%)
of whose outstanding voting capital stock and at least
eighty percent (80%) of each class of whose outstanding
non-voting capital stock is owned by a corporation more
than fifty percent (50%) of whose outstanding voting
capital stock is owned by NCNB Corporation; or
(C) any corporation at least eighty percent (80%)
of whose outstanding voting capital stock and at least
eighty percent (80%) of each class of whose outstanding
non-voting capital stock is owned by a corporation
described in subparagraph (B) above.
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<PAGE>
(48) Thrift Plan means the NCNB Corporation and Desig-
nated Subsidiaries Stock/Thrift Plan and Trust, as amended
from time to time.
(49) Total Deferral Amount means, with respect to a
Deferred Compensation Agreement, the sum of the Annual
Deferral Amounts specified in such Deferred Compensation
Agreement.
Section 2.2. Applicable Law. The Plan shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States to the extent applicable, and to
the extent such laws are not applicable, by the laws of the State
of North Carolina.
ARTICLE III
PARTICIPATION
Section 3.1. General. No person shall become a Partici-
pant unless or until such person is or becomes an Employee. In
addition, in no event shall any Employee be eligible to partici-
pate in the Plan prior to the Effective Date of the Plan.
Section 3.2. Eligibility. The Compensation Committee, in
its sole and exclusive discretion, shall determine which Execu-
tive Officers shall become Eligible Employees. In addition, the
terms of any Deferred Compensation Agreement of an Executive
Officer who has been designated as an Eligible Employee shall be
subject to the approval of the Compensation Committee. The
Management Compensation Committee, in its sole and exclusive
discretion, shall determine which Employees of the Participating
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Employers other than Executive Officers shall become Eligible
Employees. In addition, the terms of any Deferred Compensation
Agreement of an Eligible Employee who is not an Executive Officer
shall be subject to the approval of the Management Compensation
Committee. Designation of Eligible Employees and approval of
Deferred Compensation Agreements shall be made in such manner as
the Compensation Committee and the Management Compensation
Committee shall determine from time to time. Subject to the
provisions of Section 3.6, designation of an Employee as an
Eligible Employee shall apply only with respect to one Deferred
Compensation Agreement described in Section 3.3. If an Employee
who has been designated as an Eligible Employee declines to
participate in the Plan pursuant to the provisions of Section
3.3, such Employee's right to participate in the Plan at a later
date shall be subject to the provisions of Section 3.6. In
addition, if an Employee who has been designated as an Eligible
Employee elects to participate in the Plan pursuant to the
provisions of Section 3.3, such Employee's right to further
participate in the Plan at a later date shall be subject to the
provisions of Section 3.6.
Section 3.3. Election by an Eligible Employee to Become a
Participant in the Plan. An Eligible Employee may become a
Participant in the Plan by irrevocably electing, pursuant to a
Deferred Compensation Agreement, to defer future Compensation at
an annual rate for the Deferral Period specified in such Partici-
pant's Deferred Compensation Agreement. An Eligible Employee
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<PAGE>
must defer a minimum of One Thousand Two Hundred Dollars ($1,200)
per Plan Year during the Deferral Period. The maximum Annual
Deferral Amount which may be deferred with respect to any Plan
Year pursuant to a Deferred Compensation Agreement shall be
determined by the Compensation Committee or the Management
Compensation Committee, as applicable, at the time such Partici-
pant enters into the Deferred Compensation Agreement. In order
to be effective, an Eligible Employee's Deferred Compensation
Agreement must be executed and returned by such Participant to
the Plan Committee on or before the date specified by the Plan
Committee for such purpose.
Section 3.4. Compensation Subject to Deferral.
(a) General. Except as provided in Section 3.4(b) and
Section 3.4(c), a Deferred Compensation Agreement executed during
a Plan Year shall be effective only to defer a Participant's
Compensation earned in succeeding Plan Years.
(b) Eligible Employees on the Effective Date. Notwith-
standing the provisions of Section 3.4(a), the execution of a
Deferred Compensation Agreement within thirty (30) days of the
Effective Date by an Employee who is designated as an Eligible
Employee on the Effective Date shall be effective to defer
Compensation earned (i) during the remainder of the initial Plan
Year with respect to Compensation earned after the date of the
execution of such Deferred Compensation Agreement, and (ii) any
succeeding Plan Year.
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<PAGE>
(c) Employees Who Become Eligible Employees After the
Effective Date. Notwithstanding the provisions of Section
3.4(a), a Deferred Compensation Agreement executed by an Eligible
Employee within thirty (30) days of the date such Employee is
designated as an Eligible Employee (or re-designated as an
Eligible Employee as provided in Section 3.6) shall be effective
to defer Compensation earned (i) during the remainder of the Plan
Year during which such Deferred Compensation Agreement is execut-
ed with respect to Compensation earned after the date of the
execution of such Deferred Compensation Agreement, and (ii) any
succeeding Plan Year.
Section 3.5. Selection of Type of Compensation to be
Deferred. A Participant shall have the right to designate in
such Participant's Deferred Compensation Agreement the type of
Compensation earned from which such Participant shall make Annual
Deferral Amounts during the Deferral Period in accordance with
the provisions of such Participant's Deferred Compensation
Agreement. To the extent Annual Deferral Amounts are deferred
from a Participant's Base Salary, the amount to be deferred from
Base Salary shall be deferred during the Plan Year in accordance
with procedures established from time to time by the Plan
Committee.
Section 3.6. Redesignation of Eligible Employees. The
Compensation Committee or Management Compensation Committee, as
applicable, may redesignate an Employee as an Eligible Employee
for the purpose of (i) permitting an Eligible Employee who previ-
xvii
<PAGE>
ously declined to participate in the Plan to become a Participant
in the Plan, or (ii) permitting an Eligible Employee who has
become a Participant in the Plan to further participate in the
Plan by the execution of one or more additional Deferred
Compensation Agreements. In the event an Eligible Employee
executes more than one Deferred Compensation Agreement pursuant
to the Plan, the benefits to be provided to such Participant
shall be the sum of the benefits determined in accordance with
the provisions of the Plan and such Deferred Compensation
Agreements.
Section 3.7. Changes to the Schedule of Benefits. The
initial Schedule of Benefits to be used in connection with De-
ferred Compensation Agreements executed by Executive Officers and
amendments to the Schedule of Benefits to be used from time to
time in connection with Deferred Compensation Agreements executed
by Executive Officers shall be subject to the approval of the
Compensation Committee. The initial Schedule of Benefits to be
used in connection with Deferred Compensation Agreements executed
by Eligible Employees other than Executive Officers and amend-
ments to the Schedule of Benefits to be used in connection with
Deferred Compensation Agreements executed by Eligible Employees
other than Executive Officers shall be subject to the approval of
the Management Compensation Committee.
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<PAGE>
ARTICLE IV
BENEFITS
Section 4.1. General. The benefits to be provided by the
Plan shall be determined in accordance with a Participant's
Deferred Compensation Agreement and the Plan. Such benefits
shall depend upon (i) the Age at Deferral of such Participant,
(ii) the amount of Compensation deferred by such Participant and
(iii) such Participant's age and Creditable Service at the time
such Participant separates from Service. In the event a Partici-
pant separates from Service on account of Retirement, such
Participant shall become entitled to the applicable retirement
benefit provided for in Section 4.2, Section 4.3 or Section 4.4.
In the event a Participant becomes Disabled prior to the attain-
ment of such Participant's Normal Retirement Age, such Partici-
pant shall become entitled to the benefits, if any, provided for
in Section 4.5. In the event a Participant separates from
Service on account of death after becoming eligible for Retire-
ment or otherwise while in Service, the benefits, if any, provid-
ed for in Section 4.7 shall be paid to such Participant's Benefi-
ciary. In the event a Participant separates from Service for a
reason other than Retirement or death, then the only benefit
payable to such Participant under the Plan shall be the benefit
provided for in Section 4.6.
Section 4.2. Normal Retirement. Subject to the provisions
of Section 4.8 and Article VI, a Participant who separates from
Service for a reason other than death following the attainment of
xix
<PAGE>
such Participant's Normal Retirement Age and prior to the end of
the Plan Year in which such Participant attains such Normal
Retirement Age shall become entitled to such Participant's Normal
Retirement Benefit. Such Participant's Normal Retirement Benefit
shall be expressed as an annual benefit payable for fifteen (15)
years beginning on such Participant's Benefit Commencement Date.
The total Normal Retirement Benefit payable for such fifteen (15)
year period shall be payable in one hundred eighty (180) equal
monthly installments. The amount of each such monthly install-
ment shall be determined by dividing the total Normal Retirement
Benefit payable for such fifteen (15) year period by one hundred
eighty (180). Such monthly installments shall commence on such
Participant's Benefit Commencement Date and continue on the last
day of each month thereafter until one hundred eighty (180) such
monthly payments have been made.
Section 4.3. Early Retirement. Subject to the provisions
of Section 4.8 and Article VI, a Participant who separates from
Service for a reason other than death prior to attaining such
Participant's Normal Retirement Age and who is eligible for Early
Retirement at the time of such separation from Service shall
become entitled to such Participant's Regular Early Retirement
Benefit; provided, however, if at the time of such Participant's
Early Retirement such Participant has attained age fifty-five
(55) and such Participant has completed at least two hundred
forty (240) months of Creditable Service, such Participant shall
be entitled to such Participant's Special Early Retirement
xx
<PAGE>
Benefit. Such Participant's Early Retirement Benefit shall be
expressed as an annual benefit payable for fifteen (15) years
beginning on such Participant's Benefit Commencement Date. The
total Early Retirement Benefit payable for such fifteen (15) year
period shall be payable in one hundred eighty (180) equal monthly
installments. The amount of each such monthly installment shall
be determined by dividing the total Early Retirement Benefit
payable for such fifteen (15) year period by one hundred eighty
(180). Such monthly installments shall commence on such
Participant's Benefit Commencement Date and continue on the last
day of each month thereafter until one hundred eighty (180) such
monthly payments have been made.
Section 4.4. Delayed Retirement. Subject to the provi-
sions of Section 4.8 and Article VI, a Participant who separates
from Service for a reason other than death after the Plan Year in
which such Participant attains such Participant's Normal Retire-
ment Age shall become entitled to such Participant's Delayed
Retirement Benefit. Such Participant's Delayed Retirement
Benefit shall be expressed as an annual benefit payable for
fifteen (15) years beginning on such Participant's Benefit
Commencement Date. The total Delayed Retirement Benefit payable
for such fifteen (15) year period shall be payable in one hundred
eighty (180) equal monthly installments. The amount of each such
monthly installment shall be determined by dividing the total
Delayed Retirement Benefit payable for such fifteen (15) year
period by one hundred eighty (180). Such monthly installments
xxi
<PAGE>
shall commence on such Participant's Benefit Commencement Date
and continue on the last day of each month thereafter until one
hundred eighty (180) such monthly payments have been made.
Section 4.5. Disability. In the event a Participant be-
comes Disabled prior to the attainment of such Participant's
Normal Retirement Age, the following provisions shall apply:
(a) For purposes of determining such Participant's
benefits under this Plan, such Participant's Creditable
Service shall include such Participant's period of Disabili-
ty to the extent provided in the Retirement Plan.
(b) In the event such Participant remains Disabled
until such Participant attains such Participant's Normal
Retirement Age, then subject to the provisions of Section
4.8 and Article VI such Participant shall be entitled to
receive such Participant's Normal Retirement Benefit as
provided in Section 4.2 and Section 4.5(a).
(c) In the event such Participant ceases to be Dis-
abled for a reason other than death prior to the attainment
of such Participant's Normal Retirement Age and such Partic-
ipant does not reenter active Service upon the cessation of
such Participant's Disability, then such Participant shall
be deemed to have separated from Service as of the date of
the cessation of such Participant's Disability. If such
Participant is eligible for Early Retirement on the date
such Participant is deemed to have separated from Service,
then subject to the provisions of Section 4.8 and Article VI
xxii
<PAGE>
such Participant shall be entitled to receive such
Participant's Early Retirement Benefit as provided in Sec-
tion 4.3. If such Participant is not eligible for Early
Retirement on the date such Participant is deemed to have
separated from Service, then such Participant shall be
entitled to receive the benefit, if any, provided for in
Section 4.6.
(d) In the event such Participant ceases to be Dis-
abled for a reason other than death prior to the attainment
of such Participant's Normal Retirement Age and such Partic-
ipant reenters active Service upon the cessation of such
Participant's Disability, then such Participant's Creditable
Service shall include such Participant's period of Disabili-
ty to the extent provided in the Retirement Plan and such
Participant shall resume active participation in the Plan on
the date such Participant reenters active Service.
(e) A Participant who is eligible for Early Retirement
at the time such Participant becomes Disabled or who becomes
eligible for Early Retirement while still Disabled in ac-
cordance with this Section 4.5 shall be entitled to elect at
any time prior to attainment of such Participant's Normal
Retirement Age to receive such Participant's Early Retire-
ment Benefit determined in accordance with the provisions of
Section 4.3 and Section 4.5(a) as of the date of such elec-
tion.
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<PAGE>
Section 4.6. Other Separation From Service. In the event
a Participant separates from Service for a reason other than such
Participant's Retirement or death, such Participant shall be paid
in a single sum within ninety (90) days following such Partici-
pant's separation from Service all Compensation previously de-
ferred by such Participant pursuant to the Plan and such
Participant's Deferred Compensation Agreement with interest
thereon at the rate of eight percent (8%), compounded annually,
through the last day of the month immediately preceding the month
in which such Participant receives such payment. For purposes of
calculating said interest on Compensation deferred at different
times during a particular Plan Year, all such amounts shall be
deemed to have been deferred as of the first day of such Plan
Year.
Section 4.7. Death.
(a) Death After Separation from Service. In the event a
Participant separates from Service after becoming eligible for
Normal Retirement, Early Retirement or Delayed Retirement, but
such Participant dies prior to such Participant's Benefit Com-
mencement Date, the benefits that would have otherwise been paid
to such Participant shall be paid to such Participant's Benefi-
ciary commencing on the Benefit Commencement Date. In the event
a Participant separates from Service after becoming eligible for
Normal Retirement, Early Retirement or Delayed Retirement, and
such Participant dies on or after such Participant's Benefit
Commencement Date, then the remaining benefits that would have
xxiv
<PAGE>
been paid to such Participant shall be paid to such Participant's
Beneficiary commencing on the last day of the month following the
month in which such Participant's death occurs. In the event a
Participant separates from Service for a reason other than
Retirement, but such Participant dies prior to receipt of the
benefits provided in Section 4.6, then the single sum payment
that would have been paid to such Participant shall be paid to
such Participant's Beneficiary.
(b) Death of a Disabled Participant. In the event (i) a
Participant becomes Disabled prior to the attainment of such
Participant's Normal Retirement Age, and (ii) such Participant
dies prior to such Participant's Benefit Commencement Date
without recovering from such Disability, the Beneficiary of such
Participant shall be entitled to the benefits provided for in
Section 4.7(c) as if such Participant had died while in Service.
In the event (i) a Participant becomes Disabled prior to the
attainment of such Participant's Normal Retirement Age, (ii) such
Participant becomes eligible to receive such Participant's Normal
Retirement Benefit pursuant to Section 4.2 or Early Retirement
Benefit pursuant to Section 4.3, and (iii) such Participant dies
on or after such Participant's Benefit Commencement Date without
recovering from such Disability, then the remaining benefits that
would have been paid to such Participant shall be paid to such
Participant's Beneficiary commencing on the last day of the month
following the date of such Participant's death.
xxv
<PAGE>
(c) Death While in Service. In the event a Participant
dies while in Service, but prior to the first deferral of such
Participant's Compensation pursuant to such Participant's De-
ferred Compensation Agreement, then no death benefits shall be
payable under the Plan. Except as provided in Section 4.7(d), in
the event a Participant dies while in Service prior to the
attainment of such Participant's Normal Retirement Age [or, to
the extent provided in Section 4.7(b), while Disabled] the
Participant's Beneficiary shall be paid a death benefit in an
amount equal to the greater of
(i) such Participant's Regular Early Retire-
ment Benefit payable at Normal Retirement Age
determined without regard to whether such Partici-
pant had deferred Compensation equal to the Total
Deferral Amount provided in the Deferred Compensa-
tion Agreement at the time of such Participant's
death, or
(ii) if the deceased Participant had attained
age fifty-five (55) and completed at least two
hundred forty (240) months of Creditable Service,
the Special Early Retirement Benefit the Partici-
pant would have received had such Participant
retired on the date of such Participant's death
and commenced receiving such Participant's Special
Early Retirement Benefit on the January 31 follow-
ing such Participant's death.
For purposes of calculating the Special Early Retirement Benefit
which the Participant would have received pursuant to subpara-
graph (ii) above in circumstances where the Participant dies
prior to the completion of the Deferral Period specified in such
Participant's Deferred Compensation Agreement, or Compensation
equal to the Total Deferral Amount specified in such
Participant's Deferred Compensation Agreement has not been
xxvi
<PAGE>
deferred for other reasons prior to the Participant's death, then
the Special Early Retirement Benefit for purposes of subparagraph
(ii) above shall be determined by multiplying the Special Early
Retirement Benefit to which such Participant would have otherwise
been entitled by a fraction, the numerator of which is the total
amount of Compensation deferred by the Participant pursuant to
such Participant's Deferred Compensation Agreement prior to such
Participant's death and the denominator of which is the Total
Deferral Amount specified in such Participant's Deferred Compen-
sation Agreement. Except as provided in Section 4.7(d), in the
event a Participant dies while in Service after attaining such
Participant's Normal Retirement Age but prior to becoming eligi-
ble for Delayed Retirement, the Participant's Beneficiary shall
be paid a death benefit in an amount equal to the Normal Retire-
ment Benefit the Participant would have received had such Partic-
ipant retired on the date of such Participant's death and com-
menced receiving such Participant's Normal Retirement Benefit on
the January 31 following such Participant's death. Except as
provided in Section 4.7(d), in the event a Participant dies while
in Service after becoming eligible for Delayed Retirement, the
Participant's Beneficiary shall be paid a death benefit in an
amount equal to the Delayed Retirement Benefit the Participant
would have received had such Participant retired on the date of
such Participant's death and commenced receiving such
Participant's Delayed Retirement Benefit on the January 31
following such Participant's death. The death benefit provided
xxvii
<PAGE>
herein shall be expressed as an annual benefit payable for
fifteen (15) years beginning on the last day of the calendar
month following the calendar month in which such Participant
dies. The total death benefit payable for such fifteen (15) year
period shall be payable in one hundred eighty (180) equal monthly
installments. The amount of each such monthly installment shall
be determined by dividing the total death benefit payable for the
fifteen (15) year period by one hundred eighty (180). Such
monthly installments shall commence on the last day of the calen-
dar month following the month in which such Participant dies and
continue on the last day of each month thereafter until one
hundred eighty (180) such monthly payments have been made.
(d) Suicide. Notwithstanding the provisions of Section
4.7(c), in the event a Participant dies as a result of suicide
within twenty-five (25) calendar months of the calendar month
during which such Participant's Compensation is first deferred
pursuant to such Participant's Deferred Compensation Agreement,
the Beneficiary of such Participant shall not be entitled to a
death benefit pursuant to Section 4.7(c) of the Plan, but such
Beneficiary shall be entitled to receive the single sum benefit
determined in accordance with the provisions of Section 4.6 as if
such deceased Participant had separated from Service on the date
of such Participant's death.
(e) Article VI Controlling. The provisions of this Section
4.7 shall be subject to the provisions of Article VI.
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<PAGE>
Section 4.8. Accrual of Benefits. If a Participant sepa-
rates from Service prior to the completion of the Deferral Period
specified in such Participant's Deferred Compensation Agreement
for a reason other than death, or if Compensation equal to the
Total Deferral Amount specified in such Participant's Deferred
Compensation Agreement is not deferred for any reason other than
the Participant's death, then any Normal Retirement Benefit,
Early Retirement Benefit or Delayed Retirement Benefit, as
applicable, to which such Participant would have otherwise been
entitled pursuant to the provisions of Section 4.2, Section 4.3,
or Section 4.4 and such Participant's Deferred Compensation
Agreement shall be reduced to an amount determined by multiplying
the benefit which would have otherwise been payable to such
Participant had such Participant deferred Compensation equal to
the Total Deferral Amount specified in such Participant's De-
ferred Compensation Agreement by a fraction, the numerator of
which is the total amount of Compensation deferred by the Partic-
ipant pursuant to such Participant's Deferred Compensation
Agreement and the denominator of which is the Total Deferral
Amount specified in such Participant's Deferred Compensation
Agreement.
Section 4.9. Withdrawals on Account of an Unforeseeable
Emergency. A Participant who is in Service may, in the Plan
Committee's sole discretion, receive a refund of all or any part
of such Participant's Compensation previously deferred under the
Plan in the case of an "unforeseeable emergency." A Participant
xxix
<PAGE>
requesting a payment pursuant to this Section 4.9 shall have the
burden of proof of establishing, to the Plan Committee's satis-
faction, the existence of such "unforeseeable emergency," and the
amount of the payment needed to satisfy the same. In that
regard, the Participant shall provide the Plan Committee with
such financial data and information as the Plan Committee may
request. If the Plan Committee determines that a payment should
be made to a Participant under this Section 4.9, such payment
shall be made within a reasonable time after the Plan Committee's
determination of the existence of such "unforeseeable emergency"
and the amount of payment so needed. Any such payment pursuant
to this Section 4.9 shall be expressly conditional upon the
Participant receiving such payment entering into such modifica-
tion or amendment to such Participant's Deferred Compensation
Agreement as the Plan Committee may deem appropriate in its sole
and exclusive discretion to reduce the benefits that would have
otherwise been payable to such Participant had such payment not
been made to the Participant pursuant to this Section 4.9. As
used herein, the term "unforeseeable emergency" means a severe
financial hardship to a Participant resulting from a sudden and
unexpected illness or accident of a Participant or of a dependent
[as defined in Section 152(a) of the Code] of the Participant,
loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as
a result of events beyond the control of the Participant. The
circumstances that shall constitute an "unforeseeable emergency"
xxx
<PAGE>
shall depend upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or
may be relieved (i) through reimbursement or compensation by
insurance or otherwise, or (ii) by liquidation of the
Participant's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship. Exam-
ples of what are not considered to be "unforeseeable emergencies"
include the need to send a Participant's child to college or the
desire to purchase a home. Withdrawals of amounts because of an
"unforeseeable emergency" shall not exceed an amount reasonably
needed to satisfy the emergency need. If any withdrawal is
permitted pursuant to this Section 4.9 during a Deferral Period,
no further deferral of Compensation shall be made during the
Deferral Period pursuant to such Participant's Deferred Compensa-
tion Agreement from and after the effective date of the withdraw-
al.
Section 4.10. Beneficiary or Beneficiaries.
(a) Designation or Change of Beneficiary by a Participant.
Each Participant may from time to time designate the person(s) or
entity(ies) to whom the benefits provided for in Section 4.7 are
to be paid. A Participant may from time to time change such
Participant's said designation of Beneficiary and upon any such
change, any previously designated Beneficiary's right to receive
any benefits under the Plan shall terminate. In order to be
effective, any designation or change of designation of a Benefi-
ciary must be made on a form furnished by the Plan Committee and
xxxi
<PAGE>
signed by the Participant and received by the Plan Committee
while the Participant is alive. If a Beneficiary of a deceased
Participant shall survive the deceased Participant but die prior
to the receipt of all benefits payable to said Beneficiary under
the Plan, then such benefits as would have been payable to said
deceased Beneficiary shall be paid to such Beneficiary's estate
at the same time and in the same manner as such benefits would
have been payable to said deceased Beneficiary.
(b) Beneficiary Designated by the Plan. In the event that
a Participant shall die without having designated a Beneficiary,
or in the event that a Participant shall die having revoked an
earlier Beneficiary designation without having effectively desig-
nated another Beneficiary, or in the event that a Participant
shall die but the Beneficiary designated by such Participant
shall fail to survive such Participant, then and in any such
event, the person(s) who shall constitute the Beneficiary of such
deceased Participant shall be determined as follows:
(i) In the event the deceased Participant is survived
by such Participant's spouse, then such surviving spouse
shall be the Beneficiary.
(ii) In the event said deceased Participant is not
survived by such Participant's spouse, but is survived by a
child, children or by issue of a deceased child or children,
such surviving children and surviving issue of such deceased
children shall share as Beneficiaries on a per stirpes
basis, the issue of a deceased child of the deceased Partic-
ipant to take per stirpes the same share their parent would
have taken if living.
(iii) In the event said deceased Participant is not
survived by any person described in subparagraph (i) or (ii)
above, then said deceased Participant's estate shall be such
deceased Participant's Beneficiary.
xxxii
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ARTICLE V
PLAN COMMITTEE
Section 5.1. Appointment, Term of Office and Vacancy. The
Plan Committee shall consist of one or more individuals appointed
by the Management Compensation Committee who shall serve at the
pleasure of the Management Compensation Committee. The Manage-
ment Compensation Committee shall have the absolute right to
remove any member of the Plan Committee at any time, with or
without cause, and any member of the Plan Committee shall have
the right to resign at any time. If a vacancy in the Plan
Committee should occur, from death, resignation, removal or
otherwise, a successor shall be appointed by the Management
Compensation Committee.
Section 5.2. Organization of Plan Committee. The Manage-
ment Compensation Committee shall designate one of the members of
the Plan Committee to serve as its Chairman, one member as its
Vice-Chairman and one member as its Secretary. One person may
hold more than one office. The Plan Committee may appoint such
agents, who need not be members of the Plan Committee, as it may
deem necessary for the effective performance of its duties, and
may delegate to such agent such powers and duties, whether minis-
terial or discretionary, as the Plan Committee may deem expedient
or appropriate. The Plan Committee shall act by majority vote
and may adopt such bylaws, rules and regulations as it deems
desirable for the conduct of its affairs. The members of the
Plan Committee shall serve as such without compensation.
xxxiii
<PAGE>
Section 5.3. Powers of the Plan Committee. The Plan
Committee shall administer the Plan. The Plan Committee shall
have all the powers to enable it to carry out its duties under
the Plan properly. Not in limitation of the foregoing, the Plan
Committee shall have the power to construe and interpret the Plan
and determine all questions that shall arise thereunder. It
shall decide all questions relating to eligibility to receive
benefits under the Plan. The Plan Committee shall have such
other and further specified duties, powers, authority and discre-
tion as are elsewhere in the Plan either expressly or by neces-
sary implication conferred upon it. The decision of the Plan
Committee upon all matters within the scope of its authority
shall be final and conclusive on all persons, except to the
extent otherwise provided by law.
Section 5.4. Expenses of Plan Committee. The reasonable
expenses of the Plan Committee incurred by the Plan Committee in
the performance of its duties under the Plan, including without
limitation, reasonable counsel fees and expenses of other agents,
shall be paid by the Participating Employers.
ARTICLE VI
AMENDMENT AND TERMINATION
Section 6.1. Amendment and Termination of the Plan.
Except as provided in Section 6.2 with respect to Deferred
Compensation Agreements previously executed by a Participating
Employer and a Participant, the Participating Employers expressly
reserve the right, at any time and from time to time, to amend in
xxxiv
<PAGE>
whole or in part any of the terms and provisions of the Plan and
to terminate the Plan for whatever reasons the Participating
Employers may deem appropriate. The Compensation Committee shall
have authority to so amend or terminate the Plan on behalf of the
Participating Employers in all respects. Any such amendment or
termination of the Plan shall be effected by an instrument in
writing duly executed and acknowledged on behalf of the Partici-
pating Employers by duly authorized officers of NCNB Corporation,
which amendment shall become a part of the Plan. Except as
provided in Section 6.2, no such amendment or termination of the
Plan shall adversely affect any Deferred Compensation Agreement
executed by a Participant and a Participating Employer prior to
the date of the adoption of any such amendment or termination.
Section 6.2. Amendment and Termination of Previously-
Executed Deferred Compensation Agreements. The Participating
Employers have established the Plan and shall enter into Deferred
Compensation Agreements from time to time with Participants based
on certain "assumptions" regarding the income tax aspects of the
Plan. Such "assumptions" include (i) the applicability of
Section 451(a) of the Code to a Participant's recognition of
gross income as a result of participation in the Plan, (ii) the
applicability of Section 404(a)(5) of the Code to the benefits
paid by the Participating Employers to Participants under the
Plan, (iii) the provisions of Section 11 and Subchapter L of the
Code with respect to the federal income tax on corporations and
life insurance companies; and (iv) the following with respect to
xxxv
<PAGE>
any life insurance contract owned by a Participating Employer
insuring the life of an Eligible Employee:
(A) the current provisions of Section 101 of the Code
related to the exclusion from gross income of proceeds
of such contract payable upon the death of the insured;
(B) the current exclusion from income of the Partici-
pating Employer of any increase in the "cash value" of
such contract from time to time;
(C) the current exclusion from income of the Partici-
pating Employer of any "policy loan" obtained by the
Participating Employer with respect to such contract;
(D) the current exclusion from income of the Partici-
pating Employer of "dividends" declared on such con-
tract which are used to purchase additional insurance;
and
(E) the current provisions of Section 264 of the Code
related to the deductibility of interest paid on policy
loans by the Participating Employer.
Should any such "assumptions" be adversely affected in whole or
in part by reason of legislative, judicial or regulatory develop-
ments, then the Participating Employers reserve the right to
amend the provisions of such Deferred Compensation Agreement (and
the Plan) to reduce appropriately the benefits to be provided
under the Plan and such Deferred Compensation Agreement; provid-
ed, however, (i) no such amendment shall result in a Participant
receiving less than all Compensation previously deferred by such
Participant pursuant to the Plan and such Participant's Deferred
Compensation Agreement with interest thereon at the rate of eight
percent (8%), compounded annually, through the last day of the
month immediately preceding the month in which such Participant
receives such payment, such interest to be calculated in accor-
dance with the provisions of Section 4.6, and (ii) no such
xxxvi
<PAGE>
amendment shall apply to any Participant (or Beneficiary)
receiving benefits pursuant to the Plan at the time such
amendment is adopted.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Adoption by a Subsidiary Corporation. A
Subsidiary Corporation may, with the approval of the Compensation
Committee and the Board of Directors of such Subsidiary
Corporation, elect to adopt the Plan as of the date mutually
agreeable to the Compensation Committee and the Board of
Directors of such Subsidiary Corporation. Any such adoption of
the Plan by a Subsidiary Corporation shall be evidenced by an
appropriate instrument of adoption executed by such Subsidiary
Corporation.
Section 7.2. Authorization and Delegation to the Compensa-
tion Committee. Each Subsidiary Corporation which is or hereaf-
ter becomes a Participating Employer authorizes and empowers the
Compensation Committee (i) to amend or terminate the Plan without
further action by said Subsidiary Corporation as provided in
Article VI and (ii) to perform such other acts and do such other
things as the Compensation Committee is expressly directed,
authorized or permitted to perform or do as provided herein.
Section 7.3. Spendthrift Clause. To the extent permitted
by law, no benefits payable under the Plan shall be subject to
the claim of any creditor of any Participant or to any legal
process by any creditor of any Participant and no Participant
xxxvii
<PAGE>
entitled to benefits hereunder shall have any right whatsoever to
alienate, commute, anticipate or assign any benefits under the
Plan.
Section 7.4. Benefits Payable From General Assets of the
Participating Employers. All benefits payable hereunder shall be
paid from the general assets of the Participating Employers. No
assets of the Participating Employers shall be segregated or
placed in trust pursuant to the Plan in a manner which would put
such asset beyond the reach of the general creditors of any of
the Participating Employers, and the rights of any Participant
(or Beneficiary) to receive any benefits hereunder shall be no
greater than the right of any general, unsecured creditor of the
Participating Employers. Nothing contained in the Plan shall
create or be construed as creating a trust of any kind or any
other fiduciary relationship between the Participating Employers
and a Participant. In the event the Participating Employers
purchase any insurance policies insuring the life of any Eligible
Employees hereunder, no Eligible Employee shall have any rights
whatsoever therein and the Participating Employers shall be the
sole owner and beneficiary thereof and shall possess and exercise
all incidents of ownership therein.
Section 7.5. Allocation of Costs of Benefits Among the
Participating Employers. The cost of benefits to be provided a
Participant (or Beneficiary, if applicable) pursuant to this Plan
shall be paid by the Participating Employer which executes the
Deferred Compensation Agreement with the Participant. In the
xxxviii
<PAGE>
case of a transfer of a Participant between Participating
Employers, (i) the Participant's obligation to defer Compensation
pursuant to the Participant's Deferred Compensation Agreement
shall continue in effect, (ii) the Participating Employer to whom
such Participant is transferred shall assume the responsibility
of the Participating Employer from which such Participant is
transferred under the Deferred Compensation Agreement without
further action, and (iii) the cost of benefits provided pursuant
to the Plan shall be allocated among the Participating Employers
in proportion to the Compensation payable by each such Partici-
pating Employer which was deferred pursuant to the Plan.
Section 7.6. Benefits Limited to the Plan. Participation
in the Plan shall not give a Participant any right to be retained
in the employ of any one or more of the Participating Employers
nor, upon dismissal, any right or interest in the Plan except as
expressly provided herein.
ARTICLE VIII
CLAIMS PROCEDURE
Section 8.1. Claims Procedure.
(a) General. In the event that a Claimant has a Claim
under the Plan, such Claim shall be made by the Claimant's filing
a notice thereof with the Plan Committee within ninety (90) days
after such Claimant first has knowledge of such Claim. Each
Claimant who has submitted a Claim to the Plan Committee shall be
afforded a reasonable opportunity to state such Claimant's posi-
tion and to present evidence and other material relevant to the
xxxix
<PAGE>
Claim to the Plan Committee for its consideration in rendering
its decision with respect thereto. The Plan Committee shall
render its decision in writing within sixty (60) days after the
Claim is referred to it, and a copy of such written decision
shall be furnished to the Claimant.
(b) Notice of Decision of Committee. Each Claimant whose
Claim has been denied by the Plan Committee shall be provided
written notice thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s)
of the Plan upon which such denial is based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect such
Claim and an explanation of why such material or infor-
mation is necessary; and
(iv) an explanation of the procedure hereunder for
review of such Claim;
all in a manner calculated to be understood by such Claim-
ant.
(c) Review of Decision of Plan Committee. Each such
Claimant shall be afforded a reasonable opportunity for a
full and fair review of the decision of the Plan Committee
denying the Claim. Such review shall be by the Compensation
Committee. Such appeal shall be made within ninety (90)
days after the Claimant received the written decision of the
Plan Committee and shall be made by the written request of
the Claimant or such Claimant's duly authorized representa-
tive of the Compensation Committee. In the event of appeal,
the Claimant or such Claimant's duly authorized representa-
xl
<PAGE>
tive may review pertinent documents and submit issues and
comments in writing to the Compensation Committee. The
Compensation Committee shall review the following:
(i) the initial proceedings of the Plan Committee with
respect to such Claim;
(ii) such issues and comments as were submitted in
writing by the Claimant or the Claimant's duly authorized
representative; and
(iii) such other material and information as the Compen-
sation Committee, in its sole discretion, deems advisable
for a full and fair review of the decision of the Plan
Committee.
The Compensation Committee may approve, disapprove or modify the
decision of the Plan Committee, in whole or in part, or may take
such other action with respect to such appeal as it deems appro-
priate. The decision of the Compensation Committee with respect
to such appeal shall be made promptly, and in no event later than
sixty (60) days after receipt of such appeal, unless special
circumstances require an extension of such time within which to
render such decision, in which event such decision shall be
rendered as soon as possible and in no event later than one
hundred twenty (120) days following receipt of such appeal. The
decision of the Compensation Committee shall be in writing and in
a manner calculated to be understood by the Claimant and shall
include specific reasons for such decision and set forth specific
references to the pertinent provisions of the Plan upon which
such decision is based. The Claimant shall be furnished a copy
of the written decision of the Compensation Committee. Such
decision shall be final and conclusive upon all persons
xli
<PAGE>
interested therein, except to the extent otherwise provided by
applicable law.
IN WITNESS WHEREOF, NCNB Corporation has caused this instru-
ment to be executed by its duly authorized officers as of the
22nd day of June, 1988.
NCNB CORPORATION
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ J. W. Kiser
_________ Secretary
xlii
FIRST AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 28th day of
December, 1994 by and between NATIONSBANK CORPORATION, a North Carolina
corporation ("NationsBank"), and NATIONSBANK OF NORTH CAROLINA, N.A., a
national banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS, NationsBank and certain of its subsidiary corporations
(collectively with NationsBank, the "Participating Employers") maintain The
NationsBank Pension Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to (i) provide for the
new $150,000 limitation on compensation under Section 401(a)(17) of the
Internal Revenue Code, (ii) provide for "direct rollovers" as required by
Section 401(a)(31) of the Internal Revenue Code, (iii) reflect the merger
of certain plans into the Plan and (iv) reflect the termination of certain
employees of the Participating Employers; and
WHEREAS, in Section 11.1 of the Plan, the Participating Employers have
reserved the right to amend the Plan at any time, in whole or in part, and
have delegated to the Compensation Committee of the Board of Directors of
NationsBank the right to make the amendments set forth below on behalf of
all Participating Employers; and
WHEREAS, the amendments set forth below have been authorized and
approved by the Compensation Committee;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, NationsBank and the Trustee hereby agree that
the Plan is amended as follows:
1. The second sentence following subparagraph (B) of Section
2.1(c)(6) of the Plan is amended effective as of January 1, 1993 to read as
follows:
"In no event shall Compensation taken into account for any
calendar year exceed the maximum amount permitted under Code
Section 401(a)(17), and such Code limitation shall be subject to
the family aggregation rule under Code Section 401(a)(17), all as
more fully set forth in Section 7.4 below."
<PAGE>
2. The following new Sections 7.4 and 7.5 are added to the end of
Article VII of the Plan effective as of January 1, 1993:
"SECTION 7.4. COMPENSATION LIMITATION.
(a) General. The Revenue Reconciliation Act of 1993 amended Code
Section 401(a)(17) to reduce the compensation limitation thereunder from
$200,000 to $150,000 (as adjusted for cost-of-living increases) for Plan
Years beginning after 1993. The provisions of this Section 7.4 provide for
the compensation limitation as in effect prior to 1994 and implement the
change to the compensation limitation effected by the Revenue
Reconciliation Act of 1993.
(b) Compensation Limitation. In no event shall the amount of a
Participant's compensation taken into account under the Plan for any Plan
Year exceed the limitation of Section 401(a)(17) of the Code. That
limitation is $200,000 for Plan Years beginning before January 1, 1994 and
$150,000 for Plan Years beginning after December 31, 1993. In applying the
limitation of this Section 7.4, the following rules shall apply:
(i) The limitation shall be adjusted for cost-of-living
adjustments under Section 401(a)(17) of the Code when and as
provided by Section 401(a)(17). In such regard, a Section
401(a)(17) cost-of-living adjustment that is in effect for a
calendar year shall apply to the Plan Year that begins during
such calendar year.
(ii) If compensation is determined under the Plan over a
period of less than twelve (12) months, then to the extent
required by Section 401(a)(17) of the Code the limitation for
such period shall be the product obtained by multiplying the
limitation that would otherwise apply by a fraction, the
numerator of which is the number of months in such period and the
denominator of which is twelve (12).
(iii) The following rule shall apply to a Highly Compensated
Participant who is a five percent owner described in Section
13.1(b)(4)(C) or is among the ten (10) Highly Compensated
Participants receiving the greatest Affiliated Group Compensation
during the Plan Year: if any family members of the Highly
Compensated Participant also
2
<PAGE>
participate in the Plan, the
limitation shall be prorated among the Highly Compensated
Participant and the Highly Compensated Participant's family
members who are participating in the Plan in proportion to their
respective compensation determined without regard to the
limitation. A "family member" means the Highly Compensated
Participant's spouse or any lineal descendant of the Highly
Compensated Participant who has not attained nineteen (19) years
of age before the end of the Plan Year.
(c) Fresh Start for Monthly Retirement Income. Notwithstanding any
provision of the Plan to the contrary, the amount of a Participant's
monthly retirement income under the Plan determined as of a given date (an
"accrual date") that is on or after January 1, 1994 shall be the
Participant's monthly retirement income determined under the applicable
provisions of the Plan taking into account the $150,000 compensation
limitation set forth in Section 7.4(b) above for all Plan Years, including
Plan Years beginning prior to January 1, 1994; provided, however, in no
event shall such monthly retirement income as of an accrual date for a
Participant whose compensation is limited by Section 7.4(b) above be less
than the sum of Amount A and Amount B, where:
Amount A is the monthly retirement income earned by the
Participant as of December 31, 1993 (if any) determined under the
terms and provisions of the Plan in effect as of that date; and
Amount B is the monthly retirement income earned by the
Participant as of the accrual date determined in accordance with
the terms and provisions of the Plan in effect as of that date,
except that for such purpose the Participant's Benefit Service
shall be limited to the Participant's Benefit Service after
December 31, 1993, and such post-December 31, 1993 Benefit
Service used in the calculation of that portion of the
Participant's monthly retirement income attributable to Average
Compensation in excess of Covered Compensation shall be limited
further to five hundred forty (540) minus the Participant's
Benefit Service before January 1, 1994.
3
<PAGE>
SECTION 7.5. OPTIONAL TRANSFERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
If a Participant, a Beneficiary who is the surviving spouse of a deceased
Participant, or a Participant's current or former spouse who is an
alternate payee under a
Qualified Domestic Relations Order (each a "distributee") is to receive a
distribution that is an "eligible rollover distribution," the distributee
may elect to have the distribution paid directly to an "eligible retirement
plan" specified by the distributee rather than paid directly to the
distributee. The election may be made with respect to all or any portion
of the distribution, other than the portion that would not be includable in
the distributee's gross income if not so transferred (for example, the
portion representing a return of after-tax employee contributions).
For purposes of this Section 7.5:
(i) the term "eligible rollover distribution" is as defined in
Section 401(a)(31)(C) of the Code; and
(ii) the term "eligible retirement plan" is as defined in Section
401(a)(31)(D) of the Code; provided, however, that in the case of a
distributee who is the surviving spouse of a deceased Participant, the
term "eligible retirement plan" refers only to an individual
retirement account described in Section 408(a) of the Code or an
individual retirement annuity described in Section 408(b) of the Code.
The preceding provisions of this Section 7.5 shall apply only to the
extent required by Section 401(a)(31) of the Code. The Committee shall
establish the rules and procedures (i) by which Participants and other
distributees make their elections under this Section 7.5 and (ii) pursuant
to which the requirements and provisions of this Section 7.5 and Section
401(a)(31) of the Code, and any related income tax withholding rules of the
Code, are otherwise implemented. In such regard, to the extent permitted
by the Code, the Committee's rules and procedures may include rules
limiting or eliminating elections for small amounts, and may provide that a
distribution shall be paid to a distributee's individual retirement account
or other eligible retirement plan only upon the distributee's timely
election, and that if there is no such election, the distribution shall be
paid directly to the
4
<PAGE>
distributee and shall reflect any income tax withholding required by the
Code."
3. The following new Section 15.7 is added to the end of Article XV
of the Plan and Schedule 15.7 attached to this Agreement is added as an
additional Schedule to the Plan all effective as of May 1, 1993:
"SECTION 15.7. SOUTH CAROLINA BRANCH EMPLOYEES: 1993.
(a) General. Effective May 1, 1993 (the "1993 SC
Termination Date"), Participants located in certain South
Carolina branch offices of the Participating Employers set forth
on Schedule 15.7 that were sold to various purchasers terminated
their employment with the Participating Employers as the result
of such sales (the "1993 SC Affected Participants").
(b) Vesting of 1993 SC Affected Participants. The accrued
retirement income under the Plan of a 1993 SC Affected
Participant shall be fully vested and nonforfeitable as of the
1993 SC Termination Date.
(c) Payment of Benefits of 1993 SC Affected Participants.
For purposes of determining a 1993 SC Affected Participant's
accrued retirement income under the Plan, such 1993 SC Affected
Participant shall be deemed to have separated from Service as of
the 1993 SC Termination Date. Subject to Section 5.5, each 1993
SC Affected Participant may elect to receive payment of such 1993
SC Affected Participant's accrued benefit under the Plan in one
of the following forms:
(A) A lump sum amount (determined without regard to any
limits under the Plan on the amount of lump sum payments), the
single sum value of which is the actuarial equivalent of the
retirement income that would otherwise be payable under the Plan
commencing on the 1993 SC Affected Participant's Normal Re-
tirement Date; or
(B) A retirement income payable in accordance with the
optional forms of retirement income otherwise available under
Articles V and VI of the Plan;
provided, however, if the single sum value of the accrued retire-
ment income of a 1993 SC Affected Participant is less than $3,500
as of the 1993 SC Termination Date, the actuarial equivalent of
such
5
<PAGE>
income shall be paid in a lump sum as soon as practicable
after the 1993 SC Termination Date.
(d) Provisions Controlling. Notwithstanding any provisions
of the Plan to the contrary, the provisions of this Section 15.7
shall control with respect to the 1993 SC Affected Participants."
4. The following new Section 15.8 is added to the end of Article XV
of the Plan and Schedule 15.8 attached to this Agreement is added as an
additional Schedule to the Plan all effective as of June 1, 1993:
"SECTION 15.8. NORTH CAROLINA BRANCH EMPLOYEES: 1993.
(a) General. Effective June 1, 1993 (the "1993 NC
Termination Date"), Participants located in certain North
Carolina branch offices of the Participating Employers set forth
on Schedule 15.8 that were sold to various purchasers terminated
their employment with the Participating Employers as the result
of such sales (the "1993 NC Affected Participants").
(b) Vesting of 1993 NC Affected Participants. The accrued
retirement income under the Plan of a 1993 NC Affected
Participant shall be fully vested and nonforfeitable as of the
1993 NC Termination Date.
(c) Payment of Benefits of 1993 NC Affected Participants.
For purposes of determining a 1993 NC Affected Participant's
accrued retirement income under the Plan, such 1993 NC Affected
Participant shall be deemed to have separated from Service as of
the 1993 NC Termination Date. Subject to Section 5.5, each 1993
NC Affected Participant may elect to receive payment of such 1993
NC Affected Participant's accrued benefit under the Plan in one
of the following forms:
(A) A lump sum amount (determined without regard to any
limits under the Plan on the amount of lump sum payments), the
single sum value of which is the actuarial equivalent of the
retirement income that would otherwise be payable under the Plan
commencing on the 1993 NC Affected Participant's Normal Re-
tirement Date; or
(B) A retirement income payable in accordance with the
optional forms of retirement income otherwise available under
Articles V and VI of the Plan;
6
<PAGE>
provided, however, if the single sum value of the accrued retire-
ment income of a 1993 NC Affected Participant is less than $3,500
as of the 1993 NC Termination Date, the actuarial equivalent of
such income shall be paid in a lump sum as soon as practicable
after the 1993 NC Termination Date.
(d) Provisions Controlling. Notwithstanding any provisions
of the Plan to the contrary, the provisions of this Section 15.8
shall control with respect to the 1993 NC Affected Participants."
5. The following new Section 15.9 is added to the end of Article XV
of the Plan and Schedule 15.9 attached to this Agreement is added as an
additional Schedule to the Plan all effective as of January 1, 1994:
"SECTION 15.9. FORMER MNC EMPLOYEES.
(a) General. During 1993, MNC Financial, Inc. merged with
and into NationsBank Corporation. In connection with the merger,
NationsBank Corporation became the sponsor of the two tax-
qualified defined benefit plans formerly sponsored by MNC and its
affiliates (collectively, "MNC"): the MNC Financial, Inc.
Pension Plan and MNC Financial's Retirement Plan for Former
Equitable Employees (collectively, the "MNC Plans"). The MNC
Plans merged with and into the Plan effective as of January 1,
1994 (the "MNC Plan Merger Date"). As part of said plan mergers,
on the MNC Plan Merger Date the trust(s) maintained under the MNC
Plans became a part of the Trust maintained under this Plan, and
the assets of the MNC Plans thereupon became assets of this Plan.
As of the MNC Plan Merger Date, the Plan shall be the successor
in interest to, and shall have assumed all the liabilities of,
the MNC Plans, and the rights and benefits of all former
employees of MNC who were participating in the MNC Plans
immediately prior to the MNC Plan Merger Date shall be determined
solely in accordance with the terms and provisions of this Plan,
including the provisions of this Section 15.9.
(b) Participation. A person who had become a participant
in an MNC Plan by the MNC Plan Merger Date (a "Former MNC Plan
Participant") shall become a Participant in the Plan on the MNC
Plan Merger Date and participate in the Plan thereafter to the
extent provided in the Plan. Each other former employee of MNC
shall become a Participant in the Plan in accordance with the
terms and provisions of the Plan other than this Section 15.9,
except that for purposes
7
<PAGE>
of applying the eligibility requirements of Section 3.2(c), the
provisions of Section 15.9(c) below shall apply.
(c) Prior Service Credit; Loss of Service. For purposes of
determining the benefits under this Plan of a Prior MNC Plan
Participant, the Participant shall be credited with Benefit
Service and Vesting Service for time prior to the MNC Plan Merger
Date equal to:
(A) in the case of a Prior MNC Plan Participant who
participated in MNC Financial's Retirement Plan for Former
Equitable Employees, the Participant's "Benefit Credited Service"
and "Vesting Credited Service," respectively, as of the MNC Plan
Merger Date under (and as provided in) Sections 3.2 and 3.3 of
said plan; and
(B) in the case of a Prior MNC Plan Participant who
participated in the MNC Financial, Inc. Pension Plan, the
Participant's "Benefit Credited Service" and "Vesting Credited
Service," respectively, as of the MNC Plan Merger Date under (and
as provided in) Sections 3.2 and 3.3 of said plan:
Such service shall be credited without duplication in the case of a
Prior MNC Plan Participant who also had Benefit Service or Vesting
Service under this Plan immediately prior to the MNC Plan Merger Date
because of any prior participation in this Plan or for any other
reason. If a former MNC employee is not in Service on the MNC Plan
Merger Date and subsequently resumes Service, the former MNC employee
will receive no Benefit Service or Vesting Service credit under this
Section 15.9(c) if the former MNC employee's "Vesting Credited
Service" or "Benefit Credited Service" would have been disregarded
under the MNC Plans on or before the resumption of Service had the MNC
Plans remained in effect between the MNC Plan Merger Date and the date
of such resumption of Service.
(d) Compensation. In determining the Average Compensation
of a former MNC employee who becomes a Participant in the Plan,
the Participant shall be deemed to have received Compensation
prior to the MNC Plan Merger Date equal to the Participant's
"Compensation" under and as defined in the applicable MNC Plan.
(e) Benefits. The monthly retirement income under this
Plan as of any date (a "determination date") of a Participant who
was a participant in one of the MNC Plans immediately prior to
the MNC Plan Merger Date shall equal the greater of (i) such
Participant's
8
<PAGE>
monthly retirement income determined under the
applicable provisions of the Plan as of the determination date
(including the provisions of Sections 15.9(c) and (d) above) or
(ii) the sum of Amount A and Amount B, where:
Amount A is the Participant's "Accrued Benefit" under and as
defined in the applicable MNC Plan determined immediately
prior to the MNC Plan Merger Date, and
Amount B is the Participant's monthly retirement income
determined under the applicable provisions of the Plan as of
the determination date, except that for such purpose the
Participant's Benefit Service shall be limited to the
Participant's Benefit Service from and after the MNC Plan
Merger Date, and such post-MNC Plan Merger Date Benefit
Service used in the calculation of that portion of the
Participant's monthly retirement income attributable to
Average Compensation in excess of Covered Compensation shall
be limited further to five hundred forty (540) minus the
Participant's Benefit Service before the MNC Plan Merger
Date (after taking into account the provisions of Section
15.9(c) above).
(f) Separated Participants. The rights and benefits of any
person who participated in an MNC Plan and who separated from
service with MNC or the Participating Employers prior to the MNC
Plan Merger Date shall be determined solely in accordance with
the provisions of the applicable MNC Plan in effect immediately
prior to the MNC Plan Merger Date, unless such person enters
Service with a Participating Employer after the MNC Plan Merger
Date, in which event the provisions of this Section 15.9 shall
then apply to such person.
(g) Limited Effect of Plan Merger. To the extent required
by Section 204(g) of the Act and Section 411(d)(6) of the Code,
no "optional form of benefit" (within the meaning of the Act and
the Code) under an MNC Plan, including such optional forms of
benefit set forth on Schedule 15.9 attached to the Plan, shall be
reduced or eliminated as a result of the merger of the MNC Plans
into the Plan. Notwithstanding any provision of the Plan to the
contrary, the death benefits formerly provided under the MNC
Plans shall not be provided under this Plan, and the only death
benefits provided under this Plan to a former MNC employee
9
<PAGE>
participating in this Plan shall be as set forth in Article VI."
6. The following new Sections 15.10 and 15.11 are added to the end
of Article XV of the Plan effective as of December 31, 1994:
"SECTION 15.10. FORMER RHNB EMPLOYEES.
(a) General. During 1994, RHNB Corporation merged with and
into NationsBank Corporation. In connection with the merger,
Rock Hill National Bank, the sponsor of the Rock Hill National
Bank Pension Plan (the "RHNB Plan"), became a wholly owned
subsidiary of NationsBank Corporation. (RHNB Corporation and
Rock Hill National Bank are referred to collectively herein as
"RHNB"). The RHNB Plan merged into the Plan effective as of
December 31, 1994 (the "RHNB Plan Merger Date"). As part of said
plan merger, on the RHNB Plan Merger Date the trust maintained
under the RHNB Plan shall become a part of the Trust maintained
under this Plan, and the assets of the RHNB Plan thereupon became
assets of this Plan. As of the RHNB Plan Merger Date, the Plan
shall be the successor in interest to, and shall have assumed all
the liabilities of, the RHNB Plan, and the rights and benefits of
all former employees of RHNB who were participating in the RHNB
Plan immediately prior to the RHNB Plan Merger Date shall be
determined solely in accordance with the terms and provisions of
this Plan, including the provisions of this Section 15.10.
(b) Participation. A person who had become a participant
in the RHNB Plan by the RHNB Plan Merger Date (a "Former RHNB
Plan Participant") shall become a Participant in the Plan on the
RHNB Plan Merger Date and participate in the Plan thereafter to
the extent provided in the Plan. Each other former employee of
RHNB shall become a Participant in the Plan in accordance with
the terms and provisions of the Plan other than this Section
15.10, except that for purposes of applying the eligibility
requirements of Section 3.2(c), the provisions of Section
15.10(c) below shall apply.
(c) Prior Service Credit Loss of Service. for purposes of
determining the benefits under this Plan of a Prior RHNB Plan
Participant, the Participant shall be credited with Benefit Service
and Vesting Service for time prior to the RHNB Plan Merger Date equal
to the Participant's "years of participation" and "years of service,"
respectively, (expressed in months) as of the RHNB
10
<PAGE>
Plan Merger Date under (and as provided in) Sections 4.1 and 5.5 of said
plan. Such service shall be credited without duplication in the case of a
Prior RHNB Plan Participant who also had Benefit Service or Vesting Service
under this Plan immediately prior to the RHNB Plan Merger Date because
of any prior participation in this Plan or for any other reason. If a
former RHNB employee is not in Service on the RHNB Plan Merger Date
and subsequently resumes Service, the former RHNB employee will
receive no Benefit Service or Vesting Service credit under this
Section 15.10(c) if the former RHNB employee's "years of
participation" or "years of service" would have been disregarded under
the RHNB Plan on or before the resumption of Service had the RHNB Plan
remained in effect between the RHNB Plan Merger Date and the date of
such resumption of Service.
(d) Compensation. In determining the Average Compensation
of a former RHNB employee who becomes a Participant in the Plan,
the Participant shall be deemed to have received Compensation
prior to the RHNB Plan Merger Date equal to the Participant's
"Compensation" under and as defined in the RHNB Plan.
(e) Benefits. The monthly retirement income under this
Plan as of any date (a "determination date") of a Participant who
was a participant in the RHNB Plan immediately prior to the RHNB
Plan Merger Date shall equal the greater of (i) such
Participant's monthly retirement income determined under the
applicable provisions of the Plan as of the determination date
(including the provisions of Sections 15.10(c) and (d) above) or
(ii) the sum of Amount A and Amount B, where:
Amount A is the Participant's "accrued benefit" under and as
defined in the RHNB Plan determined immediately prior to the
RHNB Plan Merger Date, and
Amount B is the Participant's monthly retirement income
determined under the applicable provisions of the Plan as of
the determination date, except that for such purpose the
Participant's Benefit Service shall be limited to the
Participant's Benefit Service from and after the RHNB Plan
Merger Date, and such post-RHNB Plan Merger Date Benefit
used in the calculation of that portion of the Participant's
monthly retirement income attributable to Average
Compensation in excess of Covered Compensation shall be
limited to five hundred forty (540) minus the Participant's
Benefit Service before the RHNB Plan Merger Date
11
<PAGE>
(after taking into account the provisions of Section 15.10(c)
above).
(f) Separated Participants. The rights and benefits of any
person who participated in the RHNB Plan and who separated from
service with RHNB or the Participating Employers prior to the
RHNB Plan Merger Date shall be determined solely in accordance
with the provisions of the RHNB Plan in effect immediately prior
to the RHNB Plan Merger Date, unless such person enters Service
with a Participating Employer after the RHNB Plan Merger Date, in
which event the provisions of this Section 15.10 shall apply to
such person.
(g) Limited Effect of Plan Merger. To the extent required
by Section 204(g) of the Act and Section 411(d)(6) of the Code,
no "optional form of benefit" (within the meaning of the Act and
the Code) under the RHNB Plan shall be reduced or eliminated as a
result of the merger of the RHNB Plan into the Plan.
Notwithstanding any provision of the Plan to the contrary, the
death benefits formerly provided under the RHNB Plan shall not be
provided under this Plan, and the only death benefits provided
under this Plan to a former RHNB employee participating in this
Plan shall be as set forth in Article VI.
SECTION 15.11. MERGER OF THE NATIONSCREDIT PLAN.
(a) General. NationsCredit Corporation is a Participating
Employer under this Plan and the sponsor of the NationsCredit
Retirement Account Plan (the "NationsCredit Plan"), a tax-
qualified "cash balance" plan. The NationsCredit Plan is merged
with and into the Plan effective as of December 31, 1994 (the
"NationsCredit Plan Merger Date"). As part of said plan merger,
on the NationsCredit Plan Merger Date the trust maintained under
the NationsCredit Plan shall become a part of the Trust
maintained under this Plan, and the assets of the NationsCredit
Plan shall thereupon become assets of this Plan. As of the
NationsCredit Plan Merger Date, the Plan shall be the successor
in interest to, and shall have assumed all the liabilities of,
the NationsCredit Plan.
(b) Benefits. For a Participant who was a participant in
the NationsCredit Plan immediately prior to the NationsCredit
Plan Merger Date, such Participant's benefits under the Plan
shall equal the sum of Amount A and Amount B, where:
12
<PAGE>
Amount A is the Participant's "accrued benefit" under and as
defined in the NationsCredit Plan determined immediately
prior to the NationsCredit Plan Merger Date, as adjusted
thereafter by the applicable "cost of living escalator
percentage" under and as defined in the NationsCredit Plan
as in effect immediately prior to the NationsCredit Plan
Merger Date, and
Amount B is the Participant's benefits determined under the
applicable provisions of the Plan, including the provisions
of Section 15.5.
(c) Limited Effect of Plan Merger. To the extent required
by Section 204(g) of the Act and Section 411(d)(6) of the Code,
no "optional form of benefit" (within the meaning of the Act and
the Code) under the NationsCredit Plan shall be reduced or
eliminated as a result of the merger of the NationsCredit Plan
into the Plan."
7. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, and the Trustee have caused this Agreement to be
executed by their respective duly authorized officers, all as of the day
and year first above written.
NATIONSBANK CORPORATION
By: /s/ Susan B. Waldkirch
Name: Susan B. Waldkirch
Title: Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Robin S. Maxwell
Name: Robin S. Maxwell
Title: Senior Vice President
13
<PAGE>
SCHEDULE 15.7
South Carolina Branch Offices Covered by Section 15.7
Clearwater
Graniteville
Langley
Wagner
Six Mile
Westminister
Calhoun Falls
<PAGE>
SCHEDULE 15.8
North Carolina Branch Offices Covered by Section 15.8
Benson
Lillington
Stoneville
Wentworth
Pollocksville
<PAGE>
SCHEDULE 15.9
PROVISIONS OF THE
MNC PLANS
REQUIRING GRANDFATHERING OR SPECIAL CONSIDERATION
<TABLE>
<CAPTION>
Subject Eligibility Provisions Plan/Section
<S> <C> <C> <C>
Annual Cost of Virginia Federal retirees Each July 1, benefit increased MNC Pension Plan
Living Adjustment prior to 9/1/87 and their by the percentage increase (not section 12.10(d)
spouse or beneficiary. to exceed 3%) in the Consumer
Price Index, U.S. City Average,
All Items for the 12-month
period ending the preceding
March 31.
Distribution MNC Pension Plan and Plans provide that participants MNC Pension Plan
Options Former Equitable Plan may elect to receive a greater section 7.2(a)(3)
participants as of plan retirement prior to
merger/amendment date commencement of Social Security Former Equitable
(1/1/94) benefits and a lesser benefit Plan
thereafter in order to provide section 7.2(a)(4)
level aggregate income.
Distribution Individual employed by These individuals have the MNC Pension Plan
Options Virginia Federal prior to right to receive a lump sum section 12.14(a)
7/1/87 and their spouses distribution of their accrued
if they were married on benefit as of 6/30/89
7/1/87 (note applies to regardless of the amount. The
all employees, whether or amount accrued after 6/30/89 is
not they were participants subject to the plan's normal
as of 7/1/87) distribution provisions.
Distribution Former Equitable Plan These individuals may elect to Former Equitable
Options participants receive a reduced benefit plan
during their lifetime and to section 12.9(a)
have 50% or 75% of such reduced
benefit paid to their
descendant who is under age 20
at the time of the election.
Distribution Former Equitable Plan These participants may elect to Former Equitable
Options participants who made receive a single distribution Plan
employee contributions of their accrued benefit section 12.11
prior to 1/1/63 attributable to their employee
contributions. Interest
accrues on such contributions
at rates specified in the plan
document.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Subject Eligibility Provisions Plan/Section
<S> <C> <C> <C>
Distribution Former Equitable Plan These individuals have the Former Equitable
Options participants right to elect to have their Plan
benefits paid by purchase and section 7.1
distribution of an annuity
contract.
Distribution Former Equitable Plan Such a participant has a right Former Equitable
Options participants who were to elect to receive such Plan
participants prior to 1954 contract with a settlement section 12.11
and for whom the plan has payment either from the
retained in force any participant to the plan or from
insurance contracts the plan to the participant if
the cash value differs from the
accrued benefit attributable to
the employee's contribution.
Early Retirement Virginia Federal plan Limited to that portion of the MNC Pension Plan
Date/Age participants prior to benefit which accrued prior to section 12.4(a)
7/1/89 6/30/89, a participant is
eligible to receive
distribution upon attaining age
45 with 10 years of service.
See Pop-Up Benefits infra.
Early Retirement MNC Pension Plan Eligible for early retirement MNC Pension Plan
Date/Age participants who attained at age 55 with 15 years of section 1
age 55 prior to 1/1/89 service. All other MNC Pension Early Retirement
Plan participants must wait Date definition
until 15 years before Social
Security Retirement Age with 15
years of service.
Early Retirement Former Equitable Plan Eligible for early retirement Former Equitable
Date/Age participants at age 55 with 10 years of Plan
service but only with respect section 12.4
to those benefits which had
accrued as of 5/31/91 (12/31/88
for highly compensated
employees). See also, Pop-up
Benefits infra.
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
Subject Eligibility Provisions Plan/Section
<S> <C> <C> <C>
Early Retirement MNC Pension Plan and No reduction for retirements MNC Pension Plan
Reduction Factors Former Equitable Plan within 3 years of Normal section 4.3(a)
participants as of plan Retirement Date (which is
merger/amendment date Social Security Retirement Date Former Equitable
(1/1/94) rounded to the next full year). Plan
If more than 3 years before section 4.3
Normal Retirement Date,
reduction of 5/12 of 1% per
month from the date which is 3
years before Normal Retirement
Date. If more than 10 years
before Normal Retirement Date,
further reduced to actuarial
equivalent.
Normal Retirement Former Equitable Plan Normal Retirement Date is age Former Equitable
Date participants 65 with respect to benefits Plan
accrued as of 5/31/91 (12/31/88 section 12.5
if highly compensated). Normal
Retirement Date for all other
MNC Pension Plan participants
and for Former Equitable
Employees participants with
respect to benefits accrued
after 6/1/91 (1/1/89 if highly
compensated) is Social Security
Retirement Date.
Pop-Up Benefits Former Equitable Plan These individuals are eligible Former Equitable
participants to receive their accrued Plan
benefits as of 5/31/91 section 12.8
(12/31/88 if highly
compensated) earlier than they
are eligible to receive their
benefits accrued after 5/31/91.
If they elect early payment of
those benefits accrued as of
5/31/91, when they attain
Normal Retirement Date their
benefit is increased to the
difference between the accrued
benefits.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Subject Eligibility Provisions Plan/Section
<S> <C> <C> <C>
Pop-Up Benefits Virginia Federal Plan These individuals are eligible MNC Pension Plan
participants to receive their accrued section 12.13(a)
benefits as of 6/30/89 earlier
than they are eligible to
receive their benefits accrued
after 6/30/89. If they elect
early payment of those benefits
accrued as of 6/30/89, when
they attain Normal Retirement
Date their benefit is increased
to the difference between the
accrued benefits.
Right to Repay ASC Plan participants who If re-employed, these MNC Pension Plan
Prior Distribution had received a individuals are permitted to section 5.3(c)
distribution prior to repay their distribution with
1/1/89 and Virginia interest and thereby not have
Federal participants who their future benefit reduced
had received a for such distribution.
distribution prior to
7/1/89
Vesting MNC Pension Plan These individuals are vested as MNC Pension Plan
Participants employed of their termination date section 5.3(a)
prior to 1/1/89 and who regardless of years of service.
attained age 65 prior to
1/1/89
</TABLE>
<PAGE>
SECOND AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 28th day of
September, 1994 by and between NATIONSBANK CORPORATION, a North Carolina
corporation ("NationsBank"), and NATIONSBANK OF NORTH CAROLINA, N.A., a
national banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS, NationsBank and certain of its subsidiary corporations
(collectively with NationsBank, the "Participating Employers") maintain The
NationsBank Pension Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to permit the
appointment of one or more investment managers for the Plan's assets; and
WHEREAS, in Section 11.1 of the Plan, the Participating Employers have
reserved the right to amend the Plan at any time, in whole or in part, and
have delegated to the Compensation Committee of the Board of Directors of
NationsBank the right to make the amendments set forth below on behalf of
all Participating Employers; and
WHEREAS, the amendments set forth below have been authorized and
approved by the Compensation Committee;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, NationsBank and the Trustee hereby agree that
the Plan is amended effective as of January 1, 1993 as follows:
1. The following Section 2.1(c)(29A) is added to the Plan
immediately following Section 2.1(c)(29) of the Plan:
"(29A) Investment Manager means any person, firm or
corporation (other than the Trustee or a named fiduciary
hereunder):
(A) who has been appointed by the Compensation
Committee and has been delegated the power to manage,
acquire or dispose of any asset of the Plan;
(B) who is either:
<PAGE>
(i) a registered investment adviser under
the Investment Advisers Act of 1940,
(ii) a bank, as defined in the Investment
Advisers Act of 1940, or
(iii) an insurance company qualified to
perform such delegated services under the laws of
more than one (1) state; and
(C) who has acknowledged in writing that said
Investment Manager is a fiduciary with respect to the
Plan."
2. The first clause of the first sentence of Section 10.2(a) of the
Plan ("Subject to . . . and 10.2(c), . . .") is amended to read as follows:
"Subject to the provisions of Section 10.2(d) and the directions
of an Investment Manager (if any) or the directions of
NationsBank Corporation (if any), . . ."
3. Sections 10.2(b) and (c) of the Plan are redesignated as Sections
10.2(c) and (d), respectively, and the following Section 10.2(b) is added
to the Plan:
"(b) Investment Manager. The Compensation Committee may
appoint an Investment Manager or Managers to manage (including
the power to acquire and dispose of) all or a part of the assets
of the Trust which the Trustee is permitted to acquire and hold
under the provisions of Section 10.2(a) by a written instrument
stating that said Investment Manager has fiduciary responsibility
with respect to the fiduciary duties entrusted to said Investment
Manager, which written instrument shall be delivered to such
Investment Manager and returned to the Compensation Committee
bearing written acknowledgement by such Investment Manager that
such Investment Manager is a fiduciary with respect to the Plan
and Trust. An Investment Manager or Managers appointed by the
Compensation Committee shall be responsible for the management of
the assets of the Plan and Trust to the extent provided by the
Compensation Committee in such appointment and shall be
responsible for directing the Trustee with respect to the
investment of the Trust in accordance with Section 10.2(a)."
2
<PAGE>
4. The first clause of Section 10.2(c) (as redesignated)
("Notwithstanding . . . Section 10.2(a), . . .") is amended to read as
follows:
"Notwithstanding the provisions of Section 10.2(a) or Section
10.2(b), . . ."
5. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, and the Trustee have caused this Agreement to be
executed by their respective duly authorized officers, all as of the day
and year first above written.
NATIONSBANK CORPORATION
By: /s/ Mary E. Preslar
Name: Mary E. Preslar
Title: Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Anne-Louise Hyatt
Name: Anne-Louise Hyatt
Title: Assistant Vice President
3
<PAGE>
THIRD AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 13th day of
December, 1994 by and between NATIONSBANK CORPORATION, a North Carolina
corporation ("NationsBank"), and NATIONSBANK OF NORTH CAROLINA, N.A., a
national banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS, NationsBank and certain of its subsidiary corporations
(collectively with NationsBank, the "Participating Employers") maintain The
NationsBank Pension Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan effective as of
December 31, 1994 to provide that the interest rate and the mortality table
used for the calculation of lump sum benefits under the Plan shall be the
"applicable interest rate" and the "applicable mortality table," as said
terms are defined in Section 417(e)(3) of the Internal Revenue Code of
1986, as amended by the Retirement Protection Act of 1994; and
WHEREAS, in Section 11.1 of the Plan, the Participating Employers
reserved the right to amend the Plan at any time, in whole or in part, and
have delegated to the Compensation Committee of the Board of Directors of
NationsBank the right to make the amendments set forth below on behalf of
all Participating Employers; and
WHEREAS, the amendments set forth below have been authorized and
approved by the Compensation Committee;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, NationsBank and the Trustee hereby agree as
follows:
1. Section 5.5(d) of the Plan is amended effective as of December
31, 1994 to read as follows:
"(d) Actuarial Assumptions. For the purpose of actuarial
equivalence calculations required under the Plan, the following
assumptions shall be used:
(1) Alternative Annuity Forms of Payment. The assumptions
used for purposes of computing actuarially
<PAGE>
equivalent alternative forms of payment other than lump sum
payments shall be as follows:
Mortality: A unisex rate that is fifty percent (50%) male,
fifty percent (50%) female, taken from the 1971 Group
Annuity Mortality Table.
Interest: Nine percent (9%).
(2) Lump Sum Payments. The assumptions used for purposes
of computing lump sum payments under the Plan shall be as
follows:
(A) For lump sum payments made before December 31,
1994:
Mortality: A unisex rate that is fifty percent (50%) male,
fifty percent (50%) female, taken from the 1971 Group
Annuity Mortality Table.
Interest: The rate(s) which would be used by the Pension
Benefit Guaranty Corporation as of the first day of the Plan
Year in which the payment is made to determine the present
value of a lump sum distribution on plan termination.
(B) For lump sum payments made on or after December
31, 1994:
Mortality: The "applicable mortality table," as such term
is defined in Section 417(e)(3) of the Code, as amended by
the Retirement Protection Act of 1994.
Interest: The "applicable interest rate", as such term is
defined in Section 417(e)(3) of the Code, as amended by the
Retirement Protection Act of 1994."
2. Section 6.2(a) of the Plan is amended effective as of December
31, 1994 to read as follows:
"(a) Basis of Death Benefit. The amount provided as a death
benefit shall be based on the actuarially equivalent single-sum
present value, calculated by applying the actuarial assumptions in
Section 5.5(d)(1), of one-half (1/2) of the Participant's retirement
income determined as though the Participant had separated from Service
on the Participant's date of death and had elected to receive
retirement benefits commencing either on the first day of the month
following the date on which the Participant would have attained fifty
(50) years of age (if the Participant
2
<PAGE>
had not attained age fifty (50) by the Participant's date of death)
or commencing on the first day of the month following the
Participant's date of death (if the Participant had attained age
fifty (50) by the Participant's date of death)."
3. The second paragraph of Section 6.2(b) of the Plan is amended
effective as of December 31, 1994 to read as follows:
"Payments under such annuity shall commence to the spouse on the
first day of the month following the date on which the Participant
would have attained age fifty (50). If, however, the lump sum value
of the benefits payable to the spouse does not exceed twenty-five
thousand dollars ($25,000) (as determined pursuant to the next
sentence), such payments may commence earlier in an actuarially
equivalent reduced amount, or may be paid in a lump sum, as elected by
the spouse. If benefits are paid in a lump sum, such lump sum shall
be the larger of (1) or (2), where:
(1) is the actuarially equivalent single-sum value described in
Subsection (a) [calculated by applying the actuarial assumptions
specified in Section 5.5(d)(1)]; and
(2) is the single sum value of the fifty percent (50%) qualified
joint and survivor annuity described in this Subsection (b),
calculated by applying the actuarial assumptions specified in
Section 5.5(d)(2)(B)."
4. The second paragraph of Section 6.2(c) of the Plan is amended
effective as of December 31, 1994 to read as follows:
"Payments thereunder will commence to the spouse on the first day
of the month following the date of death of the Participant. If,
however, the lump sum value of the benefits payable to the spouse does
not exceed $25,000 (as determined pursuant to the next sentence), such
payments may be paid in a lump sum, as elected by the spouse. If
benefits are paid in a lump sum, such lump sum shall be the larger of
(1) or (2), where:
(1) is the actuarially equivalent single-sum value described in
Subsection (a) [calculated by applying the actuarial assumptions
specified in Section 5.5(d)(1)]; and
(2) is the single sum value of the fifty percent (50%) qualified
joint and survivor annuity referenced in this Subsection (c),
calculated by applying the actuarial assumptions specified in
Section 5.5(d)(2)(B)."
3
<PAGE>
5. Sections 15.4(h)(1) and 15.4(h)(2) of the Plan are amended
effective as of December 31, 1994 to read as follows:
"(1) Prior to January 1, 1995. Subject to Section 5.5 and in
lieu of the amount and form of monthly retirement income otherwise
payable under the Plan, a Prior CVN Plan Participant who separates
from Service before January 1, 1995 but after meeting the eligibility
requirements for a vested benefit may elect, at the time and in the
form required by the Committee, to receive immediate payment of the
Participant's entire monthly retirement income benefit under the Plan
(including without limitation any minimum benefit provided under
Appendix A to this Section 15.4) in accordance with any of the payment
options described in Section 5.4, including Option 5 (Lump Sum)
regardless of the single sum value of the Participant's retirement
income. Such single sum value of the Participant's retirement income
shall be calculated using the actuarial equivalence assumptions in
effect under Section 5.5(d) prior to the amendment of Section 5.5(d)
effective December 31, 1994. If a Participant is entitled to a
minimum benefit under Appendix A to this Section 15.4, then
notwithstanding the provisions of Section 5.5(d) as in effect prior to
December 31, 1994, a lump sum payment under Option 5 shall be
calculated using a mortality factor from the Unisex Pension (UP) 1984
Mortality Table with a one-year age set back.
(2) After December 31, 1994. Subject to Section 5.5 and in lieu
of the amount and form of monthly retirement income otherwise payable
under the Plan, a Prior CVN Plan Participant who separates from
Service after December 31, 1994 but after meeting the eligibility
requirements for a vested benefit may elect, at the time and in the
form required by the Committee, to receive:
(A) a lump sum payment equal to the greatest of (i)
the Participant's Cash Balance Amount, (ii) the single sum
value of any minimum benefit to which the Participant may be
entitled under The C&S Retirement Plan (a predecessor of the
CVN Plan), or (iii) the single sum value as of December 31,
1994 (determined as specified below) of the Participant's
entire monthly retirement income benefit under the Plan
(including without limitation any minimum benefit provided
under Appendix A to this Section 15.4) as of such date; or
(B) immediate payment of the lump sum amount
determined as described in Subsection (A) above in
accordance with any of the payment options
4
<PAGE>
described in Section 5.4, other than Option 5 (Lump Sum).
The single sum value of the benefit described in clauses (ii) and
(iii) of Subsection (A) above shall be calculated by applying the
actuarial assumptions specified in Section 5.5(d)(2)(B);
provided, however, in the event a Prior CVN Plan Participant is
in Service on December 31, 1994 and eligible as of December 31,
1994 for early retirement under Section 5.2 and such Prior CVN
Plan Participant separates from Service before January 1, 1997,
then such single sum value shall not be less than the single sum
value of such benefit calculated as of December 31, 1994 by
applying the actuarial assumptions specified in Section
5.5(d)(2)(A) as in effect on December 31, 1994.
The amount (if any) of the Participant's benefit in excess of any
immediate benefit payment made pursuant to this Section 15.4(h)(2)
(the "residual benefit") shall be payable at the time and in
accordance with a method of payment described in Article V of the
Plan. For purposes of this Section 15.4(h)(2), the residual benefit
shall be a monthly retirement income, commencing on the Participant's
Normal Retirement Date, that is actuarially equivalent to the excess
of (i) over (ii) where (i) is the single sum value of the
Participant's entire monthly retirement income under the Plan
(including without limitation any minimum benefit provided under
Appendix A to this Section 15.4) [calculated by applying the actuarial
assumptions specified in Section 5.5(d)(2)(B) to such benefit] and
(ii) is the lump sum amount determined as described in Subsection (A)
above. Such monthly retirement income commencing on the Participant's
Normal Retirement Date shall be reduced for early commencement, if
applicable, in accordance with Section 5.2(b)(1)."
6. Section 15.4(h)(4) of the Plan is amended effective as of December
31, 1994 to read as follows:
"(4) Actuarial Equivalence. Notwithstanding Section 5.5(d)
of the Plan, the actuarially equivalent single sum value of a
Participant's CVN Plan Minimum Monthly Benefit or Cash Balance
Monthly Benefit as of any date shall be equal to the greater of
(i) the Participant's Cash Balance Amount as of such date or (ii)
the actuarially equivalent single sum value of such benefit
determined by applying the interest rate specified in Section
5.5(d)(2)(B) and the Unisex Pension (UP) 1984 Mortality Table
with a one-year age set back to the Participant's CVN Plan
Minimum Monthly Benefit or the mortality assumption specified in
5
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Section 5.5(d)(1) to the Participant's Cash Balance Monthly
Benefit."
7. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, and the Trustee have caused this Agreement to be
executed by their respective duly authorized officers, all as of the day
and year first above written.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley, Executive
Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Robin S. Maxwell
Name: Robin S. Maxwell
Title: Senior Vice President
6
NCNB CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR SENIOR MANAGEMENT EMPLOYEES
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I NAME AND PURPOSE . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Name. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Purpose . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW . . . . . . 2
Section 2.1. Construction and Definitions . . . . . . . . . 2
Section 2.2 Applicable Law . . . . . . . . . . . . . . . 15
ARTICLE III PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1. General . . . . . . . . . . . . . . . . . . . 15
Section 3.2. Eligibility . . . . . . . . . . . . . . . . . 15
ARTICLE IV BENEFITS . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.1. General . . . . . . . . . . . . . . . . . . . 16
Section 4.2. Normal Retirement . . . . . . . . . . . . . . 16
Section 4.3. Early Retirement . . . . . . . . . . . . . . 17
Section 4.4. Delayed Retirement . . . . . . . . . . . . . 18
Section 4.5. Disability . . . . . . . . . . . . . . . . . 19
Section 4.6. Death . . . . . . . . . . . . . . . . . . . . 21
Section 4.7. Adjustment in Benefits . . . . . . . . . . . 25
Section 4.8. Special Benefit . . . . . . . . . . . . . . . 27
Section 4.9. Beneficiary or Beneficiaries . . . . . . . . 29
ARTICLE V PLAN COMMITTEE . . . . . . . . . . . . . . . . . . . . 30
Section 5.1. Appointment, Term of Office and Vacancy . . . 30
Section 5.2. Organization of Plan Committee . . . . . . . 31
Section 5.3. Powers of the Plan Committee . . . . . . . . 31
Section 5.4. Expenses of Plan Committee . . . . . . . . . 32
ARTICLE VI AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . 32
Section 6.1. Amendment of Plan . . . . . . . . . . . . . . 32
Section 6.2. Termination of Plan . . . . . . . . . . . . . 32
Section 6.3. Effective Date and Procedure for Amendment
or Termination . . . . . . . . . . . . . . . . . 33
Section 6.4. Effect of Amendment or Termination on Certain
Benefits . . . . . . . . . . . . . . . . . . 33
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 34
Section 7.1. Adoption by a Subsidiary Corporation . . . . 34
Section 7.2. Authorization and Delegation to the Compensa-
tion Committee . . . . . . . . . . . . . . . 34
Section 7.3. Spendthrift Clause . . . . . . . . . . . . . 35
<PAGE>
Section 7.4. Benefits Payable From General Assets of the
Participating Employers . . . . . . . . . . . 35
Section 7.5. Allocation of Costs of Benefits Among the
Participating Employers . . . . . . . . . . . 36
Section 7.6. Benefits Limited to the Plan . . . . . . . . 36
ARTICLE VIII CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . 36
Section 8.1. Claims Procedure . . . . . . . . . . . . . . 36
<PAGE>
NCNB CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR SENIOR MANAGEMENT EMPLOYEES
WHEREAS, NCNB Corporation and certain of its subsidiaries (the
"Participating Employers") desire to adopt and establish, effective as
of January 1, 1989, an unfunded supplemental executive retirement plan
to be known as the "NCNB Corporation and Designated Subsidiaries
Supplemental Executive Retirement Plan for Senior Management Employees"
for the purpose of providing certain benefits for eligible employees of
the Participating Employers, all as more specifically provided for
hereinbelow;
NOW, THEREFORE, the Participating Employers do hereby adopt and
establish effective as of January 1, 1989, the "NCNB Corporation and
Designated Subsidiaries Supplemental Executive Retirement Plan for
Senior Management Employees" consisting of the terms and provisions set
forth in Article I through Article VIII, inclusive, as follows:
ARTICLE I
NAME AND PURPOSE
Section 1.1. Name. The Plan shall be known as the "NCNB
Corporation and Designated Subsidiaries Supplemental Executive
Retirement Plan for Senior Management Employees."
Section 1.2. Purpose. The purpose of the Plan is to provide
certain Employees of the Participating Employers who are designated as
Participants in this Plan with certain benefits in accordance with the
provisions of the Plan.
<PAGE>
ARTICLE II
CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW
Section 2.1. Construction and Definitions.
(a) Construction. Article, section and paragraph headings have
been inserted for convenience of reference only in the Plan and are to
be ignored in any construction of the provisions hereof. If any
provision of the Plan shall for any reason be invalid or unenforceable,
the remaining provisions shall nevertheless be valid, enforceable and
fully effective.
(b) Definitions. Whenever used in the Plan, unless the context
clearly indicates otherwise, the following terms shall have the
following meanings:
(1) Assumed Retirement Benefit means, with respect to a
Participant as of any date, the sum of annual benefits, if any,
which would have been payable to such Participant as of such date
under the Retirement Plan and the ERISA Supplemental Plan assuming
for such purpose
(A) in the case of a married Participant, that the
Participant had elected to receive such benefits in the form
of a "modified joint and survivor annuity" with the survivor
annuity for such Participant's spouse being equal to sixty-six
and two-thirds percent (66-2/3%) of the benefit payable during
the joint lives of the Participant and such spouse; and
2
<PAGE>
(B) in the case of an unmarried Participant, that the
Participant had elected to receive such benefits in the form
of a "ten-year certain and life annuity."
The foregoing assumptions are made solely for the purpose of
determining the benefits, if any, payable under this Plan, and such
assumptions shall be applied regardless of the actual method of
payment used to provide such Participant's benefits under the
Retirement Plan or the ERISA Supplemental Plan.
(2) Base Salary means, with respect to a Participant, the
"base salary" payable to such Participant from time to time as
remuneration for hours of employment by a Participating Employer
determined without regard to (i) any deferrals pursuant to the
Deferred Compensation Plan, (ii) any salary reduction pursuant to
the Flexible Benefits Plan, and (iii) any salary reduction pursuant
to the Thrift Plan.
(3) Beneficiary means the person(s) or entity(ies) designated
by a Participant or the provisions of the Plan to receive such
benefits as may become payable to such person(s) or entity(ies) in
accordance with the provisions of the Plan.
(4) Bonus(es) means, with respect to a Participant, any
bonus(es) payable to such Participant pursuant to
3
<PAGE>
(A) the Management Incentive Compensation Plan, and
(B) any other similar incentive compensation plan of the
Participating Employers approved for purposes of this Plan by
the Compensation Committee
determined without regard to any deferrals pursuant to the Deferred
Compensation Plan.
(5) Child or Children means, with respect to a Participant,
each child born to or "adopted" by such Participant. A person
shall be considered "adopted" if adopted for life and either (i)
the final order of adoption has been entered or (ii) the adoption
proceeding has been instituted and the adopted person is in the
custody and possession of the adoptive parent(s) and final decree
is entered within a period not to exceed three (3) years after the
date of the institution of said adoption proceeding.
(6) Claim means a claim for benefits under the Plan.
(7) Claimant means a person making a Claim.
(8) Compensation means, with respect to a Participant, the
Base Salary and Bonus(es), if any, payable to such Participant from
time to time by a Participating Employer. Compensation shall not
include
4
<PAGE>
(A) awards, overtime pay, shift premium, or other
incentive compensation or extra or special remuneration of any
kind which is not a Bonus;
(B) any other sums paid by the Participating Employers
on account of any health, welfare or group insurance benefits
(exclusive of sick pay), including "Basic Employer
Contributions" under the Flexible Benefits Plan, or on account
of reimbursement of relocation expenses, regardless of whether
such sums are taxable income to the Participant; or
(C) any compensation pursuant to any other employee
benefit plan, including without limitation any sums selected
to be received in cash pursuant to any such plan.
Amounts of Base Salary or Bonus(es) which are deferred pursuant to
the Deferred Compensation Plan or the subject of salary reduction
pursuant to the Flexible Benefits Plan or the Thrift Plan shall be
treated as Compensation for purposes of this Plan for the calendar
year in which such amount would have been otherwise paid to a
Participant by a Participating Employer but for such deferral or
salary reduction.
(9) Compensation Committee means the Compensation Committee
of the Board of Directors of NCNB Corporation.
5
<PAGE>
(10) Creditable Service means, with respect to a Participant
as of any date, the sum of (A) and (B) where
(A) is such Participant's months of "Creditable Service"
as of such date determined in accordance with the provisions
of the Retirement Plan; and
(B) is such additional number of months, if any,
determined in the sole and exclusive discretion of the
Compensation Committee at the time such Participant commences
participation in the Plan.
(11) Deferred Compensation Plan means the NCNB Corporation and
Designated Subsidiaries Deferred Compensation Plan for Key
Employees, as amended from time to time.
(12) Delayed Retirement means, with respect to a Participant,
such Participant's separation from Service after the Plan Year in
which such Participant attains the Normal Retirement Age.
(13) Delayed Retirement Benefit means, with respect to a
Participant, an annual amount equal to (A) minus (B) where
(A) is such Participant's Target Retirement Benefit
(computed on the basis of such Participant's Final Average
Compensation at the time such
6
<PAGE>
Participant attained the Normal Retirement Age); and
(B) is the sum of such Participant's (i) Assumed
Retirement Benefit and (ii) Social Security Benefit.
(14) Disability means, with respect to a Participant,
"Disability" as defined in the Long Term Disability Plan.
(15) Disabled means, with respect to a Participant, "Disabled"
as defined in the Long Term Disability Plan.
(16) Early Retirement means, with respect to a Participant,
such Participant's separation from Service (A) after having
attained age fifty-five (55) and having completed at least one
hundred eighty (180) months of Creditable Service, (B) after having
attained age sixty (60) and having completed at least three hundred
(300) months of Creditable Service, or (C) after having attained
age sixty-two (62).
(17) Early Retirement Benefit means:
(A) with respect to a Participant eligible for Early
Retirement who has attained age sixty-two (62) or who has
attained age sixty (60) and completed at least three hundred
(300) months of Creditable Service, an annual amount equal to
(i) minus (ii) where
7
<PAGE>
(i) is such Participant's Target Retirement
Benefit; and
(ii) is the sum of such Participant's (aa)
Assumed Retirement Benefit and (bb) Social
Security Benefit; and
(B) with respect to a Participant eligible for Early
Retirement who has not attained age sixty-two (62) or who
has not attained age sixty (60) and completed at least three
hundred (300) months of Creditable Service, an annual amount
equal to (i) minus (ii) where
(i) is such Participant's Target Retirement
Benefit reduced by one-three hundred sixtieth
(1/360) for each of the first twenty-four (24)
months and one-one hundred eightieth (1/180) for
each additional month in excess of twenty-four
(24) months that the date such Participant
commences receiving such Participant's Early
Retirement Benefit precedes the month in which
such Participant would have attained age sixty-two
(62); and
(ii) is the sum of such Participant's (aa)
Assumed Retirement Benefit and (bb) Social
Security Benefit.
(18) Effective Date means, with respect to the Plan,
January 1, 1989.
(19) Eligible Spouse means, with respect to a deceased
Participant, the person, if any, who was married to such deceased
Participant throughout the entire one (1) year period ending on
the date of such deceased Participant's death.
(20) Employee means a person employed by any of the
Participating Employers.
8
<PAGE>
(21) ERISA Supplemental Plan means the NCNB Corporation and
Designated Subsidiaries Supplemental Retirement Plan, as amended
from time to time.
(22) Family Death Benefit means, with respect to a deceased
Participant, an annual amount equal to (A) minus (B) where
(A) is twenty-five percent (25%) of such deceased
Participant's Final Average Compensation, and
(B) is the sum of such Participant's (i) Retirement
Plan Death Benefit and (ii) Social Security Benefit.
(23) Family Death Benefit Termination Date means, with
respect to a deceased Participant, the date determined as
follows:
(A) if the deceased Participant is survived by an
Eligible Spouse, the date of the last to occur of the
following
(i) the death of such surviving Eligible Spouse,
or
(ii) the attainment of age twenty-one (21) by the
last Child of such deceased Participant to attain such
age or, if earlier, the death of the last Child of such
deceased Participant; or
(B) if the deceased Participant is not survived by an
Eligible Spouse, the date of the attainment of age twenty-
one (21) by the last Child of such deceased Participant to
attain such
9
<PAGE>
age or, if earlier, the date of the death of the
last Child of such deceased Participant.
(24) Final Average Compensation means, with respect to a
Participant as of any determination date, the average of the
annual Compensation paid to such Participant during the five (5)
calendar years of highest Compensation (which calendar years need
not be consecutive) during the ten (10) calendar years next
preceding the earlier to occur of
(A) the calendar year in which such Participant
attains the Normal Retirement Age; or
(B) such Participant's separation from Service,
to be determined by dividing the aggregate Compensation received
by the Participant during the appropriate five (5) calendar years
by five (5). If a Participant has completed less than five (5)
calendar years of Service as hereinabove provided, such
Participant's Final Average Compensation shall be determined by
dividing the aggregate Compensation received by the Participant
during said calendar years by the number of such calendar years.
(25) Flexible Benefits Plan means the NCNB Corporation and
Designated Subsidiaries Flexible Benefits Plan, as amended from
time to time.
10
<PAGE>
(26) Joint and Sixty-Six and Two-Thirds Percent (66-2/3%)
Annuity means an annuity for the life of a Participant with a
survivor annuity for the life of such Participant's spouse which
is sixty-six and two-thirds percent (66-2/3%) of the amount of
the annuity payable during the joint lives of the Participant and
such Participant's spouse.
(27) Long Term Disability Plan means the NCNB Corporation
Long Term Disability Plan, as amended from time to time.
(28) Long Term Disability Plan Benefit means, with respect
to a Participant, the annual amount of benefits payable to a
Disabled Participant from time to time pursuant to the provisions
of the Long Term Disability Plan.
(29) Management Incentive Compensation Plan means the NCNB
Corporation Management Incentive Compensation Plan, as amended
from time to time.
(30) Normal Retirement means, with respect to a Participant,
such Participant's separation from Service after attainment of
the Normal Retirement Age.
(31) Normal Retirement Age means, with respect to a
Participant, age sixty-five (65).
(32) Normal Retirement Benefit means, with respect to a
Participant, an annual amount equal to (A) minus (B) where
11
<PAGE>
(A) is such Participant's Target Retirement Benefit;
and
(B) is the sum of such Participant's (i) Assumed
Retirement Benefit and (ii) Social Security Benefit.
(33) Participant means an Employee who has been designated a
Participant in the Plan as provided in Section 3.2 of the Plan.
(34) Participating Employers means:
(A) NCNB Corporation, a North Carolina corporation;
(B) the following Subsidiary Corporations of NCNB
Corporation:
(i) NCNB National Bank of North Carolina, a
national banking association;
(ii) NCNB National Bank of Florida, a national
banking association;
(iii) NCNB South Carolina, a South Carolina
corporation;
(iv) NCNB Services, Inc., a North Carolina
corporation; and
(C) those Subsidiary Corporations of NCNB Corporation
which in the future adopt the Plan pursuant to the
provisions of Section 7.1 hereof.
(35) Plan means the NCNB Corporation and Designated
Subsidiaries Supplemental Executive Retirement Plan for Senior
Management Employees, as amended from time to time.
12
<PAGE>
(36) Plan Committee means the committee described in Article
V hereof.
(37) Retirement means, with respect to a Participant, such
Participant's separation from Service on account of such
Participant's Normal Retirement, Early Retirement or Delayed
Retirement.
(38) Retirement Plan means the NCNB Corporation and
Designated Subsidiaries Retirement Plan and Trust, as amended
from time to time.
(39) Retirement Plan Death Benefit means, with respect to a
deceased Participant, the sum of the annual amount of death
benefits, if any, payable from time to time to such deceased
Participant's surviving spouse pursuant to the provisions of the
Retirement Plan and the ERISA Supplemental Plan.
(40) Service means "Service" as defined in the Retirement
Plan.
(41) Social Security Benefit means, with respect to a
Participant as of any date, such Participant's "Social Security
Benefit" (expressed as an annual amount) determined as of such
date in accordance with the provisions of the Retirement Plan
(whether or not such Social Security Benefit is used for purposes
of determining such Participant's benefits under the Retirement
Plan).
13
<PAGE>
(42) Subsidiary Corporation means
(A) any corporation more than fifty percent (50%) of
whose outstanding voting capital stock is owned by NCNB
Corporation,
(B) any corporation at least eighty percent (80%) of
whose outstanding voting capital stock and at least eighty
percent (80%) of each class of whose outstanding non-voting
capital stock is owned by a corporation more than fifty
percent (50%) of whose outstanding voting capital stock is
owned by NCNB Corporation; or
(C) any corporation at least eighty percent (80%) of
whose outstanding voting capital stock and at least eighty
percent (80%) of each class of whose outstanding non-voting
capital stock is owned by a corporation described in
subparagraph (B) above.
(43) Target Retirement Benefit means, with respect to a
Participant as of any date, an annual amount equal to the product
of (A) multiplied by (B) where
(A) is fifty percent (50%) of such Participant's Final
Average Compensation; and
(B) is a fraction [not exceeding one (1)], the
numerator of which is the Participant's months of Creditable
Service as of such date, and the denominator of which is one
hundred eighty (180).
(44) Ten-Year Certain and Life Annuity means a monthly
amount payable to a Participant beginning on the date
14
<PAGE>
benefits are to commence under the Plan and continuing on the last
day of each calendar month thereafter for one hundred twenty (120)
consecutive calendar months certain and thereafter on the last
day of each calendar month until the death of such Participant
and providing that in the event that such Participant shall die
prior to the expiration of the one hundred twenty (120) month-
certain period, payments for the remainder of such period shall
be made to such Participant's Beneficiary.
(45) Thrift Plan means the NCNB Corporation and Designated
Subsidiaries Stock/Thrift Plan and Trust, as amended from time to
time.
Section 2.2 Applicable Law. The Plan shall be construed,
administered, regulated and governed in all respects under and by the
laws of the United States to the extent applicable, and to the extent
such laws are not applicable, by the laws of the State of North
Carolina.
ARTICLE III
PARTICIPATION
Section 3.1. General. No person shall become a Participant
unless or until such person is or becomes an Employee. In addition, in
no event shall any Employee be eligible to participate in the Plan prior
to the Effective Date of the Plan.
Section 3.2. Eligibility. The Compensation Committee, in its
sole and exclusive discretion, shall determine which Employees shall
become Participants. Designation of Employees as
15
<PAGE>
Participants shall be made in such manner as the Compensation Committee
shall determine from time to time.
ARTICLE IV
BENEFITS
Section 4.1. General. In the event a Participant separates from
Service on account of Retirement, such Participant shall become entitled
to the applicable retirement benefit provided for in Section 4.2,
Section 4.3 or Section 4.4. In addition, such Participant shall become
entitled to such Participant's special benefit, if any, provided for in
Section 4.8. In the event a Participant becomes Disabled prior to the
attainment of the Normal Retirement Age, such Participant shall become
entitled to the benefits, if any, provided for in Section 4.5 and the
special benefit, if any, provided for in Section 4.8. In the event a
Participant separates from Service on account of death while in Service,
(i) the benefits, if any, provided for in Section 4.6(c) and (ii) the
special benefit, if any, provided for in Section 4.8 shall be paid to
the persons or entities entitled to such benefits. In the event a
Participant separates from Service for a reason other than Retirement or
death, then the only benefit payable to such Participant under the Plan
shall be the special benefit, if any, provided for in Section 4.8.
Section 4.2. Normal Retirement. Subject to the provisions of
Section 4.7 and Article VI, a Participant who separates from Service for
a reason other than death following the attainment of the Normal
Retirement Age and prior to the end of the Plan Year
16
<PAGE>
in which such Participant attains the Normal Retirement Age shall become
entitled to such Participant's Normal Retirement Benefit. If such
Participant is unmarried at the time of such Participant's separation from
Service, such Participant's Normal Retirement Benefit shall be payable in the
form of a Ten-Year Certain and Life Annuity in a monthly amount equal to
one-twelfth (1/12) of the annual amount of such Participant's Normal
Retirement Benefit. If such Participant is married at the time of such
Participant's separation from Service, such Participant's Normal
Retirement Benefit shall be payable in the form of a Joint and Sixty-Six
and Two-Thirds Percent (66-2/3%) Annuity in a monthly amount equal to
one-twelfth (1/12) of the annual amount of such Participant's Normal
Retirement Benefit. A Participant's Normal Retirement Benefit shall
commence and thereafter be paid at the same time as such Participant's
benefits under the Retirement Plan.
Section 4.3. Early Retirement. Subject to the provisions of
Section 4.7 and Article VI, a Participant who separates from Service for
a reason other than death prior to attaining the Normal Retirement Age
and who is eligible for Early Retirement at the time of such separation
from Service shall become entitled to such Participant's Early
Retirement Benefit. If such Participant is unmarried at the time of
such Participant's separation from Service, such Participant's Early
Retirement Benefit shall be payable in the form of a Ten-Year Certain
and Life Annuity in a monthly amount equal to one-twelfth (1/12) of the
annual amount
17
<PAGE>
of such Participant's Early Retirement Benefit. If such
Participant is married at the time of such Participant's separation from
Service, such Participant's Early Retirement Benefit shall be payable in
the form of a Joint and Sixty-Six and Two-Thirds Percent (66-2/3%)
Annuity in a monthly amount equal to one-twelfth (1/12) of the annual
amount of such Participant's Early Retirement Benefit. A Participant's
Early Retirement Benefit shall commence and thereafter be paid at the
same time as such Participant's benefits under the Retirement Plan.
Section 4.4. Delayed Retirement. Subject to the provisions of
Section 4.7 and Article VI, a Participant who separates from Service for
a reason other than death after the Plan Year in which such Participant
attains the Normal Retirement Age shall become entitled to such
Participant's Delayed Retirement Benefit. If such Participant is
unmarried at the time of such Participant's separation from Service,
such Participant's Delayed Retirement Benefit shall be payable in the
form of a Ten-Year Certain and Life Annuity in a monthly amount equal to
one-twelfth (1/12) of the annual amount of such Participant's Delayed
Retirement Benefit. If such Participant is married at the time of such
Participant's separation from Service, such Participant's Delayed
Retirement Benefit shall be payable in the form of a Joint and Sixty-Six
and Two-Thirds Percent (66-2/3%) Annuity in a monthly amount equal to
one-twelfth (1/12) of the annual amount of such Participant's Delayed
Retirement Benefit. A Participant's Delayed Retirement Benefit shall
commence and
18
<PAGE>
thereafter be paid at the same time as such Participant's
benefits under the Retirement Plan.
Section 4.5. Disability. In the event a Participant becomes
Disabled prior to the attainment of the Normal Retirement Age, the
following provisions shall apply:
(a) Such Participant shall be entitled to receive such
Participant's Long Term Disability Plan Benefit, if any, provided
for under the Long Term Disability Plan and the special benefit
provided for in Section 4.8, if any.
(b) For purposes of determining such Participant's benefits
under this Plan, such Participant's Creditable Service shall
include such Participant's period of Disability to the extent
provided in the Retirement Plan and such Participant's Final
Average Compensation shall be determined as of the date such
Participant became Disabled.
(c) In the event such Participant remains Disabled until
such Participant attains the Normal Retirement Age, then subject
to the provisions of Section 4.7 and Article VI such Participant
shall be entitled to receive such Participant's Normal Retirement
Benefit as provided in Section 4.2 and Section 4.5(b); provided,
however, the amount of such Participant's Normal Retirement
Benefit otherwise payable as determined in accordance with
Section 4.2 and Section 4.5(b) shall be reduced by such
Participant's Long Term Disability Plan Benefit, if any, payable
after such Participant attains the Normal Retirement Age.
19
<PAGE>
(d) In the event such Participant ceases to be Disabled for
a reason other than death prior to the attainment of the Normal
Retirement Age and such Participant does not reenter active
Service upon the cessation of such Participant's Disability, then
such Participant shall be deemed to have separated from Service
as of the date of the cessation of such Participant's Disability.
If such Participant is eligible for Early Retirement on the date
such Participant is deemed to have separated from Service, then
subject to the provisions of Section 4.7 and Article VI such Par-
ticipant shall become entitled to such Participant's Early
Retirement Benefit determined in accordance with the provisions
of Section 4.3 and Section 4.5(b). If such Participant is not
eligible for Early Retirement on the date such Participant is
deemed to have separated from Service, then no benefits shall be
payable to such Participant under this Plan except the special
benefit, if any, provided for in Section 4.8.
(e) In the event such Participant ceases to be Disabled for
a reason other than death prior to the attainment of the Normal
Retirement Age and such Participant reenters active Service upon
the cessation of such Participant's Disability, then such
Participant's Creditable Service shall include such Participant's
period of Disability to the extent provided in the Retirement
Plan and
20
<PAGE>
such Participant shall resume active participation in
the Plan on the date such Participant reenters active Service.
(f) A Participant who is eligible for Early Retirement at
the time such Participant becomes Disabled or who becomes
eligible for Early Retirement while still Disabled in accordance
with the provisions of this Section 4.5 shall be entitled to
elect at any time prior to attainment of such Participant's
Normal Retirement Age to receive such Participant's Early
Retirement Benefit determined in accordance with the provisions
of Section 4.3 and Section 4.5(b) as of the date of such
election; provided, however, the amount of such Participant's
Early Retirement Benefit otherwise payable as determined in
accordance with Section 4.3 and Section 4.5(b) shall be reduced
by such Participant's Long Term Disability Plan Benefit, if any,
payable after such Participant makes such election.
Section 4.6. Death.
(a) Death After Commencement of Benefits. In the event a
Participant dies following the commencement of such Participant's
benefits under the Plan, the benefits, if any, payable after such
Participant's death shall be determined in accordance with the
provisions of such Joint and Sixty-Six and Two-Thirds Percent (66-2/3%)
Annuity or Ten-Year Certain and Life Annuity, as applicable, pursuant to
which such Participant was receiving or entitled to receive benefits at
the time of such Participant's death.
(b) Death of a Disabled Participant. Except as provided in
21
<PAGE>
Section 4.6(d), in the event (i) a
Participant becomes Disabled prior to the attainment of the Normal
Retirement Age and prior to being eligible for Early Retirement, (ii)
such Participant dies prior to the Normal Retirement Age without
recovering from such Disability, and (iii) such Participant is survived
by an Eligible Spouse or one (1) or more Children under age twenty-one
(21) at the time of the Participant's death, the Eligible Spouse of such
Participant, or such Participant's Beneficiary, as applicable, shall be
entitled to the death benefit provided for in Section 4.6(c)(1). Except
as provided in Section 4.6(d), in the event (i) a Participant becomes
Disabled prior to the attainment of the Normal Retirement Age, but after
being eligible for Early Retirement, (ii) such Participant does not
elect pursuant to Section 4.5(f) to receive such Participant's Early
Retirement Benefit, (iii) such Participant dies prior to the Normal
Retirement Age without recovering from such Disability, and (iv) such
Participant is survived by an Eligible Spouse or one (1) or more
Children under age twenty-one (21) at the time of the Participant's
death, the Eligible Spouse of such Participant, or such Participant's
Beneficiary, as applicable, shall be entitled to the death benefit
provided for in Section 4.6(c)(2).
(c) Death While in Service. In the event a Participant dies
while in Service, the death benefits, if any, payable following such
Participant's death, shall be determined in accordance with the
provisions of this Section 4.6(c).
22
<PAGE>
(1) Death Prior to Eligibility for Early Retirement.
Except as provided in Section 4.6(d), in the event a Participant
dies while in Service [or, to the extent provided in Section
4.6(b), while Disabled] and prior to such Participant becoming
eligible for Early Retirement, the following provisions shall
apply:
(A) In the event the deceased Participant is survived
by an Eligible Spouse, such Eligible Spouse shall become
entitled to such Participant's Family Death Benefit in a
monthly amount equal to one-twelfth (1/12) of the annual
amount of such Family Death Benefit. Such monthly benefit
shall commence on the last day of the month following the
month in which the Participant dies and continue through the
last day of the month in which the Family Death Benefit
Termination Date occurs. In the event such Eligible Spouse
dies prior to the Family Death Benefit Termination Date,
such monthly benefit shall be paid to the estate of such de-
ceased Eligible Spouse through the last day of the month in
which the Family Death Benefit Termination Date occurs.
(B) In the event the deceased Participant is not
survived by an Eligible Spouse but the deceased Participant
is survived by one (1) or more Children under age twenty-one
(21) at the time of the Participant's death, the Beneficiary
of the deceased Participant shall become entitled to such
Participant's Family Death Benefit in a monthly amount equal
to one-twelfth (1/12) of the annual amount of such Family
Death Benefit. Such monthly benefit shall commence on the
last day of the month following the month in which the
Participant dies and continue through the last day of the
month in which the Family Death Benefit Termination Date
occurs.
(C) In the event the deceased Participant is survived
neither by an Eligible Spouse nor by one (1) or more
Children under age twenty-one (21) at the time of the
Participant's death, no death benefit shall be payable under
Section 4.6(c).
23
<PAGE>
The benefits under this Section 4.6(c)(1) shall be subject to the
provisions of Section 4.7(a).
(2) Death After Eligibility for Early Retirement. Except
as provided in Section 4.6(d), in the event a Participant dies
while in Service [or, to the extent provided in Section 4.6(b),
while Disabled] and after becoming eligible for Early Retirement,
the following provisions shall apply:
(A) In the event the deceased Participant is survived
by an Eligible Spouse, such Eligible Spouse shall have the
right to irrevocably elect on or before the last day of the
month following the month in which such Participant dies to
receive
(i) such Participant's Family Death Benefit in
accordance with the provisions of Section 4.6(c)(1)(A),
or
(ii) a monthly annuity for the life of such
Eligible Spouse commencing on the last day of the month
following the month in which such Participant dies in
an amount equal to the amount which such Eligible
Spouse would have been entitled to receive if the
deceased Participant had separated from Service and
commenced receiving as of the last day of the month in
which death occurred the retirement benefit to which
such Participant was entitled pursuant to a Joint and
Sixty-Six and Two-Thirds Percent (66-2/3%) Annuity and
then the Participant had died.
The election of the Eligible Spouse pursuant to this Section
4.6(c)(2)(A) shall be made in such manner as shall be
prescribed by the Plan Committee. In the event the Eligible
Spouse fails to make the election pursuant to this Section
4.6(c)(2)(A) on or before the last day of the month
following the month in which the Participant dies, the
benefits provided for in Section 4.6(c)(2)(A)(ii) shall
apply.
24
<PAGE>
(B) In the event the deceased Participant is not
survived by an Eligible Spouse, but the deceased Participant
is survived by one (1) or more Children under age twenty-one
(21) at the time of the Participant's death, the Beneficiary
of the deceased Participant shall become entitled to such
Participant's Family Death Benefit in accordance with the
provisions of Section 4.6(c)(1)(B).
(C) In the event the deceased Participant is survived
neither by an Eligible Spouse nor by one (1) or more
Children under age twenty-one (21) at the time of the
Participant's death, no death benefits shall be payable
under this Section 4.6(c).
The benefits under this Section 4.6(c)(2) shall be subject to the
provisions of Section 4.7(a).
(d) Suicide. Notwithstanding the provisions of Section 4.6(b)
and Section 4.6(c), in the event a Participant dies as a result of
suicide within twenty-five (25) calendar months of the calendar month as
of which such Participant was designated as a Participant under Section
3.2, no death benefits shall be payable pursuant to Section 4.6(c) of
the Plan.
(e) Article VI Controlling. The provisions of this Section 4.6
shall be subject to the provisions of Article VI.
Section 4.7. Adjustment in Benefits.
(a) Reduction in Benefits Based on Spouse's Age. In the event
(i) a married Participant's spouse is more than ten (10) years younger
than such Participant at the time such Participant becomes entitled to
commence receiving such Participant's Normal Retirement Benefit provided
for in Section 4.2, Early Retirement Benefit provided for in Section 4.3
or Delayed Retirement Benefit provided for in Section 4.4, as
applicable, or (ii) an Eligible
25
<PAGE>
Spouse entitled to receive a Family
Death Benefit provided for in Section 4.6(c) is more than ten (10) years
younger than the deceased Participant at the time of such deceased
Participant's death, the benefit which such Participant is otherwise
entitled to receive (and the survivor annuity of such Participant's
spouse), or the benefit to which such Eligible Spouse is entitled, as
applicable, shall be reduced to an amount determined by multiplying such
benefit by the percentage amount determined from the table attached
hereto as Exhibit A based on the age difference between such Participant
and such Participant's spouse.
(b) Recalculation of Benefits. A Participant's Assumed
Retirement Benefit, Retirement Plan Death Benefit and Long Term
Disability Plan Benefit can vary from time to time under the terms of
the Retirement Plan, ERISA Supplemental Plan and Long Term Disability
Plan or because of possible future amendments to such Plans at the
election of the Participating Employers or as may be required by
applicable law. As of each date on which any benefit payable to a
Participant (or his spouse or Beneficiary) under the Retirement Plan,
ERISA Supplemental Plan or Long Term Disability Plan changes for any
reason, there shall be a recalculation of the benefits, if any, payable
under this Plan (based on the assumptions contained herein) to such
Participant (or his spouse or Beneficiary) using the benefits then
payable under the Retirement Plan, ERISA Supplemental Plan and Long Term
Disability Plan as a result of such changes. Such increased or
26
<PAGE>
decreased benefits payable under this Plan shall become effective at the
same time as the change in benefits under the Retirement Plan, the ERISA
Supplemental Plan and the Long Term Disability Plan. Notwithstanding
the provisions of this Section 4.7(b), once a Participant's Social
Security Benefit is determined for purposes of determining benefits
payable under this Plan, such benefits shall not be subject to
recalculation after benefits commence under the terms of this Plan due
to increases or decreases in benefits payable from time to time under
the Federal Social Security Act.
Section 4.8. Special Benefit. The Participating Employers
sponsor the Deferred Compensation Plan for the benefit of their key
employees. In the event an Employee of the Participating Employers who
has been designated as eligible to participate in the Deferred
Compensation Plan elects to participate in the Deferred Compensation
Plan by deferring Compensation pursuant to the terms of the Deferred
Compensation Plan, any Compensation which is deferred pursuant to the
Deferred Compensation Plan is ineligible to be taken into consideration
as "compensation" under the terms of the Thrift Plan for purposes of
determining the maximum amount of a Participant's salary reduction
contributions under the terms of the Thrift Plan. Under the terms of
the Thrift Plan, salary reduction contributions up to six percent (6%)
of "compensation" as defined in the Thrift Plan are eligible for a fifty
percent (50%) "matching contribution" by the Participating Employers,
that is, a "matching contribution" of
27
<PAGE>
three percent (3%) of such
Participant's "compensation." To the extent (i) a Participant in this
Plan also participates in the Deferred Compensation Plan and the Thrift
Plan and (ii) such Participant is contributing at least six percent (6%)
of "compensation" as a salary reduction contribution to the Thrift Plan,
then any "matching contribution" by the Participating Employers which
such Participant would have received under the terms of the Thrift Plan
(after applying the terms of the Thrift Plan related to limitations on
salary reduction and matching contributions under Sections 402(g) and
415 of the Internal Revenue Code of 1986) had such Participant
contributed six percent (6%) of the "Compensation" deferred pursuant to
the Deferred Compensation Plan to the Thrift Plan shall be credited to a
reserve account on the books and records of the Participating Employers
as of the last day of the calendar year in which such "matching
contribution" would have been made by the Participating Employers under
the Thrift Plan. The amount credited to such account each year shall
bear interest from the first day of such calendar year at the rate of
thirteen percent (13%) compounded annually. Upon a Participant's
separation from Service for any reason or upon a Participant becoming
Disabled, the amount of such reserve account (including any addition for
the year in which separation from Service or Disability occurs) shall be
paid to such Participant (or in the event of such Participant's death,
to such Participant's Beneficiary) in such manner as the Plan Committee
shall determine in its sole and
<PAGE>
exclusive discretion over a period of
five (5) years following such Participant's separation from Service or
such Participant becoming Disabled. Interest shall accrue with respect
to the unpaid balance of such reserve account during such payment period
through the last day of the month preceding the month in which the
unpaid balance is paid in full. In addition to the foregoing, a
Participant who separates from Service after attaining age sixty (60)
and completing three hundred (300) months of Creditable Service shall
receive a supplemental monthly benefit equal to such Participant's
monthly Social Security Benefit until such Participant attains age
sixty-two (62).
Section 4.9. Beneficiary or Beneficiaries.
(a) Designation or Change of Beneficiary by a Participant. Each
Participant may from time to time designate the person(s) or entity(ies)
to whom the death benefits provided for in Section 4.6(c)(1)(B), Section
4.6(c)(2)(B) and Section 4.8 are to be paid. A Participant may from
time to time change such Participant's said designation of Beneficiary
and upon any such change, any previously designated Beneficiary's right
to receive any benefits under the Plan shall terminate. In order to be
effective, any designation or change of designation of a Beneficiary
must be made on a form furnished by the Plan Committee and signed by the
Participant and received by the Plan Committee while the Participant is
alive. If a Beneficiary of a deceased Participant shall survive the
deceased Participant but die prior to the receipt of all benefits
payable to said
29
<PAGE>
Beneficiary under the Plan, then such benefits as would
have been payable to said deceased Beneficiary shall be paid to such
Beneficiary's estate at the same time and in the same manner as such
benefits would have been payable to said deceased Beneficiary.
(b) Beneficiary Designated by the Plan. In the event that a
Participant shall die without having designated a Beneficiary, or in the
event that a Participant shall die having revoked an earlier Beneficiary
Designation without having effectively designated another Beneficiary,
or in the event that a Participant shall die but the Beneficiary
designated by such Participant shall fail to survive such Participant,
then and in any such event, the person(s) who shall constitute the
Beneficiary of such deceased Participant shall be determined as follows:
(i) In the event said deceased Participant is survived by a
Child, Children or by issue of a deceased Child or Children, such
surviving Children and surviving issue of such deceased Children
shall share as Beneficiaries on a per stirpes basis, the issue of
a deceased Child of the deceased Participant to take per stirpes
the same share their parent would have taken if living.
(ii) In the event said deceased Participant is not survived
by any person described in subparagraph (i), then said deceased
Participant's estate shall be such deceased Participant's
Beneficiary.
ARTICLE V
PLAN COMMITTEE
Section 5.1. Appointment, Term of Office and Vacancy. The Plan
Committee shall consist of one or more individuals appointed by the
Management Compensation Committee who shall serve at the
30
<PAGE>
pleasure of the
Management Compensation Committee. The Management Compensation
Committee shall have the absolute right to remove any member of the Plan
Committee at any time, with or without cause, and any member of the Plan
Committee shall have the right to resign at any time. If a vacancy in
the Plan Committee should occur, from death, resignation, removal or
otherwise, a successor shall be appointed by the Management Compensation
Committee.
Section 5.2. Organization of Plan Committee. The Management
Compensation Committee shall designate one of the members of the Plan
Committee to serve as its Chairman, one member as its Vice-Chairman and
one member as its Secretary. One person may hold more than one office.
The Plan Committee may appoint such agents, who need not be members of
the Plan Committee, as it may deem necessary for the effective
performance of its duties, and may delegate to such agent such powers
and duties, whether ministerial or discretionary, as the Plan Committee
may deem expedient or appropriate. The Plan Committee shall act by
majority vote and may adopt such bylaws, rules and regulations as it
deems desirable for the conduct of its affairs. The members of the Plan
Committee shall serve as such without compensation.
Section 5.3. Powers of the Plan Committee. The Plan Committee
shall administer the Plan. The Plan Committee shall have all the powers
to enable it to carry out its duties under the Plan properly. Not in
limitation of the foregoing, the Plan
31
<PAGE>
Committee shall have the power to
construe and interpret the Plan and determine all questions that shall
arise thereunder. It shall decide all questions relating to eligibility
to receive benefits under the Plan. The Plan Committee shall have such
other and further specified duties, powers, authority and discretion as
are elsewhere in the Plan either expressly or by necessary implication
conferred upon it. The decision of the Plan Committee upon all matters
within the scope of its authority shall be final and conclusive on all
persons, except to the extent otherwise provided by law.
Section 5.4. Expenses of Plan Committee. The reasonable
expenses of the Plan Committee incurred by the Plan Committee in the
performance of its duties under the Plan, including without limitation,
reasonable counsel fees and expenses of other agents, shall be paid by
the Participating Employers.
ARTICLE VI
AMENDMENT AND TERMINATION
Section 6.1. Amendment of Plan. Subject to the provisions of
Section 6.4 of the Plan, the Participating Employers expressly reserve
the right, at any time and from time to time, to amend in whole or in
part any of the terms and provisions of the Plan for whatever reason(s)
the Participating Employers may deem appropriate.
Section 6.2. Termination of Plan. Subject to the provisions of
Section 6.4 of the Plan, the Participating
32
<PAGE>
Employers expressly reserve
the right, at any time and for whatever reason they may deem
appropriate, to terminate the Plan.
Section 6.3. Effective Date and Procedure for Amendment or
Termination. Subject to the provisions of Section 6.4 of the Plan, any
amendment to the Plan or termination of the Plan may be retroactive to
the extent not prohibited by applicable law. Any amendment to the Plan
or termination of the Plan shall be made by the Participating Employers
by resolution of the Compensation Committee and shall not require the
approval or consent of any Participant or Beneficiary in order to be
effective.
Section 6.4. Effect of Amendment or Termination on Certain
Benefits. No amendment or termination of the Plan may reduce or
eliminate the benefits (if any) payable under the Plan (without regard
to such amendment or termination) to:
(a) any Participant who commenced receiving benefits under
the Plan prior to the amendment or termination date and is alive
on the amendment or termination date and the spouse or
Beneficiary of such Participant; or
(b) any spouse or Beneficiary who commenced receiving
benefits under the Plan prior to the amendment and termination
date.
In addition, with respect to all other Participants in the Plan on such
amendment or termination who have not commenced receiving benefits under
the Plan prior to the amendment or termination date, any such amendment
or termination shall not result in such
33
<PAGE>
Participant receiving benefits
under the Plan upon such Participant's separation from Service which are
less than the benefits such Participant would have received under the
Plan but for such amendment or termination multiplied by a fraction, the
numerator of which is such Participant's Creditable Service at the time
of such amendment or termination and the denominator of which is the
Creditable Service such Participant would have accumulated as a
Participant if such Participant had continued as a Participant until
such Participant had attained age sixty-two (62). Except as hereinabove
expressly provided to the contrary in this Section 6.4, the Plan may be
amended or terminated so that no benefits or (if such amendment or
termination so provides) reduced benefits shall be payable to any
Participant, spouse or Beneficiary after the effective date of such
amendment or termination.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Adoption by a Subsidiary Corporation. A Subsidiary
Corporation may, with the approval of the Compensation Committee and the
Board of Directors of such Subsidiary Corporation, elect to adopt the
Plan as of the date mutually agreeable to the Compensation Committee and
the Board of Directors of such Subsidiary Corporation. Any such
adoption of the Plan by a Subsidiary Corporation shall be evidenced by
an appropriate instrument of adoption executed by such Subsidiary
Corporation.
Section 7.2. Authorization and Delegation to the Compensation
Committee. Each Subsidiary Corporation which is or
34
<PAGE>
hereafter becomes a Participating Employer authorizes and empowers the
Compensation Committee (i) to amend or terminate the Plan without further
action by said Subsidiary Corporation as provided in Article VI and (ii) to
perform such other acts and do such other things as the Compensation
Committee is expressly directed, authorized or permitted to perform or
do as provided herein.
Section 7.3. Spendthrift Clause. To the extent permitted by
law, no benefits payable under the Plan shall be subject to the claim of
any creditor of any Participant or to any legal process by any creditor
of any Participant and no Participant entitled to benefits hereunder
shall have any right whatsoever to alienate, commute, anticipate or
assign any benefits under the Plan.
Section 7.4. Benefits Payable From General Assets of the
Participating Employers. All benefits payable hereunder shall be paid
from the general assets of the Participating Employers. No assets of
the Participating Employers shall be segregated or placed in trust
pursuant to the Plan in a manner which would put such asset beyond the
reach of the general creditors of any of the Participating Employers,
and the rights of any Participant (or Beneficiary) to receive any
benefits hereunder shall be no greater than the right of any general,
unsecured creditor of the Participating Employers. Nothing contained in
the Plan shall create or be construed as creating a trust of any kind or
any other fiduciary relationship between the Participating Employers
35
<PAGE>
and a Participant. In the event the Participating Employers purchase any
insurance policies insuring the life of any Participant hereunder, no
Participant shall have any rights whatsoever therein and the
Participating Employers shall be the sole owner and beneficiary thereof
and shall possess and exercise all incidents of ownership therein.
Section 7.5. Allocation of Costs of Benefits Among the
Participating Employers. The cost of benefits to be provided a
Participant (or spouse or Beneficiary, if applicable) pursuant to this
Plan shall be paid by the Participating Employer which employs the
Participant. In the case of a Participant employed by more than one
Participating Employer the cost of benefits provided pursuant to the
Plan shall be allocated among the Participating Employers in proportion
to the Compensation payable by each such Participating Employer during
the period such Participant participates in the Plan.
Section 7.6. Benefits Limited to the Plan. Participation in the
Plan shall not give a Participant any right to be retained in the employ
of any one or more of the Participating Employers nor, upon dismissal,
any right or interest in the Plan except as expressly provided herein.
ARTICLE VIII
CLAIMS PROCEDURE
Section 8.1. Claims Procedure.
(a) General. In the event that a Claimant has a Claim under the
Plan, such Claim shall be made by the Claimant's filing
36
<PAGE>
a notice thereof
with the Plan Committee within ninety (90) days after such Claimant
first has knowledge of such Claim. Each Claimant who has submitted a
Claim to the Plan Committee shall be afforded a reasonable opportunity
to state such Claimant's position and to present evidence and other
material relevant to the Claim to the Plan Committee for its
consideration in rendering its decision with respect thereto. The Plan
Committee shall render its decision in writing within sixty (60) days
after the Claim is referred to it, and a copy of such written decision
shall be furnished to the Claimant.
(b) Notice of Decision of Committee. Each Claimant whose Claim
has been denied by the Plan Committee shall be provided written notice
thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s) of the
Plan upon which such denial is based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect such Claim and an
explanation of why such material or information is necessary; and
(iv) an explanation of the procedure hereunder for review of
such Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Committee. Each such Claimant
shall be afforded a reasonable opportunity for a full and fair review of
the decision of the Plan Committee denying the Claim. Such review shall
be by the Compensation Committee. Such appeal shall be made within
ninety (90) days after the Claimant received the written decision of the
Plan Committee and shall be
37
<PAGE>
made by the written request of the Claimant
or such Claimant's duly authorized representative of the Compensation
Committee. In the event of appeal, the Claimant or such Claimant's duly
authorized representative may review pertinent documents and submit
issues and comments in writing to the Compensation Committee. The
Compensation Committee shall review the following:
(i) the initial proceedings of the Plan Committee with
respect to such Claim;
(ii) such issues and comments as were submitted in writing
by the Claimant or the Claimant's duly authorized representative;
and
(iii) such other material and information as the Compensation
Committee, in its sole discretion, deems advisable for a full and
fair review of the decision of the Plan Committee.
The Compensation Committee may approve, disapprove or modify the
decision of the Plan Committee, in whole or in part, or may take such
other action with respect to such appeal as it deems appropriate. The
decision of the Compensation Committee with respect to such appeal shall
be made promptly, and in no event later than sixty (60) days after
receipt of such appeal, unless special circumstances require an
extension of such time within which to render such decision, in which
event such decision shall be rendered as soon as possible and in no
event later than one hundred twenty (120) days following receipt of such
appeal. The decision of the Compensation Committee shall be in writing
and in a manner calculated to be understood by the Claimant and shall
include specific reasons for such decision and set forth specific
38
<PAGE>
references to the pertinent provisions of the Plan upon which such
decision is based. The Claimant shall be furnished a copy of the
written decision of the Compensation Committee. Such decision shall be
final and conclusive upon all persons interested therein, except to the
extent otherwise provided by applicable law.
IN WITNESS WHEREOF, the Participating Employers have caused this
instrument to be executed by their duly authorized officers all as of
the 22nd day of June, 1988.
NCNB CORPORATION
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ J. W. Kiser
_________ Secretary
NCNB NATIONAL BANK OF NORTH CAROLINA
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ J. W. Kiser
_________ Secretary
NCNB NATIONAL BANK OF FLORIDA
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ J. W. Kiser
_________ Secretary
39
<PAGE>
NCNB SOUTH CAROLINA
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ J. W. Kiser
_________ Secretary
NCNB SERVICES, INC.
[CORPORATE SEAL]
ATTEST: By: /s/ C. J. Cooley
Executive Vice President
/s/ Mary B. Covington
_________ Secretary
40
<PAGE>
<PAGE>
AMENDMENT TO THE
NATIONSBANK CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR SENIOR MANAGEMENT EMPLOYEES
WHEREAS, NationsBank Corporation ("NationsBank") and certain of its
subsidiary corporations (collectively with NationsBank, the "Participating
Employers") maintain the NationsBank Corporation and Designated
Subsidiaries Supplemental Executive Retirement Plan for Senior Management
Employees (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to (i) change the
discount rate used in calculating a participant's "commuted payment amount"
under the Plan from a fixed rate of ten percent (10%) to a variable rate
equal to the rate in effect as of the last day of the calendar year
immediately preceding the calendar year of a participant's retirement for
valuing liabilities under the NationsBank Pension Plan for financial
accounting and reporting purposes and (ii) change the basis for calculating
the pre-retirement death benefit payable with respect to a deceased
participant so that such pre-retirement death benefit will be approximately
equal to the death benefit that would have been payable if the participant
had died after retirement from NationsBank; and
WHEREAS, the Compensation Committee of the Board of Directors of
NationsBank has authorized and approved said amendment to the Plan in
accordance with the provisions of Article VI of the Plan;
NOW, THEREFORE, NationsBank does hereby declare that the Plan is
hereby amended effective as of the date hereof as follows:
1. Section I.A.(5) of Exhibit B to the Plan is amended to read as
follows:
"5. Determine the AESSV by discounting the projected AESSV
obtained in A.(4) above at the "FAS Rate" (as hereinafter
defined) compounded annually from the date the Participant
would have attained age 55 to the Determination Date. For
purposes of this Exhibit B, the "FAS Rate" means a variable
rate equal to the rate in effect as of the last
<PAGE>
day of the calendar year immediately preceding the calendar year
of a Determination Date for valuing liabilities under the
Retirement Plan for financial accounting and reporting
purposes."
2. The first sentence of Section III. of Exhibit B to the Plan is
amended to read as follows:
"All AESSVs shall be determined on the basis of the FAS Rate (as
defined in I.A.(5) above) compounded annually."
3. Section 4.6(c)(2)(A)(ii) of the Plan is amended to read as
follows:
"(ii) sixty-six and two-thirds percent (66-2/3%) of the
deceased Participant's Target Retirement Benefit, reduced in
accordance with the provisions of Section 2.1(b)(17) as though
the Participant had retired on the date of the Participant's
death, minus the sum of (A) the monthly life annuity that is the
actuarial equivalent of the benefits payable to such Eligible
Spouse from the Retirement Plan and the ERISA Supplemental Plan
and (B) sixty-six and two-thirds percent (66-2/3%) of the
deceased Participant's Social Security Benefit."
4. The parenthetical in Section 4.10(iii) of the Plan ("plus
interest . . . date of payment") is amended to read as follows:
". . . (plus interest on such amount at that FAS Rate (as defined
in Exhibit B hereto) compounded annually from the date of the
Change in Control to the date of payment) . . ."
5. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank has caused this instrument to be
executed by its duly authorized officer as of the 28th day of September,
1994.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley
Executive Vice President
"NationsBank"
2
NATIONSBANK CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Name:
This plan shall be known as the "NationsBank Corporation Executive
Incentive Compensation Plan" (the "Plan").
2. Purpose and Intent:
NationsBank Corporation (the "Corporation") establishes this Plan
effective January 1, 1994 for the purpose of providing certain of its
senior executive officers with annual incentive compensation based on
the annual performance of the Corporation measured by the Corporation's
return on average common shareholders' equity. The intent of the Plan
is to provide "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Code. The provisions of the Plan shall be
construed and interpreted to effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the
following meanings:
(a) "Base Benchmark" means a level of ROE for a Plan Year selected
by the Committee below which no incentive compensation shall be payable
under the Plan to Covered Employees for such Plan Year.
(b) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and references thereto shall include the valid
Treasury regulations thereunder.
(c) "Committee" means all of the members of the Compensation
Committee of the Board of Directors of the Corporation who are Outside
Directors.
(d) "Covered Employee" for a Plan Year means any employee of the
Corporation whose compensation is anticipated to be subject to the
provisions of Section 162(m) of the Code and who is designated by the
Committee prior to the beginning of such Plan Year (or, in the case of
the 1994 Plan Year, prior to April 1, 1994) as a "Covered Employee"
under the Plan for such Plan Year.
(e) "Incentive Compensation Pool" for a Plan Year means the amount
established in accordance with paragraph 5.
(f) "Outside Director" means an "outside director" within the
meaning of Section 162(m)(4)(C)(i) of the Code.
(g) "Plan Year" means the fiscal year of the Corporation beginning
January 1 and ending December 31.
<PAGE>
(h) "ROE" means, with respect to a Plan Year, the Corporation's
"return on average common shareholders' equity" for such Plan Year
determined in accordance with generally accepted accounting principles
that would be reported in the Corporation's Annual Report to
Shareholders for such Plan Year assuming payment of the entire Incentive
Compensation Pool for such Plan Year.
4. Administration:
The Committee shall be responsible for administering the Plan. The
Committee shall have all of the powers necessary to enable it to
properly carry out its duties under the Plan. Not in limitation of the
foregoing, the Committee shall have the power to construe and interpret
the Plan and to determine all questions that shall arise thereunder.
The Committee shall have such other and further specified duties,
powers, authority and discretion as are elsewhere in the Plan either
expressly or by necessary implication conferred upon it. The Committee
may appoint such agents, who need not be members of the Committee, as it
may deem necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties as the Committee may deem
expedient or appropriate that are not inconsistent with the intent of
the Plan. The decision of the Committee upon all matters within its
scope of authority shall be final and conclusive on all persons, except
to the extent otherwise provided by law.
5. Operation:
(a) Prior to the beginning of each Plan Year (or, in the case of
the 1994 Plan Year, prior to April 1, 1994), the Committee shall
determine (i) the Covered Employees for the Plan Year, (ii) the specific
level of ROE that shall constitute the Base Benchmark for the Plan Year,
(iii) the formula for determining the amount of the Incentive
Compensation Pool in the event the Base Benchmark is attained or
exceeded for the Plan Year and (iv) the formula for determining the
allocation of the Incentive Compensation Pool, if any, for the Plan Year
among the Covered Employees for the Plan Year. In that regard, the
formula for determining the amount of the Incentive Compensation Pool in
the event the Base Benchmark is attained or exceeded and the formula for
determining the allocation of the Incentive Compensation Pool for a Plan
Year shall be fixed formulas that do not permit Committee discretion
except as otherwise provided in paragraph 5(c) below.
(b) The Incentive Compensation Pool for a Plan Year, if any, shall
be established immediately following the determination of ROE for the
Plan Year. The amount of the Incentive Compensation Pool, if any, for a
Plan Year shall be determined as follows:
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<PAGE>
(i) If ROE for the Plan Year is below the Base Benchmark
for the Plan Year, there shall be no Incentive Compensation
Pool for the Plan Year and no incentive compensation shall be
payable under the Plan to Covered Employees for the Plan Year;
and
(ii) If ROE for the Plan Year equals or exceeds the Base
Benchmark for the Plan Year, the Incentive Compensation Pool
for the Plan Year shall be equal to an amount determined under
the formula for the Plan Year established by the Committee in
accordance with paragraph 5(a). In that regard, such formula
may provide that the amount of the Incentive Compensation Pool
will increase for levels of ROE exceeding the Base Benchmark.
(c) If an Incentive Compensation Pool is established for a Plan
Year in accordance with paragraph 5(b), the Incentive Compensation Pool
shall be allocated among the Covered Employees for the Plan Year in
accordance with the formula for the Plan Year determined by the
Committee in accordance with paragraph 5(a); provided, however, that the
Committee may in its sole discretion reduce for any reason the amount
otherwise allocable to a Covered Employee. In the event the Committee
reduces an amount otherwise allocable to a Covered Employee for a Plan
Year as provided in the preceding sentence, the amount of such reduction
shall not be reallocated among the other Covered Employees for the Plan
Year.
(d) In accordance with Section 162(m)(4)(C)(iii) of the Code,
prior to any payment under the Plan for a Plan Year, the Committee shall
certify in writing the attainment of (i) the Base Benchmark for such
Plan Year and (ii) any other higher level of ROE used in determining the
amount of the Incentive Compensation Pool pursuant to the formula
established by the Committee for such Plan Year.
(e) The amounts allocated to each Covered Employee for a Plan Year
shall be paid by the Corporation to each such Covered Employee in cash,
less applicable payroll and withholding taxes, within seventy-five (75)
days after the establishment of the Incentive Compensation Pool as
provided in paragraph 5(b), subject to certification by the Committee as
provided in paragraph 5(d).
(f) Notwithstanding any provision of the Plan to the contrary, in
no event shall a Covered Employee be allocated more than Two Million
Seven Hundred Thousand Dollars ($2,700,000) under the Plan for a Plan
Year.
(g) If the employment of a Covered Employee for a Plan Year is
terminated for any reason during the Plan Year, the Covered
3
<PAGE>
Employee shall not receive any amounts otherwise allocable to the Covered
Employee under the Plan's formula established by the Committee for the
Plan Year. Such amount shall not be reallocated among the other Covered
Employees for the Plan Year.
(h) Notwithstanding any provision of the Plan to the contrary, a
reduction in the amount otherwise payable to a Covered Employee for a
Plan Year as provided in paragraph 5(c) or paragraph 5(g) above shall
not result in a recalculation of ROE for purposes of the Plan or an
increase in the amount of the Incentive Compensation Pool for such Plan
Year.
6. Shareholder Approval:
In accordance with Section 162(m)(4)(C)(ii) of the Code, the
effectiveness of the Plan is subject to its approval and ratification by
the shareholders of the Corporation after disclosure to the shareholders
of the Corporation of the material terms of the Plan, such approval and
ratification to be obtained (i) on or before December 31, 1994 and (ii)
at such other times as required by Section 162(m)(4)(C)(ii) of the Code.
7. Amendment, Modification and Termination of the Plan:
The Board of Directors of the Corporation may amend, modify or
terminate the Plan at any time, provided that no amendment, modification
or termination of the Plan shall reduce the amount payable to a Covered
Employee under the Plan as of the date of such amendment, modification
or termination.
8. Applicable Law:
The Plan shall be construed, administered, regulated and governed
in all respects under and by the laws of the United States to the extent
applicable, and to the extent such laws are not applicable, by the laws
of the state of North Carolina.
9. Miscellaneous:
A Covered Employee's rights and interests under the Plan may not be
assigned or transferred by the Covered Employee. To the extent the
Covered Employee acquires a right to receive payments from the
Corporation under the Plan, such right shall be no greater than the
right of any unsecured general creditor of the Corporation. Nothing
contained herein shall be deemed to create a trust of any kind or any
fiduciary relationship between the Corporation and the Covered Employee.
Designation as a Covered Employee in the Plan shall not entitle or be
deemed to entitle a Covered Employee to continued employment with the
Corporation.
4
<PAGE>
AMENDMENT TO THE
NATIONSBANK CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
THIS INSTRUMENT OF AMENDMENT is executed as of the 1st day of October,
1994 by NATIONSBANK CORPORATION, a North Carolina corporation (the
"Corporation").
Statement of Purpose
The Corporation maintains the NationsBank Corporation Executive
Incentive Compensation Plan (the "Plan"), pursuant to which certain covered
employees of the Corporation may receive annual incentive compensation
based on the annual performance of the Corporation consistent with the
"performance-based compensation" requirements of Section 162(m) of the
Internal Revenue Code. The Corporation desires to amend the Plan effective
October 1, 1994 to (i) permit the Compensation Committee of the Board of
Directors of the Corporation to make determinations about the identity of
the covered employees and the incentive compensation formula for a Plan
Year no later than the April 1 of such Plan Year as permitted by Internal
Revenue Service Notice 94-69 and (ii) provide covered employees with the
opportunity to defer the payment of amounts payable under the Plan. In
accordance with paragraph 7 of the Plan, such amendment has been approved
by the Board of Directors of the Corporation.
NOW, THEREFORE, the Plan is hereby amended effective as of the date
hereof as follows:
1. The following subparagraph (a) is added to paragraph 3 of the
Plan, and current subparagraphs (a) through (h) of paragraph 3 are
redesignated as subparagraphs (b) through (i):
"(a) "Account" means the account established and maintained
on the books of the Corporation to record a Covered Employee's
interest under the Plan attributable to amounts credited to the
Covered Employee pursuant to paragraph 10(b) below, as adjusted
from time to time pursuant to the terms of the Plan."
2. Paragraph 3(g) of the Plan (as redesignated as provided above) is
amended to read as follows:
"(g) "Covered Employee" for a Plan Year means any employee
of the Corporation whose compensation is anticipated to be
subject to the provisions of Section 162(m) of the Code and who
is designated by the Committee prior to the April 1 of such Plan
Year as a "Covered Employee" under the Plan for such Plan Year."
<PAGE>
3. The following subparagraph (j) is added to the end of paragraph 3
of the Plan:
"(j) "Single Sum Value" of the Account of a Covered Employee
who is receiving annual installments pursuant to paragraph 10(f)
means the single sum present value of the installments determined
as of the relevant determination date using for such purpose as
the discount rate the same rate that was used in calculating the
amount of the installments pursuant to paragraph 10(f) below."
4. The first sentence of paragraph 5(a) of the Plan is amended
effective as of October 1, 1994 to read as follows:
"(a) Prior to the April 1 of a Plan Year, the Committee
shall determine (i) the Covered Employees for the Plan Year, (ii)
the specific level of ROE that shall constitute the Base
Benchmark for the Plan Year, (iii) the formula for determining
the amount of the Incentive Compensation Pool in the event the
Base Benchmark is attained or exceeded for the Plan Year and (iv)
the formula for determining the allocation of the Incentive
Compensation Pool, if any, for the Plan Year among the Covered
Employees for the Plan Year."
5. Paragraph 5(e) of the Plan is amended to read as follows:
"(e) Unless deferred pursuant to the provisions of
paragraph 10, the amounts allocated to each Covered Employee for
a Plan Year shall be paid by the Corporation to each such Covered
Employee in cash, less applicable payroll and withholding taxes,
within seventy-five (75) days after the establishment of the
Incentive Compensation Pool as provided in paragraph 5(b),
subject to certification by the Committee as provided in
paragraph 5(d)."
6. Paragraph 7 of the Plan is amended to read as follows:
"7. Amendment, Modification and Termination of the Plan:
(a) General. The Board of Directors of the Corporation may
amend, modify or terminate the Plan at any time, provided that no
amendment, modification or termination of the Plan shall reduce
the amount payable to a Covered Employee under the Plan as of the
date of such amendment, modification or termination.
(b) Effect on Deferred Amounts Under the Plan.
Notwithstanding any provision of the Plan to the contrary, no
amendment, modification or termination of the Plan shall reduce
the amount actually credited to a
2
<PAGE>
Covered Employee's Account under the Plan on the date of such
amendment, modification or termination, or further defer the due
dates for the payment of such amounts, without the consent of
the affected Covered Employee. Notwithstanding the provisions
of paragraph 10(d), in connection with any termination of the Plan
the Committee shall have the authority to cause the Accounts of
all Covered Employees to be paid in a single sum payment as of a
date determined by the Committee or to otherwise accelerate the
payment of all Accounts in such manner as the Committee
shall determine in its discretion. In that regard, upon any
termination of the Plan the amount of any payment to a Covered
Employee (or beneficiary of a deceased Covered Employee) who is
receiving annual installments pursuant to paragraph 10(f) shall be
the Single Sum Value of the Covered Employee's Account
determined as of the selected determination date.
7. The following paragraphs 10 and 11 are added to the end of the
Plan:
"10. Deferral of Amounts Payable Under the Plan:
(a) Elections to Defer. Each Covered Employee for a Plan
Year shall be given the opportunity to irrevocably elect, on a
form provided by the Committee, to defer all or a portion of any
amount that may become payable to such Covered Employee under the
Plan for such Plan Year. In order to be effective, a Covered
Employee's election to defer must be executed and returned to the
Committee on or before the date specified by the Committee for
such purpose.
(b) Establishment of Accounts. The Corporation shall
establish and maintain on its books an Account for each Covered
Employee making an election to defer under this paragraph 10.
Each Account shall be designated by the name of the Covered
Employee for whom established. Any amount otherwise allocable to
the Covered Employee under the formula established for a Plan
Year that is deferred by the Covered Employee under this
paragraph 10 shall be credited to the Covered Employee's Account
as of the date such amount would have otherwise been paid to the
Covered Employee.
(c) Account Adjustments. As of the last day of each
calendar month, each Account shall be adjusted for such month so
that the level of investment return of the Account shall be
substantially equal to the ask yield of the most recent auction
of 30-year Treasury bonds, as quoted for the last business day of
the immediately preceding calendar month in the Wall Street
Journal
3
<PAGE>
(Eastern Edition), or if such quotations are not available
in the Wall Street Journal, in a similar financial publication
selected by the Committee.
(d) Payment Options.
(i) A Covered Employee who first elects to defer
amounts under this paragraph 10 after having attained
age fifty-four (54) shall, at the time of the Covered
Employee's initial deferral election, irrevocably elect
one of the payment options described in subparagraph
(iii) below.
(ii) For a Covered Employee who first elects to
defer amounts under this paragraph 10 before having
attained age fifty-four (54), such Covered Employee
shall, upon attainment of age fifty-four (54), be given
the opportunity to irrevocably elect one of the payment
options described in subparagraph (iii) below.
(iii) The payment options from which a Covered
Employee may elect are as follows: (1) single cash
payment, (2) five (5) annual installments or (3) ten
(10) annual installments.
(iv) Any election made under this paragraph 10(d)
shall be made on such form and at such time as
determined by the Committee in its sole discretion. An
election made under subparagraph (i) shall be effective
upon the later of the date of such election or the
attainment of age 55. An election made under
subparagraph (ii) shall not become effective until the
first anniversary of the date of such election.
(v) For a Covered Employee who does not yet have
an election in effect under this paragraph 10(d) or for
a Covered Employee who fails to elect a payment option
under this paragraph 10(d), the method of payment shall
be the single cash payment.
(e) Single Cash Payment. If a Covered Employee who is to
be paid by the single cash payment method pursuant to paragraph
10(d) terminates employment with the Corporation, then such
Covered Employee's Account shall continue to be credited with
monthly adjustments under
4
<PAGE>
paragraph 10(c) through the January 31 of the calendar year
immediately following the calendar year of such termination of
employment, except that the rate for such monthly adjustments
from the calendar month of such termination of employment through
such January 31 shall be the 30-year Treasury bond yield for
the last day of the calendar month immediately preceding such
termination of employment. The final Account balance as of such
January 31 shall be paid in a single cash payment to the
Covered Employee (or to the Covered Employee's designated
beneficiary in the case of the Covered Employee's termination
of employment as the result of the Covered Employee's death) on or
about such January 31.
(f) Annual Installments. If a Covered Employee who is to
be paid by one of the annual installment payment methods pursuant
to paragraph 10(d) terminates employment with the Corporation,
the amount of such annual installments shall be calculated and
paid pursuant to the provisions of this paragraph 10(f). The
first installment shall be paid on or about the January 31 of the
calendar year immediately following the calendar year of such
termination of employment, and each subsequent installment shall
be paid on or about each subsequent January 31. The amount of
the installments shall be calculated as follows: First, the
Covered Employee's Account shall continue to be credited with
monthly adjustments under paragraph 10(c) through such January
31, except that the rate for such monthly adjustments from the
calendar month of such termination of employment through such
January 31 shall be the 30-year Treasury bond yield for the last
day of the calendar month immediately preceding such termination
of employment. The amount of the annual installments shall then
be calculated as equal installments amortized over the selected
period using the same 30-year Treasury bond yield. If a Covered
Employee dies after the effectiveness of the Covered Employee's
election as to the method of payment under paragraph 10(d) and
the Covered Employee has selected annual installments, such
annual installments (or remaining annual installments in the case
of death after commencement of payment) shall be paid to the
Covered Employee's designated beneficiary.
(g) Other Payment Provisions. Subject to the provisions of
paragraph 10(h) below and paragraph 7 above, a Covered Employee
shall not be paid any portion of the Covered Employee's Account
prior to the Covered Employee's termination of employment with
the Corporation. Any payment hereunder shall be subject to
applicable payroll and withholding taxes. For purposes of the
Plan, a Covered Employee shall be deemed to have
5
<PAGE>
terminated employment with the Corporation upon such Covered
Employee becoming eligible for benefits under the NationsBank
Long-Term Disability Plan as in effect from time to time. In the
event any amount becomes payable under the provisions of the
Plan to a Covered Employee, beneficiary or other person who is a
minor or an incompetent, whether or not declared incompetent by a
court, such amount may be paid directly to the minor or
incompetent person or to such person's fiduciary (or
attorney-in-fact in the case of an incompetent) as the Committee,
in its sole discretion, may decide, and the Committee shall not
be liable to any person for any such decision or any payment
pursuant thereto.
(h) Withdrawals on Account of an Unforeseeable Emergency.
A Covered Employee who is in active service with the Corporation
may, in the Committee's sole discretion, receive a refund of all
or any part of the amounts previously credited to the Covered
Employee's Account in the case of an "unforeseeable emergency."
A Covered Employee requesting a payment pursuant to this
subparagraph (h) shall have the burden of proof of establishing,
to the Committee's satisfaction, the existence of such
"unforeseeable emergency," and the amount of the payment needed
to satisfy the same. In that regard, the Covered Employee shall
provide the Committee with such financial data and information as
the Committee may request. If the Committee determines that a
payment should be made to a Covered Employee under this
subparagraph (h), such payment shall be made within a reasonable
time after the Committee's determination of the existence of such
"unforeseeable emergency" and the amount of payment so needed.
As used herein, the term "unforeseeable emergency" means a severe
financial hardship to a Covered Employee resulting from a sudden
and unexpected illness or accident of the Covered Employee or of
a dependent of the Covered Employee, loss of the Covered
Employee's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Covered Employee. The
circumstances that shall constitute an "unforeseeable emergency"
shall depend upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or
may be relieved (i) through reimbursement or compensation by
insurance or otherwise, or (ii) by liquidation of the Covered
Employee's assets, to the extent the liquidation of such assets
would not itself cause severe financial hardship. Examples of
what are not considered to be "unforeseeable emergencies" include
the need to send a Covered Employee's child to college or the
desire to purchase a home. Withdrawals of amounts
6
<PAGE>
because of an "unforeseeable emergency" shall not exceed an
amount reasonably needed to satisfy the emergency need.
(i) Statements of Account. Each Covered Employee shall
receive an annual statement of the Covered Employee's Account
balance.
11. Claims Procedures:
(a) General. In the event that a Covered Employee or
designated beneficiary has a claim for benefits under the Plan (a
"Claim"), such Claim shall be made by such person's (the
"Claimant") filing a notice thereof with the Committee within
ninety (90) days after such Claimant first has knowledge of such
Claim. Each Claimant who has submitted a Claim to the Committee
shall be afforded a reasonable opportunity to state such
Claimant's position and to present evidence and other material
relevant to the Claim to the Committee for its consideration in
rendering its decision with respect thereto. The Committee shall
render its decision in writing within ninety (90) days after the
Claim is referred to it, unless special circumstances require an
extension of such time within which to render such decision, in
which event such decision shall be rendered no later than one
hundred eighty (180) days after the Claim is referred to it. A
copy of such written decision shall be furnished to the Claimant.
(b) Notice of Decision of Committee. Each Claimant whose
Claim has been denied by the Committee shall be provided written
notice thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s) of the
Plan upon which such denial is based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect such Claim and an
explanation of why such material or information is necessary; and
(iv) an explanation of the procedure hereunder for review of
such Claim;
7
<PAGE>
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Committee. Each such Claimant
shall be afforded a reasonable opportunity for a full and fair
review of the decision of the Committee denying the Claim. Such
review shall be by the Committee. Such appeal shall be made
within ninety (90) days after the Claimant received the written
decision of the Committee and shall be made by the written
request of the Claimant or such Claimant's duly authorized
representative of the Committee. In the event of appeal, the
Claimant or such Claimant's duly authorized representative may
review pertinent documents and submit issues and comments in
writing to the Committee. The Committee shall review the
following:
(i) the initial proceedings of the Committee with respect
to such Claim;
(ii) such issues and comments as were submitted in writing
by the Claimant or the Claimant's duly authorized representative;
and
(iii) such other material and information as the Committee,
in its sole discretion, deems advisable for a full and fair
review of the decision of the Committee.
The Committee may approve, disapprove or modify the decision of
the Committee, in whole or in part, or may take such other action
with respect to such appeal as it deems appropriate. The
decision of the Committee with respect to such appeal shall be
made promptly, and in no event later than sixty (60) days after
receipt of such appeal, unless special circumstances require an
extension of such time within which to render such decision, in
which event such decision shall be rendered as soon as possible
and in no event later than one hundred twenty (120) days
following receipt of such appeal. The decision of the Committee
shall be in writing and in a manner calculated to be understood
by the Claimant and shall include specific reasons for such
decision and set forth specific references to the pertinent
provisions of the Plan upon which such decision is based. The
Claimant shall be furnished a copy of the written decision of the
Committee. Such decision shall be final and conclusive upon all
persons interested therein, except to the extent otherwise
provided by applicable law."
8. Except as expressly or by necessary implication amended hereby,
the Plan shall continue in full force and effect.
8
<PAGE>
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Corporation as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
Name: C. J. Cooley
Title: Executive Vice President
"Corporation"
9
NATIONSBANK CORPORATION
KEY EMPLOYEE DEFERRAL PLAN
1. Name:
This plan shall be known as the "NationsBank Corporation Key Employee
Deferral Plan" (the "Plan").
2. Purpose and Intent:
NationsBank Corporation (the "Corporation") establishes this Plan
effective October 1, 1994 for the purpose of providing certain of its
employees with the opportunity to defer payment of certain annual
incentives in accordance with the terms and provisions set forth herein.
It is the intent of the Corporation that amounts deferred under the Plan by
an employee shall not be taxable to the employee for income tax purposes
until the time actually received by the employee. The provisions of the
Plan shall be construed and interpreted to effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "Account" means the account established and maintained on the
books of the Corporation to record a Participant's interest under the Plan
attributable to amounts credited to the Participant pursuant to paragraph
5(c) below, as adjusted from time to time pursuant to the terms of the
Plan.
(b) "Annual Incentive Award" means, with respect to a Participant,
any annual incentive award payable to such Participant pursuant to (i) the
Corporate Management Incentive Plan and (ii) any other incentive
compensation plan of the Corporation or any of its Subsidiaries approved
for purposes of this Plan by the Plan Administrator.
(c) "Claim" means a claim for benefits under the Plan.
(d) "Claimant" means a person making a Claim.
(e) "Compensation Committee" means the committee of individuals who
are serving from time to time as the Compensation Committee of the Board of
Directors of the Corporation.
(f) "Corporate Benefits Committee" means the committee of individuals
who are serving from time to time as the members of the NationsBank
Corporation Corporate Benefits Committee.
(g) "Corporate Personnel Group" means the group of employees
designated as such from time to time by the Corporation.
<PAGE>
(h) "Eligible Employee" means a Key Employee of the Corporation who
has been designated as eligible to become a Participant in the Plan by a
member of the Management Compensation Committee as provided in paragraph
5(a) below.
(i) "Key Employee" means a regular employee of the Corporation or any
of its Subsidiaries who is an officer of the Corporation or its
Subsidiaries, as determined by the Plan Administrator, and who, in the
opinion of the Plan Administrator, has demonstrated a capacity for
contributing materially to the success of the business and operations of
the Corporation and its Subsidiaries.
(j) "Management Compensation Committee" means the committee of
individuals who are serving from time to time as the NationsBank
Corporation Management Compensation Committee.
(k) "Participant" means an Eligible Employee who has elected to
participate in the Plan as provided in paragraph 5(b) below.
(l) "Plan Administrator" means the Corporate Personnel Group, or such
other person or entity designated as the "Plan Administrator" for purposes
of the Plan by the Compensation Committee.
(m) "Plan Year" means the twelve (12) month period beginning January
1 and ending December 31.
(n) "Single Sum Value" of the Account of a Participant who is
receiving annual installments pursuant to paragraph 5(g) means the single
sum present value of the installments determined as of the relevant
determination date using for such purpose as the discount rate the same
rate that was used in calculating the amount of the installments pursuant
to paragraph 5(g) below.
(o) "Subsidiary" means (i) any corporation more than fifty percent
(50%) of whose outstanding voting capital stock is owned by the
Corporation, (ii) any corporation at least eighty percent (80%) of whose
outstanding voting capital stock and at least eighty percent (80%) of each
class of whose outstanding non-voting capital stock is owned by a
corporation more than fifty percent (50%) of whose outstanding voting
capital stock is owned by the Corporation, (iii) any corporation at least
eighty percent (80%) of whose outstanding voting capital stock and at least
eighty percent (80%) of each class of whose outstanding non-voting capital
stock is owned by a corporation described in clause (ii) above, or (iv) any
other corporation or other business entity affiliated with the Corporation
that is designated by the Plan Administrator as a Subsidiary for purposes
of the Plan.
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4. Administration:
The Plan Administrator shall be responsible for administering the
Plan. The Plan Administrator shall have all of the powers necessary to
enable it to properly carry out its duties under the Plan. Not in
limitation of the foregoing, the Plan Administrator shall have the power to
construe and interpret the Plan and to determine all questions that shall
arise thereunder. The Plan Administrator shall have such other and further
specified duties, powers, authority and discretion as are elsewhere in the
Plan either expressly or by necessary implication conferred upon it. The
Plan Administrator may appoint such agents as it may deem necessary for the
effective performance of its duties, and may delegate to such agents such
powers and duties as the Plan Administrator may deem expedient or
appropriate that are not inconsistent with the intent of the Plan. The
decision of the Plan Administrator upon all matters within its scope of
authority shall be final and conclusive on all persons, except to the
extent otherwise provided by law.
5. Operation:
(a) Eligibility. The individuals who serve from time to time as the
members of the Management Compensation Committee, in their sole and
exclusive discretion, shall determine which Key Employees shall be Eligible
Employees for a Plan Year.
(b) Elections to Defer. An Eligible Employee may become a
Participant in the Plan by irrevocably electing, on a form provided by the
Plan Administrator, to defer all or a portion of the Eligible Employee's
Annual Incentive Award for a given Plan Year; provided, however, that:
(i) if an Eligible Employee elects to defer a portion of
the Eligible Employee's Annual Incentive Award for a Plan Year,
the amount elected to be deferred with respect to such Annual
Incentive Award shall not be less than Ten Thousand Dollars
($10,000); and
(ii) if an Eligible Employee's Annual Incentive Award for a
Plan Year is less than Ten Thousand Dollars ($10,000), no amount
of such Annual Incentive Award shall be deferred under the Plan
for such Plan Year.
In order to be effective, an Eligible Employee's election to defer must be
executed and returned to the Plan Administrator on or before the date
specified by the Plan Administrator for such purpose. Such election must
normally be made prior to the beginning of the Plan Year to which the
election relates. However, the Plan Administrator, in its sole and
exclusive discretion, may determine that in any Plan Year during which (A)
a Key Employee first becomes an Eligible Employee (including the Plan Year
in
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<PAGE>
which the Plan is first implemented) or (B) a Key Employee who is
already an Eligible Employee with respect to certain incentive compensation
covered by the Plan becomes an Eligible Employee with respect to incentive
compensation not previously covered by the Plan, such election may be made
by such Eligible Employee within thirty (30) days after becoming eligible.
(c) Establishment of Accounts. The Corporation shall establish and
maintain on its books an Account for each Participant. Each Account shall
be designated by the name of the Participant for whom established. The
amount of any Annual Incentive Award deferred by a Participant shall be
credited to the Participant's Account as of the date such Annual Incentive
Award would have otherwise been paid to the Participant.
(d) Account Adjustments. As of the last day of each calendar month,
each Account shall be adjusted for such month so that the level of
investment return of the Account shall be substantially equal to the ask
yield of the most recent auction of 30-year Treasury bonds, as quoted for
the last business day of the immediately preceding calendar month in the
Wall Street Journal (Eastern Edition), or if such quotations are not
available in the Wall Street Journal, in a similar financial publication
selected by the Plan Administrator.
(e) Payment Options.
(i) A Participant who first elects to defer amounts under
this paragraph 5 after having attained age fifty-four (54) shall,
at the time of the Participant's initial deferral election,
irrevocably elect one of the payment options described in
subparagraph (iii) below.
(ii) For a Participant who first elects to defer amounts
under this paragraph 5 before having attained age fifty-four
(54), such Participant shall, upon attainment of age fifty-four
(54), be given the opportunity to irrevocably elect one of the
payment options described in subparagraph (iii) below.
(iii) The payment options from which a Participant may elect
are as follows: (1) single cash payment, (2) five (5) annual
installments or (3) ten (10) annual installments.
(iv) Any election made under this paragraph 5(e) shall be
made on such form and at such time as determined by the Committee
in its sole discretion. An election made under subparagraph (i)
shall be effective upon the later of the date of such election or
the attainment of age 55. An election made under subparagraph
(ii) shall
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<PAGE>
not become effective until the first anniversary of the date of
such election.
(v) For a Participant who does not yet have an election in
effect under this paragraph 5(e) or for a Participant who fails
to elect a payment option under this paragraph 5(e), the method
of payment shall be the single cash payment.
(f) Single Cash Payment.
(i) In the case of a Participant whose termination of
employment with the Corporation and its Subsidiaries occurs
before the effectiveness of the Participant's election as to the
method of payment under paragraph 5(e), then such Participant's
Account shall be credited with a final adjustment under paragraph
5(d) for the calendar month of such termination of employment,
and such final Account balance shall be paid in a single cash
payment to the Participant (or to the Participant's designated
beneficiary in the case of the Participant's termination of
employment as the result of the Participant's death) as soon as
practical after the end of such calendar month.
(ii) In the case of a Participant whose termination of
employment with the Corporation and its Subsidiaries occurs after
the effectiveness of the Participant's election as to the method
of payment under paragraph 5(e) and who has either selected a
single cash payment or failed to select any method of payment,
then such Participant's Account shall continue to be credited
with monthly adjustments under paragraph 5(d) through the January
31 of the calendar year immediately following the calendar year
of such termination of employment, except that the rate for such
monthly adjustments from the calendar month of such termination
of employment through such January 31 shall be the 30-year
Treasury bond ask yield for the last day of the calendar month
immediately preceding such termination of employment. The final
Account balance as of such January 31 shall be paid in a single
cash payment to the Participant (or to the Participant's
designated beneficiary in the case of the Participant's
termination of employment as the result of the Participant's
death) on such January 31.
(g) Annual Installments. In the event a Participant's employment
with the Corporation and its Subsidiaries terminates after the
effectiveness of the Participant's election as to the method of payment
under paragraph 5(e) and the Participant has selected annual installments,
the amount of such annual installments shall be calculated and paid
pursuant to the
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<PAGE>
provisions of this paragraph 5(g). The first installment
shall be paid on the January 31 of the calendar year immediately following
the calendar year of such termination of employment, and each subsequent
installment shall be paid on each subsequent January 31. The amount of the
installments shall be calculated as follows: First, the Participant's
Account shall continue to be credited with monthly adjustments under
paragraph 5(d) through such January 31, except that the rate for such
monthly adjustments from the calendar month of such termination of
employment through such January 31 shall be the 30-year Treasury bond ask
yield for the last day of the calendar month immediately preceding such
termination of employment. The amount of the annual installments shall
then be calculated as equal installments amortized over the selected period
using the same 30-year Treasury bond ask yield. If a Participant dies
after the effectiveness of the Participant's election as to the method of
payment under paragraph 5(e) and the Participant has selected annual
installments, such annual installments (or remaining annual installments in
the case of death after commencement of payment) shall be paid to the
Participant's designated beneficiary.
(h) Other Payment Provisions. Subject to the provisions of paragraph
5(i) and paragraph 6 below, a Participant shall not be paid any portion of
the Participant's Account prior to the Participant's termination of
employment with the Corporation and its Subsidiaries. Any payment
hereunder shall be subject to applicable payroll and withholding taxes.
For purposes of the Plan, a Participant shall be deemed to have terminated
employment with the Corporation upon eligibility for benefits under the
NationsBank Long-Term Disability Plan as in effect from time to time. In
the event any amount becomes payable under the provisions of the Plan to a
Participant, beneficiary or other person who is a minor or an incompetent,
whether or not declared incompetent by a court, such amount may be paid
directly to the minor or incompetent person or to such person's fiduciary
(or attorney-in-fact in the case of an incompetent) as the Plan
Administrator, in its sole discretion, may decide, and the Plan
Administrator shall not be liable to any person for any such decision or
any payment pursuant thereto.
(i) Withdrawals on Account of an Unforeseeable Emergency. A
Participant who is in active service with the Corporation may, in the Plan
Administrator's sole discretion, receive a refund of all or any part of the
amounts previously credited to the Participant's Account in the case of an
"unforeseeable emergency." A Participant requesting a payment pursuant to
this subparagraph (i) shall have the burden of proof of establishing, to
the Plan Administrator's satisfaction, the existence of such "unforeseeable
emergency," and the amount of the payment needed to satisfy the same. In
that regard, the Participant shall provide the Plan Administrator with such
financial data and information as the Plan Administrator may request. If
the Plan Administrator determines that a payment
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<PAGE>
should be made to a Participant under this subparagraph (i), such payment
shall be made within a reasonable time after the Plan Administrator's
determination of the existence of such "unforeseeable emergency" and the
amount of payment so needed. As used herein, the term "unforeseeable
emergency" means a severe financial hardship to a Participant resulting from
a sudden and unexpected illness or accident of the Participant or of
a dependent of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The
circumstances that shall constitute an "unforeseeable emergency" shall
depend upon the facts of each case, but, in any case, payment may not be
made to the extent that such hardship is or may be relieved (i)
through reimbursement or compensation by insurance or otherwise, or
(ii) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship. Examples of what are not considered to be "unforeseeable
emergencies" include the need to send a Participant's child to college
or the desire to purchase a home. Withdrawals of amounts because of
an "unforeseeable emergency" shall not exceed an amount reasonably needed to
satisfy the emergency need.
(j) Statements of Account. Each Participant shall receive an annual
statement of the Participant's Account balance.
6. Amendment, Modification and Termination of the Plan:
The Compensation Committee shall have the right and power at any time
and from time to time to amend the Plan in whole or in part and at any time
to terminate the Plan; provided, however, that no such amendment or
termination shall reduce the amount actually credited to a Participant's
Account under the Plan on the date of such amendment or termination, or
further defer the due dates for the payment of such amounts, without the
consent of the affected Participant. Notwithstanding the provisions of
paragraph 5(e), in connection with any termination of the Plan the
Compensation Committee shall have the authority to cause the Accounts of
all Participants to be paid in a single sum payment as of a date determined
by the Compensation Committee or to otherwise accelerate the payment of all
Accounts in such manner as the Compensation Committee shall determine in
its discretion. In that regard, upon any termination of the Plan the
amount of any payment to a Participant (or beneficiary of a deceased
Participant) who is receiving annual installments pursuant to paragraph
5(g) shall be the Single Sum Value of the Participant's Account determined
as of the selected determination date.
7. Claims Procedures:
(a) General. In the event that a Claimant has a Claim under the
Plan, such Claim shall be made by the Claimant's filing a
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<PAGE>
notice thereof with the Plan Administrator within ninety (90) days after such
Claimant first has knowledge of such Claim. Each Claimant who has submitted a
Claim to the Plan Administrator shall be afforded a reasonable opportunity to
state such Claimant's position and to present evidence and other material
relevant to the Claim to the Plan Administrator for its consideration in
rendering its decision with respect thereto. The Plan Administrator shall
render its decision in writing within ninety (90) days after the Claim is
referred to it, unless special circumstances require an extension of such
time within which to render such decision, in which event such decision
shall be rendered no later than one hundred eighty (180) days after the
Claim is referred to it. A copy of such written decision shall be
furnished to the Claimant.
(b) Notice of Decision of Plan Administrator. Each Claimant whose
Claim has been denied by the Plan Administrator shall be provided written
notice thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s) of the Plan upon
which such denial is based;
(iii) a description of any additional material or information necessary
for the Claimant to perfect such Claim and an explanation of why such
material or information is necessary; and
(iv) an explanation of the procedure hereunder for review of such
Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Administrator. Each such Claimant
shall be afforded a reasonable opportunity for a full and fair review of
the decision of the Plan Administrator denying the Claim. Such review
shall be by the Corporate Benefits Committee. Such appeal shall be made
within ninety (90) days after the Claimant received the written decision of
the Plan Administrator and shall be made by the written request of the
Claimant or such Claimant's duly authorized representative of the Corporate
Benefits Committee. In the event of appeal, the Claimant or such
Claimant's duly authorized representative may review pertinent documents
and submit issues and comments in writing to the Corporate Benefits
Committee. The Corporate Benefits Committee shall review the following:
(i) the initial proceedings of the Plan Administrator with respect to
such Claim;
8
<PAGE>
(ii) such issues and comments as were submitted in writing by the
Claimant or the Claimant's duly authorized representative; and
(iii) such other material and information as the Corporate Benefits
Committee, in its sole discretion, deems advisable for a full and fair
review of the decision of the Plan Administrator.
The Corporate Benefits Committee may approve, disapprove or modify the
decision of the Plan Administrator, in whole or in part, or may take such
other action with respect to such appeal as it deems appropriate. The
decision of the Corporate Benefits Committee with respect to such appeal
shall be made promptly, and in no event later than sixty (60) days after
receipt of such appeal, unless special circumstances require an extension
of such time within which to render such decision, in which event such
decision shall be rendered as soon as possible and in no event later than
one hundred twenty (120) days following receipt of such appeal. The
decision of the Corporate Benefits Committee shall be in writing and in a
manner calculated to be understood by the Claimant and shall include
specific reasons for such decision and set forth specific references to the
pertinent provisions of the Plan upon which such decision is based. The
Claimant shall be furnished a copy of the written decision of the Corporate
Benefits Committee. Such decision shall be final and conclusive upon all
persons interested therein, except to the extent otherwise provided by
applicable law.
8. Applicable Law:
The Plan shall be construed, administered, regulated and governed in
all respects under and by the laws of the United States to the extent
applicable, and to the extent such laws are not applicable, by the laws of
the state of North Carolina.
9. Miscellaneous:
A Participant's rights and interests under the Plan may not be
assigned or transferred by the Participant. The Plan shall be an
unsecured, unfunded arrangement. To the extent the Participant acquires a
right to receive payments from the Corporation under the Plan, such right
shall be no greater than the right of any unsecured general creditor of the
Corporation. Nothing contained herein shall be deemed to create a trust of
any kind or any fiduciary relationship between the Corporation and any
Participant. Designation as an Eligible Employee or Participant in the
Plan shall not entitle or be deemed to entitle such person to continued
employment with the Corporation. The Plan shall be binding on the
Corporation and any successor in interest of the Corporation.
9
<PAGE>
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Corporation as of the 1st day of October, 1994.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley
Executive Vice President
"Corporation"
10
NATIONSBANK CORPORATION DIRECTOR DEFERRAL PLAN
1. Name:
This plan shall be known as the "NationsBank Corporation Director
Deferral Plan" (the "Plan").
2. Purpose and Intent:
NationsBank Corporation (the "Corporation") establishes this Plan
effective January 1, 1995 for the purpose of providing the nonemployee
members of its Board of Directors with the opportunity to defer payment of
the annual retainer fee and meeting fees in accordance with the terms and
provisions set forth herein. It is the intent of the Corporation that
amounts deferred under the Plan by a director shall not be taxable to the
director for income tax purposes until the time actually received by the
director. The provisions of the Plan shall be construed and interpreted to
effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "Account" means the account established and maintained on the
books of the Corporation to record a Participant's interest under the Plan
attributable to amounts credited to the Participant pursuant to paragraph
5(c) below, as adjusted from time to time pursuant to the terms of the
Plan.
(b) "Claim" means a claim for benefits under the Plan.
(c) "Claimant" means a person making a Claim.
(d) "Compensation Committee" means the committee of individuals who
are serving from time to time as the members of the Compensation Committee
of the Board of Directors of the Corporation.
(e) "Corporate Benefits Committee" means the committee of individuals
who are serving from time to time as the members of the NationsBank
Corporation Corporate Benefits Committee.
(f) "Corporate Personnel Group" means the group of employees
designated as such from time to time by the Corporation.
(g) "Fees" means both (i) the annual retainer fee (the "Annual
Retainer Fee") and (ii) any meetings fees (the "Meetings Fees") payable to
a Nonemployee Director under the Corporation's compensation policies for
directors in effect from time to time.
<PAGE>
(h) "Nonemployee Director" means an individual who is a member of the
Board of Directors of the Corporation, but who is not an employee of the
Corporation.
(i) "Participant" means a Nonemployee Director who has elected to
participate in the Plan as provided in paragraph 5(b) below.
(j) "Plan Administrator" means the Corporate Personnel Group, or such
other person or entity designated as the "Plan Administrator" for purposes
of the Plan by the Compensation Committee.
(k) "Plan Year" means the twelve (12) month period beginning January
1 and ending December 31.
(l) "Single Sum Value" of the Account of a Participant who is
receiving annual installments pursuant to paragraph 5(g) means the single
sum present value of the installments determined as of the relevant
determination date using for such purpose as the discount rate the same
rate that was used in calculating the amount of the installments pursuant
to paragraph 5(g) below.
4. Administration:
The Plan Administrator shall be responsible for administering the
Plan. The Plan Administrator shall have all of the powers necessary to
enable it to properly carry out its duties under the Plan. Not in
limitation of the foregoing, the Plan Administrator shall have the power to
construe and interpret the Plan and to determine all questions that shall
arise thereunder. The Plan Administrator shall have such other and further
specified duties, powers, authority and discretion as are elsewhere in the
Plan either expressly or by necessary implication conferred upon it. The
Plan Administrator may appoint such agents as it may deem necessary for the
effective performance of its duties, and may delegate to such agents such
powers and duties as the Plan Administrator may deem expedient or
appropriate that are not inconsistent with the intent of the Plan. The
decision of the Plan Administrator upon all matters within its scope of
authority shall be final and conclusive on all persons, except to the
extent otherwise provided by law.
5. Operation:
(a) Eligibility. Each Nonemployee Director shall be eligible to
participate in the Plan.
(b) Elections to Defer. A Nonemployee Director may become a
Participant in the Plan by irrevocably electing, on a form provided by the
Plan Administrator, to defer the Annual Retainer Fee paid during such Plan
Year and/or the Meetings Fees payable to the
2
<PAGE>
Nonemployee Director for all meetings occurring during such Plan Year. Such
election shall be made separately with respect to the Annual Retainer Fee
and the Meetings Fees. In order to be effective, a Nonemployee Director's
election to defer must be executed and returned to the Plan Administrator on
or before the date specified by the Plan Administrator for such purpose. Such
election must normally be made prior to the beginning of the Plan Year
to which the election relates. However, the Plan Administrator, in
its sole and exclusive discretion, may determine that in certain
circumstances an election may be made during a Plan Year if such
determination is not inconsistent with the intent of the Plan expressed in
paragraph 2 above.
(c) Establishment of Accounts. The Corporation shall establish and
maintain on its books an Account for each Participant. Each Account shall
be designated by the name of the Participant for whom established. The
amount of any Fees deferred by a Participant shall be credited to the
Participant's Account as of the date such Fees would have otherwise been
paid to the Participant.
(d) Account Adjustments. As of the last day of each calendar month,
each Account shall be adjusted for such month so that the level of
investment return of the Account shall be substantially equal to the ask
yield of the most recent auction of 30-year Treasury bonds, as quoted for
the last business day of the immediately preceding calendar month in the
Wall Street Journal (Eastern Edition), or if such quotations are not
available in the Wall Street Journal, in a similar financial publication
selected by the Plan Administrator.
(e) Payment Options. At the time a Participant first makes an
election to defer Fees under the Plan, the Participant shall be given the
opportunity to irrevocably elect one of the following payment options: (i)
single cash payment, (ii) five (5) annual installments or (iii) ten (10)
annual installments. The election shall be made in writing on a form
provided by the Plan Administrator and must be returned to the Plan
Administrator before such date as specified by the Plan Administrator.
Such election shall be effective with respect to any Fees deferred under
the Plan by the Participant, including Fees deferred under the Plan for all
subsequent Plan Years. If a Participant fails to duly elect a payment
option, the method of payment shall be the single cash payment.
(f) Single Cash Payment. If a Participant to whom the single cash
payment method applies terminates services with the Corporation as a member
of the Board of Directors of the Corporation, such Participant's Account
shall continue to be credited with monthly adjustments under paragraph 5(d)
through the January 31 of the calendar year immediately following the
calendar year of such termination of services, except that the rate for
such
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<PAGE>
monthly adjustments from the calendar month of such termination of
services through such January 31 shall be the 30-year Treasury bond ask
yield for the last day of the calendar month immediately preceding such
termination of services. The final Account balance as of such January 31
shall be paid in a single cash payment to the Participant (or to the
Participant's designated beneficiary in the case of the Participant's
termination of services as the result of the Participant's death) on or
about such January 31.
(g) Annual Installments. If a Participant to whom the annual
installments method applies terminates service with the Corporation as a
member of the Board of Directors of the Corporation, the amount of such
annual installments shall be calculated and paid pursuant to the provisions
of this paragraph 5(g). The first installment shall be paid on or about
the January 31 of the calendar year immediately following the calendar year
of such termination of services, and each subsequent installment shall be
paid on or about each subsequent January 31. The amount of the
installments shall be calculated as follows: First, the Participant's
Account shall continue to be credited with monthly adjustments under
paragraph 5(d) through such January 31, except that the rate for such
monthly adjustments from the calendar month of such termination of services
through such January 31 shall be the 30-year Treasury bond ask yield for
the last day of the calendar month immediately preceding such termination
of services. The amount of the annual installments shall then be
calculated as equal installments amortized over the selected period using
the same 30-year Treasury bond ask yield. If a Participant who has
selected the annual installments method dies before any or all of the
annual installments have been paid, such remaining annual installments
shall be paid to the Participant's designated beneficiary.
(h) Other Payment Provisions. Subject to the provisions of paragraph
5(i) and paragraph 6 below, a Participant shall not be paid any portion of
the Participant's Account prior to the Participant's termination of
services as a member of the Board of Directors of the Corporation. Any
payment hereunder shall be subject to applicable payroll and withholding
taxes. In the event any amount becomes payable under the provisions of the
Plan to a Participant, beneficiary or other person who is a minor or an
incompetent, whether or not declared incompetent by a court, such amount
may be paid directly to the minor or incompetent person or to such person's
fiduciary (or attorney-in-fact in the case of an incompetent) as the Plan
Administrator, in its sole discretion, may decide, and the Plan
Administrator shall not be liable to any person for any such decision or
any payment pursuant thereto.
(i) Withdrawals on Account of an Unforeseeable Emergency. A
Participant who is in active service as a member of the Board of Directors
of the Corporation may, in the Plan Administrator's sole discretion,
receive a refund of all or any part of the amounts
4
<PAGE>
previously credited to the Participant's Account in the case of an
"unforeseeable emergency." A Participant requesting a payment pursuant to
this subparagraph (f) shall have the burden of proof of establishing, to
the Plan Administrator's satisfaction, the existence of such
"unforeseeable emergency," and the amount of the payment needed to
satisfy the same. In that regard, the Participant shall provide the
Plan Administrator with such financial data and information as the Plan
Administrator may request. If the Plan Administrator determines that a
payment should be made to a Participant under this subparagraph (f), such
payment shall be made within a reasonable time after the Plan Administrator's
determination of the existence of such "unforeseeable emergency" and the
amount of payment so needed. As used herein, the term "unforeseeable
emergency" means a severe financial hardship to a Participant resulting
from a sudden and unexpected illness or accident of the Participant or of a
dependent of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.
The circumstances that shall constitute an "unforeseeable emergency" shall
depend upon the facts of each case, but, in any case, payment may not be
made to the extent that such hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, or (ii) by
liquidation of the Participant's assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship. Examples of
what are not considered to be "unforeseeable emergencies" include the need
to send a Participant's child to college or the desire to purchase a
home. Withdrawals of amounts because of an "unforeseeable emergency"
shall not exceed an amount reasonably needed to satisfy the emergency need.
(j) Statements of Account. Each Participant shall receive an annual
statement of the Participant's Account balance.
6. Amendment, Modification and Termination of the Plan:
The Compensation Committee shall have the right and power at any time
and from time to time to amend the Plan in whole or in part and at any time
to terminate the Plan; provided, however, that no such amendment or
termination shall reduce the amount actually credited to a Participant's
Account under the Plan on the date of such amendment or termination, or
further defer the due dates for the payment of such amounts, without the
consent of the affected Participant. Notwithstanding the provisions of
paragraph 5(e), in connection with any termination of the Plan the
Compensation Committee shall have the authority to cause the Accounts of
all Participants to be paid in a single sum payment as of a date determined
by the Compensation Committee or to otherwise accelerate the payment of all
Accounts in such manner as the Compensation Committee shall determine in
its discretion. In that regard, upon any termination of the Plan the
amount of any payment to a
5
<PAGE>
Participant (or beneficiary of a deceased Participant) who is receiving
annual installments pursuant to paragraph 5(g) shall be the Single Sum
Value of the Participant's Account determined as of the selected determination
date.
7. Claims Procedures:
(a) General. In the event that a Claimant has a Claim under the
Plan, such Claim shall be made by the Claimant's filing a notice thereof
with the Plan Administrator within ninety (90) days after such Claimant
first has knowledge of such Claim. Each Claimant who has submitted a Claim
to the Plan Administrator shall be afforded a reasonable opportunity to
state such Claimant's position and to present evidence and other material
relevant to the Claim to the Plan Administrator for its consideration in
rendering its decision with respect thereto. The Plan Administrator shall
render its decision in writing within ninety (90) days after the Claim is
referred to it, unless special circumstances require an extension of such
time within which to render such decision, in which event such decision
shall be rendered no later than one hundred eighty (180) days after the
Claim is referred to it. A copy of such written decision shall be
furnished to the Claimant.
(b) Notice of Decision of Plan Administrator. Each Claimant whose
Claim has been denied by the Plan Administrator shall be provided written
notice thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s) of the Plan upon
which such denial is based;
(iii) a description of any additional material or information necessary
for the Claimant to perfect such Claim and an explanation of why such
material or information is necessary; and
(iv) an explanation of the procedure hereunder for review of such
Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Administrator. Each such Claimant
shall be afforded a reasonable opportunity for a full and fair review of
the decision of the Plan Administrator denying the Claim. Such review
shall be by the Corporate Benefits Committee. Such appeal shall be made
within ninety (90) days after the Claimant received the written decision of
the Plan Administrator and shall be made by the written request of the
Claimant or such Claimant's duly authorized representative of the Corporate
Benefits Committee. In the event of appeal, the Claimant or such
Claimant's duly authorized representative may review pertinent documents
and
6
<PAGE>
submit issues and comments in writing to the Corporate Benefits
Committee. The Corporate Benefits Committee shall review the following:
(i) the initial proceedings of the Plan Administrator with respect to
such Claim;
(ii) such issues and comments as were submitted in writing by the
Claimant or the Claimant's duly authorized representative; and
(iii) such other material and information as the Corporate Benefits
Committee, in its sole discretion, deems advisable for a full and fair
review of the decision of the Plan Administrator.
The Corporate Benefits Committee may approve, disapprove or modify the
decision of the Plan Administrator, in whole or in part, or may take such
other action with respect to such appeal as it deems appropriate. The
decision of the Corporate Benefits Committee with respect to such appeal
shall be made promptly, and in no event later than sixty (60) days after
receipt of such appeal, unless special circumstances require an extension
of such time within which to render such decision, in which event such
decision shall be rendered as soon as possible and in no event later than
one hundred twenty (120) days following receipt of such appeal. The
decision of the Corporate Benefits Committee shall be in writing and in a
manner calculated to be understood by the Claimant and shall include
specific reasons for such decision and set forth specific references to the
pertinent provisions of the Plan upon which such decision is based. The
Claimant shall be furnished a copy of the written decision of the Corporate
Benefits Committee. Such decision shall be final and conclusive upon all
persons interested therein, except to the extent otherwise provided by
applicable law.
8. Applicable Law:
The Plan shall be construed, administered, regulated and governed in
all respects under and by the laws of the United States to the extent
applicable, and to the extent such laws are not applicable, by the laws of
the state of North Carolina.
9. Miscellaneous:
A Participant's rights and interests under the Plan may not be
assigned or transferred by the Participant. The Plan shall be an
unsecured, unfunded arrangement. To the extent the Participant acquires a
right to receive payments from the Corporation under the Plan, such right
shall be no greater than the right of any unsecured general creditor of the
Corporation. Nothing contained herein shall be deemed to create a trust of
any kind or any
7
<PAGE>
fiduciary relationship between the Corporation and any Participant. The
Plan shall be binding on the Corporation and any successor in interest
of the Corporation.
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Corporation as of the 28th day of September, 1994.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley
Executive Vice President
"Corporation"
8
SPECIAL TRUST AGREEMENT
UNDER THE
NATIONSBANK PENSION PLAN
(as effective December 31, 1994)
THIS SPECIAL TRUST AGREEMENT is made and entered into effective as of
the 31st day of December, 1994, by and between NATIONSBANK CORPORATION, a
North Carolina corporation ("NationsBank"), and WACHOVIA BANK OF NORTH
CAROLINA, N.A., a national banking association (hereinafter referred to as
the "Special Trustee").
Statement of Purpose
NationsBank and certain of its subsidiaries sponsor The NationsBank
Pension Plan (the "NationsBank Plan"). During 1994, NationsBank acquired
RHNB Corporation and its subsidiary, Rock Hill National Bank. In
connection with the consolidation of the RHNB employee benefits programs
into the NationsBank employee benefits programs, the Rock Hill National
Bank Pension Plan (the "RHNB Plan") is merging with and into the Plan
effective as of the date hereof.
A portion of the assets of the RHNB Plan have been invested in units
of the Wachovia Bank Real Estate Fund, a common trust fund established and
maintained by the Special Trustee (the "REF"). The Special Trustee is in
the process of liquidating the REF, and it is anticipated that liquidating
and other distributions will be made from time to time with respect to the
units of the REF owned by the RHNB Plan.
NationsBank desires to have the RHNB Plan's units in the REF held in a
separate special trust under the NationsBank Plan (the "Special Trust")
following the merger of the RHNB Plan into the NationsBank Plan and to
provide that the Special Trustee (and not NationsBank of North Carolina,
N.A., the Trustee of the primary Trust under the Plan) shall have fiduciary
responsibility for the assets of the Special Trust. This Special Trust
Agreement establishes and documents the Special Trust.
<PAGE>
NOW, THEREFORE, the parties hereto hereby agree that a Special Trust
for The NationsBank Pension Plan is established effective as of December
31, 1994, to consist of the following Articles I through VIII:
ARTICLE I
PURPOSE
The terms and provisions of this Special Trust Agreement govern the
Special Trust established effective December 31, 1994 under the Plan. The
Special Trust is a part of the Plan and shall be maintained for the
exclusive benefit of the Participants and their Beneficiaries, as provided
in the Plan and this Special Trust Agreement, for the purpose of:
(i) holding the assets of the Plan comprising the Plan's units in the
REF;
(ii) receiving assets in exchange for and liquidating and other
distributions made with respect to the Plan's units in the REF; and
(iii) transferring all such assets and liquidating and other
distributions as soon as practicable after their receipt by the Special
Trustee to NationsBank of North Carolina, N.A. to be held, administered and
distributed in accordance with the terms of the primary Trust under the
Plan.
It shall be impossible for any part of the assets of the Special Trust to
be diverted to or used for purposes other than the exclusive benefit of the
Participants or their Beneficiaries except as provided in the Plan or the
Special Trust and permitted qualified plans and trusts under the Act and
the Code.
ARTICLE II
CONSTRUCTION
SECTION 2.1. GENERAL.
(a) Construction. In the construction of this Special Trust Agree-
ment, reference is made to the definitions, terms and provisions of The
NationsBank Pension Plan, and the terms used in this Special Trust
Agreement shall have the same meanings as given the terms in the Plan
unless the context clearly indicates otherwise. Whenever used in this
Special Trust Agreement, unless the context clearly indicates
2
<PAGE>
otherwise, the singular shall include the plural and the plural the singular.
The conjunction "or" shall include both the conjunctive and disjunctive, and
the adjective "any" shall mean one or more or all. References to the
masculine gender are for convenience of expression only and shall refer to
the other genders as well. Article, section and paragraph headings have
been inserted for convenience of reference only and are to be ignored in
any construction of the provisions of this Special Trust Agreement. If any
provision of this Special Trust Agreement, as amended from time to time,
shall be for any reason invalid or unenforceable, the remaining provisions
shall nevertheless be valid, enforceable and fully effective.
(b) Intent. It is the intent of the parties that the Plan shall at
all times be a qualified plan under Section 401(a) of the Code and that the
Special Trust shall at all times be exempt from taxation under Section
501(a) of the Code. This Special Trust Agreement shall be construed and
interpreted to effectuate such intent.
SECTION 2.2. APPLICABLE LAW. This Special Trust Agreement and the
Special Trust herein provided for shall be construed, administered, regu-
lated and governed in all respects under and by the laws of the United
States to the extent applicable and, to the extent such laws are not
applicable, by the laws of the State of North Carolina.
ARTICLE III
ASSETS AND INVESTMENTS
SECTION 3.1. SPECIAL TRUST ASSETS. The assets of the Special Trust
shall consist of all the Plan's units in the REF and all assets received in
exchange for or liquidating and other distributions with respect to the
Plan's units in the REF.
3
<PAGE>
SECTION 3.2. INVESTMENT OF ASSETS.
(a) Primary Investment Purpose. The primary purpose of the Special
Trust is to hold the Plan's units in the REF, and therefore all of the
assets held under the Special Trust may be invested in the REF.
(b) Other Investments. A portion of the Special Trust assets need
not be invested in REF units. Such portion, however, shall consist only of
assets received by the Special Trustee in exchange for or as liquidating
and other distributions made with respect to the Plan's REF units and being
held temporarily by the Special Trustee pending the transfer of such assets
as soon as administratively practicable to NationsBank of North Carolina,
N.A. The portion of the Special Trust assets not invested in REF units
shall be (i) held in cash or cash equivalent or (ii) invested in short-term
debt obligations selected with a view towards minimal fluctuations in
principal value and otherwise on the basis of their income returns
consistent with investment quality.
ARTICLE IV
DUTIES AND POWERS
SECTION 4.1. DUTIES.
(a) General. The Special Trustee's powers, duties and
responsibilities shall be limited to the following:
(i) to manage and control the assets of the Special Trust
pursuant to the Plan and this Special Trust Agreement and to
prepare and submit the financial information with respect to said
assets (including the valuations thereof) agreed to between the
Special Trustee and the Participating Employers or required to be
furnished to the Committee, the Participating Employers, any
Participant and Beneficiary or any regulatory authority under the
Act; and
(ii) to transfer all assets received in exchange for or
distributions with respect to the Plan's REF units as soon as
practicable after their receipt by the Special Trustee to
NationsBank of North Carolina, N.A., to be held, administered and
distributed in accordance with the terms of the primary Trust
under the Plan.
4
<PAGE>
(b) Limitation. Except to the extent provided in this Special Trust
Agreement or the Plan and as otherwise required by applicable law, the
Special Trustee shall not be responsible for the administration of the Plan
nor for the acts or omissions of any other fiduciary (or agent thereof)
with respect to the Plan unless:
(i) the Special Trustee participates knowingly in, or
knowingly undertakes to conceal, an act or omission of such other
fiduciary, knowing such act or omission is a breach of trust;
(ii) by the Special Trustee's breach of fiduciary duty in
the administration of its specific responsibilities, the Special
Trustee enables such other fiduciary to commit a breach of trust;
or
(iii) the Special Trustee has knowledge of a breach of trust
by another fiduciary and fails to make reasonable efforts under
the circumstances to remedy such breach of trust.
SECTION 4.2. POWERS OF SPECIAL TRUSTEE. The Special Trustee, in
addition to and not in modification of or limitation of all of the Special
Trustee's common law and statutory authority, but subject to the provisions
of Section 3.2 and 4.1 of this Special Trust Agreement with respect to the
investments of the Special Trust, shall have all of the following powers
with regard to all property which shall at any time and from time to time
form a part of the assets of the Special Trust:
(i) to collect the principal and income of the Special
Trust as the same shall become due and payable and to give
binding receipt therefor, and if at any time there shall be a
default in the payment of such principal or income, or any part
thereof, to take such action, whether by legal proceedings,
compromise or otherwise, as the Special Trustee, in its
discretion, shall deem to be in the best interest of the Special
Trust; any property acquired by the Special Trustee under
judicial sale, or otherwise, in the enforcement or compromise of
any such claim or claims, shall be and become a part of the
Special Trust and dealt with as such by the Special Trustee;
5
<PAGE>
(ii) to invest the Special Trust assets in the REF and to
exercise all powers conferred upon the Special Trustee by the REF as
to such investment;
(iii) to keep such portion of the Special Trust in cash as
the Special Trustee may, from time to time, deem to be in the
best interest of the Special Trust, without liability for inter-
est thereon;
(iv) to make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers herein granted;
(v) to settle and compromise any claims, debts or damages due or
owing to or from the Special Trust, and to commence or defend suits or
legal and administrative proceedings; and
(vi) to employ suitable agents and counsel (who may be
counsel for the Participating Employers), and to pay their
reasonable compensation and expenses.
ARTICLE V
VALUATION OF ASSETS AND ACCOUNTING
SECTION 5.1. VALUATION OF ASSETS. The assets of the Special Trust
shall be valued at least once during each Plan Year at the then existing
fair market value, or in the absence of a readily ascertainable fair market
value, at such values as the Special Trustee shall determine in accordance
with methods consistently followed and uniformly applied. The Special
Trustee shall be responsible for the valuations of the assets of the
Special Trust hereunder.
SECTION 5.2. ACCOUNTINGS. The Special Trustee, as soon as
practicable after each Plan Year and after such other date(s) during the
Plan Year as the Special Trustee and the Committee shall agree, shall cause
a full account of the administration of the Special Trust hereunder during
the accounting period then ended to be rendered to the Committee and shall
furnish to the Committee such information as is necessary for the timely
preparation of the statements, returns, reports and information required to
be submitted, filed or distributed by the Committee within sufficient time
to permit the Committee to cause to be prepared and distributed or filed
such statements, returns, reports and information.
6
<PAGE>
ARTICLE VI
AMENDMENT AND MERGER
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND RESTRICTIONS THEREON.
The Participating Employers reserve and shall have the right at any time,
and from time to time to amend, modify or alter, in whole or in part, any
of the terms and provisions of the Special Trust and this Special Trust
Agreement, and any such amendment may be retroactive to the extent not
prohibited by applicable law; provided, however, that no amendment shall
authorize or permit any part of the Special Trust to be used for or
diverted to purposes other than the exclusive benefit of the Participants
and their Beneficiaries or shall have the effect of revesting in the
Participating Employers any part of the assets of the Special Trust unless
such amendment is permitted or required by laws governing qualified plans
and such amendment does not affect the status of the Plan as a qualified
plan under the Code or the status of the Special Trust as a tax-exempt
trust under the Code.
SECTION 6.2. AMENDMENT PROCEDURE. Any amendment to this Special
Trust Agreement shall be effected by a written agreement between
NationsBank Corporation, on behalf of the Participating Employers, and the
Special Trustee, which amendment shall become a part of this Special Trust
Agreement; provided, however, if the Special Trustee is unwilling or unable
to execute such amendment, it may resign or be removed by the Compensation
Committee.
SECTION 6.3. MERGER OR CONSOLIDATION. The Plan and its trusts
(including the Special Trust) shall not be merged or consolidated with any
other plan and trust, nor shall the assets or liabilities of the Plan and
trusts be transferred to any other plan and trust, unless the benefit which
each Participant would receive immediately after such merger, consolidation
or transfer if the Plan and trusts had then terminated is equal to or
greater
7
<PAGE>
than the benefit such Participant would have been entitled to
receive immediately before such merger, consolidation or transfer if the
Plan and trusts had then terminated.
ARTICLE VII
RESIGNATION, REMOVAL AND SUCCESSOR SPECIAL TRUSTEE
SECTION 7.1. RESIGNATION. The Special Trustee may resign from the
Special Trust at any time by giving thirty (30) days advance written notice
to the Compensation Committee. Upon such resignation becoming effective,
the Special Trustee shall render to the Committee a full account of its
administration of the Special Trust during the period following that
covered by the last accounting, and shall perform all acts necessary to
transfer and deliver the assets of the Special Trust and all information
and data relating to such administration to its successor.
SECTION 7.2. REMOVAL. The Compensation Committee may remove the
Special Trustee at any time upon delivery of thirty (30) days prior written
notice to the Special Trustee. In the event of such removal, the Special
Trustee shall be under the same duties to account for and to transfer and
deliver the assets of the Special Trust and all information and data
relating to such administration to its successor.
SECTION 7.3. SUCCESSOR. In the event of a vacancy in the
trusteeship of the Special Trust occurring at any time, the Compensation
Committee shall designate and appoint a qualified successor corporate
Special Trustee of the Special Trust. Any such successor Special Trustee
shall have all the rights and powers and all of the duties and
responsibilities herein conferred upon the original Special Trustee. If a
successor Special Trustee is not appointed within sixty (60) days after the
Special Trustee gives notice of its resignation pursuant to Section 7.1,
the Special Trustee may apply to any court of competent jurisdiction for
appointment of a successor.
8
<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. SPECIAL TRUSTEE'S COMPENSATION AND EXPENSES. The
Special Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon by the Special Trustee and NationsBank. In
addition, the Special Trustee shall be reimbursed for any reasonable
expenses, including reasonable counsel fees, incurred by the Special
Trustee in the administration of the Special Trust hereunder. The Special
Trustee's compensation and expenses shall be a charge upon and paid out of
the assets of the Plan (whether the assets of the Trust or the Special
Trust) except to the extent, if any, that the Participating Employers in
their discretion pay such compensation and expenses.
SECTION 8.2. TAXES. The Special Trustee shall pay out of the
Special Trust assets all taxes imposed or levied with respect to the
Special Trust or any part thereof, under existing or future laws, and in
its discretion may contest the validity or amount of any tax, assessment,
claim or demand with respect to the Special Trust or any part thereof.
SECTION 8.3. RECORDS. The Special Trustee shall keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions hereunder. All accounts, books and records relating thereto
shall be open to inspection by any person or persons designated by the
Committee at any reasonable time.
SECTION 8.4. ACCEPTANCE BY SPECIAL TRUSTEE. The Special Trustee, by
joining in the execution of this Special Trust Agreement, signifies its
acceptance of the Special Trust created hereunder.
SECTION 8.5. AGREEMENT BINDING. This Agreement and all amendments
hereafter adopted shall be binding upon the parties hereto, their
successors and assigns, and upon the Participants and their Beneficiaries,
heirs, executors, administrators, personal representatives and assigns.
9
<PAGE>
SECTION 8.6. GENERAL RESTRICTIONS. Neither the Special Trustee nor
any fiduciary with respect to the Plan shall exercise any power, make any
investment, engage in any act or transaction or take any other action
whatever that shall cause or result in:
(i) the Special Trust losing its status as a trust exempt
from taxation under the Code;
(ii) the Plan losing its status as a qualified plan under
the Code; or
(iii) a transaction which is prohibited the Special Trust
under the Act.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, and the Special Trustee have executed this Special
Trust Agreement as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ Susan B. Waldkirch
Name: Susan B. Waldkirch
Title: Vice President
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By: /s/ Lisa P. Trivette
Name: Lisa P. Trivette
Title: Vice President
10
<PAGE>
SPECIAL TRUST AGREEMENT
UNDER THE
NATIONSBANK PENSION PLAN
(as effective December 31, 1994)
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1. GENERAL . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. APPLICABLE LAW . . . . . . . . . . . . . . . . . . 3
ARTICLE III ASSETS AND INVESTMENTS . . . . . . . . . . . . . . . . 3
SECTION 3.1. SPECIAL TRUST ASSETS . . . . . . . . . . . . . . . 3
SECTION 3.2. INVESTMENT OF ASSETS . . . . . . . . . . . . . . . 4
ARTICLE IV DUTIES AND POWERS . . . . . . . . . . . . . . . . . . . 4
SECTION 4.1. DUTIES . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4.2. POWERS OF SPECIAL TRUSTEE . . . . . . . . . . . . . 5
ARTICLE V VALUATION OF ASSETS AND ACCOUNTING . . . . . . . . . . 6
SECTION 5.1. VALUATION OF ASSETS . . . . . . . . . . . . . . . . 6
SECTION 5.2. ACCOUNTINGS . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI AMENDMENT AND MERGER . . . . . . . . . . . . . . . . . 7
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND
RESTRICTIONS THEREON . . . . . . . . . . . . . . . 7
SECTION 6.2. AMENDMENT PROCEDURE . . . . . . . . . . . . . . . 7
SECTION 6.3. MERGER OR CONSOLIDATION . . . . . . . . . . . . . 7
ARTICLE VII RESIGNATION, REMOVAL AND SUCCESSOR SPECIAL
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7.1. RESIGNATION . . . . . . . . . . . . . . . . . . . 8
SECTION 7.2. REMOVAL . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7.3. SUCCESSOR . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.1. SPECIAL TRUSTEE'S COMPENSATION AND
EXPENSES . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.2. TAXES . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.3. RECORDS . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.4. ACCEPTANCE BY SPECIAL TRUSTEE . . . . . . . . . . 9
SECTION 8.5. AGREEMENT BINDING . . . . . . . . . . . . . . . . 9
SECTION 8.6. GENERAL RESTRICTIONS . . . . . . . . . . . . . . . 10
<PAGE>
<PAGE>
NationsBank Corporation
Exhibit 11
December 31, 1994
(shares in thousands, dollars in millions)
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992
<S> <C> <C> <C>
Average common shares outstanding........................ 274,656 257,969 243,748
Dilutive effect of
Convertible preferred stock............................ 2,513 2,453 2,473
Stock options.......................................... 1,404 2,031 2,297
Total fully dilutive shares.............................. 278,573 262,453 248,518
Income available to common shareholders before effect
of change in method of accounting for income taxes..... $ 1,680 $ 1,291 $ 1,121
Tax effect of assumed conversion of ESOP preferred stock. 0 0 (6)
Preferred dividends paid on dilutive convertible
preferred stock........................................ 10 10 9
Income available to common shareholders adjusted for
full dilution and before effect of change in method
of accounting for income taxes......................... 1,690 1,301 1,124
Effect of change in method of accounting for income taxes 0 200 0
Total net income available for common shareholders
adjusted for full dilution............................. $ 1,690 $ 1,501 $ 1,124
Fully diluted earnings per common share before effect
of change in method of accounting for income taxes..... $ 6.06 $ 4.95 $ 4.52
Fully diluted earnings per common share.................. $ 6.06 $ 5.72 $ 4.52
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONSBANK CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended
December 31
-------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
------------------------------
Income before taxes......................... $2,554,778 $1,991,103 $1,396,213 $ 108,524 $ 625,467
Equity in undistributed earnings
of unconsolidated subsidiaries............ (2,604) (4,756) (1,426) (1,114) (668)
Fixed charges:
Interest expense (including
capitalized interest)................ 2,895,569 1,420,800 915,880 1,290,755 1,851,513
Amortization of debt discount and
appropriate issuance costs........... 8,194 6,377 3,000 2,093 2,872
1/3 of net rent expense................ 114,414 95,786 90,667 81,909 66,195
---------- ---------- ---------- ---------- ----------
Total fixed charges......................... 3,018,177 1,522,963 1,009,547 1,374,757 1,920,580
Earnings (excluding capitalized interest)... $5,570,351 $3,509,310 $2,398,329 $1,470,621 $2,533,093
========== ========== ========== ========== ==========
Fixed charges............................... $3,018,177 $1,522,963 $1,009,547 $1,374,757 $1,920,580
========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges.......... 1.85 2.30 2.38 1.07 1.32
Including Interest on Deposits
------------------------------
Income before taxes......................... $2,554,778 $1,991,103 $1,396,213 $ 108,524 $ 625,467
Equity in undistributed earnings
of unconsolidated subsidiaries............ (2,604) (4,756) (1,426) (1,114) (668)
Fixed charges:
Interest expense (including
capitalized interest)................ 5,310,419 3,570,079 3,687,650 5,611,057 6,683,262
Amortization of debt discount and
appropriate issuance costs........... 8,194 6,377 3,000 2,093 2,872
1/3 of net rent expense................ 114,414 95,786 90,667 81,909 66,195
---------- ---------- ---------- ---------- ----------
Total fixed charges......................... 5,433,027 3,672,242 3,781,317 5,695,059 6,752,329
Earnings (excluding capitalized interest)... $7,985,201 $5,658,589 $5,170,099 $5,790,923 $7,364,842
========== ========== ========== ========== ==========
Fixed charges............................... $5,433,027 $3,672,242 $3,781,317 $5,695,059 $6,752,329
========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges.......... 1.47 1.54 1.37 1.02 1.09
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONSBANK CORPORATION
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Year Ended
December 31
-------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
------------------------------
Income before taxes......................... $2,554,778 $1,991,103 $1,396,213 $ 108,524 $ 625,467
Equity in undistributed earnings
of unconsolidated subsidiaries............ (2,604) (4,756) (1,426) (1,114) (668)
Fixed charges:
Interest expense (including
capitalized interest)................ 2,895,569 1,420,800 915,880 1,290,755 1,851,513
Amortization of debt discount and
appropriate issuance costs........... 8,194 6,377 3,000 2,093 2,872
1/3 of net rent expense................ 114,414 95,786 90,667 81,909 66,195
---------- ---------- ---------- ---------- ----------
Total fixed charges......................... 3,018,177 1,522,963 1,009,547 1,374,757 1,920,580
Preferred dividend requirements............. 14,796 15,737 29,260 30,775 37,979
Earnings (excluding capitalized interest)... $5,570,351 $3,509,310 $2,398,329 $1,470,621 $2,533,093
========== ========== ========== ========== ==========
Fixed charges............................... $3,032,973 $1,538,700 $1,038,807 $1,405,532 $1,958,559
========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges.......... 1.84 2.28 2.31 1.05 1.29
Including Interest on Deposits
------------------------------
Income before taxes......................... $2,554,778 $1,991,103 $1,396,213 $ 108,524 $ 625,467
Equity in undistributed earnings
of unconsolidated subsidiaries............ (2,604) (4,756) (1,426) (1,114) (668)
Fixed charges:
Interest expense (including
capitalized interest)................ 5,310,419 3,570,079 3,687,650 5,611,057 6,683,262
Amortization of debt discount and
appropriate issuance costs........... 8,194 6,377 3,000 2,093 2,872
1/3 of net rent expense................ 114,414 95,786 90,667 81,909 66,195
---------- ---------- ---------- ---------- ----------
Total fixed charges......................... 5,433,027 3,672,242 3,781,317 5,695,059 6,752,329
Preferred dividend requirements............. 14,796 15,737 29,260 30,775 37,979
Earnings (excluding capitalized interest)... $7,985,201 $5,658,589 $5,170,099 $5,790,923 $7,364,842
========== ========== ========== ========== ==========
Fixed charges............................... $5,447,823 $3,687,979 $3,810,577 $5,725,834 $6,790,308
========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges.......... 1.47 1.53 1.36 1.01 1.08
</TABLE>
<PAGE>
NationsBank Corporation and Subsidiaries
Financial Summary
--------------------------------------------------------------------------------
(Dollars in Millions Except Per-Share Information)
<TABLE>
<CAPTION>
1994 1993 Change
-------------------------------------
<S> <C> <C> <C> <C>
For the Year Net income before effect of change in method
of accounting for income taxes.......................... $ 1,690 $ 1,301 29.9 %
Net income................................................ 1,690 1,501 12.6
Earnings per common share before effect of change
in method of accounting for income taxes................ 6.12 5.00 22.4
Earnings per common share................................. 6.12 5.78 5.9
Cash dividends paid on common shares...................... 517 423 22.2
Dividends per common share................................ 1.88 1.64 14.6
Return on average common shareholders' equity............. 16.10 % 15.00 %
At Year-End Assets.................................................... $ 169,604 $ 157,686
Deposits.................................................. 100,470 91,113
Loans, leases and factored accounts receivable,
net of unearned income.................................. 103,371 92,007
Securities................................................ 25,825 29,054
Earning assets............................................ 151,722 140,890
Total shareholders' equity................................ 11,011 9,979
Per common share........................................ 39.70 36.39
Common shares issued (thousands).......................... 276,452 270,905
Market price per share of common stock.................... $ 45 1/8 $ 49
Daily Average Assets.................................................... $ 166,319 $ 134,400
for the Year Deposits.................................................. 93,757 83,471
Loans and leases, net of unearned income.................. 95,006 78,984
Securities................................................ 27,434 25,840
Earning assets............................................ 148,381 119,182
Total shareholders' equity................................ 10,484 8,651
Common shares issued (thousands).......................... 274,656 257,969
Risk-Based Tier 1.................................................... 7.43 % 7.41 %
Capital Ratios Total..................................................... 11.47 11.73
</TABLE>
Financial Summary 1
<PAGE>
Management's Discussion And Analysis
1994 Compared To 1993
Overview
NationsBank Corporation (NationsBank or the Corporation) is a bank
holding company headquartered in Charlotte, North Carolina, which provides
financial products and services, both domestically and internationally. With
$170 billion of total assets on December 31, 1994, NationsBank is the fourth
largest banking company in the United States.
Results for 1994 demonstrated the power and breadth of the
Corporation's franchise and the diversity of its business activities. Despite
the pressures of steadily rising interest rates and difficult financial
markets in 1994, the Corporation's net income of $1.7 billion represented an
increase of $389 million, or 30 percent, over 1993. Earnings in 1993 were
$1.3 billion, excluding the impact of adopting a new income tax accounting
standard. Earnings per common share were $6.12 and $5.00 for 1994 and 1993,
respectively. Including the $200-million, or $.78-per-share impact of the new
accounting standard, net income for 1993 was $1.5 billion, or $5.78 per
common share.
--------------------------------------------------------------------------------
1 FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in Millions Except Per-Share Information)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income statement
Income from earning assets...................................... $10,529 $8,327 $7,780 $9,398 $10,278
Interest expense................................................ 5,318 3,690 3,682 5,599 6,670
Net interest income (taxable-equivalent)........................ 5,305 4,723 4,190 3,940 3,771
Net interest income............................................. 5,211 4,637 4,098 3,799 3,608
Provision for credit losses..................................... 310 430 715 1,582 1,025
Gains (losses) on sales of securities........................... (13) 84 249 454 67
Noninterest income.............................................. 2,597 2,101 1,913 1,742 1,605
Other real estate owned expense (income)........................ (12) 78 183 127 65
Restructuring expense........................................... - 30 - 330 91
Other noninterest expense....................................... 4,942 4,293 3,966 3,847 3,473
Income tax expense (benefit).................................... 865 690 251 (93) 31
Effect of change in method of accounting for income taxes....... - 200 - - -
Net income...................................................... 1,690 1,501 1,145 202 595
Per common share
Earnings before effect of change in method of
accounting for income taxes.................................... 6.12 5.00 4.60 .76 2.61
Earnings........................................................ 6.12 5.78 4.60 .76 2.61
Cash dividends paid............................................. 1.88 1.64 1.51 1.48 1.42
Shareholders' equity (year-end)................................. 39.70 36.39 30.80 27.03 27.30
Market price of common stock (close at year end)................ 45 1/8 49 51 3/8 40 5/8 22 7/8
Balance sheet (year-end)
Total loans, leases and factored accounts receivable,
net of unearned income......................................... 103,371 92,007 72,714 69,108 70,891
Total assets.................................................... 169,604 157,686 118,059 110,319 112,791
Total deposits.................................................. 100,470 91,113 82,727 88,075 89,065
Long-term debt and obligations under capital leases............. 8,488 8,352 3,066 2,876 2,766
Total shareholders' equity...................................... 11,011 9,979 7,814 6,518 6,283
Performance ratios
Return on average assets........................................ 1.02% .97% 1.00% .17% .52%
Return on average common shareholders' equity (1)............... 16.10 15.00 15.83 2.70 9.56
Market price per share of common stock
High for the period............................................. $ 57 3/8 $ 58 $ 53 3/8 $ 42 3/4 $ 47 1/4
Low for the period.............................................. 43 3/8 44 1/2 39 5/8 21 1/2 16 7/8
</TABLE>
(1) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
In 1993, return on average assets and return on average common shareholders'
equity after the tax benefit from the impact of adopting the new income tax
accounting standard was 1.12% and 17.33%, respectively.
Management's Discussion and Analysis 25
<PAGE>
KEY PERFORMANCE HIGHLIGHTS FOR 1994 WERE:
. Return on average common shareholders' equity increased to 16.10 percent
from 15.00 percent in 1993.
. Taxable-equivalent net interest income increased $582 million, or 12
percent, compared to 1993, resulting from a 24-percent increase in average
earning assets. Average loans and leases rose 20 percent in 1994.
Adjusting for acquisitions, internal loan growth was 12 percent.
. Provision for credit losses decreased 28 percent to $310 million, compared
to 1993, and OREO expense declined from $78 million in 1993 to a net
recovery of $12 million in 1994. Nonperforming asset levels declined 36
percent and net charge-offs declined 23 percent.
. Noninterest income increased to $2.6 billion, or 24 percent, over 1993
levels. After adjusting for acquisitions, noninterest income increased 11
percent reflecting higher trading account profits, investment banking
income, service charges on deposit accounts and trust fees.
. Noninterest expense increased 15 percent to $4.9 billion in 1994.
Adjusting for acquisitions, expense growth was held to approximately two
and one-half percent in 1994, reflecting the results of corporate-wide
efforts to contain expense levels. The Corporation's efficiency ratio
improved to 62.54 percent in 1994 from 62.91 percent in 1993.
HIGHLIGHTS FROM A CUSTOMER GROUP PERSPECTIVE WERE:
. The General Bank's 1994 earnings of $932 million increased $192 million,
or 26 percent, from 1993. Return on average
--------------------------------------------------------------------------------
2 CUSTOMER GROUP SUMMARY
(Dollars in Millions)
<TABLE>
<CAPTION>
General Bank Institutional Group Financial Services Other
-----------------------------------------------------------------------------------
1994 1993 1994 1993 1994 1993 1994 1993
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income (taxable-equivalent).... $ 3,689 $ 3,479 $ 1,180 $ 1,040 $ 413 $ 204 $ 24 $ -
Noninterest income.......................... 1,712 1,430 834 626 51 45 - -
-----------------------------------------------------------------------------------
Total revenue............................. 5,401 4,909 2,014 1,666 464 249 24 -
Provision for credit losses................. 283 364 (46) 31 73 35 - -
Gains (losses) on sales of securities....... - - - - - - (13) 84
Other real estate owned expense (income).... 8 30 (27) 43 7 5 - -
Restructuring expense....................... - - - - - - - 30
Noninterest expense......................... 3,644 3,342 1,087 798 212 153 - -
-----------------------------------------------------------------------------------
Income before income taxes and effect of
changes in method of accounting for
income taxes.............................. 1,466 1,173 1,000 794 172 56 11 54
Income tax expense.......................... 534 433 369 302 69 21 (13) 20
-----------------------------------------------------------------------------------
Income before effect of change in method
of accounting for income taxes............ 932 740 631 492 103 35 24 34
Effect of change in method of accounting
for income taxes.......................... - - - - - - - 200
-----------------------------------------------------------------------------------
Net income.................................. $ 932 $ 740 $ 631 $ 492 $ 103 $ 35 $ 24 $ 234
===================================================================================
Net interest yield.......................... 4.52% 4.76% 2.81% (1) 3.17% (1) 7.45% 7.80%
Return on equity............................ 17% 16% 16% 16% 13% 13%
Efficiency ratio............................ 67.46 68.08 53.95 47.90 45.64 61.62
Average (2)
Total loans and leases,
net of unearned income.................. $58,582 $50,055 $31,109 $26,855 $5,537 $2,622
Total deposits............................ 77,665 71,967 11,273 8,721 - -
Total assets.............................. 86,860 77,976 66,496 44,599 6,064 3,102
Year end (2)
Total loans and leases,
net of unearned income.................. 63,578 59,591 33,193 28,244 6,380 5,164
Total deposits............................ 79,905 79,573 13,614 8,926 - -
</TABLE>
(1) Institutional Group's net interest yield excludes the impact of the primary
government securities dealer. Including the primary government securities
dealer, the net interest yield was 1.98 percent in 1994 and 2.66 percent in
1993.
(2) The sums of balance sheet amounts will differ from consolidated amounts
due to intercompany balances.
26 NationsBank Corporation Annual Report 1994
<PAGE>
[PIE CHART APPEARS HERE
1994 EARNINGS CONTRIBUTION BY CUSTOMER GROUP
<TABLE>
<CAPTION>
General Institutional Financial
Bank Group Services
-------- ------- ----------
<S> <C> <C> <C>
Percent of
net income (excludes other) 56% 38% 6%]
</TABLE>
common shareholders' equity increased to 17 percent in 1994 from 16
percent in 1993.
. Earnings for the Institutional Group grew 28 percent to $631 million,
compared to 1993 earnings of $492 million. Return on average common
shareholders' equity was 16 percent in both 1994 and 1993.
. Financial Services earnings were $103 million in 1994 compared to $35
million in the prior year, primarily reflecting the full-year impact of
the 1993 acquisition of U S WEST Financial Services Inc. Return on average
common shareholders' equity was 13 percent in both 1994 and 1993 .
The analysis of the results of operations and financial condition of
the Corporation is impacted by acquisitions. As more fully discussed in Note
2 to the consolidated financial statements, the more significant
acquisitions, all of which were accounted for as purchases, included:
. MNC Financial Inc. (MNC), a bank holding company headquartered in
Baltimore, Maryland, with total assets of approximately $16.5 billion.
Acquired October 1, 1993.
. Approximately $2.0 billion in net receivables and the ongoing business of
U S WEST Financial Services Inc., now known as Greyrock Capital Group Inc.
Acquired December 1, 1993.
. Primarily $12 billion of trading account assets and certain of the
liabilities of Chicago Research & Trading Group Ltd. (CRT), an options
market-making and trading firm and a primary government securities dealer.
Acquired July 2, 1993.
. Approximately $3.7 billion of finance receivables and certain of the
liabilities of Chrysler First Inc., the non-automotive finance subsidiary
of Chrysler Financial Corporation, which now operates as NationsCredit.
Acquired February 1, 1993.
. Several smaller banking organizations, including aggregate loans of $654
million and deposits of $5.1 billion. Several mortgage banking operations,
including mortgage servicing rights of $8.6 billion.
The remainder of management's discussion and analysis of the
consolidated results of operations and financial condition of NationsBank
Corporation should be read together with the consolidated financial
statements and related notes presented on pages 58 through 77.
Customer Group Review
The Corporation is segregated into three major internal management
units, or Customer Groups. These units, shown in TABLE 2, are managed with a
focus on numerous performance objectives including return on equity,
operating efficiency and net income.
The net income of the customer groups reflects a funds transfer
pricing system which derives net interest income by matching assets and
liabilities with similar interest rate sensitivity and maturity
characteristics. Equity capital is allocated to each customer group based on
an assessment of its inherent risk.
The General Bank includes the Banking Group, which contains the retail
banking network and is the service provider for small and medium-size
companies; Financial Products, which provides specialized services such as
credit cards, residential mortgages, indirect lending and brokerage on a
national basis; and Trust and Private Banking.
The General Bank earned $932 million in 1994, an increase of 26 percent
over 1993. Return on equity improved to 17 percent. Groups with the largest
contribution toward the higher returns included the Banking Group and Card
Services, driven primarily by improvement in operating efficiency and credit
quality. Net interest income in the General Bank grew six percent over 1993
reflecting the benefits of deposit cost containment efforts as well as
17-percent loan growth. Approximately two-thirds of this loan growth was
internally generated while the remainder resulted from acquisitions.
Internally generated loan growth was concentrated in residential mortgages
and commercial loans. The increase in net interest income resulting from loan
growth and deposit pricing was partially offset by a narrowing of the spread
between securities and market-based funds. The General Bank's efficiency
ratio continued to improve in 1994, declining 62 basis points to 67.46
percent, reflecting the benefits of operational consolidation and increases
in fee income. The efficiency improvement was realized despite Model Banking
development expense totaling $80 million in 1994. Model Banking is a system
designed and in the process of being implemented across the Corporation's
franchise to enhance retail customer sales and product delivery.
The Banking Group contributed 58 percent of the General Bank's earnings
in 1994 with a return on equity of 15 percent. In 1993, the Banking Group's
return on equity was 14 percent. During 1994, average loans increased 25
percent, or $8.4 billion, with
Management's Discussion and Analysis 27
<PAGE>
--------------------------------------------------------------------------------
3 12-MONTH TAXABLE-EQUIVALENT DATA
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------
AVERAGE Average Average
BALANCE INCOME Balance Income Balance Income
SHEET OR YIELDS/ Sheet or Yields/ Sheet or Yields/
AMOUNTS EXPENSE RATES Amounts Expense Rates Amounts Expense Rates
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2).............................. $ 41,606 $ 3,147 7.56% $ 35,050 $ 2,438 6.96% $ 29,206 $ 2,067 7.08%
Real estate commercial...................... 7,780 636 8.18 6,667 506 7.59 6,769 527 7.78
Real estate construction.................... 3,155 268 8.49 2,894 217 7.50 3,718 266 7.17
------------------------------------------------------------------------------
Total commercial.......................... 52,541 4,051 7.71 44,611 3,161 7.09 39,693 2,860 7.20
------------------------------------------------------------------------------
Residential mortgage........................ 14,980 1,141 7.62 10,904 902 8.27 8,245 769 9.33
Home equity................................. 2,531 202 7.99 2,173 155 7.14 2,109 148 7.05
Credit card................................. 3,956 508 12.84 4,376 596 13.62 3,969 574 14.45
Other consumer.............................. 17,237 1,629 9.45 14,289 1,366 9.56 12,047 1,277 10.60
------------------------------------------------------------------------------
Total consumer............................ 38,704 3,480 8.99 31,742 3,019 9.51 26,370 2,768 10.50
------------------------------------------------------------------------------
Foreign..................................... 1,417 86 6.10 961 52 5.49 823 55 6.63
Lease financing............................. 2,344 176 7.50 1,670 133 7.96 1,301 107 8.25
------------------------------------------------------------------------------
Total loans and leases, net............... 95,006 7,793 8.20 78,984 6,365 8.06 68,187 5,790 8.49
------------------------------------------------------------------------------
Securities
Held for investment......................... 15,048 761 5.06 24,823 1,375 5.54 22,541 1,542 6.84
Available for sale (3)...................... 12,386 644 5.20 1,017 49 4.80 1,785 103 5.77
------------------------------------------------------------------------------
Total securities.......................... 27,434 1,405 5.12 25,840 1,424 5.51 24,326 1,645 6.76
------------------------------------------------------------------------------
Loans held for sale......................... 339 23 6.63 790 53 6.73 967 70 7.22
Federal funds sold and securities
purchased under agreements to resell...... 13,389 547 4.09 6,049 194 3.21 5,346 201 3.77
Time deposits placed and other
short-term investments.................... 1,762 90 5.12 2,037 79 3.91 1,802 92 5.09
Trading account securities (4).............. 10,451 765 7.32 5,482 298 5.43 1,592 74 4.64
------------------------------------------------------------------------------
Total earning assets (5).................. 148,381 10,623 7.16 119,182 8,413 7.06 102,220 7,872 7.70
Cash and cash equivalents....................... 8,271 7,275 6,512
Factored accounts receivable.................... 1,252 1,074 949
Other assets, less allowance for credit losses
and excluding Special Asset Division.......... 8,415 6,869 5,366
------------------------------------------------------------------------------
Total assets, excluding Special
Asset Division............................ $166,319 $134,400 $115,047
==============================================================================
Interest-bearing liabilities
Savings....................................... $9,116 212 2.33 $ 6,774 161 2.38 $ 5,646 161 2.86
NOW and money market deposit accounts......... 29,724 696 2.34 28,641 641 2.24 28,283 798 2.82
Consumer CDs and IRAs......................... 23,937 999 4.17 23,387 1,057 4.52 25,835 1,443 5.58
Negotiated CDs, public funds
and other time deposits..................... 3,319 133 4.02 4,211 167 3.97 5,663 279 4.93
Foreign time deposits......................... 7,544 375 4.98 3,033 123 4.05 1,648 91 5.52
Borrowed funds and trading
account liabilities (4)(6).................. 48,323 2,353 4.87 33,293 1,149 3.45 19,204 639 3.33
Long-term debt and obligations under
capital leases.............................. 8,033 550 6.85 5,268 392 7.44 3,036 271 8.92
Special Asset Division net
funding allocation.......................... - - - - - - - - -
------------------------------------------------------------------------------
Total interest-bearing liabilities........ 129,996 5,318 4.09 104,607 3,690 3.53 89,315 3,682 4.12
Noninterest-bearing sources
Noninterest-bearing deposits.................. 20,097 17,425 15,597
Other liabilities............................. 5,742 3,717 2,849
FDIC interest in NationsBank of Texas......... - - -
Shareholders' equity.......................... 10,484 8,651 7,286
------------------------------------------------------------------------------
Total liabilities and shareholders'
equity................................... $166,319 $134,400 $115,047
==============================================================================
Net interest spread............................. 3.07 3.53 3.58
Impact of noninterest-bearing sources........... .51 .43 .52
------------------------------------------------------------------------------
Net interest income/yield on earning assets..... $ 5,305 3.58% $4,723 3.96% $4,190 4.10%
==============================================================================
</TABLE>
(1) Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
(2) Commercial loan interest income includes net interest rate swap revenues
related to asset conversion swaps converting variable-rate commercial loans
to fixed rate. Such amounts were $62 and $120 in 1994 and 1993,
respectively.
(3) The average balance sheet amounts and yields on securities available for
sale are based on the average of historical amortized cost balances.
(4) Gross unrealized gains and losses on off-balance sheet trading positions
are reported in other assets and liabilities, respectively.
(5) Interest income includes taxable-equivalent adjustments of $94, $86, $92,
$141, $163 and $217 for 1994, 1993, 1992, 1991, 1990 and 1989, respectively.
(6) Borrowed funds and trading account liabilities interest expense includes net
interest rate swap expense related to liability conversion swaps fixing the
cost of certain variable-rate liabilities, primarily market-based borrowed
funds. Such amounts were $31 and $3 in 1994 and 1993, respectively.
28 NationsBank Corporation Annual Report 1994
<PAGE>
--------------------------------------------------------------------------------
3 12-MONTH TAXABLE-EQUIVALENT DATA
(Dollars in Millions)
<TABLE>
<CAPTION>
1991 1990
-----------------------------------------------------------
Average Average
Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2).............................. $ 29,731 $2,586 8.70% $ 29,890 $ 3,122 10.44%
Real estate commercial...................... 6,473 591 9.13 5,931 622 10.49
Real estate construction.................... 5,085 449 8.82 5,289 573 10.84
-----------------------------------------------------------
Total commercial.......................... 41,289 3,626 8.78 41,110 4,317 10.50
-----------------------------------------------------------
Residential mortgage........................ 7,713 807 10.47 9,079 867 9.55
Home equity................................. 1,883 179 9.53 1,625 182 11.18
Credit card................................. 3,411 519 15.22 3,018 476 15.78
Other consumer.............................. 13,045 1,483 11.37 11,215 1,419 12.66
-----------------------------------------------------------
Total consumer............................ 26,052 2,988 11.47 24,937 2,944 11.81
-----------------------------------------------------------
Foreign..................................... 734 62 8.47 838 112 13.28
Lease financing............................. 1,292 141 10.89 1,240 118 9.53
-----------------------------------------------------------
Total loans and leases, net............... 69,367 6,817 9.83 68,125 7,491 11.00
-----------------------------------------------------------
Securities
Held for investment......................... 25,412 2,189 8.61 25,984 2,377 9.15
Available for sale (3)...................... - - - - - -
-----------------------------------------------------------
Total securities.......................... 25,412 2,189 8.61 25,984 2,377 9.15
-----------------------------------------------------------
Loans held for sale......................... 425 37 8.74 379 44 11.49
Federal funds sold and securities
purchased under agreements to resell...... 4,904 289 5.89 2,148 175 8.16
Time deposits placed and other
short-term investments.................... 1,661 115 6.89 2,810 251 8.95
Trading account securities (4).............. 1,321 92 6.99 1,211 103 8.43
-----------------------------------------------------------
Total earning assets (5).................. 103,090 9,539 9.25 100,657 10,441 10.37
Cash and cash equivalents....................... 6,387 6,622
Factored accounts receivable.................... 829 845
Other assets, less allowance for credit losses
and excluding Special Asset Division.......... 5,486 5,568
-----------------------------------------------------------
Total assets, excluding Special
Asset Division............................ $115,792 $113,692
===========================================================
Interest-bearing liabilities
Savings....................................... $ 4,732 216 4.55 $ 5,003 258 5.15
NOW and money market deposit accounts......... 26,854 1,331 4.96 24,536 1,477 6.02
Consumer CDs and IRAs......................... 27,261 1,912 7.01 24,713 1,962 7.94
Negotiated CDs, public funds
and other time deposits..................... 11,684 827 7.08 13,738 1,116 8.13
Foreign time deposits......................... 2,548 171 6.70 2,603 231 8.89
Borrowed funds and trading
account liabilities (4)(6).................. 18,948 1,068 5.64 21,256 1,685 7.93
Long-term debt and obligations under
capital leases.............................. 2,816 250 8.88 2,669 245 9.18
Special Asset Division net
funding allocation.......................... (2,845) (176) (6.20) (4,057) (304) (7.49)
-----------------------------------------------------------
Total interest-bearing liabilities........ 91,998 5,599 6.09 90,461 6,670 7.37
Noninterest-bearing sources
Noninterest-bearing deposits.................. 14,491 14,067
Other liabilities............................. 2,698 2,942
FDIC interest in NationsBank of Texas......... - -
Shareholders' equity.......................... 6,605 6,222
-----------------------------------------------------------
Total liabilities and shareholders'
equity................................... $115,792 $113,692
===========================================================
Net interest spread............................. 3.16 3.00
Impact of noninterest-bearing sources........... .66 .75
-----------------------------------------------------------
Net interest income/yield on earning assets..... $3,940 3.82% $3,771 3.75%
===========================================================
<CAPTION>
-------------------------------------------------------------------------------
Five-Year
1989 Compounded
------------------------- Growth Rate
Average 1989/94
Balance Income -------------------
Sheet or Yields/ Average Income or
Amounts Expense Rates Balances Expense
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2).............................. $ 28,060 $3,299 11.76% 8% (1)%
Real estate commercial...................... 5,173 573 11.08 9 2
Real estate construction.................... 4,848 580 11.96 (8) (14)
--------------------------
Total commercial.......................... 38,081 4,452 11.69 7 (2)
--------------------------
Residential mortgage........................ 7,003 774 11.06 16 8
Home equity................................. 1,506 178 11.80 11 3
Credit card................................. 2,513 413 16.45 9 4
Other consumer.............................. 11,636 1,354 11.64 8 4
--------------------------
Total consumer............................ 22,658 2,719 12.00 11 5
--------------------------
Foreign..................................... 954 109 11.38 8 (5)
Lease financing............................. 1,178 107 9.08 15 10
--------------------------
Total loans and leases, net............... 62,871 7,387 11.75 9 1
--------------------------
Securities
Held for investment......................... 20,475 1,903 9.29 (6) (17)
Available for sale (3)...................... - - -
--------------------------
Total securities.......................... 20,475 1,903 9.29 6 (6)
--------------------------
251 31 12.36 6 (6)
Loans held for sale.........................
Federal funds sold and securities 2,314 213 9.20 42 21
purchased under agreements to resell......
Time deposits placed and other 3,022 294 9.72 (10) (21)
short-term investments.................... 605 55 9.08 77 69
Trading account securities (4).............. --------------------------
Total earning assets (5).................. 89,538 9,883 11.04 11 1
Cash and cash equivalents....................... 6,474 5
Factored accounts receivable.................... 683 13
Other assets, less allowance for credit losses
and excluding Special Asset Division.......... 4,644 13
--------------------------
Total assets, excluding Special
Asset Division............................ $101,339 10
==========================
Interest-bearing liabilities
Savings....................................... $6,203 364 5.86 8 (10)
NOW and money market deposit accounts......... 18,695 1,159 6.20 10 (10)
Consumer CDs and IRAs......................... 20,446 1,735 8.48 3 (10)
Negotiated CDs, public funds
and other time deposits..................... 15,685 1,379 8.79 (27) (37)
Foreign time deposits......................... 2,670 257 9.63 23 8
Borrowed funds and trading
account liabilities (4)(6).................. 17,854 1,606 8.99 22 8
Long-term debt and obligations under
capital leases.............................. 2,061 203 9.84 31 22
Special Asset Division net
funding allocation.......................... (5,164) (424) (8.20)
--------------------------
Total interest-bearing liabilities........ 78,450 6,279 8.00 11 (3)
Noninterest-bearing sources
Noninterest-bearing deposits.................. 13,976 8
Other liabilities............................. 3,235 12
FDIC interest in NationsBank of Texas......... 412
Shareholders' equity.......................... 5,266 15
--------------------------
Total liabilities and shareholders'
equity................................... $101,339 10
==========================
Net interest spread............................. 3.04
Impact of noninterest-bearing sources........... .99
--------------------------
Net interest income/yield on earning assets..... $3,604 4.03% 8
==========================
</TABLE>
Management's Disussion and Analysis 29
<PAGE>
MNC accounting for approximately 40 percent of the increase. The $4.9 billion
increase in average deposits reflected the full-year impact of MNC and four in-
market acquisitions in Texas, Florida and South Carolina. The Financial Products
group contributed 31 percent of the General Bank's earnings with a return on
equity of 28 percent. Card Services accounted for over 50 percent of Financial
Products' earnings and generated a return on equity of 46 percent. In 1993, the
Card Services' return on equity was 27 percent. Dealer Finance is the next
largest component of Financial Products and produced a return on equity of 17
percent in 1994. The 1993 return was 15 percent.
The Institutional Group includes Corporate and Investment Banking
activities, the Real Estate Banking Group, Specialized Lending and the
Capital Markets Group, which includes customer-related derivatives, foreign
exchange, securities trading and securities underwriting activities. Housed
in this unit are NationsBanc-CRT and NationsBanc Capital Markets, Inc., which
with its Section 20/Tier II powers, underwrites and deals in various types of
corporate debt and has the power to underwrite and deal in equity securities.
The Institutional Group earned $631 million in 1994, representing a
return on equity of 16 percent. Continued asset quality improvements in the
Real Estate Banking Group drove the increased return on equity for the
Institutional Group overall. The increase in net interest income resulting from
loan growth of 16 percent over 1993 was constrained by a narrowing of the spread
between securities and market-based funds. Noninterest income for the
Institutional Group rose $208 million, or 33 percent, reflecting higher trading
gains (due to the full-year impact of CRT) and growth in investment banking and
deposit fees. Investments committed to expand capital markets activities and the
full-year impact of CRT largely drove the $289 million increase in operating
expense and the change in the efficiency ratio. Real Estate Banking Group asset
quality improvement contributed to the negative provision for credit losses and
OREO recoveries for 1994. Combined, these two categories accounted for $147
million of the Institutional Group's $206 million growth in pretax earnings over
1993.
Financial Services consists of NationsCredit and Greyrock Capital Group.
In 1994, Financial Services contributed $103 million, or six percent, of
consolidated earnings reflecting their first full year of NationsBank
operations as well as strong growth throughout the year. On a year-end basis,
loan growth of 24 percent included strength in consumer lending and inventory
financing. The 13-percent return on equity was impacted by a higher
equity-to-asset ratio of 13 percent in 1994, necessary to posture this unit
for raising funds in the financial markets.
The Other category in TABLE 2 includes gains and losses on sales of
securities and earnings on unallocated equity.
Results Of Operations
NET INTEREST INCOME
TABLE 3 presents an analysis of the Corporation's taxable-equivalent
net interest income and average balance sheet levels for the last six years.
TABLE 4 analyzes changes in net interest income from year to year.
Taxable-equivalent net interest income increased $582 million to $5.3
billion in 1994, compared to $4.7 billion in 1993. The increase was due to
higher earning asset levels, primarily loans and leases which increased $16.0
billion, or 20 percent. Loan growth in the General Bank approximated $9.0
billion, centered in commercial, residential mortgage and other consumer
loans. The Institutional Group experienced loan growth of approximately $4.0
billion, reflecting primarily an increase in commercial loans. The
$3.0-billion increase in average loans in Financial Services primarily
reflects the full-year impact of Greyrock Capital Group. On a consolidated
basis, after adjusting for acquisitions and the securitization of credit card
receivables, loan levels increased by $9.1 billion, or 12 percent. The
aggregate of average federal funds sold, securities purchased under
agreements to resell and trading account assets increased $12.3 billion,
primarily due to the 1993 acquisition and higher trading asset levels of the
Corporation's primary government securities dealer. The increase in net
interest income resulting from higher loan levels and deposit cost
containment efforts was partially offset by a narrowing of the spread between
fixed-rate investment securities and market-based funds. As more fully
discussed in the Interest Rate Risk Management section, actions taken in the
second half of 1994 to reposition the balance sheet in light of rising
interest rates had a slight negative impact on net interest income.
[PIE CHART APPEARS HERE
1994 CUSTOMER GROUP DISTRIBUTION OF LOANS AND REVENUES
<TABLE>
<CAPTION>
General Institutional Financial
Bank Group Services
------- ------- -----------
<S> <C> <C> <C>
Percent of net loans
and leases........................... 62% 32% 6%
Percent of revenues................... 68% 26% 6%]
</TABLE>
30 NationsBank Corporation Annual Report 1994
<PAGE>
The net interest yield declined 38 basis points to 3.58 percent in
1994, compared to 3.96 percent in 1993. Excluding the impact of the
Corporation's primary government securities dealer, for which revenues are
recorded in noninterest income, the net interest yield declined 14 basis
points to 4.04 percent, compared to 4.18 percent in 1993. The decline in the
yield reflected the decreased spread between fixed-rate investment securities
and market-based funds, partially offset by increased net interest yields
resulting from loan growth and deposit cost containment efforts.
The yield on average earning assets increased 10 basis points to 7.16
percent in 1994 from 7.06 percent in 1993. Excluding the impact of the
trading assets of the Corporation's primary government securities dealer, the
yield on average earning assets increased 16 basis points to 7.33 percent in
1994, compared to 7.17 percent in 1993. The yield on total loans and leases
increased 14 basis points to 8.20 percent in 1994, reflecting loan growth in
a rising interest rate environment. The Corporation's prime interest rate
rose from an average of 6.00 percent in 1993 to 7.14 percent in 1994.
--------------------------------------------------------------------------------
4 CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME
(Dollars in Millions)
This table presents an analysis of the year-to-year changes in net
interest income on a fully taxable-equivalent basis for the years shown.
The changes for each category of income and expense are divided between
the portion of change attributable to the variance in average levels or
yields/rates for that category. The amount of change that cannot be
separated is allocated to each variance proportionately.
<TABLE>
<CAPTION>
From 1993 to 1994 From 1992 to 1993
---------------------------------------------------------------------------------
Increase (Decrease) Increase (Decrease)
in Income/Expense in Income/Expense
Due to Change in Due to Change in
---------------------------------------------------------------------------------
Percentage Percentage
Average Yields/ Increase Average Yields/ Increase
Levels Rates Total (Decrease) Levels Rates Total (Decrease)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from earning assets
Loans and leases, net of unearned income
Commercial................................. $ 483 $ 226 $ 709 29.1% $ 407 $ (36) $ 371 17.9%
Real estate commercial..................... 89 41 130 25.7 (8) (13) (21) (4.0)
Real estate construction................... 21 30 51 23.5 (61) 12 (49) (18.4)
------ -----
Total commercial......................... 595 295 890 28.2 349 (48) 301 10.5
------ -----
Residential mortgage....................... 315 (76) 239 26.5 227 (94) 133 17.3
Home equity................................ 27 20 47 30.3 5 2 7 4.7
Credit card................................ (55) (33) (88) (14.8) 57 (35) 22 3.8
Other consumer............................. 279 (16) 263 19.3 222 (133) 89 7.0
------ -----
Total consumer........................... 633 (172) 461 15.3 528 (277) 251 9.1
------ -----
Foreign.................................... 27 7 34 65.4 8 (11) (3) (5.5)
Lease financing............................ 51 (8) 43 32.3 29 (3) 26 24.3
------ -----
Total loans and leases, net.............. 1,312 116 1,428 22.4 881 (306) 575 9.9
------ -----
Securities
Held for investment........................ (503) (111) (614) (44.7) 146 (313) (167) (10.8)
Available for sale......................... 591 4 595 n/m (39) (15) (54) (52.4)
------ -----
Total securities......................... 85 (104) (19) (1.3) 98 (319) (221) (13.4)
------ -----
Loans held for sale........................ (31) 1 (30) (56.6) (12) (5) (17) (24.3)
Federal funds sold and securities purchased
under agreements to resell............... 287 66 353 182.0 25 (32) (7) (3.5)
Time deposits placed and other short-term
investments.............................. (12) 23 11 13.9 11 (24) (13) (14.1)
Trading account securities................. 339 128 467 156.7 209 15 224 302.7
------ -----
Total interest income.................... 2,089 121 2,210 26.3 1,234 (693) 541 6.9
------ -----
Interest expense
Savings.................................... 55 (4) 51 31.7 29 (29) - -
NOW and money market deposit accounts...... 26 29 55 8.6 10 (167) (157) (19.7)
Consumer CDs and IRAs...................... 24 (82) (58) (5.5) (128) (258) (386) (26.7)
Negotiated CDs, public funds and other
time deposits............................ (36) 2 (34) (20.4) (64) (48) (112) (40.1)
Foreign time deposits...................... 219 33 252 204.9 61 (29) 32 35.2
Borrowed funds and trading
account liabilities...................... 629 575 1,204 104.8 485 25 510 79.8
Long-term debt and obligations under
capital leases........................... 191 (33) 158 40.3 172 (51) 121 44.6
------ -----
Total interest expense................. 982 646 1,628 44.1 581 (573) 8 .2
------ -----
Net interest income.......................... 1,076 (494) $ 582 12.3 676 (143) $ 533 12.7
====== =====
</TABLE>
n/m - not meaningful.
Management's Discussion and Analysis 31
<PAGE>
The Corporation did not fully reinvest proceeds from the 1994 maturities
and sales of certain higher yielding securities during 1994. As a result, the
yield on the securities portfolio declined 39 basis points to 5.12 percent in
1994. The average yield of the remaining securities portfolio on December 31,
1994 was 5.37 percent.
Average interest-bearing liabilities increased $25.4 billion in 1994
compared to 1993. Borrowed funds and trading liabilities increased $15.0
billion, to $48.3 billion, resulting primarily from the acquisition and funding
of the Corporation's primary government securities dealer and increased trading
activities. Long-term debt increased $2.8 billion due to debt acquired in the
MNC acquisition and debt securities issued in connection with financing
Financial Services. Interest-bearing deposits increased $7.6 billion,
principally due to acquisitions. Excluding deposits acquired from MNC in 1993
and California Federal Savings Bank in 1994, average interest-bearing deposit
levels remained relatively flat. Consumer CDs and money market savings accounts
declined, offset by increases in foreign time deposits. The increase in foreign
time deposits resulted from wholesale funding initiatives.
The rate on average interest-bearing liabilities increased 56 basis points
to 4.09 percent in 1994, from 3.53 percent in 1993. Excluding the impact of the
trading liabilities of the Corporation's primary government securities dealer,
the rate on average interest-bearing liabilities increased 39 basis points to
3.83 percent in 1994, compared to 3.44 percent in 1993. This rate increase
resulted from the Corporation's efforts to extend liability maturities through
its use of longer-term bank notes and foreign time deposits in lieu of utilizing
overnight funding.
Net interest income in 1994 was impacted by the fourth quarter 1993
securitization of credit card receivables. The Corporation periodically
securitizes credit card receivables which changes the Corporation's role from
that of a lender to that of a loan servicer. During 1994, the Corporation
managed an average credit card portfolio of $5.4 billion, including $1.4
billion which had been securitized. For the securitized portion of the credit
card portfolio, residual net interest income after paying certificate holders
and after credit losses is reported as servicing fees in noninterest income.
PROVISION FOR CREDIT LOSSES
The provision for credit losses was $310 million in 1994, compared to $430
million in the prior year. A strengthening economy, coupled with the
Corporation's continued loan workout activities, resulted in an overall
improvement in credit quality trends which led to lower credit costs. Excluding
the fourth quarter 1993 impact of MNC, nonperforming asset levels declined every
quarter of 1994 and 1993. Net charge-offs declined $96 million to $316 million
in 1994.
On December 31, 1994, the allowance for credit losses was $2.2 billion, or
2.11 percent of loans, leases and factored accounts receivable, compared to an
allowance of $2.2 billion, or 2.36 percent, at the end of 1993. The allowance
for credit losses was 273 percent of nonperforming loans on December 31, 1994,
compared to 193 percent on December 31, 1993.
TABLE 12 provides an analysis of the activity in the Corporation's
allowance for credit losses for each of the last five years. Allowance levels,
net charge-offs and nonperforming assets are discussed in the Asset Quality
Review and Credit Risk Management section.
SECURITIES GAINS AND LOSSES
Losses from the sales of securities were $13 million in 1994, as
securities were sold in the last quarter of 1994 as a part of interest rate
repositioning efforts. Gains in 1993 were $84 million.
NONINTEREST INCOME
TABLE 5 compares the major categories of noninterest income for 1994 and
1993.
Noninterest income totaled $2.6 billion in 1994, an increase of $496
million, or 24 percent, from $2.1 billion in 1993. Adjusted for acquisitions,
growth in noninterest income was 11 percent in 1994.
Trading account profits and fees, including foreign exchange income,
increased $121 million, or 80 percent, in 1994 compared to 1993. This increase,
resulting primarily from the acquisition of CRT, is concentrated in interest
rate derivatives trading and is consistent with the expansion efforts in capital
markets activities.
An analysis of trading account profits
[GRAPH APPEARS HERE
Net Interest Income
(Dollars in Billions)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net interest income....... $3.771 $3.940 $4.190 $4.723 $5.305]
</TABLE>
32 NationsBank Corporation Annual Report 1994
<PAGE>
and fees by major business activity is as follows (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------
<S> <C> <C>
Securities trading............................. $ 82 $ 73
Interest rate contracts........................ 119 21
Foreign exchange contracts 27 27
Other.......................................... 45 31
Total trading account ---- ----
profits and fees........................... $273 $152
==== ====
</TABLE>
Growth, excluding acquisitions, occurred in most major categories of
noninterest income as described below:
. General Bank trust fees increased $22 million, or six percent, in 1994
compared to 1993. Increased fees were realized primarily due to growth in
mutual fund investment advisory services, other trust related services and
increased volume of securities lending activities. Partially offsetting
these increases were fee decreases resulting from the rising interest rate
environment which caused declines in the discretionary assets under
management portfolio, principally in the market values of debt
instruments. Discretionary assets under management and total assets under
administration by the Trust Group were $57.4 billion and $163.6 billion,
respectively, on December 31, 1994.
. Service charges on deposit accounts increased $33 million, or five
percent, from 1993. Concentrated emphasis on fee collections was the
primary contributor to this growth.
. Mortgage servicing and related fees increased $2 million, or three
percent, in 1994 compared to 1993. Including acquisitions, the average
portfolio of loans serviced increased 35 percent from $26.3 billion in
1993 to $35.5 billion in 1994. On December 31, 1994, the servicing
portfolio totaled $39.0 billion. Mortgage loan originations through the
Corporation's mortgage company decreased 38 percent during 1994 to $6.9
billion. The majority of this decrease was in retail loan volume coupled
with a slight decline in correspondent wholesale volume. These declines
reflected industry-wide trends of lower origination levels resulting from
increases in interest rates.
. Higher syndication fees and venture capital income in the Institutional
Group contributed the majority of the $44-million, or 47-percent increase
in investment banking income in 1994 compared to 1993. The Capital Markets
syndication group led 362 deals totaling $195.5 billion during 1994,
compared to 234 deals totaling $115.9 billion in 1993.
. Credit card income increased $81 million in 1994, or 41 percent, compared
to 1993.
--------------------------------------------------------------------------------
5 NONINTEREST INCOME
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------
Percent Percent
of Taxable- Of Taxable-
Equivalent Equivalent Change
Net Interest Net Interest ------------------
Amount Income Amount Income Amount Percent
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trust fees........................... $ 435 8.2% $ 371 7.9% $ 64 17.3%
-------------------------------------------------------------------
Service charges on deposit accounts.. 797 15.0 681 14.4 116 17.0
-------------------------------------------------------------------
Nondeposit-related service fees
Safe deposit rent................ 27 .5 25 .5 2 8.0
Mortgage servicing and related
fees............................ 86 1.6 77 1.6 9 11.7
Fees on factored accounts
receivable...................... 74 1.4 74 1.6 - -
Investment banking income........ 138 2.6 94 2.0 44 46.8
Other service fees............... 111 2.1 93 2.0 18 19.4
-------------------------------------------------------------------
Total nondeposit-related service
fees............................ 436 8.2 363 7.7 73 20.1
-------------------------------------------------------------------
Credit card income
Merchant discount fees........... 27 .5 30 .6 (3) (10.0)
Annual credit card fees.......... 21 .4 24 .5 (3) (12.5)
Other credit card fees........... 232 4.4 144 3.1 88 61.1
-------------------------------------------------------------------
Total credit card income......... 280 5.3 198 4.2 82 41.4
-------------------------------------------------------------------
Other income
Brokerage income................. 44 .8 41 .9 3 7.3
Trading account profits and fees. 273 5.1 152 3.2 121 79.6
Bankers' acceptances and letters
of credit....................... 67 1.3 65 1.4 2 3.1
Insurance commissions and
earnings........................ 49 .9 39 .8 10 25.6
Miscellaneous.................... 216 4.2 191 4.0 25 13.1
-------------------------------------------------------------------
Total other income............... 649 12.3 488 10.3 161 33.0
-------------------------------------------------------------------
$2,597 49.0% $2,101 44.5% $ 496 23.6
===================================================================
</TABLE>
Management's Discussion and Analysis 33
<PAGE>
A large portion of the increase in other credit card fees is
related to the securitization of certain credit card loans during the
fourth quarter of 1993. While this transaction served to increase this
component of noninterest income, it also served to decrease net interest
income and net charge-offs for 1994 compared to 1993. The overall effect
on net income from the securitization of this portfolio was approximately
neutral. The remainder of the increase relates to other new credit card
initiatives including an increase in co-branding card income.
OTHER REAL ESTATE OWNED EXPENSE
OREO expense declined $90 million to a net recovery of $12 million in 1994
compared to expense of $78 million in 1993, consistent with the improvement in
asset quality. Improved real estate markets resulted in lower OREO write-downs
and increased gains on sales of these properties.
NONINTEREST EXPENSE
The Corporation's noninterest expense, as shown in TABLE 6, increased $649
million, or 15 percent, in 1994 compared to 1993. Most categories of noninterest
expense were significantly influenced by acquisitions.
Adjusting for the impact of acquisitions, noninterest expense in the
current year increased approximately two and one-half percent, primarily in the
categories described below:
. Personnel expense increased $143 million, or eight percent, primarily due
to increased incentives as well as salaries and wages. Additionally,
within the Capital Markets Group, investments in personnel to expand the
Corporation's capital markets and trading activities and growth in the
business activities of the Institutional Bank and Financial Services
resulted in increases in the number of associates in these customer
groups. Also, contributing to the increase were higher pension costs and
other employee benefits.
. Equipment expense increased $20 million, or seven percent, in 1994
compared to 1993. This increase is primarily due to enhancements to
computer resources, including higher rental expense for upgraded mainframe
equipment and increased costs relating to product delivery systems.
. Marketing expense increased $14 million, or 10 percent, in 1994 compared
to 1993, due to the continuation of a "brand image" campaign that began in
1993 focusing on the NationsBank name and the Corporation's range of
financial products and services. Increased credit card solicitations were
also a primary factor.
. Professional fees decreased $14 million, or nine percent, compared to
1993. The decline was largely the result of focused expense management
efforts in this area.
. The Corporation's FDIC insurance expense for 1994 decreased $13 million,
or six percent, as a result of higher capital levels of certain of the
Corporation's subsidiary banks as well as upgrades in supervisory risk
--------------------------------------------------------------------------------
6 NONINTEREST EXPENSE
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993
---------------------------------------------
Percent Percent
of Taxable- of Taxable-
Equivalent Equivalent Change
Net Interest Net Interest ---------------------
Amount Income Amount Income Amount Percent
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Personnel..................................... $2,311 43.6% $1,903 40.3% $408 21.4%
Occupancy, net................................ 487 9.2 434 9.2 53 12.2
Equipment..................................... 364 6.9 317 6.7 47 14.8
Marketing..................................... 161 3.0 138 2.9 23 16.7
Professional fees............................. 171 3.2 168 3.6 3 1.8
Amortization of intangibles................... 141 2.7 110 2.3 31 28.2
Credit card................................... 44 .8 49 1.0 (5) (10.2)
Private label credit card..................... 27 .5 37 .8 (10) (27.0)
FDIC insurance................................ 211 4.0 205 4.3 6 2.9
Processing.................................... 235 4.4 190 4.0 45 23.7
Telecommunications............................ 137 2.6 122 2.6 15 12.3
Postage and courier........................... 126 2.4 120 2.6 6 5.0
Other general operating....................... 388 7.3 370 7.8 18 4.9
General administrative and miscellaneous...... 139 2.6 130 2.8 9 6.9
-------------------------------------------------------------------------
$4,942 93.2% $4,293 90.9% $649 15.1
=========================================================================
</TABLE>
34 NationsBank Corporation Annual Report 1994
<PAGE>
classifications due to improved asset quality. These factors decreased
assessment rates under the risk-based assessment system mandated by the
Federal Deposit Insurance Corporation.
. The Corporation's combined general operating and general administrative
and miscellaneous expenses decreased $9 million due to focused expense
management efforts resulting in reduced expenses for postage, relocation
and supplies, partially offset by increased expenses for
telecommunications.
INCOME TAXES
The Corporation's income tax expense for 1994 was $865 million, for
an effective tax rate of 33.9 percent of pretax income. Tax expense for 1993
was $690 million, for an effective tax rate of 34.7 percent.
Note 13 to the consolidated financial statements includes a
reconciliation of federal income tax expense computed using the federal
statutory rate of 35 percent, to the actual income tax expense reported for
1994 and 1993.
See Notes 1 and 13 to the consolidated financial statements for
additional information on income taxes.
Risk Management
In conducting its business activities, the Corporation is exposed to
interest rate, liquidity and credit risk. The successful management of risk
is integral to the continued growth and profitability of the Corporation. The
following sections address the Corporation's approach to managing risk. The
first section presents a review of the Corporation's balance sheet and
liquidity risk management practices. The Corporation's asset quality results
for 1994 combined with a discussion of credit risk management policies and
procedures are presented in the second section. The third section discusses
the tools used to manage interest rate risk and outlines certain balance
sheet repositioning efforts undertaken by the Corporation during 1994. The
Corporation's capital resources and the management practices surrounding
capital are discussed in the final section.
Balance Sheet Review And
Liquidity Risk Management
Liquidity, a measure of the Corporation's ability to fulfill its cash
requirements, is managed by the Corporation through its asset and liability
management process. This entails measuring and managing the relative balance
between asset, liability and off-balance sheet positions. This process,
coupled with the Corporation's ability to raise capital and debt financing,
ensures the maintenance of sufficient funds to meet the liquidity needs of
the Corporation.
TABLE 7 presents an analysis of the major
--------------------------------------------------------------------------------
7 SOURCES AND USES OF FUNDS
(Average Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------
Amount Percent Amount Percent
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Composition of sources
Savings, NOW, money market deposit accounts,
and consumer CDs and IRAs........................................ $ 62,777 37.7% $ 58,802 43.8%
Noninterest-bearing funds........................................ 20,097 12.1 17,425 13.0
Customer-based portion of negotiated CDs......................... 1,328 .8 1,690 1.2
------------------------------------------------------
Customer-based funds............................................. 84,202 50.6 77,917 58.0
Market-based funds............................................... 57,858 34.8 38,847 28.9
Long-term debt and obligations under capital leases.............. 8,033 4.8 5,268 3.9
Other liabilities................................................ 5,742 3.5 3,717 2.8
Shareholders' equity............................................. 10,484 6.3 8,651 6.4
------------------------------------------------------
Total sources.................................................... $166,319 100.0% $134,400 100.0%
======================================================
Composition of uses
Loans and leases, net of unearned income......................... $ 95,006 57.1% $ 78,984 58.8%
Securities held for investment................................... 15,048 9.1 24,823 18.5
Securities available for sale.................................... 12,386 7.4 1,017 .7
Loans held for sale.............................................. 339 .2 790 .6
Time deposits placed and other short-term investments............ 1,762 1.1 2,037 1.5
Other earning assets............................................. 23,840 14.3 11,531 8.6
------------------------------------------------------
Total earning assets............................................. 148,381 89.2 119,182 88.7
Factored accounts receivable..................................... 1,252 .8 1,074 .8
Other assets..................................................... 16,686 10.0 14,144 10.5
------------------------------------------------------
Total uses....................................................... $166,319 100.0% $134,400 100.0%
======================================================
</TABLE>
Management's Discussion and Analysis 35
<PAGE>
sources and uses of funds for 1994 and 1993 based on average levels.
The composition of sources of funds reflected a 49-percent increase in
market-based funds to $57.9 billion in 1994 from $38.8 billion in the prior
year. These funds represented 35 percent of total sources of funds in 1994
compared to 29 percent in 1993. Excluding the impact of trading account
liabilities associated with the Corporation's primary government securities
dealer, market-based funds increased 25 percent in 1994 from the prior year,
primarily attributable to the extension of liability maturities through the
use of bank notes and foreign time deposits. Customer-based funds increased
to $84.2 billion from $77.9 billion in 1993 and represented 51 percent of
total sources of funds in 1994, compared to 58 percent in 1993.
The Corporation's primary use of funds, loans and leases, increased
$16.0 billion, or 20 percent, to $95.0 billion in 1994, compared to $79.0
billion in 1993. This increase reflects both internal loan growth as well as
acquisitions. Loans represent 57 percent of the Corporation's uses of funds.
The Corporation's ratio of average loans and leases to customer-based funds
was 113 percent in 1994, compared to 101 percent in the prior year. The
change in this ratio is primarily due to loan growth of 20 percent, coupled
with industry-wide disintermediation.
Average other earning assets rose $12.3 billion, or 107 percent, to
$23.8 billion in 1994 from $11.5 billion in 1993. Approximately $10.9 billion
of this increase resulted from higher levels of trading account assets
associated with the Corporation's primary government securities dealer.
Cash and cash equivalents increased $1.9 billion from December 31, 1993
to December 31, 1994, due to net cash provided by operating activities of
$9.1 billion, and $1.8 billion in cash provided by financing activities,
offset by $9.0 billion in cash used in investing activities.
The net increase in cash provided by operating activities of $7.0
billion from December 31, 1993 to December 31, 1994, was primarily
attributable to the net change in trading instruments of $3.8 billion during
1994 as compared to $707 million during 1993. Cash used in investing
activities decreased $1.6 billion in 1994 compared to 1993, as proceeds from
the sales and maturities of securities available for sale exceeded the
purchases of those securities. This increase in cash was offset by a decrease
in the proceeds from the sales and securitizations of loans of $4.6 billion
from year to year.
--------------------------------------------------------------------------------
8 DISTRIBUTION OF LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------------------
AMOUNT PERCENT Amount Percent Amount Percent Amount Percent Amount Percent
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic
Commercial............... $ 44,665 43.1% $40,808 44.3% $32,260 44.4% $28,701 41.5% $30,951 43.7%
Real estate commercial... 7,349 7.1 8,239 9.0 6,324 8.7 6,756 9.8 5,847 8.2
Real estate construction. 2,981 2.9 3,256 3.5 3,065 4.2 4,212 6.1 5,453 7.7
------------------------------------------------------------------------------------------------------
Total commercial....... 54,995 53.1 52,303 56.8 41,649 57.3 39,669 57.4 42,251 59.6
------------------------------------------------------------------------------------------------------
Residential mortgage..... 17,244 16.7 12,689 13.8 9,262 12.7 7,571 11.0 8,133 11.5
Home equity.............. 2,644 2.6 2,565 2.8 2,061 2.8 2,121 3.1 1,687 2.4
Credit card.............. 4,753 4.6 3,728 4.1 4,297 5.9 4,178 6.0 3,501 4.9
Other consumer........... 17,867 17.3 16,761 18.2 12,091 16.6 12,524 18.1 12,392 17.5
------------------------------------------------------------------------------------------------------
Total consumer......... 42,508 41.2 35,743 38.9 27,711 38.0 26,394 38.2 25,713 36.3
------------------------------------------------------------------------------------------------------
Lease financing.......... 2,440 2.4 1,729 1.9 1,301 1.8 1,229 1.8 1,236 1.7
Factored accounts
receivable.............. 1,004 1.0 1,001 1.1 917 1.3 817 1.2 760 1.1
------------------------------------------------------------------------------------------------------
100,947 97.7 90,776 98.7 71,578 98.4 68,109 98.6 69,960 98.7
------------------------------------------------------------------------------------------------------
Foreign
Governments and
official institutions... 6 - 22 - 2 - 42 .1 88 .1
Banks and other financial
institutions............ 795 .8 446 .5 304 .4 177 .2 197 .3
Commercial and industrial
companies............... 1,183 1.1 510 .5 634 .9 634 .9 584 .8
Lease financing.......... 440 .4 253 .3 196 .3 146 .2 62 .1
------------------------------------------------------------------------------------------------------
2,424 2.3 1,231 1.3 1,136 1.6 999 1.4 931 1.3
------------------------------------------------------------------------------------------------------
Total loans, leases and
factored accounts
receivable, net of
unearned income.......... $103,371 100.0% $92,007 100.0% $72,714 100.0% $69,108 100.0% $70,891 100.0%
======================================================================================================
</TABLE>
36 NationsBank Corporation Annual Report 1994
<PAGE>
The net cash provided by financing activities decreased $6.5 billion from
December 31, 1993 to December 31, 1994. During 1994, proceeds from the issuances
of long-term debt and subordinated capital notes exceeded principal payments and
retirements by $181 million, as compared to net proceeds in 1993 of $3.7
billion. Also, in 1994, cash provided by the net increase in deposits, federal
funds purchased and securities sold under agreements to repurchase was $1.7
billion as compared to a net increase of $2.9 billion in 1993.
SECURITIES
The securities portfolio on December 31, 1994, consisted of securities
held for investment totaling $17.8 billion and securities available for sale
totaling $8.0 billion compared to $13.6 billion and $15.5 billion, respectively,
on December 31, 1993.
On December 31, 1994, the Corporation's portfolio of securities held for
investment reflected unrealized net depreciation of $699 million compared to
unrealized net appreciation of $20 million on December 31, 1993.
The valuation reserve for securities available for sale and marketable
equity securities reduced shareholders' equity by $136 million on December 31,
1994, reflecting $264 million of pretax depreciation on securities available for
sale, offset by $48 million of pretax appreciation on marketable equity
securities. The valuation amount increased shareholders' equity by $104 million
on December 31, 1993. The changes in depreciation for both the securities held
for investment and the securities available for sale portfolios were primarily
due to the rise in interest rates. Further increases in interest rates would
cause further depreciation due to the fixed-rate nature of the portfolios.
The estimated average maturity was 2.48 years and 2.73 years for
securities held for investment and securities available for sale on December 31,
1994, respectively, compared to 1.83 years and 1.44 years on December 31, 1993.
The estimated average maturity of the combined securities portfolio was 2.56
years on December 31, 1994, compared to 1.63 years on December 31, 1993. The
increase in the estimated average maturity was primarily attributable to 1994
maturities and sales which served to decrease the aggregate period-end
securities portfolio balance 11 percent and shift the composition of the
remaining portfolio to a longer maturity.
The securities portfolio serves a primary role in the overall context
of balance sheet management by the Corporation. The decision to purchase or
sell securities is based upon the current assessment of economic and
financial conditions, including the interest rate environment and other on-
or off-balance sheet positions. The portfolio's scheduled maturities and the
liquid nature of securities, in general, represent a significant source of
liquidity. Approximately $8.0 billion, or 31 percent, of the securities
portfolio matures in 1995. No liquidations other than scheduled maturities
are currently anticipated. As such, no significant securities losses are
expected to result from the unrealized depreciation in the
--------------------------------------------------------------------------------
9 SELECTED LOAN MATURITY DATA
December 31, 1994
(Dollars in Millions)
This table presents the maturity distribution and interest sensitivity of
selected loan categories (excluding residential mortgage, home equity,
credit card, other consumer loans, lease financing and factored accounts
receivable). Maturities are presented on a contractual basis.
<TABLE>
<CAPTION>
Due after
Due in 1 1 year
year through Due after
or less 5 years 5 years Total
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial................................................................... $18,713 $18,443 $7,509 $44,665
Real estate commercial....................................................... 1,852 4,438 1,059 7,349
Real estate construction..................................................... 1,624 1,248 109 2,981
Foreign...................................................................... 1,653 247 84 1,984
--------------------------------------------
Total selected loans, net of unearned income............................... $23,842 $24,376 $8,761 $56,979
============================================
Percent of total............................................................. 41.8% 42.8% 15.4% 100.0%
Cumulative percent of total.................................................. 41.8 84.6 100.0
Sensitivity of loans to changes in interest rates--loans due after one year
Predetermined interest rate................................................ $ 6,823 $3,320 $10,143
Floating or adjustable interest rate....................................... 17,553 5,441 22,994
--------------------------------
$24,376 $8,761 $33,137
================================
</TABLE>
Management's Discussion and Analysis 37
<PAGE>
securities portfolio on December 31, 1994. For additional information on
securities see Note 3 to the consolidated financial statements.
LOANS AND LEASES
Total loans and leases increased $11.4 billion to $102.4 billion on
December 31, 1994, compared to $91.0 billion on December 31, 1993. Average loans
and leases increased $16.0 billion to $95.0 billion in 1994 compared to $79.0
billion one year earlier. Approximately $9.1 billion, or 57 percent, of the
increase in average loans and leases reflects internal loan growth, while the
remainder of the increase is the result of acquisitions.
Average loan growth in the commercial loan category increased $6.5
billion, or 19 percent, to $41.6 billion in 1994 from $35.1 billion in 1993.
Internal loan growth, primarily in the General Bank and Institutional Bank,
contributed $3.1 billion of the increase.
Real estate commercial and construction loans averaged $10.9 billion, a
$1.4 billion increase in average levels from the prior year. Excluding
acquisitions, average levels decreased $595 million.
Residential mortgage loans increased $4.1 billion, or 37 percent, to an
average of $15.0 billion in 1994. The majority of this growth was due to
increased origination of residential mortgages through the General Bank's vast
banking center network coupled with a higher retention level of adjustable-rate
mortgages generated through the Corporation's mortgage company.
The scheduled repayments and maturities of loans also represent a
substantial source of liquidity for the Corporation. TABLE 9 shows selected loan
maturity data on December 31, 1994. Approximately 42 percent of the selected
loans presented had maturities of one year or less.
Other sources of liquidity, such as the securitization and sale of certain
loans or portfolios, are also available to the Corporation.
OTHER EARNING ASSETS
As presented in TABLE 3, average other earning assets, including federal
funds sold, securities purchased under agreements to resell and trading account
securities, increased $12.3 billion to $23.8 billion in 1994, compared to 1993.
Other earning assets represented 14 percent of total uses of funds in 1994,
compared to 9 percent in 1993. Increases in trading account securities primarily
reflected the acquisition and higher trading asset levels of the Corporation's
primary government securities dealer.
DEPOSITS
TABLE 3 provides information on the average amounts of deposits and the
rates paid by deposit category. Deposits are the Corporation's primary source of
funds. Through its diverse retail banking network, the Corporation has access to
customers who provide a highly stable source of funds. Average deposits
increased $10.3 billion in 1994, compared to 1993, primarily due to
acquisitions. TABLE 10 provides information on the maturity distribution of
domestic certificates of deposit and other time deposits in amounts of $100
thousand or more for 1994. Domestic certificates of deposit and other time
deposits in denominations of $100 thousand or more amounted to $6.2 billion on
December 31, 1994, compared to $6.5 billion on December 31, 1993. Certificates
of deposit and other time deposits of $100 thousand or more of foreign offices
amounted to $12.6 billion and $3.8 billion on December 31, 1994 and 1993,
respectively.
SHORT-TERM BORROWINGS
The Corporation uses short-term borrowings as a funding source and in
its management of interest rate risk. TABLE 11 presents
<TABLE>
<CAPTION>
===============================================================================
10 MATURITY DISTRIBUTION OF DOMESTIC CERTIFICATES OF DEPOSIT AND
OTHER TIME DEPOSITS IN AMOUNTS OF $100 THOUSAND OR MORE
December 31, 1994
(Dollars in Millions)
Certificates Other Time
of Deposit Deposits Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Maturing in 3 months or less................. $2,679 $ 32 $2,711
Maturing in over 3 through 6 months.......... 1,121 20 1,141
Maturing in over 6 through 12 months......... 939 35 974
Maturing in over 12 months................... 1,093 236 1,329
--------------------------------
$5,832 $323 $6,155
================================
</TABLE>
[BAR GRAPH APPEARS HERE
Average Loans and Leases
(Dollars in Billions)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Average loans and leases........ $68.125 $69.367 $68.187 $78.984 $95.006]
</TABLE>
38 NationsBank Corporation Annual Report 1994
<PAGE>
the categories of short-term borrowings. The increase in commercial paper
outstanding in 1994 and 1993 primarily reflects the use of this funding source
to finance Financial Services, a nonbank subsidiary of the parent company.
The Corporation diversified its funding sources in 1993 by implementing
a short-term bank note program. In 1994, the banking subsidiaries increased the
maximum available issuance under this program by $3.0 billion to $6.0 billion.
Outstandings on December 31, 1994, which are included in other short-term
borrowings, were $4.5 billion under this program.
TRADING ACCOUNT LIABILITIES
Trading activities are primarily financed with funds from short sales.
During 1994, average short sales approximated $10.5 billion.
LONG-TERM DEBT
On December 31, 1994 and 1993, long-term debt was $8.5 billion and $8.3
billion, respectively. During 1994, the Corporation issued approximately $1.2
billion in long-term senior and subordinated debt. This new debt was used for
general corporate purposes including replacing debt repurchased due to its
higher cost and funding for the internal loan growth of Financial Services.
As a source of term liquidity, the Corporation has a medium-term note
program which provides for issuance from time to time of medium-term notes with
maturities of nine months or longer. See Note 7 to the consolidated financial
statements for further details on long-term debt.
OTHER
On September 30, 1994, the Corporation renegotiated its commercial
paper back-up lines establishing a single committed, $1.5 billion, three-year
credit facility. No borrowings have been made under this credit facility.
The Corporation's principal debt ratings on December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
Commercial Senior
Paper Debt
---------------------------------------------------------------------------
<S> <C> <C>
Moody's Investors Service.......................... P-1 A2
Standard & Poor's Corporation...................... A-1 A
Duff and Phelps, Inc. ............................. Duff 1+ A+
Fitch Investors Service, Inc. ..................... F-1 A+
Thomson BankWatch.................................. TBW-1 A+
</TABLE>
In managing liquidity, the Corporation takes into account the ability of
the subsidiary banks to pay dividends to the parent corporation. See Note 10 to
the consolidated financial statements for further details on dividends.
<TABLE>
<CAPTION>
===============================================================================================================================
11 SHORT-TERM BORROWINGS
(Dollars in Millions)
Federal funds purchased generally represent overnight borrowings and
repurchase agreements represent borrowings which generally range from one
day to three months in maturity. Commercial paper is issued in maturities
not to exceed nine months. Other short-term borrowings principally consist
of bank notes and U.S. Treasury note balances.
1994 1993 1992
------------------------------------------------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased
On December 31.............................................. $ 3,993 5.19% $ 7,135 2.92% $ 6,420 2.94%
Average during year......................................... 5,397 4.07 6,479 3.03 5,634 3.37
Maximum month-end balance during year....................... 7,264 - 7,899 - 8,644 -
Securities sold under agreements to repurchase
On December 31.............................................. 21,977 5.36 21,236 3.11 9,632 3.23
Average during year......................................... 24,903 4.32 17,283 3.13 10,382 3.25
Maximum month-end balance during year....................... 27,532 - 22,733 - 13,210 -
Commercial paper
On December 31.............................................. 2,519 5.22 2,056 3.26 784 3.29
Average during year......................................... 2,482 4.46 1,379 3.26 534 3.78
Maximum month-end balance during year....................... 2,871 - 2,056 - 784 -
Other short-term borrowings
On December 31.............................................. 5,640 7.21 5,522 3.08 4,560 3.18
Average during year......................................... 5,015 4.25 4,006 3.45 1,962 3.49
Maximum month-end balance during year....................... 6,634 - 8,187 - 4,781 -
</TABLE>
Management's Discussion and Analysis 39
<PAGE>
Asset Quality Review And Credit Risk Management
In conducting business activities, the Corporation is exposed to the
possibility that borrowers or counterparties may default on their obligations
to the Corporation. Credit risk arises through the extension of loans,
leases, factored accounts receivable and certain securities, financial
guarantees, and through counterparty risk on trading and capital markets
transactions. To manage this risk, the Credit Policy group establishes
policies and procedures to manage both on- and off-balance sheet risk and
communicates and monitors the application of these policies and procedures
throughout the Corporation.
================================================================================
12 ALLOWANCE FOR CREDIT LOSSES
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance on January 1....................................................... $ 2,169 $ 1,454 $ 1,605 $ 1,322 $ 878
--------------------------------------------------
Loans, leases and factored accounts receivable charged off
Commercial.............................................................. (113) (107) (245) (436) (206)
Real estate commercial.................................................. (32) (84) (279) (316) (101)
Real estate construction................................................ (27) (17) (114) (276) (58)
--------------------------------------------------
Total commercial...................................................... (172) (208) (638) (1,028) (365)
--------------------------------------------------
Residential mortgage.................................................... (7) (10) (18) (33) (15)
Home equity............................................................. (2) (3) (4) (4) (2)
Credit card............................................................. (126) (184) (172) (138) (91)
Other consumer.......................................................... (190) (169) (162) (181) (160)
--------------------------------------------------
Total consumer........................................................ (325) (366) (356) (356) (268)
--------------------------------------------------
Foreign................................................................. - - (7) (3) (28)
Lease financing......................................................... (4) (5) (8) (7) (9)
Factored accounts receivable............................................ (32) (30) (17) (23) (29)
--------------------------------------------------
Total loans, leases and factored accounts
receivable charged off.............................................. (533) (609) (1,026) (1,417) (699)
--------------------------------------------------
NationsBank of Texas charge-offs reimbursed by the FDIC.................... - - - - 13
--------------------------------------------------
Recoveries of loans, leases and factored accounts
receivable previously charged off
Commercial.............................................................. 69 67 62 36 27
Real estate commercial.................................................. 17 21 13 5 3
Real estate construction................................................ 26 12 8 3 -
--------------------------------------------------
Total commercial...................................................... 112 100 83 44 30
--------------------------------------------------
Residential mortgage.................................................... 2 3 4 3 2
Home equity............................................................. 1 1 1 1 -
Credit card............................................................. 22 19 13 19 12
Other consumer.......................................................... 66 64 47 36 30
--------------------------------------------------
Total consumer........................................................ 91 87 65 59 44
--------------------------------------------------
Foreign................................................................. - 1 1 1 2
Lease financing......................................................... 3 2 2 2 1
Factored accounts receivable............................................ 11 7 9 3 2
--------------------------------------------------
Total recoveries of loans, leases and
factored accounts receivable previously charged off................. 217 197 160 109 79
--------------------------------------------------
Net charge-offs....................................................... (316) (412) (866) (1,308) (607)
--------------------------------------------------
Provision for credit losses................................................ 310 430 715 1,582 1,025
Allowance applicable to loans of purchased companies....................... 23 697 - 9 26
--------------------------------------------------
Balance on December 31..................................................... $ 2,186 $ 2,169 $ 1,454 $ 1,605 $ 1,322
==================================================
Loans, leases and factored accounts receivable,
net of unearned income, outstanding on December 31...................... $103,371 $92,007 $72,714 $69,108 $70,891
Allowance for credit losses as a percentage of
loans, leases and factored accounts receivable,
net of unearned income, outstanding on December 31...................... 2.11% 2.36% 2.00% 2.32% 1.86%
Average loans, leases and factored accounts receivable,
net of unearned income, outstanding during the year..................... $96,258 $80,058 $69,136 $70,196 $68,970
Net charge-offs as a percentage of average loans,
leases and factored accounts receivable,
net of unearned income, outstanding during the year..................... .33% .51% 1.25% 1.86% .88%
Ratio of the allowance for credit losses
on December 31 to net charge-offs....................................... 6.93 5.27 1.68 1.23 2.18
Allowance for credit losses as a percentage of nonperforming loans......... 273.07% 193.38% 103.11% 81.82% 100.46%
</TABLE>
40 NationsBank Corporation Annual Report 1994
<PAGE>
[BAR GRAPH APPEARS HERE
Net Charge-offs As A Percentage of Average Net Loans
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net charge-offs as a
percentage of
average net loans....... 0.88% 1.86% 1.25% 0.51% 0.33%]
</TABLE>
Loan and Lease Portfolio -- The Corporation's credit risk is centered
in its loan and lease portfolio which on December 31, 1994 totaled $102.4
billion, or 67 percent, of total earning assets. The Corporation's overall
objective in managing loan portfolio risk is to minimize the adverse impact
of any single event or set of occurrences. To achieve this objective, the
Corporation strives to maintain a loan portfolio that is diverse in terms of
loan type, industry concentration, geographic distribution and borrower
concentration.
The Credit Policy group works with lending officers and is involved
with the implementation, refinement and monitoring of credit policies and
procedures.
For commercial loans, loan officers prepare proposals supporting the
extension of credit. These proposals contain an analysis of the borrower and
an evaluation of the ability of the borrower to repay the potential credit.
The proposals are subject to varying levels of approval by senior line and
credit policy management prior to extension of credit. Commercial loans
receive an initial risk rating by the originating loan officer. This rating
is based on the amount of credit risk inherent in the loan and is reviewed
for appropriateness by senior line and credit policy management. Credits are
monitored by line and credit policy personnel for deterioration in a
borrower's financial condition which would impact the borrower's ability to
repay the credit. Risk ratings are adjusted as necessary.
For consumer loans, approval and funding is conducted in centralized
locations. Generally, credit scoring systems are utilized to provide
standards for extension of credit. Consumer portfolio credit risk is
monitored primarily using statistical models to predict portfolio behavior.
Additionally, product and geographic concentrations are monitored.
An independent credit review group conducts ongoing reviews of the
loan and lease portfolio, reexamining on a regular basis risk assessments for
loans and leases and overall compliance with policy.
To limit credit exposure, the Corporation obtains collateral to
support credit extensions and commitments when deemed necessary. The most
significant categories of collateral are real and personal property, cash on
deposit and marketable securities. The Corporation obtains real property as
security for some loans that are made on the basis of the general
creditworthiness of the borrower and whose proceeds were not used for real
estate-related purposes.
The Corporation also manages exposure to a single borrower, industry,
loan-type or other concentration through syndications of credits,
participations, loan sales and securitizations. Through the Corporation's
Capital Markets Group, the Corporation is a major participant in the
syndications market. In a syndicated facility, each participating lender funds
only their portion of the syndicated facility, therefore limiting their exposure
to the borrower. The Corporation also identifies and reduces its exposure to
funded borrower or industry concentrations through loan sales. Generally, these
sales are without recourse to the Corporation.
================================================================================
13 ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial...................... $444 20.3% $403 18.6% $303 20.9% $524 32.6% $498 37.7%
Real estate commercial.......... 214 9.8 230 10.6 220 15.1 282 17.6 123 9.3
Real estate construction........ 83 3.8 123 5.7 141 9.7 252 15.7 239 18.1
------------------------------------------------------------------------------------------
Total commercial.............. 741 33.9 756 34.9 664 45.7 1,058 65.9 860 65.1
------------------------------------------------------------------------------------------
Residential mortgage............ 34 1.6 24 1.1 21 1.4 50 3.1 64 4.9
Home equity..................... 3 .1 23 1.1 18 1.2 26 1.6 23 1.7
Credit card..................... 117 5.4 92 4.2 125 8.6 104 6.5 78 5.9
Other consumer.................. 225 10.3 201 9.3 117 8.1 135 8.4 168 12.7
------------------------------------------------------------------------------------------
Total consumer................ 379 17.4 340 15.7 281 19.3 315 19.6 333 25.2
------------------------------------------------------------------------------------------
Foreign......................... 11 .5 13 .6 17 1.2 6 .4 5 .4
Lease financing................. 17 .8 13 .6 12 .8 12 .7 20 1.5
Factored accounts receivable.... 23 1.0 19 .9 18 1.2 17 1.1 11 .8
Unallocated..................... 1,015 46.4 1,028 47.3 462 31.8 197 12.3 93 7.0
------------------------------------------------------------------------------------------
$2,186 100.0% $2,169 100.0% $1,454 100.0% $1,605 100.0% $1,322 100.0%
==========================================================================================
</TABLE>
Management's Discussion and Analysis 41
<PAGE>
Allowance for Credit Losses -- The Corporation's allowance for credit
losses was $2.2 billion on December 31, 1994 and 1993. Continued improvements
in credit quality during 1994, as evidenced by a 36-percent decline in
nonperforming asset levels and a 23-percent decline in net charge-offs,
resulted in a lower provision for credit losses in 1994. The allowance
coverage of nonperforming loans increased to 273 percent on December 31,
1994, up from 193 percent at the end of 1993. Although credit quality has
improved steadily, management continues to carefully monitor asset quality
trends and reserve levels.
Based on the risk rating process described above, an amount is
allocated within the allowance for credit losses to cover the amount of loss
estimated to be inherent in particular risk categories of loans. The
allocation of the allowance for credit losses is presented in TABLE 13 and
reflects a refinement in methodology of allocating the allowance for credit
losses. The amount allocated is based upon the Corporation's loss experience
within risk categories of loans over a period of years and is adjusted for
existing economic conditions as well as performance trends within specific
industries.
In addition to the allocation by risk category, the Corporation
reviews significant individual credits and concentrations of credits and
makes additional allocations to the allowance when deemed necessary. The
nature of the process by which the Corporation determines the appropriate
allowance for credit losses requires the exercise of considerable judgment.
Management believes that the allowance for credit losses is appropriate given
inherent credit losses on December 31, 1994.
As presented in TABLE 12, net charge-offs for 1994 were $316 million,
or .33 percent of average loans, leases and factored accounts receivable,
versus $412 million, or .51 per-
================================================================================
14 NONPERFORMING ASSETS
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial.............................................................. $ 362 $ 474 $ 650 $ 831 $ 537
Real estate commercial.................................................. 201 318 404 535 374
Real estate construction................................................ 66 142 210 480 349
---------------------------------------------------
Total commercial...................................................... 629 934 1,264 1,846 1,260
---------------------------------------------------
Residential mortgage.................................................... 66 77 88 114 56
Home equity (1)......................................................... 10 7 5 - -
Other consumer (1)...................................................... 84 86 29 - -
---------------------------------------------------
Total consumer........................................................ 160 170 122 114 56
---------------------------------------------------
Foreign................................................................. 3 8 9 1 -
Lease financing (1)..................................................... 9 10 15 - -
---------------------------------------------------
Total nonperforming loans............................................. 801 1,122 1,410 1,961 1,316
---------------------------------------------------
Other real estate owned..................................................... 337 661 587 843 335
---------------------------------------------------
Total nonperforming assets............................................ $1,138 $1,783 $1,997 $2,804 $1,651
===================================================
Nonperforming assets as a percentage of
Total assets, excluding Special Asset Division.......................... .67% 1.13% 1.69% 2.54% 1.46%
Loans, leases and factored accounts receivable,
net of unearned income, and other real estate owned................... 1.10 1.92 2.72 4.01 2.32
Total loans past due 90 days or more and
not classified as nonperforming......................................... $ 146 $ 167 $ 215 $ 223 $ 406
</TABLE>
The loss of income associated with nonperforming loans on December 31 and the
cost of carrying other real estate owned were:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income that would have been recorded in accordance with
original terms........................................................ $ 96 $ 80 $ 105 $ 205 $ 140
Income actually recorded.................................................. (31) (34) (31) (82) (44)
---------------------------------------------------
Loss of income............................................................ $ 65 $ 46 $ 74 $ 123 $ 96
===================================================
Cost of carrying other real estate owned.................................. $ 24 $ 18 $ 25 $ 36 $ 19
</TABLE>
On December 31, 1994, there were no material outstanding commitments to lend
additional funds with respect to nonperforming loans.
(1) Included in commercial nonperforming loans in 1991 and 1990.
42 NationsBank Corporation Annual Report 1994
<PAGE>
[BAR GRAPH APPEARS HERE
Nonperforming Assets
(Dollars in Billions)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonperforming assets.............. $1.651 $2.804 $1.997 $1.783 $1.138
Nonperforming loans............ 1.316 1.961 1.410 1.122 0.801
OREO........................... 0.335 0.843 0.587 0.661 0.337]
</TABLE>
cent, in 1993. After adjusting for the impact of acquisitions, net charge-offs
declined $173 million, or 47 percent, from the prior year. Including
acquisitions, the most significant declines were centered in credit card and
real estate commercial loan net charge-offs which fell $61 million and $48
million, respectively. The decrease in credit card net charge-offs is
attributable to lower levels of outstanding receivables due to the fourth
quarter 1993 securitization of credit card receivables. Net charge-offs as a
percentage of managed average credit card loans were 3.46 percent in 1994,
compared to 3.78 percent in 1993. The decline in real estate commercial loan
charge-offs is due to improvements in real estate markets, primarily the Mid-
Atlantic, and the strengthened financial condition of borrowers. These declines
were partially offset by net charge-offs of other consumer loans which increased
$19 million, or 18 percent, in 1994. This increase is consistent with the 21
percent growth in average levels of the other consumer portfolio during 1994.
Net charge-offs as a percentage of average other consumer loans were .72 percent
in 1994 compared to .73 percent in 1993.
Nonperforming Assets -- On December 31, 1994, nonperforming assets
were $1.1 billion, or 1.10 percent of net loans, leases, factored accounts
receivable and other real estate owned, compared to $1.8 billion, or 1.92
percent, at the end of 1993. As presented in TABLE 14, nonperforming loans
were $801 million at the end of 1994, compared to $1.1 billion at the end of
1993. The decrease in nonperforming loan levels was centered in real estate
commercial and construction nonperforming loans, which declined $193 million,
or 42 percent, and in commercial nonperforming loans which declined $112
million, or 24 percent, from 1993. These declines primarily reflected
payments resulting from the improved financial condition of borrowers and the
results of the Corporation's continuing loan workout activities. Lease
financing, other consumer and home equity nonperforming loan levels have
increased slightly throughout the second half of 1994. These increases are
primarily reflective of the 40-percent, 21-percent and 16-percent growth,
respectively, in the average levels of these portfolios during 1994.
Other real estate owned, which
===============================================================================
15 REAL ESTATE COMMERCIAL AND CONSTRUCTION LOANS AND
OTHER REAL ESTATE OWNED BY GEOGRAPHIC REGION
December 31, 1994
(Dollars in Millions)
<TABLE>
<CAPTION>
Loans OREO
--------------------------------------------- ---------------
Outstanding Percent Nonperforming Percent Amount Percent
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maryland, District of Columbia and Virginia................. $ 3,005 29.1% $134 50.2% $122 46.4%
North Carolina and South Carolina........................... 1,951 18.9 27 10.1 33 12.5
Florida..................................................... 1,899 18.4 55 20.6 87 33.1
Other states................................................ 3,475 33.6 51 19.1 21 8.0
------------------------------------------ ------------
$10,330 100.0% $267 100.0% $263 100.0%
========================================== ============
</TABLE>
Distribution based on geographic location of collateral.
================================================================================
16 REAL ESTATE COMMERCIAL AND CONSTRUCTION LOANS AND
OTHER REAL ESTATE OWNED BY PROPERTY TYPE
December 31, 1994
(Dollars in Millions)
<TABLE>
<CAPTION>
Loans OREO
--------------------------------------------- ---------------
Outstanding Percent Nonperforming Percent Amount Percent
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shopping centers/retail..................................... $ 1,990 19.3% $ 31 11.6% $ 37 14.1%
Office buildings............................................ 1,786 17.3 40 15.0 39 14.8
Apartments.................................................. 1,478 14.3 19 7.1 5 1.9
Hotels...................................................... 965 9.3 17 6.4 3 1.1
Land and land development................................... 890 8.6 58 21.7 109 41.4
Residential................................................. 845 8.2 23 8.6 15 5.7
Industrial/warehouse........................................ 737 7.1 19 7.1 17 6.5
Commercial-other............................................ 372 3.6 10 3.7 10 3.8
Multiple use................................................ 349 3.4 4 1.5 1 .4
Resorts/golf courses........................................ 172 1.7 16 6.0 3 1.1
Other....................................................... 746 7.2 30 11.3 24 9.2
---------------------------------------------------------------
$10,330 100.0% $267 100.0% $263 100.0%
===============================================================
</TABLE>
Management's Discussion and Analysis 43
<PAGE>
represents real estate acquired through foreclosure and in-substance
foreclosures, decreased $324 million, or 49 percent, to $337 million at the end
of 1994 from $661 million at the end of 1993.
Internal loan workout units are devoted to the management and/or
collection of certain nonperforming assets as well as certain performing
loans. Aggressive collection strategies and a proactive approach to managing
overall credit risk has expedited the Corporation's disposition, collection
and renegotiation of nonperforming and other lower-quality assets and allowed
loan officers to concentrate on generating new business.
The Corporation continues its efforts to expedite disposition,
collection and renegotiation of nonperforming and other lower-quality assets.
As a part of this process, the Corporation routinely evaluates all reasonable
alternatives, including the sale of assets individually or in groups. The
final decision to proceed with any alternative is evaluated in the context of
the overall credit-risk profile of the Corporation.
Concentrations of Credit Risk -- As previously discussed, the
Corporation strives to maintain a diverse credit portfolio in an effort to
minimize the adverse impact of any single event or set of occurrences.
Summarized below are areas of credit risk with exposures in excess of 25 per-
cent of shareholders' equity and a discussion of foreign outstandings.
Real Estate -- Total nonresidential real estate commercial and
construction loans declined to $10.3 billion, or 10 percent of total loans,
leases and factored accounts receivable on December 31, 1994, from $11.5
billion, or 12 percent, at year-end 1993. TABLES 15 and 16 summarize the
geographic and property-type distribution of these loans. During 1994, the
Corporation recorded real estate net charge-offs of $16 million, or .15
percent of average real estate loans compared to net charge-offs of $68
million, or .71 percent in 1993. Nonperforming real estate loans totaled $267
million and $460 million on December 31, 1994 and 1993, respectively.
Commercial -- Commercial loan outstandings totaled $44.7 billion, or
43 percent, of total loans, leases and factored accounts receivable on
December 31, 1994, compared to $40.8 billion, or 44 percent, at year-end
1993. TABLE 17 presents selected commercial loans by industry. Net
charge-offs of commercial loans totaled $44 million, or .11 percent of
average commercial loans in 1994 versus $40 million, or .11 percent, in 1993.
Nonperforming commercial loans were $362 million and $474 million on December
31, 1994 and 1993, respectively.
Consumer -- On December 31, 1994, consumer loan outstandings totaled
$42.5 billion, representing 41 percent of total loans, leases and factored
accounts receivable. This compares to outstandings of $35.7 billion, or 39
percent, on December 31, 1993. TABLE 8 shows the components of the
Corporation's consumer loan portfolio. Net charge-offs in the consumer
portfolio were $234 million in 1994 compared to $279 million in 1993. Net
charge-offs as a percentage of average loans in 1994 were 2.63 percent for
credit card, .03 percent for residential mortgage, .04 percent for home
equity and .72 percent for other consumer loans. This compares to net
charge-off ratios of 3.77 percent, .06 percent, .09 percent and .73 percent,
respectively, in 1993.
Foreign -- Foreign outstandings, which exclude contingencies and the
local currency transactions of each country, include loans and
================================================================================
17 SELECTED COMMERCIAL LOANS
December 31, 1994
(Dollars in Millions)
<TABLE>
<CAPTION>
Unfunded
Outstanding Commitments Nonperforming
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Health care........................................................... $3,690 $1,947 $35
Oil and gas........................................................... 3,571 3,463 2
Leisure and sports.................................................... 3,300 1,947 42
Communications........................................................ 3,255 3,165 4
Food.................................................................. 3,081 2,933 28
Retail................................................................ 2,666 2,940 25
Textiles and apparel.................................................. 2,594 1,475 26
Automotive............................................................ 2,402 1,539 12
Machinery and equipment............................................... 1,978 2,197 9
Construction.......................................................... 1,856 1,125 36
Electronics........................................................... 1,779 1,713 5
Forest products and paper............................................. 1,678 1,398 3
Utilities............................................................. 1,202 1,622 1
Finance companies..................................................... 1,070 4,713 -
</TABLE>
44 NationsBank Corporation Annual Report 1994
<PAGE>
leases, interest-bearing deposits with foreign banks, bankers' acceptances and
other investments. The Corporation has no significant medium- or long-term
outstandings to restructuring countries. The Corporation's foreign outstandings
totaled $4.6 billion on December 31, 1994, compared to $2.1 billion on December
31, 1993.
Interest Rate Risk Management
The Corporation's asset and liability management process is utilized
to manage the Corporation's interest rate risk through structuring the
balance sheet and off-balance sheet portfolios to maximize net interest
income while maintaining acceptable levels of risk to changes in market
interest rates. While achievement of this goal requires a balance between
profitability, liquidity and interest rate risk, there are opportunities to
enhance revenues through controlled risk.
Interest rate risk is managed by the Corporation's Finance Committee
which formulates strategies based on a desirable level of interest rate risk.
In setting desirable levels of interest rate risk, the Finance Committee
considers the impact on earnings and capital of the current outlook on
interest rates, potential changes in the outlook on interest rates, world and
regional economies, liquidity, business strategies and other factors.
To effectively measure and manage interest rate risk, the Corporation
uses computer simulations which determine the impact on net interest income
of various interest rate scenarios, balance sheet trends and strategies.
These simulations incorporate assumptions about balance sheet dynamics, such
as loan and deposit growth, loan and deposit pricing, changes in funding mix
and asset and liability repricing and maturity characteristics. Simulations
based on numerous assumptions are run under various interest rate scenarios
to determine the impact on net interest income and capital. From these
scenarios, interest rate risk is quantified and appropriate strategies are
developed and implemented. The overall interest rate risk position and
strategies are reviewed on an ongoing basis by executive management.
Additionally, duration and market value sensitivity measures are
selectively utilized where they provide added value to the overall interest
rate risk management process.
In implementing strategies to manage interest rate risk, the primary
tools used by the Corporation are the discretionary portfolio, which is
comprised of the securities portfolio and interest rate swaps, and management
of the mix, rates and maturities of the wholesale and retail funding sources
of the Corporation.
The investment securities portfolio serves a primary role in
positioning the Corporation based on the long-term interest rate outlook.
Securities available for sale serve as a key tool for near-term interest rate
risk management and can be utilized to take advantage of market opportunities
that are medium-term in nature. Interest rate swaps allow the Corporation to
adjust its interest rate risk position without exposure to risk of loss of
principal and funding requirements, as swaps do not involve the exchange of
notional amounts, only net interest payments. The interest payments can be
based on a fixed rate or a variable index.
The Corporation uses non-leveraged generic swaps, index amortizing
swaps and collateralized mortgage obligation (CMO) swaps. Generic swaps
involve the exchange of fixed and variable interest rates based on the
contractual underlying notional amounts. Index amortizing and CMO swaps also
involve the exchange of fixed and variable interest rates, however, their
notional amounts decline and their maturities vary based on certain interest
rate indices in the case of index amortizing swaps, or mortgage prepayment
rates in the case of CMO swaps. Such instruments are subjected to the same
credit risk
================================================================================
18 ASSET AND LIABILITY MANAGEMENT INTEREST RATE SWAPS
NOTIONAL CONTRACTS
(Dollars in Millions)
<TABLE>
<CAPTION>
Index
Generic Amortizing CMO Total
----------------- ---------- --------------- -----------------
Receive Pay Receive Receive Pay Receive Pay
Fixed Fixed Fixed Fixed Fixed Fixed Fixed Total
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance on December 31, 1993............... $6,500 $ - $6,150 $1,076 $182 $13,726 $ 182 $13,908
Additions............................... 320 8,469 2,300 2,000 - 4,620 8,469 13,089
Maturities.............................. (292) (23) - (572) (85) (864) (108) (972)
--------------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1994............... $6,528 $8,446 $8,450 $2,504 $ 97 $17,482 $ 8,543 $26,025
================================================================================
</TABLE>
Management's Discussion and Analysis 45
<PAGE>
management policies and procedures as trading instruments as described on page
49.
In light of the economic momentum in the U.S. economy, and the
associated tightening of credit by the Federal Reserve Bank through increases
in interest rates, the Corporation shifted, in the latter half of 1994, its
interest rate risk position from one postured to benefit modestly from stable
to declining rates to a more neutral position. The actions taken by the
Corporation to shift its position included reduction of the net swap
position, reduction of fixed-rate assets, and extension of maturities of
fixed-rate deposits and borrowings.
In the third quarter of 1994, in order to reduce the net swap
position, the Corporation entered into two-year maturity, pay fixed, interest
rate swaps with a notional amount of $8.0 billion. As a result, the
Corporation's net receive fixed position on December 31, 1994 was $8.9
billion, compared to $13.5 billion on December 31, 1993. TABLE 18 summarizes
the notional contracts and the activity for the
================================================================================
19 ASSET AND LIABILITY MANAGEMENT INTEREST RATE SWAPS
December 31, 1994
(Dollars in Millions, Average Maturity in Years)
<TABLE>
<CAPTION>
Maturities
--------------------------------------------------------------
Market After Average
Value Total 1995 1996 1997 1998 1999 1999 Maturity
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET CONVERSION SWAPS
Receive fixed generic.................... $(188) 1.14
Notional value......................... $ 6,528 $3,137 $ 2,705 $ 575 $ 3 - $ 108
Weighted average receive rate.......... 4.52% 4.30% 4.63% 4.45% 6.58% - 8.25%
Weighted average pay rate.............. 5.84
Receive fixed amortizing................. (619) 2.61
Notional value......................... $ 8,450 $ 110 $ 186 $6,140 $2,014 - -
Weighted average receive rate.......... 4.92% 5.73% 5.69% 4.85% 5.01% - -
Weighted average pay rate.............. 6.02
Receive fixed CMO........................ (149) 2.25
-----
Notional value......................... $ 2,504 $ 708 $ 488 $ 349 $ 474 $ 485 -
Weighted average receive rate.......... 5.12% 5.12% 5.10% 5.11% 5.07% 5.21% -
Weighted average pay rate.............. 6.10
Total asset conversion swaps............. $(956) 2.01
=====
Notional value......................... $17,482 $3,955 $ 3,379 $7,064 $2,491 $ 485 $ 108
Weighted average receive rate.......... 4.80% 4.49% 4.76% 4.83% 5.02% 5.21% 8.25%
Weighted average pay rate.............. 5.96
LIABILITY CONVERSION SWAPS
Pay fixed generic........................ $ 223 1.69
Notional value......................... $ 8,446 $ 110 $ 8,037 $ 125 $ 100 - $ 74
Weighted average pay rate.............. 6.39% 6.64% 6.44% 4.52% 5.12% - 5.37%
Weighted average receive rate.......... 5.35
Pay fixed CMO............................ 7 2.08
-----
Notional value......................... $ 97 $ 24 $ 19 $ 14 $ 40 - -
Weighted average pay rate.............. 4.44% 4.44% 4.44% 4.44% 4.44% - -
Weighted average receive rate.......... 6.19
Total liability conversion swaps......... $ 230 1.69
=====
Notional value......................... $ 8,543 $ 134 $ 8,056 $ 139 $ 140 - $ 74
Weighted average pay rate.............. 6.37% 6.25% 6.44% 4.51% 4.93% - 5.37%
Weighted average receive rate.......... 5.35
Total.................................... $(726)
=====
Notional value......................... $26,025 $4,089 $11,435 $7,203 $2,631 $ 485 $ 182
Weighted average receive rate.......... 4.98%
Weighted average pay rate.............. 6.10
</TABLE>
Floating rates represent the last repricing and will change in the future
based on movements in one, three or six month LIBOR rates.
Maturities are based on interest rates implied by the forward curve on
December 31, 1994, and may differ from actual maturities, depending on future
interest rate movements and resultant prepayment patterns.
In addition to the above asset and liability management interest rate swaps, on
December 31, 1994, the Corporation had approximately $1.2 billion notional of
net receive fixed generic interest rate swaps associated primarily with the
credit card securitization. On December 31, 1994, these positions had an
unrealized market value of negative $115 million. The weighted average receive
rate is 5.19 percent and the pay rate on December 31, 1994 was 6.94 percent.
46 NationsBank Corporation Annual Report 1994
<PAGE>
year ended December 31, 1994 of asset and liability management interest rate
swaps (ALM swaps). The interest rate swap transactions entered into during 1994
increased the gross notional amount of the Corporation's ALM swaps program on
December 31, 1994, to $26.0 billion with the Corporation receiving fixed on
$17.5 billion, converting variable-rate commercial loans to fixed rate and
receiving variable on $8.5 billion, fixing the cost of certain variable-rate
liabilities, primarily market-based borrowed funds.
Secondly, the Corporation adjusted its interest rate risk position by
reducing the level of fixed-rate securities. As securities matured in 1994,
the Corporation did not fully reinvest these proceeds. Additionally, during
the fourth quarter, approximately $1.5 billion of securities were sold,
without reinvestment of those proceeds. These actions give the Corporation
the flexibility to reinvest as deemed appropriate.
The third action taken to adjust the interest rate risk position was
extension of the maturities of market-based funds, primarily bank notes and
foreign time deposits.
In addition to these efforts, the acquisition of approximately $3.9
billion of customer-based deposits from California Federal Savings Bank in
1994 helped adjust the interest rate risk sensitivity of the Corporation's
liabilities, as approximately one-half of these deposits are not rate
sensitive and are longer-term.
The above actions shifted the Corporation's interest rate position
from one postured to benefit modestly from stable to declining interest rates
to a more neutral position. On December 31, 1994, the impact of a gradual
100-basis point rise in interest rates over the next 12 months was estimated
to have an insignificant impact on net income when compared to stable rates.
TABLE 19 summarizes the maturities, average pay and receive rates and
the market value on December 31, 1994, of the Corporation's ALM swaps. The
weighted average interest receive rate was 4.98 percent and pay rate was 6.10
percent as of
================================================================================
20 INTEREST RATE GAP ANALYSIS
December 31, 1994
(Dollars in Millions)
<TABLE>
<CAPTION>
Over 12
Interest-Sensitive Months and
--------------------------------------------- Noninterest-
30-Day 3-Month 6-Month 12-Month Total Sensitive Total
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of
unearned income.................................... $ 45,946 $ 9,243 $ 4,713 $ 6,343 $66,245 $36,122 $102,367
Securities held for investment....................... 49 88 222 4,485 4,844 12,956 17,800
Securities available for sale........................ 523 1,844 407 152 2,926 5,099 8,025
Loans held for sale.................................. 318 - - - 318 - 318
Time deposits placed and other
short-term investments............................. 1,530 572 52 3 2,157 2 2,159
Other earning assets................................. 21,053 - - - 21,053 - 21,053
--------------------------------------------------------------------
Total............................................ 69,419 11,747 5,394 10,983 97,543 54,179 $151,722
--------------------------------------------------------------------
Interest-bearing liabilities
Savings.............................................. 9,037 - - - 9,037 - $ 9,037
NOW and money market deposit
accounts........................................... 21,881 - - - 21,881 7,871 29,752
Consumer CDs and IRAs................................ 3,212 3,785 4,992 4,881 16,870 8,070 24,940
Negotiated CDs, public funds and
other time deposits................................ 776 725 614 345 2,460 298 2,758
Foreign time deposits................................ 5,754 1,542 3,513 1,794 12,603 - 12,603
Borrowed funds and trading account liabilities....... 39,614 1,449 2,188 2,304 45,555 - 45,555
Long-term debt and obligations under
capital leases..................................... 552 1,605 2 565 2,724 5,764 8,488
--------------------------------------------------------------------
Total............................................ 80,826 9,106 11,309 9,889 111,130 22,003 133,133
Noninterest-bearing, net................................. - - - - - 18,589 18,589
--------------------------------------------------------------------
Total............................................ 80,826 9,106 11,309 9,889 111,130 40,592 $151,722
--------------------------------------------------------------------
Interest rate gap........................................ (11,407) 2,641 (5,915) 1,094 (13,587) 13,587
Effect of asset and liability management
interest rate swaps, futures and
other off-balance sheet items........................ (6,289) (198) (2,306) 2,662 (6,131) 6,131
---------------------------------------------------------
Adjusted interest rate gap............................... $(17,696) $ 2,443 $ (8,221) $ 3,756 $(19,718) $19,718
=========================================================
Cumulative adjusted interest rate gap.................... $(17,696) $(15,253) $(23,474) $(19,718)
======================================
</TABLE>
Management's Discussion and Analysis 47
<PAGE>
December 31, 1994. Net interest receipts and payments have been included in
interest income and expense on the underlying instruments. Deferred gains and
losses relating to any terminated contracts are insignificant.
The unrealized depreciation in the estimated value of the ALM swap
portfolio should be viewed in the context of the overall balance sheet. The
value of any single component of the balance sheet or off-balance sheet
position should not be viewed in isolation. For example, the value of core
deposits and other fixed-rate longer-term liabilities increased as interest
rates rose, offsetting the decline in value of swaps and other fixed-rate
assets. The overall impact of a 100-basis point parallel increase in interest
rates from December 31, 1994 levels is estimated to have an insignificant
impact on the market value of equity.
Table 20 represents the Corporation's interest rate gap position on
December 31, 1994. Based on contractual maturities or repricing dates, or
anticipated dates where no contractual maturity or repricing date exists,
interest sensitive assets and liabilities are placed in maturity categories.
The Corporation's negative cumulative interest rate gap position in the near
term reflects the strong customer-deposit gathering franchise which provides
a relatively stable core deposit base. These available funds have been
deployed in longer-term interest-earning assets including certain loans and
securities. A gap analysis is limited in its usefulness as it represents a
one-day position which is continually changing and not necessarily indicative
of the Corporation's position at any other time. Additionally, the gap
analysis does not consider the many factors accompanying interest rate
movements.
Capital Resources And Capital Management
Shareholders' equity on December 31, 1994, was $11.0 billion,
compared to $10.0 billion on December 31, 1993.
The Federal Reserve Board, the Office of the Comptroller of the
Currency and the FDIC have issued risk-based capital guidelines for U.S.
banking organizations. These guidelines provide a capital framework that is
sensitive to differences in risk profiles among banking companies.
The guidelines define a two-tier capital framework. Tier 1 Capital
consists of common and qualifying preferred shareholders' equity less
goodwill and other adjustments. Tier 2 Capital consists of mandatory
convertible, subordinated and other qualifying term debt, preferred stock not
qualifying as Tier 1 Capital and the allowance for credit losses up to 1.25
percent of risk-weighted assets.
The risk-based capital guidelines are designed to measure Tier 1 and
Total Capital in relation to the credit risk of both on- and off-balance
sheet items. Under the guidelines, one of four risk weights is applied to the
different on-balance sheet assets. Off-balance sheet items, such as loan
commitments and derivatives, are also applied a risk weight after conversion
to balance sheet equivalent amounts.
On December 31, 1994, the Corporation's Tier 1 ratio was 7.43
percent, compared to 7.41 percent on December 31, 1993. The total risk-based
capital ratio was 11.47 percent, compared to 11.73 percent on December 31,
1993. Both of these measures compare favorably with the regulatory minimums
of four percent for Tier 1 and eight percent for total risk-based capital.
The leverage ratio consists of Tier 1 Capital divided by total
average quarterly assets, excluding goodwill and certain other items. The
minimum leverage ratio guideline is three percent, although most banking
organizations are expected to maintain ratios of at least 100 to 200 basis
points above the three-percent minimum. The Corporation's leverage ratio was
6.18 percent on December 31, 1994, compared to 6.00 percent on December 31,
1993.
The components of Tier 1 and Total Capital and on- and off-balance
sheet risk- weighted assets on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------------------------
<S> <C> <C>
Common shareholders'
equity.................................. $ 10,976 $ 9,859
Qualifying preferred
stock................................... 35 120
Less: Deductions
from Tier 1 Capital..................... (1,500) (1,444)
----------------------
Tier 1 Capital.............................. 9,511 8,535
----------------------
Allowance for credit
losses.................................. 2,186 2,169
Qualifying debt............................. 3,781 3,667
Less: Deductions from
Tier 2 Capital.......................... (797) (865)
----------------------
Tier 2 Capital.............................. 5,170 4,971
----------------------
Total Capital........................... $ 14,681 $ 13,506
======================
Balance sheet risk-
weighted assets......................... $104,432 $ 95,084
Off-balance sheet risk-
weighted assets......................... 27,252 23,237
Less: Deductions from
risk-weighted assets.................... (3,691) (3,208)
----------------------
Net risk-weighted assets.................... $127,993 $115,113
======================
</TABLE>
[BAR GRAPH APPEARS HERE
Risk-Based Capital
(Dollars in Billions)
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Risk-Based Capital
Tier 1............................. 8.535 13.506
Total.............................. 9.511 14.681]
</TABLE>
48 NationsBank Corporation Annual Report 1994
<PAGE>
Trading Activities
The Corporation maintains trading positions in a variety of cash and
derivative financial instruments. The Corporation offers a number of products
to customers, as well as enters into transactions for its own account. In
setting trading strategies, the Corporation manages these activities to
maximize trading revenues while at the same time taking controlled risk.
Capital markets activities are managed in the Capital Markets Group
and are conducted in two principal divisions, NationsBanc Capital Markets,
Inc. (NCMI) and NationsBanc-CRT. Major trading sites include Charlotte,
Chicago, New York and London.
NCMI underwrites, trades and distributes debt and equity securities.
Its business activities include both customer and proprietary trading
activities. Additionally, NCMI is a primary dealer in U.S. Government
securities.
NationsBanc-CRT manages the Corporation's derivatives and foreign
exchange business activities. Interest rate derivatives are the primary
component of NationsBanc-CRT's customer-based and proprietary derivative
products. Other derivative products consist primarily of commodity-based
transactions.
Note 4 to the consolidated financial statements details the
individual components of the Corporation's trading assets and liabilities.
Additionally, TABLE 21 provides information on the Corporation's derivative
dealer positions.
Credit Risk -- Within the Corporation's Credit Policy organization, a
group is dedicated to managing credit risks associated with trading
activities. The Corporation maintains trading positions in a number of
markets and with a variety of counterparties or obligors (counterparties). To
limit credit exposure arising from such transactions, the Corporation
evaluates the credit standing of counterparties, establishes limits for the
total exposure to any one counterparty, monitors exposure against the
established limits and monitors trading portfolio composition to manage
concentrations.
The Corporation's exposure to credit risk from derivative financial
instruments is represented by the fair value of instruments. Credit risk
amounts represent the replacement cost the Corporation could incur should
counterparties with contracts in a gain position completely fail to perform
under the terms of those contracts and any collateral underlying the
contracts proves to be of no value to the Corporation. Counterparties are
subject to the credit approval and credit
================================================================================
21 DERIVATIVES-DEALER POSITIONS
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------
Credit Credit
Contract/ Risk Contract/ Risk
Notional Amount (1) Notional Amount (1)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Rate Contracts
Swaps................................................... $ 45,179 $ 531 $15,758 $185
Futures and forwards.................................... 124,620 30 32,503 -
Written options......................................... 114,928 - 58,499 -
Purchased options....................................... 118,839 481 55,616 129
Foreign Exchange Contracts
Swaps................................................... 470 - 258 7
Spot, futures and forwards.............................. 26,987 221 12,516 106
Written options......................................... 13,398 - 8,058 -
Purchased options....................................... 13,507 167 8,051 134
Commodity Contracts
Swaps................................................... 570 74 1,470 51
Futures and forwards.................................... 1,984 1 1,661 31
Written options......................................... 12,608 - 6,696 -
Purchased options....................................... 11,591 309 7,339 313
------ ----
$1,814 $956
====== ====
</TABLE>
(1) Represents the replacement cost the Corporation could incur should
counterparties with contracts in a gain position to the Corporation
completely fail to perform under the terms of those contracts. Amounts
include interest.
Management's Discussion and Analysis 49
<PAGE>
monitoring policies and procedures of the Corporation. Certain instruments
require the Corporation or the counterparty to maintain collateral for all or
part of the exposure. Generally, such collateral is in the form of cash or other
highly liquid instruments. Limits for exposure to any particular counterparty
are established and monitored. In certain jurisdictions, counterparty risk is
also reduced through the use of legally enforceable master netting arrangements
which allow the Corporation to settle positions with the same counterparty on a
net basis. The contract or notional amounts associated with the Corporation's
dealer derivative positions are reflected in TABLE 21. The notional or contract
amounts indicate the total volume of transactions and significantly exceed the
amount of the Corporation's credit or market risk associated with these
instruments. The credit risk amount for the instruments reflected in TABLE 21 is
measured by the Corporation as the positive replacement cost on December 31,
1994 and 1993. Of the credit risk amount reported in TABLE 21, $354 million and
$343 million relates to exchange-traded
================================================================================
22 SELECTED QUARTERLY OPERATING RESULTS
(Dollars in Millions Except Per-Share Information)
<TABLE>
<CAPTION>
1994 Quarters 1993 Quarters
------------------------------------------------------------------------------
Fourth Third Second First Fourth Third Second First
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from earning assets.................... $ 2,918 $ 2,701 $ 2,512 $ 2,398 $ 2,395 $ 2,104 $ 1,932 $ 1,896
Interest expense.............................. 1,618 1,395 1,195 1,110 1,092 956 821 821
Net interest income
(taxable-equivalent)...................... 1,326 1,330 1,339 1,310 1,326 1,168 1,131 1,098
Net interest income........................... 1,300 1,306 1,317 1,288 1,303 1,148 1,111 1,075
Provision for credit losses................... 70 70 70 100 100 100 110 120
Gains (losses) on sales of securities......... (28) (4) 5 14 - 50 22 12
Noninterest income............................ 639 649 629 680 615 524 481 481
Other real estate owned expense (income)...... (8) (6) (3) 5 22 11 21 24
Restructuring expense......................... - - - - - 30 - -
Noninterest expense........................... 1,261 1,234 1,228 1,219 1,222 1,054 1,019 998
Income before income taxes and effect
of change in method of accounting
for income taxes.......................... 588 653 656 658 574 527 464 426
Income tax expense............................ 183 222 219 241 201 186 158 145
Income before effect of change in
method of accounting for
income taxes.............................. 405 431 437 417 373 341 306 281
Effect of change in method of
accounting for income taxes............... - - - - - - - 200
Net income.................................... 405 431 437 417 373 341 306 481
Earnings per common share..................... 1.46 1.55 1.58 1.52 1.37 1.33 1.20 1.89
Dividends per common share.................... .50 .46 .46 .46 .42 .42 .40 .40
Yield on average earning assets............... 7.54% 7.24% 7.00% 6.81% 6.88% 6.96% 7.19% 7.28%
Rate on average interest-
bearing liabilities....................... 4.71 4.22 3.80 3.57 3.53 3.54 3.47 3.57
Net interest spread........................... 2.83 3.02 3.20 3.24 3.35 3.42 3.72 3.71
Net interest yield............................ 3.40 3.54 3.70 3.69 3.77 3.83 4.17 4.16
Average total assets.......................... $174,554 $167,283 $161,989 $161,294 $157,790 $136,195 $122,810 $120,374
Average total deposits........................ 98,574 94,656 91,358 90,260 90,338 80,404 81,264 81,819
Average total shareholders' equity............ 10,906 10,665 10,272 10,080 9,669 8,642 8,344 7,929
Return on average assets...................... .92% 1.02% 1.08% 1.05% .94% .99% 1.00% .95%
Return on average common
shareholders' equity...................... 14.68 16.00 17.04 16.82 15.34 15.60 14.65 14.29
Market price per share of common stock
High for the period....................... $ 50 3/4 $ 56 $ 57 3/8 $ 50 7/8 $ 53 1/4 $ 53 5/8 $ 57 7/8 $ 58
Low for the period........................ 43 3/8 47 1/8 44 1/2 44 3/8 44 1/2 48 1/4 45 49 1/2
Closing price............................. 45 1/8 49 51 3/8 45 3/4 49 51 1/2 49 5/8 54 5/8
Risk-based capital ratios
Tier 1.................................... 7.43% 7.48% 7.63% 7.50% 7.41% 7.60% 7.63% 7.61%
Total..................................... 11.47 11.57 11.57 11.66 11.73 12.15 11.75 11.80
</TABLE>
50 NationsBank Corporation Annual Report 1994
<PAGE>
instruments for 1994 and 1993, respectively. Because exchange-traded instruments
conform to standard terms and are subject to policies set by the exchange
involved, including counterparty approval, margin requirements and security
deposit requirements, the credit risk to the Corporation is minimal.
Market Risk -- Market risk arises due to fluctuations in interest
rates and market prices that may result in changes in the values of trading
instruments. The Corporation manages its exposure to market risk resulting
from trading activities through a risk management function. Each major
trading site is monitored by these risk management units.
Daily earnings at risk limits, which have been approved by the
Corporation's Finance Committee, are generally allocated to the business
units. In addition to limits placed on these individual business units,
limits are imposed on the risks certain individual traders may take. Risk
positions are monitored by line, risk management function personnel and
senior management on a daily basis.
Daily earnings at risk measures the rate of loss for a one-day,
three-standard deviation movement in market prices if traders are unable to
rehedge. In addition to these daily earnings at risk simulations, portfolios
which have significant option positions are stress tested continually to
simulate the potential loss that might occur due to unexpected market
movements in each market. Limits are also established by product for losses
which could result in these stress scenarios.
Fourth Quarter Review
The Corporation recorded net income of $405 million in the fourth
quarter of 1994, compared to $373 million in the same period of the previous
year. Results for the fourth quarter of 1993 reflected a full-quarter impact
of the MNC acquisition. TABLE 22 presents selected quarterly operating
results for each quarter of 1994 and 1993.
TABLE 23 presents an analysis of the Corporation's taxable-equivalent
net interest income for each of the last five quarters ending December 31,
1994. Taxable-equivalent net interest income was $1.3 billion in the fourth
quarter of 1994 and 1993. The net interest yield was 3.40 percent in the
fourth quarter of 1994, compared to 3.77 percent in the same quarter of 1993.
Excluding the impact of the primary government securities dealer, the net
interest yield totaled 3.88 percent in the fourth quarter of 1994 and 4.18
percent in the fourth quarter of 1993. The decline in the net interest yield
is due to the narrowing of the spread between investment securities and
market-based funds and actions taken to reposition the balance sheet in light
of rising interest rates.
Provision for credit losses was $70 million in the fourth quarter of
1994, compared to $100 million in the fourth quarter of 1993. This decline
primarily reflected improved credit quality, as evidenced by decreases in net
charge-offs and lower nonperforming asset levels. Net charge-offs for the
fourth quarter of 1994 were $98 million, compared to $136 million in the
prior year quarter.
Securities losses in the fourth quarter of 1994 were $28 million
resulting from the previously described interest rate risk repositioning
initiatives. There were no securities gains or losses in the fourth quarter
of 1993.
Noninterest income, adjusted for the effects of acquisitions,
increased $14 million in the fourth quarter of 1994 compared to the fourth
quarter of 1993. Significant changes in the components of noninterest income
included increases of $27 million in investment banking income, $8 million in
deposit account service charges and $23 million in credit card income,
primarily due to the impact of the December 1993 credit card securitization.
These increases were partially offset by decreases of $30 million in trading
account profits and fees, due to difficult conditions in the financial
markets in the fourth quarter of 1994, and $17 million in miscellaneous
income.
Other real estate owned expense was a recovery of $8 million in the
fourth quarter of 1994, compared to an expense of $22 million in the same
period of 1993.
Fourth quarter noninterest expense in 1994, adjusted for the effects
of acquisitions, increased $2 million. Increases of $49 million in personnel
expense and $7 million in equipment expense were offset by decreases in all
other noninterest expense categories totaling approximately $54 million.
In the fourth quarter of 1994, the Corporation recorded tax expense
of $183 million for an effective tax rate of 31.1 percent of pretax income,
compared to $201 million, or 35.0 percent of pretax income, recorded in the
same period of 1993. This decrease is a result of adjustment of the
Corporation's effective tax rate for the year, bringing it to 33.9 percent of
pretax income on an annual basis. See Note 13 to the consolidated financial
statements for a discussion of the Corporation's tax position.
Management's Discussion and Analysis 51
<PAGE>
================================================================================
23 QUARTERLY TAXABLE-EQUIVALENT DATA
(Dollars in Millions)
<TABLE>
<CAPTION>
Fourth Quarter 1994 Third Quarter 1994
------------------------------------------------------------
Average Average
Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2)............................................... $ 43,587 $ 855 7.78% $ 42,037 $ 805 7.60%
Real estate commercial....................................... 7,289 162 8.86 7,473 159 8.43
Real estate construction..................................... 3,038 72 9.33 3,106 66 8.50
---------------------------------------------------------
Total commercial........................................... 53,914 1,089 8.01 52,616 1,030 7.77
---------------------------------------------------------
Residential mortgage......................................... 16,680 321 7.70 15,528 296 7.63
Home equity.................................................. 2,580 56 8.71 2,516 55 8.72
Credit card.................................................. 4,357 141 12.80 4,003 131 12.96
Other consumer............................................... 17,714 430 9.63 17,357 412 9.42
---------------------------------------------------------
Total consumer............................................. 41,331 948 9.13 39,404 894 9.03
---------------------------------------------------------
Foreign...................................................... 1,764 30 6.79 1,453 23 6.34
Lease financing.............................................. 2,755 53 7.71 2,474 49 7.90
---------------------------------------------------------
Total loans and leases, net................................ 99,764 2,120 8.44 95,947 1,996 8.27
---------------------------------------------------------
Securities
Held for investment.......................................... 17,966 245 5.40 15,443 197 5.08
Available for sale (3)....................................... 8,560 117 5.44 11,683 152 5.17
---------------------------------------------------------
Total securities........................................... 26,526 362 5.42 27,126 349 5.12
---------------------------------------------------------
Loans held for sale............................................ 109 3 7.65 183 3 6.69
Federal funds sold and securities purchased
under agreements to resell................................... 16,159 203 5.00 13,495 149 4.38
Time deposits placed and other short-term investments.......... 2,231 32 5.75 2,216 29 5.16
Trading account securities (4)................................. 10,318 224 8.64 10,488 199 7.52
---------------------------------------------------------
Total earning assets (5)................................... 155,107 2,944 7.54 149,455 2,725 7.24
Cash and cash equivalents........................................ 8,674 8,372
Factored accounts receivable..................................... 1,235 1,156
Other assets, less allowance for credit losses................... 9,538 8,300
---------------------------------------------------------
Total assets............................................... $174,554 $167,283
=========================================================
Interest-bearing liabilities
Savings........................................................ $ 9,143 54 2.37 $ 9,255 54 2.31
NOW and money market deposit accounts.......................... 29,442 190 2.53 29,507 179 2.41
Consumer CDs and IRAs.......................................... 25,136 277 4.40 24,439 257 4.17
Negotiated CDs, public funds and other time deposits........... 2,825 35 4.80 3,223 34 4.23
Foreign time deposits.......................................... 11,576 162 5.57 8,436 108 5.06
Borrowed funds and trading account liabilities (4)(6).......... 50,110 756 5.99 48,688 629 5.13
Long-term debt and obligations under capital leases............ 8,147 144 7.08 7,731 134 6.95
---------------------------------------------------------
Total interest-bearing liabilities......................... 136,379 1,618 4.71 131,279 1,395 4.22
Noninterest-bearing sources
Noninterest-bearing deposits................................... 20,452 19,796
Other liabilities.............................................. 6,817 5,543
Shareholders' equity........................................... 10,906 10,665
---------------------------------------------------------
Total liabilities and shareholders' equity................. $174,554 $167,283
=========================================================
Net interest spread.............................................. 2.83 3.02
Impact of noninterest-bearing sources............................ .57 .52
---------------------------------------------------------
Net interest income/yield on earning assets...................... $1,326 3.40% $1,330 3.54%
=========================================================
</TABLE>
(1) Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
(2) Commercial loan interest income includes net interest rate swap revenues
related to asset conversion swaps converting variable-rate commercial loans
to fixed rate. Such revenue (expense) amounts were $(32), $0, $38 and $56 in
the fourth, third, second and first quarters of 1994, respectively, and $42
in the fourth quarter of 1993.
(3) The average balance sheet amounts and yields on securities available for
sale are based on the average of historical amortized cost balances.
(4) Gross unrealized gains and losses on off-balance sheet trading positions are
reported in other assets and liabilities, respectively.
(5) Interest income includes taxable-equivalent adjustments of $26, $24, $22 and
$22 in the fourth, third, second and first quarters of 1994, respectively,
and $23 in the fourth quarter of 1993.
(6) Borrowed funds and trading account liabilities interest expense includes net
interest rate swap expense related to liability conversion swaps fixing the
cost of certain variable-rate liabilities, primarily market-based borrowed
funds. Such expense (revenue) was $20, $9, $(1) and $3 in the fourth, third,
second and first quarters of 1994, respectively, and $2 in the fourth
quarter of 1993.
52 NationsBank Corporation Annual Report 1994
<PAGE>
================================================================================
23 QUARTERLY TAXABLE-EQUIVALENT DATA
(Dollars in Millions)
<TABLE>
<CAPTION>
Second Quarter 1994 First Quarter 1994
------------------------------------------------------------
Average Average
Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2)............................................... $ 40,339 $ 765 7.61% $ 40,421 $ 722 7.24%
Real estate commercial....................................... 7,955 157 7.92 8,419 158 7.61
Real estate construction..................................... 3,226 68 8.42 3,253 62 7.73
----------------------------------------------------------
Total commercial........................................... 51,520 990 7.71 52,093 942 7.33
----------------------------------------------------------
Residential mortgage......................................... 14,329 270 7.53 13,340 254 7.63
Home equity.................................................. 2,480 46 7.41 2,547 45 7.11
Credit card.................................................. 3,783 115 12.27 3,673 121 13.32
Other consumer............................................... 17,060 397 9.33 16,806 390 9.41
----------------------------------------------------------
Total consumer............................................. 37,652 828 8.82 36,366 810 8.99
----------------------------------------------------------
Foreign...................................................... 1,287 18 5.73 1,157 15 5.15
Lease financing.............................................. 2,146 38 7.08 1,992 36 7.19
----------------------------------------------------------
Total loans and leases, net................................ 92,605 1,874 8.12 91,608 1,803 7.96
----------------------------------------------------------
Securities
Held for investment.......................................... 14,009 167 4.79 12,714 152 4.82
Available for sale (3)....................................... 14,829 191 5.16 14,545 184 5.12
----------------------------------------------------------
Total securities........................................... 28,838 358 4.98 27,259 336 4.98
----------------------------------------------------------
Loans held for sale............................................ 392 6 6.49 681 11 6.46
Federal funds sold and securities purchased
under agreements to resell................................... 11,780 108 3.64 12,073 87 2.95
Time deposits placed and other short-term investments.......... 1,211 15 4.96 1,375 14 4.12
Trading account securities (4)................................. 10,265 173 6.75 10,738 169 6.39
----------------------------------------------------------
Total earning assets (5)................................... 145,091 2,534 7.00 143,734 2,420 6.81
Cash and cash equivalents........................................ 8,051 7,976
Factored accounts receivable..................................... 1,599 1,016
Other assets, less allowance for credit losses................... 7,248 8,568
----------------------------------------------------------
Total assets............................................... $161,989 $161,294
==========================================================
Interest-bearing liabilities
Savings........................................................ $ 9,181 53 2.30 $ 8,879 51 2.33
NOW and money market deposit accounts.......................... 29,816 166 2.24 30,140 161 2.17
Consumer CDs and IRAs.......................................... 22,855 231 4.02 23,295 234 4.09
Negotiated CDs, public funds and other time deposits........... 3,574 33 3.80 3,664 31 3.44
Foreign time deposits.......................................... 5,691 63 4.49 4,385 42 3.86
Borrowed funds and trading account liabilities (4)(6).......... 47,122 514 4.38 47,336 454 3.89
Long-term debt and obligations under capital leases............ 7,952 135 6.75 8,308 137 6.61
----------------------------------------------------------
Total interest-bearing liabilities......................... 126,191 1,195 3.80 126,007 1,110 3.57
Noninterest-bearing sources
Noninterest-bearing deposits................................... 20,241 19,897
Other liabilities.............................................. 5,285 5,310
Shareholders' equity........................................... 10,272 10,080
----------------------------------------------------------
Total liabilities and shareholders' equity................. $161,989 $161,294
==========================================================
Net interest spread.............................................. 3.20 3.24
Impact of noninterest-bearing sources............................ .50 .45
----------------------------------------------------------
Net interest income/yield on earning assets...................... $1,339 3.70% $1,310 3.69%
===============================================================================================================================
</TABLE>
23 QUARTERLY TAXABLE-EQUIVALENT DATA
(Dollars in Millions)
<TABLE>
<CAPTION>
Fourth Quarter 1993
-----------------------------------
Average
Balance Income
Sheet or Yields/
Amounts Expense Rates
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2)............................................... $ 39,233 $ 702 7.10%
Real estate commercial....................................... 7,915 150 7.51
Real estate construction..................................... 3,260 64 7.77
---------------------------------
Total commercial........................................... 50,408 916 7.21
---------------------------------
Residential mortgage......................................... 12,663 249 7.85
Home equity.................................................. 2,586 47 7.24
Credit card.................................................. 4,593 150 12.97
Other consumer............................................... 16,072 378 9.33
---------------------------------
Total consumer............................................. 35,914 824 9.12
---------------------------------
Foreign...................................................... 931 13 5.82
Lease financing.............................................. 1,894 35 7.47
---------------------------------
Total loans and leases, net................................ 89,147 1,788 7.97
---------------------------------
Securities
Held for investment.......................................... 27,273 354 5.16
Available for sale (3)....................................... 2,211 26 4.69
---------------------------------
Total securities........................................... 29,484 380 5.13
---------------------------------
Loans held for sale............................................ 961 16 6.54
Federal funds sold and securities purchased
under agreements to resell................................... 8,237 64 3.08
Time deposits placed and other short-term investments.......... 2,238 20 3.71
Trading account securities (4)................................. 9,590 150 6.19
---------------------------------
Total earning assets (5)................................... 139,657 2,418 6.88
Cash and cash equivalents........................................ 8,318
Factored accounts receivable..................................... 1,207
Other assets, less allowance for credit losses................... 8,608
---------------------------------
Total assets............................................... $157,790
=================================
Interest-bearing liabilities
Savings........................................................ $8,542 52 2.45
NOW and money market deposit accounts.......................... 30,383 168 2.20
Consumer CDs and IRAs.......................................... 23,813 246 4.10
Negotiated CDs, public funds and other time deposits........... 3,717 32 3.36
Foreign time deposits.......................................... 4,031 39 3.80
Borrowed funds and trading account liabilities (4)(6).......... 44,188 421 3.74
Long-term debt and obligations under capital leases............ 8,233 134 6.52
---------------------------------
Total interest-bearing liabilities......................... 122,907 1,092 3.53
Noninterest-bearing sources
Noninterest-bearing deposits................................... 19,852
Other liabilities.............................................. 5,362
Shareholders' equity........................................... 9,669
---------------------------------
Total liabilities and shareholders' equity................. $157,790
=================================
Net interest spread.............................................. 3.35
Impact of noninterest-bearing sources............................ .42
---------------------------------
Net interest income/yield on earning assets...................... $1,326 3.77%
=================================
</TABLE>
Management's Discussion and Analysis 53
<PAGE>
1993 COMPARED TO 1992
The following discussion and analysis provides a comparison of the
Corporation's results of operations for the years ended December 31, 1993 and
1992, and its financial condition as of December 31, 1993 and 1992. This
discussion should be read in conjunction with the consolidated financial
statements and related notes on pages 58 through 77.
OVERVIEW
In 1993, earnings totaled $1.5 billion, or $5.78 per common share,
compared to 1992 earnings of $1.1 billion, or $4.60 per common share. Return
on average common equity was 15.00 percent, excluding the impact of adopting
a new income tax accounting standard in 1993, compared to 15.83 percent the
previous year. The Corporation's results for 1993 reflected strong earnings
in most operating units and improved credit quality. See Note 2 regarding
information about acquisitions occurring in 1993 that affect comparability to
1992.
CUSTOMER GROUP REVIEW
The General Bank earned $740 million in 1993 compared to $660 million
in 1992. The return on equity for the General Bank increased from 15 percent
in 1992 to 16 percent in 1993. The efficiency ratio decreased from 68.64
percent in 1992 to 68.08 percent in 1993.
The Institutional Group earned $492 million, an increase of $347
million from the previous year. Return on equity for the Institutional Group
rose from 5 percent in 1992 to 16 percent in 1993. The group's efficiency
ratio declined to 47.90 percent in 1993, from 52.96 percent in the prior
year.
Financial Services, which consists of NationsCredit and Greyrock
Capital Group, was formed in 1993. For the year, net income totaled $35
million and return on equity was 13 percent. The group had an efficiency
ratio of 61.62 percent in 1993.
NET INTEREST INCOME
Taxable-equivalent net interest income in 1993 was $4.7 billion,
representing an increase of $533 million, or 13 percent, from the $4.2
billion reported in 1992. This increase was attributable to higher earning
asset levels, particularly loan levels.
The net interest yield declined 14 basis points to 3.96 percent in
1993 from 4.10 percent in 1992. The yield on average earning assets declined
64 basis points between the years, to 7.06 percent in 1993 from 7.70 percent
in 1992. Excluding the impact of the Corporation's primary government
securities dealer, the yield on average earning assets declined 53 basis
points. The replacement at lower yields of a substantial portion of the
Corporation's maturing investment securities was the largest contributor to
the 53-basis point decline. The cost of interest-bearing liabilities fell 59
basis points, to 3.53 percent in 1993 from 4.12 percent in 1992, contributing
significantly to the improvement in net interest income. A lower interest
rate environment in 1993, coupled with a change in the mix among deposits,
contributed to a decrease in rates paid on customer deposits.
PROVISION FOR CREDIT LOSSES
The provision for credit losses was $430 million in 1993, compared to
$715 million in the prior year. Net charge-offs declined $454 million to $412
million in 1993. On December 31, 1993, the allowance for credit losses was
$2.2 billion, or 2.36 percent of loans, leases and factored accounts
receivable, compared to $1.5 billion, or 2.00 percent, at the end of 1992,
and covered 193 percent of nonperforming loans, compared to 103 percent the
previous year.
SECURITIES GAINS
Gains from the sales of securities were $84 million in 1993, compared
to $249 million in 1992. The 1992 gains followed balance sheet management
strategies to reposition the components and the estimated average maturity of
the securities portfolios at a time when the portfolios contained substantial
net appreciation.
NONINTEREST INCOME
Noninterest income totaled $2.1 billion in 1993, an increase of $188
million, or 10 percent, from $1.9 billion in 1992. After adjusting for
acquisitions, divestitures and the 1992 gain on the sale of a mortgage
servicing unit, noninterest income increased $185 million, or 11 percent, in
1993. Growth in most major categories of noninterest income during 1993 was
partially offset by declines in mortgage servicing and related fees,
brokerage income and asset management fees, all reflecting divestitures.
54 NationsBank Corporation Annual Report 1994
<PAGE>
OTHER REAL ESTATE OWNED EXPENSE
OREO expense declined $105 million to $78 million in 1993 from $183
million in 1992, consistent with the improvement in asset quality. The
decline in 1993 was largely due to lower write-downs associated with real
estate values subsequent to foreclosure in the Institutional Group's Real
Estate Banking Group and lower net costs associated with management of a
reduced level of foreclosed properties compared to the previous year.
RESTRUCTURING EXPENSE
Restructuring expense of $30 million in 1993, associated with the
acquisition of MNC Financial Inc., represented the costs of employee
severance and real estate dispositions.
NONINTEREST EXPENSE
Noninterest expense of $4.3 billion in 1993 increased eight percent
from $4.0 billion in 1992. Excluding acquisitions, noninterest expense
increased $132 million or four percent, to $3.9 billion in 1993.
INCOME TAXES
The Corporation's income tax expense for 1993 was $690 million, for
an effective tax rate of 34.7 percent of pretax income. Tax expense for 1992
was $251 million, or 18.0 percent of pretax income. The lower effective rate
in 1992 was primarily attributable to $265 million in tax benefits resulting
from utilization of financial operating loss carryforwards. As a result of
adopting a change in method of accounting for income taxes, the Corporation
recorded its remaining unrecognized benefits of $200 million in 1993. As
such, the 1993 effective rate more closely approximated the statutory rate of
35 percent.
Management's Discussion and Analysis 55
<PAGE>
Report of Management
The management of NationsBank Corporation is responsible for the
preparation, integrity and objectivity of the consolidated financial statements
of the Corporation. The consolidated financial statements and notes have been
prepared by the Corporation in accordance with generally accepted accounting
principles and, in the judgment of management, present fairly the Corporation's
financial position and results of operations. The financial information
contained elsewhere in this report is consistent with that in the financial
statements. The financial statements and other financial information in this
report include amounts that are based on management's best estimates and
judgments and give due consideration to materiality.
The Corporation maintains a system of internal accounting controls to
provide reasonable assurance that assets are safeguarded and that transactions
are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in accordance with generally
accepted accounting principles.
The Internal Audit Division of the Corporation reviews, evaluates,
monitors and makes recommendations on both administrative and accounting
control, which acts as an integral, but independent, part of the system of
internal controls.
The Corporation's independent accountants were engaged to perform an audit
of the consolidated financial statements. This audit provides an objective
review of management's responsibility to report operating results and financial
condition. Working with the Corporation's internal auditors, they review and
make tests as appropriate of the data included in the financial statements.
The Board of Directors discharges its responsibility for the Corporation's
financial statements through its Audit Committee. The Audit Committee meets
periodically with the independent accountants, internal auditors and management.
Both the independent accountants and internal auditors have direct access to the
Audit Committee to discuss the scope and results of their work, the adequacy of
internal accounting controls and the quality of financial reporting.
/s/ Hugh L. McColl Jr. /s/ James H. Hance Jr.
Hugh L. McColl Jr. James H. Hance Jr.
Chairman Vice Chairman and
Chief Financial Officer
56 Report of Management
<PAGE>
Report of Independent Accountants
To the Board of Directors and
Shareholders of NationsBank Corporation
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of changes in shareholders' equity
and of cash flows present fairly, in all material respects, the financial
position of NationsBank Corporation and its subsidiaries at December 31, 1994
and 1993, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Corporation's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the
Corporation changed its methods of accounting for income taxes, postretirement
benefits other than pensions and certain investments in debt securities in 1993.
/s/ Price Waterhouse LLP
Charlotte, North Carolina
January 13, 1995
Report of Independent Accountants 57
<PAGE>
NationsBank Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Millions Except Per-Share Information)
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME FROM EARNING ASSETS
Interest and fees on loans................................................. $ 7,577 $6,198 $5,643
Lease financing income..................................................... 150 110 94
Interest and dividends on securities
Held for investment...................................................... 755 1,347 1,506
Available for sale....................................................... 623 49 103
Interest and fees on loans held for sale................................... 23 53 70
Time deposits placed and other short-term investments...................... 90 79 92
Federal funds sold......................................................... 45 14 44
Securities purchased under agreements to resell............................ 502 180 157
Trading account assets..................................................... 764 297 71
---------------------------------------
Total income from earning assets......................................... 10,529 8,327 7,780
---------------------------------------
INTEREST EXPENSE
Deposits................................................................... 2,415 2,149 2,772
Borrowed funds and trading account liabilities............................. 2,353 1,149 639
Long-term debt and obligations under capital leases........................ 550 392 271
---------------------------------------
Total interest expense................................................... 5,318 3,690 3,682
---------------------------------------
NET INTEREST INCOME............................................................ 5,211 4,637 4,098
PROVISION FOR CREDIT LOSSES.................................................... 310 430 715
---------------------------------------
NET CREDIT INCOME.............................................................. 4,901 4,207 3,383
GAINS (LOSSES) ON SALES OF SECURITIES.......................................... (13) 84 249
NONINTEREST INCOME............................................................. 2,597 2,101 1,913
OTHER REAL ESTATE OWNED EXPENSE (INCOME)....................................... (12) 78 183
RESTRUCTURING EXPENSE.......................................................... - 30 -
OTHER NONINTEREST EXPENSE...................................................... 4,942 4,293 3,966
---------------------------------------
INCOME BEFORE INCOME TAXES AND EFFECT OF CHANGE IN METHOD OF ACCOUNTING
FOR INCOME TAXES............................................................. 2,555 1,991 1,396
INCOME TAX EXPENSE............................................................. 865 690 251
---------------------------------------
INCOME BEFORE EFFECT OF CHANGE IN METHOD OF ACCOUNTING FOR INCOME TAXES........ 1,690 1,301 1,145
EFFECT OF CHANGE IN METHOD OF ACCOUNTING FOR INCOME TAXES...................... - 200 -
---------------------------------------
NET INCOME..................................................................... $ 1,690 $1,501 $1,145
=======================================
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS.................................... $ 1,680 $1,491 $1,121
=======================================
PER-SHARE INFORMATION
Earnings per common share before effect of change in method of
accounting for income taxes................................................ $ 6.12 $ 5.00 $ 4.60
Effect of change in method of accounting for income taxes.................... - .78 -
---------------------------------------
Earnings per common share.................................................... $ 6.12 $ 5.78 $ 4.60
=======================================
Fully diluted earnings per common share before effect of change in
method of accounting for income taxes...................................... $ 6.06 $ 4.95 $ 4.52
Effect of change in method of accounting for income taxes.................... - .77 -
---------------------------------------
Fully diluted earnings per common share...................................... $ 6.06 $ 5.72 $ 4.52
=======================================
Dividends per common share................................................... $ 1.88 $ 1.64 $ 1.51
=======================================
AVERAGE COMMON SHARES ISSUED (in thousands).................................... 274,656 257,969 243,748
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
58 NationsBank Corporation Annual Report 1994
<PAGE>
NationsBank Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
<TABLE>
<CAPTION>
December 31
----------------------
1994 1993
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................................................... $ 9,582 $ 7,649
Time deposits placed and other short-term investments................................... 2,159 1,479
Securities
Held for investment, at cost (market value - $17,101 and $13,604)..................... 17,800 13,584
Available for sale.................................................................... 8,025 15,470
-----------------------
Total securities.................................................................... 25,825 29,054
-----------------------
Loans held for sale..................................................................... 318 1,697
Trading account assets.................................................................. 9,941 10,610
Federal funds sold...................................................................... 960 691
Securities purchased under agreements to resell......................................... 10,152 6,353
Loans and leases, net of unearned income................................................ 102,367 91,006
Factored accounts receivable............................................................ 1,004 1,001
-----------------------
Loans, leases and factored accounts receivable, net of unearned income................ 103,371 92,007
-----------------------
Allowance for credit losses............................................................. (2,186) (2,169)
Premises, equipment and lease rights, net............................................... 2,439 2,259
Customers' acceptance liability......................................................... 684 708
Interest receivable..................................................................... 1,408 1,117
Goodwill................................................................................ 1,047 812
Core deposit and other intangibles...................................................... 665 555
Other assets............................................................................ 3,239 4,864
-----------------------
$169,604 $157,686
=======================
LIABILITIES
Deposits
Noninterest-bearing................................................................... $ 21,380 $ 20,723
Savings............................................................................... 9,037 8,784
NOW and money market deposit accounts................................................. 29,752 30,881
Time.................................................................................. 27,698 26,691
Foreign time.......................................................................... 12,603 4,034
-----------------------
Total deposits...................................................................... 100,470 91,113
-----------------------
Federal funds purchased................................................................. 3,993 7,135
Securities sold under agreements to repurchase.......................................... 21,977 21,236
Commercial paper........................................................................ 2,519 2,056
Other short-term borrowings............................................................. 5,640 5,522
Trading account liabilities............................................................. 11,426 8,299
Liability to factoring clients.......................................................... 586 534
Acceptances outstanding................................................................. 684 708
Accrued expenses and other liabilities.................................................. 2,810 2,752
Long-term debt and obligations under capital leases..................................... 8,488 8,352
-----------------------
Total liabilities..................................................................... 158,593 147,707
-----------------------
Contingent liabilities and other financial commitments (Notes 9 and 11)
SHAREHOLDERS' EQUITY
Preferred stock: authorized - 45,000,000 shares
ESOP Convertible, Series C: issued - 2,606,657 and 2,703,440 shares................... 111 115
Series CC: issued - none and 752,600 shares........................................... - 38
Series DD: issued - none and 1,107,600 shares......................................... - 55
Common stock: authorized - 800,000,000 and 500,000,000 shares;
issued - 276,451,552 and 270,904,656 shares........................................... 4,740 4,594
Retained earnings....................................................................... 6,451 5,247
Other, including loan to ESOP trust..................................................... (291) (70)
-----------------------
Total shareholders' equity.......................................................... 11,011 9,979
-----------------------
$169,604 $157,686
=======================
</TABLE>
See accompanying notes to consolidated financial statements.
Consolidated Financial Statements 59
<PAGE>
NationsBank Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................................... $ 1,690 $ 1,501 $ 1,145
Reconciliation of net income to net cash provided by operating activities
Provision for credit losses................................................ 310 430 715
(Gains) losses on sales of securities...................................... 13 (84) (249)
Gain on sale of mortgage servicing unit.................................... - - (55)
Depreciation and premises improvements amortization........................ 265 242 228
Amortization of intangibles................................................ 141 110 111
Deferred income tax expense................................................ 235 210 14
Effect of change in method of accounting for income taxes.................. - (200) -
Net change in trading instruments.......................................... 3,796 707 (783)
Net (increase) decrease in interest receivable............................. (282) (93) 88
Net increase in interest payable........................................... 299 93 81
Net (increase) decrease in loans held for sale............................. 1,379 (406) (651)
Net increase in liability to factoring clients............................. 52 52 5
Other operating activities................................................. 1,220 (425) (71)
----------------------------------------
Net cash provided by operating activities................................ 9,118 2,137 578
----------------------------------------
INVESTING ACTIVITIES
Proceeds from maturities of securities held for investment................... 5,864 9,182 5,154
Purchases of securities held for investment.................................. (10,293) (10,493) (12,234)
Proceeds from sales and maturities of securities available for sale.......... 23,762 18,295 27,981
Purchases of securities available for sale................................... (16,055) (15,805) (20,202)
Net increase in federal funds sold and securities
purchased under agreements to resell....................................... (3,805) (410) (1,963)
Net (increase) decrease in time deposits placed and other
short-term investments..................................................... (670) 816 (407)
Net originations of loans and leases......................................... (12,656) (12,473) (8,702)
Net purchases of premises and equipment...................................... (327) (65) (287)
Purchases of loans and leases................................................ (2,936) (3,830) (2,373)
Proceeds from sales and securitizations of loans............................. 4,126 8,682 6,182
Purchases of mortgage servicing rights....................................... (124) (40) (5)
Purchases of factored accounts receivable.................................... (7,612) (7,343) (6,676)
Collections of factored accounts receivable.................................. 7,577 7,229 6,559
Proceeds from sales of other real estate owned............................... 369 261 352
Acquisitions of subsidiaries, net of cash.................................... 3,778 (4,606) (21)
----------------------------------------
Net cash used in investing activities.................................... (9,002) (10,600) (6,642)
----------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.......................................... 4,261 (1,581) (5,348)
Net increase (decrease) in federal funds purchased and securities
sold under agreements to repurchase........................................ (2,562) 4,503 8,671
Net increase in other borrowed funds......................................... 491 1,958 2,884
Proceeds from issuance of long-term debt..................................... 1,198 4,125 349
Retirement of long-term debt................................................. (1,017) (405) (128)
Preferred stock repurchased and redeemed..................................... (94) - (10)
Proceeds from issuance of common stock....................................... 267 197 544
Cash dividends paid.......................................................... (527) (433) (395)
Common stock repurchased..................................................... (180) - -
Other financing activities................................................... (20) (23) 13
----------------------------------------
Net cash provided by financing activities................................ 1,817 8,341 6,580
----------------------------------------
Net increase (decrease) in cash and cash equivalents........................... 1,933 (122) 516
Cash and cash equivalents at beginning of year................................. 7,649 7,771 7,255
----------------------------------------
Cash and cash equivalents at end of year....................................... $ 9,582 $ 7,649 $ 7,771
========================================
Supplemental cash flow disclosure
Cash paid for interest....................................................... $ 5,020 $ 3,477 $ 3,601
Cash paid for income taxes................................................... 718 360 88
</TABLE>
Loans transferred to other real estate owned amounted to $207, $251 and $403
in 1994, 1993 and 1992, respectively.
See accompanying notes to consolidated financial statements.
60 NationsBank Corporation Annual Report 1994
<PAGE>
NationsBank Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in Millions, Shares in Thousands)
<TABLE>
<CAPTION>
Total
Common Stock Loan to Share-
Preferred -------------------- Retained ESOP holders'
Stock Shares Amount Earnings Trust Other Equity
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE ON DECEMBER 31, 1991.................... $373 231,246 $2,836 $3,429 $(107) $ (13) $ 6,518
Net income...................................... 1,145 1,145
Cash dividends
Common...................................... (371) (371)
Preferred................................... (24) (24)
Redemption and conversion of Series B
preferred stock............................. (250) 6,734 240 (10)
Issuance of common stock........................ 8,050 353 353
Common stock issued under dividend
reinvestment and employee plans............. 6,569 259 (78) 181
Common stock issued upon exercise
of warrants................................. 303 10 10
Other........................................... (4) 88 4 9 3 12
----------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1992.................... 119 252,990 3,702 4,179 (98) (88) 7,814
Net income...................................... 1,501 1,501
Cash dividends
Common...................................... (423) (423)
Preferred................................... (10) (10)
Issued in MNC acquisition
Series CC and DD preferred stock............ 93 93
Common stock................................ 13,608 701 701
Common stock issued under dividend
reinvestment and employee plans............. 4,213 187 10 197
Valuation reserve for securities available
for sale and marketable equity securities... 104 104
Other........................................... (4) 94 4 10 (8) 2
----------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1993.................... 208 270,905 4,594 5,247 (88) 18 9,979
Net income...................................... 1,690 1,690
Cash dividends
Common...................................... (517) (517)
Preferred................................... (10) (10)
Preferred stock repurchased and redeemed........ (93) (1) (94)
Common stock issued under dividend
reinvestment and employee plans............. 5,351 254 13 267
Common stock issued in acquisitions............. 3,510 64 41 105
Common stock repurchased........................ (3,524) (180) (180)
Net change in valuation reserve for
securities available for sale and
marketable equity securities................ (240) (240)
Other........................................... (4) 210 9 12 (6) 11
----------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1994.................... $ 111 276,452 $4,740 $6,451 $ (76) $(215) $11,011
============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
Consolidated Financial Statements 61
<PAGE>
NationsBank Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NationsBank Corporation (the Corporation) is a multi-bank holding company
organized under the laws of North Carolina in 1968 and registered under the Bank
Holding Company Act of 1956, as amended. The Corporation provides financial
products and services, both domestically and internationally.
The accounting and reporting policies of NationsBank Corporation and its
subsidiaries conform with generally accepted accounting principles. Certain
prior year amounts have been reclassified to conform to current year
classifications. A description of the significant accounting policies is
presented below.
NOTE 1 -- ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of NationsBank
Corporation and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Results of operations of
companies purchased are included from the dates of acquisition. Prior year
financial statements are restated to include accounts of companies acquired and
accounted for as poolings of interests. Assets held in an agency or fiduciary
capacity are not included in the consolidated financial statements.
CASH AND CASH EQUIVALENTS
Cash on hand, cash items in the process of collection and amounts due from
correspondent banks and the Federal Reserve Bank are included in cash and cash
equivalents.
SECURITIES
Securities are classified based on management's intention at the time of
purchase. Securities which management has the intent and ability to hold to
maturity are classified as held for investment and reported at amortized cost.
All other securities are classified as available for sale and carried at fair
value with net unrealized gains and losses included in shareholders' equity on
an after-tax basis. In addition, marketable equity securities are carried at
fair value with net unrealized gains and losses included in shareholders' equity
net of tax.
Realized gains and losses from the sales of securities are determined
using the specific identification method.
The Corporation adopted Statement of Financial Accounting Standards No.
115 "Accounting for Certain Investments in Debt and Equity Securities"
(SFAS 115), on December 31, 1993 (Note 3).
LOANS HELD FOR SALE
Loans held for sale include mortgage and other loans and are carried at
the lower of aggregate cost or market value.
TRADING INSTRUMENTS
Instruments utilized in trading activities include both securities and
derivatives and are stated at market value. Quoted market prices are generally
used as a basis to determine the market values of trading instruments. If quoted
market prices are not available, market values are estimated on the basis of
dealer quotes, pricing models, or quoted prices for instruments with similar
characteristics. Realized and unrealized gains and losses are recognized as
noninterest income.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is available to absorb losses inherent in
the credit extension process. The entire allowance is available to absorb losses
related to the loan and lease portfolio and other extensions of credit,
including off-balance sheet credit exposures. Credit exposures deemed to be
uncollectible are charged against the allowance for credit losses. Recoveries of
previously charged-off amounts are credited to the allowance for credit losses.
The adequacy of the allowance for credit losses is reviewed regularly by
management. Additions to the allowance for credit losses are made by charges to
the provision for credit losses. On a quarterly basis, a comprehensive review of
the adequacy of the allowance for credit losses is performed. This assessment is
made in the context of historical losses, as well as existing economic
conditions.
In 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan" (SFAS 114), which was amended in 1994 by Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosure" (SFAS 118). These standards address the
accounting for certain loans when it is probable that all amounts due pursuant
to the contractual terms of the loan will not be collected. Individually
identified impaired loans are measured based on the present value of payments
expected to be received, using the historical effective loan rate as the
discount rate. Loans that are to be foreclosed or that are solely dependent on
the collateral for repayment may alternatively be measured based on the fair
value of the collateral for such loans. Measurement may also be based on
observable market prices. If the recorded investment in the loan exceeds the
measure of fair value, a valuation allowance is established as a component of
the allowance for credit losses. The Corporation adopted SFAS 114 and SFAS 118
effective January 1, 1995. Adoption of the standards did not have a material
impact on the Corporation's financial position or results of operations.
LOANS
Loans are reported at their outstanding principal balances net of any
charge-offs, unamortized deferred fees and costs on originated loans or
premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are deferred
and recognized as adjustments to income over the lives of the related loans.
Discounts and premiums are amortized to income using methods that
approximate the interest method.
NONPERFORMING LOANS
Commercial loans and leases that are past due 90 days or more as to
principal or interest, or where reasonable doubt exists as to timely collection,
are generally classified as nonperforming loans unless well secured and in the
process of collection. Loans whose contractual terms have been restructured in a
manner which grants a concession to a borrower experiencing financial
difficulties, are classified as nonperforming until such time as the loan is
expected to be collected in full and the borrower has demonstrated sustained
performance in
62 NationsBank Corporation Annual Report 1994
<PAGE>
accordance with the restructured terms. Generally, loans which are past due 180
days or more as to principal or interest are classified as nonperforming
regardless of collateral or collection status. Generally, interest accrued but
not collected is reversed when a loan or lease is classified as nonperforming.
Interest collections on nonperforming loans and leases for which the
ultimate collectibility of principal is uncertain are applied as principal
reductions. Otherwise, such collections are credited to income when received.
Consumer loans, including credit card loans, that are past due 90 days or
more are not generally classified as nonperforming assets. Generally, consumer
loans are liquidated or charged off soon after becoming 90 days past due or 180
days past due for credit card loans. Income is generally recognized on past-due
consumer and credit card loans until the loan is charged off.
OTHER REAL ESTATE OWNED
Other real estate owned includes both formally foreclosed and in-substance
foreclosed property and premises no longer used for business operations.
Other real estate owned is carried at the lower of (1) the recorded amount
of the loan or lease for which the foreclosed property previously served as
collateral, or (2) the fair value of the property minus estimated costs to sell.
Prior to foreclosure, the recorded amount of the loan or lease is written down,
if necessary, to the fair value, minus estimated costs to sell, of the real
estate to be acquired by charging the allowance for credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on
the periodic revaluation of other real estate owned are credited or charged to
expense. Net costs of maintaining and operating foreclosed properties are
expensed as incurred.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are recognized principally
using the straight-line method over the estimated useful lives of the assets.
INCOME TAXES
There are two components of income tax provision, current and deferred.
Current income tax provisions approximate taxes to be paid or refunded
for the applicable period.
Balance sheet amounts of deferred taxes are recognized on the temporary
differences between the bases of assets and liabilities as measured by tax laws
and their bases as reported in the financial statements. Deferred tax expense or
benefit is then recognized for the change in deferred tax liabilities or assets
between periods.
Recognition of deferred tax balance sheet amounts is based on management's
belief that it is more likely than not that the tax benefit associated with
certain temporary differences, tax operating loss carryforwards, and tax credits
will be realized. A valuation allowance is recorded for those deferred tax items
for which it is more likely than not that realization will not occur.
During the first quarter of 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). The Corporation had previously recorded income tax expense following
Statement of Financial Accounting Standards No. 96, "Accounting for Income
Taxes" (SFAS 96).
RETIREMENT BENEFITS
The Corporation has established qualified retirement plans covering full-
time, salaried employees and certain part-time employees. Pension expense under
these plans is accrued each year. The costs are charged to current operations
and consist of several components of net pension cost based on various actuarial
assumptions regarding future experience under the plans.
In addition, the Corporation and its subsidiaries have established
unfunded supplemental benefit plans providing any benefits that could not be
paid from a qualified retirement plan because of Internal Revenue Code
restrictions and supplemental executive retirement plans for selected officers
of the Corporation and its subsidiaries. These plans are nonqualified and,
therefore, in general, a participant's or beneficiary's claim to benefits is as
a general creditor.
The Corporation and its subsidiaries have established several
postretirement medical benefit plans which are not funded.
The Corporation adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefit Other Than Pensions"
(SFAS 106), during the first quarter of 1993. Retiree benefits, including health
and life insurance, are accrued under SFAS 106 compared to the Corporation's
prior accounting method of recognizing expense as these benefits were paid.
RISK MANAGEMENT INSTRUMENTS
Revenues or expenses associated with interest rate swap contracts used in
asset and liability management are accounted for on the accrual basis and
recognized as an adjustment to income or expense on the underlying instruments.
Gains and losses associated with futures and forward contracts used as effective
hedges of existing risk positions or anticipated transactions are deferred as an
adjustment to the carrying value of the related asset or liability and
recognized in net interest income over the remaining term of the related asset
or liability.
EARNINGS PER COMMON SHARE
Earnings per common share is computed by dividing net income, reduced by
dividends on preferred stock, by the weighted average number of common shares
outstanding for each period presented.
PURCHASE METHOD OF ACCOUNTING
Net assets of companies acquired in purchase transactions are recorded at
fair value at the date of acquisition. Identified intangibles are amortized on
an accelerated or straight-line basis over the period benefited. Goodwill is
amortized on a straight-line basis over 25 years.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Foreign currency assets and liabilities of the foreign branches and
subsidiaries are translated into U.S. dollars using month-end spot rates of
exchange. Income and expense amounts are translated based on the spot rate in
effect at the date on which the individual transactions are recorded.
Notes to Consolidated Financial Statements 63
<PAGE>
NOTE 2 -- ACQUISITION ACTIVITY
On October 1, 1993, the Corporation completed the acquisition of MNC
Financial Inc. (MNC), a bank holding company headquartered in Baltimore,
Maryland, with total assets of approximately $16.5 billion. The acquisition was
accounted for as a purchase. On an unaudited pro forma basis, combined interest
and other income and net income is $11.4 billion and $1.6 billion, respectively,
for 1993. On an unaudited pro forma basis, the reduction in earnings per common
share and fully diluted earnings per common share is $.03 and $.02,
respectively, for 1993.
On December 1, 1993, the Corporation established Greyrock Capital Group
Inc. (previously named Nations Financial Capital Corporation) upon completion of
its acquisition of a substantial amount of the assets and the ongoing business
of U S WEST Financial Services Inc., a corporate finance subsidiary of U S WEST
Inc. The Corporation acquired approximately $2.0 billion in net receivables.
On July 2, 1993, the Corporation, through a banking subsidiary, completed
its acquisition of substantially all the assets and certain of the liabilities
of Chicago Research & Trading Group Ltd. (CRT) and certain of its subsidiaries,
an options market-making and trading firm and a primary government securities
dealer. Total assets at the date of purchase were approximately $12 billion and
consisted primarily of trading account assets and securities purchased under
agreements to resell.
On February 1, 1993, the Corporation, through a subsidiary, acquired
substantially all of the assets and assumed certain of the liabilities of
Chrysler First Inc., the non-automotive finance subsidiary of Chrysler Financial
Corporation. Finance receivables of approximately $3.7 billion, including $1.5
billion which were securitized, were acquired. NationsCredit was formed as a
result of this purchase.
During 1994, the Corporation acquired several smaller banking
organizations. Aggregate acquired loans and assumed deposits were $654 million
and $5.1 billion, respectively. Additionally, in 1994, several mortgage banking
operations, including mortgage servicing rights, were acquired. Aggregate
acquired mortgage servicing rights approximated $8.6 billion, bringing the
Corporation's total servicing portfolio to approximately $39 billion on December
31, 1994.
<TABLE>
<CAPTION>
====================================================================================================================================
NOTE 3 -- SECURITIES
The book and market values of securities held for investment and
securities available for sale on December 31 were (dollars in millions):
U.S. Treasury
Securities Other
and Agency Taxable Total Tax-Exempt
SECURITIES HELD FOR INVESTMENT Debentures Securities Taxable Securities Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
----
Book value.................................................... $ 17,580 $ 79 $ 17,659 $141 $17,800
Gross unrealized gains........................................ 1 - 1 1 2
Gross unrealized losses....................................... (697) (1) (698) (3) (701)
---------------------------------------------------------------
Market value.................................................. $ 16,884 $ 78 $ 16,962 $139 $17,101
===============================================================
1993
----
Book value.................................................... $ 13,110 $446 $ 13,556 $28 $13,584
Gross unrealized gains........................................ 35 15 50 2 52
Gross unrealized losses....................................... (30) (2) (32) - (32)
---------------------------------------------------------------
Market value.................................................. $ 13,115 $459 $ 13,574 $30 $13,604
===============================================================
1992
----
Book value.................................................... $ 22,352 $486 $ 22,838 $517 $23,355
Gross unrealized gains........................................ 360 5 365 36 401
Gross unrealized losses....................................... (6) (1) (7) (1) (8)
---------------------------------------------------------------
Market value.................................................. $ 22,706 $490 $ 23,196 $552 $23,748
===============================================================
SECURITIES AVAILABLE FOR SALE
----------------------------------------------------------------------------------------------------------------------------------
1994
----
Cost.......................................................... $ 7,729 $250 $ 7,979 $310 $8,289
Gross unrealized gains........................................ - - - 11 11
Gross unrealized losses....................................... (274) - (274) (1) (275)
---------------------------------------------------------------
Market value.................................................. $ 7,455 $250 $ 7,705 $320 $8,025
===============================================================
1993
----
Cost.......................................................... $ 14,960 $ 7 $ 14,967 $378 $15,345
Gross unrealized gains........................................ 100 - 100 30 130
Gross unrealized losses....................................... (5) - (5) - (5)
---------------------------------------------------------------
Market value.................................................. $ 15,055 $ 7 $ 15,062 $408 $15,470
===============================================================
1992
----
Book value.................................................... $ 1,374 $ - $ 1,374 $ - $ 1,374
Gross unrealized gains........................................ 3 - 3 - 3
---------------------------------------------------------------
Market value.................................................. $ 1,377 $ - $ 1,377 $ - $ 1,377
===============================================================
</TABLE>
64 NationsBank Corporation Annual Report 1994
<PAGE>
The components of gains and losses on sales of available for sale
securities for the years ended December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross gains on sales of securities............... $ 36 $166 $ 361
Gross losses on sales of securities.............. (49) (82) (112)
------------------------
Gains (losses) on sales of securities............ $(13) $ 84 $ 249
========================
</TABLE>
There were no sales of securities held for investment in 1994, 1993 or
1992.
The components, expected maturity distribution and yields (computed on a
taxable-equivalent basis) of the Corporation's securities portfolio on December
31, 1994, are summarized below (dollars in millions). Actual maturities may
differ from contractual maturities or maturities shown below since borrowers may
have the right to prepay obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Due after 1 Due after 5
Due in 1 year through 5 through 10 Due after
or less years years 10 years Total
-----------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Book value of securities held
for investment
U.S. Treasury securities
and agency debentures............ $4,927 4.32% $12,506 5.72% $116 5.96% $ 31 7.39% $17,580 5.33%
Other taxable securities........... 10 5.54 57 6.22 9 6.53 3 6.40 79 6.17
-----------------------------------------------------------------------------------------
Total taxable.................... 4,937 4.32 12,563 5.72 125 6.00 34 7.30 17,659 5.33
Tax-exempt securities.............. 56 5.57 44 8.23 37 10.94 4 10.42 141 7.94
-----------------------------------------------------------------------------------------
Total............................ $4,993 4.34 $12,607 5.73 $162 7.13 $ 38 7.65 $17,800 5.35
=========================================================================================
Market value of securities
held for investment................ $4,893 $12,015 $156 $ 37 $17,101
=========================================================================================
Market value of securities available
for sale
U.S. Treasury securities
and agency debentures............. $2,791 4.23% $ 4,630 5.55% $ 34 7.05% $ - -% $ 7,455 5.08%
Other taxable securities........... - - 25 8.02 11 7.32 214 6.00 250 6.25
----------------------------------------------------------------------------------------
Total taxable...................... 2,791 4.23 4,655 5.56 45 7.12 214 6.00 7,705 5.12
Tax-exempt securities.............. 111 13.27 112 11.69 37 11.29 60 11.83 320 12.21
----------------------------------------------------------------------------------------
Total............................... $2,902 4.57 $ 4,767 5.71 $ 82 9.02 $274 7.29 $ 8,025 5.40
=========================================================================================
Cost of securities available for sale.. $2,908 $ 5,024 $ 84 $273 $ 8,289
=========================================================================================
</TABLE>
There were no investments in obligations of states and political
subdivisions that were payable from and secured by the same source of revenue or
taxing authority and that exceeded 10 percent of consolidated shareholders'
equity on December 31, 1994 or 1993.
The income tax benefit attributable to securities transactions was $5
million for 1994, compared to income tax expense of $29 million and $87 million
for 1993 and 1992, respectively.
Securities are pledged or assigned to secure borrowed funds, government
and trust deposits and for other purposes. The book and market values of pledged
securities were $23.1 billion and $22.4 billion, respectively, on December 31,
1994, compared to $24.0 billion and $24.1 billion, respectively, on December 31,
1993.
On December 31, 1993, the Corporation adopted SFAS 115 related to
accounting for investments in debt and equity securities. Upon adoption, in
light of the MNC acquisition, the restrictive criteria on sales out of the held
for investment portfolio imposed by SFAS 115 and the uncertainty regarding
regulatory capital treatment of securities appreciation and depreciation, the
Corporation transferred approximately $14.6 billion from securities held for
investment to securities available for sale. Along with marketable equity
securities, the securities available for sale portfolio was marked to market
value resulting in net unrealized gains of approximately $164 million which are
included in shareholders' equity at $104 million net of tax.
On December 31, 1994, the valuation reserve for securities available for
sale and marketable equity securities reduced shareholders' equity by $136
million, reflecting $264 million of pretax depreciation on securities available
for sale, offset by $48 million of pretax appreciation on marketable equity
securities.
Notes to Consolidated Financial Statements 65
<PAGE>
NOTE 4 -- TRADING ACCOUNT ASSETS AND LIABILITIES
The market values on December 31 and the average market values for the
year ended December 31, 1994, of the components of trading account assets and
liabilities were (dollars in millions):
<TABLE>
<CAPTION>
1994
1994 1993 Average
------------------------------------------------------------------------------------------------------------------ -------
<S> <C> <C> <C>
Securities owned
U.S. Treasury securities................................................................ $ 5,968 $ 8,084 $ 7,713
Securities of other U.S. Government agencies and corporations........................... 1,185 885 1,322
Certificates of deposit, bankers' acceptances and commercial paper...................... 371 703 409
Corporate debt.......................................................................... 581 194 722
Other securities........................................................................ 259 165 285
----------------- -------
Total securities owned................................................................ 8,364 10,031 10,451
Derivatives-dealer positions................................................................ 1,577 579 1,158
----------------- -------
Total trading account assets.......................................................... $ 9,941 $10,610 $11,609
================= =======
Short sales
U.S. Treasury securities................................................................ $ 9,352 $ 7,542 $ 9,840
Securities of other U.S. Government agencies and corporations........................... 182 224 550
Corporate debt.......................................................................... 278 - 134
Other securities........................................................................ - 2 2
----------------- -------
Total short sales..................................................................... 9,812 7,768 10,526
Derivatives-dealer positions................................................................ 1,614 531 1,063
----------------- -------
Total trading account liabilities..................................................... $11,426 $ 8,299 $11,589
================= =======
</TABLE>
A discussion of the Corporation's trading activities is presented
beginning on page 49, including TABLE 21. An analysis of the revenues associated
with the Corporation's trading activities is presented in the table in the
noninterest income section on page 33.
The net change in the unrealized gain or loss on trading securities held
on December 31, 1994, included in noninterest income for 1994, was a loss of $3
million.
Derivatives-dealer positions presented in the table above represent the
market values of interest rate, foreign exchange and commodity products
including swap, futures, forward and option contracts associated with the
Corporation's trading derivatives activities.
A swap contract is an agreement between two parties to exchange cash flows
based on specified underlying notional amounts and indices. A futures or forward
contract is an agreement to buy or sell a quantity of a financial instrument or
commodity at a predetermined future date and rate or price. An option contract
is an agreement that conveys to the purchaser the right, but not the obligation,
to buy or sell a quantity of a financial instrument or commodity at a
predetermined rate or price at a time in the future.
These agreements can be transacted on an organized exchange or directly
between parties.
<TABLE>
<CAPTION>
====================================================================================================================================
NOTE 5 -- LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE
Loans, leases and factored accounts receivable on December 31 were (dollars in millions):
1994 1993
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LOANS
Commercial................................................................................. $ 44,804 $40,940
Real estate commercial..................................................................... 7,350 8,246
Real estate construction................................................................... 2,981 3,256
---------------------
Total commercial........................................................................ 55,135 52,442
---------------------
Residential mortgage....................................................................... 17,311 12,801
Home equity................................................................................ 2,644 2,565
Credit card................................................................................ 4,756 3,728
Other consumer............................................................................. 18,209 17,063
---------------------
Total consumer.......................................................................... 42,920 36,157
---------------------
Foreign.................................................................................... 1,984 978
Factored accounts receivable............................................................... 1,004 1,001
---------------------
Total loans and factored accounts receivable............................................ 101,043 90,578
Less unearned income.................................................................... (552) (553)
---------------------
Loans and factored accounts receivable, net of unearned income.......................... 100,491 90,025
---------------------
LEASES
Lease receivables.......................................................................... 3,056 2,127
Estimated residual value................................................................... 934 557
Less unearned income....................................................................... (1,110) (702)
---------------------
Leases, net of unearned income.......................................................... 2,880 1,982
---------------------
Loans, leases and factored accounts receivable, net of unearned income.................. $103,371 $92,007
=====================
</TABLE>
66 NationsBank Corporation Annual Report 1994
<PAGE>
Transactions in the allowance for credit losses were (dollars in
millions):
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance on January 1......................................................................... $2,169 $1,454 $1,605
----------------------------------
Loans, leases and factored accounts receivable charged off................................... (533) (609) (1,026)
Recoveries of loans, leases and factored accounts receivable previously charged off.......... 217 197 160
----------------------------------
Net charge-offs.......................................................................... (316) (412) (866)
Provision for credit losses.................................................................. 310 430 715
Allowance applicable to loans of purchased companies......................................... 23 697 -
----------------------------------
Balance on December 31....................................................................... $2,186 $2,169 $1,454
==================================
</TABLE>
Loans to directors and executive officers of the Corporation on December
31, 1994, were $142 million and $180 million on January 1 and December 31, 1994,
respectively. An analysis of activity for 1994 with respect to such aggregate
loans is as follows (dollars in millions):
Balance New Balance
January 1 Loans Payments December 31
------------------------------------------------------
$142 $166 $128 $180
================================================================================
Loans to immediate family members of directors and executive officers of
the Corporation totaled $10 million and $17 million on January 1 and December
31, 1994, respectively.
Loans to directors and executive officers who were solely directors and/or
executive officers of the Corporation's significant subsidiaries, excluding the
aggregate loan amount of any loans to members of their immediate families,
amounted to $505 million on December 31, 1994.
Extensions of credit to such persons have been made in the ordinary course
of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time in comparable transactions with
others and did not involve more than normal risk of collectibility or present
other unfavorable features.
On December 31, 1994, 1993 and 1992, nonperforming loans totaled $801
million, $1.1 billion and $1.4 billion, respectively.
The net amount of interest recorded during each year on loans that were
nonperforming or restructured on December 31 was $31 million, $34 million and
$31 million in 1994, 1993 and 1992, respectively. If these loans had been
accruing interest at their originally contracted rates, related income would
have been $96 million in 1994, $80 million in 1993 and $105 million in 1992.
Other real estate owned amounted to $337 million, $661 million and $587
million on December 31, 1994, 1993 and 1992, respectively. The cost of carrying
other real estate owned amounted to $24 million, $18 million and $25 million in
1994, 1993 and 1992, respectively.
================================================================================
<TABLE>
<CAPTION>
NOTE 6 -- PREMISES, EQUIPMENT AND LEASE RIGHTS, NET
Premises, equipment and lease rights, net on December 31 were (dollars in millions):
1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land and land improvements................................................. $ 387 $ 318
Buildings.................................................................. 1,465 1,408
Capitalized leased premises................................................ 50 55
Leasehold improvements..................................................... 508 525
Furniture and equipment.................................................... 1,782 1,690
Construction in process.................................................... 82 63
-------------------
4,274 4,059
Less accumulated depreciation and amortization............................. (1,835) (1,800)
-------------------
$ 2,439 $ 2,259
===================
</TABLE>
Provisions for depreciation and amortization charged to noninterest
expense were $265 million, $242 million and $228 million for 1994, 1993 and
1992, respectively.
On December 31, 1994, the minimum future noncancelable operating lease
payments for premises and equipment are $236 million, $199 million, $166
million, $144 million and $112 million for each of the succeeding years 1995
through 1999, respectively. Rental expense, excluding executory costs, charged
to operating expenses during 1994, 1993 and 1992 was approximately $343 million,
$287 million and $272 million, respectively.
Notes to Consolidated Financial Statements 67
<PAGE>
NOTE 7 -- SHORT-TERM BORROWINGS AND LONG-TERM DEBT
The Corporation's banking subsidiaries in North Carolina, Georgia and
Texas jointly maintain a program to offer from time to time up to $6 billion in
short-term bank notes with fixed or floating rates and maturities from 30 days
to one year from date of issue. As of December 31, 1994 and 1993, short-term
bank notes outstanding were $4.5 billion and $2.2 billion, respectively.
On September 30, 1994, the Corporation renegotiated its commercial paper
back-up lines establishing a single committed, $1.5 billion, three-year credit
facility. As of December 31, 1994, the facility was unused. On December 31,
1993, established and unused bank lines of credit amounted to $1.0 billion. In
both years, these lines were supported by fees paid directly by the Corporation
to unaffiliated banks.
Long-term debt on December 31 is summarized as follows (dollars in
millions):
<TABLE>
<CAPTION>
1994 1993
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SENIOR DEBT
Parent company
Floating rate notes, due 1994.......................................................... $ - $ 50
5 3/8 percent notes, due 1995.......................................................... 400 399
11.70 percent notes, due 1995.......................................................... 75 75
4 3/4 percent notes, due 1996.......................................................... 399 399
8 1/2 percent notes, due 1996.......................................................... 150 150
Floating rate medium-term notes at spreads over LIBOR, due 1995 through 1999........... 1,438 683
5 1/8 percent notes, due 1998.......................................................... 300 299
6 5/8 percent notes, due 1998.......................................................... 399 399
5.51 percent ESOP secured notes, due 1996 through 1999................................. 125 125
4.36 to 8.20 percent medium-term notes, due 1995 through 2000.......................... 482 477
5 3/8 percent notes, due 2000.......................................................... 397 396
9 1/4 percent unsecured notes, due 2006................................................ 124 124
Other senior notes..................................................................... 101 190
---------------------
4,390 3,766
---------------------
Banking and nonbanking subsidiaries
Floating rate municipal financing, repurchased 1994.................................... - 120
Floating rate collateralized financing, due 1994 through 1996.......................... 477 919
Other senior notes..................................................................... 80 100
---------------------
557 1,139
---------------------
Total senior debt...................................................................... 4,947 4,905
---------------------
SUBORDINATED DEBT
Parent company
Floating rate notes, repurchased 1994.................................................. - 299
9 3/8 percent notes, due 1997.......................................................... 82 84
9 3/4 percent capital notes, due 1999.................................................. 100 99
10 1/2 percent notes, due 1999......................................................... 299 299
9 1/8 percent notes, due 2001.......................................................... 299 299
8 1/8 percent notes, due 2002.......................................................... 349 349
6 1/2 percent notes, due 2003.......................................................... 600 600
6.20 percent medium-term notes, due 2003............................................... 75 75
7 3/4 percent notes, due 2004.......................................................... 299 -
6 7/8 percent notes, due 2005.......................................................... 398 398
9 3/8 percent notes, due 2009.......................................................... 397 397
10.20 percent notes, due 2015.......................................................... 200 200
8.57 percent medium-term notes, due 2024, putable 2004................................. 100 -
Other subordinated notes............................................................... 10 12
---------------------
3,208 3,111
---------------------
Banking and nonbanking subsidiaries
9 1/2 percent notes, due 2004.......................................................... 301 301
Other subordinated notes............................................................... 8 8
---------------------
309 309
---------------------
Total subordinated debt................................................................ 3,517 3,420
---------------------
Total long-term debt................................................................... 8,464 8,325
---------------------
Obligations under capital leases....................................................... 24 27
---------------------
Total long-term debt and obligations under capital leases.............................. $8,488 $8,352
=====================
</TABLE>
Under its $1.1 billion of remaining shelf capacity, in December 1994, the
Corporation initiated a program to issue from time to time up to $1 billion in
aggregate principal amount of certain medium-term notes, which may be senior
debt securities, subordinated debt, or any combination thereof. As of February
28, 1995, approximately $800 million of senior debt notes have been issued under
this program.
As of February 28, 1995, $3 billion of corporate debt securities, and
preferred and common stock was available for issuance under a shelf registration
filed February 1, 1995.
68 NationsBank Corporation Annual Report 1994
<PAGE>
The floating rate collateralized financing consists of $247 million in
consumer loan financing and $230 million in homes financing. Consumer loan
financing consists of revolving credit and closed-end asset-backed certificates
collateralized by a pool of credit lines and loans with a book value of $430
million at December 31, 1994. Homes financing consists of home equity and second
mortgage asset-backed certificates collateralized by a pool of second mortgages
and home equity loans with a book value of $427 million on December 31, 1994.
The components of collateralized financing bear interest at floating rates based
on factors of LIBOR. On December 31, 1994, the rates on both the consumer
financing and homes financing were 6.40 percent.
The indentures covering the parent company's senior long-term debt include
provisions that limit funded debt, long-term lease commitments, issuance of
subsidiary preferred stock, creation of liens upon the property of the
Corporation and the payment of dividends. Under the most restrictive of the
provisions, approximately $2.1 billion was available for payment of dividends on
December 31, 1994.
The floating rate collateralized financing obligations may be redeemed at
any time at the option of the Corporation. The 10 1/2-percent subordinated
notes, due 1999, are redeemable beginning in 1996.
The principal maturities for the next five years of long-term debt
outstanding on December 31, 1994, were (dollars in millions):
<TABLE>
<S> <C>
1995................................................ $1,256
1996................................................ 1,395
1997................................................ 309
1998................................................ 892
1999................................................ 970
</TABLE>
===============================================================================
NOTE 8 -- SHAREHOLDERS' EQUITY
The Corporation has authorized 45 million shares of preferred stock. As
of December 31, 1994, the Corporation had issued 2.6 million shares of ESOP
Convertible Preferred Stock, Series C (ESOP Preferred Stock). The ESOP Preferred
Stock has a stated and liquidation value of $42.50 per share, provides for an
annual cumulative dividend of $3.30 per share and is convertible into .84 shares
of the Corporation's common stock at an initial conversion price of $42.50 per
.84 shares of the Corporation's common stock. In 1994, 1993 and 1992, ESOP
Preferred Stock in the amount of $4 million was converted into the Corporation's
common stock.
In connection with MNC acquisition, Series CC and DD Preferred Stock
was issued. During the first quarter of 1994, the Corporation repurchased and
redeemed all 753 thousand shares of its Series CC Preferred Stock at a
weighted average price of $51.32 per share and all 1.108 million shares of
its Series DD Preferred Stock at a weighted average price of $49.86 per
share. The aggregate redemption price was $94 million.
In 1992, all 5 million shares of Series B Preferred Stock were
converted into the Corporation's common stock or redeemed for cash.
On July 27, 1994, the Board of Directors authorized the Corporation
during the next 12 months to purchase from time to time in the open market up
to 10 million shares of its common stock representing the number of shares of
common stock it intends to issue for its dividend reinvestment and stock
purchase plan, its various employee benefit plans and additional shares
associated with small acquisitions. On December 31, 1994, 3.5 million shares
had been repurchased under this program at a repurchase amount of $180
million. In addition to the above authorization, on September 28, 1994, the
Board authorized the Corporation to purchase up to 20 million shares of its
common stock from time to time in open market or privately negotiated
transactions.
Other shareholders' equity on December 31 was comprised of the
following (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
------------------------------------------------------------------------
<S> <C> <C>
Restricted stock award plan
deferred compensation............................. $ (62) $(74)
Net unrealized gains (losses) on available for
sale securities and marketable equity
securities, net of tax............................ (136) 104
Foreign currency adjustment and other................. (17) (12)
--------------
$(215) $18
==============
</TABLE>
===============================================================================
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Corporation enters into a number of
off-balance sheet commitments. These instruments expose the Corporation to
varying degrees of credit and market risk and are subject to the same credit and
risk limitation reviews as those recorded on the balance sheet. See the
discussion of credit risk policies and procedures and concentrations of credit
risk beginning on page 40.
CREDIT EXTENSION COMMITMENTS
The Corporation enters into commitments to extend credit, standby
letters of credit and commercial letters of credit to meet the financing
needs of its customers. The commitments shown below have been reduced by
amounts collateralized by cash and participated to other financial
institutions. The following summarizes commitments outstanding on December 31
(dollars in millions):
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit
Credit card commitments....................... $15,921 $12,808
Other loan commitments........................ 58,813 48,521
Standby letters of credit and
financial guarantees.......................... 6,884 6,265
Commercial letters of credit...................... 1,282 983
</TABLE>
Notes to Consolidated Financial Statements 69
<PAGE>
Commitments to extend credit are legally binding, generally have
specified rates and maturities and are for specified purposes. The
Corporation manages the credit risk on these commitments by subjecting these
commitments to normal credit approval and monitoring processes and protecting
against deterioration in the borrowers' ability to pay through adverse-change
clauses which require borrowers to maintain various credit and liquidity
measures. Credit card lines are unsecured commitments which are reviewed at
least annually by management. Upon evaluation of the customer's
creditworthiness, the Corporation has the right to change or terminate the
terms of the credit card line. Of the December 31, 1994 total other loan
commitments, $24.7 billion is scheduled to expire in less than one year,
$24.7 billion in one to five years and $9.4 billion after five years.
Standby letters of credit (SBLC) and financial guarantees are issued to
support the debt obligations of customers. If a SBLC or financial guarantee
is drawn upon, the Corporation looks to its customer for payment. SBLCs and
financial guarantees are subject to the same approval and collateral policies
as other extensions of credit. Of the December 31, 1994 total SBLCs and
financial guarantees, $4.3 billion is scheduled to expire in less than one
year, $2.4 billion in one to five years and $151 million after five years.
Commercial letters of credit, issued primarily to facilitate customer
trade finance activities, are collateralized by the underlying goods being
shipped by the customer and are generally short term.
For each of these types of instruments, the Corporation's maximum
exposure to credit loss is represented by the contractual amount of these
instruments. Many of the commitments are collateralized or are expected to
expire without being drawn upon; therefore, the total commitment amounts do
not necessarily represent risk of loss or future cash requirements.
DERIVATIVES
Derivative transactions are entered into by the Corporation to meet the
financing needs of its customers, to manage its own interest rate and
currency risks, and as part of its trading activities. See TABLES 18 and 19
on pages 45 and 46 and the first eight paragraphs under Interest Rate Risk
Management beginning on page 45 regarding the Corporation's use of
derivatives for risk management purposes. See TABLE 21 on page 49, the
discussion beginning on page 49 and Note 4 regarding the Corporation's
derivative-dealer activities.
SECURITIES LENDING
The Corporation executes securities lending transactions on behalf of
certain customers. In certain instances, the Corporation indemnifies the
customer against certain losses. The Corporation obtains collateral with a
market value in excess of the market value of the securities loaned. On
December 31, 1994 and 1993, indemnified securities lending transactions
totaled $5.7 billion and $5.1 billion, respectively. Collateral with a market
value of $5.9 billion and $5.2 billion on December 31, 1994 and 1993,
respectively, was obtained by the Corporation in support of these
transactions.
WHEN ISSUED SECURITIES
When issued securities are commitments entered into to purchase or sell
securities in the time period between the announcement of a securities
offering and the issuance of those securities. On December 31, 1994, the
Corporation had commitments to purchase and sell when issued securities of
$2.2 billion and $2.5 billion, respectively. This compares to commitments to
purchase and sell when issued securities of $1.1 billion and $866 million,
respectively, on December 31, 1993.
LITIGATION
The Corporation and its subsidiaries are defendants in or parties to a
number of pending and threatened legal actions and proceedings. Management
believes, based upon the opinion of counsel, that the actions and liability
or loss, if any, resulting from the final outcome of these proceedings, will
not be material in the aggregate.
==============================================================================
NOTE 10 -- REGULATORY REQUIREMENTS AND RESTRICTIONS
The banking subsidiaries are required to maintain average reserve
balances with the Federal Reserve Bank based on a percentage of certain
deposits. The average of those reserve balances amounted to $1.4 billion for
both 1994 and 1993.
Funds for cash distributions by the Corporation to its shareholders are
derived from a variety of sources, including cash and investments. The
primary source of such funds, however, is dividends received from its banking
subsidiaries. The subsidiary banks can initiate dividend payments in 1995,
without prior regulatory approval, of $1.0 billion plus an additional amount
equal to their net profits, as defined by statute, for 1995 up to the date of
any such dividend declaration. The amount of dividends that each subsidiary
bank may declare in a calendar year without approval by the OCC is the bank's
net profits for that year combined with its net retained profits, as defined,
for the preceding two years.
Regulations also restrict banking subsidiaries in lending funds to
affiliates. On December 31, 1994, the total amount which could be loaned to
the Corporation by its banking subsidiaries was approximately $1.2 billion.
On December 31, 1994, no loans to the Corporation from its banking
subsidiaries were outstanding.
On December 31, 1994, as a result of the above regulatory restrictions,
substantially all of the net assets of the Corporation's banking
subsidiaries, in excess of the allowable amounts mentioned above, were
restricted from transfer to the Corporation in the form of cash dividends,
loans or advances.
70 NationsBank Corporation Annual Report 1994
<PAGE>
NOTE 11 -- EMPLOYEE BENEFIT PLANS
The Corporation sponsors noncontributory trusteed pension plans that
cover substantially all officers and employees. The plans provide defined
benefits based on an employee's compensation, age at retirement and years of
service. It is the policy of the Corporation to fund not less than the
minimum funding amount required by the Employee Retirement Income Security
Act.
The following table sets forth the plans' estimated status on December
31 (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation
Accumulated benefit obligation, including vested benefits of $711 and $755......................... $(734) $(781)
==================
Projected benefit obligation for service rendered to date.......................................... $(869) $(917)
Plan assets at fair value, primarily listed stocks, fixed income securities and real estate............ 964 1,046
------------------
Plan assets in excess of projected benefit obligation.................................................. 95 129
Unrecognized net loss.................................................................................. 135 243
Unrecognized net transition asset being amortized...................................................... (15) (18)
Unrecognized prior service benefit being amortized..................................................... (34) (30)
Deferred investment (gain) loss........................................................................ 126 (9)
------------------
Prepaid pension cost............................................................................... $ 307 $ 315
==================
</TABLE>
Net periodic pension expense (income) for the years ended December 31
included the following components (dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period.......................... $ 39 $ 31 $ 28
Interest cost on projected benefit obligation........................... 72 58 51
Actual return on plan assets............................................. 22 (101) (21)
Net amortization and deferral............................................ (121) 3 (69)
----------------------
Net periodic pension expense (income).................................. $ 12 $ (9) $ (11)
=======================
</TABLE>
For December 31, 1994, the weighted average discount rate and rate of
increase in future compensation used in determining the actuarial present
value of the projected benefit obligation was 8.5 percent and 4.25 percent,
respectively. The related expected long-term rate of return on plan assets
was 10.0 percent. For December 31, 1993, the weighted average discount rate,
rate of increase in future compensation and expected long-term rate of return
on plan assets was 7.75 percent, 4.0 percent and 10.0 percent, respectively.
HEALTH AND LIFE BENEFIT PLANS
In addition to providing retirement benefits, the Corporation provides
health care and life insurance benefits for active and retired employees.
Substantially all of the Corporation's employees, including certain employees
in foreign countries, may become eligible for postretirement benefits if they
reach early retirement age while employed by the Corporation and they have
the required number of years of service. Under the Corporation's current
plan, eligible retirees are entitled to a fixed dollar amount for each year
of service. Additionally, certain current retirees are eligible for different
benefits attributable to prior plans.
All of the Corporation's accrued postretirement benefit liability was
unfunded at year-end 1994. The "projected unit credit" actuarial method was
used to determine the normal cost and actuarial liability.
A reconciliation of the estimated status of the postretirement benefit
obligation on December 31 is as follows (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees....................................... $(128) $(158)
Fully eligible active participants............. (3) (2)
Other active plan participants................. (47) (39)
-------------------
(178) (199)
Unamortized transition obligation.................. 125 135
Unrecognized net loss (gain)....................... (9) 7
-------------------
Accrued postemployment benefit liability....... $ (62) $ (57)
===================
</TABLE>
Net periodic postretirement benefit cost for the years ended December
31 included the following (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------------------------
<S> <C> <C>
Service cost.............................................. $ 3 $ 2
Interest cost on accumulated
postretirement benefit obligation..................... 14 15
Amortization of transition obligation
over 20 years......................................... 7 7
Amortization of gains..................................... (6) -
------------
Net periodic postretirement benefit cost.............. $18 $24
============
</TABLE>
The health care cost trend rates used in determining the accumulated
postretirement benefit obligation were 7.0 percent for pre-65 benefits and
5.75 percent for post-65 benefits. A one-percent change in the average
health care cost trend rates would increase the accumulated postretirement
benefit obligation by 5.1 percent and the aggregate of the service cost
Notes to Consolidated Financial Statements 71
<PAGE>
and interest cost components of net periodic postretirement benefit cost by 3.9
percent. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 8.50 percent in 1994 and
7.75 percent in 1993.
SAVINGS AND PROFIT SHARING PLANS
In addition to the retirement plans, the Corporation maintains several
defined contribution savings and profit sharing plans, one of which features
a leveraged employee stock ownership (ESOP) provision.
For 1994, 1993 and 1992, the Corporation contributed approximately $41
million, $35 million and $34 million, respectively, in cash which was
utilized primarily to purchase the Corporation's common stock under the terms
of these plans.
Under the terms of the ESOP provision, payments to the plan for
dividends on the ESOP Preferred Stock were $9 million for 1994, 1993 and
1992. Interest incurred to service the ESOP debt amounted to $5 million for
1994, 1993 and 1992.
STOCK OPTION AND AWARD PLANS
Under the 1992 Associates Stock Option Plan, on July 1, 1992, eligible
full-time and part-time employees received a one-time award of a
predetermined number of stock options entitling them to purchase shares of
the Corporation's common stock at the closing market price of $48 3/8 per
share. The options are exercisable until June 30, 1997.
Additional options under a former plan and restricted stock and stock
options assumed in connection with various acquisitions remain outstanding.
No further options or rights will be granted under such plans.
Under the Corporation's current Restricted Stock Award Plan, key
employees are awarded shares of the Corporation's common stock subject to
certain vesting requirements. Generally, vesting occurs in five equal annual
installments and the related deferred compensation is expensed over the same
period.
During 1994, the Board of Directors approved the Key Employee Stock
Plan, subject to shareholder approval at the 1995 Annual Meeting. The Key
Employee Stock Plan will replace the current Restricted Stock Award Plan and
is anticipated to provide for different types of awards including stock
options, restricted stock and performance shares.
The following table summarizes activity under the option and award
plans for 1994 and the status on December 31, 1994:
<TABLE>
<CAPTION>
Outstanding Exercisable
Options Options
--------------------------------------
Average Average
Option Option
Employee Stock Option Plans Shares Price Shares Price
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance on December 31, 1993.................... 8,589,996 $40.88 8,262,677 $41.67
Shares due to acquisition....................... 19,596 29.51 6,996 22.20
Became exercisable.............................. - - 327,319 20.98
Less
Exercised................................... (1,785,281) 38.94 (1,785,281) 38.94
Expired or canceled......................... (453,560) 50.87 (453,560) 50.87
----------------------------------------
Balance on December 31, 1994.................... 6,370,751 40.68 6,358,151 40.69
=======================================
<CAPTION>
Average
Grant
Restricted Stock Award Plan Shares Price
-------------------------------------------------------------------------
<S> <C> <C>
Outstanding unvested grants on December 31, 1993.... 2,150,570 $44.57
Additional stock grants............................. 287,000 51.88
Less
Shares vested..................................... (594,358) 44.06
Shares canceled................................... (26,360) 46.88
-------------------
Outstanding unvested grants on December 31, 1994.... 1,816,852 45.86
===================
</TABLE>
===============================================================================
NOTE 12 -- NONINTEREST INCOME AND EXPENSE
The significant components of noninterest income and expense for the
years ended December 31 are presented below (dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
NONINTEREST INCOME
Trust fees..................................... $ 435 $371 $331
Service charges on deposit accounts............ 797 681 600
Mortgage servicing and related fees............ 86 77 105
Fees on factored accounts receivable........... 74 74 69
Other nondeposit-related service fees.......... 276 212 144
Credit card income............................. 280 198 199
Trading account profits and fees............... 273 152 71
Other income................................... 376 336 394
---------------------
$2,597 $2,101 $1,913
=====================
</TABLE>
72 NationsBank Corporation Annual Report 1994
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONINTEREST EXPENSE
Personnel.......................................................... $2,311 $1,903 $1,807
Occupancy, net..................................................... 487 434 435
Equipment.......................................................... 364 317 291
Marketing.......................................................... 161 138 105
Professional fees.................................................. 171 168 182
Amortization of intangibles........................................ 141 110 111
Credit card........................................................ 44 49 41
Private label credit card.......................................... 27 37 43
FDIC insurance..................................................... 211 205 189
Processing......................................................... 235 190 139
Telecommunications................................................. 137 122 109
Postage and courier................................................ 126 120 111
Other general operating............................................ 388 370 281
General administrative and miscellaneous........................... 139 130 122
--------------------------
$4,942 $4,293 $3,966
=========================
</TABLE>
================================================================================
NOTE 13 -- INCOME TAXES
The components of income tax expense for the years ended December 31
were (dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current portion--expense
Federal..................................................... $559 $419 $222
State....................................................... 54 54 13
Foreign..................................................... 17 7 2
--------------------
630 480 237
--------------------
Deferred portion--expense
Federal..................................................... 223 218 11
State....................................................... 12 (11) 4
Foreign..................................................... - 3 (1)
--------------------
235 210 14
--------------------
Total tax expense......................................... $865 $690 $251
====================
</TABLE>
The Corporation's current income tax expense of $630 million, $480
million and $237 million for 1994, 1993 and 1992, respectively, includes
amounts computed under the regular and alternative minimum tax (AMT) systems
and approximates the amounts payable for those years.
Deferred expense represents the change in the deferred tax asset or
liability.
A reconciliation of the expected federal tax expense, based on the
federal statutory rate of 35 percent for 1994 and 1993 and 34 percent for
1992, to the actual consolidated tax expense for the years ended December 31
is as follows
(dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected federal tax expense.............................................................. $894 $697 $475
Increase (decrease) in taxes resulting from
Tax-exempt income...................................................................... (34) (33) (38)
Net utilization of operating loss carryforwards for financial reporting purposes....... - - (265)
State tax expense, net of federal benefit.............................................. 50 30 17
Tax rate change on beginning net deferred tax assets................................... - (6) -
Other.................................................................................. (45) 2 62
---------------------
Total tax expense.................................................................... $865 $690 $251
=====================
</TABLE>
Notes to Consolidated Financial Statements 73
<PAGE>
Significant components of the Corporation's deferred tax (liabilities)
and assets on December 31 are as follows (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities
Equipment lease financing................................... $ (596) $ (475)
Depreciation................................................ (66) (75)
Securities available for sale............................... - (58)
Intangibles................................................. (53) (69)
Employee retirement benefits................................ (33) (57)
Other, net.................................................. (205) (76)
--------------
Gross deferred tax liabilities............................ (953) (810)
--------------
Deferred tax assets
Securities available for sale............................... 80 -
Federal net operating loss carryforwards.................... 17 8
Allowance for credit losses................................. 730 731
Other real estate owned..................................... 66 73
Loan fees and expenses...................................... 37 55
AMT credit carryforwards.................................... - 58
Other, net.................................................. 181 132
--------------
Gross deferred tax assets................................. 1,111 1,057
Valuation allowance......................................... (60) (77)
--------------
Deferred tax assets, net of valuation allowance........... 1,051 980
---------------
Net deferred tax assets....................................... $ 98 $ 170
===============
</TABLE>
The Corporation's $98-million net deferred tax assets include a
valuation allowance of $60 million representing primarily state net operating
loss carryforwards for which realization is uncertain. The net change in the
valuation allowance for deferred tax assets was a decrease of $17 million,
due to the realization of certain state deferred tax assets.
During the first quarter of 1993, the Corporation adopted SFAS 109,
which superseded SFAS 96. SFAS 109 allows for the recognition of deferred tax
assets with respect to previously unrecognized operating loss and alternative
minimum tax (AMT) credit carryforwards. The cumulative benefit of adopting
the new accounting principle was $200 million.
===============================================================================
NOTE 14 -- FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments" (SFAS 107), requires the
disclosure of the estimated fair values of financial instruments. The fair
value of a financial instrument is the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in
a forced or liquidation sale. Quoted market prices, if available, are
utilized as estimates of the fair values of financial instruments. Because no
quoted market prices exist for a significant part of the Corporation's
financial instruments, the fair values of such instruments have been derived
based on management's assumptions with respect to future economic conditions,
the amount and timing of future cash flows and estimated discount rates. The
estimation methods for individual classifications of financial instruments
are more fully described below. Different assumptions could significantly
affect these estimates. Accordingly, the net realizable values could be
materially different from the estimates presented below.
In addition, the estimates are only indicative of individual
financial instruments' values and should not be considered an indication of
the fair value of the combined Corporation. The provisions of SFAS 107 do not
require the disclosure of nonfinancial instruments, including intangible
assets. The value of the Corporation's intangibles such as franchise, credit
card and trust relationships, and mortgage servicing rights, is significant.
SHORT-TERM FINANCIAL INSTRUMENTS
The carrying value of short-term financial instruments, including cash
and cash equivalents, federal funds sold and purchased, resell and repurchase
agreements, and commercial paper and short-term borrowings, approximate the
fair value. These financial instruments generally expose the Corporation to
limited credit risk and have no stated maturities, or have an average
maturity of less than 30 days and carry interest rates which approximate
market.
74 NationsBank Corporation Annual Report 1994
<PAGE>
FINANCIAL INSTRUMENTS TRADED IN THE SECONDARY MARKET WITH QUOTED MARKET
PRICES OR DEALER QUOTES
Securities held for investment, securities available for sale, loans
held for sale, trading account instruments, and long-term debt which are
actively traded in the secondary market have been valued using quoted market
prices.
LOANS
Fair values were estimated for groups of similar loans based upon type
of loan, credit quality and maturity. The fair value of fixed-rate loans was
estimated by discounting estimated cash flows using corporate bond rates
adjusted by credit risk and servicing costs for commercial and real estate
commercial and construction loans; and for consumer loans, the Corporation's
December 31 origination rate for similar loans. Contractual cash flows for
consumer loans were adjusted for prepayments using published industry data.
For variable-rate loans, the carrying amount was considered to approximate
fair value. Where credit deterioration has occurred, cash flows for fixed-
and variable-rate loans have been reduced to incorporate estimated losses.
Where quoted market prices were available, primarily for certain residential
mortgage loans, such market prices were utilized as estimates for fair
values.
DEPOSITS
The fair value for fixed-rate deposits with stated maturities was
calculated by discounting the difference between the cash flows on a
contractual basis and current market rates for instruments with similar
maturities. For variable-rate deposits, the carrying amount was considered to
approximate fair value.
The book and fair values of financial instruments on December 31 were
(dollars in millions):
<TABLE>
<CAPTION>
1994 1993
------------------------------------------
BOOK FAIR Book Fair
VALUE VALUE Value Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and cash equivalents......................................................... $ 9,582 $ 9,582 $ 7,649 $ 7,649
Time deposits placed and other short-term investments............................. 2,159 2,159 1,479 1,479
Securities held for investment.................................................... 17,800 17,101 13,584 13,604
Securities available for sale..................................................... 8,025 8,025 15,470 15,470
Loans held for sale............................................................... 318 318 1,697 1,697
Trading account assets............................................................ 9,941 9,941 10,610 10,610
Federal funds sold and securities purchased under agreements to resell............ 11,112 11,112 7,044 7,044
Loans, net of unearned income
Commercial and foreign......................................................... 46,649 46,375 41,786 41,812
Real estate commercial and construction........................................ 10,330 10,227 11,495 11,072
Residential mortgage........................................................... 17,244 16,251 12,689 12,898
Credit card.................................................................... 4,753 4,782 3,728 3,839
Other consumer and home equity................................................. 20,511 20,328 19,326 19,413
Allowance for credit losses....................................................... (2,186) - (2,169) -
FINANCIAL LIABILITIES
Deposits
Noninterest-bearing............................................................. 21,380 21,380 20,723 20,723
Savings......................................................................... 9,037 9,037 8,784 8,784
NOW and money market deposit accounts........................................... 29,752 29,752 30,881 30,881
Consumer CDs.................................................................... 19,369 19,001 17,850 17,970
Other time deposits............................................................. 20,932 20,721 12,875 13,014
Federal funds purchased and securities sold under agreements to repurchase........ 25,970 25,970 28,371 28,371
Commercial paper.................................................................. 2,519 2,519 2,056 2,056
Other short-term borrowings....................................................... 5,640 5,640 5,522 5,522
Trading account liabilities....................................................... 11,426 11,426 8,299 8,299
Long-term debt.................................................................... 8,464 8,199 8,325 8,774
</TABLE>
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
For a presentation of the fair value of the Corporation's derivative-
dealer positions, see Note 4. The fair value of the Corporation's asset and
liability management and other interest rate swaps is presented in TABLE 19 on
page 46.
The fair value of liabilities on binding commitments to lend is based
on the net present value of cash flow streams using fee rates currently
charged for similar agreements versus original contractual fee rates, taking
into account the creditworthiness of the borrowers. The fair value was a
liability of $92 million and $111 million on December 31, 1994 and 1993,
respectively.
Notes to Consolidated Financial Statements 75
<PAGE>
NOTE 15 -- PARENT COMPANY FINANCIAL INFORMATION
The following tables present consolidated parent company financial
information:
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------
1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income
Dividends from consolidated
Subsidiary banks and bank holding companies.................................................. $1,864 $ 894 $ 481
Other subsidiaries........................................................................... 5 - 40
Interest from consolidated subsidiaries........................................................ 355 172 85
Other income................................................................................... 501 533 688
-----------------------------
2,725 1,599 1,294
-----------------------------
Expenses
Interest on borrowed funds..................................................................... 582 389 255
Noninterest expense............................................................................ 442 453 645
-----------------------------
1,024 842 900
-----------------------------
Earnings
Income before equity in undistributed earnings of consolidated subsidiaries and taxes.......... 1,701 757 394
-----------------------------
Equity in undistributed earnings of consolidated
Subsidiary banks and bank holding companies.................................................. (247) 742 588
Other subsidiaries...........................................................................
140 73 27
-----------------------------
(107) 815 615
-----------------------------
Income before income taxes and effect of change in method
of accounting for income taxes................................................................. 1,594 1,572 1,009
Income tax benefit............................................................................... (96) (56) (136)
-----------------------------
Income before effect of change in method of accounting for income taxes.......................... 1,690 1,628 1,145
Effect of change in method of accounting for income taxes........................................ - (127) -
-----------------------------
Net income....................................................................................... $1,690 $1,501 $1,145
=============================
Net income available to common shareholders...................................................... $1,680 $1,491 $1,121
=============================
</TABLE>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
<TABLE>
<CAPTION>
December 31
---------------------
1994 1993
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash held at subsidiary banks.................................................................. $ 4 $ 11
Temporary investments.......................................................................... 583 312
Receivables from consolidated
Subsidiary banks and bank holding companies.................................................. 1,187 1,176
Other subsidiaries........................................................................... 7,407 6,002
Investment in consolidated
Subsidiary banks and bank holding companies.................................................. 10,739 10,696
Other subsidiaries........................................................................... 1,173 1,249
Other assets................................................................................... 616 562
---------------------
$21,709 $20,008
=====================
Liabilities and Shareholders' Equity
Commercial paper and other notes payable....................................................... $ 2,426 $ 2,282
Accrued expenses and other liabilities......................................................... 674 870
Long-term debt................................................................................. 7,598 6,877
Shareholders' equity........................................................................... 11,011 9,979
---------------------
$21,709 $20,008
=====================
</TABLE>
76 NationsBank Corporation Annual Report 1994
<PAGE>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------
1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income................................................................................... $ 1,690 $ 1,501 $ 1,145
Reconciliation of net income to net cash provided by operating activities
Gain on sale of mortgage servicing unit...................................................... - - (55)
Equity in undistributed earnings of consolidated subsidiaries................................ 107 (815) (615)
Effect of change in method of accounting for income taxes.................................... - 127 -
Other operating activities................................................................... 142 113 (23)
-------------------------------
Net cash provided by operating activities.................................................... 1,939 926 452
-------------------------------
Investing Activities
Net (increase) decrease in temporary investments............................................. (271) (134) 356
Net increase in receivables from consolidated subsidiaries................................... (1,416) (231) (895)
Additional capital investment in subsidiaries................................................ (764) (1,428) (140)
(Acquisitions) sales of subsidiaries, net of cash............................................ 101 (4,220) (21)
-------------------------------
Net cash used in investing activities........................................................ (2,350) (6,013) (700)
-------------------------------
Financing Activities
Net increase (decrease) in commercial paper and other notes payable.......................... 144 1,332 (124)
Proceeds from issuance of long-term debt..................................................... 1,159 4,125 349
Retirement of long-term debt................................................................. (438) (174) (115)
Preferred stock repurchased and redeemed..................................................... (94) - (10)
Proceeds from issuance of common stock....................................................... 267 197 544
Common stock repurchased..................................................................... (180) - -
Cash dividends paid.......................................................................... (527) (433) (395)
Other financing activities................................................................... 73 30 12
-------------------------------
Net cash provided by financing activities.................................................... 404 5,077 261
-------------------------------
Net increase (decrease) in cash.................................................................. (7) (10) 13
Cash at beginning of year........................................................................ 11 21 8
-------------------------------
Cash at end of year.............................................................................. $ 4 $ 11 $ 21
===============================
</TABLE>
Notes to Consolidated Financial Statements 77
<PAGE>
NationsBank Corporation and Subsidiaries
SIX-YEAR CONSOLIDATED STATISTICAL SUMMARY
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TAXABLE-EQUIVALENT YIELDS EARNED
Loans and leases, net of unearned income
Commercial..................................................... 7.56% 6.96% 7.08% 8.70% 10.44% 11.76%
Real estate commercial......................................... 8.18 7.59 7.78 9.13 10.49 11.08
Real estate construction....................................... 8.49 7.50 7.17 8.82 10.84 11.96
Total commercial............................................. 7.71 7.09 7.20 8.78 10.50 11.69
Residential mortgage........................................... 7.62 8.27 9.33 10.47 9.55 11.06
Home equity.................................................... 7.99 7.14 7.05 9.53 11.18 11.80
Credit card.................................................... 12.84 13.62 14.45 15.22 15.78 16.45
Other consumer................................................. 9.45 9.56 10.60 11.37 12.66 11.64
Total consumer............................................... 8.99 9.51 10.50 11.47 11.81 12.00
Foreign........................................................ 6.10 5.49 6.63 8.47 13.28 11.38
Lease financing................................................ 7.50 7.96 8.25 10.89 9.53 9.08
Total loans and leases, net.................................. 8.20 8.06 8.49 9.83 11.00 11.75
Securities
Held for investment............................................ 5.06 5.54 6.84 8.61 9.15 9.29
Available for sale............................................. 5.20 4.80 5.77 - - -
Total securities............................................. 5.12 5.51 6.76 8.61 9.15 9.29
Loans held for sale.............................................. 6.63 6.73 7.22 8.74 11.49 12.36
Federal funds sold and securities
purchased under agreements to resell........................... 4.09 3.21 3.77 5.89 8.16 9.20
Time deposits placed and other short-term investments............ 5.12 3.91 5.09 6.89 8.95 9.72
Trading account securities....................................... 7.32 5.43 4.64 6.99 8.43 9.08
Total earning assets......................................... 7.16 7.06 7.70 9.25 10.37 11.04
RATES PAID
Savings.......................................................... 2.33 2.38 2.86 4.55 5.15 5.86
NOW and money market deposit accounts............................ 2.34 2.24 2.82 4.96 6.02 6.20
Consumer CDs and IRAs............................................ 4.17 4.52 5.58 7.01 7.94 8.48
Negotiated CDs, public funds and other time deposits............. 4.02 3.97 4.93 7.08 8.13 8.79
Foreign time deposits............................................ 4.98 4.05 5.52 6.70 8.89 9.63
Borrowed funds and trading account liabilities................... 4.87 3.45 3.33 5.64 7.93 8.99
Long-term debt and obligations under capital leases.............. 6.85 7.44 8.92 8.88 9.18 9.84
Special Asset Division net funding allocation.................... - - - (6.20) (7.49) (8.20)
Total interest-bearing liabilities........................... 4.09 3.53 4.12 6.09 7.37 8.00
PROFIT MARGINS
Net interest spread.............................................. 3.07 3.53 3.58 3.16 3.00 3.04
Net interest yield............................................... 3.58 3.96 4.10 3.82 3.75 4.03
YEAR-END DATA
(Dollars in millions)
Loans, leases and factored accounts
receivable, net of unearned income............................. $103,371 $92,007 $72,714 $69,108 $70,891 $66,360
Securities held for investment................................... 17,800 13,584 23,355 16,275 25,530 25,278
Securities available for sale.................................... 8,025 15,470 1,374 8,904 - -
Loans held for sale.............................................. 318 1,697 1,236 585 315 357
Time deposits placed and other short-term investments............ 2,159 1,479 1,994 1,622 1,289 3,499
Total earning assets............................................. 151,722 140,890 103,872 96,491 98,754 96,052
Total assets (1)................................................. 169,604 157,686 118,059 100,319 112,791 110,246
Noninterest-bearing deposits..................................... 21,380 20,723 17,702 16,356 16,850 16,112
Domestic savings and time deposits............................... 66,487 66,356 62,988 70,359 70,091 66,790
Foreign time deposits............................................ 12,603 4,034 2,037 1,360 2,124 2,478
Total savings and time deposits.................................. 79,090 70,390 65,025 71,719 72,215 69,268
Total deposits................................................... 100,470 91,113 82,727 88,075 89,065 85,380
Borrowed funds and trading account liabilities................... 45,555 44,248 21,957 9,846 15,474 17,870
Long-term debt and obligations under capital leases.............. 8,488 8,352 3,066 2,876 2,766 2,517
Total shareholders' equity....................................... 11,011 9,979 7,814 6,518 6,283 6,003
</TABLE>
(1) Excludes assets of NationsBank of Texas Special Asset Division in 1991,
1990 and 1989.
(2) Includes FDIC's interest in earnings of NationsBank of Texas in 1989.
78 NationsBank Corporation Annual Report 1994
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS RATIOS
Return on average
Total assets (1)(2).......................................... 1.02% .97% 1.00% .17% .52% 1.06%
Earning assets (1)(2)........................................ 1.14 1.09 1.12 .20 .59 1.07
Common shareholders' equity.................................. 16.10 15.00 15.83 2.70 9.56 18.85
EARNINGS ANALYSIS (Taxable-Equivalent)
Noninterest income as a percentage of net
interest income.............................................. 48.96 44.48 45.65 44.22 42.56 39.23
Noninterest expense, excluding restructuring,
as a percentage of net interest income....................... 93.16 90.90 94.64 97.62 92.10 89.44
Efficiency ratio: noninterest expense, excluding
restructuring, divided by the sum of net interest
income and noninterest income................................ 62.54 62.91 64.98 67.69 64.60 64.24
Overhead ratio: noninterest expense, excluding
restructuring, less noninterest income
divided by net interest income............................... 44.20 46.42 48.99 53.40 49.54 50.21
Net income as a percentage of net
interest income.............................................. 31.86 31.79 27.33 5.12 15.77 26.48
ASSET QUALITY
For the year
Net charge-offs as a percentage of average
loans, leases and factored accounts receivable............... .33 .51 1.25 1.86 .88 .48
Net charge-offs as a percentage of the
provision for credit losses.................................. 101.79 95.76 121.15 82.70 59.24 74.38
At year end
Allowance for credit losses as a percentage of net
loans, leases and factored accounts receivable............... 2.11 2.36 2.00 2.32 1.86 1.32
Allowance for credit losses as a percentage of
nonperforming loans.......................................... 273.07 193.38 103.11 81.82 100.46 151.67
Nonperforming assets as a percentage of net
loans, leases, factored accounts receivable,
and other real estate owned.................................. 1.10 1.92 2.72 4.01 2.32 1.08
Nonperforming assets as a percentage of
total assets (1)............................................. .67 1.13 1.69 2.54 1.46 .65
Nonperforming assets (in millions)............................. $1,138 $1,783 $1,997 $2,804 $1,651 $716
RISK-BASED CAPITAL RATIOS
Tier 1......................................................... 7.43% 7.41% 7.54% 6.38% 5.79% --
Total.......................................................... 11.47 11.73 11.52 10.30 9.58 --
Common shareholders' equity as a
percentage of total assets at year end (1)................... 6.47% 6.25% 6.60% 5.67% 5.23% 5.10%
Dividend payout ratio (per common share)....................... 30.78 28.38 33.07 215.36 61.54 30.66
Shareholders' equity per common share
Average...................................................... $37.99 $33.36 $29.05 $27.97 $27.31 $24.97
At year end.................................................. 39.70 36.39 30.80 27.03 27.30 26.41
OTHER STATISTICS
Number of full-time equivalent employees....................... 61,484 57,742 50,828 57,177 58,449 57,069
Rate of increase (decrease) in average
Total loans and leases, net of unearned income............... 20.29% 15.83% (1.70)% 1.82% 8.36% 38.71%
Earning assets............................................... 24.50 16.59 (.84) 2.42 12.42 44.26
Total assets (1)............................................. 23.75 16.82 (.64) 1.85 12.19 43.10
Total deposits............................................... 12.30 .97 (5.59) 3.44 8.99 51.37
Total shareholders' equity................................... 21.19 18.73 10.31 6.16 18.15 23.01
COMMON STOCK INFORMATION
Market price per share
High for the year............................................ $57 3/8 $58 $53 3/8 $42 3/4 $47 1/4 $55
Low for the year............................................. 43 3/8 44 1/2 39 5/8 21 1/2 16 7/8 27
Close at the end of the year................................. 45 1/8 49 51 3/8 40 5/8 22 7/8 46 1/4
Daily average trading volume................................... 753,515 666,591 727,578 397,054 405,087 303,599
Number of shareholders of record............................... 105,774 108,435 89,371 102,209 30,824 29,064
</TABLE>
Six-Year Consolidated Statistical Summary 79
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF NATIONSBANK CORPORATION AND ITS SUBSIDIARIES AT 12/31/94
(100% Owned by NationsBank Corporation Unless Otherwise Noted)
American Security Insurance Corporation
ASB Capital Management, Inc.
Atlantic Credit Corporation
Atlantic Equity Corporation
Carolina Mountain Holding Company
Equitable Bancorporation Overseas Finance N.V.
Export Funding Corporation
Fayette Insurance Corporation
MAR, Inc.
MN Credit Corporation
MN World Trade Corporation
MNC Affiliates Group, Inc.
MNC American Corporation (1)
MNC Credit Corp (1)
A/M Properties, Inc. (2)
American Financial Service Group, Inc. (LEASEFIRST) (2)
Maryland National Realty Investors, Inc. (2)
Maryland National Leasing Services Corporation (2)
MNC Canadian Real Property, Inc. (2)
MNC Capital Corporation (2)
Nations Financial Holdings Corporation
Greyrock Capital Group Inc. (3)
ALS II, Inc. (3A)
ALS Superior, Inc. (3A)
American Acceptance Corporation (3A)
Cape Canterbury, Ltd. (3A)
Central Texas Small Business Investment Corporation (3A)
Portfolio Acceptance Corp. (3A)
Canterbury Indiana Holdings, Inc. (3AA)
SunStar Acceptance Corporation (3A)
USW SIS I, Inc. (3A)
USW SIS II, Inc. (3A)
USWFS/Oxford 1991-A Limited Partnership (3AB)
USWFS/Oxford 1991-B Limited Partnership (3AB)
USWFS/Oxford 1992-A Limited Partnership (3AC)
USWFS/Oxford Fixed Rate, L.P. (3AB)
NationsCredit Corporation (3)
NationsCredit Acceptance Corporation (3B)
NationsCredit Commercial Corporation (3B)
Ariens Credit Corporation (3BB)
Fisher Credit Services Inc. (3BB)
Gravely Credit Corporation (3BB)
Komatsu Forklift Credit Corporation (3BB)
Korg Acceptance Corporation (3BB)
Mercury Marine Acceptance Corporation (3BB)
Music America Finance Corporation (3BB)
NationsCredit Commercial Corporation Ltd. (3BB)
NIMAC Finance Corp. (3BB)
Roth Financial Services Company (3BB)
1
<PAGE>
Sea Ray Credit Corporation (3BB)
Trek Financial Services, Inc. (3BB)
Winnebago Acceptance Corporation (3BB)
NationsCredit Consumer Discount Company (3B)
NationsCredit Finance Group Inc. (3B)
NationsCredit Financial Acceptance Corporation (3B)
NationsCredit Financial Services Corporation (3B)
NationsCredit Financial Services Corporation of Alabama (3B)
NationsCredit Financial Services Corporation of America (3B)
NationsCredit Financial Services Corporation of Florida (3B)
NationsCredit Mortgage Corporation of Florida (3BC)
NationsCredit Financial Services Corporation of Nevada (3B)
NationsCredit Financial Services Corporation of Virginia (3B)
NationsCredit Home Equity Corporation of Kentucky (3B)
NationsCredit Home Equity Corporation of Virginia (3B)
NationsCredit Insurance Agency, Inc. (3B)
NationsCredit Insurance Corporation (3B)
NationsBanc Business Credit, Inc.
NationsBanc Capital Markets, Inc.
NationsBanc Leasing Corporation
McCormick Realty Limited Partnership (4)
NationsBanc Mortgage Capital Corporation
NB Holdings Corporation
Consolidated Bank, N.A. (55)
Mid-Atlantic Life Insurance Company (5)
NationsBank, N.A. (5)
303 International M Corp. (5A)
1268 M Corp. (5A)
7514 A Corp. (5A)
Amberwood A Corp. (5A)
American Security (Louisiana) Ltd. (5A)
AS Land II, Inc. (5A)
ASB Ames Plaza, Inc. (5A)
ASB Realty, Inc. (5A)
Westmarket A Corp. (5AA)
ASB Southside, Inc. (5A)
ASB Southwest Corporation (5A)
ASB-Stevensville Corp. (5A)
Ashburn A Corp. (5A)
Baltic M Corp. (5A)
Baltin Yachting M Corp. (5A)
Beaumeade M Corp. (5A)
Bright Seat M Corp. (5A)
Campus Hills M Corp. (5A)
Caradoc Estates, Inc. (5A)
Carlin M Springs Corp. (5A)
CC Plaza M Corp. (5A)
Central Leasing Corporation (5A)
Chalmers M Corp. (5A)
Chesapeake M Corp. (5A)
Coleman M Corp. (5A)
Courtcom M Corp. (5A)
CSB Insurance Agency (5A)
Daventry A Corp. (5A)
DC Bancorp Investment Company (5A)
2
<PAGE>
Devon A Corp. (5A)
Dulaney Valley Corporation (5A)
Elwin Company, Inc. (5A)
Englewood M Corp. (5A)
Equitable Financial Corporation (5A)
Equitable of Washington, Inc. (5A)
FCOP, Inc. (5A)
Federal Properties I, Inc. (5A)
Festival VM Corp. (5A)
Field A Corp. (5A)
Fifty West Corp. (5A)
Forrest-Marbury Corp. (5A)
Fountain Square Corporation of Maryland (5A)
Glen M Corp. (5A)
Hallmark - Renaissance M Corp. (5A)
Harper Farm M Corp. (5A)
HICO Park M Corp. (5A)
Hunt A Corp. (5A)
Logan Circle A Corp. (5A)
Madison Park A Corp. (5A)
Manab Properties, Inc. (5A)
Mar A Lowe Corp. (5A)
Marco Properties, Inc. (5A)
Breckinridge Development, Inc. (5AB)
Greenburgh Marco, Inc. (5AC)
Recap, Inc. (5AC)
Rehold, Inc. (5AC)
Reprise, Inc. (5AC)
Woodside Corporation (5AC)
Maryland National Community Development Corporation (5A)
Greensides Elderly Limited Partnership (5AD)
The Maryland National/Enterprise Equity Fund Limited Partnership (5AD)
Montgomery Homes Limited Partnership III (5AD)
Montgomery Homes Limited Partnership IV (5AD)
Neighborhood Rental Limited Partnership II (5AE)
The Newington Limited Partnership (5AE)
Rosedale Terrace Limited Partnership (5AE)
St. Wenceslaus Limited Partnership (5AE)
Maryland National Financial Services Corporation (5A)
Maryland National Financial Corporation (5A)
Maryland Nationalease Corporation (5A)
Melwood M Corp. (5A)
Metropo M Corp. (5A)
Metropolitan Commercial Properties Corporation (5A)
Metropolitan Commercial Properties Corporation VIII (5A)
Metropolitan Commercial Properties Corporation X (5A)
Metropolitan Commercial Properties Corporation XIII (5A)
Mirror Ridge A Corp. (5A)
MNB Tarrymore, Inc. (5A)
MNB University, Inc. (5A)
MNC Consumer Discount Company (5A)
MNC National Direct Mail Services Corp. (5AF)
MNC International Bank (5A)
MNC Investment Bank, Ltd. (5A)
NationsBank Trust Company, N.A. (5A)
3
<PAGE>
Nor Dan M Corp. (5A)
Occoquan M Corp. (5A)
Palisades A Corp. (5A)
Pilgrim's Progress (5A)
Potomac, Inc. II (5A)
Pratt Management Company (5A)
Quality A Corp. (5A)
Rabbit Road M Corp. (5A)
Rannoch M Corp. (5A)
Ritchie Court M Corporation (5A)
Rive Gauche A Corp. (5A)
SCRC Carrolltowne, Inc. (5A)
SCRC Process Service Corp. (5A)
Service-Wright Corporation (5A)
Shockey M Corp. (5A)
SOB-A Corp. (5A)
SOP M Corp. (5A)
Sorrento M Corp. (5A)
South Charles Realty Corp (5A)
South Point Shopping Center, Inc. (5A)
Spotted Horse Holdings, Inc. (5A)
Stevens Pier A Corp. (5A)
Storage A Corp. (5A)
Suburban Trust Data Services, Inc. (5A)
Sully A Corp. (5A)
Sunset Hill Corporation (5A)
Sweitzer M Corp. (5A)
Sykesville M Corp. (5A)
Three Ponds M Corp. (5A)
Vernon M Corp. (5A)
Virgrun A Corp. (5A)
Wales B Corp. (5A)
Washington View, Inc. (5A)
Washington View (H) Corporation (5AG)
Washington View (NH) Corporation (5AG)
Wellington Land Co., Inc. (5A)
Westfields M Corp. (5A)
Wickliffe A Corp. (5A)
Windemere M Corp. (5A)
Woods M Corp. (5A)
NationsBank of Delaware, N.A. (5)
Terminal Management Systems, Inc. (5B)
NationsBank of Florida, N.A. (5)
First Land Sales, Inc. (5C)
NationsBank of Georgia, N.A. (5)
NationsBanc Commercial Corporation (5D)
NationsBanc Leasing Corporation of North Carolina (5D)
DFF Funding I, Inc. (5DD)
DFF Funding II, Inc. (5DD)
DFF Funding III, Inc. (5DD)
DFF Funding IV, Inc. (5DD)
The Ocumulgee Corporation (5D)
NationsBank of Kentucky, N.A. (5)
NationsBank of North Carolina, N.A. (5)
BNC Realty Company (5E)
4
<PAGE>
Floresville Company Ltd. (5EA)
Multi-State Properties, Inc. (5E)
NationsBanc Charlotte Center, Inc. (5E)
NationsBanc-CRT Holdings I, Inc. (5E)
NationsBanc-CRT Options, L. P. (5EB)
NationsBanc-CRT Holdings II, Inc. (5E)
NationsBanc Dealer Leasing, Inc. (5E)
NationsBanc Discount Brokerage, Inc. (5E)
NationsBanc Enterprise, Inc. (5E)
NationsSecurities (5EC)
NationsBanc Lease Investments, Inc. (5E)
NationsBanc SBIC Corporation (5E)
NationsBanc Venture Corporation (5E)
NationsBank Europe Limited (5E)
Carolina Leasing Ltd. (5ED)
Demandand Supply Company Ltd. (5ED)
Friary Nominees Ltd. (5ED)
NationsBank Panmure Investment Management Limited (5ED)
Commonwealth Securities Limited (5EE)
NCNB (Export Finance) Ltd. (5ED)
Panmure Gordon & Co. Limited (5ED)
NationsBank Securities Services Ltd. (5EF)
Panmure Gordon Financial Futures Limited (5EF)
Parish Nominees Limited (5EF)
Rectory Nominees Limited (5EF)
St. Michael Nominees Limited (5EF)
Panmure Gordon Investments Limited (5ED)
NationsBank International (5E)
NB Partner Corp. (5E)
NCNB Community Development Corporation (5EG)
Gateway Hotel Enterprises, Inc. (5EH)
Trico Investment, Inc. (5EH)
NationsBank Overseas Corporation (5E)
AF Funding (1993), Inc. (5F)
Kill Devil Hills Finance Limited Partnership (5FA)
Air France/NationsBank (Grantor Trust) (5FB)
Wrightbrothers Ltd. (5FC)
AF Funding II (1993), Inc. (5F)
Kill Devil Hills II Limited Partnership (5FD)
Air France/KDHF II (NGHGI) (Grantor Trust) (5FE)
Florita Finance Ltd. (5FF)
Binfield Ltd. (5F)
Carolina Investments Limited (5F)
Cathay Pacific\NationsBank Trust I (Grantor Trust) (5F)
Wanda Finance Ltd. (5FG)
Clenston Ltd. (5F)
Friary Leasing Limited (5F)
Hatteras Finance Ltd. (5F)
InterFirst Leasing Ltd. (London) (5FH)
Japan Airlines/NCNB 1993-1 (Grantor Trust) (5F)
First in Flight Finance Ltd. (5FI)
Nations-CRT Asia, Inc. (5F)
Nations-CRT Hong Kong, Limited (5F)
Nations-CRT International, Inc. (5F)
Nations-CRT International (5FJ)
5
<PAGE>
Nations . CRT Japan, Inc. (5F)
Nations-CRT Overseas, Inc. (5F)
Nations-CRT Overseas Inc. & Co. (5FK)
Nations-CRT U.K. & Co. (5F)
NationsBank International Trust (Jersey) Limited (5FZ)
NCNB Lease Atlantic, Inc. (5F)
NCNB Lease Finance III (5FL)
Blue Ridge Finance Ltd. (5FM)
NCNB Lease Finance (5F)
Wingtip Finance Limited (5FN)
NCNB Lease Finance IV (5F)
Sandhills Finance Ltd. (5FO)
NCNB Lease Finance V (5F)
Piedmont Finance Ltd. (5FP)
NCNB Lease Finance VI (5F)
Kitty Hawk Finance Ltd. (5FQ)
NCNB Lease International, Inc. (5F)
Barnesbury, Ltd. (5FR)
NCNB Lease Offshore, Inc. (5F)
NCNB Lease Finance II (5FS)
Outerbanks Finance Ltd. (5FT)
NCNB Overseas Services, Inc. (5F)
Phaestos FSC, Inc. (5FU)
Republic Dallas Ltd. (U.K.) (5FV)
TransPacific Funding (1993), Inc. (5F)
TransPacific Finance Limited Partnership (5FW)
ANA II (Grantor Trust) (5FX)
Fontana Finance Ltd. (5FY)
NationsBank of South Carolina, N.A. (5)
BT Building Corporation (5G)
Central City General (5GG)
Carolina Pacific, Inc. (5G)
NationsBank of Tennessee, N.A. (5)
Commerce Place Company (5H)
Commerce Trading Corporation (5H)
NationsBank Texas Bancorporation, Inc. (5)
NationsBank of Texas, N.A. (5I)
APL, Inc. (5IA)
Austin National Realty Corporation (5IA)
Capitol Information Networks, Inc. (5IA)
DPC, Inc. (5IA)
Westdale Investments, I, Inc. (5IB)
First RepublicBank Advisory Services, Inc. (5IA)
Main Place Funding Corporation (5IA)
NationsBanc Capital Corporation (5IA)
NationsBanc Energy Group Denver, Inc. (5IA)
NationsBanc Mortgage Corporation (5IA)
NCNB Texas TBM, Inc. (5IA)
NationsBanc Services, Inc. (5IC)
Republic National Corporation (5IA)
Tarrant Investment Company, Inc. (5IA)
TBRC, Inc. (5IA)
RepublicBank Insurance Agency, Inc. (5I)
NationsBank of Virginia, N.A. (5)
Seventeenth Commerce Properties Corporation (5J)
6
<PAGE>
Equitable Leasing Corporation (5J)
First Development Corporation (5J)
First Realty Mortgage Corporation (5J)
NationsBanc Equity Mortgage Corporation (5J)
NationsBanc Leasing Corporation of Virginia (5J)
NationsBank Community Development Corporation of Virginia(5J)
Bancshares Properties, Inc. (5)
Cash Flow, Inc. (5)
C&S Premises, Inc. (5)
DC Bancorp Venture Capital Company (6)
First Mortgage Corporation (5)
NationsBanc Insurance Agency, Inc. (5)
NationsBanc Insurance Company, Inc. (5)
NationsBanc Insurance Inc. (5)
NationsBanc Insurance Services, Inc. (5)
NationsBanc Investment Corporation (5)
NationsBanc Leasing & Finance Corporation (5)
NationsBanc Mortgage Corporation of Georgia (5)
NationsBank Trust Company of New York (5)
On Call, Inc. (5)
Second Land Sales, Inc. (5)
Sovran Capital Management Corporation (5)
Suburban Service Corporation (5)
Three Commercial Place Associates (6A)
NationsBanc-CRT Energy (U.K.), Ltd.
NationsBanc-CRT Services, Inc.
NCNB Corporate Services, Inc.
NCNB Properties, Inc.
TIM, Inc.
Tryon Assurance Company, Ltd.
NationsBank Community Development Corporation (7)
Atlanta Affordable Housing Fund Limited Partnership (7A)
Carlton Court Community Development Corporation (7B)
Historic District Redevelopment Partnership (7C)
Leon Avenue Redevelopment Company (7E)
NationsBank CDC Special Holding Company, Inc. (7B)
Southern Oaks Condominium Partners, Ltd. (7D)
Terry Street Redevelopment Limited Liability Company (7F)
NationsBank Housing Fund Investment Corporation (8)
Nations Housing Fund Limited Partnership (8A)
1 MNC Affiliates Group, Inc. owns 100% of this entity.
2 MNC Credit Corp owns 100% of this entity.
3 Nations Financial Holdings Corporation owns 100% of this entity.
3A Greyrock Capital Group Inc. owns 100% of this entity.
3AA Portfolio Acceptance Corp. owns 100% of this entity.
3AB Greyrock Capital Group Inc. owns 62.5% of this entity.
3AC Greyrock Capital Group Inc. owns 67.33% of this entity.
3B NationsCredit Corporation owns 100% of this entity.
3BB NationsCredit Commercial Corporation owns 100% of this entity.
3BC NationsCredit Financial Services Corporation of Florida owns 100%
of this entity.
4 NationsBanc Leasing Corporation owns 100% of this entity.
5 NB Holdings Corporation owns 100% of this entity.
55 NB Holdings Corporation owns 99.9% of this entity.
5A NationsBank, N.A. owns 100% of this entity.
7
<PAGE>
5AA ASB Realty owns 100% of this entity.
5AB Marco Properties, Inc. owns 75% of this entity.
5AC Marco Properties, Inc. owns 100% of this entity.
5AD Maryland National Community Development Corporation owns 99% of
this entity.
5AE Maryland National Community Development Corporation owns 98.99%
of this entity.
5AF MNC Consumer Discount Company owns 100% of this entity.
5AG Washington View, Inc. owns 69% of this entity.
5B NationsBank of Delaware owns 100% of this entity.
5C NationsBank of Florida, N.A. owns 100% of this entity.
5D NationsBank of Georgia, N.A. owns 100% of this entity.
5DD NationsBanc Leasing Corporation of North Carolina owns 100% of this
entity.
5E NationsBank of North Carolina, N.A. owns 100% of this entity.
5EA NationsBank of North Carolina, N.A. holds 100% of this entity in trust.
5E NationsBanc-CRT Holdings I, Inc. has a 99% general partnership interest
and NationsBanc-CRT Holdings II. Inc. has a 1% limited partnership
interest in this limited partnership.
5EC NationsBanc Enterprise, Inc. owns 50% of this general partnership, and
NationsBanc Discount Brokerage, Inc. owns 50%.
5ED NationsBank Europe Limited owns 100% of this entity.
5EE NationsBank Panmure Investment Management Limited owns 100% of this
entity.
5EF Panmure Gordon & Co. Limited owns 100% of this entity.
5EG NationsBank of North Carolina, N.A. is the sole member of this
non-profit corporation.
5EH NCNB Community Development Corporation owns 100% of this entity.
5F NationsBank Overseas Corporation owns 100% of this entity.
5FA AF Funding (1993), Inc. holds a 1% general partnership and a 49% limited
partnership interest in this entity.
5FB Kill Devil Hills Finance Limited Partnership owns 100% of this entity.
5FC Air France/NationsBank (Grantor Trust) owns 100% of this entity.
5FD AF Funding II (1993), Inc. holds a 1% general partnership and a 34%
limited partnership interest in this entity.
5FE Kill Devil Hills II Limited Partnership owns 100% of this entity.
5FF Air France/KDHF II (NGHGI) (Grantor Trust) owns 100% of this entity.
5FG Cathay Pacific/NationsBank Trust I (Grantor Trust) owns 100% of this
entity.
5FH NationsBank Overseas Corporation owns 99.5% of this entity.
5FI Japan Airlines/NCNB 1993-1 (Grantor Trust) owns 100% of this entity.
5FJ Nations-CRT U.K. & Co. and Nations-CRT International, Inc.,
respectively, have 1% and 99% general partnership interests in this
entity.
5FK Nations-CRT U.K. & Co. and Nations-CRT Overseas, Inc., respectively,
have 1% and 99% general partnership interests in this entity.
5FL NCNB Lease Atlantic, Inc. owns 100% of this entity.
5FM NCNB Lease Finance III owns 100% of this entity.
5FN NCNB Lease Finance owns 100% of this entity.
5FO NCNB Lease Finance IV owns 100% of this entity.
5FP NCNB Lease Finance V owns 100% of this entity.
5FQ NCNB Lease Finance VI owns 100% of this entity.
5FR NCNB Lease International, Inc. owns 99.9% of this entity.
5FS NCNB Lease Offshore, Inc. owns 100% of this entity.
5FT NCNB Lease Finance II owns 100% of this entity.
5FU NationsBank Overseas Corporation owns 50% of this entity.
5FV NationsBank Overseas Corporation owns 98% of this entity.
5FW TransPacific Funding (1993), Inc. holds a 1% general partnership and
a 65% limited partnership interest in this entity.
5FX TransPacific Finance Limited Partnership owns 100% of this entity.
5FY ANA II (Grantor Trust) owns 100% of this entity.
5FZ NationsBank Overseas Corporation and NationsBank, N.A. (Carolinas)
own 99.33% and .67%, respectively, of this entity.
5G NationsBank of South Carolina, N.A. owns 100% of this entity.
8
<PAGE>
5GG BT Building Corporation has a 19% general partnrship interest and a
43% limited partnership interest in this partnership.
5H NationsBank of Tennessee, N.A. owns 100% of this entity.
5I NationsBank Texas Bancorporation, Inc. owns 100% of this entity.
5IA NationsBank of Texas, N.A. owns 100% of this entity.
5IB DPC, Inc. owns 100% of this entity.
5IC NCNB Texas TBM, Inc. owns 100% of this entity.
5J NationsBank of Virginia, N.A. owns 100% of this entity.
6 NB Holdings Corporation owns 66.66% of this entity.
6A NB Holdings Corporation owns 70% of this entity.
7 NationsBank of Florida, N.A.; NationsBank of Georgia, N.A.;
NationsBank of North Carolina, N.A.; NationsBank of South Carolina,
N.A.; and NationsBank of Texas, N.A. own, respectively, 4.67%, 33.33%,
28.67%, 8.33% and 25% of this entity.
7A NationsBank Community Development Corporation has a 95.4% general
partnership interest in this entity.
7B NationsBank Community Development Corporation owns 100% of this entity.
7C NationsBank Community Development Corporation has a 94.8% interest in
this entity.
7D NationsBank Community Development Corporation has a 50.26% interest
in this entity.
7E NationsBank Community Development Corporation owns 80% of this entity.
7F NationsBank Community Development Corporation owns 98% of this entity.
8 NationsBank of Florida, N.A.; NationsBank of Georgia, N.A.; NationsBank
of North Carolina, N.A. and NationsBank of Texas, N.A., each, owns 25%
of the voting stock of this entity.
8A NationsBank Housing Fund Investment Corporation has a 99% limited
partnership interest in this entity.
9
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-44826,
33-49881 and 33-57533); the Prospectuses constituting part of the Registration
Statements on Form S-4 (Nos. 33-43125 and Post-Effective Amendment No. 1
thereto, and 33-55145 and Post-Effective Amendment No. 1 thereto); and the
Prospectuses constituting part of the Registration Statements on Form S-8 (Nos.
2-91958; 2-73761; 2-80406 and Post-Effective Amendment Nos. 1, 2, 3 and 4
thereto; 33-43125 and Post-Effective Amendment No. 1 thereto, originally filed
on Form S-4 (No. 33-43125); 33-55145 and Post-Effective Amendment No. 1 thereto,
originally filed on Form S-4 (No. 33-55145); 33-45279 and 33-48883) of
NationsBank Corporation of our report dated January 13, 1995, which appears on
page 57 of the 1994 Annual Report to Shareholders of NationsBank Corporation,
which is incorporated by reference in NationsBank Corporation's Annual Report on
Form 10-K for the year ended December 31, 1994.
(signature appears here)
PRICE WATERHOUSE LLP
Charlotte, North Carolina
March 30, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints J. W. Kiser and Charles M. Berger, and each of
them (with full power to each of them to act alone), his attorneys-in-fact, for
him in any and all capacities, to sign any amendments to this report and to file
the same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
Chairman of the Board, and March 22, 1995
Chief Executive Officer
(HUGH L. MCCOLL, JR.)
Vice Chairman and March 22, 1995
Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
Executive Vice President March 22, 1995
(Principal Accounting Officer)
(MARC D. OKEN)
Director March 22, 1995
(RONALD W. ALLEN)
Director March 22, 1995
(WILLIAM M. BARNHARDT)
Director March 22, 1995
(THOMAS M. BELK)
Director March 22, 1995
(THOMAS E. CAPPS)
Director March 22, 1995
(R. EUGENE CARTLEDGE)
Director March 22, 1995
(CHARLES W. COKER)
Director March 22, 1995
(THOMAS G. COUSINS)
Director March 22, 1995
(ALAN T. DICKSON)
Director March 22, 1995
(W. FRANK DOWD, JR.)
Director March 22, 1995
(A. L. ELLIS)
<PAGE>
SIGNATURE TITLE DATE
Director March 22, 1995
(PAUL FULTON)
Director March 22, 1995
(L. L. GELLERSTEDT, JR.)
Director March 22, 1995
(TIMOTHY L. GUZZLE)
Director March 22, 1995
(E. BRONSON INGRAM)
Director March 22, 1995
(W. W. JOHNSON)
Director March 22, 1995
(BUCK MICKEL)
Director March 22, 1995
(JOHN J. MURPHY)
Director March 22, 1995
(JOHN W. SNOW)
Director March 22, 1995
(WILLIAM W. SPRAGUE, JR.)
Director March 22, 1995
(RONALD TOWNSEND)
Director March 22, 1995
(JACKIE M. WARD)
Director March 22, 1995
(MICHAEL WEINTRAUB)
/TABLE
<PAGE>
<PAGE>
EXHIBIT 24(b)
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTION
MARCH 22, 1995
RESOLVED, that the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "10-K Report"), be, and it hereby is, authorized
and approved substantially in the form presented to and considered at this
meeting, with such changes in form or content or attachment of exhibits as the
signing officers shall approve, their approval to be conclusively evidenced by
their signature thereof;
RESOLVED FURTHER, that the proper officers of the Corporation be, and they
hereby are, authorized and empowered on behalf of the Corporation to execute the
10-K Report and file it with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended, and with such other
governmental agencies or instrumentalities as such officers deem necessary or
desirable, and to make, execute and file any amendment or amendments to the 10-K
Report, as they may deem necessary or appropriate;
RESOLVED FURTHER, that J.W. Kiser and Charles M. Berger be, and each of
them with full power to act without the other hereby is, authorized and
empowered to sign the aforesaid 10-K Report and any amendment or amendments
thereto on behalf of and as attorneys for NationsBank Corporation and on behalf
of and as attorneys for any of the following, to wit: the Principal Executive
Officer, the Principal Financial Officer, the Principal Accounting Officer, and
any other officer of NationsBank Corporation.
RESOLVED FURTHER, that the officers of NationsBank Corporation be, and they
hereby are, authorized and directed to do all things necessary, appropriate or
convenient to carry into effect, the foregoing resolutions.
CERTIFICATE OF SECRETARY
I, ALLISON L. GILLIAM, Assistant Secretary of NationsBank Corporation, a
corporation duly organized and existing under the laws of the State of North
Carolina, do hereby certify that the foregoing is a true and correct copy of a
resolution duly adopted by a majority of the entire Board of Directors of said
Corporation at a meeting of said Board of Directors held on March 22, 1995, at
which meeting a quorum was present and acted throughout and that said resolution
is in full force and effect and has not been amended or rescinded as of the date
hereof.
IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of
said corporation this 22nd day of March, 1995.
(SEAL)
ALLISON L. GILLIAM
ASSISTANT SECRETARY
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary information extracted from the December 31,
1994, Form 8-K for NationsBank Corporation and is qualified in its entirety
by reference to such financial statements.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,582
<INT-BEARING-DEPOSITS> 2,159
<FED-FUNDS-SOLD> 11,112
<TRADING-ASSETS> 9,941
<INVESTMENTS-HELD-FOR-SALE> 8,025
<INVESTMENTS-CARRYING> 17,800
<INVESTMENTS-MARKET> 17,101
<LOANS> 103,371
<ALLOWANCE> (2,186)
<TOTAL-ASSETS> 169,604
<DEPOSITS> 100,470
<SHORT-TERM> 45,555
<LIABILITIES-OTHER> 4,080
<LONG-TERM> 8,488
<COMMON> 4,740
0
111
<OTHER-SE> 6,160
<TOTAL-LIABILITIES-AND-EQUITY> 169,604
<INTEREST-LOAN> 7,577
<INTEREST-INVEST> 1,378
<INTEREST-OTHER> 1,574
<INTEREST-TOTAL> 10,529
<INTEREST-DEPOSIT> 2,415
<INTEREST-EXPENSE> 5,318
<INTEREST-INCOME-NET> 5,211
<LOAN-LOSSES> 310
<SECURITIES-GAINS> (13)
<EXPENSE-OTHER> 4,930
<INCOME-PRETAX> 2,555
<INCOME-PRE-EXTRAORDINARY> 2,555
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,690
<EPS-PRIMARY> 6.12
<EPS-DILUTED> 6.06
<YIELD-ACTUAL> 3.58
<LOANS-NON> 801
<LOANS-PAST> 146
<LOANS-TROUBLED> 177
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,169
<CHARGE-OFFS> 533
<RECOVERIES> 217
<ALLOWANCE-CLOSE> 2,186
<ALLOWANCE-DOMESTIC> 1,160
<ALLOWANCE-FOREIGN> 11
<ALLOWANCE-UNALLOCATED> 1,015
</TABLE>
