<PAGE>
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, 1996 -- Commission File Number 1-6523
NATIONSBANK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
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)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
<S> <C>
Common Stock New York Stock Exchange
London Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
7 3/4% Debentures, due 2002 American Stock Exchange
</TABLE>
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 $41,994,576,000 computed by reference
to the closing price of Common Stock of $58.00 per share on March 20, 1997, on
the New York Stock Exchange Composite Transactions List, as reported in
published financial sources, a stated price of $42.50 per share of the ESOP
Convertible Preferred Stock, Series C, and the stated value of $100 per share of
the 7% Cumulative Redeemable Preferred Stock, Series B.
Of the registrant's only class of Common Stock, there were 741,505,154 shares
outstanding as of March 7, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
DOCUMENT OF THE REGISTRANT FORM 10-K REFERENCE LOCATIONS
<S> <C>
1996 Annual Report to Shareholders PARTS I, II and IV
1997 Proxy Statement PART III
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
The registrant is a North Carolina corporation and a multi-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 Mid-Atlantic, Midwest, Southeast and Southwest. The principal
executive offices of the registrant are located at NationsBank Corporate Center
in Charlotte, North Carolina 28255.
On February 27, 1997, the registrant completed a two-for-one split of its
common stock (the "Split"). All financial data included in this Annual Report on
Form 10-K has been restated to reflect the Split.
ACQUISITIONS AND DISPOSITIONS
On January 9, 1996, the registrant completed the acquisition of Bank South
Corporation ("BKSO"). As of the acquisition date, BKSO had assets of
approximately $7.4 billion and deposits of approximately $5.1 billion. The
registrant issued 0.88 shares of its common stock for each outstanding share of
BKSO common stock, for an aggregate purchase price of approximately 53 million
shares of the registrant's common stock (adjusted for the Split).
On January 10, 1996, the registrant completed the acquisition of CSF
Holdings, Inc. ("CSF"). As of the acquisition date, CSF had assets of
approximately $4.8 billion and deposits of approximately $3.8 billion. The
purchase price was approximately $516 million and was paid in cash.
On January 31, 1996, the registrant completed the acquisition of Sun World,
N.A. ("Sun World"). As of the acquisition date, Sun World had assets of
approximately $136 million and deposits of approximately $123 million. The
purchase price was approximately $16 million and was paid in cash.
On April 29, 1996, the registrant, through NationsCredit Commercial
Corporation, its wholly owned, indirect subsidiary engaged primarily in the
commercial financial services business, completed the acquisition of LDI
Corporation ("LDI"). As of the acquisition date, LDI had assets of approximately
$247 million. The purchase price was approximately $28 million and was paid in
cash.
On May 24, 1996, the registrant completed the acquisition of Charter
Bancshares, Inc. ("CBI"). As of the acquisition date, CBI had assets of
approximately $928 million and deposits of approximately $720 million. The
registrant issued 0.77 shares of its common stock for each outstanding share of
CBI common stock, for an aggregate purchase price of approximately 2.8 million
shares of the registrant's common stock (adjusted for the Split). Prior to this
acquisition, the registrant owned approximately 42% of CBI.
On August 13, 1996, the registrant completed the acquisition of TAC
Bancshares, Inc. ("TAC") and its subsidiary, Chase Federal Bank FSB ("Chase
Federal"). As of the acquisition date, TAC and Chase Federal had total assets
and total deposits of $2.8 billion and $2.0 billion, respectively. The purchase
price was approximately $280 million, in the aggregate, and was paid in cash.
On August 31, 1996, the registrant acquired aggregate deposits of
approximately $970 million from Bluebonnet Savings Bank, FSB. The purchase price
was approximately $46 million and was paid in cash.
In connection with the divestiture of its affinity loan business, on
September 27, 1996, the registrant, through one of its banking subsidiaries,
NationsBank, N.A., sold approximately $393 million in loan account receivables
to Household Bank, f.s.b. and approximately $728 million in loan account
receivables to MBNA America Bank, N.A. The sales prices for these transactions
were approximately $433 million and $784 million, respectively, and were
received in cash.
On January 7, 1997, the registrant completed the acquisition of Boatmen's
Bancshares, Inc. ("BBI"). As of the acquisition date, BBI had assets of
approximately $41.2 billion and deposits of approximately $32.0 billion. In the
acquisition, each outstanding share of BBI common stock was converted into 1.305
shares of the registrant's common stock (adjusted for the Split) or, at the
shareholder's election, $63.11 in cash, for an aggregate
1
<PAGE>
purchase price of approximately 195 million shares of the registrant's common
stock (adjusted for the Split) and $371 million in cash.
The registrant currently intends to consummate the acquisition of First
Federal Savings Bank of Brunswick, Georgia ("Brunswick") in the second quarter
of 1997. As of December 31, 1996, Brunswick had assets of approximately $254
million and deposits of approximately $220 million. The registrant expects to
issue approximately 2.4 million shares of its common stock in the acquisition
(adjusted for the Split).
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 ownership or
control. 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
nonbanking financial services and products through its various subsidiaries. The
registrant manages its business activities through three major business units:
the General Bank, Global Finance and Financial Services.
The General Bank provides comprehensive services in the retail and
commercial banking fields, including the origination and servicing of home
mortgage loans, the issuance and servicing of credit cards (through a Delaware
subsidiary), indirect lending, dealer finance and certain insurance services.
The General Bank also provides full service and discount brokerage services and
investment advisory services, including advising the Nations Funds family of
mutual funds, as well as banking, fiduciary and investment management services
through subsidiaries of the registrant. The registrant has announced its intent
to sell its line of business that provides retirement services for defined
benefit and defined contribution plans. As of January 7, 1997, the General Bank
operated approximately 2,600 banking offices in the states of Arkansas, Florida,
Georgia, Illinois, Iowa, Kansas, Kentucky, Maryland, Missouri, New Mexico, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia and the
District of Columbia. The General Bank also provides fully automated 24-hour
cash dispensing and depositing services throughout the states in which it is
located, through over 5,000 automated teller machines.
Global Finance provides comprehensive corporate and investment banking
services to domestic and international customers. Global Finance serves as a
principal lender and investor, as well as an advisor, and manages treasury and
trade transactions for clients and customers. Loan origination and syndication,
asset-backed lending, leasing, factoring, project finance and mergers and
acquisitions are representative of the services provided. These services are
provided through various domestic offices as well as offices located in London,
Singapore, Bogota, Mexico City, Grand Cayman, Nassau, Seoul, Tokyo, Osaka,
Mumbai (formerly Bombay), Jakarta, Taipei, Sao Paulo, Frankfurt and Hong Kong.
Global Finance also underwrites, distributes and makes markets in high-grade and
high-yield securities, is a primary dealer of U.S. Government securities and is
a market maker in derivatives products, including swap agreements, option
contracts, forward settlement contracts, financial futures and other derivative
products in certain interest rate, foreign exchange, commodity and equity
markets. In support of these activities, Global Finance takes positions to
support client demands and its own account. Major centers for such activities
are Charlotte, Chicago, London, New York, Singapore and Tokyo.
Financial Services is primarily comprised of NationsCredit Corporation, a
holding company, which includes NationsCredit Consumer Corporation and
NationsCredit Commercial Corporation. NationsCredit Consumer Corporation, which
has approximately 264 offices located in 32 states, provides personal, mortgage
and automobile loans to consumers and retail finance programs to dealers.
NationsCredit Commercial Corporation consists of divisions that specialize in
the following areas of commercial finance: equipment loans and leases; loans for
debt restructuring, mergers and acquisitions and working capital; real estate,
golf/recreational and health care financing; and inventory financing to
manufacturers, distributors and dealers.
Additional information about the registrant and its operations is
incorporated by reference from Table Two (page 19) and the narrative comments
under the caption "Management's Discussion and Analysis -- Business Unit
Operations" (pages 19 through 22) in the registrant's 1996 Annual Report to
Shareholders.
2
<PAGE>
PRIMARY MARKET AREAS
The registrant provides banking and banking-related services primarily
throughout the Mid-Atlantic (Maryland, Virginia and the District of Columbia),
the Midwest (Illinois, Iowa, Kansas and Missouri), the Southeast (Florida,
Georgia, Kentucky, North Carolina, South Carolina and Tennessee) and the
Southwest (Arkansas, New Mexico, Oklahoma and Texas). The registrant serves an
aggregate of over 13 million customers in these regions, and management believes
that these are dynamic regions in which to be located. Personal income levels in
these regions as a whole rose 5.1% between 1995 and 1996, and the population in
these areas as a whole rose an estimated 1.2% between 1995 and 1996. The number
of housing permits authorized increased 8.4% between 1995 and 1996, ranging from
an increase of 2.95% in the Mid-Atlantic to an increase of 11.84% in the
Midwest. Between 1995 and 1996, the levels of unemployment in these regions as a
whole fell by approximately .20 percentage points, for an average unemployment
rate of 4.98% in 1996.
The registrant has the leading deposit market share position in Georgia,
Kansas, Maryland, New Mexico, Oklahoma, Texas and Virginia. In addition, the
registrant ranks second in terms of deposit market share in Arkansas, the
District of Columbia, Missouri and South Carolina, third in Florida, fourth in
North Carolina, fifth in Tennessee and sixth in Iowa. The registrant has less
than 1% of the market share in Illinois and Kentucky.
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 Board of Governors of the
Federal Reserve System (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"), and as state chartered banks, which are subject to regulation,
supervision and examination by the relevant state regulators. The Banks are also
subject to regulation by the Federal Deposit Insurance Corporation (the "FDIC")
and other federal regulatory agencies. The registrant also owns a federal
savings bank which is subject to supervision, regulation and examination by the
Office of Thrift Supervision. 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.
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 or to acquire more than 5% of any
class of voting stock of any company.
Bank holding companies are also required 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
became able to acquire banks in states other than its home state, beginning
September 29, 1995, without regard to the permissibility of such acquisitions
under state law, but subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company, prior to or following the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and no more than 30% of
such deposits in that state (or such lesser or greater amount set by state law).
3
<PAGE>
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. Of those states in which the Banks are
located, Delaware, Maryland, New Mexico, North Carolina, Oklahoma and Virginia
have enacted legislation to "opt in", thereby permitting interstate branching
prior to June 1, 1997, and Texas has adopted legislation to "opt out" of the
interstate branching provisions (which Texas law currently expires on September
2, 1999). To the extent permitted under these laws, the registrant plans to
consolidate the Banks (with the exception of NationsBank of Delaware, N.A.) into
a single bank as soon as practicable. The registrant currently operates four
interstate banks (i.e., banks with banking centers in more than one state):
NationsBank, N.A., headquartered in Charlotte, North Carolina, with offices in
Maryland, North Carolina, South Carolina, Virginia, and the District of
Columbia; NationsBank, N.A. (South), headquartered in Atlanta, Georgia, with
offices in Florida and Georgia; NationsBank, N.A. (Midwest), headquartered in
Kansas City, Missouri, with offices in Kansas and Missouri; and The Boatmen's
National Bank of St. Louis, headquartered in St. Louis, Missouri, with offices
in Illinois and Missouri. 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. The likelihood and timing of any such
proposals or bills and the impact they might have on the registrant and its
subsidiaries 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 Federal Reserve Board risk-based guidelines define a
two-tier capital framework. Tier 1 capital consists of common and qualifying
preferred shareholders' equity, less certain intangibles and other adjustments.
Tier 2 capital consists of subordinated and other qualifying debt, and the
allowance for credit losses up to 1.25% of risk-weighted assets. The sum of Tier
1 and Tier 2 capital less investments in unconsolidated subsidiaries represents
qualifying total capital, at least 50% of which must consist of Tier 1 capital.
Risk-based capital ratios are calculated by dividing Tier 1 and total capital by
risk-weighted assets. Assets and off-balance sheet exposures are assigned to one
of four categories of risk-weights, based primarily on relative credit risk. The
minimum Tier 1 capital ratio is 4% and the minimum total capital ratio is 8%.
The registrant's Tier 1 and total risk-based capital ratios under these
guidelines at December 31, 1996 were 7.76% and 12.66%, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3%. The registrant's leverage ratio at December 31, 1996 was 7.09%.
Management believes that the registrant meets its leverage ratio requirement.
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,
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
4
<PAGE>
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 well capitalized.
Banking agencies have also 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 adopted final regulations
requiring regulators to consider 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
capital adequacy. Concurrently, banking agencies have proposed a methodology for
evaluating interest rate risk. After gaining experience with the proposed
measurement process, those banking agencies intend to propose further
regulations to establish an explicit risk-based capital charge for interest rate
risk.
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 the Banks.
Each of the Banks is subject to various general regulatory policies and
requirements relating to the payment of dividends, including requirements to
maintain capital above regulatory minimums. The appropriate federal regulatory
authority is authorized to determine under certain circumstances relating to the
financial condition of the bank or bank holding company that the payment of
dividends would be an unsafe or unsound practice and to prohibit payment
thereof.
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. 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.
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.
Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance
Act, 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
Banks may be assessed for the FDIC's loss, subject to certain exceptions.
ADDITIONAL INFORMATION
The following information set forth in the 1996 Annual Report to
Shareholders of the registrant is hereby incorporated by reference:
Table Three (page 21) for average balance sheet amounts, related
taxable-equivalent interest earned or paid, and related average yields
earned and rates paid.
5
<PAGE>
Table Four (page 23) and the narrative comments under the caption "Net
Interest Income" (page 22) 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 27 and
28) and Note Three (pages 56 through 58) 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 Seven (page 28), Eight (page 29) and Nineteen (page 41) for
distribution of loans, leases and factored accounts receivable, selected
loan maturity data and interest-rate risk.
Table Fourteen (page 36), the narrative comments under the caption
"Credit Risk Management And Credit Portfolio Review -- Nonperforming
Assets" (pages 36 and 37), and Note One (page 54) of the Notes To
Consolidated Financial Statements for information on the nonperforming
assets of the registrant. Table Fifteen (page 36) for information on loans
past due 90 days or more and still accruing interest. The narrative
comments under the captions "Credit Risk Management And Credit Portfolio
Review" (pages 32 through 35) and "Loans And Leases" (pages 28 and 29) and
Tables Seventeen and Eighteen (pages 38 and 39) for a discussion of the
characteristics of the loan and lease portfolio.
Tables Twelve (page 34) and Thirteen (page 35), the narrative comments
under the captions "Provision for Credit Losses" (pages 22 through 24) and
"Credit Risk Management And Credit Portfolio Review -- Allowance for Credit
Losses" (page 35) and Note One (page 54) of the Notes To Consolidated
Financial Statements for information on the credit loss experience of the
registrant.
Table Three (page 21) and the narrative comments under the caption
"Deposits" (page 29) for deposit information.
"Six-Year Consolidated Statistical Summary" (page 73) for return on
assets, return on equity and dividend payout ratio for 1991 through 1996,
inclusive.
Table Nine (page 30) and Note Six (pages 60 and 61) 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 17
through 47 and pages 72 and 73 for additional data on the consolidated
operations of the registrant and its majority-owned subsidiaries.
COMPETITION
The activities in which the registrant and its three major business units
(the General Bank, Global Finance and Financial Services) engage are highly
competitive. Generally, the lines of activity and markets served involve
competition with other banks, savings and loan associations, credit unions and
other 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 three major business units is highly competitive. The General Bank,
Global Finance and Financial Services compete with other commercial banks,
savings and loan associations, finance companies and other businesses which
provide similar services. The three major business units 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
registrant's non-banking subsidiaries and the Banks. In its consumer lending
operations, the competitors of the three major business units 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, investment advisory and brokerage business, the registrant's
non-banking subsidiaries compete with other banking and investment banking
firms, investment advisory firms, brokerage firms, mutual funds and other
organizations offering similar services. 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, trust companies, insurance agents,
6
<PAGE>
financial counselors and other fiduciaries for personal trust business. The
registrant and its three major business units 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 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 banking and
branching legislation and certain state legislation.
EMPLOYEES
As of December 31, 1996, the registrant and its subsidiaries had 62,971
full-time equivalent employees. Of the foregoing employees, 35,766 were employed
by the General Bank, 5,178 were employed by Global Finance, 3,129 were employed
by Financial Services, 14,815 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 subsidiaries. As of December 31, 1996, BBI and its
subsidiaries had 19,028 full-time equivalent employees. None of the registrant's
domestic employees are covered by a collective bargaining agreement. Management
considers its employee relations to be good.
ITEM 2. PROPERTIES
The principal offices of the registrant, as well as the General Bank and
Global Finance, are located in the 60-story NationsBank Corporate 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,
1996, substantially all of the space was occupied by the registrant or subject
to existing third party leases or letters of intention to lease.
The principal offices of Financial Services are located in approximately
136,000 square feet of space leased by NationsCredit Corporation and
NationsCredit Consumer Corporation in Irving, Texas, under a lease which expires
in 2006, and 40,000 square feet of space leased by NationsCredit Commercial
Corporation in Stamford, Connecticut, under a lease which expires in 1998.
The registrant also leases or owns a significant amount of space in
Albuquerque, New Mexico; Atlanta, Georgia; Baltimore, Maryland; Dallas, Texas;
Richmond, Virginia; St. Louis, Missouri; and Wichita, Kansas; as well as
additional premises in Charlotte and throughout its franchise. As of January 7,
1997, the registrant and its subsidiaries owned or leased approximately 3,340
locations in 22 states, the District of Columbia and 10 foreign countries.
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, environmental, banking and other laws.
Management believes, based upon the advice of counsel, that these actions and
proceedings and the 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.
7
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of shareholders was held on December 20, 1996 (the
"Special Meeting"). The registrant's Common Stock and ESOP Convertible Preferred
Stock, Series C, voted together as a single class on the matters submitted to
the shareholders at the Special Meeting. The following are voting results on
each of these matters:
<TABLE>
<CAPTION>
Against
or Broker
For Withheld Abstentions Nonvotes
<S> <C> <C> <C> <C>
1. The issuance of shares of the
registrant's Common Stock and
Convertible Preferred Stock,
Series A, in the merger with
Boatmen's Bancshares, Inc.... 212,153,684 1,702,058 1,119,123 23,662,030
2. The amendment of the
registrant's Restated
Articles of Incorporation to
increase the number of
authorized shares of Common
Stock to 1,250,000,000....... 231,010,690 6,040,086 1,586,119 0
3. The amendment and restatement
of the NationsBank
Corporation Key Employee
Stock Plan................... 189,481,251 22,637,568 2,811,251 23,706,825
</TABLE>
ITEM 4A. 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 and the principal
accounting 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.
Andrew B. Craig, III, age 66, Chairman of the Board of the registrant. Mr.
Craig was Chairman of the Board and Chief Executive Officer of Boatmen's
Bancshares, Inc. from 1988 until January 7, 1997 when Boatmen's Bancshares, Inc.
was merged with the registrant at which time he was elected as Chairman of the
Board and a director of the registrant. He also served as President of Boatmen's
Bancshares, Inc. from 1985 to 1994.
Fredric J. Figge, II, age 60, 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 52, 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 October 1993 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 of Tennessee, N.A. and
various other subsidiaries of the registrant.
Kenneth D. Lewis, age 49, 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. He first
became an officer in 1971. Mr. Lewis also serves as Chairman and a director of
NationsBank, N.A., as President and a director of NationsBank, N.A. (South) and
as a director of NationsBank of Texas, N.A.
Hugh L. McColl, Jr., age 61, Chief Executive Officer of the registrant and
Chief Executive Officer of the Banks. Mr. McColl was Chairman of the registrant
from September 1983 until December 31, 1991, and from December 31, 1992 until
January 7, 1997. He first became an officer in 1962. He also serves as a
director of the registrant.
8
<PAGE>
Marc D. Oken, age 50, Executive Vice President and Principal Accounting
Officer of the registrant. He first became an officer in 1989.
F. William Vandiver, Jr., age 55, President of NationsBank Global Finance,
which includes Corporate Finance/Capital Markets, Real Estate and Specialized
Lending. Mr. Vandiver was named President of NationsBank Global Finance in
January 1996. In 1984, he was named Investment Banking Company executive and
president in 1988. He has been an officer since 1968. He also serves as
President and a director of NationsBank, N.A.
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 Common Stock is also
listed on the London Stock Exchange and the Pacific Stock Exchange, and certain
shares are listed on the Tokyo Stock Exchange. The following table sets forth
the high and low sales prices of Common Stock on the New York Stock Exchange
Composite Transactions List, restated to give effect to the Split, for the
periods indicated:
<TABLE>
<CAPTION>
QUARTER HIGH LOW
<S> <C> <C> <C>
1995 first $25 7/8 $22 5/16
second 28 7/8 24 13/16
third 34 7/16 26 7/8
fourth 37 3/8 32
1996 first 40 11/16 32 3/16
second 42 5/16 37 3/8
third 47 1/16 38 3/16
fourth 52 5/8 43 1/8
</TABLE>
As of January 7,, 1997, there were 145,657 record holders of Common Stock.
During 1995 and 1996, the registrant paid dividends on the Common Stock on a
quarterly basis. The following table sets forth dividends declared per share of
Common Stock for the periods indicated, restated to give effect to the Split:
<TABLE>
<CAPTION>
QUARTER DIVIDEND
<S> <C> <C>
1995 first $.25
second .25
third .25
fourth .29
1996 first .29
second .29
third .29
fourth .33
</TABLE>
For additional information regarding the registrant's ability to pay
dividends, see "Government Supervision and Regulation -- Distributions." Note
Nine (page 63) of the Notes To Consolidated Financial Statements in the
registrant's 1996 Annual Report to Shareholders is hereby incorporated by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in Table One (page 18) in the registrant's 1996
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 -- 1996 Compared to 1995" (pages 17 through 43),
"Management's Discussion and Analysis -- 1995 Compared to 1994" (pages 43
through 47), "Report of Management" (page 48) and all tables, graphs and charts
presented under
9
<PAGE>
the foregoing captions in the 1996 Annual Report to Shareholders of the
registrant are hereby incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the 1996 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 10, 1997 (pages 48 through 71);
the unaudited information presented in Table Twenty (page 44); and the narrative
comments under the caption "Fourth Quarter Review" (page 43).
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.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information set forth under the caption "Election of Directors" on pages 2
through 8 of the definitive 1997 Proxy Statement of the registrant furnished to
shareholders in connection with its Annual Meeting to be held on April 23, 1997
(the "1997 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 "Section 16(a) Beneficial Ownership Reporting Compliance" on page 11 of
the 1997 Proxy Statement with respect to Section 16 matters, is hereby
incorporated by reference. The information required by Item 10 with respect to
executive officers is set forth in Part I, Item 4A hereof.
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 1997 Proxy Statement (i) under the
caption "Board of Directors' Compensation" on pages 11 and 12 thereof, (ii)
under the caption "Executive Compensation" on pages 12 and 13 thereof, (iii)
under the caption "Retirement Plans" on pages 13 and 14 thereof, (iv) under the
caption "Deferred Compensation Plan" on page 14 thereof, (v) under the caption
"Special Compensation Arrangement" on page 14 thereof, (vi) under the caption
"Compensation Committee Interlocks and Insider Participation" on page 18
thereof, and (vii) under the caption "Certain Transactions" on pages 18 and 19
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, ESOP Preferred Stock or 7% Cumulative Redeemable Preferred
Stock, Series B, 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 8 through 10 of the 1997 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 1997
Proxy Statement under the caption "Compensation Committee Interlocks and Insider
Participation" on page 18 and under the caption "Certain Transactions" on pages
18 and 19 thereof, is, to the extent such information is required by Item 404 of
Regulation S-K, hereby incorporated by reference.
10
<PAGE>
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....................................................... 48
Consolidated Statement of Income for each of the three years ended
December 31, 1996..................................................................... 49
Consolidated Balance Sheet at December 31, 1996 and 1995................................ 50
Consolidated Statement of Cash Flows for each of the three years ended
December 31, 1996..................................................................... 51
Consolidated Statement of Changes in Shareholders' Equity for each of the three years
ended December 31, 1996............................................................... 52
Notes to Consolidated Financial Statements.............................................. 53-71
* Incorporated by reference from the indicated pages of the 1996 Annual Report to
Shareholders.
(2) All schedules are omitted because they are not applicable or the required
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, 1996:
Current Report on Form 8-K dated October 15, 1996 and filed October
25, 1996, Items 5 and 7.
Current Report on Form 8-K/A-2 dated August 29, 1996 and filed
November 13, 1996, Item 7. The following financial statements of
the business to be acquired (Boatmen's Bancshares, Inc.) were filed
as part of this Current Report on Form 8-K/A-2:
Consolidated Balance Sheets as of September 30, 1996 (unaudited),
June 30, 1996 (unaudited) and December 31, 1995 and 1994;
Consolidated Statements of Income for the nine months ended
September 30, 1996 and 1995 (unaudited), the six months ended June
30, 1996 and 1995 (unaudited) and the years ended December 31, 1995
and 1994;
Consolidated Statements of Changes in Shareholders' Equity for the
nine months ended September 30, 1996 and 1995 (unaudited), the six
months ended June 30, 1996 and 1995 (unaudited) and the years ended
December 31, 1995 and 1994; and
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 (unaudited), the six months ended June
30, 1996 and 1995 (unaudited) and the years ended December 31, 1995
and 1994.
In addition, the following unaudited pro forma financial
information was filed as part of this Current Report on Form
8-K/A-2:
Unaudited Pro Forma Condensed Balance Sheet as of September 30,
1996;
Unaudited Pro Forma Condensed Statement of Income for the nine
months ended September 30, 1996; and
Unaudited Pro Forma Condensed Statement of Income for the year
ended December 31, 1995.
Current Report on Form 8-K dated November 8, 1996 and filed
November 14, 1996, Items 5 and 7.
11
<PAGE>
Current Report on Form 8-K dated November 27, 1996 and filed
December 4, 1996, Items 5 and 7.
Current Report on Form 8-K dated December 10, 1996 and filed
December 17, 1996, Items 5 and 7.
Current Report on Form 8-K dated December 13, 1996 and filed
December 17, 1996, 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 1996 Annual Report to Shareholders and the 1997 Proxy Statement
are not to be deemed filed as part of this Annual Report on Form 10-K.
12
<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 28, 1997 By: */s/ Hugh L. McColl, Jr.
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE 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>
Chief Executive Officer and Director March 28, 1997
*/s/ Hugh L. McColl, Jr. (Principal Executive Officer)
(HUGH L. MCCOLL, JR.)
Vice Chairman and March 28, 1997
*/s/ James H. Hance, Jr. Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
Executive Vice President March 28, 1997
*/s/ Marc D. Oken (Principal Accounting Officer)
(MARC D. OKEN)
*/s/ Andrew B. Craig, III Chairman of the Board March 28, 1997
(ANDREW B. CRAIG, III)
*/s/ Ronald W. Allen Director March 28, 1997
(RONALD W. ALLEN)
*/s/ Ray C. Anderson Director March 28, 1997
(RAY C. ANDERSON)
*/s/ William M. Barnhardt Director March 28, 1997
(WILLIAM M. BARNHARDT)
*/s/ B. A. Bridgewater, JR. Director March 28, 1997
(B. A. BRIDGEWATER, JR.)
*/s/ Thomas E. Capps Director March 28, 1997
(THOMAS E. CAPPS)
*/s/ Charles W. Coker Director March 28, 1997
(CHARLES W. COKER)
*/s/ Thomas G. Cousins Director March 28, 1997
(THOMAS G. COUSINS)
*/s/ Alan T. Dickson Director March 28, 1997
(ALAN T. DICKSON)
*/s/ W. Frank Dowd, Jr. Director March 28, 1997
(W. FRANK DOWD, JR.)
*/s/ Paul Fulton Director March 28, 1997
(PAUL FULTON)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
*/s/ Timothy L. Guzzle Director March 28, 1997
(TIMOTHY L. GUZZLE)
*/s/ C. Ray Holman Director March 28, 1997
(C. RAY HOLMAN)
*/s/ W. W. Johnson Director March 28, 1997
(W. W. JOHNSON)
*/s/ Russell W. Meyer, Jr. Director March 28, 1997
(RUSSELL W. MEYER, JR.)
Director March , 1997
(JOHN J. MURPHY)
*/s/ Richard B. Priory Director March 28, 1997
(RICHARD B. PRIORY)
*/s/ John C. Slane Director March 28, 1997
(JOHN C. SLANE)
*/s/ O. Temple Sloan, Jr. Director March 28, 1997
(O. TEMPLE SLOAN, JR.)
*/s/ John W. Snow Director March 28, 1997
(JOHN W. SNOW)
*/s/ Meredith R. Spangler Director March 28, 1997
(MEREDITH R. SPANGLER)
*/s/ Robert H. Spilman Director March 28, 1997
(ROBERT H. SPILMAN)
*/s/ Albert E. Suter Director March 28, 1997
(ALBERT E. SUTER)
*/s/ Ronald Townsend Director March 28, 1997
(RONALD TOWNSEND)
*/s/ Jackie M. Ward Director March 28, 1997
(JACKIE M. WARD)
*/s/ Virgil R. Williams Director March 28, 1997
(VIRGIL R. WILLIAMS)
*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>
3. (a) Restated Articles of Incorporation of registrant, as in effect on the date hereof,
incorporated by reference to Exhibit 3.1 of registrant's Current Report on Form 8-K dated
December 31, 1996.
(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 29,
1996 (the "1995 Form 10-K").
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 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.
(d) 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.
(e) 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,
incorporated by reference to Exhibit 4.1 of registrant's Registration No. 33-54784.
(f) 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.
(g) 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 5 1/8% Senior Notes, due 1998; and its 5 3/8% Senior Notes,
due 2000, incorporated by reference to Exhibit 4.1 of registrant's Current Report on Form
8-K dated July 6, 1993.
(h) 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 Current Report on Form 8-K dated July 6, 1993.
(i) 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; its
7% Senior Notes, due, 2003; its 7% Senior Notes, due 2001; and its Senior Medium-Term
Notes, Series D, E and F, incorporated by reference to Exhibit 4.1 of registrant's
Registration No. 33-57533.
(j) Indenture dated as of January 1, 1995 between registrant and The Bank of New York,
pursuant to which registrant issued its 7 5/8% Subordinated Notes, due 2005; its 7 3/4%
Subordinated Notes, due 2015; its 7 1/4% Subordinated Notes, due 2025; its 6 1/2%
Subordinated Notes, due 2006; its 7.80% Subordinated Notes, due 2016; and its Subordinated
Medium-Term Notes, Series D, E and F, incorporated by reference to Exhibit 4.1 of
registrant's Registration No. 33-57533.
(k) Fiscal and Paying Agency Agreement dated as of July 5, 1995, between registrant and The
Chase Manhattan Bank, N.A. (London Branch), pursuant to which registrant issued its
Floating Rate Senior Notes, due 2000, incorporated by reference to Exhibit 4(l) of the
1995 Form 10-K.
(l) Agency Agreement dated as of November 8, 1995 between registrant and The Chase Manhattan
Bank, N.A. (London Branch), pursuant to which registrant issued its Senior Euro
Medium-Term Notes, as amended and restated dated as of
July 5, 1996.
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
(m) Issuing and Paying Agency Agreement dated as of April 10, 1995 between NationsBank,
N.A. (as successor to NationsBank, N.A. (Carolinas)), NationsBank of Texas, N.A. and
NationsBank, N.A. (South) (as successor to NationsBank of Georgia, N.A.), as Issuers,
and Bankers Trust Company, as Issuing and Paying Agent, incorporated by reference to
Exhibit 4(n) of the 1995 Form 10-K.
(n) Articles of Association of NationsBank, N.A. (South), incorporated by reference to
Exhibit 4(o) of the 1995 Form 10-K.
(o) Statement of Designation relating to the NationsBank, N.A. (South) Series H Preferred
Stock, incorporated by reference to Exhibit 4(p) of the 1995 Form 10-K.
(p) Statement of Designation relating to the NationsBank, N.A. (South) Series 1993A
Preferred Stock, incorporated by reference to Exhibit 4(q) of the 1995 Form 10-K.
(q) Specimen certificate of registrant's 7% Cumulative Redeemable Preferred Stock, Series
B.
(r) Indenture dated as of November 27, 1996 between the registrant and The Bank of New
York, incorporated by reference to Exhibit 4.10 of registrant's Registration No.
333-15375.
(s) First Supplemental Indenture dated as of December 4, 1996 to the Indenture dated as
of November 27, 1996 between the registrant and The Bank of New York pursuant to
which the registrant issued its 7.84% Junior Subordinated Deferrable Interest Notes
due 2026, incorporated by reference to Exhibit 4.3 of registrant's Current Report on
Form 8-K dated November 27, 1996.
(t) Second Supplemental Indenture dated as of December 17, 1996 to the Indenture dated as
of November 27, 1996 between the registrant and The Bank of New York pursuant to
which the registrant issued its 7.83% Junior Subordinated Deferrable Interest Notes
due 2026, incorporated by reference to Exhibit 4.3 of registrant's Current Report on
Form 8-K dated December 10, 1996.
(u) Third Supplemental Indenture dated as of February 3, 1997 to the Indenture dated as
of November 27, 1996 between the registrant and The Bank of New York pursuant to
which the registrant issued its Floating Rate Junior Subordinated Deferrable Interest
Notes due 2027, incorporated by reference to Exhibit 4.3 of registrant's Current
Report on Form 8-K dated January 22, 1997.
(v) 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.
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, incorporated by reference to Exhibit 10(a) of registrant's Annual Report on
Form 10-K dated March 30, 1995.
(b) 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; Amendment thereto dated as of December 31, 1993, incorporated by reference
to Exhibit 10(c) of registrant's Annual Report on Form 10-K dated March 30, 1995;
Amendments thereto dated as of December 31, 1994 and August 1, 1995, both of which
are incorporated by reference to Exhibit 10(b) of the 1995 Form 10-K; and Amendments
thereto dated as of December 31, 1995, January 1, 1996, June 30, 1996 and October 1,
1996.
(c) 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.
(d) 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.
(e) 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.
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
(f) 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.
(g) 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; Amendment thereto dated as of September 28, 1994, incorporated
by reference to Exhibit 10(i) of registrant's Annual Report on Form 10-K dated March
30, 1995; and Amendment thereto dated as of April 24, 1996.
(h) NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement *
Plan, incorporated by reference to Exhibit 10(j) of registrant's Annual Report on
Form 10-K dated March 30, 1995; 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;
Amendments thereto dated as of December 3, 1992 and 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,
incorporated by reference to Exhibit 10(j) of registrant's Annual Report on Form 10-K
dated March 30, 1995.
(i) NationsBank Corporation and Designated Subsidiaries Deferred Compensation Plan for *
Key Employees, incorporated by reference to Exhibit 10(k) of registrant's Annual
Report on Form 10-K dated March 30, 1995; 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.
(j) 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.
(k) 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;
Amendments thereto dated as of September 28, 1994, December 15, 1994 and December 28,
1994, all of which are incorporated by reference to Exhibit 10(m) of registrant's
Annual Report on Form 10-K dated March 30, 1995; Amendments thereto dated as of June
28, 1995, July 5, 1995, August 24, 1995 and September 28, 1995, all of which are
incorporated by reference to Exhibit 10(k) of the 1995 Form 10-K; and Amendments
thereto dated as of December 31, 1995, June 26, 1996 and October 2, 1996.
(l) 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; Amendments
thereto dated as of December 3, 1992 and 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; and Amendment thereto dated as of July 5, 1995, incorporated by
reference to Exhibit 10(l) of the 1995 Form 10-K.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
(m) NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement *
Plan for Senior Management Employees, incorporated by reference to Exhibit 10(o) of
registrant's Annual Report on Form 10-K dated March 30, 1995; Amendment thereto dated
as of June 28, 1989, incorporated by reference to Exhibit 10(l) 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; Amendments thereto dated as of December 3, 1992 and
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, incorporated by reference to Exhibit 10(o) of
registrant's Annual Report on Form 10-K dated March 30, 1995.
(n) 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.
(o) 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; 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; and Trustee Removal/Appointment Agreement dated as of December
19, 1995, incorporated by reference to Exhibit 10(o) of the 1995 Form 10-K.
(p) The NationsBank Retirement Savings Restoration Plan, as amended and restated *
effective July 1, 1996.
(q) 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.
(r) NationsBank Corporation Executive Incentive Compensation Plan, as amended and *
restated effective July 1, 1996.
(s) NationsBank Corporation Key Employee Deferral Plan, as amended and restated effective *
July 1, 1996.
(t) NationsBank Corporation Director Deferral Plan, as amended and restated effective *
April 24, 1996.
(u) Special Trust Agreement under The NationsBank Pension Plan, as effective December 31, *
1994, incorporated by reference to Exhibit 10(y) of registrant's Annual Report on
Form 10-K dated March 30, 1995.
(v) NationsBank Corporation Key Employee Stock Plan, as amended and restated effective
December 20, 1996. *
(w) NationsBank Corporation Directors' Stock Plan, incorporated by reference to Exhibit *
99.1 of registrant's Registration No. 333-02875.
(x) Amendment to Restricted Stock Award Plan Agreements with Hugh L. McColl, Jr. dated *
December 20, 1996.
(y) Agreement and Plan of Merger, by and between Boatmen's Bancshares, Inc. and
registrant, dated as of August 29, 1996, incorporated by reference to Exhibit 2.1 of
registrant's Registration No. 333-16189; Amendment thereto, dated as of November 11,
1996, incorporated by reference to Exhibit 2.2 of registrant's Registration No.
333-16189; and Amendment thereto, dated as of January 6, 1997.
(z) Employment Agreement, dated as of September 26, 1996, by and between registrant and *
Andrew B. Craig, III, incorporated by reference to Exhibit 10.1 of registrant's
Registration No. 333-16189.
(aa) Employment Agreement, dated as of January 30, 1996, as amended May 17, 1996, by and *
between Boatmen's Bancshares, Inc. and Andrew B. Craig, III, incorporated by
reference to Exhibit 10.2 of registrant's Registration No. 333-16189.
11. Earnings per share computation.
12. (a) Ratio of Earnings to Fixed Charges.
(b) Ratio of Earnings to Fixed Charges and Preferred Dividends.
13. 1996 Annual Report to Shareholders. This exhibit contains only those portions of the Annual
Report that are incorporated by reference herein.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
21. List of Subsidiaries of Registrant.
23. Consent of Price Waterhouse LLP.
24. (a) Power of Attorney.
(b) Corporate Resolution.
27. Financial Data Schedule.
</TABLE>
* Denotes executive compensation plan or arrangement.
E-5
AMENDED AND RESTATED
AGENCY AGREEMENT
RELATING TO
NATIONSBANK CORPORATION,
U.S. $4,500,000,000
Euro Medium-Term Note Program
AMONG
NATIONSBANK CORPORATION
as Issuer
and
THE CHASE MANHATTAN BANK, N.A., London Branch
as Issuing and Principal Paying Agent
and
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
Dated as of July 5, 1996
<PAGE>
INDEX
Clause Page
1. Definitions and Interpretation.................................... 1
2. Appointments of Agent, Paying Agents
and Calculation Agents......................................... 3
3. Issue of Temporary Global Notes................................... 4
4. Determination of Exchange Date, Issue of Permanent
Global Notes or Definitive Notes and
Determination of Restricted Period............................. 5
5. Issue of Definitive Notes......................................... 6
6. Terms of Issue.................................................... 6
7. Payments.......................................................... 7
8. Determinations and Notifications in Respect of
Notes and Interest Determination............................... 9
9. Notice of any Withholding or Deduction............................ 11
10. Duties of the Agent in Connection with Early
Redemption..................................................... 12
11. Receipt and Publication of Notices; Receipt of
Certificates................................................... 13
12. Cancellation of Notes, Receipts, Coupons and Talons............... 13
13. Issue of Replacement Notes, Receipts, Coupons and
Talons......................................................... 14
14. Copies of Documents Available for Inspection...................... 15
15. Meetings of Noteholders........................................... 15
16. Repayment by the Agent............................................ 16
17. Conditions of Appointment......................................... 16
18. Communication Between the Parties................................. 17
19. Change in Agent and Paying Agents................................. 17
20. Merger and Consolidation.......................................... 19
21. Notification of Changes to Paying Agents.......................... 19
22. Change of Specified Office........................................ 19
23. Notices........................................................... 19
24. Taxes and Stamp Duties............................................ 20
25. Commissions, Fees and Expenses.................................... 20
26. Indemnity......................................................... 21
27. Reporting......................................................... 21
28. Governing Law..................................................... 22
29. Amendments........................................................ 22
30. Descriptive Headings.............................................. 23
31. Counterparts...................................................... 23
Schedule 1 - Form of Temporary Global Note
- ----------
Schedule 2 - Form of Permanent Global Note
- ----------
Schedule 3 - Form of Definitive Note, Coupon, Receipt and Talon
- ----------
Schedule 4 - Terms and Conditions
- ----------
Schedule 5 - Form of Certificate to be Presented by Euroclear or
Cedel Bank
- ----------
Schedule 6 - Form of Certificate of Beneficial Owner
- ----------
Schedule 7 - Provision for Meetings of Noteholders
- ----------
Schedule 8 - Form of Put Notice
- ----------
Schedule 9 - Form of Calculation Agency Agreement
- ----------
<PAGE>
THIS AMENDED AND RESTATED AGREEMENT dated as of July 5, 1996 among:
(i) NationsBank Corporation (the "Corporation");
(ii) The Chase Manhattan Bank, N.A., London Branch (the
"Agent" and the "Issuing and
Principal Paying Agent"); and
(iii) Chase Manhattan Bank Luxembourg S.A. (the "Paying
Agent").
WHEREAS, the Corporation, the Agent and the Paying Agent wish
to record the arrangements originally agreed among them pursuant to that certain
Agency Agreement dated November 8, 1995 (the "Original Agency Agreement").
WHEREAS, the Corporation proposes to issue up to U.S.
$4,500,000,000 (or its equivalent in other currencies) in aggregate principal
amount of Euro Medium-Term Notes (the "Notes") outstanding at any one time as
provided in an amended and restated Program Agreement of even date among the
Corporation, the Arrangers and the Dealers named therein (the "Program
Agreement") and as described in an Offering Circular of even date (the "Offering
Circular");
WHEREAS, Notes will be issued in the denominations specified
in the relevant Pricing Supplement issued in connection with each Series and
each Tranche of Notes;
WHEREAS, beneficial interests in each Tranche of Notes will
initially be represented by a Temporary Global Note, exchangeable, as provided
in such Temporary Global Note, for beneficial interests in a Permanent Global
Note and, only under limited circumstances, beneficial interests in a Global
Note may be exchangeable for Definitive Notes, in each case in accordance with
the terms of the Global Notes; and
NOW, THEREFORE, it is agreed as follows:
1. Definitions and Interpretation
(1) Terms and expressions defined in the Program Agreement or
the Notes or used in the applicable Pricing Supplement shall have the same
meanings in this Agreement, except where the context requires otherwise.
(2) Without prejudice to the foregoing in this Agreement:
"outstanding" means, in relation to the Notes, all the Notes
issued other than (a) those which have been redeemed in accordance with the
Terms and Conditions, (b) those in respect of which the date for redemption in
accordance with the Terms and Conditions has occurred and the redemption moneys
(including all interest accrued on such Notes to the date for such redemption
and any interest or other amounts payable under the Terms and Conditions after
such date) have been duly paid to the Agent as provided in this Agreement and
remain available for payment against presentation and surrender of Notes and/or
Receipts and/or Coupons, as the case may be, (c) those which have become void
under Condition 8, (d) those which have been purchased and canceled as provided
in Condition 6 (or as provided in the Global Notes), (e) those mutilated or
defaced Notes which have been surrendered in exchange for replacement Notes
pursuant to Condition 10, (f) (for the purposes only of determining how many
Notes are outstanding and without prejudice to their status for any other
purpose) those Notes alleged to have been lost, stolen or destroyed and in
respect of which replacement Notes have been issued pursuant to Condition 10,
(g) any Temporary Global Note to the extent that it shall have been exchanged
for a Permanent Global Note, in each case pursuant to their respective
provisions; provided that for the purposes of (i) ascertaining the right to
attend and vote at any meeting of the Noteholders and (ii) the determination of
how many Notes are outstanding for the purposes of Schedule 7, those Notes which
are beneficially held by, or are held on behalf of, the Corporation or any of
its affiliates shall (unless and until ceasing to be so held) be deemed not to
remain outstanding;
<PAGE>
"Paying Agents" means the Issuing and Principal Paying Agent
and the Paying Agent referred to above and such other Paying Agent or Agents as
may be appointed from time to time hereunder; and
(3) The term "Notes" as used in this Agreement shall include
the Permanent Global Note, the Definitive Notes and the Coupons and, as the case
may be, the Temporary Global Note. The term "Global Note" as used in this
Agreement shall include both the Temporary Global Note and the Permanent Global
Note, each of which is a "Global Note." The term "Noteholders" as used in this
Agreement shall mean the several persons who are for the time being the holders
of the Notes, which expression shall, while the Notes are represented by a
Global Note, mean (other than with respect to the payment of principal and
interest on the Notes, the right to which shall be vested as against the
Corporation solely in the bearer of such Global Note in accordance with and
subject to its terms) the persons for the time being shown in the records of
Euroclear (as defined below) or Cedel Bank (as defined below)(other than Cedel
Bank, if Cedel Bank shall be an accountholder of Euroclear, and Euroclear, if
Euroclear shall be an accountholder of Cedel Bank) as the Noteholders of
particular principal amounts of Notes (in which regard any certificate or other
document issued by Euroclear or Cedel Bank as to the principal amount of Notes
standing to the credit of the account of any person shall be conclusive and
binding for all purposes).
(4) For purposes of this Agreement, the Notes of each Series
shall form a separate series of Notes and the provisions of this Agreement shall
apply mutatis mutandis separately and independently to the Notes of each Series
and in such provisions the expressions "Notes", "Noteholders", "Receipts,
"Receiptholders", "Coupons", "Couponholders", "Talons" and "Talonholders" shall
be construed accordingly.
(5) All references in this Agreement to principal and/or
interest or both in respect of the Notes or to any moneys payable by the
Corporation under this Agreement shall have the meaning set out in Condition 5.
(6) All references in this Agreement to the "relevant
currency" shall be construed as references to the currency (which term shall,
for these purposes, be deemed to include ECU) in which the relevant Notes and/or
Coupons are denominated (or payable in the case of Dual Currency Notes) or, in
the case of Notes denominated in ECU, the chosen currency (as defined in
Condition 5(c)) in which payments in respect of such Notes are to be made, as
the case may be.
(7) In this Agreement, Clause headings are inserted for
convenience and ease of reference only and shall not affect the interpretation
of this Agreement. All references in this Agreement to the provisions of any
statute shall be deemed to be references to that statute as from time to time
modified, extended, amended or re-enacted or to any statutory instrument, order
or regulation made thereunder or under such re-enactment.
(8) All references in this Agreement to an agreement,
instrument or other document (including, without limitation, this Agreement, the
Program Agreement, the Notes and any Terms and Conditions appertaining thereto)
shall be construed as a reference to that agreement, instrument or document as
the same may be amended, modified, varied or supplemented from time to time.
(9) Any references herein to Euroclear and/or Cedel Bank
shall, whenever the context so permits, be deemed to include a reference to any
additional or alternative clearance system approved by the Corporation and the
Agent.
2. Appointments of Agent, Paying Agents and Calculation
Agents
(1) The Corporation hereby appoints The Chase Manhattan Bank,
N.A., London Branch, as Agent and The Chase Manhattan Bank, N.A., London Branch,
hereby accepts such appointment as Agent of the Corporation, upon the terms and
subject to the conditions set out below, for the purposes of, INTER ALIA:
(a) completing, authenticating and delivering Globa
Notes and (if required) authenticating and delivering
Definitive Notes;
-2-
<PAGE>
(b) exchanging Temporary Global Notes for Permanent
Global Notes or Definitive Notes, as the case may be, in
accordance with the terms of such Temporary Global Notes;
(c) under limited circumstances, exchanging
Permanent Global Notes for Definitive Notes in accordance
with the terms of such Permanent Global Notes;
(d) paying sums due on Global Notes and Definitive
Notes, Receipts and Coupons;
(e) determining the end of the Restricted Period
applicable to each Tranche;
(f) unless otherwise specified in the applicable
Pricing Supplement, determining the interest and/or other
amounts payable in respect of the Notes in accordance with the
Terms and Conditions;
(g) arranging on behalf of the Corporation for
notices to be communicated to the Noteholders;
(h) preparing and sending monthly reports to the
Ministry of Finance of Japan (the "MoF"), the German Central
Bank and the Bank of England and, subject to confirmation from
the Corporation for the need for such further reporting,
ensuring that all necessary action is taken to comply with any
reporting requirements of any competent authority of any
relevant currency as may be in force from time to time with
respect to the Notes to be issued under the Program;
(i) subject to the Procedures Memorandum, submitting
to the Stock Exchange such number of copies of each Pricing
Supplement which relates to Notes which are to be listed as it
may reasonably require;
(j) receiving notice from Euroclear and/or Cedel
Bank relating to the certificates of non-US. beneficial
ownership of the Notes; and
(k) performing all other obligations and duties
imposed upon it by the Terms and Conditions and this
Agreement.
(2) The Corporation may, in its discretion, appoint one or
more agents outside the United States and its possessions (each a "Paying
Agent") for the payment (subject to applicable laws and regulations) of the
principal of and any interest and Additional Amounts, if any, (as defined in
Section 5 of the Terms and Conditions) on the Notes. The Corporation hereby
appoints Chase Manhattan Bank Luxembourg S.A., at its office in Luxembourg at 5
rue Plaetis, L-2338 Luxembourg-Grund, as its Paying Agent in Luxembourg. Each
Paying Agent shall have the powers and authority granted to and conferred upon
it herein and in the Notes, and such further powers and authority, acceptable to
it, to act on behalf of the Corporation as the Corporation may hereafter grant
to or confer upon it in writing. As used herein, "paying agencies" shall mean
paying agencies maintained by a Paying Agent on behalf of the Corporation as
provided elsewhere herein.
(3) The Corporation will appoint an agent to make certain
calculations with respect to the Notes (the "Calculation Agent") pursuant to the
Terms and Conditions.
3. Issue of Temporary Global Notes
(1) Subject to sub-clause (2), following receipt of a
notification from the Corporation in respect of an issue of Notes (such
notification being by receipt of a confirmation (a "Confirmation"),
substantially in the applicable form set out in the Procedures Memorandum) the
Agent will take the steps required of the Agent in the Procedures Memorandum.
For this purpose the Agent is hereby authorized on behalf of the Corporation:
-3-
<PAGE>
(a) to prepare a Temporary Global Note in accordance
with such Confirmation by attaching a copy of the applicable
Pricing Supplement to a copy of the relevant master Temporary
Global Note;
(b) to authenticate (or cause to be authenticated)
such Temporary Global Note;
(c) to deliver such Temporary Global Note to the
specified common depositary of Euroclear and/or Cedel Bank in
accordance with the Confirmation against receipt from the
common depositary of confirmation that such common depositary
is holding the Temporary Global Note in safe custody for the
account of Euroclear and/or Cedel Bank and to instruct
Euroclear or Cedel Bank or both of them (as the case may be)
unless otherwise agreed in writing between the Agent and the
Corporation (i) in the case of an issue of Notes on a
non-syndicated basis, to credit the Notes represented by such
Temporary Global Note to the Agent's distribution account, and
(ii) in the case of Notes issued on a syndicated basis, to
hold the Notes represented by such Temporary Global Note to
the Corporation's order; and
(d) to ensure that the Notes of each Tranche are
assigned a Common Code and ISIN by Euroclear and Cedel Bank
which are different from the Common Code and ISIN assigned to
Notes of any other Tranche of the same Series until 40 days
after the completion of the distribution of the Notes of such
Tranche as notified by the Agent to the relevant Dealer.
(2) The Agent shall only be required to perform its
obligations under sub-clause (1) if it holds:
(a) master Temporary Global Notes, duly executed by a
person or persons authorized to execute the same on behalf of
the Corporation, which may be used by the Agent for the
purpose of preparing Temporary Global Notes in accordance with
paragraph (a) of that sub-clause; and
(b) master Permanent Global Notes, duly executed by a
person or persons authorized to execute the same on behalf of
the Corporation, which may be used by the Agent for the
purpose of preparing Permanent Global Notes in accordance with
Clause 4 below.
(3) The Agent will provide Euroclear and/or Cedel Bank with
the notifications, instructions or other information to be given by the Agent to
Euroclear and/or Cedel Bank in accordance with the standard procedures of
Euroclear and/or Cedel Bank.
4. Determination of Exchange Date, Issue of Permanent Global
Notes or Definitive Notes and Determination of Restricted
Period
(1) (a) The Agent shall determine the Exchange Date for each
Temporary Global Note in accordance with the terms thereof.
Forthwith upon determining the Exchange Date in respect of any
Tranche the Agent shall notify such determination to the
Corporation, the relevant Dealer, Euroclear and Cedel Bank.
(b) The Agent shall deliver, upon notice from
Euroclear or Cedel Bank, a Permanent Global Note or Definitive
Notes, as the case may be, in accordance with the terms of the
Temporary Global Note. Upon any such exchange of a portion of
a Temporary Global Note for an interest in a Permanent Global
Note the Agent is hereby authorized on behalf of the
Corporation:
(i) in the case of the first Tranche of any
Series of Notes, to prepare and complete a Permanent
Global Note in accordance with the terms of the
Temporary Global Note applicable to such Tranche by
attaching a copy of the applicable Pricing Supplement
to a copy of the relevant master Permanent Global
Note;
-4-
<PAGE>
(ii) in the case of the first Tranche of
any Series of Notes, to authenticate such Permanent
Global Note;
(iii) in the case of the first Tranche of
any Series of Notes, to deliver such Permanent Global
Note to the common depositary which is holding the
Temporary Global Note applicable to such Tranche for
the time being on behalf of Euroclear and/or Cedel
Bank either in exchange for such Temporary Global
Note or, in the case of a partial exchange, on
entering details of such partial exchange of the
Temporary Global Note in the relevant spaces in
Schedule 2 of both the Temporary Global Note and the
Permanent Global Note, and in either case against
receipt from the common depositary of confirmation
that such common depositary is holding the Permanent
Global Note in safe custody for the account of
Euroclear and/or Cedel Bank; and
(iv) in any other case, to attach a copy of
the applicable Pricing Supplement to the Permanent
Global Note applicable to the relevant Series and
enter details of any exchange in whole or part as
aforesaid.
(2) (a) In the case of a Tranche in respect of which there is
only one Dealer, the Agent will determine the end of the
Restricted Period in respect of such Tranche as being the
fortieth day following the date certified by the relevant
Dealer to the Agent as being the date as of which distribution
of the Notes of that Tranche was completed.
(b) In the case of a Tranche in respect of which
there is more than one Dealer but is not issued on a
syndicated basis, the Agent will determine the end of the
Restricted Period in respect of such Tranche as being the
fortieth day following the latest of the dates certified by
all the relevant Dealers to the Agent as being the respective
dates as of which distribution of the Notes of that Tranche
purchased by each such dealer was completed.
(c) In the case of a Tranche issued on a syndicated
basis, the Agent will determine the end of the Restricted
Period in respect of such Tranche as being the fortieth day
following the date certified by the Lead Manager to the Agent
as being the date as of which distribution of the Notes of
that Tranche was completed.
(d) Forthwith upon determining the end of the
Restricted Period in respect of any Tranche, the Agent shall
notify such determination to the Corporation and the relevant
Dealer or the Lead Manager in the case of a syndicated issue.
5. Issue of Definitive Notes
(1) Interests in a Global Note will be exchangeable for
Definitive Notes with Coupons attached only if: (i) an Event of Default (as
defined in the Terms and Conditions) occurs and is continuing, or (ii) the
Corporation is notified that either Euroclear or Cedel Bank has been closed for
business for a continuous period of 14 days (other than by reason of holiday,
statutory or otherwise) after the original issuance of the Notes or has
announced an intention permanently to cease business or has in fact done so and
no alternative clearance system approved by the Noteholders is available, or
(iii) the Corporation, after notice to the Agent, determines to issue Notes in
definitive form. Upon the occurrence of these events, the Agent shall deliver
the relevant Definitive Note(s) in accordance with the terms of the relevant
Global Note.
For this purpose the Agent is hereby authorized on behalf of
the Corporation:
(a) to authenticate such Definitive Note(s) in
accordance with the provisions of this Agreement; and
(b) to deliver such Definitive Note(s) to or to the
order of Euroclear and/or Cedel Bank in exchange for such
Global Note.
-5-
<PAGE>
The Agent shall notify the Corporation forthwith upon receipt of a request for
issue of (a) Definitive Note(s) in accordance with the provisions of a Global
Note and this Agreement (and the aggregate principal amount of such Temporary
Global Note or Permanent Global Note, as the case may be, to be exchanged in
connection therewith).
(2) The Corporation undertakes to deliver to the Agent
sufficient numbers of executed Definitive Notes with, if applicable, Receipts,
Coupons and Talons attached to enable the Agent to comply with its obligations
under this Clause 5.
6. Terms of Issue
(1) The Agent shall cause all Temporary Global Notes,
Permanent Global Notes and Definitive Notes delivered to and held by it under
this Agreement to be maintained in safe custody and shall ensure that such Notes
are issued only in accordance with the provisions of this Agreement and the
relevant Global Note and Terms and Conditions.
(2) Subject to the procedures set out in the Procedures
Memorandum, for the purposes of Clause 3(1) the Agent is entitled to treat a
telephone, telex or facsimile communication from a person purporting to be (and
who the Agent believes in good faith to be) the authorized representative of the
Corporation named in the lists referred to in, or notified pursuant to, Clause
17(7) as sufficient instructions and authority of the Corporation for the Agent
to act in accordance with Clause 3(l).
(3) In the event that a person who has signed on behalf of the
Corporation any Note not yet issued but held by the Agent in accordance with
Clause 3(1) ceases to be authorized as described in Clause 17(7), the Agent
shall (unless the Corporation gives notice to the Agent that Notes signed by
that person do not constitute valid and binding obligations of the Corporation
or otherwise until replacements have been provided to the Agent) continue to
have authority to issue any such Notes, and the Corporation hereby warrants to
the Agent that such Notes shall, unless notified as aforesaid, be valid and
binding obligations of the Corporation. Promptly upon such person ceasing to be
authorized, the Corporation shall provide the Agent with replacement Notes and
upon receipt of such replacement Notes the Agent shall cancel and destroy the
Notes held by it which are signed by such person and shall provide to the
Corporation a confirmation of destruction in respect thereof specifying the
Notes so canceled and destroyed.
(4) If the Agent pays an amount (the "Advance") to the
Corporation on the basis that a payment (the "Payment") has been, or will be,
received from a Dealer and if the Payment is not received by the Agent on the
date the Agent pays the Corporation, the Agent shall notify the Corporation by
tested telex or facsimile that the Payment has not been received and the
Corporation shall repay to the Agent the Advance and shall pay interest on the
Advance (or the unreimbursed portion thereof) from (and including) the date such
Advance is made to (but excluding) the earlier of repayment of the Advance and
receipt by the Agent of the Payment (at a rate quoted at that time by the Agent
as its cost of funding the Advance).
(5) Except in the case of issues where the Agent does not act
as receiving bank for the Corporation in respect of the purchase price of the
Notes being issued, if on the relevant Issue Date a Dealer does not pay the full
purchase price due from it in respect of any Note (the "Defaulted Note") and, as
a result, the Defaulted Note remains in the Agent's distribution account with
Euroclear and/or Cedel Bank) after such Issue Date, the Agent will continue to
hold the Defaulted Note to the order of the Corporation. The Agent shall notify
the Corporation forthwith of the failure of the Dealer to pay the full purchase
price due from it in respect of any Defaulted Note and, subsequently, shall
notify the Corporation forthwith upon receipt from the Dealer of the full
purchase price in respect of such Defaulted Note.
-6-
<PAGE>
7. Payments
(1) The Agent shall advise the Corporation, no later than ten
Business Days (as defined below) immediately preceding the date on which any
payment is to be made to the Agent pursuant to this sub-clause (1) of the
payment amount, value date and payment instructions and the Corporation will
before 10:00 a.m. New York time on each date on which any payment in respect of
any Notes issued by it becomes due, transfer to an account specified by the
Agent such amount in the relevant currency as shall be sufficient for the
purposes of such payment in funds settled through such payment system as the
Agent and the Corporation may agree.
(2) The Corporation will ensure that no later than 4:00 p.m.
(London time) on the second Business Day (as defined below) immediately
preceding the date on which any payment is to be made to the Agent pursuant to
sub-clause (1), the Agent shall receive from the paying bank of the Corporation
an irrevocable confirmation in the form of a SWIFT message or tested telex that
such payment shall be made. For the purposes of this Clause 7 "Business Day"
means a day which is both:
(a) a day (other than a Saturday or a Sunday) on
which commercial banks and foreign exchange markets settle
payments in London and in Charlotte, North Carolina; and
(b) either (1) in relation to a payment to be made in
a Specified Currency other than ECU, a day on which commercial
banks and foreign exchange markets settle payments in the
principal financial center of the country of the relevant
Specified Currency (if other than London) or (2) in relation
to a payment to be made in ECU, an ECU Settlement Day.
(3) The Agent shall ensure that payments of both principal and
interest in respect of any Temporary Global Note will be made only to the extent
that certification of non-U.S. beneficial ownership as required by U.S.
securities laws and U.S. Treasury regulations (in the form set out in the
Temporary Global Note) has been received from Euroclear and/or Cedel Bank in
accordance with the terms thereof.
(4) Subject to the receipt by the Agent of the payment
confirmation as provided in sub-clause (2) above, the Agent or the relevant
Paying Agent shall pay or cause to be paid all amounts due in respect of the
Notes on behalf of the Corporation in the manner provided in the Terms and
Conditions. If any payment provided for in sub-clause (l) is made late but
otherwise in accordance with the provisions of this Agreement, the Agent and
each Paying Agent shall nevertheless make payments in respect of the Notes as
aforesaid following receipt by it of such payment.
(5) If for any reason the Agent considers in its sole
discretion that the amounts to be received by the Agent pursuant to sub-clause
(1) will be, or the amounts actually received by it pursuant thereto are,
insufficient to satisfy all claims in respect of all payments then falling due
in respect of the Notes, neither the Agent nor any Paying Agent shall be obliged
to pay any such claims until the Agent has received the full amount of all such
payments. Should the Agent or any Paying Agent elect not to make payment of
amounts falling due in respect of the Notes as aforesaid, it shall advise the
Corporation of any such decision as soon as practicable by telephone with
confirmation by telefax.
(6) Without prejudice to sub-clauses (4) and (5), if the Agent
pays any amounts to the holders of Notes, Receipts or Coupons or to any Paying
Agent at a time when it has not received payment in full in respect of the
relevant Notes in accordance with sub-clause (1) (the excess of the amounts so
paid over the amounts so received being the "Shortfall"), the Corporation will,
in addition to paying amounts due under sub-clause (l), pay to the Agent on
demand interest (at a rate which represents the Agent's cost of funding the
Shortfall) on the Shortfall (or the unreimbursed portion thereof) until the
receipt in full by the Agent of the Shortfall.
(7) The Agent shall on demand promptly reimburse each Paying
Agent for payments in respect of Notes properly made by such Paying Agent in
accordance with this Agreement and the Terms and Conditions unless the Agent has
notified the Paying Agent, prior to the opening of business in the location of
the office of the Paying Agent through which payment in respect of the Notes can
be made prior to the day on which such Agent has to give payment instructions in
respect of the due date of a payment in respect of the Notes, that the
-7-
<PAGE>
Agent does not expect to receive sufficient funds to make payment of all amounts
falling due in respect of such Notes.
(8) If the Agent pays out on or after the due date therefor,
or becomes liable to pay out, funds on the assumption that the corresponding
payment by the Corporation has been or will be made and such payment has in fact
not been so made by the Corporation, then the Corporation shall on demand
reimburse the Agent for the relevant amount, and pay interest to the Agent on
such amount from the date on which it is paid out to the date of reimbursement
at a rate per annum equal to the cost to the Agent of funding the amount paid
out, as certified by the Agent and expressed as a rate per annum. For the
avoidance of doubt, the provisions of the Terms and Conditions as to
subordination shall not apply to the Corporation's obligations under this
sub-clause 8.
(9) While any Notes are represented by a Global Note or Global
Notes, all payments due in respect of such Notes shall be made to, or to the
order of, the holder of the Global Note or Global Notes, subject to and in
accordance with the provisions of the Global Note or Global Notes. On the
occasion of any such payment the Paying Agent to which any Global Note was
presented for the purpose of making such payment shall cause the appropriate
Schedule to the relevant Global Note to be annotated so as to evidence the
amounts and dates of such payments of principal and/or interest as applicable.
(10) If a payment in respect of a Note denominated in ECU
is to be made in a chosen currency:
(i) the Agent shall choose a component currency of
the ECU as the chosen currency as provided in Condition 5(c)
and shall forthwith notify the Corporation, the other Paying
Agents and the Stock Exchange;
(ii) the Agent shall promptly perform the duties
required of it under Condition 5(c); and
(iii) the Agent shall notify the Corporation and the
other Paying Agents of the amount payable per Note and Coupon
in the chosen currency.
(11) If the amount of principal and/or interest then due for
payment is not paid in full (otherwise than by reason of a deduction required by
law to be made therefrom), the Paying Agent to which a Note is presented for the
purpose of making such payment shall make a record of such shortfall on the Note
and such record shall, in the absence of manifest error, be prima facie evidence
that the payment in question has not to that extent been made.
8. Determinations and Notifications in Respect of Notes
and Interest Determination
(a) Determinations and Notifications
(1) The Agent shall make all such determinations and
calculations (howsoever described) as it is required to do under the Terms and
Conditions, all subject to and in accordance with the Terms and Conditions,
provided that certain calculations with respect to the Notes, and associated
publication or notification, shall be made by the Calculation Agent in
accordance with the Terms and Conditions.
(2) The Agent or the Calculation Agent, as the case may be,
shall not be responsible to the Corporation or to any third party (except in the
event of negligence, default or bad faith of the Agent or the Calculation Agent)
as a result of the Agent or the Calculation Agent having acted in good faith on
any quotation given by any Reference Bank which subsequently may be found to be
incorrect.
(3) The Agent or the Calculation Agent, as the case may be,
shall promptly notify (and confirm in writing to) the Corporation, the other
Paying Agents and (in respect of a Series of Notes listed on a Stock Exchange)
the relevant Stock Exchange of, INTER ALIA, each Rate of Interest, Interest
Amount and Interest Payment Date and all other amounts, rates and dates which it
is obliged to determine or calculate under the Terms
-8-
<PAGE>
and Conditions as soon as practicable after the determination thereof (and in
any event no later than the tenth Business Day as defined in Clause 7(2)
immediately preceding the date on which payment is to be made to the Agent
pursuant to Clause 7(l)) and of any subsequent amendment thereto pursuant to the
Terms and Conditions.
(4) The Agent or the Calculation Agent, as the case may be,
shall use its best efforts to cause each Rate of Interest, Interest Amount and
Interest Payment Date and all other amounts, rates and dates which it is obliged
to determine or calculate under the Terms and Conditions to be published as
required in accordance with the Terms and Conditions as soon as possible after
their determination or calculation.
(5) If the Agent or the Calculation Agent, as the case may be,
does not at any material time for any reason determine and/or calculate and/or
publish the Rate of Interest, Interest Amount and/or Interest Payment Date in
respect of any Interest Period or any other amount, rate or date as provided in
this Clause 8, it shall forthwith notify the Corporation and the Paying Agents
of such fact.
(6) Determinations with regard to Notes (including, without
limitation, Indexed Notes and Dual Currency Notes) shall be made by the
Calculation Agent specified in the applicable Pricing Supplement in the manner
specified in the applicable Pricing Supplement. Unless otherwise agreed between
the Corporation and the relevant Dealer, such determinations shall be made on
the basis of a Calculation Agency Agreement substantially in the form of
Schedule 9 to this Agreement.
(7) For the purposes of monitoring the aggregate principal
amount of Notes issued under the Program, the Agent shall determine the U.S.
dollar equivalent of the principal amount of each issue of Notes denominated in
another currency, each issue of Dual Currency Notes and each issue of Indexed
Notes as follows:
(a) the U.S. dollar equivalent of Notes denominated
in a currency other than U.S. Dollars shall be determined by
the Agent as of the date of the agreement to issue such Notes
or on the preceding day on which commercial banks and foreign
exchange markets are open for business in London, in each case
on the basis of the spot rate for the sale of the U.S. dollar
against the purchase of such other currency in the London
foreign exchange market quoted by any leading bank selected by
the Agent;
(b) the U.S. dollar equivalent of Dual Currency
Notes, Indexed Notes and Partly Paid Notes shall be determined
in the manner specified above by reference to the original
principal amount of such Notes; and
(c) the U.S. dollar equivalent of Zero Coupon Notes
and other Notes issued at a discount shall be deemed to be the
net proceeds received by the Company for the relevant issue.
(b) Interest Determination, Screen Rate Determination
including Fallback Provisions
(1) Where screen rate determination ("Screen Rate
Determination") is specified in the applicable Pricing Supplement as the manner
in which the Rate of Interest is to be determined, the Rate of Interest for each
Interest Period will, subject as provided below, be either:
(A) the offered quotation (if there is only one
quotation on the relevant screen page (the "Relevant
Screen Page")); or
(B) the arithmetic mean (rounded if necessary to the
fifth decimal place, with 0.000005 being rounded upwards) of
the offered quotations,
(expressed as a percentage rate per annum), for the reference rate ("Reference
Rate") which appears or appear, as the case may be, on the Relevant Screen Page
at approximately 11:00 a.m. (London time) on the interest determination date
("Interest Determination Date") in question plus or minus (as indicated in the
applicable Pricing Supplement) the Margin (if any), all as determined by the
Calculation Agent. If five or more such offered quotations are available on the
Relevant Screen Page, the highest (or, if there is more than one such highest
-9-
<PAGE>
quotation, one only of such quotations) and the lowest (or, if there is more
than one such lowest quotation, one only of such quotations) shall be
disregarded by the Calculation Agent for the purpose of determining the
arithmetic mean (rounded as provided above) of such offered quotations.
(2) If the Relevant Screen Page is not available or if, in the
case of sub-clause(b)(1)(A) above, no such offered quotation appears or, in the
case of sub-clause (b)(1)(B) above, fewer than three such offered quotations
appear, in each case as at the time specified in the preceding paragraph, the
Calculation Agent shall at its sole discretion request the principal London
office of each of the Reference Banks (defined below) to provide the Calculation
Agent with its offered quotation (expressed as a percentage rate per annum) for
deposits in the Specified Currency for the relevant Interest Period to leading
banks in the London inter-bank market at approximately 11:00 a.m. (London time)
on the Interest Determination Date in question. If two or more of the Reference
Banks provide the Calculation Agent with such offered quotations, the Rate of
Interest for such Interest Period shall be the arithmetic mean (rounded if
necessary to the fifth decimal place with 0.000005 being rounded upwards) of
such offered quotations plus or minus (as appropriate) the Margin (if any), all
as determined by the Calculation Agent.
(3) If on any Interest Determination Date one only or none of
the Reference Banks provides the Calculation Agent with such offered quotations
as provided in the preceding paragraph, the Rate of Interest for the relevant
Interest Period shall be the rate per annum which the Calculation Agent
determines as being the arithmetic mean (rounded if necessary to the fifth
decimal place, with 0.000005 being rounded upwards) of the rates, as
communicated to (and at the request of) the Calculation Agent by the Reference
Banks or any two or more of them, at which such banks offered, at approximately
11:00 a.m. (London time) on the relevant Interest Determination Date, deposits
in the Specified Currency for the relevant Interest Period by leading banks in
the London inter-bank market plus or minus (as appropriate) the Margin (if any).
If fewer than two of the Reference Banks provide the Calculation Agent with such
offered quotations, the Rate of Interest shall be the offered quotation for
deposits in the Specified Currency for the relevant Interest Period, or the
arithmetic mean (rounded as provided above) of the offered quotations for
deposits in the Specified Currency for the relevant Interest Period, at which,
at approximately 11:00 a.m. (London time) on the relevant Interest Determination
Date, any one or more banks informs the Calculation Agent it is quoting to
leading banks in the London inter-bank market plus or minus (as appropriate) the
Margin (if any), provided that, if the Rate of Interest cannot be determined in
accordance with the foregoing provisions of this paragraph, the Rate of Interest
shall be determined as at the last preceding Interest Determination Date (though
substituting, where a different Margin is to be applied to the relevant Interest
Period from that which applied to the last preceding Interest Period, the Margin
relating to the relevant Interest Period, in place of the Margin relating to
that last preceding Interest Period).
(4) If the Reference Rate from time to time in respect of
Floating Rate Notes is specified in the applicable Pricing Supplement as being
other than the London inter-bank offered rate, the Rate of Interest in respect
of such Notes will be determined as provided in the applicable Pricing
Supplement.
In this Clause 8, the expression "Reference Banks" means, in
the case of sub-clause (b)(1)(A) above, those banks whose offered rates were
used to determine such quotation when such quotation last appeared on the
Relevant Screen Page and in the case of sub-clause (b)(1)(B) above, those banks
whose offered quotations last appeared on the Relevant Screen Page when no fewer
than three such offered quotations appeared.
9. Notice of any Withholding or Deduction
If the Corporation is, in respect of any payment, compelled to
withhold or deduct any amount for or on account of taxes, duties, assessments or
governmental charges as specifically contemplated under the Terms and
Conditions, the Corporation shall give notice thereof to the Agent as soon as it
becomes aware of the requirement to make such withholding or deduction and shall
give to the Agent such information as it shall require to enable it to comply
with such requirement.
-10-
<PAGE>
10. Duties of the Agent in Connection with Early Redemption
(1) If the Corporation decides to redeem any outstanding Notes
(in whole or in part) for the time being outstanding prior to their Maturity
Date or the Interest Payment Date falling in the Redemption Month (as the case
may be) in accordance with the Terms and Conditions, the Corporation shall give
notice of such decision to the Agent not less than seven London Business Days
before the date on which the Corporation will give notice to the Noteholders in
accordance with the Terms and Conditions of such redemption in order to enable
the Agent to undertake its obligations herein and in the Terms and Conditions.
(2) If only some of the Notes of like tenor and of the same
Series are to be redeemed on such date, the Agent shall make the required
drawing in accordance with the Terms and Conditions but shall give the
Corporation reasonable notice of the time and place proposed for such drawing.
Where partial redemptions are to be effected when there are Definitive Notes
outstanding, the Issuing and Principal Paying Agent will select by lot the Notes
to be redeemed from the outstanding Notes in compliance with all applicable laws
and stock exchange requirements and deemed by the Agent to be appropriate and
fair; and where partial redemptions are to be effected when there are no
Definitive Notes outstanding, the rights of Noteholders will be governed by the
standard provisions of Euroclear and Cedel Bank. Notice of any partial
redemption and, when there are Definitive Notes outstanding, of the serial
numbers of the Notes so drawn, will be given by the Agent to the Noteholders in
accordance with the terms of the Notes and this Agreement.
(3) The Agent shall publish the notice on behalf of and at the
expense of the Corporation required in connection with any such redemption and
shall at the same time also publish a separate list of the serial numbers of any
Notes previously drawn and not presented for redemption. Such notice shall
specify the date fixed for redemption, the redemption amount, the manner in
which redemption will be effected and, in the case of a partial redemption, the
serial numbers of the Notes to be redeemed. Such notice will be published in
accordance with the Terms and Conditions. The Agent will also notify the other
Paying Agents of any date fixed for redemption of any Notes.
(4) Immediately prior to the date on which any notice of
redemption is to be given to the Noteholders, the Corporation shall deliver to
the Agent a certificate stating that the Corporation is entitled to effect such
redemption and setting forth in reasonable detail a statement of facts showing
that all conditions precedent to such redemption have occurred or been satisfied
and shall comply with all notice requirements provided for in the Terms and
Conditions.
(5) Each Paying Agent will keep a stock of notices (each a
"Put Notice") in the form set out in Schedule 8 and will make such notices
available on demand to holders of Notes, the Terms and Conditions of which
provide for redemption at the option of Noteholders. Upon receipt of any Note
deposited in the exercise of such option in accordance with the Terms and
Conditions, the Paying Agent with which such Note is deposited shall hold such
Note (together with any Coupons, if any, relating to it and deposited with it)
on behalf of the depositing Noteholder (but shall not, save as provided below,
release it) until the due date for redemption of the relevant Note consequent
upon the exercise of such option, when, subject as provided below, it shall
present such Note (and any such Coupons, if any) to itself for payment of the
amount due thereon together with any interest due on such date in accordance
with the Terms and Conditions and shall pay such moneys in accordance with the
directions of the Noteholder contained in the Put Notice. If, prior to such due
date for its redemption, such Note becomes immediately due and payable or if
upon due presentation payment of such redemption moneys is improperly withheld
or refused, the Paying Agent concerned shall post such Note (together with any
such Coupons, if any) by uninsured post to, and at the risk of, the relevant
Noteholder unless the Noteholder has otherwise requested and paid the costs of
such insurance to the relevant Paying Agent at the time of depositing the Notes
at such address as may have been given by the Noteholder in the Put Notice. At
the end of each period for the exercise of such option, each Paying Agent shall
promptly notify the Agent of the principal amount of the Notes in respect of
which such option has been exercised with it together with their serial numbers
and the Agent shall promptly notify such details to the Corporation.
11. Receipt and Publication of Notices; Receipt of
Certificates
-11-
<PAGE>
(1) Upon the receipt by the Agent of a demand or notice from
any Noteholder in accordance with the Terms and Conditions the Agent shall
forward a copy thereof to the Corporation.
(2) On behalf of and at the request and expense of the
Corporation, the Agent shall cause to be published all notices required to be
given by the Corporation to the Noteholders in accordance with the Terms and
Conditions.
(3) The Agent shall have no responsibility to obtain the
certificate of the Corporation delivered by the Corporation to the Agent
pursuant to Condition 9 if such a certificate is required to be issued, nor
shall the Agent have any responsibility to notify the Corporation that the Agent
has not obtained such a certificate from the Corporation if such a certificate
is required to be issued.
12. Cancellation of Notes, Receipts, Coupons and Talons
(1) All Notes which are redeemed, all Receipts or Coupons
which are paid and all Talons which are exchanged shall be delivered outside the
United States to the Agent, and shall be canceled by the Agent. In addition, all
Notes which are purchased by or on behalf of the Corporation or any of its
subsidiaries and are surrendered to the Agent for cancellation, together (in the
case of Notes in definitive form) with all unmatured Receipts, Coupons or Talons
(if any) attached thereto or surrendered therewith, shall be canceled by the
Agent.
(2) The Corporation shall have the right to request that the
Agent provide, without limitation, the following information:
(a) the aggregate principal amount of Notes which
have been redeemed and the aggregate amount paid in respect
thereof;
(b) the number of Notes canceled together (in the
case of Definitive Notes, if any) with details of all
unmatured Receipts, Coupons or Talons (if any) attached
thereto or delivered therewith;
(c) the aggregate amount paid in respect of interest
on the Notes;
(d) the total number by maturity date of Receipts,
Coupons and Talons so canceled; and
(e) (in the case of Definitive Notes, if any) the
serial numbers of such Notes,
shall be given to the Corporation by the Agent as soon as reasonably practicable
and in any event within three months after the date of such repayment or, as the
case may be, payment or exchange.
(3) The Agent shall destroy all canceled Notes, Receipts
Coupons and Talons.
(4) The Agent shall keep a full and complete record of all
Notes, Receipts, Coupons and Talons (other than serial numbers of Coupons,
except those which have been replaced pursuant to Condition 10) and of all
replacement Notes, Receipts, Coupons or Talons issued in substitution for
mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or
Talons. The Agent shall at all reasonable times make such record available to
the Corporation and any persons authorized by it for inspection and for the
taking of copies thereof or extracts therefrom.
(5) All records and certificates made or given pursuant to
this Clause 12 and Clause 13 shall make a distinction between Notes, Receipts,
Coupons and Talons of each Series.
13. Issue of Replacement Notes, Receipts, Coupons and Talons
(1) The Corporation will cause a sufficient quantity of
additional forms of Notes, Receipts, Coupons and Talons to be available, upon
request to the Agent in Luxembourg (in such capacity, the "Replacement
-12-
<PAGE>
Agent")
at its specified office for the purpose of issuing replacement Notes, Receipts,
Coupons and Talons as provided below.
(2) The Replacement Agent will, subject to and in accordance
with the Terms and Conditions and the following provisions of this Clause 13,
authenticate and cause to be delivered any replacement Notes, Receipts, Coupons
and Talons which the Corporation may determine to issue in place of Notes,
Receipts, Coupons and Talons which have been lost, stolen, mutilated, defaced or
destroyed.
(3) In the case of a mutilated or defaced Note, the
Replacement Agent shall ensure that (unless otherwise covered by such indemnity
as the Corporation may reasonably require) any replacement Note will only have
attached to it Receipts, Coupons and Talons corresponding to those (if any)
attached to the mutilated or defaced Note which is presented for replacement.
(4) The Replacement Agent shall not issue any replacement
Note, Receipt, Coupon or Talon unless and until the applicant therefor shall
have:
(a) paid such reasonable costs and expenses as may be
incurred in connection therewith, including any tax or other
governmental charge that may be imposed in relation thereto;
(b) furnished it with such evidence and indemnity as
the Corporation may reasonably require; and
(c) in the case of any mutilated or defaced Note,
Receipt, Coupon or Talon, surrendered it to the Replacement
Agent.
(5) The Replacement Agent shall cancel any mutilated or
defaced Notes, Receipts, Coupons and Talons in respect of which replacement
Notes, Receipts, Coupons and Talons have been issued pursuant to this Clause 13
and shall furnish the Corporation with a certificate stating the serial numbers
of the Notes, Receipts, Coupons and Talons so canceled and, unless otherwise
instructed by the Corporation in writing, shall destroy such canceled Notes,
Receipts, Coupons and Talons and furnish the Corporation with a destruction
certificate stating the serial number of the Notes (in the case of Definitive
Notes) and the number by maturity date of Receipts, Coupons and Talons so
destroyed.
(6) The Replacement Agent shall, on issuing any replacement
Note, Receipt, Coupon or Talon, forthwith inform the Corporation, the Agent and
the other Paying Agents of the serial number of such replacement Note, Receipt,
Coupon or Talon issued and (if known) of the serial number of the Note, Receipt,
Coupon or Talon in place of which such replacement Note, Receipt, Coupon or
Talon has been issued. Whenever replacement Receipts, Coupons or Talons are
issued pursuant to the provisions of this Clause 13, the Replacement Agent shall
also notify the Agent and the other Paying Agents of the maturity dates of the
lost, stolen, mutilated, defaced or destroyed Receipts, Coupons or Talons and of
the replacement Receipts, Coupons or Talons issued.
(7) The Agent shall keep a full and complete record of all
replacement Notes, Receipts, Coupons and Talons issued and shall make such
record available at all reasonable times to the Corporation and any persons
authorized by it for inspection and for the taking of copies thereof or extracts
therefrom.
(8) Whenever any Note, Receipt, Coupon or Talon for which a
replacement Note, Receipt, Coupon or Talon has been issued and in respect of
which the serial number is known is presented to the Agent or any of the Paying
Agents for payment, the Agent or, as the case may be, the relevant Paying Agent
shall immediately send notice thereof to the Corporation and the other Paying
Agents and shall not make payment in respect thereto, until instructed by the
Corporation.
14. Copies of Documents Available for Inspection
The Agent and the Paying Agents shall hold available for
inspection copies of:
-13-
<PAGE>
(i) the organizational documents of the Corporation;
(ii) the latest available audited consolidated
financial statements of NationsBank Corporation and its
consolidated subsidiaries beginning with such financial
statements for the fiscal years ended December 31, 1993,
December 31, 1994 and December 31, 1995, and the latest
available consolidated unaudited interim financial statements
of NationsBank Corporation and its consolidated subsidiaries,
beginning with the statements for the quarter ended March 31,
1996;
(iii) the Program Agreement and this Agreement;
(iv) the Offering Circular; and
(v) any future offering circulars, information
memoranda and supplements (except that a Pricing Supplement
relating to any unlisted Note will only be available for
inspection by a holder of such Note and such holder must
produce evidence satisfactory to the Paying Agent as to
ownership) to the Offering Circular and any other documents
incorporated therein by reference and in the case of a
syndicated issue of listed Notes, the syndication agreement
(or equivalent document).
For this purpose, the Corporation shall furnish the Agent and
the Paying Agents with sufficient copies of each of such documents.
15. Meetings of Noteholders
(1) The provisions of Schedule 7 hereto shall apply to
meetings of the Noteholders and shall have effect in the same manner as if set
out in this Agreement.
(2) Without prejudice to sub-clause (l), each of the Agent and
the Paying Agents on the request of any Noteholder shall issue voting
certificates and block voting instructions in accordance with Schedule 7 and
shall forthwith give notice to the Corporation in writing of any revocation or
amendment of a block voting instruction. Each of the Agent and the Paying Agents
will keep a full and complete record of all voting certificates and block voting
instructions issued by it and will, not less than 24 hours before the time
appointed for holding a meeting or adjourned meeting, deposit at such place as
the Agent shall designate or approve, full particulars of all voting
certificates and block voting instructions issued by it in respect of such
meeting or adjourned meeting.
16. Repayment by the Agent
Upon the Corporation being discharged from its obligation to
make payments in respect of any Notes pursuant to the relevant Terms and
Conditions, and provided that there is no outstanding, bona fide and proper
claim in respect of any such payments, the Agent shall forthwith on written
demand pay to the Corporation sums equivalent to any amounts paid to it by the
Corporation for the purposes of such payments.
17. Conditions of Appointment
(1) The Agent shall be entitled to deal with money paid to it
by the Corporation for the purpose of this Agreement in the same manner as other
money paid to a banker by its customers except:
(a) that it shall not exercise any right of
set-off, lien or similar claim in respect thereof;
(b) as provided in sub-clause (2) below; and
(c) that it shall not be liable to account to the
Corporation for any interest thereon.
-14-
(2) In acting hereunder and in connection with the Notes, the
Agent and the Paying Agents shall act solely as agents of the Corporation and
will not thereby assume any obligations towards or relationship of agency or
trust for or with any of the owners or holders of the Notes, Receipts, Coupons
or Talons.
(3) The Agent and the Paying Agents hereby undertake to the
Corporation to perform such obligations and duties, and shall be obliged to
perform such duties and only such duties as are herein, in the Terms and
Conditions and in the Procedures Memorandum specifically set forth and no
implied duties or obligations shall be read into this Agreement or the Notes
against the Agent and the Paying Agents, other than the duty to act honestly and
in good faith.
(4) The Agent may consult with legal and other professional
advisers and the opinion of such advisers shall be full and complete protection
in respect of any action taken, omitted or suffered hereunder in good faith and
in accordance with the opinion of such advisers.
(5) Each of the Agent and the Paying Agents shall be protected
and shall incur no liability for or in respect of any action taken, omitted or
suffered in reliance upon any instruction, request or order from the Corporation
or any notice, resolution, direction, consent, certificate, affidavit,
statement, cable, telex or other paper or document which it reasonably believes
to be genuine and to have been delivered, signed or sent by the proper party or
parties or upon written instructions from the Corporation.
(6) Any of the Agent and the Paying Agents and their officers,
directors and employees may become the owner of, or acquire any interest in any
Notes, Receipts, Coupons or Talons with the same rights that it or he would have
if the Agent or the relevant Paying Agent, as the case may be, concerned were
not appointed hereunder, and may engage or be interested in any financial or
other transactions with the Corporation and may act on, or as depositary,
trustee or agent for, any committee or body of Noteholders or Couponholders or
in connection with any other obligations of the Corporation as freely as if the
Agent or the relevant Paying Agent, as the case may be, were not appointed
hereunder.
(7) The Corporation shall provide the Agent with a certified
copy of the list of persons authorized to execute documents and take action on
its behalf in connection with this Agreement and shall notify the Agent
immediately in writing if any of such persons ceases to be so authorized or if
any additional person becomes so authorized together, in the case of an
additional authorized person, with evidence satisfactory to the Agent that such
person has been so authorized, provided, however, that the Agent shall not incur
any liability for any losses, claims or damages resulting from the Corporation's
failure to provide such notification to the Agent.
18. Communication Between the Parties
A copy of all communications relating to the subject matter of
this Agreement between the Corporation and the Noteholders, Receiptholders or
Couponholders and any of the Paying Agents shall be sent to the Agent by the
relevant Paying Agent.
19. Changes in Agent and Paying Agents
(1) The Corporation agrees that, for so long as any Note is
outstanding, or until moneys for the payment of all amounts in respect of all
outstanding Notes have been made available to the Agent or have been returned to
the Corporation as provided herein:
(a) so long as any Notes are listed on any Stock
Exchange, there will at all times be a Paying Agent with a
specified office in such place as may be required by the rules
and regulations of the relevant Stock Exchange; and
(b) there will at all times be a Paying Agent
with a specified office in a city in continental Europe; and
(c) there will at all times be an Agent.
In addition, the Corporation shall appoint a Paying Agent
having a specified office in New York City in the circumstances described in the
final paragraph of Condition 5(b). Any variation, termination, appointment or
change shall only take effect (other than in the case of insolvency (as provided
in sub-clause (5)), when it shall be of immediate effect) after not less than 30
nor more than 45 days' prior notice thereof shall have been given to the
Noteholders in accordance with the Terms and Conditions.
(2) The Agent may (subject as provided in sub-clause (4)) at
any time resign as Agent by giving at least 90 days' written notice to the
Corporation of such intention on its part, specifying the date on which its
desired resignation shall become effective, provided that such date shall never
be less than three months after the receipt of such notice by the Corporation
unless the Corporation agrees to accept less notice.
(3) The Agent may (subject as provided in sub-clause (4)) be
removed at any time on at least 45 days' notice by the filing with it of an
instrument in writing signed on behalf of the Corporation specifying such
removal and the date when it shall become effective.
(4) Any resignation under sub-clause (2) or removal under
sub-clause (3) shall only take effect upon the appointment by the Corporation as
hereinafter provided, of a successor Agent and (other than in cases of
insolvency of the Agent) on the expiry of the notice to be given under Clause
21. The Corporation agrees with the Agent that if, by the day falling ten days
before the expiry of any notice under sub-clause (2), the Corporation has not
appointed a successor Agent, then the Agent shall be entitled, on behalf of the
Corporation, to appoint as a successor Agent in its place a reputable financial
institution of good standing as it may reasonably determine to be capable of
performing the duties of the Agent hereunder.
(5) In case at any time the Agent resigns, or is removed, or
becomes incapable of acting or is adjudged bankrupt or insolvent, or files a
voluntary petition in bankruptcy or makes an assignment for the benefit of its
creditors or consents to the appointment of an administrator, liquidator or
administrative or other receiver of all or a substantial part of its property,
or admits in writing its inability to pay or meet its debts as they mature or
suspends payment thereof, or if any order of any court is entered approving any
petition filed by or against it under the provisions of any applicable
bankruptcy or insolvency law or if a receiver of it or of all or a substantial
part of its property is appointed or any officer takes charge or control of it
or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, a successor Agent, which shall be a reputable financial institution
of good standing, may be appointed by the Corporation by an instrument in
writing filed with the successor Agent. Upon the appointment as aforesaid of a
successor Agent and acceptance by the latter of such appointment and (other than
in case of insolvency of the Agent) upon expiry of the notice to be given under
Clause 21 the Agent so superseded shall cease to be the Agent hereunder.
(6) Subject to sub-clause (l):
(A) the Corporation may, after prior consultation
(other than in the case of insolvency of any Paying Agent)
with the Agent, terminate the appointment of any of the Paying
Agents at any time; and/or
(B) the Corporation may in respect of the Program or
the Corporation may in respect of any Series of Notes, if so
required by the relevant Stock Exchange or regulatory body,
appoint one or more further Paying Agents by giving to the
Agent, and to the relevant Paying Agent, at least 45 days'
notice in writing to that effect.
(7) Subject to sub-clause (l), all or any of the Paying Agents
may resign their respective appointments hereunder at any time by giving the
Corporation and the Agent at least 45 days' written notice to that effect.
(8) Upon its resignation or removal becoming effective the
Agent or the relevant Paying Agent:
(a) shall, in the case of the Agent, forthwith
transfer all moneys held by it hereunder and the records
referred to in Clause 12(4) to the successor Agent hereunder;
and
<PAGE>
(b) shall be entitled to the payment by the
Corporation of its commissions, fees and expenses for the
services theretofore rendered hereunder in accordance with the
terms of Clause 25.
(9) Upon its appointment becoming effective, a successor Agent
and any new Paying Agent shall, without further act, deed or conveyance, become
vested with all the authority, rights, powers, trusts, immunities, duties and
obligations of its predecessor or, as the case may be, a Paying Agent with like
effect as if originally named as Agent or (as the case may be) a Paying Agent
hereunder.
20. Merger and Consolidation
Any corporation into which the Agent or any Paying Agent may
be merged or converted, or any corporation with which the Agent or any of the
Paying Agents may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Agent or any of the Paying Agents shall
be a party, or any corporation to which the Agent or any of the Paying Agents
shall sell or otherwise transfer all or substantially all the assets of the
Agent or any Paying Agent shall, on the date when such merger, conversion,
consolidation or transfer becomes effective and to the extent permitted by any
applicable laws, become the successor Agent or, as the case may be, Paying Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of the parties hereto, unless otherwise required by the
Corporation, and after the said effective date all references in this Agreement
to the Agent or, as the case may be, such Paying Agent shall be deemed to be
references to such corporation. Written notice of any such merger, conversion,
consolidation or transfer shall forthwith be given to the Corporation by the
relevant Agent or Paying Agent.
21. Notification of Changes to Paying Agents
Following receipt of notice of resignation from the Agent or
any Paying Agent and forthwith upon appointing a successor Agent or, as the case
may be, further or other Paying Agents or on giving notice to terminate the
appointment of any Agent or, as the case may be, Paying Agent, the Agent (on
behalf of and at the expense of the Corporation) shall give or cause to be given
not more than 60 days' nor less than 30 days' notice thereof to the Noteholders
in accordance with the Terms and Conditions.
22. Change of Specified Office
If the Agent or any Paying Agent determines to change its
specified office it shall give to the Corporation and (if applicable) the Agent
written notice of such determination giving the address of the new specified
office which shall be in the same city and stating the date on which such change
is to take effect, which shall not be less than 45 days thereafter. The Agent
(on behalf and at the expense of the Corporation) shall within 15 days of
receipt of such notice (unless the appointment of the Agent or the relevant
Paying Agent, as the case may be, is to terminate pursuant to Clause 19 on or
prior to the date of such change) give or cause to be given not more than 45
days' nor less than 30 days' notice thereof to the Noteholders in accordance
with the Terms and Conditions.
23. Notices
All notices hereunder shall be deemed to have been given when
deposited in the mail as first class mail, registered or certified, return
receipt requested, postage prepaid, addressed to any party hereto as follows:
Address
The Corporation: NationsBank Corporation
NationsBank Corporate Center
NC 1007-23-1
Charlotte, North Carolina 28255-0065
Attn: John E. Mack
-17-
<PAGE>
Treasurer
Telecopy: (704)386-0270
with a copy to:
NationsBank Corporation
NationsBank Corporate Center
Legal Department
NC 1007-20-1
Charlotte, North Carolina 28255-0065
Attn: Paul J. Polking, Esq.
General Counsel
Telecopy: (704)386-6453
The Agent: The Chase Manhattan Bank, N.A.
Woolgate House
Coleman Street
London EC2P 2HD
United Kingdom
Attn: Manager, Corporate Trust
Operations
Telecopy: 44-1202-347438
The Paying Agent: Chase Manhattan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg - Grund
Attn: Manager, Corporate Trust Operations
Telecopy: 352-462685-380
or at any other address of which any of the foregoing shall have notified the
others in writing.
(a) if delivered in person to the relevant address
specified in the signature pages hereof and if so delivered,
shall be deemed to have been delivered at the time of receipt;
or
(b) if sent by facsimile or telex to the relevant
number specified on the signature pages hereof and, if so
sent, shall be deemed to have been delivered immediately after
transmission provided such transmission is confirmed by the
answerback of the recipient (in the case of telex) or when an
acknowledgement of receipt is received (in the case of
facsimile).
Where a communication is received after business hours it
shall be deemed to be received and become effective on the next business day.
Every communication shall be irrevocable save in respect of any manifest error
therein.
24. Taxes and Stamp Duties
The Corporation agrees to pay any and all stamp and other
documentary taxes or duties which may be payable in connection with the
execution, delivery, performance and enforcement of this Agreement.
25. Commissions, Fees and Expenses
(1) The Corporation undertakes to pay in respect of the
services of the Agent and the Paying Agents under this Agreement such fees and
expenses as may be agreed between them from time to time, the initial such fees
being set out in a letter of even date herewith from the Agent to, and
countersigned by, the Corporation.
-18-
<PAGE>
(2) The Corporation will promptly pay on demand all
out-of-pocket expenses (including legal, advertising, facsimile, telex and
postage expenses) properly incurred by the Agent and the Paying Agents in
connection with their services hereunder, including without limitation the
expenses contemplated in Clause 24.
26. Indemnity
(1) The Corporation undertakes to indemnify and hold harmless
each of the Agent and the Paying Agents against all losses, liabilities, costs
(including, without limitation, legal fees and expenses), expenses, claims,
actions or demands which the Agent or any Paying Agent, as the case may be, may
reasonably incur or which may be made against the Agent or any Paying Agent, as
a result of or in connection with the appointment or the exercise of or
performance of the powers, discretions, authorities and duties of the Agent or
any Paying Agent under this Agreement except such as may result from its own
gross negligence, bad faith or failure to comply with its obligations hereunder
or that of its officers, employees or agents.
(2) Each of the Agent and the Paying Agents shall severally
indemnify and hold harmless the Corporation against any loss, liability, costs
(including, without limitation, legal fees and expenses), expense, claim, action
or demand which it may reasonably incur or which may be made against it as a
result of such Agent's or Paying Agent's own negligence, bad faith or material
failure to comply with its obligations under this Agreement or that of its
officers, employees or agents.
(3) If, under any applicable law and whether pursuant to a
judgment being made or registered or in the liquidation, insolvency or analogous
process of any party hereto or for any other reason, any payment under or in
connection with this Agreement is made or fails to be satisfied in a currency
(the "Other Currency") other than that in which the relevant payment is
expressed to be due (the "Required Currency") under this Agreement, then, to the
extent that the payment (when converted into the Required Currency at the rate
of exchange on the date of payment or, if it is not practicable for the payee to
purchase the Required Currency with the Other Currency on the date of payment,
at the rate of exchange as soon thereafter as it is practicable for it to do so
or, in the case of a liquidation, insolvency or analogous process, at the rate
of exchange on the latest date permitted by applicable law for the determination
of liabilities in such liquidation, insolvency or analogous process) actually
received by the payee falls short of the amount due under the terms of this
Agreement, the payor shall, as a separate and independent obligation, indemnify
and hold harmless the payee against the amount of such shortfall. For the
purpose of this Clause 26, "rate of exchange" means the rate at which the payee
is able on the relevant date to purchase the Required Currency with the Other
Currency and shall take into account any premium and other costs of exchange.
27. Reporting
(1) The Agent shall upon receipt of a written request therefor
from the Corporation and after the payment of any further remuneration agreed
between the Corporation and the Agent (on behalf of the Corporation and on the
basis of the information and documentation the Agent had in its possession) use
all reasonable efforts to submit such reports or information as may be required
from time to time by any applicable law, regulation or guideline promulgated by
(i) any relevant United States governmental regulatory authority in respect of
the issue and purchase of Notes or (ii) any other relevant governmental
regulatory authority in respect of the issue and purchase of Notes denominated
in the applicable currency of such governmental regulatory authority.
(2) The Agent will notify the MoF of such details relating to
Yen Notes and provide such other information about the Program to the MoF as may
be required.
(3) The Agent will notify the German Bundesbank at the end of
each month about the amounts, dates of issue and other terms of all
DM-denominated Notes issued during the month in question and provide such other
information about the Program to the German Bundesbank as may be required.
(4) The Agent will notify the Bank of England of such details
relating to Sterling Notes and provide such other information about the Program
to the Bank of England as may be required.
-19-
<PAGE>
28. Governing Law
(1) This Agreement, the Notes, and any Receipts, Coupons or
Talons appertaining thereto shall be governed by and construed in accordance
with the laws of the State of New York, United States of America, without regard
to principles of conflicts of laws.
(2) The Corporation and the Agent each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal court
sitting in New York City, the Borough of Manhattan over any suit, action or
proceeding arising out of or related to this Agreement, any Note, Receipt,
Coupon or Talon, as the case may be (together, the "Proceedings"). The
Corporation and the Agent each irrevocably waives, to the fullest extent
permitted by law, any objection which it may have to the laying of the venue of
the Proceedings brought in such a court and any claim that the Proceedings have
been brought in an inconvenient forum. The Corporation and the Agent each agrees
that final judgment in the Proceedings brought in such a court shall be
conclusive and binding upon the Corporation or the Agent, as the case may be,
and may be enforced in any court of the jurisdiction to which the Corporation or
the Agent is subject by a suit upon such judgment, provided that the service of
process is effected upon the Corporation and the Agent in the manner specified
in subsection (C) below or as otherwise permitted by law.
(3) As long as any of the Notes, Receipts, Coupons or Talons
remains outstanding, the Corporation shall at all times either maintain an
office or have an authorized agent in New York City upon whom process may be
served in the Proceedings. Service of process upon either it at its offices or
upon such agent with written notice of such service mailed or delivered to the
Corporation shall, to the fullest extent permitted by law, be deemed in every
respect effective service of process upon the Corporation in the Proceedings.
The Corporation hereby appoints CT Corporation System located at 1633 Broadway,
New York, New York 10019 as its agent for such purposes, and covenants and
agrees that service of process in the Proceedings may be made upon it at its
office or at the specified offices of such agent (or such other addresses or at
the offices of any other authorized agents which the Corporation may designate
by written notice to the Agent) and prior to any termination of such agencies
for any reason, it will so appoint a successor thereto as agent hereunder.
29. Amendments
Without the consent of the Noteholders, Receiptholders or
Couponholders, the Agent and the Corporation may agree to modifications of or
amendments to this Agreement, the Notes, the Receipts or the Coupons for any of
the following purposes:
(i) to evidence the succession of another corporation to the
Corporation and the assumption by any such successor of
the covenants of the Corporation in this Agreement, the
Notes, Receipts or Coupons;
(ii) to add to the covenants of the Corporation for the
benefit of the Noteholders, the Receiptholders or the
Couponholders, or to surrender any right or power herein
conferred upon the Corporation;
(iii) to relax or eliminate the restrictions on payment of
principal and interest in respect of the Notes, Receipts
or Coupons in the United States, provided that such
payment is permitted by United States tax laws and
regulations then in effect and provided that no adverse
tax consequences would result to the Noteholders, the
Receiptholders or the Couponholders;
(iv) to cure any ambiguity, to correct or supplement any
defective provision herein or any provision which may be
inconsistent with any other provision herein;
(v) to make any other provisions with respect to matters
or questions arising under the Notes, the Receipts,
the Coupons or this Agreement, provided such action
pursuant to
-21-
<PAGE>
this sub-clause (v) shall not adversely
affect the interests of the Noteholders, the
Receiptholders or the Couponholders; and
(vi) permit further issuances of Notes in accordance with
the terms of this Agreement and as further provided
hereof.
Any such modification or amendment shall be binding on the
Noteholders, the Receiptholders and the Couponholders and any such modification
or amendment shall be notified to the Noteholders, the Receiptholders or the
Couponholders in accordance with Condition 13 as soon as practicable thereafter.
30. Descriptive Headings
The descriptive headings in this Agreement are for convenience
of reference only and shall not define or limit the provisions hereof.
31. Counterparts
This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument. Any party may enter
into this Agreement by signing such a counterpart.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their respective corporate names by their respective
officers thereunder duly authorized as of the date and year first above written.
NATIONSBANK CORPORATION
as Issuer
By /s/ John E. Mack
______________________________________________
Name: John E. Mack
Title: Senior Vice President and Treasurer
THE CHASE MANHATTAN BANK, N.A.,
LONDON BRANCH
as Agent and
Principal Paying Agent
By /s/ Chris Knowles
______________________________________________
Name: Chris Knowles
Title: Second Vice President
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
By /s/ Chris Knowles
______________________________________________
Name: Chris Knowles
Title: Second Vice President
-22-
<PAGE>
(TO COME)
EXHIBIT 4
[FACE OF CERTIFICATE]
7% CUMULATIVE REDEEMABLE NATIONSBANK CORPORATION 7% CUMULATIVE REDEEMABLE
PREFERRED STOCK, SERIES B PREFERRED STOCK, SERIES B
NUMBER SHARES
PB
INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA
CUSIP 638585 60 4
SEE REVERSE FOR CERTAIN DEFINITIONS
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE STATED VALUE OF ONE HUNDRED DOLLARS
EACH OF THE 7% CUMULATIVE REDEEMABLE PREFERRED STOCK, SERIES B OF
NationsBank Corporation transferable only on the Books of the Corporation in
conformity with the Bylaws in person or by Attorney on the surrender of this
certificate. This certificate is not valid until countersigned by the Transfer
Agent.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
SECRETARY [SEAL] CHIEF EXECUTIVE OFFICER
countersigned:
chasemellon shareholder services, l.l.c.
transfer agent
by
authorized signature
<PAGE>
[REVERSE OF CERTIFICATE]
NATIONSBANK CORPORATION
NATIONSBANK CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES COMMON STOCK
AND ADDITIONAL SERIES OF PREFERRED STOCK WHICH, WHEN ISSUED, MAY HAVE CERTAIN
PREFERENCES OR SPECIAL RIGHTS IN THE PAYMENT OF DIVIDENDS, IN VOTING, UPON
LIQUIDATION, OR OTHERWISE. THE CORPORATION WILL, UPON REQUEST, FURNISH TO ANY
SHAREHOLDER WITHOUT CHARGE INFORMATION IN WRITING AS TO EACH CLASS OR SERIES OF
SUCH COMMON AND PREFERRED STOCK AUTHORIZED AND OUTSTANDING AND A COPY OF THE
PORTIONS OF THE RESTATED ARTICLES OF INCORPORATION OR RESOLUTIONS CONTAINING THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ALL SHARES AND ANY
CLASS OR SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE TRANSFER
AGENT NAMED ON THE FACE OF THIS CERTIFICATE.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED
THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE
OF A REPLACEMENT CERTIFICATE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TEN COM -- as tenants in common UNIF GIF MIN ACT -- _______Custodian __________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minor
survivorship and not as tenants Act ______________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
SHARES OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
ATTORNEY TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION
WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATE
SIGNATURE
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
FOURTH AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT is executed as of the 31st day of December, 1995 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
The NationsBank Retirement Savings Plan (the "Plan") was amended and
restated effective January 1, 1993 by Instrument dated December 31, 1992 and
further amended by Instruments dated December 31, 1993, December 31, 1994 and
August 1, 1995. By this Instrument, NationsBank is amending the Plan to modify
the definition of compensation and to reflect the merger of certain defined
contribution plans into the Plan and other matters related to plan mergers,
corporate acquisitions and dispositions. 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, as subsequently amended, is amended as
follows:
Section 2.1(c)(18) of the Plan is amended effective as of January 1,
1996 to read as follows:
"(18) Compensation of a Participant for a particular period of
time means the base salary or base wages payable by the Participating
Employers to the Participant for employment with the Participating
Employers during such period prior to (i) any salary or wage reduction
pursuant to Article IV of the Plan or (ii) any salary or wage reduction
pursuant to the Group Benefits Plan. Compensation shall not include:
(A) any amount excluded by Section 5.6 of the Plan
(regarding the Code Section 401(a)(17)
limitation on compensation);
(B) any bonuses (contractual, discretionary or otherwise),
awards, overtime
<PAGE>
pay, shift premium, incentive compensation of any kind
whatsoever, or other extra or special remuneration of
any kind, except to the extent otherwise provided in the last
paragraph of this Section 2.1(c)(18);
(C) any deferred compensation pursuant to the Plan or any
other agreement or arrangement between a Participating
Employer and the Participant, including any deferrals of base
salary or wages pursuant to any nonqualified deferred
compensation plan;
(D) any sums paid by a Participating Employer (i) on account
of any health, welfare or group insurance benefits (exclusive
of sick pay), including dependent care assistance, or (ii) on
account of reimbursement of relocation expenses, regardless of
whether such sums are taxable income to the Participant;
provided, however, this subparagraph (D) shall not exclude
from Compensation any sums paid by a Participating Employer
that are attributable to base salary or wage reductions under
the Group Benefits Plan;
(E) any severance, vacation or similar benefits paid in a
lump sum; or
(F) any compensation pursuant to any other employee benefit
plan, including without limitation, any sums elected to be
received in cash pursuant to any such plan.
Notwithstanding subparagraph (B) above, a Participant's Compensation
shall include, in addition to base salary or wages, fifty percent (50%)
of the commissions payable to the Participant if:
(X) the Participant's remuneration from the Participating
Employers is based solely on commissions earned by the
Participant and the Participant's base salary is deducted from
the commissions earned by and payable to the Participant;
(Y) the Participant is employed in a position which directly
supervises Participant(s) described in subparagraph (X) above
and some or all of the Participant's remuneration from the
Participating Employers is based on override commissions from
the production of the supervised Participant(s); or
(Z) the Participant is employed in a position which directly
supervises Participant(s) described in subparagraph (X) above
and some or all of the Participant's remuneration from the
Participating Employers is based on commissions resulting from
the Participant's personal production."
<PAGE>
2. Section 7.4(a)(i) of the Plan is amended effective as of October 1,
1995 to read as follows:
"(i) Basic Form. Except as otherwise provided in Section
7.2(d)(2) of the Plan (requiring Financial Hardship Distributions to be
made in cash) or Article XVI or Article XVIII (regarding prior methods
of payments under certain merged defined contribution plans), the
method of Distribution shall be a single lump sum consisting of cash
and/or shares of NationsBank Common Stock as hereinafter provided."
3. The following Section 16.16 is added to the Plan effective as
of January 1, 1995:
"SECTION 16.16. DIVESTITURES
(a) General. From time to time, certain banking centers and
other business units of the Participating Employers are sold to
unrelated third parties, and as a result certain Participants employed
at such banking centers and other business units (the "Affected
Participants") terminate their employment with the Participating
Employers. Schedule 16.16 attached to the Plan lists (i) the banking
centers and other business units that have been sold which are subject
to this Section, (ii) the names of the various purchasers and (iii) the
effective dates of such sales. Schedule 16.16 shall be updated from
time to time by the Participating Employers to reflect additional sales
that are subject to this Section. The provisions of this Section shall
be effective with respect to a particular group of Affected
Participants as of the applicable effective date set forth on Schedule
16.16 (a "Termination Date"). Notwithstanding any provisions of the
Plan to the contrary, the provisions of this Section 16.16 shall
control with respect to the Affected Participants.
(b) Pre-Tax Employee Contributions. No Pre-Tax Employee
Contributions shall be made for an Affected Participant with respect to
any payroll periods that begin after the Termination Date applicable to
such Affected Participant.
(c) Matching Contribution Accounts of Affected Participants.
The Matching Contribution Account of an Affected Participant shall be
fully vested and nonforfeitable as of the Termination Date applicable
to such Affected Participant. Schedule 16.16 shall indicate for each
divestiture subject to this Section whether the applicable Affected
Participants shall be eligible to receive a Matching Contribution for
the Plan Year in which the applicable Termination Date occurs. For the
divestitures in which the applicable Affected Participants
<PAGE>
are eligible for a Matching Contribution and solely for
purposes of determining the amount and form (i.e., cash or stock) of
such Matching Contributions, each such Affected Participant shall be
treated as if he or she had Retired as of the applicable Termination
Date and shall therefore be allocated a Matching Contribution for the
Plan Year in which such Termination Date occurs consistent with the
provisions of Article V of the Plan.
(d) Transfer of Accounts. If indicated on Schedule 16.16 with
respect to a divestiture, the Accounts of each applicable Affected
Participant shall be transferred in a trustee-to-trustee transfer to
the tax-qualified plan maintained by the applicable purchaser."
4. The following 16.17 is added to the Plan effective as of
April 1, 1995:
"SECTION 16.17. CERTAIN FORMER EMPLOYEES OF PEROT SYSTEMS CORPORATION.
(a) General. NationsBanc Services, Inc., which is a
Participating Employer ("NBSI"), and Perot Systems Corporation ("PSC")
entered into an Agreement dated April 1, 1995 modifying the business
relationships between them (the "April 1, 1995 PSC Agreement"). The
April 1, 1995 PSC Agreement contemplates that certain PSC employees,
referred to in the April 1, 1995 PSC Agreement as "Transferred
Employees," will become employees of NBSI during 1995 and 1996
("Transferred PSC Employees").
Certain Transferred PSC Employees will have participated in
the Perot Systems Corporation Retirement Savings Plan (the "PSC Plan")
during their PSC employment. The April 1, 1995 PSC Agreement also
provides for the transfer to the Plan of the PSC Plan assets
representing the PSC Plan accounts of certain Transferred PSC
Employees.
(b) Accounts Related to Participation in the PSC Plan.
(1) Establishment of Accounts. Whenever PSC Plan assets
representing a Transferred PSC Employee's PSC Plan accounts are
transferred to the Plan pursuant to the April 1, 1995 PSC Agreement,
the transferred assets shall be credited as of the date of transfer to
existing or new Plan accounts for the Transferred PSC Employee as
follows:
(i) Accounts for Salary Reduction Contributions. Any
transferred assets representing the Transferred PSC Employee's
interest in "Salary Reduction Contributions" under the PSC
Plan (or contributions of
<PAGE>
the same type under its predecessor of transferor plans)
shall be credited to the Transferred PSC Employee's Pre-Tax
Employee Contribution Account under the Plan.
(ii) Creation of Former PSC Plan Accounts. Any
transferred assets representing the Transferred PSC Employee's
interest in other contributions under the PSC Plan (or its
predecessor or transferor plans) shall be credited to one or
more Accounts established under the Plan for such purpose
("Former PSC Plan Accounts"). The Committee shall cause to be
maintained such sub-accounts as are necessary to limit or
restrict in-Service distributions as required by the Code.
The Committee may from time to time combine a Participant's Former PSC
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) Investment of Accounts. Except for promissory notes
evidencing Participant loans (see the next paragraph), the Accounts
representing a Participant's interest in the PSC 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 PSC Plan assets
transferred to the Plan pursuant to the April 1, 1995 PSC Agreement
include a Transferred PSC Employee's promissory note representing an
outstanding loan made under the PSC Plan (or its predecessor or
transferor plans), the promissory note shall be held by the Investment
Trustee as a segregated investment allocated to and made solely for the
benefit of the Transferred PSC Employee's Account(s) that correspond to
the Transferred PSC Employee's PSC Plan account(s) that were invested
in such note. The Investment Trustee shall become the successor lender
with respect to such "earmarked" loan for all purposes, and the
transfer of the promissory note from the PSC Plan shall not affect the
terms of the promissory note or the security for the repayment of the
promissory note evidencing such loan.
(c) Active Participation in the Plan. The following rules
apply for purposes of determining when a Transferred PSC Employee
becomes a Participant in the Plan on or after the date on which he or
she becomes an Employee of NBSI as a Transferred PSC Employee (the
Transferred PSC Employee's "NBSI Employment Date"):
<PAGE>
(i) Eligible on NBSI Employment Date. If the
Transferred PSC Employee is a Covered Employee on the NBSI
Employment Date and has satisfied the eligibility requirements
of Section 3.2(c) of the Plan by then, the Transferred PSC
Employee shall become a Participant on the NBSI Employment
Date.
(ii) Other Situations. If the Transferred PSC
Employee does not become a Participant on the NBSI Employment
Date as provided immediately above, the Transferred PSC
Employee shall become a Participant when and as provided in
Section 3.2(c) of the Plan. If, however, one or more Accounts
are established for the Transferred PSC Employee pursuant to
Section 16.17(b)(1) of the Plan because of assets transferred
from the PSC Plan, the Transferred PSC Employee shall become a
Participant on the NBSI Employment Date for purposes of the
investment, administration and distribution of those
Account(s) in accordance with the provisions of the Plan, but
the Transferred PSC Employee shall not be entitled to
otherwise participate in the Plan unless and until he or she
satisfies the requirements of Section 3.2(c) of the Plan.
(iii) Eligibility Service. For purposes of Section
3.2(c), the Transferred PSC Employee's Periods of Service and
Qualifying Periods of Severance shall include the following:
the Transferred PSC Employee shall be credited with Months of
Service for time prior to the Transferred PSC Employee's NBSI
Employment Date determined as if PSC had been a Participating
Employer in the Plan.
(d) Vesting in Former PSC Plan Accounts; Vesting Service.
(1) Former PSC Plan Accounts. A Transferred PSC Employee's
Former PSC Plan Accounts shall be fully Vested and nonforfeitable.
(2) Determination of Vesting Service. For purposes of
determining the Vesting Service of a Participant who is a Transferred
PSC Employee, the person's Vesting Service shall be determined under
the applicable provisions of the Plan other than this Section 16.17,
except that the person shall be credited (without duplication) with
Months of Service for the person's employment with PSC determined as if
PSC had been a Participating Employer in the Plan.
(e) Distribution of Accounts. While a Transferred PSC Employee
is in Service, Distributions to the Transferred PSC Employee from the
Transferred PSC Employee's Former PSC Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the
PSC Plan had remained in effect.
<PAGE>
Following separation from Service of a Transferred PSC
Employee who has any Former PSC Plan Accounts, Distributions from the
Transferred PSC Employee's Accounts (including Accounts that are not
Former PSC Plan Accounts) shall be made either (i) when and as provided
in Section 7.3 and 7.4 of the Plan or (ii) if the total Vested interest
in the Transferred PSC Employee's Accounts at the time of Distribution
exceeds three thousand five hundred dollars ($3,500), as provided in
Article XVIII of the Plan. The Committee shall establish the procedures
by which Transferred PSC Employees and Beneficiaries may make their
related payment elections."
5. The following Section 16.18 is added to the Plan effective as
of June 30, 1995.
"SECTION 16.18. CERTAIN FORMER EMPLOYEES OF THE NNW UTILITY
FUNDING COMPANIES. Pursuant to a Purchase Agreement dated June 8, 1995,
NationsBanc Leasing Corporation of North Carolina, which is a
Participating Employer ("NBLC-NC"), acquired NNW Utility Funding I,
Inc. and NNW Utility Funding II, Inc. on June 30, 1995. The June 8,
1995 Purchase Agreement contemplates that certain employees of the
acquired companies or their affiliates, referred to in the Purchase
Agreement and this Section 16.18 as "Transferred Employees," will
become employees of NBLC-NC during 1995. For purposes of (i)
determining when a Transferred Employee becomes a Participant in the
Plan (after becoming a Covered Employee of NBLC-NC) and (ii)
determining the Transferred Employee's Vesting Service, the Transferred
Employee shall be credited with the service that was credited to the
Transferred Employee for eligibility and vesting purposes under the
NNW, Inc. 401(k) Plan on the effective date of the Transferred
Employee's employment with NBLC-NC."
6. The following Sections 16.19 through Section 16.21 are added
to the Plan effective as of December 31, 1995:
SECTION 16.19. MERGER OF THE INTERCONTINENTAL PLAN.
(a) Merger of the Intercontinental Plan. NationsBank acquired
Intercontinental Bank on December 13, 1995 (the "Intercontinental
Acquisition Date"). At the time of the acquisition, Intercontinental
Bank sponsored the Intercontinental Bank Retirement Plan (the
"Intercontinental Plan"), which has continued in existence since then.
The Intercontinental Plan shall merge with and into the Plan
effective as of the close of business on December 31, 1995. In
connection therewith and
<PAGE>
effective as of that time, (i) the Trust under the
Intercontinental Plan shall merge with and into the Investment Trust
for the Plan and (ii) the assets of the Trust under the
Intercontinental 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 Intercontinental
Plan on December 31, 1995 with and into the Funds being maintained by
the Investment Trustee under the Investment Trust on or after January
1, 1996 pursuant to Article XII of the Plan.
(b) Accounts Related to Participation in the
Intercontinental Plan.
(1) Establishment of Accounts. Effective as of January 1,
1996, the accounts being maintained for participants in the
Intercontinental Plan on December 31, 1995 shall be combined with other
accounts, or maintained as separate accounts, under the Plan as
follows:
(i) Accounts for Salary Deferral Contributions. The
account maintained under the Intercontinental Plan for a
Participant who participated in the Intercontinental Plan
representing the Participant's interest in the Participant's
"Salary Deferral Contributions" thereunder shall become the
Participant's Pre-Tax Employee Contribution Account under the
Plan.
(ii) Creation of Former Intercontinental Plan
Accounts. An Account shall be established under the Plan for
each of the accounts maintained under the Intercontinental
Plan for a Participant who participated in the
Intercontinental Plan other than the account described
immediately above. These Accounts are referred to in the Plan
as "Former Intercontinental Plan Accounts." The Committee
shall cause to be maintained such sub-accounts as are
necessary to limit or restrict in-Service distributions as
required by the Code.
The Committee may from time to time after January 1, 1996 combine a
Participant's Former Intercontinental 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) Investment of Accounts. The Accounts representing a
Participant's interest in the Intercontinental 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.
<PAGE>
(c) Active Participation in the Plan. The following rules
shall apply for the purpose of determining when persons with "Hours of
Service" under the Intercontinental Plan before January 1, 1996 for
employment with any participating employer in the Intercontinental Plan
become Participants in the Plan on or after January 1, 1996:
(i) Prior Participants. With respect to persons who
had become "Participants" in the Intercontinental Plan by
December 31, 1995:
Covered Employee on January 1, 1996. If a person is a
Covered Employee on January 1, 1996, the person shall
become a Participant on that date.
Non-Covered Employee or Former Employee on January 1,
1996. If the person is not a Covered Employee on
January 1, 1996 but one or more Accounts are
established for the person pursuant to Section
16.19(b)(1) of the Plan because of the person's
Intercontinental 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.
Other situations. In any other case, the person shall
become a Participant if and when the person becomes a
Covered Employee after January 1, 1996.
(ii) Other Employees. With respect to persons who
had not become "Participants" in the Intercontinental Plan
by December 31, 1995:
Eligible Covered Employee on January 1, 1996. If the
person is a Covered Employee on January 1, 1996 and
would have commenced participation in the
Intercontinental Plan on January 1, 1996 had it not
merged into the Plan, the person shall become a
Participant on January 1, 1996.
Other situations. Otherwise, the person shall become
a Participant when and as provided in Section 3.2(c)
of the Plan. For purposes of Section 3.2(c), the
person's Periods of Service and Qualifying Periods of
Severance shall include the following: the person
shall be credited with Months of Service for time
prior to the
<PAGE>
Intercontinental Acquisition Date determined
as if the participating employers in the
Intercontinental Plan had been Participating
Employers in the Plan.
(d) Vesting in Former Intercontinental Plan Accounts and
Matching Contribution Accounts; Vesting Service.
(1) Former Intercontinental Plan Accounts. A Participant's
Former Intercontinental Plan Account representing the Participant's
"Rollover Contributions" to the Intercontinental Plan shall be fully
Vested and nonforfeitable. The person's other Former Intercontinental
Plan Accounts shall vest as follows:
(i) Employee on Intercontinental Acquisition Date.
If the person was an employee of any Intercontinental Plan
participating employer on the Intercontinental Acquisition
Date, the person's Former Intercontinental Plan Accounts
shall be fully Vested and nonforfeitable.
(ii) Not Employee on Intercontinental Acquisition
Date. If the person was not an employee of any
Intercontinental Plan participating employer on the
Intercontinental Acquisition Date, the participant's Former
Intercontinental Plan Accounts shall be subject to the
vesting schedule set forth in Section 6.4(b)(iii) of the
Plan.
(2) Matching Contribution Accounts. The Matching Contribution
Accounts of persons who had "Hours of Service" under the
Intercontinental Plan on or before the Intercontinental Acquisition
Date for employment with any participating employer in the
Intercontinental Plan (including persons who had not become
"Participants" in the Intercontinental Plan by the Intercontinental
Acquisition Date) shall vest as follows:
(i) Employee on Intercontinental Acquisition Date.
If the person was an employee of any Intercontinental Plan
participating employer on the Intercontinental Acquisition
Date, the person's Matching Contribution Account shall be
fully Vested and nonforfeitable.
(ii) Not Employee on Intercontinental Acquisition
Date. If the person was not an employee of any
Intercontinental Plan participating employer on the
Intercontinental Acquisition Date, the person's Matching
Contribution Account shall be subject to the vesting schedule
set forth in Section 6.4(b)(iii) of the Plan.
(3) Determination of Vesting Service. In determining the
Vesting
<PAGE>
Service of a person described in Section 16.19(d)(1)(ii) or
16.17(d)(2)(ii) of the Plan, the person's Vesting Service shall be
determined under the applicable provisions of the Plan other than this
Section 16.17(d), except that the person shall be credited with Months
of Service for time prior to the Intercontinental Acquisition Date
determined as if the participating employers in the Intercontinental
Plan and their affiliates and predecessor companies had been
Participating Employers in the Plan. If the person had become a
"Participant" in the Intercontinental Plan by December 31, 1995,
however, in no event shall the person's Vesting Service for time prior
to January 1, 1996 be less than the person's "Vesting Service" on
December 31, 1995 under the Intercontinental Plan.
(e) Distribution of Accounts.
(1) General. While a Participant is in Service, Distributions
to the Participant from the Participant's Former Intercontinental Plan
Accounts shall be determined, to the extent required by the Act and the
Code, as if the Intercontinental Plan had remained in effect.
Following separation from Service of a Participant who has any
Former Intercontinental Plan Accounts, Distributions from the
Participant's Accounts (including Accounts that are not Former
Intercontinental Plan Accounts) shall be made either (i) when and as
provided in Section 7.3 and 7.4 of the Plan or (ii) if the total Vested
interest in the Participant's Accounts at the time of Distribution
exceeds three thousand five hundred dollars ($3,500), as provided in
Article XVIII of the Plan. The Committee shall establish the procedures
by which Participants and Beneficiaries may make their related payment
elections.
(2) Benefit Payments in Progress. The merger of the
Intercontinental Plan into the Plan shall not revoke or suspend any
Intercontinental Plan methods of payment elected before or in progress
on January 1, 1996, and any method of payment in progress under the
Intercontinental Plan on January 1, 1996 with respect to a
Participant's accounts thereunder shall continue in effect with respect
to the Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the Intercontinental Plan with
respect to the Participant's accounts thereunder shall not be revoked
by reason of the merger of the Intercontinental Plan into the Plan.
Such designation shall be effective under the Plan from and after
January 1, 1996 as designating the Beneficiary of all of the
Participant's Accounts, including any resulting Former Intercontinental
Plan Accounts, unless and until the Participant revokes or changes the
designation or the designation otherwise becomes ineffective, in
accordance with the terms and
<PAGE>
provisions of the Plan.
SECTION 16.20. MERGER OF THE NATIONSSECURITIES PLAN
(a) Merger of the NationsSecurities Plan. NationsBank acquired
full ownership of NationsSecurities, a Dean Witter/NationsBank Company
("NationsSecurities"), on November 15, 1994 (the "NationsSecurities
Acquisition Date"). At the time of the acquisition, NationsSecurities
sponsored the NationsSecurities, a Dean Witter/NationsBank Company
Employee Retirement Investment Plan (the "NationsSecurities Plan"),
which has continued in existence since then.
The NationsSecurities Plan shall merge with and into the Plan
effective as of the close of business on December 31, 1995. In
connection therewith and effective as of that time, (i) the Trust under
the NationsSecurities Plan shall merge with and into the Investment
Trust for the Plan and (ii) the assets of the Trust under the
NationsSecurities 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 NationsSecurities
Plan on December 31, 1995 with and into the Funds being maintained by
the Investment Trustee under the Investment Trust on or after January
1, 1996 pursuant to Article XII of the Plan.
(b) Accounts Related to Participation in the NationsSecurities
Plan.
(1) Establishment of Accounts. Effective as of January 1,
1996, the accounts being maintained for participants in the
NationsSecurities Plan on December 31, 1995 shall be combined with
other accounts, or maintained as separate accounts, under the Plan as
follows:
(i) Accounts for Elective Deferrals. The accounts
maintained under the NationsSecurities Plan for a Participant
who participated in the NationsSecurities Plan representing
the Participant's interest in the Participant's "Elective
Deferrals" thereunder shall become the Participant's Pre-Tax
Employee Contribution Account under the Plan.
(ii) Creation of Former NationsSecurities Plan
Accounts. An Account shall be established under the Plan for
each of the accounts maintained under the NationsSecurities
Plan for a Participant who participated in the
NationsSecurities Plan other than the account described
immediately above. These Accounts are referred to in the Plan
as "Former NationsSecurities Plan Accounts." The Committee
shall cause to be maintained such sub-accounts as are
necessary to limit or restrict in-
<PAGE>
Service distributions as required by the Code.
The Committee may from time to time after January 1, 1996 combine a
Participant's Former NationsSecurities 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) Investment of Accounts. The Accounts representing a
Participant's interest in the NationsSecurities 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.
(c) Active Participation in the Plan. The following rules
shall apply for the purpose of determining when persons with "Hours of
Service" under the NationsSecurities Plan before January 1, 1996 for
employment with any participating employer in the NationsSecurities
Plan become Participants in the Plan on or after January 1, 1996:
(i) Prior Participants. With respect to persons who
had become "Participants" in the NationsSecurities Plan by
December 31, 1995:
Covered Employee on January 1, 1996. If a person is a
Covered Employee on January 1, 1996, the person shall
become a Participant on that date.
Non-Covered Employee or Former Employee on January 1,
1996. If the person is not a Covered Employee on
January 1, 1996 but one or more Accounts are
established for the person pursuant to Section
16.20(b)(1) of the Plan because of the person's
NationsSecurities 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.
Other situations. In any other case, the person shall
become a Participant if and when the person becomes a
Covered Employee after January 1, 1996.
<PAGE>
(ii) Other Employees. With respect to persons who
had not become "Participants" in the NationsSecurities Plan
by December 31, 1995:
Eligible Covered Employee on January 1, 1996. If the
person is a Covered Employee on January 1, 1996 and
would have commenced participation in the
NationsSecurities Plan on January 1, 1996 had it not
merged into the Plan, the person shall become a
Participant on January 1, 1996.
Other situations. Otherwise, the person shall become
a Participant when and as provided in Section 3.2(c)
of the Plan. For purposes of Section 3.2(c), the
person's Periods of Service and Qualifying Periods of
Severance shall include the following: the person
shall be credited (without duplication) with Months
of Service for time prior to the NationsSecurities
Acquisition Date equal to the person's "Period of
Service" under the NationsSecurities Plan on the
NationsSecurities Acquisition Date.
(d) Vesting in Former NationsSecurities Plan Accounts and
Matching Contribution Accounts; Vesting Service.
(1) Former NationsSecurities Plan Accounts. A Participant's
Former NationsSecurities Plan Accounts that correspond to the
Participant's "Qualified Company Contribution Account" and the portion
of the Participant's "Supplemental Pretax Account" attributable to
"Rollover Contributions" under the NationsSecurities Plan shall be
fully Vested and nonforfeitable. A Participant's Former
NationsSecurities Plan Account that corresponds to the Participant's
"Matching Contribution Account" under the NationsSecurities Plan shall
be subject to the vesting schedule set forth in Section 6.4(b)(iii) of
the Plan.
(2) Determination of Vesting Service. For purposes of
determining the Vesting Service of a Participant who had "Hours of
Service" under the NationsSecurities Plan before January 1, 1996 for
employment with any participating employer in the NationsSecurities
Plan, the person's Vesting Service shall be determined under the
applicable provisions of the Plan other than this Section 16.20(d),
except that the person shall be credited (without duplication) with
Months of Service for time prior to the NationsSecurities Acquisition
Date equal to the person's "Period of Service" under the
NationsSecurities Plan on the NationsSecurities Acquisition Date.
(e) Distribution of Accounts.
<PAGE>
(1) General. While a Participant is in Service, Distributions
to the Participant from the Participant's Former NationsSecurities Plan
Accounts shall be determined, to the extent required by the Act and the
Code, as if the NationsSecurities Plan had remained in effect.
Following separation from Service of a Participant who has any
Former NationsSecurities Plan Accounts, Distributions from the
Participant's Accounts (including Accounts that are not Former
NationsSecurities Plan Accounts) shall be made when and as provided in
Section 7.3 and 7.4 of the Plan.
(2) Benefit Payments in Progress. The merger of the
NationsSecurities Plan into the Plan shall not revoke or suspend any
NationsSecurities Plan methods of payment elected before or in progress
on January 1, 1996, and any method of payment in progress under the
NationsSecurities Plan on January 1, 1996 with respect to a
Participant's accounts thereunder shall continue in effect with respect
to the Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the NationsSecurities Plan with
respect to the Participant's accounts thereunder shall not be revoked
by reason of the merger of the NationsSecurities Plan into the Plan.
Such designation shall be effective under the Plan from and after
January 1, 1996 as designating the Beneficiary of all of the
Participant's Accounts, including any resulting Former
NationsSecurities 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.
SECTION 16.21. MERGER OF THE NORTH FLORIDA PLAN
(a) Merger of the North Florida Plan. NationsBank acquired
North Florida Bank Corporation on December 21, 1995 (the "North Florida
Acquisition Date"). At the time of the acquisition, North Florida Bank
Corporation sponsored the North Florida Bank Corporation Profit Sharing
and Thrift Plan (the "North Florida Plan"), which has continued in
existence since then.
The North Florida Plan shall merge with and into the Plan
effective as of the close of business on December 31, 1995. In
connection therewith and effective as of that time, (i) the Trust under
the North Florida Plan shall merge with and into the Investment Trust
for the Plan and (ii) the assets of the Trust under the North Florida
Plan shall become assets of the Plan. The Committee shall have the duty
and authority to direct the Investment Trustee with respect to
<PAGE>
the merger and consolidation of the assets of the various investment
funds maintained under the Trust of the North Florida Plan on December
31, 1995 with and into the Funds being maintained by the Investment
Trustee under the Investment Trust on or after January 1, 1996
pursuant to Article XII of the Plan.
(b) Accounts Related to Participation in the North Florida
Plan.
(1) Establishment of Accounts. Effective as of January 1,
1996, the accounts being maintained for participants in the North
Florida Plan on December 31, 1995 shall be combined with other
accounts, or maintained as separate accounts, under the Plan as
follows:
(i) Accounts for Elective Contributions. The account
maintained under the North Florida Plan for a Participant who
participated in the North Florida Plan representing the
Participant's interest in the Participant's "elective
contributions" thereunder shall become the Participant's
Pre-Tax Employee Contribution Account under the Plan.
(ii) Creation of Former North Florida Plan Accounts.
An Account shall be established under the Plan for each of the
accounts maintained under the North Florida Plan for a
Participant who participated in the North Florida Plan other
than the account described immediately above. These Accounts
are referred to in the Plan as "Former North Florida Plan
Accounts." The Committee shall cause to be maintained such
sub-accounts as are necessary to limit or restrict in-Service
distributions as required by the Code.
The Committee may from time to time after January 1, 1996 combine a
Participant's Former North Florida 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) Investment of Accounts. Except as provided in the next
paragraph, the Accounts representing a Participant's interest in the
North Florida 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.
The North Florida Plan maintained "Merger Accounts" for
certain Participants representing their interests in the North Florida
Bank Corporation Employee Stock Ownership Plan, which had merged into
the North Florida Plan. If a Participant had a "Merger Account" that
was invested in NationsBank Common Stock on December 31, 1995, the
corresponding Former North Florida
<PAGE>
Plan Account shall be subject to the investment restrictions of Section
12.6(a) of the Plan. (Therefore, the Account must be invested in the
NationsBank Common Stock Fund until transferred to the other Funds
pursuant to Section 12.6(b) of the Plan.)
(c) Active Participation in the Plan. The following rules
shall apply for the purpose of determining when persons with "Hours of
Service" under the North Florida Plan before January 1, 1996 for
employment with any participating employer in the North Florida Plan
become Participants in the Plan on or after January 1, 1996:
(i) Prior Participants. With respect to persons who had
become "Participants" in the North Florida Plan by December 31, 1995:
Covered Employee on January 1, 1996. If a person is a Covered
Employee on January 1, 1996, the person shall become a
Participant on that date.
Non-Covered Employee or Former Employee on January 1, 1996. If
the person is not a Covered Employee on January 1, 1996 but
one or more Accounts are established for the person pursuant
to Section 16.21(b)(1) of the Plan because of the person's
North Florida 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.
Other situations. In any other case, the person shall become a
Participant if and when the person becomes a Covered Employee
after January 1, 1996.
(ii) Other Employees. With respect to persons who had
not become "Participants" in the North Florida Plan by December 31,
1995:
Eligible Covered Employee on January 1, 1996. If the person is
a Covered Employee on January 1, 1996 and would have commenced
participation in the North Florida Plan on January 1, 1996 had
it not merged into the Plan, the person shall become a
Participant on January 1, 1996.
Other situations. Otherwise, the person shall become a
Participant when
<PAGE>
and as provided in Section 3.2(c) of the Plan. 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 the North Florida Acquisition Date determined as if
the participating employers in the North Florida Plan and
their 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 "Year of Service" for eligibility
purposes under the North Florida Plan that the person had as
of December 31, 1995. (See paragraph (uu)(1)(B) of Article I
of the North Florida Plan.)
If the person had in progress on December 31, 1995 a 12-month
computation period that would be a "Year of Service" for
eligibility purposes under the North Florida Plan if the
person completed 1,000 Hours of Service within it, the person
shall be credited with twelve (12) Months of Service upon the
completion of such computation period during 1996 if the
person had completed 1,000 "Hours of Service" under the North
Florida Plan during the portion of the computation period that
had elapsed by December 31, 1995.
(d) Vesting in Former North Florida Plan Accounts and
Matching Contribution Accounts; Vesting Service.
(1) Former North Florida Plan Accounts. A Participant's Former
North Florida Plan Accounts that correspond to the Participant's
"Matching Contribution Account," "Non-Elective Contribution Account"
and "Rollover Contribution Account" under the North Florida Plan shall
be fully Vested and nonforfeitable. A Participant's Former North
Florida Plan Accounts that correspond to the Participant's "Employer
Contribution Account" and "Merger Account" under the North Florida Plan
shall be subject to the vesting schedule set forth in Section
6.4(b)(iii) of the Plan.
(2) Determination of Vesting Service. For purposes of
determining the Vesting Service of a Participant who had "Hours of
Service" under the North Florida Plan before January 1, 1996 for
employment with any participating employer in the North Florida Plan,
the person's Vesting Service shall be determined under the applicable
provisions of the Plan other than this Section 16.21(d), except that
the person shall be credited with Months of Service for time prior to
the North Florida Acquisition Date determined as if the participating
employers in the North Florida Plan and their affiliates and
predecessor
<PAGE>
companies had been Participating Employers in the Plan. If
the Participant had become a "Participant" in the North Florida Plan by
December 31, 1995, however, in no event shall such Participant's Vested
percentage in any Account that is subject to the vesting schedule set
forth in Section 6.4(b)(iii) of the Plan be less at any time than the
Vested percentage that would result had the vesting provisions of the
North Florida Plan remained in effect.
(e) Distribution of Accounts.
(1) General. While a Participant is in Service, Distributions
to the Participant from the Participant's Former North Florida Plan
Accounts shall be determined, to the extent required by the Act and the
Code, as if the North Florida Plan had remained in effect.
Following separation from Service of a Participant who has any
Former North Florida Plan Accounts, Distributions from the
Participant's Accounts (including Accounts that are not Former North
Florida Plan Accounts) shall be made either (i) when and as provided in
Section 7.3 and 7.4 of the Plan or (ii) if the total Vested interest in
the Participant's Accounts at the time of Distribution exceeds three
thousand five hundred dollars ($3,500), as provided by Article XVIII of
the Plan. The Committee shall establish the procedures by which
Participants and Beneficiaries may make their related payment
elections.
(2) Benefit Payments in Progress. The merger of the North
Florida Plan into the Plan shall not revoke or suspend any North
Florida Plan methods of payment elected before or in progress on
January 1, 1996, and any method of payment in progress under the North
Florida Plan on January 1, 1996 with respect to a Participant's
accounts thereunder shall continue in effect with respect to the
Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the North Florida Plan with
respect to the Participant's accounts thereunder shall not be revoked
by reason of the merger of the North Florida Plan into the Plan. Such
designation shall be effective under the Plan from and after January 1,
1996 as designating the Beneficiary of all of the Participant's
Accounts, including any resulting Former North Florida 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."
7. The following Article XVIII is added to the Plan effective
as of October 1, 1995:
<PAGE>
"ARTICLE XVIII
ADDITIONAL METHODS OF DISTRIBUTION
SECTION 18.1. GENERAL. From time to time certain tax-qualified
defined contribution plans are merged into the Plan or transfer assets
to the Plan in connection with business acquisitions by the
Participating Employers. Sometimes these prior plans provide for
annuity or installment methods of payment which are required to be
preserved under the Plan in accordance with Code Section 411(d)(6). In
some cases, the prior plans provide for a Qualified Annuity as the
normal form of payment. The purpose of this Article is to provide for
additional methods of Distribution and special rules applicable to
Qualified Annuities and Qualified Preretirement Survivor Annuities for
Participants who participated in these prior plans.
SECTION 18.2. DEFINITIONS. For purposes of this Article,
the following terms shall have the following meanings:
(a) Applicable Election Period means:
(i) in the case of a Participant's election to waive
the Qualified Annuity form of Distribution, the ninety (90)
day period ending on the date of commencement of
Distribution; and
(ii) in the case of a Participant's election to waive
the Qualified Preretirement Survivor Annuity form of
Distribution, the period which begins on the first day of the
Plan Year in which the Participant attains age thirty-five
(35) and ends on the date of the Participant's death;
provided, however, in the case the Participant separates from
Service, the period under this subparagraph (ii), with respect
to benefits accrued before the date of the separation of
Service, shall not begin later than the date of the separation
from Service.
(b) Prior Plan means each plan listed on Schedule 18.2(b)
attached to the Plan. Schedule 18.2(b) shall indicate which Prior Plans
had a Qualified Annuity as the normal form of payment. Schedule 18.2(b)
shall be updated from time to time to reflect additional merged or
transferor plans that are subject to this Article.
(c) Qualified Annuity means:
(i) with respect to a married Participant, an annuity
for the life
<PAGE>
of the Participant with a survivor annuity for the life
of the Participant's spouse which is not less than
fifty percent (50%), nor greater than one hundred percent
(100%), of the amount which is payable during the joint lives
of the Participant and such spouse; and
(ii) with respect to an unmarried Participant, an
annuity for the life of the Participant.
(d) Qualified Preretirement Survivor Annuity means, with
respect to the surviving spouse of a Participant, an annuity for the
life of such surviving spouse.
(e) Qualified Waiver means, with respect to a Participant, a
written election by the Participant to waive the Qualified Annuity form
of Distribution or the Qualified Preretirement Survivor Annuity form of
Distribution (as the case may be). The election must (i) be in writing,
(ii) be delivered to the Committee at any time during the Applicable
Election Period with respect to the election, (iii) specify the
alternative method of Distribution and (iv) if applicable, specify any
non-spouse Beneficiary under the alternative method of Distribution. If
the Participant is married, the election shall not be effective unless
(i) the spouse of the Participant consents in writing to the election
and the spouse's said consent acknowledges the effect of the election
and is witnessed by a member of the Committee or other representative
of the Plan or by a notary public or (ii) it is established to the
satisfaction of the Committee or other representative of the Plan that
such consent may not be obtained because there is no spouse, because
such spouse cannot be located, or because of such circumstances as may
be prescribed by applicable Code regulations. Any consent by a spouse,
or establishment that the consent of a spouse may not be obtained,
shall be effective only with respect to that spouse. Any Qualified
Waiver by a Participant may be revoked by the Participant, without the
consent of the Participant's spouse to such revocation, at any time
during the Applicable Election Period with respect to the Qualified
Waiver by written notice of revocation delivered to the Committee
during the Applicable Election Period. Following any such revocation,
the Participant may make another Qualified Waiver pursuant to the
provisions set forth above.
SECTION 18.3 PARTICIPANTS SUBJECT TO THIS ARTICLE. The
Participants subject to this Article shall be each Participant who
participated in a Prior Plan and whose account(s) under the Prior Plan
were transferred to this Plan. For these Participants, the provisions
of this Article shall control notwithstanding any provision of this
Plan to the contrary.
SECTION 18.4 ADDITIONAL METHODS OF DISTRIBUTION.
<PAGE>
In addition to the single lump sum method of Distribution as provided
in Section 7.4, a Participant who has separated from Service, and any
Beneficiary of a deceased Participant who died prior to commencement of
Distribution, may elect to have the Participant's Accounts paid by one
or any combination of the following methods, subject to the provisions
of this Article:
Single Life Annuity: an annuity payable for the life of the
Participant (or Beneficiary, if applicable).
Term Certain Annuity: an annuity payable for the life of the
Participant (or Beneficiary, if applicable), with payments
guaranteed for a period selected by the Participant (or
Beneficiary, if applicable) of five (5), ten (10), fifteen
(15) or twenty (20) years. Any payments during the guaranteed
period following the Participant's (or Beneficiary's) death
would be paid to the Participant's (or Beneficiary's)
designated beneficiary.
Contingent Annuity: an annuity payable for the life of the
Participant (or Beneficiary, if applicable), with a survivor
annuity payable to the Participant's (or Beneficiary's)
designated beneficiary equal to either fifty percent (50%) or
one hundred percent (100%), as selected by the Participant (or
Beneficiary), of the amount payable during the joint lives of
the Participant (or Beneficiary) and such designated
beneficiary.
Installments: payment of the balance of the Participant's
Accounts in substantially equal installments at regular
intervals not more frequent than monthly over a period
selected by the Participant (or Beneficiary, if applicable)
In certain circumstances some Participants may have available
additional methods of Distribution that are required to be preserved
under the Plan in accordance with Code Section 411(d)(6). See Article
XVI of the Plan.
SECTION 18.5 QUALIFIED ANNUITY AS NORMAL FORM. For a
Participant who participated in a Prior Plan that had a Qualified
Annuity as the normal form of payment:
(i) where there is no Qualified Waiver in effect with
respect to the Qualified Annuity method of Distribution, the
method of Distribution to the Participant shall be by
purchasing a Qualified Annuity with the amount distributable
to the Participant and distributing the Qualified Annuity to
the Participant; and
<PAGE>
(ii) where there is a Qualified Waiver in effect with
respect to the Qualified Annuity method of Distribution, the
method of Distribution to the Participant shall be in
accordance with the method selected by the Participant as
described above and consistent with the Qualified Waiver.
SECTION 18.6 QUALIFIED ANNUITY NOT AS NORMAL FORM. For a
Participant who participated in a Prior Plan that did not have a
Qualified Annuity as the normal form of payment, no Qualified Waiver
shall be required for the Participant to be paid by the single lump sum
method or installment method of Distribution. If, however, the
Participant elects an annuity method of Distribution, the method of
Distribution to the Participant shall be by purchasing a Qualified
Annuity with the amount distributable to the Participant and
distributing the Qualified Annuity to the Participant unless a
Qualified Waiver is in effect permitting the elected method of payment.
SECTION 18.7 ADDITIONAL REQUIREMENTS.
(a) Qualified Preretirement Survivor Annuity. The Qualified
Preretirement Survivor Annuity requirement of this Section 18.7(a)
shall apply with respect to each Participant with respect to whom the
Qualified Annuity requirement of this Article applies. If such
requirement applies with respect to a Participant and the Participant
dies prior to the commencement of Distribution and is survived by the
Participant's spouse, then:
(i) where there is no Qualified Waiver with respect
to the Qualified Preretirement Survivor Annuity form of
Distribution in effect at the time of the Participant's death,
the spouse shall be the Participant's Beneficiary and the
method of Distribution to the Beneficiary shall be (A) by
purchasing a Qualified Preretirement Survivor Annuity with the
amount distributable to the Beneficiary and distributing the
Qualified Preretirement Survivor Annuity to the Beneficiary or
(B) at the Beneficiary's election, by any alternative method
set forth in Section 18.4 of the Plan; and
(ii) where there is a Qualified Waiver in effect with
respect to the Qualified Preretirement Survivor Annuity form
of Distribution, the Beneficiary shall be as provided in or
permitted by the Qualified Waiver and the method of
Distribution to such Beneficiary shall be consistent with the
Qualified Waiver.
(b) Notice Requirements. The Committee shall provide each
Participant with respect to whom the Qualified Annuity requirement of
this
<PAGE>
Article applies, within a reasonable period of time prior to the
commencement of Distribution, with a written explanation of (i) the
terms and conditions of the Qualified Annuity, (ii) the Participant's
right to make, and the effect of, a Qualified Waiver with respect to
the Qualified Annuity form of Distribution, (iii) the rights of the
Participant's spouse as to spousal consent with respect to the
Qualified Waiver and (iv) the right to make, and the effect of, a
revocation of a Qualified Waiver. The Committee shall also provide each
Participant with respect to whom the Qualified Preretirement Survivor
Annuity requirement of this Article applies with a written explanation
with respect to the Qualified Preretirement Survivor Annuity that is
comparable to the explanation hereinabove required with respect to the
Qualified Annuity. The Committee shall provide such written explanation
with respect to the Qualified Preretirement Survivor Annuity within the
period (i) beginning on the first day of the Plan Year in which the
Participant attains age thirty-two (32) and (ii) ending with the close
of the Plan Year in which the Participant attains and thirty-five (35).
If the Participant becomes a Participant in the Plan after the first
day of the Plan Year in which the Participant attains age thirty-two
(32), however, the Committee shall provide the written explanation with
respect to the Qualified Preretirement Survivor Annuity to the
Participant no later than the close of the second Plan Year following
the Participant's becoming a Participant in the Plan.
(c) Purchase of Annuities. Any annuity that is to be purchased
and distributed to a Participant or Beneficiary under this Article
shall be provided under a contract issued by an insurance company
selected by the Committee, and the Committee shall provide such
insurance company with all pertinent information required for issuance
of the annuity contract, including without limitation the name, sex and
date of birth of the annuitant(s) and the type of annuity to be
provided under the annuity contract. The amount distributable shall
disbursed to the insurance company in payment of the annuity contract.
Any annuity contract distributed to a Participant or Beneficiary shall
be nontransferable.
(d) Maximum Period of Distribution to Participants. Any
method of Distribution to a Participant mus meet either the
requirements of subparagraph (i) or subparagraph (ii) below:
(i) such method shall provide for Distribution over a
period which does not exceed the life expectancy of the
Participant or the joint life and last survivor expectancy of
the Participant and the Participant's Beneficiary; or
(ii) such method is the purchase of an annuity
providing for payments to the Participant over the life of the
Participant or to the
<PAGE>
Participant and the Participant's Beneficiary over the joint
lives and life of the survivor of the Participant and the
Participant's Beneficiary.
(e) Maximum Period of Distribution to Beneficiaries. If
Distribution had begun to the Participant [within the meaning of
Section 401(a)(9)(B)(i) of the Code], Distributions to the
Participant's Beneficiary shall be completed at least as rapidly as
under the method under which Distributions were being made to the
Participant at the time of the Participant's death. If Distributions
had not so begun to the Participant, Distributions to the Participant's
Beneficiary shall be completed within five (5) years after the
Participant's death; provided, however:
(i) if the Participant's Beneficiary is an individual
and Distributions to or on behalf of such Beneficiary begin
not later than one (1) year after the date of the
Participant's death [or such later date as may be provided by
regulations under Section 401(a)(9) of the Code],
Distributions may be made over a period that does not exceed
the life expectancy of the Beneficiary or by the purchase of
an annuity providing for payments over the life of the
Beneficiary; and
(ii) in the event that the Beneficiary is the
Participant's surviving spouse, (A) if Distributions to such
Beneficiary begin not later than the date on which the
Participant would have attained age seventy and one-half
(70-1/2), Distributions may be made over a period not
exceeding the life expectancy of the Beneficiary or by the
purchase of an annuity providing for payments over the life of
the Beneficiary, and (B) if the Beneficiary dies before
Distributions commence, the provisions of this Section 18.7
shall apply as if the Beneficiary had been the Participant.
(f) Exception. Notwithstanding any provision of this Article
to the contrary, any Distribution with respect to a Participant whose
Accounts do not exceed three thousand five hundred dollars ($3,500) in
the aggregate shall be paid in the form of a single lump sum payment in
accordance with the provisions of the Plan other than this Article.
(g) Compliance with Section 401(a)(9). Payments of Plan
benefits under this Article shall comply with the requirements of
Section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of Section 401(a)(9)(G) of the Code and
Proposed Treasury Regulation ss.1.401(a)(9)-2."
<PAGE>
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, has caused this Instrument to be executed by its duly
authorized officer, as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/Susan B. Waldkirch
Name: Susan B. Waldkirch
Title: Vice President
<PAGE>
FIFTH AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT is executed as of the 1st day of January, 1996 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
The NationsBank Retirement Savings Plan (the "Plan") was amended and
restated effective January 1, 1993 by Instrument dated December 31, 1992 and
further amended by Instruments dated December 31, 1993, December 31, 1994,
August 1, 1995 and December 31, 1995. By this Instrument, NationsBank is
amending the Plan to reflect three 1996 corporate acquisitions. 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, as subsequently amended, is amended as
follows:
1. The following Section 16.22 is added to the Plan effective as of
January 10, 1996:
"SECTION 16.22. EMPLOYEES OF CSF HOLDINGS.
(a) General. NationsBank acquired CSF Holdings, Inc. ("CSF
Holdings") on January 10, 1996 (the "CSF Holdings Acquisition Date").
At the time of the acquisition, CSF Holdings sponsored the CSF Holdings
Cash or Deferred Profit Sharing Plan (the "CSF Holdings Plan"), and
contributions to the CSF Holdings Plan ceased effective as of the CSF
Holdings Acquisition Date. This Section 16.22 provides rules for (i)
determining when persons employed by CSF Holdings or any of its
subsidiary companies on or before the CSF Holdings Acquisition Date
become Participants in the Plan and (ii) determining their Vested
interest in their resulting Matching Contribution Accounts.
(b) Participation in the Plan. The following rules shall apply
for the purpose of determining when persons employed by CSF Holdings or
any of its subsidiary companies on or before the CSF Holdings
Acquisition Date become
<PAGE>
Participants in the Plan on or after the CSF Holdings Acquisition Date:
(i) CSF Holdings Plan Participants. With respect to
persons who had become "Participants" in the CSF Holdings Plan
before the CSF Holdings Acquisition Date (including persons
who could have elected to participate by the CSF Holdings
Acquisition Date but chose not to do so):
Covered Employee on the CSF Holdings Acquisition
Date. If a person is a Covered Employee on the CSF
Holdings Acquisition Date, the person shall become a
Participant on that date.
Non-Covered Employee or Former Employee on the CSF
Holdings Acquisition Date. If the person is not a
Covered Employee on the CSF Holdings Acquisition
Date, the person shall become a Participant if and
when the person becomes a Covered Employee after the
CSF Holdings Acquisition Date.
(ii) Other Employees. With respect to persons who had
not become "Participants" in the CSF Holdings Plan before the
CSF Holdings Acquisition Date, the person shall become a
Participant when and as provided in Section 3.2(c) of the
Plan. 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 the CSF
Holdings Acquisition Date determined as if CSF Holdings and
its subsidiary companies and their predecessor companies had
been Participating Employers in the Plan.
(c) Vesting in Matching Contribution Accounts; Vesting
Service. The Matching Contribution Accounts of persons who were
employees of CSF Holdings or any of its subsidiary companies on or
before the CSF Holdings Acquisition Date (including persons who had not
become "Participants" in the CSF Holdings Plan by the CSF Holdings
Acquisition Date) shall vest as follows:
(i) Employee on CSF Holdings Acquisition Date. If the
person was an employee of CSF Holdings or any of its
subsidiary companies on the CSF Holdings Acquisition Date, the
person's Matching Contribution Account shall be fully Vested
and nonforfeitable.
(ii) Not Employee on CSF Holdings Acquisition Date.
If the person was not an employee of CSF Holdings or any of
its subsidiary companies on the CSF Holdings Acquisition Date,
the person's
<PAGE>
Matching Contribution Account shall be subject to
the vesting schedule set forth in Section 6.4(b)(iii) of the
Plan. The person's Vesting Service shall be determined under
the applicable provisions of the Plan other than this Section
16.22(c), except that the person shall be credited (without
duplication) with Months of Service for time prior to the CSF
Holdings Acquisition Date determined as if CSF Holdings and
its subsidiary companies and their predecessor companies had
been Participating Employers in the Plan."
2. The following Section 16.23 is added to the Plan effective as of
February 1, 1996:
"SECTION 16.23. EMPLOYEES OF BANK SOUTH.
(a) General. NationsBank acquired Bank South Corporation
("Bank South") on January 9, 1996 (the "Bank South Acquisition Date").
At the time of the acquisition, Bank South sponsored the Bank South
401(k) Investment Plan (the "Bank South Plan"), and contributions to
the Bank South Plan ceased effective January 31, 1996. This Section
16.23 provides rules for (i) determining when persons employed by Bank
South or any of its subsidiary companies on or before the Bank South
Acquisition Date become Participants in the Plan and (ii) determining
their Vested interest in their resulting Matching Contribution
Accounts.
(b) Participation in the Plan. The following rules shall apply
for the purpose of determining when persons employed by Bank South or
any of its subsidiary companies on or before the Bank South Acquisition
Date become Participants in the Plan on or after February 1, 1996:
(i) Bank South Plan Participants. With respect to
persons who had become "Participants" in the Bank South Plan
by January 31, 1996 (including persons who could have elected
to participate in the "Pay Transfer Portion" of the Bank South
Plan by January 1, 1996 but chose not to do so):
Covered Employee on February 1, 1996. If the person
is a Covered Employee on February 1, 1996, the person
shall become a Participant on that date.
Non-Covered Employee or Former Employee on February
1, 1996. If the person is not a Covered Employee on
February 1, 1996, the person shall become a
Participant if and when the person becomes a Covered
Employee after February 1, 1996.
<PAGE>
(ii) Other Employees. With respect to persons who
had not become "Participants" in the Bank South Plan by
January 31, 1996:
Eligible Covered Employee on February 1, 1996. If the
person is a Covered Employee on February 1, 1996 and
had completed "Six Months of Service" within the
meaning of Section 3.2(b) of the Bank South Plan by
January 31, 1996, the person shall become a
Participant on February 1, 1996.
Other situations. Otherwise, the person shall become
a Participant when and as provided in Section 3.2(c)
of the Plan. 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 the Bank South
Acquisition Date determined as if Bank South and its
subsidiary companies and their predecessor companies
had been Participating Employers in the Plan.
(c) Vesting in Matching Contribution Accounts; Vesting
Service. The Matching Contribution Accounts of persons who were
employees of Bank South or any of its subsidiary companies on or prior
to the Bank South Acquisition Date (including persons who had not
become "Participants" in the Bank South Plan by the Bank South
Acquisition Date) shall vest as follows:
(i) Employee on Bank South Acquisition Date. If the
person was an employee of Bank South or any of its subsidiary
companies on the Bank South Acquisition Date, the person's
Matching Contribution Account shall be fully Vested and
nonforfeitable.
(ii) Not Employee on Bank South Acquisition Date. If
the person was not an employee of Bank South or any of its
subsidiary companies on the Bank South Acquisition Date, the
person's Matching Contribution Account shall be subject to the
vesting schedule set forth in Section 6.4(b)(iii) of the Plan.
The person's Vesting Service shall be determined under the
applicable provisions of the Plan other than this Section
16.23(c), except that the person shall be credited (without
duplication) with Months of Service for time prior to the Bank
South Acquisition Date determined as if Bank South and its
subsidiary companies and their predecessor companies had been
Participating Employers in the Plan."
3. The following Section 16.24 is added to the Plan effective as
of February 1, 1996:
<PAGE>
"SECTION 16.24. CERTAIN FORMER EMPLOYEES OF SUN WORLD BANK.
(a) General. NationsBank acquired Sun World Savings Bank, FSB
("Sun World") on January 31, 1996 (the "Sun World Acquisition Date").
At the time of the acquisition, Sun World participated in the Sun World
401(k) Savings Plan, a defined contribution plan sponsored by Sun
World's affiliate Sun World Corporation (the "Sun World Plan"). This
Section 16.24 applies to persons who are employed by Sun World on the
Sun World Acquisition Date and provides rules for (i) determining when
they become Participants in the Plan and (ii) determining their Vested
Service for time prior to the Sun World Acquisition Date.
(b) Participation in the Plan. The following rules shall apply
for purposes of determining when persons employed by Sun World on the
Sun World Acquisition Date become Participants in the Plan on or after
February 1, 1996:
(i) Sun World Plan Participants. With respect to
persons who had become "Participants" in the Sun World Plan by
the Sun World Acquisition Date (including persons who could
have elected to participate in the Sun World Plan by the Sun
World Acquisition Date but chose not to do so):
Covered Employee on February 1, 1996. If the person
is a Covered Employee on February 1, 1996, the person
shall become a Participant on that date.
Non-Covered Employee or Former Employee on February
1, 1996. If a person is not a Covered Employee on
February 1, 1996, the person shall become a
Participant if and when the person becomes a Covered
Employee after February 1, 1996.
(ii) Other Employees. With respect to persons who had
not become "Participants" in the Sun World Plan by the Sun
World Acquisition Date, the person shall become a Participant
when and as provided in Section 3.2(c) of the Plan, but in no
event earlier than February 1, 1996. For purposes of Section
3.2(c), a 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 the Sun World Acquisition Date determined as
if Sun World and its affiliated companies and their
predecessor companies had been Participating Employers in the
Plan.
<PAGE>
(c) Vesting Service. The Vesting Service of a person who is
employed by Sun World on the Sun World Acquisition Date shall be
determined under the applicable provisions of the Plan other than this
Section 16.24, except that the person shall be credited (without
duplication) with Months of Service for time prior to the Sun World
Acquisition Date determined as if Sun World and its affiliated
companies and their predecessor companies had been Participating
Employers in the Plan."
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, has caused this Instrument to be executed by its duly
authorized officer, as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/Susan B. Waldkirch
Name: Susan B. Waldkirch
Title: Vice President
<PAGE>
SIXTH AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT is executed as of the 30th day of June, 1996 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
The NationsBank Retirement Savings Plan (the "Plan") was amended and
restated effective January 1, 1993 by Instrument dated December 31, 1992 and
further amended by Instruments dated December 31, 1993, December 31, 1994,
August 1, 1995, December 31, 1995 and January 1, 1996. By this Instrument,
NationsBank is amending the Plan to reflect certain 1996 corporate acquisitions.
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, as subsequently amended, is amended as
follows:
1. The following Sections 16.25, Section 16.26 and Section 16.27 are
added to the Plan effective as of June 30, 1996:
"SECTION 16.25. MERGER OF THE LDI PLAN
(a) Merger of the LDI Plan. NationsCredit Commercial
Corporation, which is a Participating Employer, acquired LDI
Corporation on April 29, 1996 (the "LDI Acquisition Date"). At the time
of the acquisition, LDI Corporation sponsored the LDI Corporation
Retirement Savings Plan (the "LDI Plan"), which has continued in
existence since then.
The LDI Plan shall merge with and into the Plan effective as
of the close of business on June 30, 1996. In connection therewith and
effective as of that time, (i) the Trust under the LDI Plan shall merge
with and into the Investment Trust for the Plan and (ii) the assets of
the Trust under the LDI 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
<PAGE>
the various investment funds maintained under the Trust of the LDI Plan
on June 30, 1996 with and into the Funds being maintained by the
Investment Trustee under the Investment Trust on or after July 1, 1996
pursuant to Article XII of the Plan.
(b) Accounts Related to Participation in the LDI Plan.
(1) Establishment of Accounts. Effective as of July 1, 1996,
the accounts being maintained for participants in the LDI Plan on June
30, 1996 shall be combined with other accounts, or maintained as
separate accounts, under the Plan as follows:
(i) Accounts for Participant Elected Contributions.
The account maintained under the LDI Plan for a Participant
who participated in the LDI Plan representing the
Participant's interest in the Participant's "Participant
Elected Contributions" thereunder shall become the
Participant's Pre-Tax Employee Contribution Account under the
Plan.
(ii) Creation of Former LDI Plan Accounts. An Account
shall be established under the Plan for each of the accounts
maintained under the LDI Plan for a Participant who
participated in the LDI Plan other than the account described
immediately above. These Accounts are referred to in the Plan
as "Former LDI Plan Accounts." The Committee shall cause to be
maintained such sub-accounts as are necessary to limit or
restrict in-Service distributions as required by the Code.
The Committee may from time to time after July 1, 1996 combine a
Participant's Former LDI 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) Investment of Accounts. Except as hereafter provided in
this Section 16.25(b)(2), the Accounts representing a Participant's
interest in the LDI 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.
If a loan made under the LDI Plan to a Participant who
participated in the LDI Plan is outstanding on July 1, 1996, 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 LDI Plan that were invested in such
promissory note. The Investment Trustee shall become the successor
lender of each such "earmarked" loan outstanding on July 1, 1996 for
all purposes, and the
<PAGE>
merger of the LDI Plan into the Plan shall not adversely
affect the interest of the Plan (as successor to the LDI
Plan) in the promissory note evidencing such loan or in the security
for the repayment of the promissory note. (No loans were made under the
LDI Plan after May 22, 1996.)
Certain participant accounts in the LDI Plan were invested in
insurance contracts issued by Aetna Life Insurance Company (or an
affiliate thereof). If any such contract is held by the LDI Plan at the
time of its merger into the Plan, the contract shall be held by the
Investment Trustee, as successor contractholder, as a segregated
investment allocated to and made solely for the benefit of the
Participant's Account(s) that correspond to the Participant's LDI Plan
account(s) that were invested in the contract.
(c) Active Participation in the Plan. The following rules
shall apply for the purpose of determining when persons with "Hours of
Service" under the LDI Plan before July 1, 1996 for employment with any
participating employer in the LDI Plan become Participants in the Plan
on or after July 1, 1996:
(i) Prior Participants. With respect to persons
who had become "Participants" in the LDI Plan by June 30,
1996:
Covered Employee on July 1, 1996. If the person is a
Covered Employee on July 1, 1996, the person shall
become a Participant on that date.
Non-Covered Employee or Former Employee on July 1,
1996. If the person is not a Covered Employee on July
1, 1996 but one or more Accounts are established for
the person pursuant to Section 16.25(b)(1) of the
Plan because of the person's LDI 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.
Other situations. In any other case, the person shall
become a Participant if and when the person becomes a
Covered Employee after July 1, 1996.
(ii) Other Employees. With respect to persons who
had not become "Participants" in the LDI Plan by June
30, 1996:
<PAGE>
Eligible Covered Employee on January 1, 1996. If the
person is a Covered Employee on July 1, 1996 and
would have commenced participation in the LDI Plan on
July 1, 1996 had it not merged into the Plan, the
person shall become a Participant on July 1, 1996.
Other situations. Otherwise, the person shall become
a Participant when and as provided in Section 3.2(c)
of the Plan. For purposes of Section 3.2(c), the
person shall be credited with Months of Service for
time prior to the LDI Acquisition Date determined as
if the participating employers in the LDI Plan and
their affiliates and predecessor companies had been
Participating Employers in the Plan.
(d) Vesting in Former LDI Plan Accounts; Vesting Service.
(1) Former LDI Plan Accounts. A Participant's Former
LDI Plan Accounts shall be fully Vested and nonforfeitable.
(2) Determination of Vesting Service. For purposes of
determining the Vesting Service of a Participant who had "Hours of
Service" under the LDI Plan before July 1, 1996 for employment with any
participating employer in the LDI Plan, the person's Vesting Service
shall be determined under the applicable provisions of the Plan other
than this Section 16.25(d), except that the person shall be credited
with Months of Service for time prior to the LDI Acquisition Date
determined as if the participating employers in the LDI Plan and their
affiliates and predecessor companies had been Participating Employers
in the Plan.
(e) Distribution of Accounts.
(1) General. While a Participant is in Service, Distributions
to the Participant from the Participant's Former LDI Plan Accounts
shall be determined, to the extent required by the Act and the Code, as
if the LDI Plan had remained in effect.
Following separation from Service of a Participant who has any
Former LDI Plan Accounts, Distributions from the Participant's Accounts
(including Accounts that are not Former LDI Plan Accounts) shall be
made either (i) when and as provided in Section 7.3 and 7.4 of the Plan
or (ii) if the total Vested interest in the Participant's Accounts at
the time of Distribution exceeds three thousand five hundred dollars
($3,500), as provided by Article XVIII of the Plan.
<PAGE>
The Committee shall establish the procedures by which Participants and
Beneficiaries may make their related payment elections.
(2) Benefit Payments in Progress. The merger of the LDI Plan
into the Plan shall not revoke or suspend any LDI Plan methods of
payment elected before or in progress on July 1, 1996, and any method
of payment in progress under the LDI Plan on July 1, 1996 with respect
to a Participant's accounts thereunder shall continue in effect with
respect to the Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the LDI Plan with respect to
the Participant's accounts thereunder shall not be revoked by reason of
the merger of the LDI Plan into the Plan. Such designation shall be
effective under the Plan from and after July 1, 1996 as designating the
Beneficiary of all of the Participant's Accounts, including any
resulting Former LDI Plan Accounts, unless the Participant revokes or
changes the designation or the designation otherwise becomes
ineffective, in accordance with the terms and provisions of the Plan.
(For example, the designation is superseded by a beneficiary
designation made by the Participant at the time that the Participant
enrolls in the Plan.)
SECTION 16.26. MERGER OF THE CHARTER BANCSHARES PLAN
(a) Merger of the Charter Bancshares Plan. NationsBank
acquired Charter Bancshares, Inc. on May 24, 1996 (the "Charter
Bancshares Acquisition Date"). At the time of the acquisition, Charter
Bancshares, Inc. sponsored the Charter Bancshares, Inc. 401(k) Profit
Sharing Plan (the "Charter Bancshares" Plan), which has continued in
existence since then.
The Charter Bancshares Plan shall merge with and into the Plan
effective as of the close of business on June 30, 1996. In connection
therewith and effective as of that time, (i) the Trust under the
Charter Bancshares Plan shall merge with and into the Investment Trust
for the Plan and (ii) the assets of the Trust under the Charter
Bancshares 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 Charter Bancshares
Plan on June 30, 1996 with and into the Funds being maintained by the
Investment Trustee under the Investment Trust on or after July 1, 1996
pursuant to Article XII of the Plan.
(b) Accounts Related to Participation in the Charter
Bancshares Plan.
<PAGE>
(1) Establishment of Accounts. Effective as of July 1, 1996,
the accounts being maintained for participants in the Charter
Bancshares Plan on June 30, 1996 shall be combined with other accounts,
or maintained as separate accounts, under the Plan as follows:
(i) Accounts for Deferral Contributions. The account
maintained under the Charter Bancshares Plan for a Participant
who participated in the Charter Bancshares Plan representing
the Participant's interest in the Participant's "deferral
contributions" thereunder shall become the Participant's
Pre-Tax Employee Contribution Account under the Plan.
(ii) Creation of Former Charter Bancshares Plan
Accounts. An Account shall be established under the Plan for
each of the accounts maintained under the Charter Bancshares
Plan for a Participant who participated in the Charter
Bancshares Plan other than the account described immediately
above. These Accounts are referred to in the Plan as "Former
Charter Bancshares Plan Accounts." The Committee shall cause
to be maintained such sub-accounts as are necessary to limit
or restrict in-Service distributions as required by the Code.
The Committee may from time to time after July 1, 1996 combine a
Participant's Former Charter Bancshares 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) Investment of Accounts. Except as provided in the next
paragraph, the Accounts representing a Participant's interest in the
Charter Bancshares 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.
If a loan made under the Charter Bancshares Plan to a
Participant who participated in the Charter Bancshares Plan is
outstanding on July 1, 1996, the promissory note evidencing such loan
shall be held by the Investment Trustee as a segregated, "earmarked"
investment allocated to and made solely for the benefit of the
Participant's Account(s). The Investment Trustee shall become the
successor lender of each such outstanding loan for all purposes, and
the merger of the Charter Bancshares Plan into the Plan shall not
adversely affect the interest of the Plan (as successor to the Charter
Bancshares Plan) in the promissory note evidencing such loan or in the
security for the repayment of the promissory note. (No loans were made
under the Charter Bancshares Plan after June 15, 1996.)
<PAGE>
(c) Active Participation in the Plan. The following rules
shall apply for the purpose of determining when persons with "Hours of
Service" under the Charter Bancshares Plan before July 1, 1996 for
employment with any participating employer in the Charter Bancshares
Plan become Participants in the Plan on or after July 1, 1996:
(i) Prior Participants. With respect to persons
who had become "Participants" in the Charter Bancshares
Plan by June 30, 1996:
Covered Employee on July 1, 1996. If the person is a
Covered Employee on July 1, 1996, the person shall
become a Participant on that date.
Non-Covered Employee or Former Employee on July 1,
1996. If the person is not a Covered Employee on July
1, 1996 but one or more Accounts are established for
the person pursuant to Section 16.26(b)(1) of the
Plan because of the person's Charter Bancshares 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.
Other situations. In any other case, the person shall
become a Participant if and when the person becomes a
Covered Employee after July 1, 1996.
(ii) Other Employees. With respect to persons who
had not become "Participants" in the Charter Bancshares Plan
by June 30, 1996:
Eligible Covered Employee on January 1, 1996. If the
person is a Covered Employee on July 1, 1996 and
would have commenced participation in the Charter
Bancshares Plan on July 1, 1996 had it not merged
into the Plan, the person shall become a Participant
on July 1, 1996.
Other situations. Otherwise, the person shall become
a Participant when and as provided in Section 3.2(c)
of the Plan. For purposes of Section 3.2(c), the
person's Periods of Service and Qualifying Periods of
Severance shall include (without duplication) the
following:
<PAGE>
The person shall be credited with Months of
Service for time prior to the Charter
Bancshares Acquisition Date determined as if
the participating employers in the Charter
Bancshares Plan and their 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
"Year of Service" for eligibility purposes
under the Charter Bancshares Plan that the
person had as of June 30, 1996. (See Section
2.02 of the Charter Bancshares Plan.)
If the person had in progress on June 30,
1996 a 12-month computation period that
would be a "Year of Service" for eligibility
purposes under the Charter Bancshares Plan
if the person completed 1,000 Hours of
Service within it, the person shall be
credited with twelve (12) Months of Service
upon the completion of such computation
period if the person had completed 1,000
"Hours of Service" under the Charter
Bancshares Plan during the portion of the
computation period that had elapsed by June
30, 1996.
(d) Vesting in Former Charter Bancshares Plan Accounts;
Vesting Service.
(1) Former Charter Bancshares Plan Accounts. A Participant's
Former Charter Bancshares Plan Accounts shall be fully Vested and
nonforfeitable.
(2) Determination of Vesting Service. For purposes of
determining the Vesting Service of a Participant who had "Hours of
Service" under the Charter Bancshares Plan before July 1, 1996 for
employment with any participating employer in the Charter Bancshares
Plan, the person's Vesting Service shall be determined under the
applicable provisions of the Plan other than this Section 16.26(d),
except that the person shall be credited with Months of Service for
time prior to the Charter Bancshares Acquisition Date determined as if
the participating employers in the Charter Bancshares Plan and their
affiliates and predecessor companies had been Participating Employers
in the Plan.
(e) Distribution of Accounts.
(1) General. While a Participant is in Service, Distributions
to the Participant from the Participant's Former Charter Bancshares
Plan Accounts shall
<PAGE>
be determined, to the extent required by the Act and the Code,
as if the Charter Bancshares Plan had remained in effect.
Following separation from Service of a Participant who has any
Former Charter Bancshares Plan Accounts, Distributions from the
Participant's Accounts (including Accounts that are not Former Charter
Bancshares Plan Accounts) shall be made either (i) when and as provided
in Section 7.3 and 7.4 of the Plan or (ii) if the total Vested interest
in the Participant's Accounts at the time of Distribution exceeds three
thousand five hundred dollars ($3,500), as provided by Article XVIII of
the Plan. The Committee shall establish the procedures by which
Participants and Beneficiaries may make their related payment
elections.
(2) Benefit Payments in Progress. The merger of the Charter
Bancshares Plan into the Plan shall not revoke or suspend any Charter
Bancshares Plan methods of payment elected before or in progress on
July 1, 1996, and any method of payment in progress under the Charter
Bancshares Plan on July 1, 1996 with respect to a Participant's
accounts thereunder shall continue in effect with respect to the
Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the Charter Bancshares Plan
with respect to the Participant's accounts thereunder shall not be
revoked by reason of the merger of the Charter Bancshares Plan into the
Plan. Such designation shall be effective under the Plan from and after
July 1, 1996 as designating the Beneficiary of all of the Participant's
Accounts, including any resulting Former Charter Bancshares Plan
Accounts, unless the Participant revokes or changes the designation or
the designation otherwise becomes ineffective, in accordance with the
terms and provisions of the Plan. (For example, the designation is
superseded by a beneficiary designation made by the Participant at the
time that the Participant enrolls in the Plan.)
SECTION 16.27. MERGER OF THE CHATTAHOOCHEE BANCORP PLAN
(a) Merger of the Chattahoochee Bancorp Plan. Bank South
Corporation ("Bank South"), which was acquired by NationsBank on
January 9, 1996 (see Section 16.23 of the Plan), acquired Chattahoochee
Bancorp, Inc., the sponsor of the Chattahoochee Bancorp, Inc. 401(k)
and Employee Stock Ownership Plan ("the Chattahoochee Bancorp Plan") on
March 15, 1994. In connection with that acquisition, all participant
accounts in the Chattahoochee Bancorp Plan became fully vested,
contributions to the Chattahoochee Bancorp Plan ceased, and the assets
of the Chattahoochee Bancorp Plan attributable to its
<PAGE>
"employee stock ownership plan" feature were transferred to a
separate plan.
The Chattahoochee Bancorp Plan shall merge with and into the
Plan effective as of the close of business on June 30, 1996. In
connection therewith and effective as of that time, (i) the Trust under
the Chattahoochee Bancorp Plan shall merge with and into the Investment
Trust for the Plan and (ii) the assets of the Trust under the
Chattahoochee Bancorp 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
Chattahoochee Bancorp Plan on June 30, 1996 with and into the Funds
being maintained by the Investment Trustee under the Investment Trust
on or after July 1, 1996 pursuant to Article XII of the Plan.
The suspense account being maintained under the Chattahoochee
Bancorp Plan on June 30, 1996 for Code Section 415 annual additions
shall be applied to reduce employer contributions to the Plan as soon
as practical pursuant to Section 5.5(b) of the Plan.
(b) Accounts Related to Participation in the
Chattahoochee Bancorp Plan.
(1) Establishment of Accounts. Effective as of July 1, 1996,
the accounts being maintained for participants in the Chattahoochee
Bancorp Plan on June 30, 1996 shall be combined with other accounts, or
maintained as separate accounts, under the Plan as follows:
(i) Accounts for Elective Deferrals. The account
maintained under the Chattahoochee Bancorp Plan for a
Participant who participated in the Chattahoochee Bancorp Plan
representing the Participant's interest in the Participant's
"Elective Deferrals" thereunder shall become the Participant's
Pre-Tax Employee Contribution Account under the Plan (or shall
be added to the person's existing Pre-Tax Employee
Contribution Account if the person has participated in the
Plan).
(ii) Creation of Former Chattahoochee Bancorp Plan
Accounts. An Account shall be established under the Plan for
each of the accounts maintained under the Chattahoochee
Bancorp Plan for a Participant who participated in the
Chattahoochee Bancorp Plan other than the account described
immediately above. These Accounts are referred to in the Plan
as "Former Chattahoochee Bancorp Plan Accounts." The Committee
shall cause to be maintained such sub-accounts as are
necessary to limit or restrict in-Service distributions as
required by the Code.
<PAGE>
The Committee may from time to time after July 1, 1996 combine a
Participant's Former Chattahoochee Bancorp 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) Investment of Accounts. The Accounts representing a
Participant's interest in the Chattahoochee Bancorp 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.
(c) Active Participation in the Plan. Each person for whom one
or more Accounts are established for the person pursuant to Section
16.27(b)(1) of the Plan because of the person's Chattahoochee Bancorp
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. The person,
however, shall not be entitled to otherwise participate in the Plan
except to the extent (if any) provided by the applicable provisions of
the Plan other than this Section 16.27.
(d) Vesting in Former Chattahoochee Bancorp Plan Accounts. A
Participant's Former Chattahoochee Bancorp Plan Accounts shall be fully
Vested and nonforfeitable.
(e) Distribution of Accounts. While a Participant is in
Service, Distributions to the Participant from the Participant's Former
Chattahoochee Bancorp Plan Accounts shall be determined, to the extent
required by the Act and the Code, as if the Chattahoochee Bancorp Plan
had remained in effect.
Following separation from Service of a Participant who has any
Former Chattahoochee Bancorp Plan Accounts, Distributions from the
Participant's Accounts (including Accounts that are not Former
Chattahoochee Bancorp Plan Accounts) shall be made when and as provided
in Section 7.3 and 7.4 of the Plan. The Committee shall establish the
procedures by which Participants and Beneficiaries may make their
related payment elections.
(f) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the Chattahoochee Bancorp Plan
with respect to the Participant's accounts thereunder shall not be
revoked by reason of the merger of the Chattahoochee Bancorp Plan into
the Plan. Such designation shall be effective under the Plan from and
after July 1, 1996 as designating the
<PAGE>
Beneficiary of all of the Participant's Accounts, including any
resulting Former Chattahoochee Bancorp Plan Accounts, unless the
Participant revokes or changes the designation or the designation
otherwise becomes ineffective, in accordance with the terms and
provisions of the Plan. (For example, the designation is superseded by
a beneficiary designation made by the Participant at the time that the
Participant enrolls in the Plan.)"
2. The following Section 16.28 is added to the Plan effective as of
July 1, 1996:
"SECTION 16.28. CERTAIN FORMER EMPLOYEES OF COMMERCE FINANCE.
Pursuant to an Agreement of Purchase and Sale dated May 10, 1996,
NationsCredit Financial Services Corporation, which is a Participating
Employer ("NationsCredit"), acquired certain branch offices of Commerce
Financial Company ("Commerce Finance") on July 1, 1996. In connection
therewith, certain employees of Commerce Finance were offered
employment with, and became employees of, NationsCredit at the time of
the acquisition ("Transferred Commerce Finance Employees"). For
purposes of (i) determining when a Transferred Commerce Finance
Employee becomes a Participant in the Plan (after becoming a Covered
Employee of NationsCredit) and (ii) determining the Transferred
Commerce Financial Employee's Vesting Service, the Transferred Commerce
Financial Employee will be credited (without duplication) with Months
of Service for time prior to July 1, 1996 determined as if Commerce
Finance and its affiliates and their predecessor companies had been
Participating Employers in the Plan."
3. The following Section 16.29 is added to the Plan effective
as of August 30, 1996:
"SECTION 16.29. CERTAIN FORMER EMPLOYEES OF BLUEBONNET
SAVINGS BANK. Pursuant to a Purchase of Assets and Liability Assumption
Agreement dated April 24, 1996, NationsBank of Texas, N.A., which is a
Participating Employer ("NationsBank-Texas"), acquired certain branch
offices of Bluebonnet Savings Bank FSB ("Bluebonnet Savings Bank") on
August 30, 1996. In connection therewith, certain employees of
Bluebonnet Savings Plan were offered employment with, and became
employees of, NationsBank-Texas at the time of the acquisition
("Transferred Bluebonnet Employees"). For purposes of (i) determining
when a Transferred Bluebonnet Employee becomes a Participant in the
Plan (after becoming a Covered Employee of NationsBank-Texas) and (ii)
determining the Transferred Bluebonnet Employee's Vesting Service, the
Transferred Bluebonnet Employee will be credited (without duplication)
with Months of Service for time prior to August 30, 1996 determined as
if Bluebonnet Savings Bank and its affiliates and their
<PAGE>
predecessor companies had been Participating Employers in the
Plan."
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, has caused this Instrument to be executed by its duly
authorized officer, as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/Ann P. West
Name: Ann P. West
Title: Vice President
<PAGE>
SEVENTH AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT is executed as of the 1st day of October, 1996 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
The NationsBank Retirement Savings Plan (the "Plan") was amended and
restated effective January 1, 1993 by Instrument dated December 31, 1992 and
further amended by Instruments dated December 31, 1993, December 31, 1994,
August 1, 1995, December 31, 1995, January 1, 1996 and June 30, 1996. By this
Instrument, NationsBank is amending the Plan to modify the payment procedures
following a participant's separation from service. 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, as subsequently amended, is amended as
follows:
1. The following subparagraph (d) is added to the end of Section
6.1 of the Plan effective as of October 1, 1996:
"(d) Coordination With Distributions Following Separation From
Service. Section 7.3(a) of the Plan provides that a Distribution to a
Participant following the Participant's separation from Service shall
be made based on the Vested balance in the Participant's Accounts
determined as of the Valuation Date at the end of the Valuation Period
immediately preceding the Valuation Period in which the Participant
separates from Service (or, if applicable, the Valuation Date at the
end of the Valuation Period immediately preceding the Valuation Period
in which the Participant consents to the Distribution) (the
"Distribution Valuation Date"). In order to make the Distribution as
soon as administratively practicable after the Distribution Valuation
Date, (i) no Adjustment shall be made with respect to the Participant's
Accounts for any Valuation Period beginning after the Distribution
Valuation Date, and (ii) no additional shares of NationsBank Employer
Stock shall be credited to the Participant's Accounts with respect to
any
<PAGE>
cash dividends declared or paid after the Distribution Valuation
Date on shares of NationsBank Employer Stock invested in the
Participant's Accounts."
2. Section 7.3(a) of the Plan is amended effective as of October 1,
1996 to read as follows:
" (a) Distributions to Participants. Following a Participant's
separation from Service, Distribution of the Vested shares of
NationsBank Employer Stock and all other Vested amounts credited to the
Participant's Accounts as of the Valuation Date at the end of the
Valuation Period immediately preceding the Valuation Period in which
the Participant's separation from Service occurs shall be made as soon
as practicable following such Valuation Date. If the Participant's
total Vested interest in the Plan at the time of Distribution exceeds
three thousand five hundred dollars ($3,500), however, Distribution to
the Participant may not be made without the Participant's consent
before the date on which the Participant attains seventy and one-half
(70-1/2) years of age. (See Section 7.1(b) of the Plan.) A Participant
whose Distribution is deferred pursuant to the provisions of the
preceding sentence and who has not returned to Service may elect to
receive Distribution as soon as practicable following the end of any
Valuation Period that immediately precedes the Valuation Period during
which the Participant provides written notice to the Committee to that
effect in accordance with procedures prescribed by the Committee.
Distribution during the lifetime of a Participant shall be made only to
or for the benefit of the Participant."
3. 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, has caused this Instrument to be executed by its duly
authorized officer, as of the day and year first above written.
<PAGE>
NATIONSBANK CORPORATION
By: /s/C. J. Cooley
C. J. Cooley, Executive
Vice President
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 and
certain participating subsidiaries (collectively, the "Participating
Employers"); and
WHEREAS, NationsBank is establishing the NationsBank Corporation
Directors' Stock Plan (the "Stock Plan"); and
WHEREAS, the Participating Employers desire to amend the Plan to
provide that (i) current and future directors of NationsBank shall not
participate in the Plan and (ii) current directors of NationsBank shall have
benefits accrued under the Plan calculated and paid as of April 24, 1996 in a
combination of cash and shares of NationsBank common stock to be issued under
the Stock Plan, all as more specifically set forth herein; 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. The following Section 5.5 is added to the end of Article V of
the Plan:
"Section 5.5. Termination of Participation for Certain
NationsBank Corporation Directors. A person who serves as a Director of
NationsBank Corporation at any time after April 24, 1996 (the
"Determination Date") shall not be paid any benefit under the Plan
attributable to such person's service as a Director of NationsBank
Corporation except as otherwise provided by this Section 5.5. The
provisions of this Section 5.5 shall not affect the amount of benefits,
the timing of the payment of such benefits or the method of payment of
such benefits under the Plan for any person other than the Directors
described in the preceding sentence, including (i) Former Directors who
have ceased serving as Directors on or before the Determination Date
and (ii) Directors of Participating Employers other than NationsBank
Corporation. For any person serving as a Director of NationsBank
Corporation immediately following the Determination Date (other than
any person who was first elected as a director on the Determination
Date) (each an "Affected Director"), NationsBank Corporation shall
calculate the present value of such
<PAGE>
Affected Director's benefits earned under Article II of the Plan as of
the Determination Date using for such purpose the methodology set forth
on Exhibit I attached hereto. As soon as practicable after the
Determination Date, each Affected Director shall be paid such present
value as follows: fifty percent (50%) of such amount shall be paid in
cash and fifty percent (50%) shall be paid in shares of common stock of
NationsBank Corporation issued under, and in accordance with, the
NationsBank Corporation Directors' Stock Plan."
2. The amendment set forth in paragraph 1 above is contingent on the
approval of the NationsBank Corporation Directors' Stock Plan by the
shareholders of the Corporation at the 1996 annual shareholders' meeting. If
such plan is not so approved by the shareholders, the amendment set forth herein
shall be null and void.
3. Except as expressly or by necessary implication amended
hereby, the Plan shall continue in full force and effect.
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 24th day of April, 1996.
NATIONSBANK CORPORATION
By: /s/C. J. Cooley
C. J. Cooley
Executive Vice President
"NationsBank"
<PAGE>
EXHIBIT I
METHODOLOGY FOR DETERMINING THE PRESENT VALUE
OF ACCRUED BENEFITS FOR ACTIVE NONEMPLOYEE DIRECTORS OF
NATIONSBANK CORPORATION IN THE DIRECTORS' RETIREMENT PLAN
I. Establish the Participant's annual retirement benefit based on an
annual retainer amount of $36,000, and the maximum period the benefit
would have been paid (the lesser of 10 years or the number of completed
years of service as a Director as of the Determination Date).
II. Establish the Participant's Assumed Benefit Commencement Date as
the last day of the quarter in which the last of the following dates
occurs:
A. The date the Participant attains age 65,
B. The fifth anniversary of the Participant's date of election
to the Board, or
C. The Determination Date (April 24, 1996).
III. Determine the Present Value of Accrued Benefits as of the
Determination Date. For purposes of this determination an interest
rate of 7.50% compounded annually and the 1983 Group Annuity
Mortality Table shall be used.
<PAGE>
EIGHTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 31st day of December,
1995 by and between NATIONSBANK CORPORATION, a North Carolina corporation
("NationsBank"), and NATIONSBANK, 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) modify the
definition of "Compensation" to include a portion of commissions paid to
Participants who are compensated through commission arrangements, (ii) modify
the application of the Plan to Participants who remain employed with the
Participating Employers in a "benefits-eligible" position after age sixty-five
(65) or who retire and commence receiving benefits under the Plan and are
subsequently rehired by the Participating Employers in a "benefits-eligible"
position, (iii) reflect certain business acquisitions of the Participating
Employers and the merger of a pension plan into the Plan as a result of one of
those acquisitions and (iv) add special provisions for the benefit of certain
employees of the Participating Employers who separate from service with the
Participating Employers as a result of certain business dispositions; 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
ovenants herein contained, NationsBank and the Trustee hereby agree as
follows:
<PAGE>
1. Section 2.1(c)(14) of the Plan is amended effective as of
January 1, 1996 to read as follows:
"(14) Compensation of a Participant means the base salary or
base wages payable by the Participating Employers to the Participant
for employment with the Participating Employers prior to (i) any salary
or wage reduction pursuant to Article IV of the Savings Plan or (ii)
any salary or wage reduction pursuant to the Group Benefits Plan.
Compensation shall not include:
(A) any bonuses (contractual, discretionary or
otherwise), awards, overtime pay, shift premium, incentive
compensation of any kind whatsoever, or other extra or special
remuneration of any kind, except to the extent otherwise
provided in the last paragraph of this Section 2.1(c)(14);
(B) any deferred compensation pursuant to the Plan or
any other agreement or arrangement between a Participating
Employer and the Participant, including any deferrals of base
salary or wages pursuant to any nonqualified deferred
compensation plan;
(C) any sums paid by a Participating Employer (i) on
account of any health, welfare or group insurance benefits
(exclusive of sick pay), including dependent care assistance,
or (ii) on account of reimbursement of relocation expenses,
regardless of whether such sums are taxable income to the
Participant; provided, however, this subparagraph (C) shall
not exclude from Compensation any sums paid by a Participating
Employer that are attributable to base salary or wage
reductions under the Group Benefits Plan;
(D) any severance, vacation or similar benefits paid
in a lump sum; or
(E) any compensation pursuant to any other employee
benefit plan, including without limitation, any sums elected
to be received in cash pursuant to any such plan.
For periods during which a Participant is on a leave of absence and
deemed to have Hours of Service during such absence as provided in
Section 2.1(c)(29)(E), Compensation shall mean the base salary or base
wages which would have been paid by the Participating Employers to the
Participant during such absence assuming the base salary or base wages
paid by the Participating Employers to the Par-
<PAGE>
ticipant had continued during such absence at the monthly rate in
effect when such absence commenced.
Notwithstanding subparagraph (A) above, a Participant's
Compensation shall include, in addition to base salary or wages, fifty
percent (50%) of the commissions payable to the Participant if:
(X) the Participant's remuneration from the
Participating Employers is based solely on commissions earned
by the Participant and the Participant's base salary is
deducted from the commissions earned by and payable to the
Participant;
(Y) the Participant is employed in a position which
directly supervises Participant(s) described in subparagraph
(X) above and some or all of the Participant's remuneration
from the Participating Employers is based on override
commissions from the production of the supervised
Participant(s); or
(Z) the Participant is employed in a position which
directly supervises Participant(s) described in subparagraph
(X) above and some or all of the Participant's remuneration
from the Participating Employers is based on commissions
resulting from the Participant's personal production."
2. The following Section 5.1(e) is added to the end of Section 5.1 of
the Plan effective as of January 1, 1995:
"(e) Special Retirement Benefit for Retirement After Age 65.
Notwithstanding the foregoing provisions of this Section 5.1, in the
event a Participant retires after the Participant's Normal Retirement
Date, the amount of the Participant's retirement income payable under
the Plan shall be the greater of Amount A or Amount B, where:
Amount A is the amount of the Participant's retirement income
determined under the Plan without regard to this Section
5.1(e), and
Amount B is the amount of the Participant's accrued retirement
income under the Plan as of the Participant's Normal
Retirement Date actuarially increased to the date of the
Participant's actual retirement, using for such purpose the
following actuarial assumptions:
Mortality: A unisex rate that is fifty percent (50%)
male, fifty percent (50%) female, taken from the 1971
Group Annuity Mortality Table.
<PAGE>
Interest: Five percent (5%)."
3. Section 5.8 of the Plan is deleted in its entirety, and Sections 5.9
and 5.10 of the Plan and all references in the Plan to said Section 5.9 and 5.10
are redesignated as Sections 5.8 and 5.9, respectively, all effective as of
January 1, 1995.
4. Section 6.3(a) and Section 6.3(b) of the Plan are amended effective
as of January 1, 1995 to read as follows:
"(a) Prior to Normal Retirement Date. No Participant, regardless
of the Participant's vesting status, shall receive a retirement income
payment for any month prior to the Participant's Normal Retirement Date
if, on the date during such month when the Participant's retirement
income payment would otherwise be made thereunder, the Participant is
in Service. However, any retirement income that has commenced to a
Participant who is not in Service shall not be stopped if the
Participant resumes Service and is regularly scheduled to work less
than forty (40) hours per week (as referred to in Section 6.3(b)
below), and Section 6.3(b)(5) below shall apply to such a Participant.
(b) On Or After Normal Retirement Date. No Participant, regardless
of the Participant's vesting status, may commence receiving retirement
income payments for any month following the Participant's Normal
Retirement Date if the Participant is in Service and regularly
scheduled to work at least twenty (20) hours per week. Provided,
however, the following conditions shall apply:
(1) Payments shall commence to a Participant whose
regularly scheduled hours of employment decrease after the
Participant's Normal Retirement Date from twenty (20) or more
per week to less than twenty (20) per week only if the
Participant so elects in writing under the Plan's regular
benefit election procedures.
(2) Any retirement income that has commenced to a
Participant not in Service shall be withheld only if the
Participant resumes Service and is regularly scheduled to work
at least forty (40) hours per week.
(3) No retirement income shall be withheld after the
Participant's required commencement date under Section 5.1(c).
(4) The amount of retirement income to be withheld
any month shall be equal to the amount otherwise payable for
such month.
<PAGE>
(5) The following provisions apply to the
Participants described below who die while in Service prior to
the required commencement date of their retirement income
under Section 5.1(c). If at the time of such Participant's
death the Participant's retirement income is being withheld
under this Section 6.3 because (i) the Participant has resumed
Service and the Participant's regularly scheduled hours of
employment following such resumption of Service equal or
exceed forty (40) hours per week or (ii) the Participant has
continued Service following the Participant's Normal
Retirement Date and the Participant's regularly scheduled
hours of employment have remained at least twenty (20) hours
per week, the Participant shall be covered by the death
benefit provisions of Section 6.2. If at the time of the
Participant's death the Participant's retirement income is
being paid to the Participant because (i) the Participant has
resumed Service and the Participant's regularly scheduled
hours of employment following such resumption of Service do
not equal or exceed forty (40) hours per week or (ii) the
Participant has continued Service following the Participant's
Normal Retirement Date but the Participant's regularly
scheduled hours of employment decreased to less than twenty
(20) hours per week, the Participant shall be covered by the
death benefit provisions of Section 6.2 only with respect to
any additional retirement income the Participant has accrued
over and above the retirement income that was being paid to
the Participant at the time of the Participant's death, and
the only death benefit, if any, payable with respect to the
retirement income being paid to the Participant at the time of
the Participant's death shall be according to the form of
payment applicable to such retirement income."
5. Section 6.4 of the Plan is amended effective as of January 1, 1995
to read as follows:
"SECTION 6.4. BENEFIT ACCRUAL AFTER CERTAIN PERIODS OF
INTERRUPTED SERVICE OR AFTER CERTAIN COMMENCEMENTS OF RETIREMENT
INCOME.
(a) After Certain Interruptions of Service. If a Participant's
Service is interrupted and then recommenced, and either such
interruption did not result in benefit payments being made to the
Participant or, even if payments were so made, such Participant was
reemployed at a regularly scheduled rate of forty (40) or more hours
per week (as referred to in Section 6.3), then any retirement income
subsequently payable to the Participant shall be calculated by
combining Benefit Service and Compensation as described in the next
sentence. Benefit Service credited and Compensation earned by the
Participant prior to such interruption shall be combined with any
Benefit Service credited and Compensation earned after such
interruption, subject, however, to the exclusion of any such Benefit
Service or Compensation under other provisions of the Plan. Any
<PAGE>
retirement income so calculated shall be appropriately reduced to
reflect any retirement income payments or lump sum payment (other than
Disability retirement income payments) previously received by the
Participant. In no event, however, shall the Participant's retirement
income be less than the sum of (i) the amount of retirement income
previously being paid to the Participant, actuarially increased in
accordance with Section 5.1(e) if the Participant's retirement income
is being recommenced after the Participant's Normal Retirement Date,
or, in the case of a Participant whose retirement income was not yet
being paid, the Participant's retirement income that would have
commenced at the Participant's Normal Retirement Date, reduced, if
applicable, for earlier commencement in accordance with Section
5.2(b)(1) and (ii) any additional retirement income accrued hereunder
by the Participant derived solely from the Benefit Service credited to
the Participant and Compensation earned by the Participant during the
Participant's period of recommenced Service.
If a Participant's Service is interrupted and then recommenced
and benefit payments to such Participant continue following such
resumption of Service because the Participant's regularly scheduled
hours of employment following such resumption of Service do not equal
or exceed forty (40) hours per week (as referred to in Section 6.3),
then any additional retirement income accrued hereunder by the
Participant shall be derived solely from the Participant's period of
recommenced Service.
(b) After Certain Commencements of Retirement Income. If a
Participant's retirement income commenced while the Participant
remained in Service after the Participant's Normal Retirement Date
because the Participant's regularly scheduled hours of employment
decreased to below the twenty (20) hour per week level (as referred to
in Section 6.3), then any additional retirement income accrued by the
Participant shall be derived solely from the Participant's period of
Service that began when the Participant's Service decreased below that
level."
6. The following new Sections 15.14 and 15.15 are added to the end of
Article XV of the Plan effective as of January 1, 1995:
"SECTION 15.14. DIVESTITURES.
(a) General. From time to time, certain banking centers and
other business units of the Participating Employers are sold to
unrelated third parties, and as a result certain Participants employed
at such banking centers and other business units (the "Affected
Participants") terminate their employment with the Participating
Employers. Schedule 15.14 attached to the Plan lists (i) the banking
centers and other business units that have been sold which are subject
to this Section, (ii) the names of the various purchasers and (iii) the
effective dates of such sales. Schedule 15.14 shall be updated from
time to time by the Participating Employers to reflect additional sales
that are subject to this Section. The provisions of this Section shall
be effective with respect to a particular group
<PAGE>
of Affected Participants as of the applicable effective date set forth
on Schedule 15.14 (a "Termination Date").
(b) Vesting of Affected Participants. The accrued retirement
income under the Plan of an Affected Participant shall be fully vested
and nonforfeitable as of the Termination Date applicable to such
Affected Participant.
(c) Separation from Service. For purposes of determining an
Affected Participant's accrued retirement income under the Plan, such
Affected Participant shall be deemed to have separated from Service as
of the Termination Date applicable to such Affected Participant.
(d) Provisions Controlling. Notwithstanding any provisions of
the Plan to the contrary, the provisions of this Section 15.14 shall
control with respect to the Affected Participants.
SECTION 15.15. ACQUISITIONS.
(a) General. From time to time the Participating Employers
acquire certain businesses, and as a result certain of the employees of
such acquired businesses become Covered Employees of the Participating
Employers (the "Acquired Employees"). Schedule 15.15 attached to the
Plan lists (i) the acquired businesses which are subject to this
Section and (ii) the effective dates of such acquisitions. Schedule
15.15 shall be updated from time to time by the Participating Employers
to reflect additional acquisitions that are subject to this Section.
The provisions of this Section shall be effective with respect to a
particular group of Affected Participants as of the applicable
effective date set forth on Schedule 15.15 (an "Acquisition Date").
(b) Eligibility, Vesting and Benefit Service. Solely for
purposes of determining (i) whether an Acquired Employee has satisfied
the eligibility requirements of Article III, (ii) an Acquired
Employee's Vesting Service and (iii) to the extent specified in
Schedule 15.15, an Acquired Employee's Benefit Service, the Acquired
Employee's service with the acquired business prior to the applicable
Acquisition Date shall be treated as Service with the Participating
Employers.
(c) Provisions Controlling. Notwithstanding any provisions of
the Plan to the contrary, the provisions of this Section 15.15
shall control with respect to the Acquired Employees."
7. The following Section 15.16 is added to the end of Article XV of
the Plan effective as of February 1, 1996:
"SECTION 15.16. MERGER OF THE BANK SOUTH PLAN.
<PAGE>
(a) General. Bank South Corporation sponsored the Bank South
Corporation Employees' Retirement Plan and Trust (the "Bank South
Plan"), a tax-qualified defined benefit plan. Bank South Corporation
was acquired by NationsBank Corporation. In connection therewith, the
Bank South Plan is merged with and into the Plan effective as of
February 1, 1996 (the "Bank South Plan Merger Date"). As part of said
plan merger, on the Bank South Plan Merger Date the trust maintained
under the Bank South Plan shall become a part of the Trust maintained
under this Plan, and the assets of the Bank South Plan shall thereupon
become assets of this Plan. As of the Bank South Plan Merger Date, the
Plan shall be the successor in interest to, and shall have assumed all
the liabilities of, the Bank South Plan.
(b) Benefits. For a Participant who was a participant in the
Bank South Plan immediately prior to the Bank South Plan Merger Date,
such Participant's benefits under the Plan shall equal the sum of
Amount A and Amount B, where:
Amount A is the Participant's "Accrued Benefit" under and as
defined in the Bank South Plan (which includes such
Participant's "Final Average Earnings Benefit" and "Cash
Balance Benefit" under the Bank South Plan) determined
immediately prior to the Bank South Plan Merger Date, and
Amount B is the Participant's benefits determined under the
applicable provisions of the Plan without regard to any
Service for periods prior to the Bank South Plan Merger Date.
(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 Bank South Plan shall be reduced or eliminated as a result of
the merger of the Bank South Plan into the Plan."
8. Schedules 15.14 and 15.15 attached hereto are hereby added to and
made a part of the Schedules to the Plan effective as of December 31, 1995.
9. Except as expressly or by necessary implication amended hereby, the
Plan shall continue in full force and effect.
<PAGE>
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/Ann P. West
Name: Ann P. West
Title: Vice President
NATIONSBANK, N.A.
By: /s/Ann-Louise Hyatt
Name: Ann-Louise Hyatt
Title: Vice President
<PAGE>
NINTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 26th day of June,
1996 by and between NATIONSBANK CORPORATION, a North Carolina corporation
("NationsBank"), and NATIONSBANK, 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 extend the transition
provisions in the Plan for the calculation of certain lump sum benefit payments
using the interest rate and mortality assumptions specified 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. The first paragraph immediately following subparagraph (B) of
Section 15.4(h)(2) of the Plan (as amended by the Third Amendment to the
Plan) is amended effective as of June 26, 1996 to read as follows:
"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, 1998, then such single sum
<PAGE>
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."
2. 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, N.A.
By: /s/David R. Lofland
Name: David R. Lofland
Title: Senior Vice President
<PAGE>
TENTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 2nd day of October,
1996 by and between NATIONSBANK CORPORATION, a North Carolina corporation
("NationsBank"), and NATIONSBANK, N.A., a national banking association (the
"Trustee").
Statement of Purpose
NationsBank sponsors The NationsBank Pension Plan (the "Plan"). A civil
action was filed in 1994 in the United States District Court for the Northern
District of Texas, Fort Worth Division, (Civil Action No. 4-94CV-104A) as a
class action entitled "Sam L. Gill, Jr. et al. v. NationsBank Corporation and
The NationsBank Pension Plan" relating to the First United Bancorporation
Pension Trust (the "FUBI Plan"), which was previously maintained by First United
Bancorporation, Inc. and certain of its subsidiaries. The FUBI Plan was merged
into the InterFirst Corporation Pension Plan (the "InterFirst Plan"), which was
sponsored by InterFirst Corporation. Subsequently, the InterFirst Plan was
merged into this Plan.
In connection with the settlement of all issues of the class action
lawsuit other than attorneys' fees, the Plan was amended by the Seventh
Amendment to the Plan to add Section 15.13 to the Plan regarding the "FUBI Plan
Special Benefit," which amendment was approved by the Court in connection with
the settlement and by the Internal Revenue Service pursuant to a determination
letter request. However, the attorneys' fee issue of the class action lawsuit
was not settled. Pursuant to an order of the Court regarding the attorneys' fee
issue, Section 15.13 of the Plan is required to be further amended as set forth
herein to provide that the FUBI Plan Special Benefit of an "Eligible Former FUBI
Plan Participant" be reduced by an "Attorneys' Fee Amount" in the event such
benefit becomes payable, which such amendment is authorized and permitted under
the terms of the Seventh Amendment to the Plan.
In Section 11.1 of the Plan the "Participating Employers" under the
Plan 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. The undersigned has been
<PAGE>
authorized by the Compensation Committee to make the amendments set forth
below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, NationsBank and the Trustee hereby agree as follows:
1. Section 15.13(c) of the Plan is hereby amended to read as
follows:
"(c) FUBI Plan Special Benefit Defined. The "FUBI Plan Special
Benefit" means, with respect to an Eligible Former FUBI Plan
Participant, the sum of (A) plus (B) plus (C), reduced by (D), where:
(A) is the "FUBI Portion" of such Eligible Former FUBI
Plan Participant's FUBI Plan Special Benefit (as
defined in subparagraph (d) below);
(B) is the "InterFirst Portion," if any, of such Eligible
Former FUBI Plan Participant's FUBI Plan Special
Benefit (as defined in subparagraph (e) below);
(C) is the "NationsBank Portion," if any, of such
Eligible Former FUBI Plan Participant's FUBI Plan
Special Benefit (as defined in subparagraph (f)
below); and
(D) is the "Attorneys' Fee Amount" of such Eligible
Former FUBI Plan Participant's FUBI Plan Special
Benefit (as defined in subparagraph (q) below).
The FUBI Portion of an Eligible Former FUBI Plan Participant's FUBI
Plan Special Benefit shall be subject to the FUBI Plan COLAs as
provided in subparagraph (k) below. For purposes of determining the
FUBI Plan Special Benefit for an Eligible Former FUBI Plan Participant,
both the FUBI Portion and the InterFirst Portion, if any, of such FUBI
Plan Special Benefit shall be converted to a single life annuity as
provided below. An Eligible Former FUBI Plan Participant's FUBI Plan
Special Benefit shall be stated as a monthly benefit and may be paid
pursuant to any optional form of benefit set forth in Section 5.4 which
such Participant elects (to the extent eligible) in accordance with the
terms and provisions of the Plan other than this Section 15.13;
provided, however, that the special provisions of subparagraph (r)
below shall apply in the case of lump sum payments."
2. The following Sections 15.13(q) and 15.13(r) are hereby
added to the Plan:
"(q) Attorneys' Fee Amount Defined. The Attorneys' Fee Amount
of the FUBI Plan Special Benefit of a particular Eligible Former FUBI
Plan
<PAGE>
Participant means the product of (i) 20.9172% times (ii) the
"Excess FUBI Plan Special Benefit" with respect to such Participant.
The "Excess FUBI Plan Special Benefit" with respect to an Eligible
Former FUBI Plan Participant means the excess, if any, of (x) such
Participant's FUBI Plan Special Benefit determined without reduction
for the Attorneys' Fee Amount over (y) the amount of such Participant's
monthly retirement income determined under the provisions of the Plan
without regard to this Section 15.13. The amount in (x) and the amount
in (y) shall each be appropriately adjusted in accordance with the
terms of the Plan in the event the Eligible Former FUBI Plan
Participant's monthly retirement income under the Plan is payable in an
optional form of payment or commences prior to the Participant's Normal
Retirement Date.
(r) Special Provisions Related to Lump Sum Payments. The
following provisions shall apply with respect to an Eligible Former
FUBI Plan Participant who is eligible to receive the Participant's
monthly retirement income under the Plan in the form of a lump sum
payment and the Participant in fact elects such method of payment:
(i) The amount of the lump sum payment determined as
of a given determination date shall equal the sum of (A) and
(B), reduced by (C), where:
(A) is an amount determined as of the
determination date equal to the
single sum value of the
Participant's monthly retirement
income under the Plan payable
through the Participant's "Crossover
Date" (as defined below);
(B) is an amount determined as of the
determination date equal to the
single sum value of the
Participant's FUBI Plan Special
Benefit payable from and after the
Participant's Crossover Date but
without regard to the Attorneys' Fee
Amount set forth in Section 15.13(q)
above; and
(C) is the Attorneys' Fee Amount with
respect to the lump sum payment
determined in accordance with
subparagraph (iv) below.
(ii) For purposes of this Section 15.13(r), the
"Crossover Date" determined as of a given determination date
with respect to an Eligible Former FUBI Plan Participant means
the first date, if any, on which the
<PAGE>
Participant's FUBI Plan Special Benefit is expected (based on
the assumptions set forth in subparagraph (iii) below) to
equal or exceed the Participant's monthly retirement income
under the Plan determined without regard to the provisions of
this Section 15.13.
(iii) The calculation of all single sum values under
this Section 15.13(r) shall be made using the actuarial
assumptions and methods in effect from time to time under the
Plan for determining lump sum payments. In addition, for
purposes of calculating the single sum value of an Eligible
Former FUBI Plan Participant's FUBI Plan Special Benefit
payable after the Participant's Crossover Date, as well as for
purposes of determining such Crossover Date, the FUBI Portion
of the Participant's FUBI Plan Special Benefit shall be
assumed to increase at an annual rate equal to the average
over the twenty (20) completed calendar year period
immediately preceding the determination date of the COLA
amounts determined in accordance with the provisions of
Section 15.13(k) above.
(iv) For purposes of this Section 15.13(r), the
Attorneys' Fee Amount with respect to an Eligible Former FUBI
Plan Participant's lump sum payment shall equal the product of
(A) and (B) where:
(A) is 20.9172%; and
(B) is the amount, if any, by which the
sum of (A) and (B) under
subparagraph (i) above exceeds the
single sum value of the
Participant's monthly retirement
income under the Plan determined
without regard to the provisions of
this Section 15.13, all determined
as of the applicable determination
date using the actuarial assumptions
set forth in subparagraph (iii)
above."
3. The effective date of the amendment set forth herein shall be July
5, 1995 (the effective date of the Seventh Amendment to the Plan), subject,
however, to the entering of a "Final Judgment as to Attorneys' Fees and
Expenses" which has become final and nonappealable. If such "Final Judgment as
to Attorneys' Fees and Expenses" is not entered or does not become final and
nonappealable, the amendment set forth herein shall be null and void.
4. Except as expressly or by necessary implication amended hereby, the
Plan shall continue in full force and effect.
<PAGE>
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"
NATIONSBANK, N.A.
By: /s/Anne-Louise Hyatt
Name: Ann-Louie Hyatt
Title: Vice President
"Trustee"
THE NATIONSBANK RETIREMENT SAVINGS RESTORATION PLAN
(as amended and restated effective July 1, 1996)
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE I. DEFINITIONS............................................................................1
-----------
Section 1.1 Definitions............................................................................1
-----------
ARTICLE II. PLAN ADMINISTRATION....................................................................3
-------------------
Section 2.1 Restoration Plan Committee.............................................................3
--------------------------
ARTICLE III. DEFERRED COMPENSATION PROVISIONS.......................................................4
--------------------------------
Section 3.1 Employee Elections.....................................................................4
------------------
Section 3.2 Deferral Accounts......................................................................4
-----------------
Section 3.3 Matching Contribution Restoration Accounts.............................................5
------------------------------------------
Section 3.4 Account Adjustments....................................................................5
-------------------
Section 3.5 Account Payments.......................................................................6
----------------
Section 3.6 Withdrawals on Account of an Unforeseeable Emergency...................................9
----------------------------------------------------
ARTICLE IV. AMENDMENT AND TERMINATION.............................................................10
-------------------------
Section 4.1 Amendment and Termination.............................................................10
-------------------------
ARTICLE V. MISCELLANEOUS PROVISIONS..............................................................10
------------------------
Section 5.1 Nature of Plan and Rights.............................................................10
-------------------------
Section 5.2 Termination of Employment.............................................................11
-------------------------
Section 5.3 Spendthrift Provision.................................................................11
---------------------
Section 5.4 Employment Noncontractual.............................................................11
-------------------------
Section 5.5 Adoption by Other Participating Employers.............................................11
-----------------------------------------
Section 5.6 Applicable Law........................................................................11
--------------
Section 5.7 Merged Plans..........................................................................11
------------
</TABLE>
<PAGE>
THE NATIONSBANK RETIREMENT SAVINGS RESTORATION PLAN
(as amended and restated effective July 1, 1996)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed as of the 1st
day of July, 1996, by NATIONSBANK CORPORATION, a North Carolina Corporation
("NationsBank");
Statement of Purpose
NationsBank sponsors The NationsBank Retirement Savings Restoration
Plan (the "Restoration Plan"). The purpose of the Restoration Plan is to provide
benefits, on a non-qualified and unfunded basis, to certain employees whose
benefits under The NationsBank Retirement Savings Plan are adversely affected by
the limitations of Sections 401(a)(17), 401(k)(3), 401(m) and 402(g) of the
Internal Revenue Code.
By this Instrument, NationsBank is amending and restating the
Restoration Plan effective July 1, 1996 to (i) provide covered employees with a
choice in methods for determining the adjustment to Restoration Plan accounts
and (ii) modify the payment methods available under the Restoration Plan.
NOW, THEREFORE, for the purposes aforesaid, NationsBank hereby amends
and restates the Restoration Plan effective July 1, 1996 to consist of the
following Articles I through V:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. Unless the context clearly indicates
otherwise, when used in the Restoration Plan:
(a) Account means, collectively, the Deferral Account and
Matching Contribution Restoration Account.
(b) Code means the Internal Revenue Code of 1986. References
to the Code shall include the valid and binding governmental
regulations, court decisions and other regulatory and judicial
authority issued or rendered thereunder.
(c) Code Limitations means any one or more of the limitations
and
<PAGE>
restrictions that Sections 401(a)(17), 401(k)(3), 401(m)
and 402(g) of the Code place on the Pre-Tax Employee
Contributions and Matching Contributions for a Covered
Employee under the Retirement Savings Plan. In addition, Code
Limitations also means and refers to any limitations on
contributions under the Retirement Savings Plan established by
the Retirement Savings Plan administrative committee with
respect to highly compensated participants.
(d) Covered Employee means an Employee eligible to participate
in the Retirement Savings Plan.
(e) Deferral Account means the account established and
maintained on the books of a Participating Employer to record
a Covered Employee's interest under the Restoration Plan
attributable to amounts credited to the Covered Employee
pursuant to Section 3.2 of the Restoration Plan.
(f) Employee means an individual employed by a Participating
Employer.
(g) Matching Contribution Restoration Account means the
account established and maintained on the books of a
Participating Employer to record a Covered Employee's interest
under the Restoration Plan attributable to amounts credited to
the Covered Employee pursuant to Section 3.3 of the
Restoration Plan. Prior to January 1, 1993, the Restoration
Plan referred to this account as the "Restoration Account."
(h) Mirror Rate Method means a method for determining the
adjustment to a Covered Employee's Account for a month such
that the level of investment return for the Account for such
month substantially equals the aggregate level of investment
return for such month of all of the Covered Employee's
accounts under the Retirement Savings Plan that are invested
in the Investment Trust under the Retirement Savings Plan
other than amounts mandatorily invested in the common stock of
NationsBank under the Investment Trust. For this purpose,
amounts shall be deemed to be mandatorily invested in the
common stock of NationsBank even if the Covered Employee is
eligible to make a diversification election under the
Retirement Savings Plan with respect to such common stock.
However, once such a diversification election is in fact made
by a Covered Employee, amounts transferred out of such
mandatorily invested account in accordance with such election
shall be included in determining the aggregate level of
investment return under the Mirror Rate Method for the Covered
Employee from and after the effective date of such election.
(i) Participating Employer means (i) NationsBank, (ii) each
other
<PAGE>
"Participating Employer" under (and as defined in) the
Retirement Savings Plan on the date hereof and (iii) any other
incorporated or unincorporated trade or business which may
hereafter adopt both the Retirement Savings Plan and the
Restoration Plan.
(j) Plan Year means the twelve-month period commencing
January 1 and ending the following December 31.
(k) Restoration Plan means this Plan: The NationsBank
Retirement Savings Restoration Plan as in effect from time to
time. Prior to January 1, 1993, the Restoration Plan was
named the "NationsBank Thrift Restoration Plan."
(l) Restoration Plan Committee means the committee designated
pursuant to Section 2.1 of the Restoration Plan.
(m) Retirement Savings Plan means The NationsBank Retirement
Savings Plan, as in effect from time to time. Prior to January
1, 1993, the Retirement Savings Plan was named the
"NationsBank Corporation and Designated Subsidiaries
Stock/Thrift Plan."
(n) 30-Year Treasury Rate Method means a method for
determining the adjustment to a Covered Employee's Account for
a month such that the level of investment return of the
Account for such month substantially equals 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
Restoration Plan Committee.
Any capitalized terms used in the Restoration Plan that are defined in the
documents comprising the Retirement Savings Plan have the meanings assigned to
them in the Retirement Savings Plan, unless such terms are otherwise defined
above in this Article or unless the context clearly indicates otherwise.
ARTICLE II.
PLAN ADMINISTRATION
Section 2.1 Restoration Plan Committee. The Restoration Plan shall be
administered by the Restoration Plan Committee, which shall have the same
membership as the committee from time to time acting as the "Committee" under
(and as defined in) the Retirement Savings Plan. The Restoration Plan Committee
shall be empowered to interpret the provisions of the
<PAGE>
Restoration Plan and to perform and exercise all of the duties and powers
granted to it under the terms of the Restoration Plan by action of a majority of
its members in office from time to time. The Restoration Plan Committee may
adopt such rules and regulations for the administration of the Restoration Plan
as are consistent with the terms hereof and shall keep adequate records of its
proceedings and acts. All interpretations and decisions made (both as to law and
fact) and other action taken by the Restoration Plan Committee with respect to
the Restoration Plan shall be conclusive and binding upon all parties having or
claiming to have an interest under the Restoration Plan. Not in limitation of
the foregoing, the Restoration Plan Committee shall have the discretion to
decide any factual or interpretative issues that may arise in connection with
its administration of the Restoration Plan (including without limitation any
determination as to claims for benefits hereunder), and the Restoration Plan
Committee's exercise of such discretion shall be conclusive and binding on all
affected parties as long as it is not arbitrary or capricious.
ARTICLE III.
DEFERRED COMPENSATION PROVISIONS
Section 3.1 Employee Elections. Prior to January 1 of a Plan Year, or
at such other times as may be established by the Restoration Plan Committee, a
Covered Employee who is expected to be a highly compensated employee within the
meaning of section 414(q) of the Code for the Plan Year of the Retirement
Savings Plan to which such election relates may elect to defer under the
Restoration Plan the portion of the Covered Employee's Pre-Tax Employee
Contributions otherwise permissible under the Retirement Savings Plan which
cannot be credited to the Covered Employee under the Retirement Savings Plan for
such Plan Year because of the Code Limitations. All elections made under this
Section 3.1 shall be made in writing on a form prescribed by and filed with the
Restoration Plan Committee and shall be irrevocable for such Plan Year. An
election by a Covered Employee under this Section 3.1 shall continue in effect
for all subsequent Plan Years (during which the Covered Employee is a highly
compensated employee) unless and until changed or terminated by the Covered
Employee in accordance with procedures established from time to time by the
Restoration Plan Committee. Any such change in or termination of an election
under this Section 3.1 shall be effective as of the January 1 of the next
succeeding Plan Year.
Section 3.2 Deferral Accounts. A Participating Employer shall establish
and maintain on its books a Deferral Account for each Covered Employee employed
by such Participating Employer who elects to defer the receipt of any amount
pursuant to Section 3.1 of the Restoration Plan. Such Deferral Account shall be
designated by the name of the Covered Employee for whom established. The amount
attributable to any Pre-Tax Employee Contribution for a particular pay period
during such Plan Year which cannot be credited to the Covered Employee under the
Retirement Savings Plan because of the Code Limitations, and which the Covered
Employee has elected to defer pursuant to Section 3.1 of the Restoration Plan,
shall be credited to such Deferral Account as of the last day of the calendar
month to which such contribution is related and actually withheld.
<PAGE>
Section 3.3 Matching Contribution Restoration Accounts. A Participating
Employer shall establish and maintain on its books a Matching Contribution
Restoration Account for each Covered Employee employed by such Participating
Employer whose Matching Contributions under the Retirement Savings Plan shall
have been limited, directly or indirectly, by the operation of the Code
Limitations. Such Matching Contribution Restoration Account shall be designated
by the name of the Covered Employee for whom established. If a Covered Employee
is a Participant Eligible for Matching Contributions for the Plan Year under the
Retirement Savings Plan, the Covered Employee's Matching Contribution
Restoration Account shall be credited as of the Valuation Date under the
Retirement Savings Plan that occurs on the last day of the Plan Year with an
amount equal to the sum of Amount A and Amount B, where:
Amount A is seventy-five percent (75%) of the sum of the portions (if
any) of the amounts credited to the Covered Employee's Deferral Account
for the Plan Year pursuant to Section 3.1 of the Restoration Plan that
would have been Matchable Pre-Tax Employee Contributions for the Plan
Year under the Retirement Savings Plan had such amounts been
contributed to the Retirement Savings Plan as Pre-Tax Employee
Contributions for the Covered Employee and the Code Limitations not
applied to the Retirement Savings Plan.
Amount B is seventy-five percent (75%) of the portion (if any) of the
actual Matchable Pre-Tax Employee Contributions made to the Retirement
Savings Plan for the Covered Employee for the Plan Year with respect to
which Matching Contribution allocations were not made under Section 5.2
of the Retirement Savings Plan or (if made) were forfeited under
Section 5.4 of the Retirement Savings Plan because of the Code
Limitations.
Section 3.4 Account Adjustments. Beginning July 1, 1996, each Account
shall be adjusted on a monthly basis pursuant to either the Mirror Rate Method
or the 30-Year Treasury Rate Method. Each Covered Employee with an Account shall
be given an opportunity to elect between the Mirror Rate Method and the 30-Year
Treasury Rate Method for such purpose. To be effective, such election must be
made at such times, on such forms and pursuant to such procedures as established
by the Restoration Plan Committee in its sole discretion from time to time. An
election once made shall remain in effect unless and until changed by the
Covered Employee in accordance with this Section 3.4. If a Covered Employee
fails to make an election under this Section 3.4, the method for making
adjustments to the Covered Employee's Account shall be the 30-Year Treasury Rate
Method. Prior to July 1, 1996, account adjustments were made in accordance with
the terms of the Restoration Plan as then in effect. If a Covered Employee has
elected the Mirror Rate Method, and subsequently the Covered Employee ceases to
have any account balances under the Retirement Savings Plan upon which the
Mirror Rate Method is based (e.g., as a result of an in-service withdrawal of
the Covered Employee's accounts under the Retirement Savings Plan after
attaining age 59 1/2), then the method for making adjustments to the Covered
Employee's Account shall automatically be changed to the
<PAGE>
30-Year Treasury Rate Method beginning effective with the calendar month in
which the Covered Employee ceases to have such Retirement Savings Plan account
balances.
Section 3.5 Account Payments.
(a) Payment Options.
(i) A Covered Employee who first elects to defer
amounts under this Article III 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 Article III 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: (A) single cash payment,
(B) five (5) annual installments or (C) ten (10) annual
installments, as such methods are more fully described below.
(iv) Any election made under this Section 3.5(a)
shall be made on such form, at such time and pursuant to such
procedures as determined by the Restoration Plan Committee in
its sole discretion from time to time. An election made under
subparagraph (i) shall be effective upon the later of the date
of such election or the attainment of age fifty-five (55). An
election made under subparagraph (ii) shall not become
effective until the first anniversary of the date of such
election. In addition, the Committee may establish special
procedures for the first Plan Year in which this election
becomes available for Covered Employees who are age fifty-four
(54) and older, provided that any such election is not
effective for at least twelve (12) months from the date made.
(v) For a Covered Employee who does not yet have an
election in effect under this Section 3.5(a) or for a Covered
Employee who fails to elect a payment option under this
Section 3.5(a), the method of payment shall be the single cash
payment.
(b) Single Cash Payments. The following provisions shall
apply with respect to single cash payments under the Restoration Plan:
<PAGE>
(i) In the case of a Covered Employee whose
termination of employment with the Participating Employers
occurs before the Covered Employee attains age fifty-five
(55), then such Covered Employee's Account, to the extent
vested, shall be determined as of the last business day of the
calendar month immediately preceding such termination of
employment, and such final vested Account balance shall be
paid in a single cash payment to the Covered Employee (or to
the Covered Employees's "Beneficiary" as determined under the
Retirement Savings Plan in the case of the Covered Employee's
termination of employment as the result of the Covered
Employee's death) as soon as administratively practicable
after the date of such termination of employment.
(ii) In the case of a Covered Employee whose
termination of employment with the Participating Employers
occurs on or after the Covered Employee attains age fifty-five
(55) and whose vested Account balance is to be paid in a
single cash payment in accordance with Section 3.5(a), then
such Covered Employee's Account, to the extent vested, shall
continue to be credited with monthly adjustments under Section
3.4 through March 31 of the calendar year immediately
following the calendar year of such termination of employment,
except that the rate for such monthly adjustments for the
calendar month of such termination of employment through such
March 31 shall be the 30-year Treasury bond ask yield for the
last business day of the calendar month immediately preceding
such termination of employment (regardless of the method of
Account adjustment elected by the Covered Employee under
Section 3.4 above). The final vested Account balance as of
such March 31 shall be paid in a single cash payment to the
Covered Employee (or to the Covered Employees's "Beneficiary"
as determined under the Retirement Savings Plan in the case of
the Covered Employee's termination of employment as the result
of the Covered Employee's death) on or about such March 31.
(c) Annual Installments. In the event a Covered Employee's
employment with the Participating Employers terminates after the
effectiveness of the Covered Employee's election as to the method of
payment under Section 3.5(a) and the Covered Employee has selected
annual installments, the amount of such annual installments shall be
calculated and paid pursuant to the provisions of this Section 3.5(c).
The first installment shall be paid on or about March 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 March 31. The amount of the
installments shall be calculated as follows: First, the Covered
Employee's Account, to the extent vested, shall continue to be credited
with monthly adjustments under Section 3.4 through such March 31,
except that the rate for such monthly adjustments for the
<PAGE>
calendar month of such termination of employment through such March 31
shall be the 30-year Treasury bond ask yield for the last business day
of the calendar month immediately preceding such termination of
employment (regardless of the method of Account adjustment elected by
the Covered Employee under Section 3.4 above). The amount of the annual
installments shall then be calculated, based on the vested Account
balance as of such March 31, as equal annual installments amortized
over the selected period using the same 30-year Treasury bond ask
yield. If a Covered Employee dies after the effectiveness of the
Covered Employee's election as to the method of payment under Section
3.5(a) 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
Employees's "Beneficiary" as determined under the Retirement Savings
Plan.
(d) Vesting of Matching Contribution Restoration Account.
Notwithstanding any provision of the Restoration Plan to the contrary,
if a Covered Employee is not fully (100%) vested in the amount credited
to the Employee's Matching Contribution Account and/or the Employee's
Pre-1993 Stock/Thrift Plan Matching Contribution Account under the
Retirement Savings Plan at the time of the Employee's termination of
employment with the Participating Employers, the amount credited to the
Covered Employee's Matching Contribution Restoration Account shall be
reduced at the time of such termination of employment to an amount
equal to the product of (i) the amount then credited to said Matching
Contribution Restoration Account multiplied by (ii) the vested
percentage applicable to the Employee's Matching Contribution Account
and Pre-1993 Stock/Thrift Plan Matching Contribution Account under the
Retirement Savings Plan as of the date of such termination of
employment. The amount by which the Employee's Matching Contribution
Restoration Account is reduced by application of the preceding sentence
shall be forfeited at the time the Employee terminates employment.
(e) Other Payment Provisions. Subject to the provisions of
Section 3.6, a Covered Employee shall not be paid any portion of the
Employee's Account prior to the Employee's termination of employment
with the Participating Employers. Any deferral or payment hereunder
shall be subject to applicable payroll and withholding taxes. For
purposes of the Restoration Plan, a Covered Employee shall be deemed to
have terminated employment with the Participating Employers 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 Restoration 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
Restoration Plan Committee, in its sole discretion, may decide, and the
Restoration Plan Committee shall not be liable to any person for any
such decision or any payment pursuant thereto.
<PAGE>
Section 3.6 Withdrawals on Account of an Unforeseeable Emergency. A
Covered Employee who is in active service of a Participating Employer may, in
the Restoration Plan Committee's sole discretion, receive a refund of all or any
part of the amounts previously credited to the Covered Employee's Deferral
Account (but not the Covered Employee's Matching Contribution Restoration
Account) in the case of an "unforeseeable emergency." A Covered Employee
requesting a payment pursuant to this Section shall have the burden of proof of
establishing, to the Restoration Plan 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 Restoration
Plan Committee with such financial data and information as the Restoration Plan
Committee may request. If the Restoration Plan Committee determines that a
payment should be made to a Covered Employee under this Section such payment
shall be made within a reasonable time after the Restoration Plan 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 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 during a Plan Year, no further deferral of compensation shall be made
during the Plan Year from and after the effective date of the withdrawal.
ARTICLE IV.
AMENDMENT AND TERMINATION
Section 4.1 Amendment and Termination. NationsBank shall have the right
and power at any time and from time to time to amend the Restoration Plan in
whole or in part, on behalf of all Participating Employers, and at any time to
terminate the Restoration Plan or any Participating Employer's participation
hereunder; provided, however, that no such amendment or termination shall reduce
the amount actually credited to an Employee's Account(s) under the Restoration
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
Employee.
ARTICLE V.
<PAGE>
MISCELLANEOUS PROVISIONS
Section 5.1 Nature of Plan and Rights. The Restoration Plan is unfunded
and intended to constitute an incentive and deferred compensation plan for a
select group of officers and key management employees of the Participating
Employers. If necessary to preserve the above intended plan status, the
Restoration Plan Committee, in its sole discretion, reserves the right to limit
or reduce the number of actual participants and otherwise to take any remedial
or curative action that the Restoration Plan Committee deems necessary or
advisable. The Accounts established and maintained under the Restoration Plan by
a Participating Employer are for accounting purposes only and shall not be
deemed or construed to create a trust fund of any kind or to grant a property
interest of any kind to any Employee, designated beneficiary or estate. The
amounts credited by a Participating Employer to such Accounts are and for all
purposes shall continue to be a part of the general assets of such Participating
Employer, and to the extent that an Employee, beneficiary or estate acquires a
right to receive payments from such Participating Employer pursuant to the
Restoration Plan, such right shall be no greater than the right of any unsecured
general creditor of such Participating Employer.
Section 5.2 Termination of Employment. For the purposes of the
Restoration Plan, an Employee's employment with a Participating Employer shall
not be considered to have terminated so long as the Employee is in the employ of
any Participating Employer or other member of the Controlled Group.
Section 5.3 Spendthrift Provision. No Account balance or other right or
interest under the Restoration Plan of an Employee, beneficiary or estate may be
assigned, transferred or alienated, in whole or in part, either directly or by
operation of law, and no such balance, right or interest shall be liable for or
subject to any debt, obligation or liability of the Employee, designated
beneficiary or estate.
Section 5.4 Employment Noncontractual. The establishment of the
Restoration Plan shall not enlarge or otherwise affect the terms of any
Employee's employment with his Participating Employer, and such Participating
Employer may terminate the employment of the Employee as freely and with the
same effect as if the Restoration Plan had not been established.
Section 5.5 Adoption by Other Participating Employers. The Restoration
Plan may be adopted by any Participating Employer participating under the
Retirement Savings Plan, such adoption to be effective as of the date specified
by such Participating Employer at the time of adoption.
Section 5.6 Applicable Law. The Restoration Plan shall be governed and
construed in accordance with the laws of the State of North Carolina, except to
the extent such laws are preempted by the laws of the United States of America.
<PAGE>
Section 5.7 Merged Plans. From time to time the Participating Employers
may cause other nonqualified plans to be merged into the Restoration Plan.
Schedule 5.7 attached hereto sets forth the names of the plans that merged into
the Restoration Plan by July 1, 1996 and their respective merger dates. Schedule
5.7 shall be updated from time to time to reflect mergers after July 1, 1996.
Upon such a merger, the account balance(s) immediately prior to the
date of merger of each participant in the merged plan shall be transferred and
credited as of the merger date to one or more accounts established under the
Restoration Plan for such participant. From and after the merger date, the
participant's rights shall be determined under the Restoration Plan, and the
participant shall be subject to all of the restrictions, limitations and other
terms and provisions of the Restoration Plan. Not in limitation of the
foregoing, each Restoration Plan Account established for the participant as a
result of the merger shall be periodically adjusted when and as provided in
Section 3.4 hereof as in effect from time to time and shall be paid at such time
and in such manner as provided in Section 3.5 and Section 3.6 hereof, except to
the extent otherwise provided on Schedule 5.7.
IN WITNESS WHEREOF, this instrument has been executed by NationsBank as
of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/C. J. Cooley
Title: Executive Vice President
<PAGE>
SCHEDULE 5.7
MERGED PLANS AS OF JULY 1, 1996
Plan Name Date of Merger
C&S Policy Committee Supplemental December 31, 1992
Savings Plan
C&S Key Executive Supplemental December 31, 1992
Savings Plan
C&S/Sovran Supplemental Retirement Plan December 31, 1992
for Former Sovran Executives
(Thrift Restoration Benefits)
First & Merchants Corporation Deferred March 31, 1993
Management Incentive Compensation
Plan
Sovran Deferred Compensation Plan March 31, 1993
NationsBank of Texas, N.A. Profit March 31, 1993
Sharing Restoration Plan
Thrift Plan Reserve Account Maintained Mach 31, 1993
Under the NationsBank Corporation
and Designated Subsidiaries
Supplemental Executive Retirement Plan
Bank South Executive Bonus Deferral Plan July 1, 1996
<PAGE>
NATIONSBANK CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
(as amended and restated effective July 1, 1996)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed as of the 1st
day of July, 1996 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
Plan permits covered employees to defer the payment of amounts under the Plan,
and such deferred amounts are credited with earnings based on the 30-year
Treasury bond rate. The Corporation desires to amend the Plan effective July 1,
1996 to give covered employees who defer amounts under the Plan a choice between
the 30-year treasury bond rate and a rate that "mirrors" the covered employee's
investment results under The NationsBank Retirement Savings Plan. The
Corporation believes that such amendment can best be effected by amending and
restating the Plan in its entirety effective as of July 1, 1996. In accordance
with paragraph 7 of the Plan, such amendment and restatement of the Plan has
been approved by the Board of Directors of the Corporation.
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety
to consist of the following paragraphs 1 through 11 effective as of the date
hereof:
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") established 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. This amendment and restatement is effective July 1,
1996. The intent of the Plan is to provide "performance-based compensation"
<PAGE>
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) "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.
(b) "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.
(c) "Claim" means a claim for benefits under the Plan.
(d) "Claimant" means a person making a Claim.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and references thereto shall include the valid Treasury
regulations thereunder.
(f) "Committee" means all of the members of the Compensation Committee
of the Board of Directors of the Corporation who are Outside Directors.
(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 April
1 of such Plan Year as a "Covered Employee" under the Plan for such Plan Year.
(h) "Incentive Compensation Pool" for a Plan Year means the amount
established in accordance with paragraph 5.
(i) "Mirror Rate Method" means a method for determining the adjustment
to a Covered Employee's Account for a month such that the level of investment
return for the Account for such month substantially equals the aggregate level
of investment return for such month of all of the Covered Employee's accounts
under The NationsBank Retirement Savings Plan (the "Savings Plan") that are
invested in the Investment Trust under the Savings Plan other
<PAGE>
than amounts mandatorily invested in the common stock of the Corporation under
the Investment Trust. For this purpose, amounts shall be deemed to be
mandatorily invested in the common stock of the Corporation even if the Covered
Employee is eligible to make a diversification election under the Savings Plan
with respect to such common stock. However, once such a diversification election
is in fact made by a Covered Employee, amounts transferred out of such
mandatorily invested account in accordance with such election shall be included
in determining the aggregate level of investment return under the Mirror Rate
Method for the Covered Employee from and after the effective date of such
election.
(j) "Outside Director" means an "outside director" within the meaning
of Section 162(m)(4)(C)(i) of the Code.
(k) "Plan Year" means the fiscal year of the Corporation beginning
January 1 and ending December 31.
(l) "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.
(m) "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.
(n) "30-Year Treasury Rate Method" means a method for determining the
adjustment to a Covered Employee's Account for a month such that the level of
investment return of the Account for such month substantially equals 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 Committee.
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
<PAGE>
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 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. 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:
(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.
<PAGE>
(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) 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).
(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 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:
<PAGE>
Shareholder approval for and ratification of the Plan was originally
obtained on or before December 31, 1994. In accordance with Section
162(m)(4)(C)(ii) of the Code, the continued effectiveness of the Plan is subject
to its approval and ratification by the shareholders of the Corporation at such
other times as required by Section 162(m)(4)(C)(ii) of the Code.
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 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.
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
<PAGE>
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.
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. Each Account shall be adjusted on a monthly
basis pursuant to either the Mirror Rate Method or the 30-Year Treasury Rate
Method. Each Covered Employee with an Account shall be given an opportunity to
elect between the Mirror Rate Method and the 30-Year Treasury Rate Method for
such purpose. To be effective, such election must be made at such times, on such
forms and pursuant to such procedures as established by the Committee in its
sole discretion from time to time. An election once made shall remain in effect
unless and until changed by the Covered Employee in accordance with this
paragraph 10(c). If a Covered Employee fails to make an election under this
paragraph 10(c), the method for making adjustments to the Covered Employee's
Account shall be the 30-Year Treasury Rate Method. If a Covered Employee has
elected the Mirror Rate Method, and subsequently the Covered Employee ceases to
have any account balances under the Savings Plan upon which the Mirror Rate
Method is based (e.g., as a result of an in-service withdrawal of the Covered
Employee's accounts under the Savings Plan after attaining age 59-1/2), then the
method for making adjustments to the Covered Employee's Account shall
automatically be changed to the 30-Year Treasury Rate Method beginning effective
with the calendar month in which the Covered Employee ceases to have such
Savings Plan account balances.
(d) Payment Options.
<PAGE>
(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: (A) single cash payment, (B) five (5) annual
installments or (C) ten (10) annual installments, as such methods are
more fully described below.
(iv) Any election made under this paragraph 10(d) shall be made on
such forms, at such time and pursuant to such procedures as determined
by the Committee in its sole discretion from time to time. An election
made under subparagraph (i) shall be immediately effective. An election
made under subparagraph (ii) shall not become effective until the first
anniversary of the date of such election. In addition, the Committee
may establish special procedures for the first Plan Year in which such
election becomes available for Covered Employees who are age fifty-four
(54) and older, provided that any such election is not effective for at
least twelve (12) months from the date made.
(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 paragraph 10(c) through March 31 of the
calendar year immediately following the calendar year of such termination of
employment, except that the rate for such monthly adjustments for the calendar
month of such termination of employment through such March 31 shall be the
30-year Treasury bond ask yield for the last business day of the calendar month
immediately preceding such termination of employment (regardless of the method
of Account adjustment elected by the Covered Employee under paragraph 10(d)
above). The final Account
<PAGE>
balance as of such March 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 March 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 March 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 March 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 March 31, except that the rate
for such monthly adjustments for the calendar month of such termination of
employment through such March 31 shall be the 30-year Treasury bond ask yield
for the last business day of the calendar month immediately preceding such
termination of employment (regardless of the method of Account adjustment
elected by the Covered Employee under paragraph 10(d) above). The amount of the
annual installments shall then be calculated, based on the Account balance as of
such March 31, as equal annual installments amortized over the selected period
using the same 30-year Treasury bond ask 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 deferral or payment
hereunder shall be subject to applicable payroll and withholding taxes. For
purposes of the Plan, a Covered Employee shall be deemed to have 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.
<PAGE>
(h) Withdrawals on Account of an Unforeseeable Emergency. A Covered
Employee 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 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 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
<PAGE>
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;
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.
<PAGE>
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.
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
C. J. Cooley
Executive Vice President
"Corporation"
NATIONSBANK CORPORATION
KEY EMPLOYEE DEFERRAL PLAN
(as amended and restated effective July 1, 1996)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed as of the 1st
day of July, 1996 by NATIONSBANK CORPORATION, a North Carolina corporation (the
"Corporation").
Statement of Purpose
The Corporation maintains the NationsBank Corporation Key Employee
Deferral Plan (the "Plan"), pursuant to which certain of its employees may defer
payment of certain annual incentives in accordance with the terms and provisions
set forth herein. The Plan provides that amounts deferred under the Plan are
credited with earnings based on the 30-year Treasury bond rate. The Corporation
desires to amend the Plan effective July 1, 1996 to give participants under the
Plan a choice between the 30-year Treasury bond rate and a rate that "mirrors"
the participant's investment results under The NationsBank Retirement Savings
Plan. The Corporation believes that such amendment can best be effected by
amending and restating the Plan in its entirety effective as of July 1, 1996. In
accordance with paragraph 6 of the Plan, such amendment and restatement of the
Plan has been approved by the Compensation Committee of the Board of Directors
of the Corporation.
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety
to consist of the following paragraphs 1 through 9 effective as of the date
hereof:
1. Name:
This plan shall be known as the "NationsBank Corporation Key Employee
Deferral Plan" (the "Plan").
2. Purpose and Intent:
The Corporation established this Plan effective October 1, 1994 for the
purpose of providing certain of its key employees with the opportunity to defer
payment of certain annual incentives. This amendment and restatement is
effective July 1, 1996. 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:
<PAGE>
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.
(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.
<PAGE>
(k) "Mirror Rate Method" means a method for determining the adjustment
to a Participant's Account for a month such that the level of investment return
for the Account for such month substantially equals the aggregate level of
investment return for such month of all of the Participants's accounts under The
NationsBank Retirement Savings Plan (the "Savings Plan") that are invested in
the Investment Trust under the Savings Plan other than amounts mandatorily
invested in the common stock of the Corporation under the Investment Trust. For
this purpose, amounts shall be deemed to be mandatorily invested in the common
stock of the Corporation even if the Participant is eligible to make a
diversification election under the Savings Plan with respect to such common
stock. However, once such a diversification election is in fact made by a
Participant, amounts transferred out of such mandatorily invested account in
accordance with such election shall be included in determining the aggregate
level of investment return under the Mirror Rate Method for the Participant from
and after the effective date of such election.
(l) "Participant" means an Eligible Employee who has elected to
participate in the Plan as provided in paragraph 5(b) below.
(m) "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.
(n) "Plan Year" means the twelve (12) month period beginning January 1
and ending December 31.
(o) "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.
(p) "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.
<PAGE>
(q) "30-Year Treasury Rate Method" means a method for determining the
adjustment to a Participant's Account for a month such that the level of
investment return of the Account for such month substantially equals 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.
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.
<PAGE>
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 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. Each Account shall be adjusted on a monthly
basis pursuant to either the Mirror Rate Method or the 30-Year Treasury Rate
Method. Each Participant with an Account shall be given an opportunity to elect
between the Mirror Rate Method and the 30-Year Treasury Rate Method for such
purpose. To be effective, such election must be made at such times, on such
forms and pursuant to such procedures as established by the Plan Administrator
in its sole discretion from time to time. An election once made shall remain in
effect unless and until changed by the Participant in accordance with this
paragraph 5(d). If a Participant fails to make an election under this paragraph
5(d), the method for making adjustments to the Participant's Account shall be
the 30-Year Treasury Rate Method. If a Participant has elected the Mirror Rate
Method, and subsequently the Participant ceases to have any account balances
under the Savings Plan upon which the Mirror Rate Method is based (e.g., as a
result of an in-service withdrawal of the Participant's accounts under the
Savings Plan after attaining age 592), then the method for making adjustments to
the Participant's Account shall automatically be changed to the 30-Year Treasury
Rate Method beginning effective with the calendar month in which the Participant
ceases to have such Savings Plan account balances.
(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.
<PAGE>
(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: (A) single cash payment, (B) five (5) annual installments or
(C) ten (10) annual installments, as such methods are more fully
described below.
(iv) Any election made under this paragraph 5(e) shall be made on
such forms, at such time and pursuant to such procedures as determined
by the Plan Administrator in its sole discretion from time to time. An
election made under subparagraph (i) shall be effective upon the later
of the date of such election or the attainment of age fifty-five (55).
An election made under subparagraph (ii) shall not become effective
until the first anniversary of the date of such election. In addition,
the Plan Administrator may establish special procedures for the first
Plan Year in which this election becomes available for Participants who
are age fifty-four (54) and older, provided that any such election is
not effective for at least twelve (12) months from the date made.
(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
Participant attains age fifty-five (55), then such Participant's
Account shall be determined as of the last business day of the calendar
month immediately preceding 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 administratively practicable after the
date of such termination of employment.
(ii) In the case of a Participant whose termination of employment
with the Corporation and its Subsidiaries occurs on or after the
Participant attains age fifty-five (55) and whose Account balance is to
be paid in a single cash payment in accordance with paragraph 5(e),
then such Participant's Account shall continue to be credited with
<PAGE>
monthly adjustments under paragraph 5(d) through March 31 of the
calendar year immediately following the calendar year of such
termination of employment, except that the rate for such monthly
adjustments for the calendar month of such termination of employment
through such March 31 shall be the 30-year Treasury bond ask yield for
the last business day of the calendar month immediately preceding such
termination of employment (regardless of the method of Account
adjustment elected by the Participant under paragraph 5(d) above). The
final Account balance as of such March 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 or about such March 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 provisions of this
paragraph 5(g). The first installment shall be paid on or about March 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 March 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 March 31, except that the
rate for such monthly adjustments for the calendar month of such termination of
employment through such March 31 shall be the 30-year Treasury bond ask yield
for the last business day of the calendar month immediately preceding such
termination of employment (regardless of the method of Account adjustment
elected by the Participant under paragraph 5(d) above). The amount of the annual
installments shall then be calculated, based on the Account balance as of such
March 31, as equal annual 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 deferral or 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
<PAGE>
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 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.
<PAGE>
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 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;
<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 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;
(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.
<PAGE>
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.
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Corporation as of the 1st day of July, 1996.
NATIONSBANK CORPORATION
By: /s/C. J. Cooley
C. J. Cooley
Executive Vice President
"Corporation"
NATIONSBANK CORPORATION DIRECTOR DEFERRAL PLAN
AS AMENDED AND RESTATED EFFECTIVE APRIL 24, 1996
1. NAME:
This plan shall be known as the "NationsBank Corporation Director
Deferral Plan" (the "Plan").
2. PURPOSE AND INTENT:
NationsBank Corporation (the "Corporation") established 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 all (but not
any portion of) the annual retainer fee and/or meetings fees payable during a
year. Effective April 24, 1996, the Corporation adopted the NationsBank
Corporation Directors' Stock Plan (the "Stock Plan") which provides in part that
a portion of a director's annual retainer fee will be paid in cash and a portion
in shares of common stock of the Corporation. This amendment and restatement of
the Plan (i) allows a participating director to defer all or any portion of the
director's annual retainer fee and/or meetings fees and (ii) sets forth special
provisions for crediting the portion of any annual retainer fee deferred
hereunder that would have been paid in stock under the Stock Plan. 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) "Accounts" of a Participant mean collectively the Participant's
Cash Account and the Stock Account.
(b) "Cash Account" means the account established and maintained on the
books of the Corporation to record a Participant's interest under the Plan
attributable to the cash portion of any Annual Retainer Fee and Meetings Fees
credited to the Participant pursuant to paragraph 5(c) below, as adjusted from
time to time pursuant to the terms of the Plan.
(c) "Claim" means a claim for benefits under the Plan.
(d) "Claimant" means a person making a Claim.
<PAGE>
(e) "Common Stock" means the common stock of the Corporation.
(f) "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.
(g) "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.
(h) "Corporate Personnel Group" means the group of employees
designated as such from time to time by the Corporation.
(i) "Fair Market Value" of a share of Common Stock means the closing
price on the relevant date of a share of Common Stock on the New York Stock
Exchange (or such other principal securities exchange on which the shares of the
Common Stock are traded if such shares are no longer traded on the New York
Stock Exchange).
(j) "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.
(k) "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 or any of its subsidiaries.
(l) "Participant" means a Nonemployee Director who has elected to
participate in the Plan as provided in paragraph 5(b) below.
(m) "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.
(n) "Plan Year" means the twelve (12) month period beginning January 1
and ending December 31.
(o) "Single Sum Value" of the Cash Account of a Participant who is
receiving annual installments pursuant to paragraph 5(h) 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(h) below.
<PAGE>
(p) "Stock Account" means the account established and maintained on the
books of the Corporation to record a Participant's interest under the Plan
attributable to the stock portion of any Annual Retainer Fee credited to the
Participant pursuant to paragraph 5(c) below, as adjusted from time to time
pursuant to the terms of the Plan.
(q) "Stock Unit" means a unit having a value as of a given date equal
to the Fair Market Value of one (1) share of Common Stock on such date.
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 all or any portion of the Annual Retainer Fee payable to
the Nonemployee Director during such Plan Year and/or the Meetings Fees payable
to the Nonemployee Director for all meetings occurring during such Plan Year.
Such election shall be made separately with respect to the cash and stock
portions of 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.
<PAGE>
(c) Establishment of Accounts. The Corporation shall establish and
maintain on its books a Cash Account for each Participant and, if the
Participant elects to defer the stock portion of an Annual Retainer Fee, a Stock
Account. Each Account shall be designated by the name of the Participant for
whom established. Both the Meetings Fees and the cash portion of any Annual
Retainer Fee deferred by a Participant shall be credited to the Participant's
Cash Account as of the date such Fees would have otherwise been paid to the
Participant. The Stock Account of a Participant who elects to defer the stock
portion of an Annual Retainer Fee shall be credited with a number of Stock Units
equal to the number of shares of Common Stock which the Participant would have
received under the Stock Plan with respect to such Annual Retainer Fee, and such
Stock Units shall be credited to the Participant's Stock Account as of the date
the related shares would have been issued to the Participant.
(d) Account Adjustments: Cash Account. As of the last day of each
calendar month, each Cash Account shall be adjusted for such month so that the
level of investment return of the Cash 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) Account Adjustments: Stock Account. Each Stock Account shall be
credited additional full or fractional Stock Units for cash dividends paid on
the Common Stock based on the number of Stock Units in the Stock Account on the
applicable dividend record date and calculated based on the Fair Market Value of
the Common Stock on the applicable dividend payment date. Each Stock Account
shall also be equitably adjusted as determined by the Plan Administrator in the
event of any stock dividend, stock split or similar change in the capitalization
of the Corporation.
(f) 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.
(g) 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 Accounts shall
continue to be credited with adjustments under paragraph 5(d) and paragraph 5(e)
above through January 31 of the calendar year immediately following the calendar
year of such termination of services, except that, with respect to the
Participant's Cash Account, the rate for
<PAGE>
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 number of Stock Units in the Stock Account as of such January 31
shall be converted to cash based on the Fair Market Value of the Common Stock on
such date, and such cash amount together with the final Cash 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.
(h) 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(h). 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, as of such date of termination of services the Participant's
Stock Account shall be debited of all Stock Units credited to it, and the
Participant's Cash Account shall be credited with an amount equal to the
aggregate Fair Market Value of such debited Stock Units as of such date of
termination. Second, the Participant's Cash 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. Participants shall designate a
beneficiary under the Plan on a form furnished by the Plan Administrator, and if
a Participant does not have a beneficiary designation in effect, the designated
beneficiary shall be the Participant's estate.
(i) Other Payment Provisions. Subject to the provisions of paragraph
5(j) and paragraph 6 below, a Participant shall not be paid any portion of the
Participant's Accounts 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.
<PAGE>
(j) 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 payment
of all or any part of the amounts previously credited to the Participant's Cash
Account (but not Stock Account) in the case of an "unforeseeable emergency." A
Participant requesting a payment pursuant to this subparagraph (j) 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 (j), 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.
(k) Statements of Account. Each Participant shall receive an annual
statement of the balance in the Participant's Accounts.
<PAGE>
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 Accounts 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(f), 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 cash
payment as of a date determined by the Compensation Committee or to otherwise
accelerate the payment of 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(h)
shall be the Single Sum Value of the Participant's Cash Account determined as of
the selected determination date. Notwithstanding the foregoing, the accelerated
payment of Participant Accounts described above shall be limited to the
Participants' Cash Accounts to the extent necessary to insure that Stock Units
under the Plan do not constitute "derivative securities" that are subject to the
short-swing profit recovery rules of Section 16 of the Securities Exchange Act
of 1934, and in such case a Participant's Stock Account shall continue to be
adjusted and shall be paid as and when provided by the Plan without regard to
such action to terminate the Plan.
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;
<PAGE>
(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;
(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
<PAGE>
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. 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 24th day of April, 1996.
NATIONSBANK CORPORATION
By: /s/C. J. Cooley
C. J. Cooley
Executive Vice President
"Corporation"
NATIONSBANK CORPORATION
KEY EMPLOYEE STOCK PLAN
Effective Date: January 1, 1995
(As amended and restated effective December 20, 1996)
<PAGE>
CONTENTS
- ---------------------------------------------------------------------------
PAGE
Article 1. Establishment, Purpose, and Duration 1
Article 2. Definitions 1
Article 3. Administration 6
Article 4. Shares Subject to the Plan 7
Article 5. Eligibility and Participation 8
Article 6. Stock Options 8
Article 7. Stock Appreciation Rights 10
Article 8. Restricted Stock 12
Article 9. Performance Shares 14
Article 10. Performance Measures 15
Article 11. Beneficiary Designation 15
Article 12. Deferrals 16
Article 13. Rights of Key Employees 16
Article 14. Change in Control 16
Article 15. Amendment, Modification, and Termination 19
Article 16. Withholding 19
Article 17. Indemnification 20
Article 18. Successors 20
Article 19. Legal Construction 20
<PAGE>
NATIONSBANK CORPORATION
KEY EMPLOYEE STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. NationsBank Corporation, a North Carolina
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "NationsBank Corporation Key
Employee Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock and
Performance Shares.
Subject to approval by the Company's shareholders, the Plan shall become
effective as of January 1, 1995 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment, interest and special effort the successful conduct of its operation
largely is dependent.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan after December 31, 2004.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock or Performance Shares.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.3 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
1
<PAGE>
2.4 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.5 "CHANGE IN CONTROL" of the Company means, and shall be deemed to have
occurred upon, any of the following events:
(a) The acquisition by any Person of Beneficial Ownership of twenty-five
percent (25%) or more of either:
(i) The then-outstanding Shares (the "Outstanding Shares"); or
(ii) The combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of Directors (the "Outstanding Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from
the Company or pursuant to a written agreement to which the
Company is a party, as such written agreement is more
particularly described in Section 55-9A-01(b)(3)f and g of the
North Carolina Business Corporation Act as ratified by the North
Carolina General Assembly on June 8, 1989, (B) any acquisition by
the Company or any of its Subsidiaries, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries, (D) any
acquisition by any corporation with respect to which, following
such acquisition, more than fifty percent (50%) of, respectively,
the then-outstanding shares of common stock of such corporation
and the combined voting power of the then-outstanding voting
securities of such corporation entitled to vote generally in the
election of directors are then beneficially owned by all or
substantially all of the Persons who were the Beneficial Owners,
respectively, of the Outstanding Shares and Outstanding Voting
Securities immediately prior to such acquisition in substantially
the same proportions as their Beneficial Ownership, immediately
prior to such acquisition, of the Outstanding Shares and
Outstanding Voting Securities, as the case may be; or
(b) Individuals who, as of the Effective Date, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors; provided, however, that
any individual who becomes a Director subsequent to the Effective Date
and whose election, or whose nomination for election by the Company's
shareholders, to the Board of Directors was either (i) approved by a
vote of at least a majority of the Directors then comprising the
Incumbent Board or (ii) recommended by a Nominating Committee
comprised entirely of Directors who are then Incumbent Board members
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act), other
actual or threatened solicitation of proxies or consents or an actual
or threatened tender offer; or
2
<PAGE>
(c) Approval by the Company's shareholders of a reorganization, merger, or
consolidation, in each case, with respect to which all or
substantially all of the Persons who were the Beneficial Owners,
respectively, of the Outstanding Shares and Outstanding Voting
Securities immediately prior to such reorganization, merger, or
consolidation do not, following such reorganization, merger, or
consolidation, beneficially own more than fifty percent (50%) of,
respectively, the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger,
or consolidation in substantially the same proportions as their
Beneficial Ownership, immediately prior to such reorganization,
merger, or consolidation, of the Outstanding Shares and Outstanding
Voting Securities, as the case may be; or
(d) Approval by the Company's shareholders of:
(i) A complete liquidation or dissolution of the Company; or
(ii) The sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, more than
fifty percent (50%) of, respectively, the then-outstanding shares
of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned by all or substantially all of the Persons who
were the Beneficial Owners, respectively, of the Outstanding
Shares and Outstanding Voting Securities immediately prior to
such sale or other disposition in substantially the same
proportion as their Beneficial Ownership, immediately prior to
such sale or other disposition, of the Outstanding Shares and
Outstanding Voting Securities, as the case may be.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time. References to the Code shall include the valid and binding governmental
regulations, court decisions and other regulatory and judicial authority issued
or rendered thereunder.
2.7 "COMMITTEE" means the Stock Option Committee of the Board, as
specified in Article 3 herein, appointed by the Board to administer the Plan
with respect to grants of Awards.
2.8 "COMPANY" means NationsBank Corporation, a North Carolina
corporation, and any successor as provided in Article 18 herein.
2.9 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.10 "DISABILITY," with respect to a Participant, means "disability" as
defined from time to time under any long-term disability plan of the Company or
Subsidiary with which the Participant is employed.
3
<PAGE>
2.11 "EARNINGS PER SHARE" means "earnings per common share" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.12 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.14 "FAIR MARKET VALUE" shall be determined on the basis of the closing
sale price on the New York Stock Exchange (or such other principal securities
exchange on which the Shares are traded if the Shares are no longer traded on
the New York Stock Exchange) or, if there is no such sale on the relevant date,
then on the last previous day on which a sale was reported.
2.15 "FREESTANDING SAR" means an SAR that is granted independently of any
Options.
2.16 "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares,
granted under Article 6 herein, and which is designated as an Incentive Stock
Option which is intended to meet the requirements of Section 422 of the Code.
2.17 "INSIDER" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.18 "KEY EMPLOYEE" means an employee of the Company, including an officer
of the Company, in a managerial or other important position who, by virtue of
such employee's ability, qualifications and performance, has made important
contributions to the Company, all as determined by the Committee in its
discretion.
2.19 "NAMED EXECUTIVE OFFICER" means, for a calendar year, a Participant
who is one of the group of "covered employees" for such calendar year within the
meaning of Code Section 162(m) or any successor statute.
2.20 "NET INCOME" means "net income" of the Company determined in
accordance with generally accepted accounting principles that would be reported
in the Company's Annual Report to Shareholders.
2.21 "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted to Key Employees under Article 6 herein, and which is not
intended to meet the requirements of Code Section 422.
2.22 "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option.
4
<PAGE>
2.23 "OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.24 "PARTICIPANT" means a Key Employee who has outstanding an Award
granted under the Plan.
2.25 "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
set forth in Code Section 162(m)(4)(C) from the deductibility limitations of
Code Section 162(m).
2.26 "PERFORMANCE SHARE" means an Award granted to an Key Employee, as
described in Article 9 herein.
2.27 "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.29 "RESTRICTED STOCK" means an Award granted to a Participant pursuant to
Article 8 herein.
2.30 "RETIREMENT" of a Participant means the Participant's termination of
employment with the Company and Subsidiaries (other than by reason of death)
after the Participant has attained both (i) age fifty (50) and (ii) a combined
age and years of "Vesting Service" under the NationsBank Pension Plan equal to
at least seventy-five (75).
2.31 "RETURN ON ASSETS" means "return on average assets" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.32 "RETURN ON EQUITY" means "return on average common shareholders'
equity" of the Company determined in accordance with generally accepted
accounting principles that would be reported in the Company's Annual Report to
Shareholders.
2.33 "SHARES" means the shares of Common Stock of the Company.
2.34 "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
2.35 "SUBSIDIARY" means any corporation, partnership, joint venture,
affiliate, or other entity in which the Company has an ownership interest, and
which the Committee designates as a participating entity in the Plan.
5
<PAGE>
2.36 "TANDEM SAR" means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).
2.37 "TOTAL SHAREHOLDER RETURN" means the percentage change of an initial
investment in Shares over a specified period assuming reinvestment of all
dividends during the period.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Stock Option
Committee of the Board or by any other Committee appointed by the Board
consisting of not less than two (2) Directors. All of the members of the
Committee shall comply with the "disinterested administration" rules of Rule
16b-3 under the Exchange Act. The members of the Committee shall be appointed
from time to time by, and shall serve at the discretion of, the Board of
Directors. In addition, any action taken with respect to Named Executive
Officers for purposes of meeting the Performance-Based Exception shall be taken
by the Committee only if all of the members of the Committee are "outside
directors" within the meaning of Code Section 162(m). If all of the members of
the Committee are not "outside directors," such action shall be taken by a
subcommittee of the Committee comprised of at least two (2) members who are
"outside directors."
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law, or by the
Articles of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Key Employees
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 15 herein),
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law,
the Committee may delegate its authority as identified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders, employees, Participants, and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Beginning on the Effective Date,
there is hereby reserved for issuance under the Plan a number of shares equal
to:
(a) seventy-five one hundredths of a percent (0.75%) of the outstanding
Shares as of the first business day of each calendar year beginning
with calendar year 1995 and continuing through calendar year 2004;
plus
6
<PAGE>
(b) the Shares available for issuance under the Company's 1986 Restricted
Stock Award Plan (the "1986 Plan") as of January 31, 1995.
Such Shares available for grants of Awards in any year shall be increased by the
number of Shares available under this Section 4.1 in previous years but not
covered by Awards granted under this Plan in those years plus any Shares as to
which Awards granted under this Plan have lapsed, expired, terminated, or been
canceled. In addition, any Shares as to which Awards under the Company's 1986
Plan may lapse, expire, terminate, or be canceled, shall also be reserved and
available for issuance or reissuance under this Section 4.1 in any calendar
year. No further awards are to be granted under the 1986 Plan after January 31,
1995; provided that any outstanding awards under the 1986 Plan shall continue to
remain outstanding in accordance with the terms thereof. In addition, the
Company has entered an Agreement and Plan of Merger with Boatmen's Bancshares,
Inc. ("Boatmen's"). In the event the Boatmen's transaction is consummated, an
additional Five Million Two Hundred Fifty Thousand (5,250,000) Shares shall be
made available for grants of Awards under the Plan beginning effective as of the
consummation of such transaction. In no event shall a Participant receive an
Award or Awards during any one (1) calendar year covering in the aggregate more
than Two Hundred Fifty Thousand (250,000) Shares. In addition, in no event shall
the total number of Incentive Stock Options granted during the ten (10) year
term of the Plan cover in the aggregate more than the product of (i) ten (10)
times (ii) seventy-five one hundredths of a percent (0.75%) of the outstanding
Shares as of the first business day of calendar year 1995. The number of Shares
reserved for issuance under this Section 4.1 and the limitations on the number
of Incentive Stock Option Awards and annual Awards to individuals set forth
above shall be subject to adjustment as provided in Section 4.3.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan are all Key
Employees of the Company, as determined by the Committee, including Key
Employees who are Directors, but excluding Directors who are not Key Employees.
7
<PAGE>
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Key Employees those
to whom Awards shall be granted and shall determine the nature and amount of
each Award.
5.3 FOREIGN EMPLOYEES. Notwithstanding any provision of the Plan to the
contrary, in order to foster and promote achievement of the purposes of the Plan
or to comply with provisions of laws in other countries in which the Company
operates or has employees, the Committee, in its sole discretion, shall have the
power and authority to (i) determine which Key Employees (if any) employed
outside the United States are eligible to participate in the Plan, (ii) modify
the terms and conditions of any Awards made to such Key Employees and (iii)
establish subplans, modified Option exercise and other terms and procedures to
the extent such actions may be necessary or advisable.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or an NQSO whose grant is intended not to fall under Code Section 422.
6.3 OPTION PRICE. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve and which shall be set forth in the
applicable Award Agreement, which need not be the same for each grant or for
each Participant.
6.6 PAYMENT. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price), or (c) by a combination of
(a) and (b).
8
<PAGE>
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 TERMINATION OF EMPLOYMENT. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company and its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with Participants, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination of employment. In that regard, if an Award Agreement permits
exercise of an Option following the death of the Participant, the Award
Agreement shall provide that such Option shall be exercisable to the extent
provided therein by any person that may be empowered to do so under the
Participant's will, or if the Participant shall fail to make a testamentary
disposition of the Option or shall have died intestate, by the Participant's
executor or other legal representative.
6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant.
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6
may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a
Participant's Award Agreement, all NQSOs granted to a Participant
under this Article 6 shall be exercisable during his or her lifetime
only by such Participant.
9
<PAGE>
6.10 NO RIGHTS. A Participant granted an Option shall have no rights as a
shareholder of the Company with respect to the Shares covered by such Option
except to the extent that Shares are issued to the Participant upon the due
exercise of the Option.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs
may be granted to Key Employees at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
10
<PAGE>
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
(or any successor rule) of the Exchange Act.
7.8 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
In that regard, if an Award Agreement permits exercise of an SAR following the
death of the Participant, the Award Agreement shall provide that such SAR shall
be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the SAR or shall have died intestate,
by the Participant's executor or other legal representative.
7.9 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
7.10 NO RIGHTS. A Participant granted an SAR shall have no rights as a
shareholder of the Company with respect to the Shares covered by such SAR except
to the extent that Shares are issued to the Participant upon the due exercise of
the SAR.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Key Employees in such amounts as the Committee
shall determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Shares of Restricted Stock granted, and
such other provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established
11
<PAGE>
by the Committee and specified in the Restricted Stock Award Agreement, or upon
earlier satisfaction of any other conditions, as specified by the Committee in
its sole discretion and set forth in the Restricted Stock Agreement. All rights
with respect to the Restricted Stock granted to a Participant under the Plan
shall be available during his or her lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. The Committee shall impose such other conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions on
vesting following the attainment of the performance goals, and/or restrictions
under applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the Period of Restriction.
8.5 VOTING RIGHTS. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the remaining vesting period of
the Shares of Restricted Stock with respect to which the dividend is paid.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
with the Company and its Subsidiaries. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement
entered into with Participants, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions based
on the reasons for termination of employment. In amplification but not
limitation of the foregoing, in the case of an award of Restricted Stock to a
Named Executive Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Restricted Stock may become
payable in the event of a termination of employment by reason of
12
<PAGE>
death, Disability or Change in Control, such payment not to occur before
attainment of the related performance goal.
ARTICLE 9. PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE SHARES. Subject to the terms of the Plan,
Performance Shares may be granted to eligible Key Employees in such amount and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee. The number and/or vesting of Performance Shares granted, in
the Committee's discretion, shall be contingent upon the degree of attainment of
specified performance goals or other conditions over a specified period (the
"Performance Period"). The terms and conditions of an Award of Performance
Shares shall be evidenced by an appropriate Award Agreement.
9.2 VALUE OF PERFORMANCE SHARES. The value of a Performance Share at any
time shall equal the Fair Market Value of a Share at such time.
9.3 FORM AND TIMING OF PAYMENT OF PERFORMANCE SHARES. During the course of
a Performance Period, the Committee shall determine the number of Performance
Shares as to which the Participant has earned a right to be paid pursuant to the
terms of the applicable Award Agreement. The Committee shall pay any earned
Performance Shares as soon as practical after they are earned in the form of
cash, Shares or a combination thereof (as determined by the Committee) having an
aggregate Fair Market Value equal to the value of the earned Performance Shares
as of the date they are earned. Any Shares used to pay out earned Performance
Shares may be granted subject to any restrictions deemed appropriate by the
Committee. In addition, the Committee, in its discretion, may cancel any earned
Performance Shares and grant Stock Options to the Participant which the
Committee determines to be of equivalent value based on a conversion formula
stated in the Performance Shares Award Agreement.
The Committee, in its discretion, may also grant dividend equivalents
rights with respect to earned but unpaid Performance Shares as evidenced by the
applicable Award Agreement. Performance Shares shall not have any voting rights.
Prior to the beginning of a Performance Period (or at such other time as
determined by the Committee), Participants may elect to defer the receipt of
payment of any Performance Shares or other amounts (e.g., dividend equivalents
rights) earned pursuant to the Award Agreement upon such terms as the Committee
deems appropriate and as set forth in the applicable Award Agreement.
9.4 TERMINATION OF EMPLOYMENT. Each Performance Share Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unearned Performance Shares following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreements entered into with Participants, need not be uniform among all
Performance Shares awarded pursuant to the Plan, and may reflect distinctions
based on the reasons of termination of employment. In amplification but not
limitation of the foregoing, in the case of an award of Performance Shares to a
Named Executive Officer which is intended to qualify for the Performance-
13
<PAGE>
Based Exception, the Award Agreement may provide that such Performance Shares
may become payable in the event of a termination of employment by reason of
death, Disability or Change in Control, such payment not to occur before
attainment of the related performance goal.
9.5 NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant.
ARTICLE 10. PERFORMANCE MEASURES
The performance measure(s) to be used for purposes of Awards to Named
Executive Officers which are designed to qualify for the Performance-Based
Exception shall be chosen from among the following alternatives:
(a) Earnings Per Share;
(b) Net Income;
(c) Return On Assets;
(d) Return On Equity; or
(e) Total Shareholder Return.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by Named Executive Officers, may not be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.
ARTICLE 11. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
ARTICLE 12. DEFERRALS
14
<PAGE>
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the satisfaction of
any requirements or goals with respect to Performance Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 13. RIGHTS OF KEY EMPLOYEES
13.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to erminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
For purposes of this Plan, a transfer of a Participant's employment between
the Company and a Subsidiary, or between Subsidiaries, shall not be deemed to be
a termination of employment. Upon such a transfer, the Committee may make such
adjustments to outstanding Awards as it deems appropriate to reflect the changed
reporting relationships.
13.2 PARTICIPATION. No Key Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 14. CHANGE IN CONTROL
14.1TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any restriction periods and restrictions imposed on shares of
Restricted Stock shall lapse;
(c) The target payout opportunities attainable under all outstanding
Awards of Restricted Stock and Performance Shares shall be deemed to
have been fully earned for the entire Performance Period(s) as of the
effective date of the Change in Control, and the vesting of all Awards
shall be accelerated as of the effective date of the Change in
Control; and
(d) Subject to Article 15 herein, the Committee shall have the authority
to make any modifications to the Awards as determined by the Committee
to be appropriate before the effective date of the Change in Control.
14.2 LIMITATION ON CHANGE-IN-CONTROL BENEFITS. It is the intention of the
Company and the Participants to reduce the amounts payable or distributable to a
Participant hereunder if the aggregate Net After Tax Receipts (as defined below)
to the Participant would thereby be increased, as a result of the application of
the excise tax provisions of Section 4999 of the Code. Accordingly, anything in
this Plan to the contrary notwithstanding, in the event that the certified
public accountants regularly employed by the Company immediately prior to any
"change" described below (the "Accounting
15
<PAGE>
Firm") shall determine that receipt of all Payments (as defined below) would
subject the Participant to tax under Section 4999 of the Code, it shall
determine whether some amount of Payments would meet the definition of a
"Reduced Amount," (as defined below). If the Accounting Firm determines that
there is a Reduced Amount, the aggregate Payments shall be reduced to such
Reduced Amount in accordance with the provisions of Section 14.2(b) below.
(a) For purposes of this Section 14.2(a):
(i) A "Payment" shall mean any payment or distribution in the nature
of compensation to or for the benefit of a Participant who is a
"disqualified individual" within the meaning of Section 280G(c)
of the Code and which is contingent on a "change" described in
Section 280G(b)(2)(A)(i) of the Code with respect to the Company,
whether paid or payable pursuant to this Plan or otherwise;
(ii) "Plan Payment" shall mean a Payment paid or payable pursuant to
this Plan (disregarding this Section 14.2);
(iii)"Net After Tax Receipt" shall mean the Present Value of a
Payment, net of all taxes imposed on the Participant with respect
thereto under Sections 1 and 4999 of the Code, determined by
applying the highest marginal rate under Section 1 of the Code
which applied to the Participant's Federal taxable income for the
immediately preceding taxable year;
(iv) "Present Value" shall mean such value determined in accordance
with Section 280G(d)(4) of the Code; and
(v) "Reduced Amount" shall mean the smallest aggregate amount of
Payments which (A) is less than the sum of all Payments and (B)
results in aggregate Net After Tax Receipts which are equal to or
greater than the Net After Tax Receipts which would result if all
Payments were paid to or for the benefit of the Participant.
(b) If the Accounting Firm determines that aggregate Payments should be
reduced to the Reduced Amount, the Committee shall promptly give the
Participant notice to that effect and a copy of the detailed
calculation thereof, and the Participant may then elect, in the
Participant's sole discretion, which and how much of the Payments,
including without limitation Plan Payments, shall be eliminated or
reduced (as long as after such election the Present Value of the
aggregate Payments is equal to the Reduced Amount), and shall advise
the Committee in writing of such election within ten (10) days of the
Participant's receipt of notice. If no such election is made by the
Participant within such ten (10) day period, the Committee may elect
which of the Payments, including without limitation Plan Payments,
shall be eliminated or reduced (as long as after such election the
Present Value of the aggregate Payments is equal to the Reduced
Amount) and shall notify the Participant promptly of such election.
All determinations made by the Accounting Firm under this Section 14.2
shall be binding upon the Company and the Participant and shall be
made within sixty (60) days immediately following the event
constituting the "change" referred to above. As promptly as
16
<PAGE>
practicable following such determination, the Company shall pay to or
distribute for the benefit of the Participant such Payments as are
then due to the Participant under this Plan.
(c) At the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or
distributed by the Company to or for the benefit of the Participant
pursuant to this Plan which should not have been so paid or
distributed ("Overpayment") or that additional amounts which will have
not been paid or distributed by the Company to or for the benefit of
the Participant pursuant to this Plan could have been so paid or
distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the
Accounting Firm, based either upon the assertion of a deficiency by
the Internal Revenue Service against the Company or the Participant
which the Accounting Firm believes has a high probability of success
or controlling precedent or other substantial authority, determines
that an Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for the benefit of the Participant
shall be treated for all purposes as a loan ab initio to the
Participant which the Participant shall repay to the Company together
with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable by the
Participant to the Company if and to the extent such deemed loan and
payment would not either reduce the amount on which the Participant is
subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes.
In the event that the Accounting Firm, based upon controlling
precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Participant together
with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
14.3 TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards; provided, however, the Board of Directors, upon recommendation of the
Committee, may terminate, amend, or modify this Article 14 at any time and from
time to prior to the date of a Change in Control.
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
15.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, however, that no amendment which requires shareholder
approval in order for the Plan to continue to comply with Rule 16b-3 under the
Exchange Act, including any successor to such Rule, shall be effective unless
such amendment shall be approved by the requisite vote of shareholders of the
Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
17
<PAGE>
15.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
15.3 ACCELERATION OF AWARD VESTING; WAIVER OF RESTRICTIONS. Notwithstanding
any provision of this Plan or any Award Agreement provision to the contrary, the
Committee, in its sole and exclusive discretion, shall have the power at any
time to (i) accelerate the vesting of any Award granted under the Plan,
including without limitation, acceleration to such a date that would result in
said Awards becoming immediately vested, or (ii) waive any restrictions of any
Award granted under the Plan.
ARTICLE 16. WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
ARTICLE 17. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation of Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 18. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
18
<PAGE>
ARTICLE 19. LEGAL CONSTRUCTION
19.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
19.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions or Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
19.5 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of North Carolina.
19
<PAGE>
<PAGE>
AMENDMENT TO
RESTRICTED STOCK AWARD PLAN AGREEMENTS
THIS AMENDMENT TO RESTRICTED STOCK AWARD PLAN AGREEMENTS (the "Agreement")
is made and entered into as of the 20 day of December, 1996, by and between
NATIONSBANK CORPORATION, a North Carolina corporation ("NationsBank"), and
HUGH L. McCOLL, JR. ("Executive").
Statement of Purpose
NationsBank and Executive previously entered into a Restricted Stock
Award Plan Agreement dated January 22, 1992 and another Restricted Stock Award
Plan Agreement dated June 22, 1994 (collectively, the "Award Agreements," and
individually, an "Award Agreement"). Under the Award Agreements, shares of
restricted stock (the "Restricted Stock") were granted to Executive under
the 1986 Restricted Stock Award Plan of NationsBank Corporation, as amended
(the "Restricted Stock Plan"), and such shares of Restricted Stock were
scheduled to vest in five (5) equal annual installments beginning January 1,
1993 in the case of the 1992 Award Agreement and January 1, 1995 in the case of
the 1994 Award Agreement. As of the date hereof, shares of Restricted Stock
remain unvested under each Award Agreement. As additional incentive for
Executive to remain with NationsBank through his normal retirement date, the
parties desire to amend the Award Agreements as set forth herein to provide
that the unvested shares of Restricted Stock shall not vest until Executive's
normal retirement date.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, NationsBank and Executive hereby agree that each Award
Agreement is amended as follows:
1. Notwithstanding any provision of the Award Agreements to the contrary,
(i) the vesting schedule attached as Exhibit B to each Award Agreement is
hereby terminated with respect to any shares of the Restricted Stock that
are not vested as of the date hereof, and (ii) in lieu thereof, such unvested
shares of Restricted Stock shall not vest until July 1, 2000 (i.e.,
Executive's normal retirement date), subject to becoming earlier vested in
accordance with the provisions of Paragraph 6 of the Restricted Stock Plan.
2. Except as expressly or by necessary implication amended hereby, each
Award Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, NationsBank has caused this Agreement to be executed
by its duly authorized officer and Executive has hereunto set his hand and
seal, all as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley, Executive Vice President
"NationsBank"
/s/ Hugh L. McColl, Jr. [SEAL]
Hugh L. McColl, Jr.
"Executive"
Exhibit 10(y)
AMENDMENT #2
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT, dated as of January 6, 1997 (this "Amendment") between
NationsBank Corporation, a North Carolina corporation ("Parent"), NB Holdings
Corporation, a Delaware corporation and wholly-owned subsidiary of Parent
("Merger Sub") and Boatmen's Bancshares, Inc., a Missouri corporation (the
"Company").
WHEREAS, Parent, the Company and Merger Sub have previously entered
into that certain Agreement and Plan of Merger dated as of August 29, 1996, as
amended on November 11, 1996 (the "Agreement"); and
WHEREAS, such persons wish to amend the Agreement in the manner set
forth below.
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given them in the Agreement, and each reference in
the Agreement to "this Agreement", "hereof", "herein", "hereunder" or
"hereby" and each other similar reference shall be deemed to refer to the
Agreement as amended hereby. All references to the Agreement in any other
agreement between Parent and the Company relating to the transactions
comtemplated by the Agreement shall be deemed to refer to the Agreement as
amended hereby.
2. Section 2.01(b) is hereby amended and restated in its entirety as
follows:
(b) Effectiveness And Effects Of the Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VII in
accordance with this Agreement, the Merger shall become effective upon the
filing in the office of the Secretary of State of Delaware of a certificate
of merger or such later date and time as may be set forth in such
certificate of merger in accordance with Section 252 of the General
Corporation Law of the State of Delaware (the "GCL"). The Merger shall have
the effects prescribed in Section 450 of the General and Business
Corporation Law of Missouri and Section 252 of the GCL.
3. This Amendment shall be governed by and construed in accordance
with the law of the State of Missouri, without regard to the conflicts of law
rules of such state.
<PAGE>
4. This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment shall
become effective when each party hereto shall have received counterparts hereof
signed by all of the other parties hereto.
5. Except as expressly amended hereby, the Agreement shall remain in
full force and effect.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of the
day and year first above written.
BOATMEN'S BANCSHARES, INC.
By: /s/ Gregory L. Curl
Name: Gregory L. Curl
Title: Vice Chairman
NATIONSBANK CORPORATION
By: /s/ James H. Hance, Jr.
Name: James H. Hance, Jr.
Title: Vice Chairman and
Chief Financial Officer
NB HOLDINGS CORPORATION
By: /s/ James H. Hance, Jr.
Name: James H. Hance, Jr.
Title: Vice Chairman and
Chief Financial Officer
-3-
<PAGE>
EXHIBIT 11
FULLY DILUTED EARNINGS PER COMMON SHARE AND FULLY DILUTED AVERAGE
COMMON SHARES OUTSTANDING
For fully diluted earnings per common share, net income available to common
shareholders can be affected by the conversion of the registrant's convertible
preferred stock. Where the effect of this conversion would have been dilutive,
net income available to common shareholders is adjusted by the associated
preferred dividends. This adjusted net income is divided by the weighted average
number of common shares outstanding for each period plus amounts representing
the dilutive effect of stock options outstanding and the dilution resulting from
the conversion of the registrant's convertible preferred stock, if applicable.
The effect of convertible preferred stock is excluded from the computation of
fully diluted earnings per share in periods in which the effect would be
antidilutive.
Fully diluted earnings per common share was determined as follows
(shares in thousands, dollars in millions except per-share information):
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Average common shares outstanding ................................... 590,216 544,959 549,312
Dilutive effect of
Convertible preferred stock ........................................ 3,896 4,582 5,026
Stock options ...................................................... 9,418 4,726 2,808
-------- -------- --------
Total fully dilutive shares ......................................... 603,530 554,267 557,146
======== ======== ========
Income available to common shareholders ............................. $ 2,360 $ 1,942 $ 1,680
Preferred dividends paid on dilutive convertible
preferred stock .................................................. 7 8 10
-------- -------- --------
Total net income available for common shareholders
adjusted for full dilution ....................................... $ 2,367 $ 1,950 $ 1,690
======== ======== ========
Fully diluted earnings per common share ............................. $ 3.92 $ 3.52 $ 3.03
======== ======== ========
</TABLE>
<PAGE>
NATIONSBANK CORPORATION AND SUBSIDIARIES EXHIBIT 12(a)
RATIO OF EARNINGS TO FIXED CHARGES
- --------------------------------------------------------------------------------
(Dollars in Millions)
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
- -------------------------------
Income before taxes .................................. $ 3,634 $ 2,991 $ 2,555 $ 1,991 $ 1,396
Equity in undistributed (earnings) losses
of unconsolidated subsidiaries...................... 2 (7) (3) (5) (1)
Fixed charges:
Interest expense (including
capitalized interest) ......................... 4,125 4,480 2,896 1,421 916
Amortization of debt discount and
appropriate issuance costs .................... 20 12 8 6 3
1/3 of net rent expense ......................... 126 125 114 96 91
-------- -------- ------- ------- --------
Total fixed charges ........................... 4,271 4,617 3,018 1,523 1,010
Earnings (excluding capitalized interest) ............ $ 7,907 $ 7,601 $ 5,570 $ 3,509 $ 2,398
======== ======== ======= ======= ========
Fixed charges ........................................ $ 4,271 $ 4,617 $ 3,018 $ 1,523 $ 1,010
======== ======== ======= ======= ========
Ratio of Earnings to Fixed Charges ................... 1.85 1.65 1.85 2.30 2.38
INCLUDING INTEREST ON DEPOSITS
- ------------------------------
Income before taxes .................................. $ 3,634 $ 2,991 $ 2,555 $ 1,991 $ 1,396
Equity in undistributed (earnings) losses
of unconsolidated subsidiaries...................... 2 (7) (3) (5) (1)
Fixed charges:
Interest expense (including
capitalized interest) ......................... 7,447 7,761 5,310 3,570 3,688
Amortization of debt discount and
appropriate issuance costs .................... 20 12 8 6 3
1/3 of net rent expense ......................... 126 125 114 96 91
-------- -------- ------- ------- --------
Total fixed charges ........................... 7,593 7,898 5,432 3,672 3,782
Earnings (excluding capitalized interest) ............ $ 11,229 $ 10,882 $ 7,984 $ 5,658 $ 5,170
======== ======== ======= ======= ========
Fixed charges ........................................ $ 7,593 $ 7,898 $ 5,432 $ 3,672 $ 3,782
======== ======== ======= ======= ========
Ratio of Earnings to Fixed Charges ................... 1.48 1.38 1.47 1.54 1.37
</TABLE>
<PAGE>
NATIONSBANK CORPORATION AND SUBSIDIARIES EXHIBIT 12(b)
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
- --------------------------------------------------------------------------------
(Dollars in Millions)
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
- -------------------------------
Income before taxes .................................. $ 3,634 $ 2,991 $ 2,555 $ 1,991 $ 1,396
Equity in undistributed (earnings) losses
of unconsolidated subsidiaries...................... 2 (7) (3) (5) (1)
Fixed charges:
Interest expense (including
capitalized interest) ......................... 4,125 4,480 2,896 1,421 916
Amortization of debt discount and
appropriate issuance costs .................... 20 12 8 6 3
1/3 of net rent expense ......................... 126 125 114 96 91
-------- -------- ------- ------- --------
Total fixed charges ........................... 4,271 4,617 3,018 1,523 1,010
Preferred dividend requirements....................... 22 13 15 16 29
Earnings (excluding capitalized interest) ............ $ 7,907 $ 7,601 $ 5,570 $ 3,509 $ 2,398
======== ======== ======= ======= ========
Fixed charges ........................................ $ 4,293 $ 4,630 $ 3,033 $ 1,539 $ 1,039
======== ======== ======= ======= ========
Ratio of Earnings to Fixed Charges ................... 1.84 1.64 1.84 2.28 2.31
INCLUDING INTEREST ON DEPOSITS
- -------------------------------
Income before taxes .................................. $ 3,634 $ 2,991 $ 2,555 $ 1,991 $ 1,396
Equity in undistributed (earnings) losses
of unconsolidated subsidiaries...................... 2 (7) (3) (5) (1)
Fixed charges:
Interest expense (including
capitalized interest) ......................... 7,447 7,761 5,310 3,570 3,688
Amortization of debt discount and
appropriate issuance costs .................... 20 12 8 6 3
1/3 of net rent expense ......................... 126 125 114 96 91
-------- -------- ------- ------- --------
Total fixed charges ........................... 7,593 7,898 5,432 3,672 3,782
Preferred dividend requirements ...................... 22 13 15 16 29
Earnings (excluding capitalized interest) ............ $ 11,229 $ 10,882 $ 7,984 $ 5,658 $ 5,170
======== ======== ======= ======= ========
Fixed charges ........................................ $ 7,615 $ 7,911 $ 5,447 $ 3,688 $ 3,811
======== ======== ======= ======= ========
Ratio of Earnings to Fixed Charges ................... 1.47 1.38 1.47 1.53 1.36
</TABLE>
<PAGE>
<PAGE>
1996 ANNUAL
REPORT
Management's
Discussion
And Analysis
ON FEBRUARY 27, 1997, NATIONSBANK COMPLETED A 2-FOR-1 SPLIT OF ITS COMMON STOCK.
ALL FINANCIAL DATA INCLUDED IN THE 1996 ANNUAL REPORT HAS BEEN RESTATED TO
REFLECT THE IMPACT OF THE STOCK SPLIT.
1996 COMPARED TO 1995
OVERVIEW
NationsBank Corporation (the Corporation), a multi-bank holding company
headquartered in Charlotte, North Carolina, provides a diversified range of
banking and certain non-banking financial services both domestically and
internationally through three major Business Units: the GENERAL BANK, GLOBAL
FINANCE and FINANCIAL SERVICES. After the acquisition of Boatmen's Bancshares,
Inc. on January 7, 1997, the Corporation had approximately $227 billion in
assets, making it the fourth largest banking company in the United States.
The Corporation's continued earnings momentum was demonstrated through a
26-percent increase in operating net income to $2.45 billion in 1996 compared to
$1.95 billion in 1995. Operating earnings per common share for 1996 increased 16
percent to $4.13 from $3.56 in 1995 and fully diluted operating earnings per
share increased 15 percent to $4.05. Including a merger-related charge of $118
million ($77 million, net of tax), net income increased 22 percent to $2.38
billion, earnings per share rose 12 percent to $4.00 and fully diluted earnings
per share increased 11 percent to $3.92.
KEY PERFORMANCE HIGHLIGHTS FOR
1996 WERE:
(bullet) Operating return on average common shareholders' equity increased 152
basis points to 18.53 percent from 17.01 percent in 1995. Including
the merger-related charge, return on average common shareholders'
equity increased to 17.95 percent for 1996.
(bullet) Taxable-equivalent net interest income rose 16 percent to $6.4
billion in 1996 due to the impact of acquisitions, higher spreads
in the securities portfolio, growth in average consumer loans and
an increase in noninterest-bearing deposits. The net interest yield
increased to 3.62 percent compared to 3.33 percent in 1995.
(bullet) Provision for credit losses covered net charge-offs and totaled $605
million in 1996 compared to $382 million in 1995, reflecting the
continuation of a return to more normalized levels of credit losses
following periods of unusually low credit losses. Net charge-offs
totaled $598 million, or .48 percent of average loans, leases and
factored accounts receivable, versus .38 percent in 1995.
Nonperforming assets increased to $1.0 billion on December 31, 1996
compared to $853 million on December 31, 1995 due primarily to
acquisitions.
(bullet) Noninterest income increased 18.5 percent to $3.6 billion in 1996,
driven primarily by higher deposit account service charges,
investment banking income and mortgage servicing and mortgage-related
fees.
(bullet) Noninterest expense increased 9.7 percent to $5.7 billion. Excluding
the impact of acquisitions, noninterest expense increased only 4
percent.
(bullet) Revenue growth continued to outpace expense growth in 1996,
improving the efficiency ratio 351 basis points to 56.3 percent.
(bullet) Cash basis ratios, which measure operating performance excluding
intangible assets and the related amortization expense, improved with
cash basis earnings per share rising 15 percent to $4.34 and return
Management's Discussion And Analysis 17
<PAGE>
<TABLE>
<CAPTION>
TABLE ONE. FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
===================================================================================================================================
(DOLLARS IN MILLIONS EXCEPT PER-SHARE INFORMATION)
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
Income from earning assets........................................ $13,796 $13,220 $10,529 $8,327 $7,780
Interest expense.................................................. 7,467 7,773 5,318 3,690 3,682
Net interest income (taxable-equivalent).......................... 6,423 5,560 5,305 4,723 4,190
Net interest income............................................... 6,329 5,447 5,211 4,637 4,098
Provision for credit losses....................................... 605 382 310 430 715
Gains (losses) on sales of securities............................. 67 29 (13) 84 249
Noninterest income................................................ 3,646 3,078 2,597 2,101 1,913
Other real estate owned expense (income).......................... 20 18 (12) 78 183
Merger-related charge............................................. 118 - - 30 -
Other noninterest expense......................................... 5,665 5,163 4,942 4,293 3,966
Income before taxes and effect of change
in method of accounting for income taxes........................ 3,634 2,991 2,555 1,991 1,396
Income tax expense................................................ 1,259 1,041 865 690 251
Income before effect of change in method of
accounting for income taxes..................................... 2,375 1,950 1,690 1,301 1,145
Effect of change in method of accounting for income taxes......... - - - 200 -
Net income........................................................ 2,375 1,950 1,690 1,501 1,145
Net income available to common shareholders....................... 2,360 1,942 1,680 1,491 1,121
Net income (excluding merger-related charge)...................... 2,452 1,950 1,690 1,521 1,145
Average common shares issued (in thousands)....................... 590,216 544,959 549,312 515,938 487,496
PER COMMON SHARE
Earnings before effect of change in method of
accounting for income taxes...................................... $4.00 $3.56 $3.06 $2.50 $2.30
Earnings............................................................ 4.00 3.56 3.06 2.89 2.30
Earnings (excluding merger-related charge).......................... 4.13 3.56 3.06 2.93 2.30
Fully diluted earnings per share.................................... 3.92 3.52 3.03 2.86 2.26
Fully diluted earnings per share (excluding merger-related charge).. 4.05 3.52 3.03 2.90 2.26
Cash basis earnings (excluding merger-related charge) (1)........... 4.34 3.78 3.28 3.10 2.48
Cash dividends paid................................................. 1.20 1.04 .94 .82 .76
Shareholders' equity (year-end)..................................... 23.69 23.26 19.85 18.20 15.40
BALANCE SHEET (YEAR-END)
Total loans, leases and factored accounts receivable,
net of unearned income...........................................122,630 117,033 103,371 92,007 72,714
Total assets.......................................................185,794 187,298 169,604 157,686 118,059
Total deposits.....................................................106,498 100,691 100,470 91,113 82,727
Long-term debt..................................................... 22,985 17,775 8,488 8,352 3,066
Common shareholders' equity........................................ 13,586 12,759 10,976 9,859 7,793
Total shareholders' equity......................................... 13,709 12,801 11,011 9,979 7,814
PERFORMANCE RATIOS
Return on average assets........................................... 1.18% 1.03% 1.02% .97% 1.00%
Return on average assets (excluding merger-related charge)......... 1.22 1.03 1.02 .98 1.00
Return on average tangible assets
(excluding merger-related charge) (1)............................ 1.30 1.11 1.10 1.06 1.08
Return on average common shareholders' equity (2).................. 17.95 17.01 16.10 15.00 15.83
Return on average common shareholders' equity
(excluding merger-related charge) (2)............................ 18.53 17.01 16.10 15.23 15.83
Return on average tangible common shareholders' equity
(excluding merger-related charge) (1)(2)......................... 22.80 20.74 19.85 18.34 19.46
Tier 1 capital ratio............................................... 7.76 7.24 7.43 7.41 7.54
Total capital ratio................................................ 12.66 11.58 11.47 11.73 11.52
Leverage capital ratio............................................. 7.09 6.27 6.18 6.00 6.16
Total equity to total assets....................................... 7.38 6.83 6.49 6.33 6.62
MARKET PRICE PER SHARE OF COMMON STOCK
Market price of common stock (close at the end of the year)........ $48 7/8 $34 13/16 $22 9/16 $24 1/2 $25 11/16
High for the year.................................................. 52 5/8 37 3/8 28 11/16 29 26 11/16
Low for the year................................................... 32 3/16 22 5/16 21 11/16 22 1/4 19 13/16
</TABLE>
(1) CASH BASIS RATIOS EXCLUDE INTANGIBLE ASSETS AND THE RELATED AMORTIZATION
EXPENSE.
(2) 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 EQUITY AFTER THE TAX BENEFIT
FROM THE IMPACT OF ADOPTING A NEW INCOME TAX ACCOUNTING STANDARD WERE 1.12% AND
17.33%, RESPECTIVELY.
18 NationsBank Corporation Annual Report 1996
<PAGE>
on average tangible common shareholders' equity increasing over 200 basis points
to 22.80 percent.
HIGHLIGHTS FROM A BUSINESS UNIT
PERSPECTIVE WERE:
(bullet) The GENERAL BANK'S 1996 earnings increased 35 percent to $1.6 billion.
Return on equity increased approximately 300 basis points to 22
percent in 1996. Revenue growth and expense control led to a 520
basis-point improvement in the efficiency ratio in 1996 to 58.6
percent.
(bullet) GLOBAL FINANCE's earnings rose to $635 million in 1996. Return on
equity remained constant at 16 percent in 1996. The efficiency ratio
improved slightly to 53.5 percent.
(bullet) FINANCIAL SERVICES' earnings rose 29 percent to $166 million in 1996.
Return on equity remained constant at 14 percent in 1996. The
efficiency ratio was 45.1 percent in 1996 compared to 42.1 percent in
1995 due primarily to office consolidation costs in 1996.
The remainder of management's discussion and analysis of the consolidated
results of operations and financial condition of the Corporation should be read
together with the consolidated financial statements and related notes presented
on pages 49 through 71.
BUSINESS UNIT OPERATIONS
The Business Units are managed with a focus on numerous performance
objectives including return on equity, operating efficiency and net income.
TABLE TWO summarizes key performance measures for each of the Business Units.
The net interest income of the Business Units reflects the results of a funds
transfer pricing process which derives net interest
<TABLE>
<CAPTION>
TABLE TWO. BUSINESS UNIT SUMMARY
================================================================================================================================
(DOLLARS IN MILLIONS)
GENERAL BANK GLOBAL FINANCE FINANCIAL SERVICES
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income (taxable-equivalent) ................ $4,602 $3,817 $1,202 $1,186 $572 $527
Noninterest income ...................................... 2,500 2,100 1,019 910 122 68
---------------------------------------------------------------------
Total revenue ........................................ 7,102 5,917 2,221 2,096 694 595
Provision for credit losses ............................. 438 267 43 - 124 115
Gains on sales of securities ............................ 25 - - - - -
Other real estate owned expense (income) ................ 16 11 (5) (7) 9 14
Noninterest expense ..................................... 4,165 3,776 1,188 1,136 313 250
--------------------------------------------------------------------
Income before income taxes .............................. 2,508 1,863 995 967 248 216
Income tax expense ...................................... 916 688 360 358 82 87
--------------------------------------------------------------------
Net income (1) .......................................... $1,592 $1,175 $635 $609 $166 $129
======================================================================
Net interest yield (2) .................................. 4.68% 4.69% 3.09% (3) 3.39% (3) 7.10% 7.30%
Average equity to assets ................................ 6.8% 6.8% 4.9% 5.4% 14.1% 12.2%
Return on equity ........................................ 22% 19% 16% 16% 14% 14%
Efficiency ratio ........................................ 58.6% 63.8% 53.5% 54.2% 45.1% 42.1%
Average (2)(4)
Total loans and leases, net of unearned income .......$78,708 $68,607 $36,117 $34,195 $8,022 $7,204
Total deposits ....................................... 87,904 77,333 8,212 7,160 - -
Total assets .........................................104,395 88,918 78,368 71,833 8,528 7,699
Year-end (2)(4)
Total loans and leases, net of unearned income ....... 76,815 74,031 36,763 35,187 8,279 7,798
Total deposits ....................................... 90,080 79,549 8,321 7,861 - -
</TABLE>
(1) BUSINESS UNIT RESULTS ARE PRESENTED ON A FULLY ALLOCATED BASIS EXCEPT FOR
MINOR AMOUNTS ASSOCIATED WITH UNASSIGNED CAPITAL, GAINS ON SALES OF CERTAIN
SECURITIES, MERGER-RELATED CHARGES AND OTHER CORPORATE ACTIVITIES.
(2) 1995 NET INTEREST YIELDS AND AVERAGE AND YEAR-END BALANCES HAVE BEEN
RESTATED TO REFLECT THE CURRENT ORGANIZATIONAL STRUCTURE.
(3) GLOBAL FINANCE'S NET INTEREST YIELD EXCLUDES THE IMPACT OF TRADING-RELATED
ACTIVITIES. INCLUDING TRADING-RELATED ACTIVITIES, THE NET INTEREST YIELD WAS
1.78 PERCENT FOR 1996 AND 1.95 PERCENT FOR 1995.
(4) THE SUMS OF BALANCE SHEET AMOUNTS DIFFER FROM CONSOLIDATED AMOUNTS DUE TO
ACTIVITIES BETWEEN THE BUSINESS UNITS.
Management's Discussion And Analysis 19
<PAGE>
income by matching assets and liabilities with similar interest rate sensitivity
and maturity characteristics. Equity capital is allocated to each Business Unit
based on an assessment of its inherent risk.
The GENERAL BANK provides comprehensive services in the retail and commercial
banking fields. Within the GENERAL BANK, the BANKING GROUP, which contains the
retail banking network, is the service provider for small and medium-size
companies and individuals. On December 31, 1996, the BANKING GROUP had 1,979
banking offices located in the states of Florida, Georgia, Kentucky, Maryland,
North Carolina, South Carolina, Tennessee, Texas and Virginia and the District
of Columbia. In addition, fully-automated, 24-hour cash dispensing and
depositing services are provided throughout these states through 3,948 automated
teller machines. Specialized services, such as the origination and servicing of
home mortgage loans, the issuance and servicing of credit cards, indirect
lending, dealer finance and certain insurance services, are provided throughout
the Corporation's franchise, and on a nationwide basis for certain products,
through the FINANCIAL PRODUCTS group of the GENERAL BANK. The GENERAL BANK also
contains the ASSET MANAGEMENT GROUP which includes INVESTING AND INVESTMENT
MANAGEMENT, which provides retirement services for defined benefit and defined
contribution plans, full service and discount brokerage services and investment
advisory services, including advising the Nations Funds family of mutual funds,
and THE PRIVATE CLIENT GROUP, which offers banking, fiduciary and investment
management services.
The GENERAL BANK'S earnings increased 35 percent to $1.6 billion in 1996. The
BANKING GROUP'S strong loan growth and growth in fee income accounted for most
of the increased earnings over 1995. The GENERAL BANK'S return on equity rose
approximately 300 basis points to 22 percent. Taxable-equivalent net interest
income increased 21 percent including the impact of acquisitions. Excluding the
impact of acquisitions and securitizations, net interest income increased 10
percent. Average loans and leases in the GENERAL BANK increased 15 percent
primarily attributable to residential mortgages acquired through acquisitions.
Noninterest income rose 19 percent to $2.5 billion led by increases in
deposit service fee income, increased mortgage servicing and production fees, a
gain related to the change in control of Gartmore plc and a gain on the sale of
certain consumer loans. Noninterest expense increased 10 percent, which was
significantly below the total revenue growth of 20 percent. Acquisition-related
and other increases in personnel and higher general operating expense accounted
for most of the expense growth. Excluding acquisitions, noninterest expense
increased only 3 percent. Strong revenue growth offset moderate expense growth,
resulting in a 520 basis-point improvement in the efficiency ratio.
GLOBAL FINANCE provides comprehensive corporate and investment banking
services to domestic and international customers through its CORPORATE
FINANCE/CAPITAL MARKETS, SPECIALIZED LENDING and REAL ESTATE units. The GLOBAL
FINANCE group serves as a principal lender and investor as well as an advisor,
and manages treasury and trade transactions for clients and customers. Loan
origination and syndication, asset-backed lending, leasing, factoring, project
finance and mergers and acquisitions are representative of the services
provided. These services are provided through various domestic offices as well
as offices located in London, Singapore, Bogota, Mexico City, Grand Cayman,
Nassau, Seoul, Tokyo, Osaka, Bombay, Jakarta, Taipei, Sao Paulo and Hong Kong.
Through its Section 20 subsidiary, NATIONSBANC CAPITAL MARKETS, INC., GLOBAL
FINANCE underwrites, distributes and makes markets in high-grade and high-yield
securities. Additionally, GLOBAL FINANCE is a primary dealer of U.S. Government
securities and is a market maker in derivatives products which include swap
agreements, option contracts, forward settlement contracts, financial futures
and other derivative products in certain interest rate, foreign exchange,
commodity and equity markets. In support of these activities, GLOBAL FINANCE
takes positions to support client demands and its own account. Major centers for
the above activities are Charlotte, Chicago, London, New York, Singapore and
Tokyo.
GLOBAL FINANCE'S earnings increased 4 percent to $635 million in 1996,
resulting in a consistent return on equity of 16 percent. Taxable-equivalent net
interest income increased $16 million over 1995 due to loan growth which was
partially offset by competitive loan pricing. Loan growth, primarily commercial,
was concentrated in the CORPORATE FINANCE/CAPITAL MARKETS and SPECIALIZED
LENDING units.
20 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE THREE. 12-MONTH TAXABLE-EQUIVALENT DATA
===================================================================================================================================
(DOLLARS IN MILLIONS)
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
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) ............................. $49,553 $4,042 8.16% $46,358 $3,797 8.19%$41,606 $3,147 7.56%
Real estate commercial .................... 6,090 550 9.03 7,195 669 9.30 7,780 636 8.18
Real estate construction .................. 3,165 281 8.89 3,106 302 9.73 3,155 268 8.49
- -----------------------------------------------------------------------------------------------------------------------------------
Total commercial ........................ 58,808 4,873 8.29 56,659 4,768 8.42 52,541 4,051 7.71
- -----------------------------------------------------------------------------------------------------------------------------------
Residential mortgage ...................... 27,813 2,169 7.80 20,562 1,600 7.78 14,980 1,141 7.62
Credit card ............................... 6,228 733 11.77 5,013 641 12.78 3,956 508 12.84
Other consumer ............................ 22,467 2,218 9.87 21,940 2,209 10.07 19,768 1,831 9.26
- -----------------------------------------------------------------------------------------------------------------------------------
Total consumer .......................... 56,508 5,120 9.06 47,515 4,450 9.37 38,704 3,480 8.99
- -----------------------------------------------------------------------------------------------------------------------------------
Foreign ................................... 2,664 183 6.87 2,036 157 7.71 1,417 86 6.10
Lease financing ........................... 4,288 324 7.58 3,277 249 7.59 2,344 176 7.50
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans and leases, net ............. 122,268 10,500 8.59 109,487 9,624 8.79 95,006 7,793 8.20
- -----------------------------------------------------------------------------------------------------------------------------------
Securities
Held for investment ....................... 3,442 193 5.59 15,521 864 5.57 15,048 761 5.06
Available for sale (3) .................... 17,295 1,146 6.63 10,272 642 6.25 12,386 644 5.20
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities ........................ 20,737 1,339 6.46 25,793 1,506 5.84 27,434 1,405 5.12
- -----------------------------------------------------------------------------------------------------------------------------------
Loans held for sale ......................... 1,078 79 7.30 322 24 7.47 339 23 6.63
Federal funds sold .......................... 389 23 5.95 774 47 6.10 983 45 4.59
Securities purchased under agreements to resell 12,445 643 5.16 14,385 890 6.19 12,406 502 4.05
Time deposits placed and other
short-term investments .................... 1,436 80 5.54 2,066 142 6.87 1,762 90 5.12
Trading account securities (4) .............. 19,047 1,226 6.44 14,177 1,100 7.76 10,451 765 7.32
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets (5) ................ 177,400 13,890 7.83 167,004 13,333 7.98 148,381 10,623 7.16
Cash and cash equivalents ...................... 7,807 7,820 8,271
Factored accounts receivable ................... 1,135 1,163 1,252
Other assets, less allowance for credit losses . 14,543 12,560 8,415
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets ............................ $200,885 $188,547 $166,319
===================================================================================================================================
Interest-bearing liabilities
Savings ..................................... $9,024 201 2.22 $8,575 204 2.37 $9,116 212 2.33
NOW and money market deposit accounts ....... 30,243 763 2.52 27,640 740 2.68 29,724 696 2.34
Consumer CDs and IRAs (6) ................... 30,034 1,585 5.28 24,840 1,290 5.19 23,937 999 4.17
Negotiated CDs, public funds
and other time deposits ................... 3,114 171 5.49 2,992 166 5.56 3,319 133 4.02
Foreign time deposits ....................... 11,180 602 5.38 14,103 881 6.25 7,544 375 4.98
Federal funds purchased ..................... 4,694 251 5.35 5,455 322 5.91 5,397 219 4.07
Securities sold under agreements to
repurchase (6) ............................. 28,517 1,531 5.37 30,336 1,863 6.14 24,903 1,075 4.32
Commercial paper ............................ 2,966 165 5.57 2,804 171 6.10 2,482 111 4.46
Other short-term borrowings (6) ............. 3,344 208 6.22 5,690 354 6.20 5,015 213 4.25
Trading account liabilities (4) ............. 10,137 653 6.44 12,025 896 7.45 10,526 735 6.98
Long-term debt (7) .......................... 20,603 1,337 6.51 12,652 886 7.00 8,033 550 6.85
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ...... 153,856 7,467 4.85 147,112 7,773 5.28 129,996 5,318 4.09
Noninterest-bearing sources
Noninterest-bearing deposits ................ 23,990 21,128 20,097
Other liabilities ........................... 9,776 8,856 5,742
Shareholders' equity ........................ 13,263 11,451 10,484
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity ................................ $200,885 $188,547 $166,319
===================================================================================================================================
Net interest spread ............................ 2.98 2.70 3.07
Impact of noninterest-bearing sources .......... .64 .63 .51
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income/yield on earning assets .... $6,423 3.62% $5,560 3.33% $5,305 3.58%
===================================================================================================================================
</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 SWAPS CONVERTING VARIABLE-RATE COMMERCIAL LOANS TO FIXED RATE.
INTEREST RATE SWAPS INCREASED (DECREASED) INTEREST INCOME $26, ($209) AND
$62 IN 1996, 1995 AND 1994, 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) THE FAIR VALUES OF DERIVATIVES-DEALER POSITIONS ARE REPORTED IN OTHER ASSETS
AND LIABILITIES, RESPECTIVELY.
(5) INTEREST INCOME INCLUDES TAXABLE-EQUIVALENT ADJUSTMENTS OF $94, $113 AND
$94 IN 1996, 1995 AND 1994, RESPECTIVELY.
(6) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, OTHER SHORT-TERM BORROWINGS
AND CONSUMER CDS INTEREST EXPENSE INCLUDES NET INTEREST RATE SWAP EXPENSE
RELATED TO SWAPS FIXING THE COST OF CERTAIN OF THESE LIABILITIES. INTEREST
RATE SWAPS INCREASED INTEREST EXPENSE $66, $28 AND $35 IN 1996, 1995 AND
1994, RESPECTIVELY.
(7) LONG-TERM DEBT INTEREST EXPENSE INCLUDES NET INTEREST RATE SWAP EXPENSE
RELATED TO SWAPS PRIMARILY CONVERTING THE COST OF CERTAIN FIXED-RATE DEBT TO
VARIABLE RATE. INTEREST RATE SWAPS INCREASED (DECREASED) INTEREST EXPENSE
($12) AND $2 IN 1996 AND 1995, RESPECTIVELY.
Management's Discussion And Analysis 21
<PAGE>
Continued progress was made in reducing average commercial real estate
outstandings by $1.3 billion in 1996.
Noninterest income increased 12 percent over 1995, with most of the growth
concentrated in investment banking income. Noninterest expense rose only 4.6
percent, contributing to a 70 basis-point improvement in the efficiency ratio.
FINANCIAL SERVICES is primarily comprised of the holding company,
NATIONSCREDIT CORPORATION, which includes NATIONSCREDIT CONSUMER CORPORATION,
primarily a consumer finance operation, and NATIONSCREDIT COMMERCIAL
CORPORATION, primarily a commercial finance operation. NATIONSCREDIT CONSUMER
CORPORATION, which has 293 branches in 33 states, provides personal, mortgage
and automobile loans to consumers, and retail finance programs to dealers.
NATIONSCREDIT COMMERCIAL CORPORATION consists of divisions that specialize in
the following commercial financing areas: equipment loans and leases; loans for
debt restructuring, mergers and acquisitions and working capital; real estate,
golf/recreational and health care financing; and inventory financing to
manufacturers, distributors and dealers.
FINANCIAL SERVICES' earnings of $166 million increased 29 percent over 1995.
Consistent with 1995, earnings represented 7 percent of consolidated earnings
and return on equity was 14 percent. Taxable-equivalent net interest income
increased 9 percent as average loans and leases increased 11 percent. Market
demand in the consumer lending, commercial real estate and distribution finance
businesses continued to contribute to loan growth. The increase in provision for
credit losses was mainly driven by loan growth and higher consumer loss rates.
The net interest yield decreased 20 basis points to 7.10 percent in 1996 due to
higher funding costs combined with more competitive loan pricing. Noninterest
income increased $54 million reflecting higher warrant gains and higher loan
prepayment fees. Noninterest expense increased $63 million driven by office
consolidation costs and operating expenses for acquisitions, resulting in an
efficiency ratio of 45.1 percent for 1996.
RESULTS OF OPERATIONS
NET INTEREST INCOME
An analysis of the Corporation's taxable-equivalent net interest income and
average balance sheet levels for the last three years is presented in TABLE
THREE. The changes in net interest income from year to year are analyzed in
TABLE FOUR.
Taxable-equivalent net interest income increased 16 percent to $6.4 billion
in 1996 compared to $5.6 billion in 1995 due to acquisitions of several banking
operations, higher spreads in the securities portfolio, core loan growth and an
increase in noninterest-bearing deposits, partially offset by the impact of
securitizations and a shift in funding to term debt. While securitizations
lowered net interest income by $264 million in 1996, they do not significantly
affect the Corporation's earnings. As the Corporation continues to securitize
loans, its role becomes that of a servicer and the income related to securitized
loans is reflected in noninterest income.
The net interest yield increased 29 basis points to 3.62 percent in 1996
compared to 1995 due to the sale of low-yielding securities and the reinvestment
of proceeds from the sale of low-yielding securities into higher-spread
products.
Loan growth is dependent on economic conditions as well as various
discretionary factors, such as decisions to securitize certain loan portfolios,
the retention of residential mortgage loans generated by the Corporation's
mortgage subsidiary and the management of borrower, industry, product and
geographic concentrations.
PROVISION FOR CREDIT LOSSES
The provision for credit losses covered net charge-offs and was $605 million
in 1996 compared to $382 million in the prior year. Net charge-offs increased
$177 million to $598 million in 1996 compared to 1995 due primarily to increases
in commercial, other consumer and credit card net charge-offs. Management
expects the charge-off trends experienced in 1996 to continue as the Corporation
maintains its efforts to shift the mix of the loan portfolio to a higher
consumer concentration and credit losses return to more normalized levels.
NET INTEREST INCOME
(Billions)
(chart appears along the right side of
page and its plot points are as follows)
1992 4.1
1993 4.6
1994 5.2
1995 5.4
1996 6.3
22 NationsBank Corporation Annual Report 1996
<PAGE>
The allowance for credit losses was $2.3 billion, or 1.89 percent of net
loans, leases and factored accounts receivable, on December 31, 1996 compared to
$2.2 billion, or 1.85 percent, at the end of 1995. The allowance for credit
losses was 260 percent of nonperforming loans on December 31, 1996 compared to
306 percent on December 31, 1995. Future economic conditions will impact credit
quality and may result in increased net charge-offs and higher provisions for
credit losses.
TABLE TWELVE provides an analysis of the activity in the Corporation's
allowance for
TABLE FOUR. CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME
<TABLE>
<CAPTION>
===================================================================================================================================
(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.
FROM 1995 TO 1996 FROM 1994 TO 1995
- -----------------------------------------------------------------------------------------------------------------------------------
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 ................................ $ 261 $(16) $245 6.5% $377 $ 273 $650 20.7%
Real estate commercial .................... (100) (19) (119) (17.8) (50) 83 33 5.2
Real estate construction .................. 6 (27) (21) (7.0) (4) 38 34 12.7
----- -----
Total commercial ........................ 179 (74) 105 2.2 331 386 717 17.7
----- -----
Residential mortgage ...................... 565 4 569 35.6 434 25 459 40.2
Credit card ............................... 146 (54) 92 14.4 135 (2) 133 26.2
Other consumer ............................ 52 (43) 9 .4 211 167 378 20.6
----- -----
Total consumer .......................... 819 (149) 670 15.1 820 150 970 27.9
----- -----
Foreign ................................... 45 (19) 26 16.6 44 27 71 82.6
Lease financing ........................... 76 (1) 75 30.1 71 2 73 41.5
----- -----
Total loans and leases, net ............. 1,102 (226) 876 9.1 1,246 585 1,831 23.5
Securities
----- -----
Held for investment ....................... (677) 6 (671) (77.7) 24 79 103 13.5
Available for sale ........................ 463 41 504 78.5 (120) 118 (2) (.3)
----- -----
Total securities ........................ (316) 149 (167) (11.1) (88) 189 101 7.2
----- -----
Loans held for sale ......................... 55 - 55 229.2 (1) 2 1 4.3
Federal funds sold .......................... (23) (1) (24) (51.1) (11) 13 2 4.4
Securities purchased under agreements
to resell ................................. (111) (136) (247) (27.8) 90 298 388 77.3
Time deposits placed and other
short-term investments .................... (38) (24) (62) (43.7) 17 35 52 57.8
Trading account securities .................. 335 (209) 126 11.5 287 48 335 43.8
----- -----
Total income from earning assets ........ 818 (261) 557 4.2 1,413 1,297 2,710 25.5
----- -----
Interest expense
Savings ..................................... 10 (13) (3) (1.5) (13) 5 (8) (3.8)
NOW and money market deposit accounts ....... 67 (44) 23 3.1 (51) 95 44 6.3
Consumer CDs and IRAs ....................... 274 21 295 22.9 39 252 291 29.1
Negotiated CDs, public funds
and other time deposits ................... 7 (2) 5 3.0 (14) 47 33 24.8
Foreign time deposits ....................... (167) (112) (279) (31.7) 391 115 506 134.9
Federal funds purchased ..................... (42) (29) (71) (22.0) 2 101 103 47.0
Securities sold under agreements
to repurchase ............................. (107) (225) (332) (17.8) 268 520 788 73.3
Commercial paper ............................ 10 (16) (6) (3.5) 16 44 60 54.1
Other short-term borrowings ................. (146) - (146) (41.2) 32 109 141 66.2
Trading account liabilities ................. (130) (113) (243) (27.1) 109 52 161 21.9
Long-term debt .............................. 520 (69) 451 50.9 323 13 336 61.1
----- -----
Total interest expense .................. 346 (652) (306) (3.9) 764 1,691 2,455 46.2
----- -----
Net interest income ............................ 359 504 $863 15.5 636 (381) $255 4.8
===== =====
</TABLE>
Management's Discussion And Analysis 23
<PAGE>
credit losses for each of the last five years. Allowance levels, net charge-offs
and nonperforming assets are discussed in the Credit Risk Management and Credit
Portfolio Review section beginning on page 32.
NONINTEREST INCOME
As presented in TABLE FIVE, noninterest income increased 18.5 percent to $3.6
billion in 1996, reflecting strong growth in most categories as described below:
(bullet) Service charges on deposit accounts increased 27 percent over 1995,
attributable to growth in number of households served, in part due to
acquisitions, higher fees and emphasis on fee collection.
(bullet) Mortgage servicing and mortgage-related fees grew 54 percent to $213
million in 1996. Including acquisitions, the average portfolio of
loans serviced increased 30 percent from $69.3 billion in 1995 to
$89.9 billion in 1996. On December 31, 1996, the servicing portfolio,
which includes mortgage loans originated by the Corporation's mortgage
subsidiary as well as loans serviced on behalf of the Corporation's
banking subsidiaries, totaled $96.4 billion compared to $81.4 billion
on December 31, 1995. Mortgage loan originations through the
Corporation's mortgage subsidiary increased $901 million to $12.0
billion in 1996, compared to $11.1 billion in 1995, primarily
reflecting changes in the interest rate environment in 1996.
Origination volume in 1996 consisted of approximately $4.7 billion
of retail loan volume and $7.3 billion of correspondent and wholesale
loan volume.
In conducting its mortgage banking activities, the Corporation is
exposed to interest rate risk for the period between loan commitment
date and subsequent delivery date. The value of the Corporation's
mortgage servicing rights is also affected by changes in prepayment
rates. To manage risk associated with mortgage banking activities,
the Corporation enters into various financial instruments including
option contracts, forward delivery contracts and certain rate swaps.
The contract notional amount of these instruments approximated $7.8
billion on December 31, 1996. Net unrealized gains associated with
these contracts were insignificant on December 31,1996.
(bullet) Investment banking income increased 85 percent to $356 million in
1996, primarily reflecting increased syndication, securities
underwriting activity and gains on principal investment activity
(investing
<TABLE>
<CAPTION>
TABLE FIVE. NONINTEREST INCOME
===================================================================================================================================
(DOLLARS IN MILLIONS)
CHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 AMOUNT PERCENT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service charges on deposit accounts ......................................... $1,121 $884 $237 26.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Nondeposit-related service fees
Safe deposit rent ........................................................ 28 27 1 3.7
Mortgage servicing and mortgage-related fees ............................. 213 138 75 54.3
Fees on factored accounts receivable ..................................... 64 68 (4) (5.9)
Investment banking income ................................................ 356 192 164 85.4
Other service fees ....................................................... 170 129 41 31.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total nondeposit-related service fees .................................. 831 554 277 50.0
- -----------------------------------------------------------------------------------------------------------------------------------
Asset management and fiduciary service fees ................................. 432 444 (12) (2.7)
- -----------------------------------------------------------------------------------------------------------------------------------
Credit card income
Merchant discount fees ................................................... 6 7 (1) (14.3)
Annual credit card fees .................................................. 25 24 1 4.2
Other credit card fees ................................................... 283 246 37 15.0
- -----------------------------------------------------------------------------------------------------------------------------------
Total credit card income ............................................... 314 277 37 13.4
- -----------------------------------------------------------------------------------------------------------------------------------
Other income
Brokerage income ......................................................... 110 114 (4) (3.5)
Trading account profits and fees ......................................... 274 306 (32) (10.5)
Bankers' acceptances and letters of credit fees .......................... 67 74 (7) (9.5)
Insurance commissions and earnings ....................................... 79 65 14 21.5
Miscellaneous ............................................................ 418 360 58 16.1
- -----------------------------------------------------------------------------------------------------------------------------------
Total other income ..................................................... 948 919 29 3.2
- -----------------------------------------------------------------------------------------------------------------------------------
$3,646 $3,078 $568 18.5
===================================================================================================================================
</TABLE>
24 NationsBank Corporation Annual Report 1996
<PAGE>
in equity or equity-related transactions on behalf of clients). The GLOBAL
FINANCE syndication group was agent or co-agent on 566 deals totaling $346.0
billion in 1996, compared to 420 deals totaling $281.6 billion in 1995.
An analysis of investment banking income by major business activity
follows (in millions):
1996 1995
- -------------------------------------------------
INVESTMENT BANKING INCOME
Syndications .............. $108 $93
Securities underwriting ... 84 40
Principal investment
activities .............. 77 19
Other ..................... 87 40
- -------------------------------------------------
Total investment
banking income ........ $356 $192
=================================================
(bullet) GENERAL BANK asset management and fiduciary service fees declined $12
million to $432 million in 1996, reflecting the impact of the late
1995 sale of the Corporate Trust business. Excluding the impact of
this sale, asset management fees increased 17 percent in 1996. An
analysis of asset management and fiduciary service fees by major
business activity for 1996 and 1995 as well as the market values of
assets under management and administration on December 31 are
presented below (in millions):
1996 1995
- --------------------------------------------------
ASSET MANAGEMENT AND
FIDUCIARY SERVICE FEES
Private Client Group ...... $271 $241
Retirement services and
corporate trust ......... 66 107
Mutual funds .............. 29 28
Investment management
subsidiaries and other .. 66 68
- --------------------------------------------------
Total asset
management and
fiduciary service
fees ................ $ 432 $444
==================================================
MARKET VALUE OF ASSETS
Assets under
management ............ $72,270 $66,200
Assets under
administration ........ 180,269 183,200
The Private Client Group provides investment management, fiduciary and tax
services primarily to individuals and investors. These fees increased $30
million in 1996 over 1995, principally due to increased sales, market
appreciation associated with assets under management and acquisitions.
Retirement services and corporate trust encompass a wide range of services
including investment advisory, administrative and record-keeping services for
customers' employee benefit plans, securities lending and investment management
services offered to corporations, municipalities and others. The decline in
retirement services and corporate trust fees in 1996 reflects the impact of
management's repositioning of this business in an effort to concentrate on the
most profitable product lines. Mutual fund revenues reflect fees received for
providing advisory services to the Nations Funds family. Investment management
subsidiaries' fees include revenues of SOVRAN CAPITAL MANAGEMENT, ASB CAPITAL
MANAGEMENT and TRADESTREET INVESTMENT ASSOCIATES, INC., which provide
institutional investors with investment management services.
(bullet) Credit card income increased 13 percent to $314 million in 1996,
primarily due to increased purchase volume and interchange rates.
Credit card income includes $58 million from the impact of credit
card securitizations.
(bullet) Trading account profits and fees totaled $274 million in 1996, a
decrease of $32 million from $306 million in 1995, reflecting a
continued expansion of the Corporation's client-driven business more
than offset by less favorable gains on position-taking.
An analysis of GLOBAL FINANCE'S trading account profits and fees by major
business activity follows (in millions):
1996 1995
- ---------------------------------------------------
TRADING ACCOUNT PROFITS AND FEES
Securities trading ........... $96 $103
Interest rate contracts ......... 136 151
Foreign exchange contracts ...... 4 26
Other ..................... 38 26
- ---------------------------------------------------
Total trading account
profits and fees ......... $274 $306
===================================================
(bullet) Miscellaneous income totaled $418 million in 1996, an increase of $58
million over 1995. Miscellaneous income includes certain prepayment
fees and other fees such as net gains on sales of miscellaneous
investments, business activities, premises, venture capital
investments and other similar items.
<PAGE>
NONINTEREST EXPENSE
As presented in TABLE SIX, the Corporation's noninterest expense increased
9.7 percent to $5.7 billion in 1996 from $5.2 billion in 1995.
Approximately two-thirds of the increase in 1996 over 1995 resulted from
acquisitions of several smaller banking organizations. Additionally, increased
expenditures in selected areas to enhance revenue growth contributed to the
year-over-year increase, including the costs of ongoing initiatives related to
enhancing customer sales and optimizing product delivery channels. For example,
the Model Banking project was implemented in the District of Columbia and four
states of the Corporation's franchise to facilitate and enhance the GENERAL
BANK'S retail customer sales and product delivery. PC Banking was also
introduced in 9 states of the Corporation's franchise providing instant on-line
account access and personal finance management capabilities for customers.
A discussion of the significant components of noninterest expense in 1996
compared to 1995 is as follows:
(bullet)Personnel expense increased $240 million over 1995, primarily due to the
impact of acquisitions and an increase in personnel and contracted temporary
services for the implementation of revenue enhancement projects.
(bullet)Equipment expense increased 14 percent in 1996 over 1995, reflecting
acquisitions and enhancements to computer resources throughout the
Corporation and to product delivery systems, such as PC banking, direct
banking and data base management. This investment in infrastructure is
expected to continue due to the Corpor-ation's commitment to maintaining
state-of-the-art capabilities in sales, information, processing and delivery
to customers and across lines of business.
(bullet) Marketing expense increased $35 million to $252 million in 1996,
primarily attributable to the Corporation's sponsorship of the 1996 Olympic
Summer Games.
(bullet) Professional fees increased $74 million, reflecting higher consulting
and technical support fees for projects to enhance revenue growth and for
the development and installation of infrastructure enhancements.
(bullet)The Corporation's deposit insurance expense totaled $26 million in 1996
compared to $118 million in 1995, reflecting reductions beginning June 1,
1995 in insurance rates charged by the FDIC.
(bullet)Other general operating expenses increased $79 million to $490 million
in 1996. Included in 1996 expenses are $43 million in pretax charges
reflecting the estimated losses associated with certain customers' fraudulent
commercial transactions.
TABLE SIX. NONINTEREST EXPENSE
<TABLE>
<CAPTION>
===========================================================================================================================
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
PERCENT PERCENT
OF TAXABLE- OF TAXABLE-
EQUIVALENT EQUIVALENT
NET INTEREST NET INTEREST
AND AND
NONINTEREST NONINTEREST CHANGE
AMOUNT INCOME AMOUNT INCOME AMOUNT PERCENT
- ---------------------------------------------------------------------------------------------------------------------------------
Personnel ........................................... $2,731 27.1% $2,491 28.8% $ 240 9.6%
Occupancy, net ...................................... 523 5.2 495 5.7 28 5.7
Equipment ........................................... 451 4.5 397 4.6 54 13.6
Marketing ........................................... 252 2.5 217 2.5 35 16.1
Professional fees ................................... 256 2.5 182 2.1 74 40.7
Amortization of intangibles ......................... 128 1.3 119 1.4 9 7.6
Credit card ......................................... 64 .6 55 .6 9 16.4
Deposit insurance ................................... 26 .3 118 1.4 (92) (78.0)
Data processing ..................................... 237 2.4 229 2.7 8 3.5
Telecommunications .................................. 172 1.7 150 1.7 22 14.7
Postage and courier ................................. 148 1.5 135 1.6 13 9.6
Other general operating ............................. 490 4.8 411 4.8 79 19.2
General administrative and miscellaneous ............ 187 1.9 164 1.9 23 14.0
-------------------------------------------------------------------------
$5,665 56.3% $5,163 59.8% $ 502 9.7
=========================================================================
</TABLE>
26 NationsBank Corporation Annual Report 1996
<PAGE>
INCOME TAXES
The Corporation's income tax expense for 1996 was $1.3 billion, for an
effective tax rate of 34.6 percent of pretax income. Income tax expense for 1995
was $1.0 billion, for an effective rate of 34.8 percent.
Note Twelve to the consolidated financial statements includes a reconciliation
of federal income tax expense computed using the federal statutory rate of 35
percent to actual income tax expense.
BALANCE SHEET REVIEW AND LIQUIDITY RISK MANAGEMENT
The Corporation utilizes an integrated approach in managing its balance sheet
which includes management of interest rate sensitivity, credit risk, liquidity
risk and capital position.
Average customer-based funds increased $11.1 billion in 1996 compared to 1995
primarily due to deposits acquired in acquisitions. As a percentage of the total
funding mix, average customer-based funds increased to 46 percent in 1996 from
44 percent in 1995.
Average market-based funds decreased $9.5 billion in 1996 compared to 1995
and comprised a smaller portion of total sources of funds at 32 percent for 1996
compared to 39 percent in 1995, the result of a shift towards term debt for
funding. Average long-term debt increased $8.0 billion in 1996 over 1995 and
represented 10 percent of total sources of funds compared to 7 percent during
1995.
Average loans and leases, the Corporation's primary utilization of funds,
increased $12.8 billion during 1996 due to the impact of acquisitions and core
loan growth partially offset by the impact of securitizations, and comprised 61
percent of total uses of funds compared to 58 percent during 1995. The ratio of
average loans and leases to customer-based funds was approximately 130 percent
in both 1996 and 1995.
The average securities portfolio as a percentage of total uses decreased to
10 percent in 1996 from 14 percent in 1995 due to management's focus on the
reduction of low-yielding assets.
Cash and cash equivalents were $8.9 billion on December 31, 1996, an increase
of $485 million from December 31, 1995. During 1996, net cash provided by
operating activities was $1.8 billion, net cash provided by investing activities
was $15.9 billion and net cash used in financing activities was $17.2 billion.
For further information on cash flows, see the Consolidated Statement of Cash
Flows in the consolidated financial statements.
Liquidity is a measure of the Corporation's ability to fulfill its cash
requirements and is managed by the Corporation through its asset and liability
management process. The Corporation monitors its assets and liabilities and
modifies these positions as liquidity requirements change. This process, coupled
with the Corporation's ability to raise capital and debt financing, is designed
to cover the liquidity needs of the Corporation. The following discussion
provides an overview of significant on- and off-balance sheet components of
liquidity.
SECURITIES
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, liquidity requirements and
on- and off-balance sheet positions.
The securities portfolio on December 31, 1996 consisted of securities held
for investment totaling $2.1 billion and securities available for sale totaling
$12.3 billion compared to $4.4 billion and $19.4 billion, respectively, on
December 31, 1995. The decrease in the securities portfolio from December 31,
1995 to December 31, 1996 was attributable to management's focus on the
reduction of low-yielding assets.
On December 31, 1996 and 1995, the market value of the Corporation's
portfolio of securities held for investment approximated the book value of the
portfolio.
The valuation reserve for securities available for sale and marketable equity
securities increased shareholders' equity by $86 million on December 31, 1996,
reflecting pretax appreciation of $8 million on securities available for sale
and $123 million on marketable equity securities. The valuation reserve
increased shareholders' equity by $323 million on December 31, 1995. The
decrease in
Management's Discussion And Analysis 27
<PAGE>
the valuation reserve was primarily attributable to maturities and sales of
securities and the general increase in interest rates when comparing December
31, 1996 to December 31, 1995.
The average expected maturity of the securities held for investment and
securities available for sale portfolios were 1.47 years and 6.91 years,
respectively, on December 31, 1996 compared to 1.65 years and 2.96 years,
respectively, on December 31, 1995. The increase in the average expected
maturity of the available for sale portfolio reflects the sale and maturity of
shorter average life securities and the addition of mortgage-backed securities
obtained primarily through securitization of the Corporation's residential
mortgages and acquisitions.
On December 31, 1996, the Corporation had forward agreements to purchase $1.5
billion of mortgage-backed securities.
LOANS AND LEASES
Total loans and leases increased approximately 5 percent to $121.6 billion
on December 31, 1996 compared to $116.0 billion on December 31, 1995. Average
loans and leases increased 12 percent to $122.3 billion in 1996 compared to
1995 due primarily to growth in residential mortgage, commercial and credit
card loans partially offset by the impact of securitizations.
Average residential mortgage loans increased 35 percent to $27.8 billion in
1996 compared to $20.6 billion in 1995, primarily as a result of acquisitions.
Average total commercial loans increased to $58.8 billion in 1996 compared to
$56.7 billion in 1995, primarily due to acquisitions. Average real estate
commercial and construction loans decreased to $9.3 billion in 1996 as a result
of the Corporation's efforts to lower its exposure to this line of business.
Average credit card and other consumer loans, including direct and indirect
consumer loans and home equity loans, increased $1.7 billion including the
impact of securitizations in 1996. Higher levels of consumer
AVERAGE LOANS
AND LEASES
(BILLIONS)
(Chart appears on the right side of the
page and its plot points are as follows)
'92 '93 '94 '95 '96
68 79 95 109 122
TABLE SEVEN. DISTRIBUTION OF LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
=================================================================================================================================
DECEMBER 31
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
- -------------------------------------------------------------------------------------------------------------------------------
Domestic
Commercial .................. $ 50,270 41.0% $ 47,989 41.0% $ 44,665 43.1% $ 40,808 44.3% $ 32,260 44.4%
Real estate commercial ...... 5,445 4.4 6,183 5.3 7,349 7.1 8,239 9.0 6,324 8.7
Real estate construction .... 2,863 2.3 2,976 2.5 2,981 2.9 3,256 3.5 3,065 4.2
-------------------------------------------------------------------------------------------------
Total commercial .......... 58,578 47.7 57,148 48.8 54,995 53.1 52,303 56.8 41,649 57.3
-------------------------------------------------------------------------------------------------
Residential mortgage ........ 27,963 22.8 24,026 20.6 17,244 16.7 12,689 13.8 9,262 12.7
Credit card ................. 6,747 5.5 6,532 5.6 4,753 4.6 3,728 4.1 4,297 5.9
Other consumer .............. 20,595 16.8 22,287 19.0 20,511 19.9 19,326 21.0 14,152 19.4
-------------------------------------------------------------------------------------------------
Total consumer ............ 55,305 45.1 52,845 45.2 42,508 41.2 35,743 38.9 27,711 38.0
-------------------------------------------------------------------------------------------------
Lease financing ............. 4,198 3.4 3,264 2.8 2,440 2.4 1,729 1.9 1,301 1.8
Factored accounts receivable 1,047 .9 991 .8 1,004 1.0 1,001 1.1 917 1.3
-------------------------------------------------------------------------------------------------
119,128 97.1 114,248 97.6 100,947 97.7 90,776 98.7 71,578 98.4
-------------------------------------------------------------------------------------------------
Foreign
Commercial and industrial
companies ................. 2,229 1.8 1,635 1.4 1,183 1.1 510 .5 634 .9
Banks and other financial
institutions .............. 599 .5 609 .5 795 .8 446 .5 304 .4
Governments and
official institutions ..... -- -- 7 -- 6 -- 22 -- 2 --
Lease financing ............. 674 .6 534 .5 440 .4 253 .3 196 .3
-----------------------------------------------------------------------------------------------
3,502 2.9 2,785 2.4 2,424 2.3 1,231 1.3 1,136 1.6
-----------------------------------------------------------------------------------------------
Total loans, leases and factored
accounts receivable, net
of unearned income .......... $122,630 100.0% $117,033 100.0% $103,371 100.0% $ 92,007 100.0% $ 72,714 100.0%
=================================================================================================
</TABLE>
28 NationsBank Corporation Annual Report 1996
<PAGE>
loans are the result of the Corporation's efforts to shift the mix of the loan
portfolio to a higher consumer concentration and the impact of acquisitions.
A significant source of liquidity for the Corporation is the repayment and
maturities of loans. TABLE EIGHT shows selected loan maturity data on December
31, 1996 and indicates that approximately 38 percent of the selected loans had
maturities of one year or less. The securitization and sale of certain loans and
the use of loans as collateral in asset-backed financing arrangements are also
sources of liquidity. The Corporation securitized approximately $900 million of
credit card loans in the second quarter of 1996 and approximately $2.1 billion
of indirect auto loans in the third quarter of 1996.
DEPOSITS
TABLE THREE provides information on the average amounts of deposits and the
rates paid by deposit category. Through the Corporation's diverse retail banking
network, deposits remain a primary source of funds for the Corporation. Average
deposits increased 8 percent in 1996 compared to 1995 primarily due to deposits
acquired in acquisitions.
On December 31, 1996, the Corporation had domestic certificates of deposit
greater than $100 thousand totaling $7.3 billion, with $3.6 billion maturing
within three months or less, $1.5 billion maturing within three to six months,
$1.1 billion maturing within six to twelve months and $1.1 billion maturing
after twelve months. Additionally, on December 31, 1996, the Corporation had
other domestic time deposits greater than $100 thousand totaling $499 million,
with $59 million maturing within three months or less, $47 million maturing
within three to six months, $55 million maturing within six to twelve months and
$338 million maturing after twelve months. Foreign office certificates of
deposit and other time deposits of $100 thousand or more totaled $8.1 billion
and $12.9 billion on December 31, 1996 and 1995, respectively.
TABLE EIGHT. SELECTED LOAN MATURITY DATA
================================================================================
DECEMBER 31, 1996
(DOLLARS IN MILLIONS)
THIS TABLE PRESENTS THE MATURITY DISTRIBUTION AND INTEREST
SENSITIVITY OF SELECTED LOAN CATEGORIES (EXCLUDING RESIDENTIAL
MORTGAGE, CREDIT CARD, OTHER CONSUMER LOANS, LEASE FINANCING AND
FACTORED ACCOUNTS RECEIVABLE). MATURITIES ARE PRESENTED ON A
CONTRACTUAL BASIS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DUE AFTER
DUE IN 1 1 YEAR
YEAR THROUGH DUE AFTER
OR LESS 5 YEARS 5 YEARS TOTAL
- -----------------------------------------------------------------------------------------------------------------------
Commercial ................................................................ $17,950 $23,082 $ 9,238 $50,270
Real estate commercial .................................................... 1,615 3,014 816 5,445
Real estate construction .................................................. 1,736 1,038 89 2,863
Foreign ................................................................... 2,149 434 245 2,828
-----------------------------------------
Total selected loans, net of unearned income ........................... $23,450 $27,568 $10,388 $61,406
=========================================
Percent of total .......................................................... 38.2% 44.9% 16.9% 100.0%
Cumulative percent of total ............................................... 38.2 83.1 100.0
Sensitivity of loans to changes in interest rates--loans due after one year
Predetermined interest rate ............................................ $ 7,182 $ 4,661 $11,843
Floating or adjustable interest rate ................................... 20,386 5,727 26,113
--------------------------------------------------
$27,568 $10,388 $37,956
==================================================
</TABLE>
Management's Discussion And Analysis 29
<PAGE>
SHORT-TERM BORROWINGS AND TRADING ACCOUNT LIABILITIES
The Corporation uses short-term borrowings as a funding source and in its
management of interest rate risk. TABLE NINE presents the categories of
short-term borrowings.
As of December 31, 1996, short-term bank notes outstanding under the
Corporation's bank note program were $872 million compared to $3.1 billion on
December 31, 1995.
Total average short-term borrowings decreased 11 percent to $39.5 billion and
average short sales decreased 16 percent to $10.1 billion in 1996 compared to
1995 levels.
LONG-TERM DEBT
On December 31, 1996 and 1995, long-term debt was $23.0 billion and $17.8
billion, respectively. The Corporation continued to diversify its funding
sources through increasing its Euro medium-term note program to offer up to $4.5
billion in senior and subordinated notes and the issuance of $965 million of
trust preferred securities. During 1996, the Corporation issued approximately
$7.2 billion in long-term senior and subordinated debt, including $2.8 billion
which was issued under its medium-term note programs.
Proceeds from the issuance of long-term debt were used primarily to fund
average earning asset growth of 6 percent, various common stock repurchase
programs and certain banking acquisitions. See Note Six to the consolidated
financial statements for further details on long-term debt.
OTHER
The Corporation has commercial paper back-up lines totaling $1.5 billion
which mature in 1997. No borrowings have been made under these lines.
The strength of the Corporation's overall
TABLE NINE. 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1996 1995 1994
- -----------------------------------------------------------------------------------------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
- -----------------------------------------------------------------------------------------------------
Federal funds purchased
On December 31 ............................ $ 3,536 6.58% $ 5,940 5.26% $ 3,993 5.19%
Average during year ....................... 4,694 5.35 5,455 5.91 5,397 4.07
Maximum month-end balance during year ..... 8,585 -- 7,317 -- 7,264 --
Securities sold under agreements to repurchase
On December 31 ............................ 15,842 5.40 23,034 5.66 21,977 5.36
Average during year ....................... 28,517 5.37 30,336 6.14 24,903 4.32
Maximum month-end balance during year ..... 29,582 -- 38,926 -- 27,532 --
Commercial paper
On December 31 ............................ 2,787 5.41 2,773 5.65 2,519 5.22
Average during year ....................... 2,966 5.57 2,804 6.10 2,482 4.46
Maximum month-end balance during year ..... 3,276 -- 2,930 -- 2,871 --
Other short-term borrowings
On December 31 ............................ 1,836 5.20 4,143 5.94 5,640 7.21
Average during year ....................... 3,344 6.22 5,690 6.20 5,015 4.25
Maximum month-end balance during year ..... 4,954 -- 7,378 -- 6,634 --
</TABLE>
30 NationsBank Corporation Annual Report 1996
<PAGE>
financial position is reflected in the following December 31, 1996 debt ratings
which reflect upgrades since December 31, 1995:
COMMERCIAL SENIOR
PAPER DEBT
- --------------------------------------------------------------------------------
Moody's Investors
Service ................. P-1 A1
Standard & Poor's
Corporation ............ A-1 A+
Duff and Phelps, Inc....... D-1+ A+
Fitch Investors
Service, Inc. .......... F-1 A+
IBCA ...................... A1 A+
Thomson BankWatch ......... TBW-1 A+
In managing liquidity, the Corporation takes into consideration the ability
of the subsidiary banks to pay dividends to the parent company. See Note Nine to
the consolidated financial statements for further details on dividend
capabilities of the subsidiary banks.
OFF-BALANCE SHEET
DERIVATIVES -- ASSET AND LIABILITY MANAGEMENT POSITIONS
The Corporation utilizes interest rate contracts in its asset and liability
management (ALM) process. Interest rate contracts allow the Corporation to
efficiently manage its interest rate risk position.
The Corporation primarily uses non-leveraged generic and basis swaps. Generic
swaps involve the exchange of fixed-rate and variable-rate interest payments
based on the contractual underlying notional amounts. Basis swaps involve the
exchange of interest payments based on the contractual underlying notional
amounts, where both the pay rate and the receive rate are floating rates based
on different indices. As presented in the footnotes to TABLE THREE, net interest
receipts and payments on these contracts have been included in interest income
and expense on the underlying instruments.
TABLE TEN summarizes the notional amount and the activity of ALM interest
rate contracts for the year ended December 31, 1996. As reflected in the table,
the gross notional amount of the Corporation's ALM swap program on December 31,
1996 was $30.1 billion, with the Corporation receiving fixed on $27.7 billion,
primarily converting variable-rate commercial loans to fixed rate, and receiving
variable on $1.0 billion, fixing the cost of certain liabilities. Subsequent to
the sale and securitization of fixed-rate assets during 1996, the Corporation
increased the net receive fixed position to $26.7 billion on December 31, 1996
from $3.9 billion on December 31, 1995 in order to maintain the Corporation's
relatively neutral posture to changes in interest rates. The net receive fixed
position modifies the interest rate characteristics of certain variable-rate
assets.
TABLE ELEVEN summarizes the expected maturities, weighted average pay and
receive rates and the unrealized gain/loss on December 31, 1996 of the
Corporation's ALM swaps. Floating rates represent the last repricing and will
change in the future primarily based on movements in one-, three- and six-month
LIBOR rates. The net unrealized appreciation of the ALM swap portfolio on
December 31, 1996 was $69 million compared to net unrealized depreciation of $75
million on December 31, 1995, reflecting
TABLE TEN. ASSET AND LIABILITY MANAGEMENT INTEREST RATE NOTIONAL CONTRACTS
<TABLE>
<CAPTION>
================================================================================================================================
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CMO AND INDEX
GENERIC AMORTIZING TOTAL
TOTAL
--------------------------------------------- INTEREST
RECEIVE PAY RECEIVE PAY RECEIVE PAY TOTAL OPTION RATE
FIXED FIXED FIXED FIXED FIXED FIXED BASIS SWAPS PRODUCTS CONTRACTS
- --------------------------------------------------------------------------------------------------------------------------------
Balance on December 31, 1995.... $5,963 $9,908 $7,875 $75 $13,838 $9,983 $486 $24,307 $80 $24,387
Additions.................... 26,271 478 1,256 - 27,527 478 960 28,965 7,249 36,214
Maturities, terminations
and other.................. (4,494) (9,351) (9,131) (75) (13,625) (9,426) (100) (23,151) (934) (24,085)
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1996 $27,740 $1,035 $- $- $27,740 $1,035 $1,346 $30,121 $6,395 $36,516
================================================================================================================================
</TABLE>
Management's Discussion And Analysis 31
<PAGE>
the maturity and termination during 1996 of certain contracts in a loss
position. The amount of net realized deferred losses associated with ALM swaps
terminated during 1996 was $48 million on December 31, 1996.
In its ALM process, the Corporation also utilizes interest rate option
products, primarily caps and floors. Interest rate caps and floors are
agreements where, for a fee, the purchaser obtains the right to receive interest
payments when a variable interest rate moves above or below a specified cap or
floor rate, respectively. TABLE TEN includes a summary of the notional amount
and the activity of ALM interest rate option contracts for the year ended
December 31, 1996. At December 31, 1996, the Corporation had a gross notional
amount of $6.4 billion in outstanding interest rate option contracts used for
ALM purposes. Such instruments are primarily linked to term debt, short-term
borrowings and pools of residential mortgages. TABLE ELEVEN includes a summary
of the expected maturities and the net unrealized gain of the Corporation's
ALM option contracts. On December 31, 1996, the net unrealized appreciation of
option products was $2 million.
The net unrealized appreciation in the estimated value of the ALM interest
rate contract 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 positions should not be viewed in isolation.
For a discussion of the Corporation's management of risk associated with
mortgage banking activities, see Noninterest Income beginning on page 24.
CREDIT RISK MANAGEMENT
AND CREDIT PORTFOLIO REVIEW
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 and
factored accounts receivable, certain securities, letters of credit, 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 credit risk and
communicates and monitors the application of these policies and procedures
throughout the Corporation.
The Corporation's overall objective in managing credit 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 credit risk profile that is
diverse in terms of product type, industry concentration, geographic
distribution and borrower or counterparty concentration.
The Credit Policy group works with lending officers, trading personnel and
various other line personnel in areas that conduct activities involving credit
risk and is involved in the implementation, refinement and monitoring of credit
policies and procedures.
The Corporation manages credit exposure to individual borrowers and
counterparties on an aggregate basis including loans, leases, factored accounts
receivable, securities, letters of credit, bankers' acceptances, derivatives and
unfunded commitments. The creditworthiness of a borrower or counterparty is
determined by experienced personnel, and limits are established for the total
credit exposure to any one borrower or counterparty. Credit limits are subject
to varying levels of approval by senior line and credit policy management. Total
exposure to a borrower or counterparty is aggregated and measured against
established limits.
The originating credit officer assigns borrowers or counterparties an initial
risk rating which is based on the amount of inherent credit risk and reviewed
for appropriateness by senior line and credit policy personnel. Credits are
monitored by line and credit policy personnel for deterioration in a borrower's
or counterparty's financial condition which would impact the ability of the
borrower or counterparty to perform under the contract. Risk ratings are
adjusted as necessary.
For consumer lending, 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.
Whenever possible, the Corporation obtains collateral to support credit
extensions and commitments. Generally, such collateral is in the form of real
and personal property, cash on deposit or other highly liquid instruments. In
certain circumstances, the Corporation obtains real property as security for
loans that are made on the general
32 NationsBank Corporation Annual Report 1996
<PAGE>
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,
product-type or other concentration through syndications
TABLE ELEVEN. ASSET AND LIABILITY MANAGEMENT INTEREST RATE CONTRACTS
<TABLE>
<CAPTION>
===========================================================================================================================
DECEMBER 31, 1996
(DOLLARS IN MILLIONS, AVERAGE EXPECTED MATURITY IN YEARS)
<S> <C> <C> <C> <C> <C> <C>
EXPECTED MATURITY
------------------------------------------------------------------------------- AVERAGE
UNREALIZED AFTER EXPECTED
GAIN/(LOSS) TOTAL 1997 1998 1999 2000 2001 2001 MATURITY
- ---------------------------------------------------------------------------------------------------------------------------
ASSET CONVERSION SWAPS
Receive fixed generic .......... $ 121 3.44
Notional amount .............. $ 23,510 $ 500 $ 2,000 $ 5,800 $ 7,060 $ 8,150 --
Weighted average receive rate. 6.42% 4.59% 5.89% 6.48% 6.48% 6.57% --
Weighted average pay rate .... 5.58
Pay fixed generic .............. (1) 4.76
--------
Notional amount .............. $ 10 $ 1 $ 1 $ 1 $ 1 $ 1 $ 5
Weighted average pay rate .... 9.78% 9.78% 9.78% 9.78% 9.78% 9.78% 9.78%
Weighted average receive rate. 6.80
Total asset conversion swaps ... $ 120
========
Notional amount .............. $ 23,520 $ 501 $ 2,001 $ 5,801 $ 7,061 $ 8,151 $ 5
LIABILITY CONVERSION SWAPS
Receive fixed generic .......... $ (38) 6.19
Notional amount .............. $ 4,230 $ 175 $ 28 $ 679 $ 308 $ 1,439 $1,601
Weighted average receive rate 6.81% 6.77% 6.32% 7.36% 6.79% 6.41% 6.94%
Weighted average pay rate .... 5.86
Pay fixed generic .............. (13) .39
--------
Notional amount .............. $ 1,025 $ 925 $ 100 -- -- -- --
Weighted average pay rate .... 8.24% 8.13% 9.31% -- -- -- --
Weighted average receive rate 5.71
Total liability conversion swaps $ (51)
========
Notional amount .............. $ 5,255 $ 1,100 $ 128 $ 679 $ 308 $ 1,439 $ 1,601
- ------------------------------------------------------------------------------------------------------------------------------------
Total receive fixed swaps ...... $ 83 3.86
Notional amount .............. $ 27,740 $ 675 $ 2,028 $6,479 $ 7,368 $ 9,589 $ 1,601
Weighted average receive rate. 6.48% 5.15% 5.89% 6.57% 6.49% 6.55% 6.94%
Weighted average pay rate .... 5.62
Total pay fixed swaps .......... (14) .43
Notional amount .............. $ 1,035 $ 926 $ 101 $ 1 $ 1 $ 1 $ 5
Weighted average pay rate .... 8.26% 8.13% 9.31% 9.78% 9.78% 9.78% 9.78%
Weighted average receive rate. 5.72
Basis swaps .................... -- 1.40
--------
Notional amount .............. $ 1,346 $ 371 $ 700 $ 250 -- $ 25 --
Weighted average receive rate. 5.53%
Weighted average pay rate .... 5.55
Total swaps .................... $ 69
========
Notional amount .............. $ 30,121 $ 1,972 $ 2,829 $6,730 $ 7,369 $ 9,615 $ 1,606
- ----------------------------------------------------------------------------------------------------------------------------------
OPTION PRODUCTS ................... $ 2
========
Notional amount .............. $ 6,395 $ 600 $ 2,425 $ 2,075 $ 10 $ 1,086 $ 199
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest rate contracts .. $ 71
========
Notional amount .............. $ 36,516 $ 2,572 $ 5,254 $ 8,805 $ 7,379 $ 10,701 $ 1,805
</TABLE>
ON DECEMBER 31, 1996, IN ADDITION TO THE ABOVE INTEREST RATE SWAPS, THE
CORPORATION HAD A $500 MILLION NOTIONAL RECEIVE FIXED GENERIC INTEREST RATE SWAP
ASSOCIATED WITH A CREDIT CARD SECURITIZATION. ON DECEMBER 31, 1996, THIS
POSITION HAD AN UNREALIZED MARKET VALUE OF NEGATIVE $17 MILLION, A WEIGHTED
AVERAGE RECEIVE RATE OF 5.96 PERCENT, A PAY RATE OF 5.61 PERCENT AND AN EXPECTED
MATURITY OF 6.96 YEARS.
Management's Discussion And Analysis 33
<PAGE>
of credits, participations, loan sales and securitizations. Through GLOBAL
FINANCE, the Corporation is a major participant in the syndications market. In a
syndicated facility, each participating lender funds only its portion of the
syndicated facility, therefore limiting its exposure to the borrower. The
Corporation also identifies and reduces its exposure to funded borrower, product
or industry concentrations through loan sales. Generally, these sales are
without recourse to the Corporation. For instance, in the second quarter of
1996, to further reduce real estate exposures, the Corporation sold $110 million
of primarily lower quality commercial real estate loans.
TABLE TWELVE. ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
===============================================================================================================================
(DOLLARS IN MILLIONS)
1996 1995 1994 1993 1992
----------------------------------------------------------
Balance on January 1............................................... $2,163 $2,186 $2,169 $1,454 $1,605
----------------------------------------------------------
Loans, leases and factored accounts receivable charged off
Commercial ..................................................... (150) (98) (113) (107) (245)
Real estate commercial ......................................... (38) (25) (32) (84) (279)
Real estate construction ....................................... (5) (17) (27) (17) (114)
-----------------------------------------------------------
Total commercial ............................................. (193) (140) (172) (208) (638)
----------------------------------------------------------
Residential mortgage ........................................... (12) (8) (7) (10) (18)
Credit card .................................................... (272) (189) (126) (184) (172)
Other consumer ................................................. (329) (263) (192) (172) (166)
-----------------------------------------------------------
Total consumer ............................................... (613) (460) (325) (366) (356)
-----------------------------------------------------------
Foreign ........................................................ -- -- -- -- (7)
Lease financing ................................................ (4) (2) (4) (5) (8)
Factored accounts receivable ................................... (26) (34) (32) (30) (17)
-----------------------------------------------------------
Total loans, leases and factored accounts receivable charged off (836) (636) (533) (609) (1,026)
-----------------------------------------------------------
Recoveries of loans, leases and factored accounts
receivable previously charged off
Commercial ..................................................... 66 78 69 67 62
Real estate commercial ......................................... 13 15 17 21 13
Real estate construction ....................................... 2 9 26 12 8
----------------------------------------------------------
Total commercial ............................................. 81 102 112 100 83
----------------------------------------------------------
Residential mortgage ........................................... 2 2 2 3 4
Credit card .................................................... 60 26 22 19 13
Other consumer ................................................. 85 72 67 65 48
----------------------------------------------------------
Total consumer ............................................... 147 100 91 87 65
----------------------------------------------------------
Foreign ........................................................ -- -- -- 1 1
Lease financing ................................................ 1 1 3 2 2
Factored accounts receivable ................................... 9 12 11 7 9
----------------------------------------------------------
Total recoveries of loans, leases and
factored accounts receivable previously charged off .......... 238 215 217 197 160
----------------------------------------------------------
Net charge-offs ................................................ (598) (421) (316) (412) (866)
----------------------------------------------------------
Provision for credit losses ....................................... 605 382 310 430 715
Allowance applicable to loans of purchased companies and other .... 145 16 23 697 --
-----------------------------------------------------------
Balance on December 31 ............................................ $ 2,315 $ 2,163 $ 2,186 $ 2,169 $ 1,454
===========================================================
Loans, leases and factored accounts receivable,
net of unearned income, outstanding on December 31 ............. $ 122,630 $ 117,033 $ 103,371 $ 92,007 $ 72,714
Allowance for credit losses as a percentage of
loans, leases and factored accounts receivable,
net of unearned income, outstanding on December 31 ............. 1.89% 1.85% 2.11% 2.36% 2.00%
Average loans, leases and factored accounts receivable,
net of unearned income, outstanding during the year ............ $ 123,403 $ 110,650 $ 96,258 $ 80,058 $ 69,136
Net charge-offs as a percentage of average loans,
leases and factored accounts receivable,
net of unearned income, outstanding during the year ............ .48% .38% .33% .51% 1.25%
Ratio of the allowance for credit losses
on December 31 to net charge-offs .............................. 3.87 5.14 6.93 5.27 1.68
Allowance for credit losses as a percentage of nonperforming loans. 260.02% 306.49% 273.07% 193.38% 103.11%
</TABLE>
34 NationsBank Corporation Annual Report 1996
<PAGE>
(Chart appears here as follows)
Net Charge-Offs
As A Percentage Of
Average Net Loans
(Percent)
(Chart appears along right side of
page and its plot points are as follows):
92 1.25
93 .51
94 .33
95 .38
96 .48
In conducting derivatives activities in certain jurisdictions, the
Corporation reduces risk to any one counterparty through the use of legally
enforceable master netting agreements which allow the Corporation to settle
positive and negative positions with the same counterparty on a net basis.
An independent credit review group conducts ongoing reviews of credit
activities and portfolios, reexamining on a regular basis risk assessments for
credit exposures and overall compliance with policy.
LOAN, LEASE AND FACTORED ACCOUNTS RECEIVABLE PORTFOLIO - The Corporation's
credit exposure is centered in its loan, lease and factored accounts receivable
portfolio which on December 31, 1996 totaled $122.6 billion. TABLE SEVEN on page
28 presents a distribution of loans by product type.
ALLOWANCE FOR CREDIT LOSSES - The Corporation's allowance for credit losses
was $2.3 billion and $2.2 billion on December 31, 1996 and 1995, respectively.
TABLE TWELVE provides an analysis of the changes in the allowance for credit
losses. The provision for credit losses increased $223 million to $605 million
in 1996 compared to 1995, reflecting the industry-wide trend towards more normal
losses compared to lower levels in prior periods. Total net charge-offs
increased $177 million in 1996 to $598 million, or .48 percent of average loans,
leases and factored accounts receivable, versus $421 million, or .38 percent, in
1995. The increases were experienced primarily in commercial, other consumer and
credit card net charge-offs, which increased $64 million, $53 million and $49
million, respectively. The increase in credit card net charge-offs was partially
due to the seasoning of the credit card portfolio and an increase in the rate of
personal bankruptcies in 1996. Management expects the charge-offs trends
experienced in 1996 to continue as the Corporation maintains its efforts to
shift the mix of the loan portfolio to a higher consumer concentration and
credit losses return to more normalized levels.
Portions of the allowance for credit losses are allocated to cover the
estimated losses inherent in particular categories of credit risk. The
allocation of the allowance for credit losses, as presented in TABLE THIRTEEN,
is based upon the Corporation's loss experience over a period of years and is
adjusted for existing economic conditions as well as performance trends within
specific portfolio segments and individual concentrations of credit. In 1996,
the Corporation modified its allocation methodology to include historical peak
loss conditions. Prior year allocations have been restated to reflect the
current allocation methodology.
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 its analysis of inherent credit losses on December 31, 1996.
<TABLE>
<CAPTION>
TABLE THIRTEEN. ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES
===================================================================================================================================
DECEMBER 31
(DOLLARS IN MILLIONS)
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial ....................... $665 28.7% $626 28.9% $569 26.0% $510 23.5% $389 26.8%
Real estate commercial ........... 267 11.5 311 14.4 397 18.2 403 18.6 310 21.3
Real estate construction ......... 140 6.1 146 6.7 147 6.7 160 7.4 150 10.3
-----------------------------------------------------------------------------------------------
Total commercial .............. 1,072 46.3 1,083 50.0 1,113 50.9 1,073 49.5 849 58.4
-----------------------------------------------------------------------------------------------
Residential mortgage ............. 78 3.4 64 3.0 45 2.0 32 1.4 24 1.6
Credit card ...................... 216 9.3 209 9.7 152 7.0 119 5.5 136 9.4
Other consumer ................... 281 12.1 291 13.4 211 9.7 199 9.2 144 9.9
-----------------------------------------------------------------------------------------------
Total consumer ................ 575 24.8 564 26.1 408 18.7 350 16.1 304 20.9
-----------------------------------------------------------------------------------------------
Foreign .......................... 23 1.0 21 1.0 19 .9 8 .4 8 .6
Lease financing .................. 61 2.6 36 1.7 26 1.2 16 .7 12 .8
Factored accounts receivable ..... 20 .9 20 .9 13 .6 13 .6 12 .8
Unallocated ...................... 564 24.4 439 20.3 607 27.7 709 32.7 269 18.5
-----------------------------------------------------------------------------------------------
$2,315 100.0% $2,163 100.0% $2,186 100.0% $2,169 100.0% $1,454 100.0%
===============================================================================================
</TABLE>
Management's Discussion and Analysis 35
<PAGE>
NONPERFORMING ASSETS - On December 31, 1996, nonperforming assets were $1.0
billion, or .85 percent of net loans, leases, factored accounts receivable and
other real estate owned, compared to $853 million, or .73 percent, on December
31, 1995. As presented in TABLE FOURTEEN, nonperforming loans were $890 million
at the end of 1996 compared to $706 million at the end of 1995. The allowance
coverage of nonperforming loans was 260 percent on December 31, 1996 compared to
306 percent at the end of 1995.
<TABLE>
<CAPTION>
TABLE FOURTEEN. NONPERFORMING ASSETS
===================================================================================================================================
DECEMBER 31
(DOLLARS IN MILLIONS)
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial ......................................................... $342 $271 $362 $474 $650
Real estate commercial ............................................. 145 196 201 318 404
Real estate construction ........................................... 28 16 66 142 210
---------------------------------------------------------
Total commercial ................................................. 515 483 629 934 1,264
_________________________________________________________
Residential mortgage ............................................... 215 87 66 77 88
Other consumer ..................................................... 135 130 94 93 34
---------------------------------------------------------
Total consumer ................................................... 350 217 160 170 122
_________________________________________________________
Foreign ............................................................ - - 3 8 9
Lease financing .................................................... 25 6 9 10 15
---------------------------------------------------------
Total nonperforming loans ...................................... 890 706 801 1,122 1,410
_________________________________________________________
Other real estate owned ............................................... 153 147 337 661 587
_________________________________________________________
Total nonperforming assets ................................... $1,043 $853 $1,138 $1,783 $1,997
=========================================================
Nonperforming assets as a percentage of
Total assets .56% .46% .67% 1.13% 1.69%
Loans, leases and factored accounts receivable,
net of unearned income, and other real estate owned .85 .73 1.10 1.92 2.72
</TABLE>
The loss of income associated with nonperforming loans on December 31 and
the cost of carrying other real estate owned were:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income that would have been recorded in accordance
with original terms ................................................... $103 $102 $96 $80 $105
Less income actually recorded ............................................ (35) (27) (31) (34) (31)
-------------------------------------------------------
Loss of income ........................................................... $68 $75 $65 $46 $74
=======================================================
Cost of carrying other real estate owned ................................. $8 $13 $24 $18 $25
=======================================================
</TABLE>
ON DECEMBER 31, 1996, THERE WERE NO MATERIAL COMMITMENTS TO LEND ADDITIONAL
FUNDS WITH RESPECT TO NONPERFORMING LOANS.
<TABLE>
<CAPTION>
TABLE FIFTEEN. LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
===================================================================================================================================
DECEMBER 31
(DOLLARS IN MILLIONS)
1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
AMOUNT PERCENT (1) AMOUNT PERCENT (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial ................................................................ $38 .08% $24 .05%
Real estate commercial .................................................... 13 .24 6 .10
Real estate construction .................................................. 5 .17 - -
--------------------------------------------------
Total commercial ........................................................ 56 .10 30 .05
________________________________________________
Residential mortgage ...................................................... 45 .16 22 .09
Credit card ............................................................... 105 1.56 70 1.07
Other consumer ............................................................ 30 .15 34 .15
--------------------------------------------------
Total consumer .......................................................... 180 .33 126 .24
__________________________________________________
Foreign ................................................................... - - 10 .36
Factored accounts receivable .............................................. 9 .86 8 .81
--------------------------------------------------
Total ................................................................. $245 .20 $174 .15
==================================================
</TABLE>
(1)REPRESENTS AMOUNTS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST AS A
PERCENTAGE OF NET LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE FOR EACH
RESPECTIVE CATEGORY.
36 NationsBank Corporation Annual Report 1996
<PAGE>
(Chart appears along the
left side of the page and
its plot points are as follows):
Nonperforming Assets
(Billions)
92 2.0
93 1.8
94 1.1
95 .85
96 1.0
Other real estate owned increased to $153 million on December 31, 1996
compared to $147 million on December 31, 1995.
Internal loan workout units are devoted to the management and/or collection
of certain nonperforming assets as well as certain performing loans. Concerted
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. As 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.
LOANS PAST DUE 90 DAYS OR MORE - TABLE FIFTEEN presents total loans past due
90 days or more and still accruing interest. On December 31, 1996, loans past
due 90 days or more and still accruing interest were $245 million, or .20
percent of net loans, leases and factored accounts receivable, compared to $174
million, or .15 percent, on December 31, 1995.
DERIVATIVES ACTIVITIES - Credit risk associated with derivatives positions is
measured as the net 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. In managing derivatives credit
risk, the Corporation considers both the current exposure, which is the
replacement cost of contracts on the measurement date, as well as an estimate of
the potential change in value of contracts over their remaining lives.
TABLE SIXTEEN presents the notional or contract amounts on December 31, 1996
and 1995 and the current credit risk amounts (the net replacement cost of
contracts in a gain position on December 31, 1996 and 1995) of the Corporation's
derivatives-dealer positions which are primarily executed in the
over-the-counter market. The notional or contract amounts indicate the total
volume of transactions and significantly exceed the
<TABLE>
<CAPTION>
TABLE SIXTEEN. DERIVATIVES-DEALER POSITIONS
===================================================================================================================================
DECEMBER 31
(DOLLARS IN MILLIONS)
1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
CONTRACT/ CREDIT RISK CONTRACT/ CREDIT RISK
NOTIONAL AMOUNT (1) NOTIONAL AMOUNT (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Rate Contracts
Swaps ............................................................... $252,187 $927 $123,946 $989
Futures and forwards ................................................ 186,333 5 193,774 37
Written options ..................................................... 298,594 - 233,976 -
Purchased options ................................................... 294,591 561 236,317 1,310
Foreign Exchange Contracts
Swaps ............................................................... 1,303 24 1,196 21
Spot, futures and forwards .......................................... 94,028 1,137 70,199 532
Written options ..................................................... 63,081 - 42,227 -
Purchased options ................................................... 61,716 352 44,273 350
Commodity and Other Contracts
Swaps ............................................................... 812 81 757 141
Futures and forwards ................................................ 2,728 - 3,231 3
Written options ..................................................... 14,064 - 15,476 -
Purchased options ................................................... 13,828 357 16,344 600
----- -----
Total before cross product netting ................................ 3,444 3,983
----- -----
Cross product netting ............................................. 286 183
------ ------
Net replacement cost .............................................. $3,158 $3,800
====== ======
</TABLE>
(1)REPRESENTS THE NET 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 ACCRUED INTEREST.
Management's Discussion and Analysis 37
<PAGE>
amount of the Corporation's credit or market risk associated with these
instruments. The credit risk amounts presented in TABLE SIXTEEN do not consider
the value of any collateral, but generally take into consideration the effects
of legally enforceable master netting agreements. On December 31, 1996, the
credit risk associated with the Corporation's asset and liability management
positions was not significant.
In managing credit risk associated with its derivatives activities, the
Corporation deals with creditworthy counterparties, primarily U.S. and foreign
commercial banks, broker-dealers and corporates.
A portion of the Corporation's derivatives-dealer activity involves
exchange-traded instruments. 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.
During 1996 there were no credit losses associated with derivatives
transactions. In addition, on December 31, 1996, there were no nonperforming
derivatives positions.
CONCENTRATIONS OF CREDIT RISK - As previously discussed, in an effort to
minimize the adverse impact of any single event or set of occurrences, the
Corporation strives to maintain a diverse credit portfolio. Summarized below are
areas of significant credit risk.
REAL ESTATE - Total nonresidential real estate commercial and construction
loans, the portion of such loans which are nonperforming, OREO and other credit
exposures are presented in TABLE SEVENTEEN. The exposures presented represent
credit extensions for real estate-related purposes to borrowers or
counterparties who are primarily in the real estate development or investment
business and for which the ultimate repayment of the credit is dependent on the
sale, lease, rental or refinancing of the real estate.
Total nonresidential real estate commercial and construction loans continued
to decline in 1996 and totaled $8.3 billion, or 7 percent of net loans, leases
and factored
<TABLE>
<CAPTION>
TABLE SEVENTEEN. REAL ESTATE COMMERCIAL AND CONSTRUCTION LOANS,
OTHER REAL ESTATE OWNED AND OTHER REAL ESTATE CREDIT EXPOSURES
===================================================================================================================================
DECEMBER 31, 1996
(DOLLARS IN MILLIONS)
LOANS (1) OTHER CREDIT
_____________________
OUTSTANDING NONPERFORMING OREO EXPOSURES (2)
- -----------------------------------------------------------------------------------------------------------------------------------
BY GEOGRAPHIC REGION (3):
<S> <C> <C> <C> <C>
Maryland, District of Columbia and Virginia ............................ $1,643 $51 $32 $377
Florida ................................................................ 1,746 49 41 172
North Carolina and South Carolina ...................................... 1,369 33 28 29
Other states ........................................................... 3,550 40 11 301
---------------------------------------------------------
$8,308 $173 $112 $879
=========================================================
BY PROPERTY TYPE:
Apartments ............................................................. $1,484 $26 $- $325
Shopping centers/retail ................................................ 1,264 13 2 105
Residential ............................................................ 1,215 12 12 36
Office buildings ....................................................... 1,174 20 13 16
Hotels ................................................................. 630 3 2 48
Land and land development .............................................. 573 20 43 78
Industrial/warehouse ................................................... 551 18 1 19
Commercial-other ....................................................... 404 17 11 11
Resorts/golf courses ................................................... 275 - - -
Unsecured .............................................................. 159 2 - 35
Multiple use ........................................................... 115 5 1 3
Other .................................................................. 464 37 27 203
---------------------------------------------------------
$8,308 $173 $112 $879
=========================================================
</TABLE>
(1) ON DECEMBER 31, 1996, THE CORPORATION HAD UNFUNDED BINDING REAL ESTATE
COMMERCIAL AND CONSTRUCTION LOAN COMMITMENTS.
(2) OTHER CREDIT EXPOSURES INCLUDE LETTERS OF CREDIT AND LOANS HELD FOR SALE.
(3) DISTRIBUTION BASED ON GEOGRAPHIC LOCATION OF COLLATERAL.
38 NationsBank Corporation Annual Report 1996
<PAGE>
accounts receivable, on December 31, 1996 compared to $9.2 billion, or 8
percent, at the end of 1995. During 1996, the Corporation recorded real estate
net charge-offs of $28 million, or .30 percent of average real estate loans,
compared to net charge-offs of $18 million, or .17 percent, in 1995. Of the
increase in total real estate net charge-offs in 1996, $18 million was
attributable to the second quarter bulk sale of $110 million of loans, primarily
commercial real estate. Real estate commercial and construction loans which were
past due 90 days or more and still accruing interest were $18 million, or .22
percent of total real estate loans, on December 31, 1996 compared to $6 million,
or .07 percent, at the end of 1995. Nonperforming real estate commercial and
construction loans decreased $39 million to $173 million on December 31, 1996
compared to December 31, 1995, primarily due to the above-mentioned bulk sale.
The exposures included in TABLE SEVENTEEN do not include credit extensions
which were made on the general creditworthiness of the borrower for which real
estate was obtained as security or as an abundance of caution and for which the
ultimate repayment of the credit is not dependent on the sale, lease, rental or
refinancing of the real estate. Accordingly, the exposures presented do not
include commercial loans secured by owner-occupied real estate, except where the
borrower is a real estate developer. In addition to the amounts presented in the
tables, on December 31, 1996, the Corporation had approximately $7.9 billion of
commercial loans which were not real estate dependent but for which the
Corporation had obtained real estate as secondary repayment security.
OTHER INDUSTRIES - TABLE EIGHTEEN presents selected industry credit
exposures. Commercial loans, factored accounts receivable and lease financings
are included in the table. Other credit exposures as presented include loans
held for sale, letters of credit, bankers' acceptances and derivatives exposures
in a gain position. Commercial loan outstandings totaled $50.3 billion and $48.0
billion on December 31, 1996 and 1995, respectively, or 41 percent of net loans,
leases and factored accounts receivable. Net charge-offs of commercial loans
totaled $84 million, or .17 percent of average commercial loans, in 1996, versus
$20 million, or .04 percent, in 1995. Commercial loans which were past due 90
days or more and still accruing interest were $38 million, or .08 percent of
commercial loans, on December 31, 1996 compared to $24 million, or .05 percent,
at the end of 1995. Nonperforming commercial loans were $342 million and $271
million on December 31, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
TABLE EIGHTEEN. SELECTED INDUSTRY CREDIT EXPOSURES
===========================================================================================================================
DECEMBER 31, 1996
(DOLLARS IN MILLIONS)
LOANS, LEASES AND FACTORED ACCOUNTS
RECEIVABLE, NET OF UNEARNED INCOME
________________________________________________ OTHER
UNFUNDED CREDIT
OUTSTANDING NONPERFORMING COMMITMENTS EXPOSURES (1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Communications ................................................... $4,653 $18 $5,669 $449
Health care ...................................................... 3,852 9 3,543 858
Leisure and sports ............................................... 3,133 29 2,104 243
Textiles and apparel ............................................. 2,750 39 1,578 362
Oil and gas ...................................................... 2,734 30 3,852 730
Automotive, excluding trucking ................................... 2,618 9 2,153 92
Retail ........................................................... 2,528 46 3,531 562
Food, including agribusiness ..................................... 2,487 14 2,441 304
Machinery and equipment, excluding defense ....................... 2,412 3 2,665 244
Forest products and paper ........................................ 1,670 16 2,113 303
Services ......................................................... 1,605 14 1,679 293
Computers and electronics ........................................ 1,594 15 2,831 112
Utilities ........................................................ 1,383 1 4,247 222
Finance companies ................................................ 1,042 1 4,570 156
Banks ............................................................ 880 1 1,663 2,646
Brokers and dealers .............................................. 246 - 1,220 1,198
</TABLE>
(1) OTHER CREDIT EXPOSURES INCLUDE LOANS HELD FOR SALE, LETTERS OF CREDIT,
BANKERS' ACCEPTANCES AND DERIVATIVES EXPOSURES IN A GAIN POSITION.
Management's Discussion and Analysis 39
<PAGE>
CONSUMER - On December 31, 1996 and 1995, consumer loan outstandings totaled
$55.3 billion and $52.8 billion, respectively, representing 45 percent of net
loans, leases and factored accounts receivable. Net charge-offs in the consumer
portfolio were $466 million in 1996 compared to $360 million in 1995, reflecting
the impact of loan growth and the continuation of a return to more normal levels
of credit losses. TABLE SEVEN details the components of the Corporation's
consumer loan portfolio. In addition to the credit card and other consumer loans
reported in the financial statements, the Corporation manages credit card and
consumer receivables which have been sold.
Total average credit card receivables managed by the CARD SERVICES group
(excluding private label credit cards) were $8.1 billion in 1996 compared to
$6.1 billion in 1995. Average securitized credit card loans totaled $2.2 billion
during 1996 and included a $900 million securitization completed during the
second quarter. During 1995, average securitized credit card loans were $1.3
billion. Net charge-off ratios for the managed credit card portfolio were 4.54
percent for 1996 and 3.95 percent for 1995.
Total average managed other consumer loans, including direct and indirect
consumer loans and home equity lines, were $24.6 billion in 1996 including the
impact of the July 31, 1996 securitization of $2.1 billion of indirect auto
loans compared to total average managed other consumer loans of $22.6 billion in
1995. The consumer managed portfolio, which includes both on balance sheet
receivables and indirect auto loan and consumer finance securitizations,
experienced net charge-offs as a percentage of average managed consumer loans of
1.07 percent in 1996 and .87 percent in 1995.
Total consumer loans which were past due 90 days or more and still accruing
interest were $180 million, or .33 percent of total consumer loans, on December
31, 1996 compared to $126 million, or .24 percent, at the end of 1995. Total
consumer nonperforming loans were $350 million and $217 million on December 31,
1996 and 1995, respectively, primarily due to an increase in nonperforming
residential mortgage loans obtained through acquisitions.
FOREIGN - Foreign outstandings include loans and 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 $8.1
billion on December 31, 1996 compared to $3.8 billion on December 31, 1995.
MARKET RISK MANAGEMENT
In the normal course of conducting business activities, the Corporation is
exposed to market risk which includes both price and liquidity risk. Price risk
arises from fluctuations in interest rates, foreign exchange rates and commodity
and equity prices that may result in changes in the values of financial
instruments. Liquidity risk arises from the possibility that the Corporation may
not be able to satisfy current and future financial commitments or that the
Corporation may not be able to liquidate financial instruments at market prices.
Risk management procedures and policies have been established and are utilized
to manage the Corporation's exposure to market risk. The strategy of the
Corporation with respect to market risk is to maximize net income while
maintaining an acceptable level of risk to changes in market rates. While
achievement of this goal requires a balance between profitability, liquidity and
market price risk, there are opportunities to enhance revenues through
controlled risks.
Market risk is managed by the Corporation's Finance Committee which
formulates policy based on desirable levels of market risk. In setting desirable
levels of market risk, the Finance Committee considers the impact on both
earnings and capital of the current outlook in market rates, potential changes
in the outlook in market rates, world and regional economies, liquidity,
business strategies and other factors.
The Corporation's asset and liability management process is utilized to
manage interest rate risk through the structuring of balance sheet and
off-balance sheet portfolios. To effectively measure and manage interest rate
risk, the Corporation uses computer simulations which determine the impact on
net interest income of numerous interest rate scenarios, balance sheet trends
and strategies. These simulations incorporate assumptions about balance sheet
dynamics, such as loan and deposit growth and pricing, changes in funding mix
and asset and liability repricing and maturity characteristics. Simulations are
run under various interest
40 NationsBank Corporation Annual Report 1996
<PAGE>
rate scenarios to determine the impacts on net 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 securities portfolio and interest rate swaps,
and management of the mix, yields or rates and maturities of assets and of the
wholesale and retail funding sources of the Corporation.
TABLE NINETEEN represents the Corporation's interest rate gap position on
December 31, 1996. Based on contractual maturities or repricing dates (or
anticipated dates where no contractual maturity or repricing date exists or
where prepayments are a factor), interest-sensitive assets and liabilities are
placed in maturity categories. The Corporation's near-term cumulative interest
rate gap position is a reflection of the customer-deposit gathering franchise
which provides the Corporation with a relatively stable core deposit base. These
funds have been deployed in longer-term interest earning assets, primarily 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.
<TABLE>
<CAPTION>
TABLE NINETEEN. INTEREST RATE GAP ANALYSIS
===================================================================================================================================
DECEMBER 31, 1996
(DOLLARS IN MILLIONS) OVER 12
MONTHS AND
INTEREST-SENSITIVE NONINTEREST-
________________________________________________
30-DAY 3-MONTH 6-MONTH 12-MONTH TOTAL SENSITIVE TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
Earning assets
<S> <C> <C> <C> <C> <C> <C> <C>
Loans and leases, net of unearned income ..... $49,346 $12,268 $4,636 $8,716 $74,966 $46,617 $121,583
Securities held for investment ............... 53 197 308 394 952 1,158 2,110
Securities available for sale ................ 135 275 432 1,143 1,985 10,292 12,277
Loans held for sale .......................... 1,215 - - - 1,215 - 1,215
Time deposits placed and other
short-term investments ..................... 1,402 355 31 55 1,843 - 1,843
Trading account securities ................... 15,391 - - - 15,391 - 15,391
Federal funds sold and securities
purchased under agreements to resell ....... 6,959 - - - 6,959 - 6,959
-------------------------------------------------------------------------------
Total .................................... 74,501 13,095 5,407 10,308 103,311 58,067 161,378
_____________________________________________________________________________
Interest-bearing liabilities
Savings ...................................... 8,498 - - - 8,498 - 8,498
NOW and money market deposit accounts ........ 31,128 - - - 31,128 - 31,128
Consumer CDs and IRAs ........................ 4,352 4,993 6,143 6,583 22,071 8,701 30,772
Negotiated CDs, public funds and
other time deposits ........................ 785 473 385 338 1,981 328 2,309
Foreign time deposits ........................ 7,103 507 347 96 8,053 - 8,053
Borrowed funds ............................... 21,619 1,957 414 11 24,001 - 24,001
Short sales .................................. 7,904 - - - 7,904 - 7,904
Trust preferred securities ................... - - - - - 965 965
Long-term debt ............................... 4,873 7,398 200 208 12,679 10,306 22,985
-------------------------------------------------------------------------------
Total .................................... 86,262 15,328 7,489 7,236 116,315 20,300 136,615
Noninterest-bearing, net ........................ - - - - - 24,763 24,763
-------------------------------------------------------------------------------
Total .................................... 86,262 15,328 7,489 7,236 116,315 45,063 $161,378
-------------------------------------------------------------------------------
Interest rate gap ............................... (11,761) (2,233) (2,082) 3,072 (13,004) 13,004
Effect of asset and liability management
interest rate swaps, futures and
other off-balance sheet items ................ (11,673) (14,188) (790) (103) (26,754) 26,754
------------------------------------------------------------------
Adjusted interest rate gap ...................... $(23,434) $(16,421) $(2,872) $2,969 $(39,758) $39,758
==================================================================
Cumulative adjusted interest rate gap ........... $(23,434) $(39,855) $(42,727) $(39,758)
============================================
</TABLE>
Management's Discussion and Analysis 41
<PAGE>
Additionally, the gap analysis does not
consider the many factors accompanying interest rate movements.
On December 31, 1996, the interest
rate risk position of the Corporation was relatively neutral as the impact of a
gradual parallel 100 basis-point rise or fall in interest rates over the next
12 months was estimated to be less than one percent of net income when compared
to stable rates.
The Corporation manages its exposure to market risk resulting from trading
activities through a risk management function which is independent of the
business units. Each major trading site in Charlotte, Chicago, New York, London,
Singapore and Tokyo is monitored by these risk management units. Risk limits
have been approved by the Corporation's Finance Committee, and daily earnings at
risk limits are generally allocated to the business units. In addition to limits
placed on these individual business units, limits are also imposed on the risks
individual traders can take and on the amount of risk that can be concentrated
in a particular product or market. Risk positions are monitored by business
unit, risk management personnel and senior management on a daily basis. Business
unit and risk management personnel are responsible for continual monitoring of
the changing aggregate position of the portfolios under their responsibility,
including projection of the profit or loss levels that could result from both
normal and extreme market moves. If any market risk limits are exceeded, the
risk management units are responsible for taking actions as necessary to bring
portfolios within approved trading limits.
To estimate potential losses that could result from adverse market movements,
the Corporation uses a daily earnings at risk methodology. Earnings at risk
represents a one-day measurement of pretax earnings at risk from movements in
market prices using the assumption that positions cannot be rehedged during the
period of any prescribed price and volatility change. A 99-percent confidence
level is utilized, which indicates that actual trading profits and losses may
deviate from expected levels and exceed estimates approximately one day out of
every 100 days of trading activity.
Earnings at risk estimates are measured on a daily basis at the individual
trading unit level, by type of trading activity and for all trading activities
in the aggregate. Daily reports of estimates compared to respective limits are
reviewed by senior management, and trading strategies are adjusted accordingly.
In addition to these 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.
Earnings at risk is measured on both a gross and uncorrelated basis. The
gross measure assumes that adverse market movements occur simultaneously across
all segments of the trading portfolio, an unlikely assumption. On December 31,
1996, the gross estimates for aggregate interest rate, foreign exchange and
equity and commodity trading activities were $59 million, $3 million and $2
million, respectively. Alternately, using a statistical measure which is more
likely to capture the effects of market movements, the uncorrelated estimate on
December 31, 1996 for aggregate trading activities was $25 million.
Average daily trading-related revenues in 1996 approximated $1 million.
During 1996, the Corporation's trading-related activities resulted in positive
daily revenues for approximately 74 percent of total trading days. In 1996, the
standard deviation of trading-related revenues was $3 million. Using this data,
one can conclude that the aggregate trading activities should not result in
exposure of more than $7 million for any one day, assuming 99-percent
confidence. When comparing daily earnings at risk to trading-related revenues,
daily earnings at risk will average considerably more due to the assumption of
no evasive actions as well as the assumption that adverse market movements occur
simultaneously across all segments of the trading portfolio.
CAPITAL RESOURCES AND
CAPITAL MANAGEMENT
Shareholders' equity on December 31, 1996 was $13.7 billion compared to
$12.8 billion on December 31, 1995. Net earnings retention of $1.7 billion
coupled with the acquisition of Bank South Corporation, which resulted in the
issuance of 52.6 million shares of common stock and an increase of $685 million
in shareholders'
<PAGE>
42 NationsBank Corporation Annual Report 1996
equity, were the primary reasons for the increase. The increase was partially
offset by the repurchase of 34.2 million shares of common stock for
approximately $1.5 billion and net depreciation of $240 million in the market
value of securities available for sale and marketable equity securities due to
sales and maturities of securities during 1996.
The Corporation's and significant subsidiaries' regulatory capital ratios,
along with a description of the components of risk-based capital, capital
adequacy requirements and prompt corrective action provisions, are included in
Note Nine to the consolidated financial statements.
FOURTH QUARTER REVIEW
During the fourth quarter of 1996, the Corporation recorded net income of
$632 million compared to $510 million in the fourth quarter of 1995.TABLE TWENTY
presents selected quarterly operating results for each quarter of 1996 and 1995.
TABLE TWENTY-ONE presents an analysis of the Corporation's
taxable-equivalent net interest income for each of the last five quarters.
Taxable-equivalent net interest income was $1.6 billion in the fourth quarter of
1996 compared to $1.4 billion in the comparable 1995 period. The net interest
yield was 3.75 percent in the fourth quarter of 1996 compared to 3.38 percent in
the fourth quarter of 1995. The increase in the net interest yield reflected the
sale of low-yielding securities and the reinvestment of cash from the sale of
low-yielding securities into higher-spread products.
The provision for credit losses was $150 million in the fourth quarter of
1996 compared to $142 million in the same quarter of 1995. Net charge-offs for
the fourth quarter of 1996 were $151 million compared to $156 million in the
fourth quarter of 1995. The increase in the provision for credit losses resulted
from growth in commercial and consumer lending as well as the continuation of a
return to more normalized levels of credit losses following periods of unusually
low credit losses.
Noninterest income was $958 million and $846 million in the fourth quarters
of 1996 and 1995, respectively. The 13-percent increase was driven primarily by
higher deposit account service charges, investment banking income and trading
account profits and fees.
Noninterest expense increased 9 percent in the fourth quarter of 1996
compared to the fourth quarter of 1995, primarily due to acquisitions.
Income tax expense was $326 million in the fourth quarter of 1996, reflecting
an effective tax rate of 34.0 percent of pretax income. This compared to income
tax expense of $278 million, or an effective tax rate of 35.3 percent, in the
fourth quarter of 1995.
1995 COMPARED TO 1994
The following discussion and analysis provides a comparison of the
Corporation's results of operations for the years ended December 31, 1995 and
1994. This discussion should be read in conjunction with the consolidated
financial statements and related notes on pages 49 through 71.
OVERVIEW
The Corporation's net income of $1.95 billion in 1995 reflected an increase
of 15 percent over 1994. Earnings per common share for 1995 increased 16 percent
to $3.56 from $3.06 for 1994. Return on average common shareholders' equity rose
to 17.01 percent from 16.10 percent in 1994. Revenue growth outpaced expense
growth in 1995, bringing the efficiency ratio to 59.8 percent, an improvement of
approximately 280 basis points over 1994.
BUSINESS UNIT OPERATIONS
The GENERAL BANK'S 1995 earnings of $1.2 billion increased 26 percent over
1994. Return on equity increased to 19 percent in 1995 from 17 percent in 1994.
Revenue growth and expense control led to a 365 basis-point improvement in the
efficiency ratio in 1995 to 63.8 percent.
GLOBAL FINANCE produced a return on equity of 16 percent in 1995, consistent
with the return in 1994. Earnings were $609 million compared to $631 million in
1994. Increased investment in personnel resulted in a 27 basis-point rise in the
efficiency ratio to 54.2 percent in 1995.
FINANCIAL SERVICES' earnings increased 25 percent to $129 million in 1995.
Return on equity increased to 14 percent in 1995 from 13 percent in the prior
year. The efficiency ratio improved 352 basis points in 1995 to 42.1 percent.
<PAGE>
Management's Discussion and Analysis 43
NET INTEREST INCOME
Taxable-equivalent net interest income increased $255 million to $5.6 billion
in 1995, driven by growth in average earning assets, principally loans and
leases, which increased $14.5 billion to $109.5 billion. The increase in net
interest income resulting primarily from loan growth was partially offset by the
use of higher cost market-based funds and term debt. As the growth in earning
assets outpaced customer deposit growth, the Corporation shifted to alternative
funding sources such as term debt.
The net interest yield of 3.33 percent in 1995 reflected the funding of
earning asset growth principally with market-based funds
<TABLE>
<CAPTION>
TABLE TWENTY. SELECTED QUARTERLY OPERATING RESULTS
===========================================================================================================================
(DOLLARS IN MILLIONS EXCEPT PER-SHARE INFORMATION)
1996 QUARTERS 1995 QUARTERS
___________________________________________________________________________________
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Income from earning assets ................ $3,358 $3,423 $3,442 $3,573 $3,361 $3,398 $3,391 $3,070
Interest expense .......................... 1,768 1,828 1,855 2,016 1,948 2,007 2,055 1,763
Net interest income (taxable-equivalent) .. 1,612 1,616 1,611 1,584 1,438 1,420 1,367 1,335
Net interest income ....................... 1,590 1,595 1,587 1,557 1,413 1,391 1,336 1,307
Provision for credit losses ............... 150 145 155 155 142 100 70 70
Gains (losses) on sales of securities ..... 33 26 (6) 14 21 3 4 1
Noninterest income ........................ 958 886 917 885 846 776 730 726
Other real estate owned expense ........... 7 6 7 - 8 7 1 2
Merger-related charge ..................... - - - 118 - - - -
Other noninterest expense ................. 1,466 1,400 1,405 1,394 1,342 1,245 1,288 1,288
Income before income taxes ................ 958 956 931 789 788 818 711 674
Income tax expense ........................ 326 331 326 276 278 288 244 231
Net income ................................ 632 625 605 513 510 530 467 443
Net income (excluding merger-related
charge) ................................ 632 625 605 590 510 530 467 443
Earnings per common share ................. 1.09 1.06 1.00 .85 .94 .98 .86 .80
Earnings per common share (excluding
merger-related charge) ................. 1.09 1.06 1.00 .98 .94 .98 .86 .80
Dividends per common share ................ .33 .29 .29 .29 .29 .25 .25 .25
Yield on average earning assets ........... 7.86% 7.87% 7.80% 7.80% 7.95% 8.08% 7.98% 7.93%
Rate on average interest-
bearing liabilities .................... 4.77 4.84 4.83 4.97 5.22 5.38 5.39 5.13
Net interest spread ....................... 3.09 3.03 2.97 2.83 2.73 2.70 2.59 2.80
Net interest yield ........................ 3.75 3.69 3.62 3.43 3.38 3.35 3.19 3.41
Average total assets ......................$194,321 $197,923 $202,796 $208,617 $191,693 $190,501 $194,302 $177,515
Average total deposits .................... 105,765 107,715 109,988 106,906 98,602 98,671 100,569 99,285
Average total shareholders' equity ........ 13,224 13,133 13,552 13,144 11,903 11,487 11,213 11,192
Return on average assets .................. 1.29% 1.26% 1.20% .99% 1.06% 1.10% .96% 1.01%
Return on average assets (excluding
merger-related charge) ................. 1.29 1.26 1.20 1.14 1.06 1.10 .96 1.01
Return on average common
shareholders' equity (1) ............... 19.06 19.00 18.00 15.71 16.98 18.29 16.69 16.03
Return on average common shareholders'
equity (excluding merger-related
charge) (1) ............................ 19.06 19.00 18.00 18.07 16.98 18.29 16.69 16.03
Market price per share of common stock
High for the period .................... $52 5/8 $47 1/16 $42 5/16 $40 11/16 $37 3/8 $34 7/16 $28 7/8 $25 7/8
Low for the period ..................... 43 1/8 38 3/16 37 3/8 32 3/16 32 26 7/8 24 13/16 22 5/16
Closing price .......................... 48 7/8 43 7/16 41 5/16 40 1/16 34 13/16 33 5/8 26 13/16 25 3/8
Tier 1 capital ratio ...................... 7.76% 7.05% 7.58% 7.35% 7.24% 7.16% 7.03% 7.25%
Total capital ratio ....................... 12.66 12.05 11.93 11.71 11.58 11.23 10.90 11.06
(1)AVERAGE COMMON SHAREHOLDERS' EQUITY DOES NOT INCLUDE THE EFFECT OF MARKET
VALUE ADJUSTMENTS TO SECURITIES AVAILABLE FOR SALE AND MARKETABLE EQUITY
SECURITIES.
</TABLE>
44 NationsBank Corporation Annual Report 1996
<PAGE>
and term debt and the addition of $6.5 billion in low-spread trading-related
assets when compared to 1994.
PROVISION FOR CREDIT LOSSES
The provision for credit losses was $382 million in 1995 compared to $310
million in the prior year, reflecting increased loans, the continuing shift in
the mix of the loan portfolio towards consumer lending and the maturing credit
cycle. The level of provision expense in 1995 was consistent with credit quality
indicators. Net charge-offs in 1995 increased by $105 million compared to 1994
due to higher levels of credit card and other consumer loan charge-offs coupled
with a lower level of recoveries in 1995.
The allowance for credit losses was $2.2 billion, or 1.85 percent of net
loans, leases and factored accounts receivable, on December 31, 1995 compared to
$2.2 billion, or 2.11 percent, at the end of 1994. The allowance for credit
losses was 306 percent of nonperforming loans on December 31, 1995 compared to
273 percent on December 31, 1994.
NONINTEREST INCOME
Noninterest income increased 19 percent to $3.1 billion in 1995, reflecting
the diverse fee-generating activities of the Corporation. Capital markets
revenues, deposit and other service fees and acquisition-related mortgage
servicing fees were factors in the year-over-year increase.
NONINTEREST EXPENSE
Noninterest expense increased 4 percent to $5.2 billion. Excluding the impact
of acquisitions, noninterest expense increased 3 percent reflecting additional
investment in personnel in selected areas, expanded marketing efforts to support
revenue growth and increased expenditures related to technology initiatives,
partially offset by reduced deposit insurance expense.
INCOME TAXES
The Corporation's income tax expense for 1995 was $1.0 billion, for an
effective tax rate of 34.8 percent of pretax income. Income tax expense for 1994
was $865 million, reflecting an effective tax rate of 33.9 percent.
Management's Discussion And Analysis 45
<PAGE>
<TABLE>
<CAPTION>
TABLE TWENTY-ONE. QUARTERLY TAXABLE-EQUIVALENT DATA
- ----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
FOURTH QUARTER 1996 THIRD QUARTER 1996
-----------------------------------------------------------
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)....................................... 49,987 $1,044 8.30% $ 48,920 $1,011 8.23%
Real estate commercial............................... 5,388 122 9.00 5,921 138 9.25
Real estate construction............................. 3,084 67 8.74 3,195 74 9.15
------------------------------------------------------------
Total commercial................................... 58,459 1,233 8.39 58,036 1,223 8.38
------------------------------------------------------------
Residential mortgage................................. 28,174 548 7.77 27,990 545 7.77
Credit card.......................................... 6,363 185 11.58 5,903 169 11.38
Other consumer....................................... 20,581 503 9.69 22,026 544 9.84
------------------------------------------------------------
Total consumer..................................... 55,118 1,236 8.93 55,919 1,258 8.97
------------------------------------------------------------
Foreign.............................................. 2,701 47 6.89 2,813 46 6.59
Lease financing...................................... 4,614 87 7.66 4,429 85 7.60
------------------------------------------------------------
Total loans and leases, net........................ 120,892 2,603 8.57 121,197 2,612 8.58
------------------------------------------------------------
Securities
Held for investment.................................. 2,585 36 5.55 3,173 46 5.73
Available for sale (3)............................... 11,540 205 7.10 16,388 273 6.66
------------------------------------------------------------
Total securities................................... 14,125 241 6.82 19,561 319 6.51
------------------------------------------------------------
Loans held for sale.................................... 802 15 7.31 1,025 20 7.87
Federal funds sold..................................... 273 4 5.79 361 6 6.39
Securities purchased under agreements to resell........ 12,018 158 5.21 11,828 153 5.14
Time deposits placed and other
short-term investments............................... 1,991 25 4.86 1,430 20 5.74
Trading account securities (4)......................... 21,148 334 6.32 18,897 314 6.60
------------------------------------------------------------
Total earning assets (5)............................. 171,249 3,380 7.86 174,299 3,444 7.87
Cash and cash equivalents................................ 7,720 7,597
Factored accounts receivable............................. 1,256 1,150
Other assets, less allowance for credit losses........... 14,096 14,877
------------------------------------------------------------
Total assets......................................... $194,321 $197,923
============================================================
Interest-bearing liabilities
Savings................................................ $ 8,607 46 2.12 $ 8,798 48 2.15
NOW and money market deposit accounts.................. 30,634 191 2.47 30,485 189 2.49
Consumer CDs and IRAs (6).............................. 30,870 405 5.22 30,092 394 5.21
Negotiated CDs, public funds and other time
deposits............................................. 2,544 35 5.53 3,314 46 5.50
Foreign time deposits.................................. 9,139 117 5.10 10,836 145 5.31
Federal funds purchased................................ 3,915 51 5.21 3,631 49 5.39
Securities sold under agreements to repurchase (6)..... 25,192 330 5.22 26,309 355 5.36
Commercial paper....................................... 2,850 40 5.59 3,129 44 5.59
Other short-term borrowings (6)........................ 1,971 34 6.99 2,999 51 6.76
Trading account liabilities (4)........................ 9,314 152 6.48 9,848 163 6.57
Long-term debt (7)..................................... 22,702 367 6.53 21,067 344 6.53
------------------------------------------------------------
Total interest-bearing liabilities................... 147,738 1,768 4.77 150,508 1,828 4.84
------------------------------------------------------------
Noninterest-bearing sources
Noninterest-bearing deposits........................... 23,971 24,190
Other liabilities...................................... 9,388 10,092
Shareholders' equity................................... 13,224 13,133
------------------------------------------------------------
Total liabilities and shareholders' equity........... $194,321 $197,923
=============================================================
Net interest spread...................................... 3.09 3.03
Impact of noninterest-bearing sources.................... .66 .66
------------------------------------------------------------
Net interest income/yield on earning assets.............. $1,612 3.75% $1,616 3.69%
=============================================================
</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 SWAPS CONVERTING VARIABLE-RATE COMMERCIAL LOANS TO FIXED RATE.
INTEREST RATE SWAPS INCREASED (DECREASED) INTEREST INCOME $31, $11, $3 AND
($19) IN THE FOURTH, THIRD, SECOND AND FIRST QUARTERS OF 1996,
RESPECTIVELY, AND ($34) IN THE FOURTH QUARTER OF 1995.
(3) THE AVERAGE BALANCE SHEET AMOUNTS AND YIELDS ON SECURITIES AVAILABLE FOR
SALE ARE BASED ON THE AVERAGE OF HISTORICAL AMORTIZED COST BALANCES.
(4) THE FAIR VALUES OF DERIVATIVES-DEALER POSITIONS ARE REPORTED IN OTHER
ASSETS AND LIABILITIES, RESPECTIVELY.
(5) INTEREST INCOME INCLUDES TAXABLE-EQUIVALENT ADJUSTMENTS OF $22, $21, $24
AND $27 IN THE FOURTH, THIRD, SECOND AND FIRST QUARTERS OF 1996,
RESPECTIVELY, AND $25 IN THE FOURTH QUARTER OF 1995.
(6) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, OTHER SHORT-TERM BORROWINGS
AND CONSUMER CDS INTEREST EXPENSE INCLUDES NET INTEREST RATE SWAP EXPENSE
RELATED TO SWAPS FIXING THE COST OF CERTAIN OF THESE LIABILITIES. INTEREST
RATE SWAPS INCREASED INTEREST EXPENSE $3, $16, $26 AND $21 IN THE FOURTH,
THIRD, SECOND AND FIRST QUARTERS OF 1996, RESPECTIVELY, AND $12 IN THE
FOURTH QUARTER OF 1995.
(7) LONG-TERM DEBT INTEREST EXPENSE INCLUDES NET INTEREST RATE SWAP EXPENSE
RELATED TO SWAPS PRIMARILY CONVERTING THE COST OF CERTAIN FIXED-RATE DEBT
TO VARIABLE RATE. INTEREST RATE SWAPS DECREASED INTEREST EXPENSE $4, $3, $2
AND $3 IN THE FOURTH, THIRD, SECOND AND FIRST QUARTERS OF 1996,
RESPECTIVELY.
46 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
SECOND QUARTER 1996 FIRST QUARTER 1996 FOURTH QUARTER 1995
- ------------------------------------------------------------------------------------------
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>
$ 49,983 $1,000 8.04% $ 49,319 $ 987 8.05% $ 47,077 $ 971 8.18%
6,288 141 9.07 6,774 149 8.82 6,649 157 9.39
3,229 71 8.83 3,154 69 8.85 3,016 72 9.44
- ------------------------------------------------------------------------------------------
59,500 1,212 8.19 59,247 1,205 8.18 56,742 1,200 8.39
- ------------------------------------------------------------------------------------------
27,728 542 7.82 27,352 534 7.83 23,573 459 7.78
6,057 173 11.45 6,590 206 12.59 5,709 182 12.69
23,441 578 9.93 23,850 593 9.99 22,852 581 10.09
- ------------------------------------------------------------------------------------------
57,226 1,293 9.07 57,792 1,333 9.26 52,134 1,222 9.33
- ------------------------------------------------------------------------------------------
2,746 45 6.56 2,392 45 7.54 2,100 40 7.65
4,254 80 7.59 3,851 72 7.46 3,628 68 7.48
- ------------------------------------------------------------------------------------------
123,726 2,630 8.54 123,282 2,655 8.65 114,604 2,530 8.77
- ------------------------------------------------------------------------------------------
3,731 51 5.45 4,292 60 5.62 12,945 186 5.72
18,328 303 6.64 22,997 365 6.37 10,689 174 6.45
- ------------------------------------------------------------------------------------------
22,059 354 6.44 27,289 425 6.25 23,634 360 6.05
- ------------------------------------------------------------------------------------------
1,156 19 6.49 1,331 25 7.55 644 12 7.34
397 5 5.75 525 8 5.89 534 8 6.02
12,075 149 4.99 13,870 183 5.29 12,088 163 5.36
1,263 17 5.28 1,056 18 6.90 1,634 28 6.77
17,912 292 6.53 18,213 286 6.33 16,196 285 6.99
- ------------------------------------------------------------------------------------------
178,588 3,466 7.80 185,566 3,600 7.80 169,334 3,386 7.95
7,928 7,998 7,500
1,124 1,010 1,221
15,156 14,043 13,638
- ------------------------------------------------------------------------------------------
$202,796 $208,617 $191,693
===========================================================================================
$ 9,336 52 2.27 $ 9,361 55 2.35 $ 8,287 49 2.34
30,155 191 2.52 29,692 192 2.61 27,233 185 2.71
29,698 389 5.28 29,469 397 5.42 24,682 339 5.44
3,331 46 5.53 3,273 44 5.42 2,946 42 5.74
12,867 170 5.34 11,902 170 5.73 13,546 211 6.18
4,433 59 5.37 6,817 92 5.41 5,599 81 5.78
28,924 391 5.44 33,705 455 5.43 30,136 440 5.79
3,064 42 5.49 2,821 39 5.62 2,871 43 5.89
3,968 58 5.80 4,455 65 5.89 4,550 78 6.72
8,912 147 6.63 12,485 191 6.16 11,125 185 6.60
19,730 310 6.30 18,885 316 6.68 17,276 295 6.83
- ------------------------------------------------------------------------------------------
154,418 1,855 4.83 162,865 2,016 4.97 148,251 1,948 5.22
- ------------------------------------------------------------------------------------------
24,601 23,209 21,908
10,225 9,399 9,631
13,552 13,144 11,903
- ------------------------------------------------------------------------------------------
$202,796 $208,617 $191,693
===========================================================================================
2.97 2.83 2.73
.65 .60 .65
- ------------------------------------------------------------------------------------------
$1,611 3.62% $1,584 3.43% $1,438 3.38%
===========================================================================================
</TABLE>
Management's Discussion And Analysis 47
<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. Management recognizes that even a highly
effective internal control system has inherent risks, including the possibility
of human error and the circumvention or overriding of controls, and that the
effectiveness of an internal control system can change with circumstances.
However, management believes that the internal control system provides
reasonable assurance that errors or irregularities that could be material to the
financial statements are prevented or would be detected on a timely basis and
corrected through the normal course of business. As of December 31, 1996,
management believes that the internal controls are in place and operating
effectively.
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 independent accountants were engaged to perform an independent audit of
the consolidated financial statements. In determining the nature and extent of
their auditing procedures, they have evaluated the Corporation's accounting
policies and procedures and the effectiveness of the related internal control
system. An independent audit provides an objective review of management's
responsibility to report operating results and financial condition. Their report
appears below.
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.
(Signature of Hugh L. McColl, Jr.) (Signature of James H. Hance Jr.)
Hugh L. McColl Jr. James H. Hance Jr.
Chief Executive Officer Vice Chairman and
Chief Financial Officer
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, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, 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.
(Signature of Price Waterhouse LLP)
Charlotte, North Carolina
January 10, 1997
48 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
NationsBank Corporation And Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER-SHARE INFORMATION)
YEAR ENDED DECEMBER 31
-----------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME FROM EARNING ASSETS
Interest and fees on loans................................ $10,138 $ 9,331 $ 7,577
Lease financing income.................................... 302 221 150
Interest and dividends on securities
Held for investment..................................... 186 851 755
Available for sale...................................... 1,120 617 623
Interest and fees on loans held for sale.................. 79 24 23
Interest on time deposits placed and
other short-term investments............................ 80 142 90
Federal funds sold........................................ 23 47 45
Securities purchased under agreements to resell........... 643 890 502
Trading account securities................................ 1,225 1,097 764
-------------------------------
Total income from earning assets...................... 13,796 13,220 10,529
-------------------------------
INTEREST EXPENSE
Deposits.................................................. 3,322 3,281 2,415
Borrowed funds............................................ 2,155 2,710 1,618
Trading account liabilities............................... 653 896 735
Long-term debt............................................ 1,337 886 550
-------------------------------
Total interest expense................................ 7,467 7,773 5,318
-------------------------------
NET INTEREST INCOME......................................... 6,329 5,447 5,211
PROVISION FOR CREDIT LOSSES................................. 605 382 310
-------------------------------
NET CREDIT INCOME........................................... 5,724 5,065 4,901
GAINS (LOSSES) ON SALES OF SECURITIES....................... 67 29 (13)
NONINTEREST INCOME.......................................... 3,646 3,078 2,597
OTHER REAL ESTATE OWNED EXPENSE (INCOME).................... 20 18 (12)
MERGER-RELATED CHARGE....................................... 118 - -
OTHER NONINTEREST EXPENSE................................... 5,665 5,163 4,942
-------------------------------
INCOME BEFORE INCOME TAXES.................................. 3,634 2,991 2,555
INCOME TAX EXPENSE.......................................... 1,259 1,041 865
-------------------------------
NET INCOME.................................................. $ 2,375 $ 1,950 $ 1,690
===============================
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS................. $ 2,360 $ 1,942 $ 1,680
===============================
PER-SHARE INFORMATION (RESTATED FOR 2-FOR-1 STOCK SPLIT ON
FEBRUARY 27, 1997)
Earnings per common share................................. $ 4.00 $ 3.56 $ 3.06
===============================
Fully diluted earnings per common share................... $ 3.92 $ 3.52 $ 3.03
===============================
Dividends per common share................................ $ 1.20 $ 1.04 $ .94
===============================
AVERAGE COMMON SHARES ISSUED (in thousands)................. 590,216 544,959 549,312
===============================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Consolidated Financial Statements 49
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
NationsBank Corporation And Subsidiaries
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
DECEMBER 31
----------------------
1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................. $ 8,933 $ 8,448
Time deposits placed and other short-term
investments............................................. 1,843 1,296
Securities
Held for investment, at cost (market value -
$2,110 and $4,432).................................... 2,110 4,432
Available for sale...................................... 12,277 19,415
----------------------
Total securities...................................... 14,387 23,847
----------------------
Loans held for sale....................................... 1,215 1,663
Federal funds sold........................................ 77 111
Securities purchased under agreements to resell........... 6,882 6,119
Trading account assets.................................... 18,689 18,867
Loans and leases, net of unearned income.................. 121,583 116,042
Factored accounts receivable.............................. 1,047 991
Allowance for credit losses............................... (2,315) (2,163)
----------------------
Loans, leases and factored accounts receivable,
net of unearned income
and allowance for credit losses....................... 120,315 114,870
----------------------
Premises, equipment and lease rights, net................. 2,712 2,508
Customers' acceptance liability........................... 858 918
Interest receivable....................................... 1,159 1,597
Mortgage servicing rights................................. 946 707
Goodwill.................................................. 1,640 1,139
Core deposit and other intangibles........................ 390 375
Other assets.............................................. 5,748 4,833
----------------------
$185,794 $187,298
=======================
LIABILITIES
Deposits
Noninterest-bearing..................................... $ 25,738 $ 23,414
Savings................................................. 8,498 8,257
NOW and money market deposit accounts................... 31,128 28,160
Time.................................................... 33,081 27,971
Foreign time............................................ 8,053 12,889
----------------------
Total deposits........................................ 106,498 100,691
----------------------
Federal funds purchased................................... 3,536 5,940
Securities sold under agreements to repurchase............ 15,842 23,034
Trading account liabilities............................... 11,752 15,177
Commercial paper.......................................... 2,787 2,773
Other short-term borrowings............................... 1,836 4,143
Liability to factoring clients............................ 597 580
Acceptances outstanding................................... 858 918
Accrued expenses and other liabilities.................... 4,429 3,466
Trust preferred securities................................ 965 -
Long-term debt............................................ 22,985 17,775
----------------------
Total liabilities..................................... 172,085 174,497
----------------------
Contingent liabilities and other financial
commitments (Notes Eight and Ten)
SHAREHOLDERS' EQUITY
Preferred stock: authorized - 45,000,000 shares;
issued - 5,220,459 and 2,473,081 shares................. 171 105
Common stock: authorized - 1,250,000,000 shares;
issued - 573,492,308 and 548,537,546 shares (Note One).. 3,855 4,655
Retained earnings......................................... 9,673 7,826
Other, including loan to ESOP trust...................... 10 215
----------------------
Total shareholders' equity............................ 13,709 12,801
----------------------
$185,794 $187,298
======================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
50 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
NationsBank Corporation And Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
YEAR ENDED DECEMBER 31
-----------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income................................................ $ 2,375 $ 1,950 $ 1,690
Reconciliation of net income to net cash provided by
(used in) operating activities
Provision for credit losses............................. 605 382 310
(Gains) losses on sales of securities................... (67) (29) 13
Depreciation and premises improvements
amortization.......................................... 314 280 265
Amortization of intangibles............................. 128 119 141
Deferred income tax expense............................. 304 159 372
Net change in trading instruments....................... (3,280) (5,175) 3,796
Net decrease (increase) in interest receivable.......... 518 (182) (282)
Net (decrease) increase in interest payable............. (545) 208 299
Net decrease (increase) in loans held for sale.......... 449 (1,345) 1,379
Net increase (decrease) in liability to factoring
clients............................................... 17 (6) 52
Other operating activities.............................. 986 (1,294) 1,083
-----------------------------------
Net cash provided by (used in) operating
activities.......................................... 1,804 (4,933) 9,118
-----------------------------------
Investing Activities
Proceeds from maturities of securities held for
investment.............................................. 2,329 5,547 5,864
Purchases of securities held for investment............... (14) (545) (10,293)
Proceeds from sales and maturities of securities
available for sale...................................... 28,998 25,556 23,762
Purchases of securities available for sale................ (12,708) (27,594) (16,055)
Net (increase) decrease in federal funds sold and
securities
purchased under agreements to resell.................... (424) 4,931 (3,805)
Net (increase) decrease in time deposits placed and
other short-term investments............................ (565) 863 (670)
Purchases and net originations of loans and leases........ (13,822) (18,331) (15,592)
Proceeds from sales and securitizations of loans and
leases.................................................. 12,286 4,681 4,126
Purchases and originations of mortgage servicing
rights.................................................. (366) (598) (124)
Purchases of factored accounts receivable................. (7,738) (7,856) (7,612)
Collections of factored accounts receivable............... 7,656 7,834 7,577
Net purchases of premises and equipment................... (348) (307) (327)
Proceeds from sales of other real estate owned............ 174 204 369
Sales (acquisitions) of business activities, net of
cash.................................................... 416 (567) 3,778
-----------------------------------
Net cash provided by (used in) investing
activities.......................................... 15,874 (6,182) (9,002)
-----------------------------------
Financing Activities
Net (decrease) increase in deposits....................... (6,573) (158) 4,261
Net (decrease) increase in federal funds purchased and
securities
sold under agreements to repurchase..................... (10,601) 2,909 (2,562)
Net (decrease) increase in other short-term borrowings
and commercial paper.................................... (3,171) (1,244) 491
Proceeds from issuance of trust preferred
securities.............................................. 965 - -
Proceeds from issuance of long-term debt.................. 7,230 11,393 1,198
Retirement of long-term debt.............................. (3,093) (2,061) (1,017)
Preferred stock repurchased and redeemed.................. - - (94)
Proceeds from issuance of common stock.................... 136 239 267
Cash dividends paid....................................... (722) (575) (527)
Common stock repurchased.................................. (1,503) (522) (180)
Other financing activities................................ 139 - (20)
-----------------------------------
Net cash (used in) provided by financing
activities.......................................... (17,193) 9,981 1,817
-----------------------------------
Net increase (decrease) in cash and cash equivalents........ 485 (1,134) 1,933
Cash and cash equivalents on January 1...................... 8,448 9,582 7,649
-----------------------------------
Cash and cash equivalents on December 31.................... $ 8,933 $ 8,448 $ 9,582
===================================
Supplemental cash flow disclosure:
Cash paid for interest.................................... $ 7,974 $ 7,565 $ 5,020
Cash paid for income taxes................................ 786 675 718
</TABLE>
LOANS TRANSFERRED TO OTHER REAL ESTATE OWNED AMOUNTED TO $160, $98 AND $207 IN
1996, 1995 AND 1994, RESPECTIVELY. MORTGAGE LOANS CONVERTED TO MORTGAGE-BACKED
SECURITIES AMOUNTED TO $4,302 FOR THE YEAR ENDED DECEMBER 31, 1996.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Consolidated Financial Statements 51
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NationsBank Corporation And Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS)
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, 1993................. $208 541,810 $ 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.......... 10,702 254 13 267
Common stock issued in acquisitions........ 7,020 64 41 105
Common stock repurchased................... (7,048) (180) (180)
Net change in unrealized gains (losses)
on securities available for sale and
marketable equity securities............. (240) (240)
Other...................................... (4) 420 9 12 (6) 11
--------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1994................. 111 552,904 4,740 6,451 (76) (215) 11,011
Net income................................. 1,950 1,950
Cash dividends
Common................................... (567) (567)
Preferred................................ (8) (8)
Common stock issued under dividend
reinvestment and employee plans.......... 8,878 214 25 239
Common stock issued in acquisitions........ 5,996 217 217
Common stock repurchased................... (19,466) (522) (522)
Net change in unrealized gains (losses)
on securities available for sale and
marketable equity securities............. 460 460
Other...................................... (6) 226 6 13 8 21
--------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1995................. 105 548,538 4,655 7,826 (63) 278 12,801
Net income................................. 2,375 2,375
Cash dividends
Common................................... (707) (707)
Preferred................................ (15) (15)
Common stock issued under dividend
reinvestment and employee plans.......... 3,456 109 27 136
Stock issued in acquisitions............... 73 55,436 586 192 2 853
Common stock repurchased................... (34,196) (1,503) (1,503)
Net change in unrealized gains (losses)
on securities available for sale and
marketable equity securities............. (240) (240)
Other...................................... (7) 258 8 2 15 (9) 9
--------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1996................. $171 573,492 $ 3,855 $9,673 $ (48) $ 58 $13,709
==========================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
52 NationsBank Corporation Annual Report 1996
<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. As discussed more fully in the first
and fourth full paragraphs on page 20 and the second full paragraph on page 22,
through its banking subsidiaries and its various nonbanking subsidiaries, the
Corporation provides banking and banking-related services, primarily throughout
the Southeast and Mid-Atlantic states and Texas. The geographic region served by
the Corporation has been expanded through the acquisition of Boatmen's
Bancshares, Inc. (Boatmen's) on January 7, 1997 to include the Midwestern
states.
NOTE ONE. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
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. Certain prior
period amounts have been reclassified to conform to current year
classifications.
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.
Assets held in an agency or fiduciary capacity are not included in the
consolidated financial statements.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and disclosures. Actual results could
differ from those estimates. Significant estimates made by management are
discussed in these footnotes as applicable.
On February 27, 1997, the Corporation completed a 2-for-1 split of its
common stock. Accordingly, the financial statements for all years presented have
been restated to reflect the impact of the stock split.
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 on the date 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, except those used in trading activities, 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.
Interest and dividends on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.
LOANS HELD FOR SALE
Loans held for sale include residential mortgage, commercial real estate and
other loans and are carried at the lower of aggregate cost or market value.
Generally, such loans are originated with the intent of sale.
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities purchased under agreements to resell and securities sold under
agreements to repurchase are treated as collateralized financing transactions
and are recorded at the amounts at which the securities were acquired or sold
plus accrued interest. It is the Corporation's policy to obtain control or take
possession of securities purchased under agreements to resell. The Corporation
monitors the market value of the underlying securities which collateralize the
related receivable on resale agreements, including accrued interest, and
requests additional collateral when deemed appropriate.
TRADING INSTRUMENTS
Instruments utilized in trading activities include both securities and
derivatives and are stated at fair value. Fair value is generally based on
quoted market prices. If quoted market prices are not available, fair values are
estimated on the basis of dealer quotes, pricing models or quoted prices for
instruments with similar characteristics. Gross unrealized gains and losses on
trading derivative positions with the same counterparty are generally presented
on a net basis for balance sheet reporting purposes where legally enforceable
master netting agreements have been executed. Realized and unrealized gains and
losses are recognized as noninterest income.
LOANS
Loans are reported at their outstanding principal balances net of any
charge-offs, unamortized deferred fees and costs on originated loans and
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.
Notes to Consolidated Financial Statements 53
<PAGE>
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is primarily available to absorb losses
inherent in the loan and lease portfolio. 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.
Individually identified impaired loans are measured based on the present
value of payments expected to be received, observable market prices, or for
loans that are solely dependent on the collateral for repayment, the estimated
fair value of the collateral. If the recorded investment in the impaired loan
exceeds the measure of estimated fair value, a valuation allowance is
established as a component of the allowance for credit losses.
The Corporation's process for determining an appropriate allowance for
credit losses includes management's judgment and use of estimates. The adequacy
of the allowance for credit losses is reviewed regularly by management. 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 and performance trends within
specific portfolio segments and individual concentrations of credit. Additions
to the allowance for credit losses are made by charges to the provision for
credit losses.
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,
including loans that are individually identified as being impaired, 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, and loans similarly restructured prior to 1995 that are impaired,
are classified as nonperforming until such time as the loan is not impaired
based on the terms of the restructured agreement and the interest rate is a
market rate as measured at the restructuring date. 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.
Credit card loans that are 180 days past due are charged off and not
classified as nonperforming. All other consumer loans and residential mortgages
are generally charged off at 120 days or placed on nonperforming status upon
repossession or the inception of foreclosure proceedings. Ordinarily, interest
accrued but not collected is charged off along with the principal.
OTHER REAL ESTATE OWNED
Loans are classified as other real estate owned when the Corporation
forecloses on a property or when physical possession of the collateral is taken
regardless of whether foreclosure proceedings have taken place. In addition,
other real estate owned includes 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 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 reduced, 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.
MORTGAGE SERVICING RIGHTS
Beginning April 1, 1995, the Corporation revised its accounting for Mortgage
Servicing Rights (MSRs). The total cost of mortgage loans originated or
purchased is allocated between the cost of the loans and the MSRs based on the
relative fair values of the loans and the MSRs. MSRs acquired separately are
capitalized at their cost. During 1996, the Corporation capitalized $366 million
of MSRs. Prior to April 1, 1995, only MSRs purchased separately were recorded as
assets. The cost of the MSRs is amortized in proportion to and over the
estimated period of net servicing revenues. During 1996 and 1995, amortization
was $127 million and $86 million, respectively.
The fair value on December 31, 1996 of servicing for which the Corporation
has capitalized an acquisition cost was $1.1 billion compared to a carrying
value of $946 million. Additionally, there is value associated with servicing
originated prior to April 1995 for which the carrying value is zero. Total loans
serviced approximated $96.4 billion on December 31, 1996, including loans
serviced on behalf of the Corporation's banking subsidiaries. The Corporation
evaluates MSRs strata for impairment by estimating the fair value based on
anticipated future net cash flows, taking into consideration prepayment
predictions. The predominant characteristics used as the basis for stratifying
MSRs are loan type and period of origination. MSRs acquired prior to April 1,
1995 are evaluated for impairment separately. If the carrying value of the MSRs
exceeds the estimated fair value, a valuation allowance is established. Changes
to the valuation allowance are charged against or credited to mortgage servicing
income and fees. The valuation allowance on December 31, 1996 and 1995 and
changes in the valuation allowance during 1996 were insignificant.
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
54 NationsBank Corporation Annual Report 1996
<PAGE>
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 assets 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.
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.
RISK MANAGEMENT INSTRUMENTS
Risk management instruments are utilized to modify the interest rate
characteristics of related assets or liabilities or hedge against changes in
interest rates, currency fluctuations or other such exposures as part of the
Corporation's asset and liability management process. Instruments must be
designated as hedges and must be effective throughout the hedge period.
Swaps, principally interest rate, used in the asset and liability management
process are accounted for on the accrual basis with revenues or expenses
recognized as adjustments to income or expense on the underlying linked assets
or liabilities. Risk management swaps generally are not terminated. When
terminations do occur, gains or losses are recorded as adjustments to the
carrying value of the underlying assets or liabilities and recognized as income
or expense over the shorter of either the remaining expected lives of such
underlying assets or liabilities or the remaining life of the swap. In
circumstances where the underlying assets or liabilities are sold, any remaining
carrying value adjustments and the cumulative change in value of any open
positions are recognized immediately as a component of the gain or loss on
disposition of such underlying assets and liabilities.
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 income over the remaining term of the related asset
or liability.
Risk management instruments used to hedge or modify the interest rate
characteristics of debt securities classified as available for sale are carried
at fair value with unrealized gains or losses deferred as a component of
shareholders' equity.
The Corporation also purchases options in the interest rate market to
protect the value of certain assets, principally mortgage servicing rights,
against changes in prepayment rates. Option premiums are amortized over the
option life on a straight-line basis. Such contracts are designated as hedges,
and gains or losses are recorded as adjustments to the carrying value of the
underlying assets. As such, they are included in the basis of mortgage servicing
rights which are subjected to impairment valuations as described in the Mortgage
Servicing Rights accounting policy.
The Corporation also utilizes forward delivery contracts and options to
reduce the interest rate risk inherent in mortgage loans held for sale and the
commitments made to borrowers for mortgage loans which have not been funded.
These financial instruments are considered in the Corporation's valuation of its
mortgage loans held for sale which are carried at the lower of cost or market.
EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income, reduced by
dividends on preferred stock, by the weighted average number of common shares
outstanding for each period presented. Fully diluted earnings per share are
computed by dividing net income available to common shareholders, adjusted for
preferred dividends paid on dilutive convertible preferred stock, by average
fully dilutive shares outstanding, which include convertible preferred stock and
stock options.
NOTE TWO. MERGER-RELATED ACTIVITY
On January 7, 1997, the Corporation completed the acquisition of Boatmen's,
headquartered in St. Louis, Missouri. Each outstanding share of Boatmen's common
stock was converted into 1.305 shares of the Corporation's common stock
(adjusted for 2-for-1 stock split) or, at the election of each holder of
Boatmen's common stock, an amount in cash as specified in the merger agreement,
resulting in the net issuance of approximately 195 million shares of the
Corporation's common stock valued at $9.4 billion on the date of the merger and
aggregate cash payments of $371 million to Boatmen's shareholders. Boatmen's
unaudited total assets and total deposits were approximately $41.2 billion and
$32.0 billion, respectively, on the date of the acquisition. The Corporation
will account for this acquisition as a purchase; therefore, the results of
operations of Boatmen's will be included in the consolidated financial
statements of the Corporation from the date of acquisition.
The following table presents condensed pro forma consolidated results of
operations as if the acquisition of Boatmen's had occurred on January 1, 1996.
This information combines
Notes To Consolidated Financial Statements 55
<PAGE>
the historical results of operations of the Corporation and Boatmen's after
the effect of estimated preliminary purchase accounting adjustments. Actual
adjustments will be made on the basis of appraisals and evaluations and may
differ from those reflected below. A cash election of 40 percent in the
Boatmen's acquisition has been assumed. The Corporation currently expects to
repurchase shares of its common stock from time to time so that the pro forma
impact of the Boatmen's acquisition will be the issuance of approximately 60
percent of the aggregate consideration in the Corporation's common stock and 40
percent of the aggregate consideration in cash. The actual cash election in the
transaction was approximately 4 percent. The pro forma information does not
purport to be indicative of the results that would have been obtained if the
operations had actually been combined during the period presented and is not
necessarily indicative of operating results to be expected in future periods.
UNAUDITED PRO FORMA RESULTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION)
1996
- -----------------------------------------------------
Net interest income........................... $7,573
Net income.................................... 2,379
Net income available to common shareholders... 2,357
Earnings per common share..................... 3.30
Fully diluted earnings per common share....... 3.25
On January 9, 1996, the Corporation completed the acquisition of Bank South
Corporation (Bank South), headquartered in Atlanta, Georgia. Each outstanding
share of Bank South common stock was converted into .88 shares of Corporation
common stock (adjusted for 2-for-1 stock split), resulting in the net issuance
of 52,609,234 shares of common stock by the Corporation. Bank South's total
assets, total deposits and total shareholders' equity were $7.4 billion, $5.1
billion and $685 million, respectively, on the date of acquisition. This
acquisition was accounted for as a pooling of interests and did not have a
material impact on the results of operations or financial condition of the
Corporation.
During 1996, the Corporation acquired several small banking organizations
and banking centers in Florida and Texas. Combined total loans and total
deposits of these entities acquired were $5.1 billion and $7.6 billion,
respectively. These acquisitions were accounted for as purchases and did not
have a material impact on the results of operations or financial condition of
the Corporation.
During the first quarter of 1996, primarily in connection with the
acquisition of Bank South, the Corporation recorded a pre-tax merger-related
charge of $118 million. The charge consisted of $34 million of severance costs,
$28 million for facilities consolidations and branch closures, $11 million
related to cancellations of contractual obligations, and other merger-related
expenses. An immaterial amount of the $118 million accrued charge remained at
December 31, 1996.
NOTE THREE. SECURITIES
The book and market values of securities held for investment and securities
available for sale on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
GROSS GROSS
BOOK UNREALIZED UNREALIZED MARKET
SECURITIES HELD FOR INVESTMENT VALUE GAINS LOSSES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
- ----
U.S. Treasury securities and agency debentures... $ 862 $ - $ (3) $ 859
Foreign sovereign securities..................... 25 - - 25
Mortgage-backed securities....................... 1,101 3 (4) 1,100
Other taxable securities......................... 5 - - 5
------------------------------------------------
Total taxable.................................. 1,993 3 (7) 1,989
------------------------------------------------
Tax-exempt securities............................ 117 4 - 121
------------------------------------------------
Total.......................................... $ 2,110 $ 7 $ (7) $ 2,110
================================================
1995
- ----
U.S. Treasury securities and agency debentures... $ 2,309 $ 7 $ (10) $ 2,306
Foreign sovereign securities..................... 22 - - 22
Mortgage-backed securities....................... 1,883 5 (8) 1,880
Other taxable securities......................... 18 - - 18
------------------------------------------------
Total taxable.................................. 4,232 12 (18) 4,226
------------------------------------------------
Tax-exempt securities............................ 200 7 (1) 206
------------------------------------------------
Total.......................................... $ 4,432 $ 19 $ (19) $ 4,432
================================================
1994
- ----
U.S. Treasury securities and agency debentures... $15,097 $ 1 $ (593) $14,505
Foreign sovereign securities..................... 19 - - 19
Mortgage-backed securities....................... 2,492 - (101) 2,391
Other taxable securities......................... 51 - (4) 47
------------------------------------------------
Total taxable.................................. 17,659 1 (698) 16,962
------------------------------------------------
Tax-exempt securities............................ 141 1 (3) 139
------------------------------------------------
Total.......................................... $17,800 $ 2 $ (701) $17,101
================================================
</TABLE>
56 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED MARKET
SECURITIES AVAILABLE FOR SALE COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
- ----
U.S. Treasury securities and agency debentures... $ 1,437 $ 5 $ (26) $ 1,416
Foreign sovereign securities..................... 952 2 (8) 946
Mortgage-backed securities....................... 8,805 58 (45) 8,818
Other taxable securities......................... 484 5 (1) 488
------------------------------------------------
Total taxable.................................. 11,678 70 (80) 11,668
------------------------------------------------
Tax-exempt securities............................ 591 20 (2) 609
------------------------------------------------
Total.......................................... $12,269 $ 90 $ (82) $12,277
================================================
1995
- ----
U.S. Treasury securities and agency debentures... $16,909 $ 407 $ (16) $17,300
Foreign sovereign securities..................... 1,591 22 - 1,613
Mortgage-backed securities....................... 63 1 - 64
Other taxable securities......................... 392 3 - 395
------------------------------------------------
Total taxable.................................. 18,955 433 (16) 19,372
------------------------------------------------
Tax-exempt securities............................ 42 1 - 43
------------------------------------------------
Total.......................................... $18,997 $ 434 $ (16) $19,415
================================================
1994
- ----
U.S. Treasury securities and agency debentures... $ 7,729 $ - $ (274) $ 7,455
Mortgage-backed securities....................... 1 - - 1
Other taxable securities......................... 249 - - 249
------------------------------------------------
Total taxable.................................. 7,979 - (274) 7,705
------------------------------------------------
Tax-exempt securities............................ 310 11 (1) 320
------------------------------------------------
Total.......................................... $ 8,289 $ 11 $ (275) $ 8,025
================================================
</TABLE>
The components, expected maturity distribution and yields (computed on a
taxable-equivalent basis) of the Corporation's securities portfolio on December
31, 1996 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............. $364 4.79% $ 498 5.66% $ - -% $ - -% $ 862 5.30%
Foreign sovereign securities........ 3 7.48 13 7.71 8 6.52 1 6.17 25 7.25
Mortgage-backed securities.......... 483 5.74 594 6.11 24 5.32 - - 1,101 5.93
Other taxable securities............ 2 1.41 - - - - 3 6.35 5 4.08
---------------------------------------------------------------------------------------
Total taxable..................... 852 5.33 1,105 5.93 32 5.62 4 6.33 1,993 5.67
Tax-exempt securities............... 26 10.93 55 10.22 19 9.90 17 8.77 117 10.07
---------------------------------------------------------------------------------------
Total............................. $878 5.50 $1,160 6.12 $ 51 7.25 $ 21 8.36 $ 2,110 5.91
=======================================================================================
Market value of securities
held for investment................... $877 $1,159 $ 52 $ 22 $ 2,110
=======================================================================================
Market value of securities available
for sale
U.S. Treasury securities
and agency debentures............. $ 58 5.20% $ 470 6.01% $ 870 6.15% $ 18 8.57% $ 1,416 6.09%
Foreign sovereign securities........ 61 24.10 206 4.49 158 6.01 521 6.28 946 7.00
Mortgage-backed securities.......... 71 7.30 3,419 7.32 3,944 7.03 1,384 7.32 8,818 7.19
Other taxable securities............ 8 7.24 45 6.97 168 7.07 267 6.17 488 6.57
---------------------------------------------------------------------------------------
Total taxable..................... 198 11.88 4,140 7.03 5,140 6.85 2,190 6.94 11,668 7.02
Tax-exempt securities............... 4 10.93 11 7.71 88 8.31 506 9.02 609 8.90
---------------------------------------------------------------------------------------
Total............................. $202 11.87 $4,151 7.03 $5,228 6.88 $2,696 7.33 $12,277 7.11
=======================================================================================
Cost of securities available for sale... $202 $4,135 $5,236 $2,696 $12,269
=======================================================================================
</TABLE>
Notes To Consolidated Financial Statements 57
<PAGE>
The components of gains and losses on sales of available for sale securities
for the years ended December 31 were (dollars in millions):
1996 1995 1994
- -------------------------------------------------------------------
Gross gains on sales of securities...... $ 200 $ 74 $ 36
Gross losses on sales of securities..... (133) (45) (49)
---------------------------
Gains (losses) on sales of securities... $ 67 $ 29 $ (13)
===========================
There were no sales of securities held for investment in 1996, 1995 or 1994.
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, 1996 or 1995.
The income tax expense attributable to securities transactions was $23
million for 1996 compared to $10 million in 1995 and an income tax benefit of $5
million in 1994.
Securities are pledged or assigned to secure borrowed funds, government and
trust deposits and for other purposes. The carrying value of pledged securities
was $12.6 billion and $22.5 billion on December 31, 1996 and December 31, 1995.
On December 31, 1996, the valuation reserve for securities available for
sale and marketable equity securities increased shareholders' equity by $86
million, reflecting $8 million of pretax appreciation on securities available
for sale and $123 million of pretax appreciation on marketable equity
securities.
NOTE FOUR. TRADING ACCOUNT ASSETS AND LIABILITIES
The fair values on December 31 and the average fair values for the years
ended December 31 of the components of trading account assets and liabilities
were (dollars in millions):
<TABLE>
<CAPTION>
AVERAGE BALANCES
------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------- ------------------
Securities owned
U.S. Treasury securities.................................. $ 6,914 $10,364 $13,168 $10,254
Securities of other U.S. Government agencies and
corporations............................................ 2,096 1,508 1,843 1,541
Certificates of deposit, bankers' acceptances and
commercial paper........................................ 501 555 553 524
Corporate debt............................................ 1,552 1,443 1,589 1,031
Foreign sovereign debt.................................... 3,396 576 1,044 200
Other securities.......................................... 932 402 850 627
------------------ ------------------
Total securities owned.................................. 15,391 14,848 19,047 14,177
Derivatives-dealer positions................................ 3,298 4,019 3,791 3,230
------------------ ------------------
Total trading account assets............................ $18,689 $18,867 $22,838 $17,407
================== ==================
Short sales
U.S. Treasury securities.................................. $ 7,143 $11,066 $ 9,287 $11,416
Corporate debt............................................ 452 683 535 591
Other securities.......................................... 309 33 315 18
------------------ ------------------
Total short sales....................................... 7,904 11,782 10,137 12,025
Derivatives-dealer positions................................ 3,848 3,395 3,170 2,970
------------------ ------------------
Total trading account liabilities....................... $11,752 $15,177 $13,307 $14,995
================== ==================
</TABLE>
A discussion of the Corporation's trading activities and an analysis of the
revenues associated with the Corporation's trading activities is presented on
page 25. The Corporation's derivatives-dealer positions are presented in the
discussion beginning on page 37 and TABLE SIXTEEN.
The net change in the unrealized gain or loss on trading securities held on
December 31, 1996 and 1995, included in noninterest income, was a gain of $68
million for 1996 and a gain of $44 million for 1995.
Derivatives-dealer positions presented in the table above represent the fair
values of interest rate, foreign exchange, equity and commodity-related products
including financial futures, forward settlement and option contracts and swap
agreements associated with the Corporation's derivative trading activities.
A swap agreement is a contract between two parties to exchange cash flows
based on specified underlying notional amounts and indices. Financial futures or
forward settlement contracts are agreements 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, index or commodity at a predetermined rate or price at a time or
during a period in the future. These agreements can be transacted on organized
exchanges or directly between parties.
58 NationsBank Corporation Annual Report 1996
<PAGE>
NOTE FIVE. LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE
Loans, leases and factored accounts receivable on December 31 were (dollars
in millions):
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
LOANS
Commercial................................................ $ 50,488 $ 48,186
Real estate commercial.................................... 5,445 6,183
Real estate construction.................................. 2,863 2,976
----------------------
Total commercial........................................ 58,796 57,345
----------------------
Residential mortgage...................................... 27,948 24,043
Credit card............................................... 6,747 6,532
Other consumer............................................ 20,993 22,751
----------------------
Total consumer.......................................... 55,688 53,326
----------------------
Foreign................................................... 2,829 2,251
Factored accounts receivable.............................. 1,047 991
----------------------
Total loans and factored accounts receivable............ 118,360 113,913
Less unearned income.................................... (602) (678)
----------------------
Loans and factored accounts receivable, net of
unearned income....................................... 117,758 113,235
----------------------
LEASES
Lease receivables......................................... 5,134 3,915
Estimated residual value.................................. 1,537 1,192
Less unearned income...................................... (1,799) (1,309)
----------------------
Leases, net of unearned income.......................... 4,872 3,798
----------------------
Loans, leases and factored accounts receivable,
net of unearned income................................ $122,630 $117,033
======================
</TABLE>
Transactions in the allowance for credit losses were (dollars in millions):
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance on January 1........................................ $2,163 $2,186 $2,169
-----------------------------
Loans, leases and factored accounts receivable charged
off....................................................... (836) (636) (533)
Recoveries of loans, leases and factored accounts
receivable previously charged off......................... 238 215 217
-----------------------------
Net charge-offs........................................... (598) (421) (316)
Provision for credit losses................................. 605 382 310
Allowance applicable to loans of purchased companies and
other..................................................... 145 16 23
-----------------------------
Balance on December 31...................................... $2,315 $2,163 $2,186
=============================
</TABLE>
The following table presents the recorded investment in certain loans that
were considered to be impaired, all of which were classified as nonperforming,
on December 31 (dollars in millions):
1996 1995
- ----------------------------------------
Commercial................. $342 $271
Real estate commercial..... 145 196
Real estate construction... 28 16
------------
Total impaired loans..... $515 $483
============
The average recorded investment in certain impaired loans for the years
ended December 31, 1996 and 1995 was approximately $542 million and $598
million, respectively. For the years ended December 31, 1996 and 1995, interest
income recognized on impaired loans totaled $26 million each year, all of which
was recognized on a cash basis.
On December 31, 1996, 1995 and 1994, nonperforming loans, including certain
loans which are considered impaired, totaled $890 million, $706 million and
$801 million, respectively.
The net amount of interest recorded during each year on loans that were
classified as nonperforming or restructured on December 31, 1996, 1995 and 1994
was $35 million, $27 million and $31 million, respectively. If these loans had
been accruing interest at their originally contracted rates, related income
would have been $103 million in 1996, $102 million in 1995 and $96 million in
1994.
Other real estate owned amounted to $153 million, $147 million and $337
million on December 31, 1996, 1995 and 1994, respectively. On January 1, 1995,
$80 million of in-substance foreclosed loans previously reported as other real
estate owned was reclassified to nonperforming loans. The cost of carrying other
real estate owned amounted to $8 million, $13 million and $24 million in 1996,
1995 and 1994, respectively.
Notes To Consolidated Financial Statements 59
<PAGE>
NOTE SIX. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Certain of the Corporation's banking subsidiaries, NationsBank, N.A.,
NationsBank, N.A. (South) and NationsBank of Texas, N.A., jointly maintain a
program to offer up to $9.0 billion of bank notes from time to time with fixed
or floating rates and maturities from 30 days to 15 years from date of issue. On
December 31, 1996 and 1995, there were short-term bank notes outstanding of $872
million and $3.1 billion, respectively. In addition, there were bank notes
outstanding on December 31, 1996 and 1995 totaling $3.5 billion and $1.9
billion, respectively, which were classified as long-term debt.
On December 31, 1996 and 1995, the Corporation had unused commercial back-up
lines of credit totaling $1.5 billion which expire in 1997. These lines were
supported by fees paid directly by the Corporation to unaffiliated banks.
The maturities of long-term debt on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1996
-------------------------------------
VARIOUS VARIOUS
FIXED-RATE FLOATING-RATE 1995
DEBT DEBT AMOUNT AMOUNT
OBLIGATIONS OBLIGATIONS OUTSTANDING OUTSTANDING
- ------------------------------------------------------------------------------------------------ -----------
<S> <C> <C> <C> <C>
PARENT COMPANY
Senior debt
Due in 1996............................................. $ - $ - $ - $ 1,194
Due in 1997............................................. 337 405 742 743
Due in 1998............................................. 889 525 1,414 1,414
Due in 1999............................................. 116 1,209 1,325 917
Due in 2000............................................. 698 868 1,566 1,513
Due in 2001............................................. - 1,602 1,602 602
Thereafter.............................................. 651 2,129 2,780 369
----------------------------------- -----------
2,691 6,738 9,429 6,752
----------------------------------- -----------
Subordinated debt
Due in 1997............................................. 75 - 75 75
Due in 1999............................................. 130 - 130 399
Due in 2001............................................. 299 - 299 299
Thereafter.............................................. 4,257 1,060 5,317 3,674
----------------------------------- -----------
4,761 1,060 5,821 4,447
----------------------------------- -----------
Total parent company long-term debt..................... 7,452 7,798 15,250 11,199
----------------------------------- -----------
BANKING AND NONBANKING SUBSIDIARIES
Senior debt
Due in 1996............................................. - - - 244
Due in 1997............................................. 307 995 1,302 908
Due in 1998............................................. 110 2,776 2,886 1,809
Due in 1999............................................. 25 199 224 84
Due in 2000............................................. 28 1,900 1,928 3,001
Due in 2001............................................. 30 317 347 33
Thereafter.............................................. 88 351 439 167
----------------------------------- -----------
588 6,538 7,126 6,246
----------------------------------- -----------
Subordinated debt
Due in 1997............................................. 5 - 5 -
Due in 2004 and thereafter.............................. 300 8 308 308
----------------------------------- -----------
305 8 313 308
----------------------------------- -----------
Total banking and nonbanking subsidiaries long-
term debt............................................. 893 6,546 7,439 6,554
----------------------------------- -----------
$8,345 $14,344 22,689 17,753
----------------------------------- -----------
Obligations under capital leases........................ 296 22
---------- -----------
Total long-term debt.................................... $ 22,985 $17,775
========== ===========
</TABLE>
60 NationsBank Corporation Annual Report 1996
<PAGE>
As part of its interest rate risk management activities, the Corporation
enters into interest rate swap agreements for certain long-term debt issuances.
Through the use of interest rate swaps, $1.7 billion of fixed-rate debt with
rates ranging from 5.60 percent to 8.57 percent have been effectively converted
to floating rates primarily at spreads over LIBOR. In addition, $300 million of
notes with floating rates have been converted to fixed rates ranging from 8.02
percent to 8.12 percent.
On December 31, 1996, including the effects of interest rate swap agreements
entered into for certain long-term debt issuances, the weighted average
effective interest rates for total long-term debt, total fixed-rate debt and
total floating-rate debt (based on the rates in effect on December 31, 1996)
were 6.39 percent, 7.39 percent and 5.80 percent, respectively.
Two series of mortgage-backed bonds were issued during 1995 through Main
Place Real Estate Investment Trust (MPREIT), formerly Main Place Funding
Corporation, a limited-purpose subsidiary of NationsBank, N.A., a wholly owned
banking subsidiary of the Corporation. Outstandings under these issuances were
$3.0 billion on December 31, 1996. On December 31, 1996, MPREIT had $14.7
billion of 1-4 family mortgage loans, of which $4.4 billion served as collateral
for the two series of mortgage-backed bonds. On February 10, 1997, $1.0 billion
was available for issuance under a shelf registration statement filed by MPREIT.
On March 15, 1996, the Corporation redeemed $300 million of 101/2-percent
subordinated notes originally due 1999. Certain other debt obligations may be
redeemed prior to maturity at the option of the Corporation. Of total long-term
debt on December 31, 1996, $28 million of debt scheduled to mature in 2002 has
been redeemable since 1982, $500 million scheduled to mature in 2000 is
redeemable beginning in 1998, an aggregate of $70 million scheduled to mature in
either 2006 or 2010 is redeemable beginning in 1999, an aggregate of $513
million scheduled to mature in either 2005, 2006, 2010 or 2011 is redeemable
beginning in 2000 and $20 million scheduled to mature in 2006 is redeemable
beginning in 2003.
On July 5, 1996, the Corporation increased its Euro medium-term note program
to offer up to $4.5 billion of senior or subordinated notes exclusively to non-
United States residents. The notes bear interest at fixed or floating rates and
may be denominated in foreign currencies. The Corporation uses foreign currency
swaps to convert foreign-denominated debt into U.S. dollars. As of February 10,
1997, the Corporation had issued $1.4 billion under this program.
During the fourth quarter of 1996, the Corporation formed three wholly owned
grantor trust subsidiaries (the Trusts) to issue preferred securities (Preferred
Securities) representing undivided beneficial interests in the assets of the
respective Trusts and to invest the gross proceeds of such Preferred Securities
into notes of the Corporation. The sole assets of the Trusts are $619 million
aggregate principal amount of the Corporation's 7.84% Junior Subordinated
Deferrable Interest Notes due 2026 which are redeemable beginning in 2001 and
$376 million aggregate principal amount of the Corporation's 7.83% Junior
Subordinated Deferrable Interest Notes due 2026 which are redeemable in 2006.
Such securities qualify as Tier 1 Capital for regulatory purposes. On January
22, 1997, the Trusts issued an additional $500 million of Preferred Securities.
As of February 10, 1997, two additional wholly owned grantor trust subsidiaries
formed by the Corporation had the authority to issue $500 million of Preferred
Securities.
Payment of periodic cash distributions and payment upon liquidation or
redemption with respect to Preferred Securities is guaranteed by the Corporation
to the extent of funds held by the Trust (the Preferred Securities Guarantee).
The Preferred Securities Guarantee, when taken together with the Corporation's
other obligations including its obligations under the Junior Subordinated
Deferrable Interest Notes, will constitute a full and unconditional guarantee,
on a subordinated basis, by the Corporation of payments due on the Preferred
Securities.
As of February 10, 1997, the Corporation had the authority to issue
approximately $5.0 billion of corporate debt securities and preferred and common
stock under its existing shelf registration statements and $3.1 billion of
corporate debt securities under the Euro medium-term note program.
NOTE SEVEN. SHAREHOLDERS' EQUITY
The Corporation has authorized 45 million shares of preferred stock. As of
December 31, 1996, the Corporation had issued 2.3 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 1.68
shares of the Corporation's common stock at an initial conversion price of
$21.25 per 1.68 shares of the Corporation's common stock. ESOP Preferred Stock
in the amount of $7.0 million in 1996, $6.0 million in 1995 and $4.0 million in
1994 was converted into the Corporation's common stock.
In connection with the acquisition of a small Florida banking organization
(Citizens Federal), a banking subsidiary of the Corporation issued
approximately .5 million shares of 8.50% Series H Noncumulative Preferred Stock
(Series H Preferred Stock) to holders of the 8.50% Series H Noncumulative
Preferred Stock of Citizens Federal and 2.4 million shares of 8.75% Series
1993A Noncumulative Preferred Stock (1993A Preferred Stock) to holders of 8.75%
Series 1993A Noncumulative Preferred Stock of Citizens Federal. The Series H
Preferred Stock has a stated and liquidation value of $25 per share and
provides for an annual noncumulative dividend of $2.125 per share. The 1993A
Preferred
Notes To Consolidated Financial Statements 61
<PAGE>
Stock has a stated and liquidation value of $25 per share and provides for an
annual noncumulative dividend of $2.1875 per share.
During 1996 and 1995, the Corporation repurchased 34.2 million shares and
19.5 million shares, respectively, of its common stock under various stock
repurchase programs authorized by the Board of Directors. Additionally, on
August 29, 1996, the Board of Directors authorized the Corporation to repurchase
shares of its common stock from time to time so that the pro forma impact of the
Boatmen's acquisition will be the issuance of approximately 60 percent of the
aggregate consideration in the Corporation's common stock and 40 percent of the
aggregate consideration in cash. On January 14, 1997, the Corporation purchased
24 million shares of its common stock pursuant to a purchase agreement with an
agent of the Corporation.
On January 22, 1997, the Board of Directors approved a 2-for-1 split of the
Corporation's common stock payable on February 27, 1997 to shareholders of
record February 7, 1997.
Other shareholders' equity on December 31 was comprised of the following
(dollars in millions):
1996 1995
- ---------------------------------------------------------
Restricted stock award plan
deferred compensation.................. $ (10) $ (37)
Net unrealized gains on available for
sale securities and marketable equity
securities, net of tax................. 86 323
Foreign exchange translation adjustments
and other.............................. (18) (8)
----------------
$ 58 $ 278
================
NOTE EIGHT. 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 beginning on page 32 through
the second full paragraph on page 35.
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 amounts participated to other financial institutions.
The following summarizes commitments outstanding on December 31 (dollars in
millions):
1996 1995
- --------------------------------------------------
Commitments to extend credit
Credit card commitments...... $24,255 $21,033
Other loan commitments....... 82,506 66,638
Standby letters of credit and
financial guarantees......... 10,060 8,356
Commercial letters of credit... 761 986
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 customers' credit-worthiness, the Corporation has the
right to terminate or change the terms of the credit card lines. Of the December
31, 1996 total other loan commitments, $33.8 billion is scheduled to expire in
less than one year, $36.8 billion in one to five years and $11.9 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, 1996 total SBLCs and financial
guarantees, $6.7 billion is scheduled to expire in less than one year, $3.1
billion in one to five years and $282 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 dealer activities. See TABLES TEN and ELEVEN on pages
31 and 33, the first two paragraphs under Off-Balance Sheet Derivatives - Asset
and Liability Management Positions on page 31 and the second full paragraph
under the mortgage servicing discussion on page 24 for derivatives used for risk
management purposes. See TABLE SIXTEEN on page 37, the discussion beginning on
page 37 and Note Four regarding the Corporation's derivative dealer activities.
62 NationsBank Corporation Annual Report 1996
<PAGE>
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, 1996 and 1995, indemnified securities lending transactions totaled $7.1
billion and $2.6 billion, respectively. Collateral with a market value of $7.2
billion and $2.7 billion on December 31, 1996 and 1995, 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, 1996, the Corporation had
commitments to purchase and sell when issued securities of $7.4 billion each. On
December 31, 1995, commitments to purchase and sell when issued securities were
$4.4 billion and $4.3 billion, respectively.
LITIGATION
In the ordinary course of business, the Corporation 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 Corporation and its subsidiaries and
certain of these actions and proceedings are based on alleged violations of
consumer protection, securities, environmental, banking and other laws.
Management believes, based upon the advice of counsel, that the actions and
proceedings and losses, if any, resulting from the final outcome thereof, will
not be material in the aggregate to the Corporation's financial position or
results of operations.
NOTE NINE. REGULATORY REQUIREMENTS AND RESTRICTIONS
The Corporation's 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 $873 million and
$1.1 billion for 1996 and 1995, respectively.
The primary source of funds for cash distributions by the Corporation to its
shareholders is dividends received from its banking subsidiaries. The subsidiary
banks, including those acquired through the Boatmen's acquisition, can initiate
dividend payments in 1997, without prior regulatory approval, of $1.4 billion
plus an additional amount equal to their net profits for 1997, as defined by
statute, 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 Office of the Comptroller of the Currency (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, 1996, the total amount which could be loaned to the
Corporation by its banking subsidiaries was approximately $1.6 billion. On
December 31, 1996, no loans to the Corporation from its banking subsidiaries
were outstanding.
The Federal Reserve Board (FRB), the OCC and the Federal Deposit Insurance
Corporation have issued risk-based capital guidelines for U.S. banking
organizations. As of December 31, 1996, the Corporation and its banking
subsidiaries were well capitalized under this regulatory framework. Failure to
meet the capital requirements can initiate certain mandatory and discretionary
actions by regulators that could have a material effect on the Corporation's
financial statements. There are no conditions or events since December 31, 1996
that management believes have changed either the Corporation's or its banking
subsidiaries' capital classifications.
The risk-based capital guidelines measure capital in relation to the credit
risk of both on- and off-balance sheet items using various risk weights. Under
the risk-based capital guidelines, Total Capital consists of two tiers of
capital. Tier 1 Capital includes common shareholders' equity and qualifying
preferred stock, less goodwill and other adjustments. Tier 2 Capital consists of
preferred stock not qualifying as Tier 1, mandatory convertible debt, limited
amounts of subordinated debt, other qualifying term debt and the allowance for
credit losses up to 1.25 percent of risk-weighted assets. Additionally, in
accordance with the FRB's capital adequacy guidelines, the Corporation is
required to exclude the equity, assets and off-balance sheet exposures of its
broker-dealer subsidiary, NATIONSBANC CAPITAL MARKETS, INC., when calculating
regulatory capital ratios.
A well-capitalized institution must maintain a Tier 1 Capital ratio of six
percent and a Total Capital ratio of ten percent. In order to meet minimum
regulatory capital requirements, an institution must maintain a Tier 1 Capital
ratio of four percent and a Total Capital ratio of eight percent.
The leverage ratio guidelines establish a minimum ratio of Tier 1 Capital to
quarterly average assets, excluding goodwill and certain other items, of three
to four percent. Banking organizations must maintain a leverage capital ratio of
at least five percent to be classified as well capitalized.
Notes To Consolidated Financial Statements 63
<PAGE>
The following table presents the actual capital ratios and amounts and
minimum required capital amounts for the Corporation and its significant
banking subsidiaries on December 31 (dollars in millions):
<TABLE>
<CAPTION>
1996 1995
------------------------------------------------------------------
AMOUNT REQUIRED AMOUNT REQUIRED
ACTUAL FOR MINIMUM ACTUAL FOR MINIMUM
------------------ CAPITAL --------------- CAPITAL
RATIO AMOUNT ADEQUACY RATIO AMOUNT ADEQUACY
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TIER 1 CAPITAL
NATIONSBANK CORPORATION...... 7.76% $12,384 $ 6,384 7.24% $10,799 $ 5,966
NationsBank, N.A............. 7.54 5,137 2,725 7.60 4,623 2,433
NationsBank, N.A. (South).... 8.05 2,899 1,440 8.65 2,500 1,156
NationsBank of Texas, N.A.... 6.78 2,468 1,456 6.37 2,487 1,562
TOTAL CAPITAL
NATIONSBANK CORPORATION...... 12.66 20,208 12,770 11.58 17,264 11,927
NationsBank, N.A............. 10.41 7,093 5,451 10.19 6,199 4,867
NationsBank, N.A. (South).... 10.56 3,801 2,880 11.46 3,312 2,312
NationsBank of Texas, N.A.... 10.19 3,706 2,910 8.93 3,490 3,127
LEVERAGE CAPITAL
NATIONSBANK CORPORATION...... 7.09 12,384 6,987 6.27 10,799 6,889
NationsBank, N.A............. 6.21 5,137 3,309 5.66 4,623 3,267
NationsBank, N.A. (South).... 6.46 2,899 1,795 6.71 2,500 1,490
NationsBank of Texas, N.A.... 6.23 2,468 1,585 5.30 2,487 1,877
</TABLE>
NOTE TEN. 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>
1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation
Accumulated benefit obligation, including vested
benefits of $813 and $864............................... $ (840) $ (884)
=====================
Projected benefit obligation for service rendered to
date.................................................... $ (997) $ (1,047)
Plan assets at fair value, primarily listed stocks, fixed-
income securities and real estate......................... 1,202 1,091
---------------------
Plan assets in excess of projected benefit obligation....... 205 44
Unrecognized net loss....................................... 187 398
Unrecognized net transition asset being amortized........... (12) (13)
Unrecognized prior service benefit being amortized.......... (33) (29)
Deferred investment gain.................................... (39) (97)
---------------------
Prepaid pension cost...................................... $ 308 $ 303
=====================
</TABLE>
Net periodic pension expense for the years ended December 31 included the
following components (dollars in millions):
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period... $ 43 $ 35 $ 39
Interest cost on projected benefit obligation.... 77 74 72
Actual return on plan assets..................... (148) (199) 22
Net amortization and deferral.................... 39 95 (121)
--------------------------
Net periodic pension expense................... $ 11 $ 5 $ 12
==========================
</TABLE>
For December 31, 1996, the weighted average discount rate and rate of
increase in future compensation used in determining the actuarial present value
of the projected benefit obligation were 8.0 percent and 4.0 percent,
respectively. The related expected long-term rate of return on plan assets was
10.0 percent. For December 31, 1995, the weighted average discount rate, rate of
increase in future compensation and expected long-term rate of return on plan
assets were 7.5 percent, 4.0 percent and 10.0 percent, respectively.
64 NationsBank Corporation Annual Report 1996
<PAGE>
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 1996. 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):
1996 1995
- ----------------------------------------------------------------
Accumulated postretirement benefit obligation
Retirees................................... $ (148) $ (136)
Fully eligible active participants......... (3) (2)
Other active plan participants............. (42) (49)
------------------
(193) (187)
Unamortized transition obligation............ 116 118
Unamortized service cost..................... 1 -
Unrecognized net (gain) loss................. (1) 3
------------------
Accrued postemployment benefit liability... $ (77) $ (66)
==================
Net periodic postretirement benefit cost for the years ended December 31
included the following (dollars in millions):
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost................................................ $ 3 $ 2 $ 3
Interest cost on accumulated postretirement benefit
obligation................................................ 15 15 14
Amortization of transition obligation over 20 years......... 7 7 7
Amortization of gains....................................... (1) (5) (6)
----------------------
Net periodic postretirement benefit cost.................. $ 24 $ 19 $ 18
======================
</TABLE>
The health care cost trend rates used in determining the accumulated
postretirement benefit obligation were 6.50 percent for pre-65 benefits and 5.25
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 percent and the aggregate of the service cost and interest cost
components of net periodic postretirement benefit cost by 3 percent. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.0 percent and 7.5 percent at December
31, 1996 and 1995, respectively.
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 1996, 1995 and 1994, the Corporation contributed approximately $39
million, $43 million and $41 million, respectively, in cash which was utilized
primarily to purchase the Corporation's common stock under the terms of these
plans. On December 31, 1996, an aggregate of 17,491,082 shares of the
Corporation's common stock and 2,319,060 shares of ESOP preferred stock were
held by the Corporation's various savings and profit sharing plans.
Under the terms of the ESOP provision, payments to the plan for dividends on
the ESOP Preferred Stock were $8 million for 1996, $8 million for 1995 and $9
million for 1994. Interest incurred to service the ESOP debt amounted to $3
million, $4 million and $5 million for 1996, 1995 and 1994, respectively.
STOCK OPTION AND AWARD PLANS
At December 31, 1996, the Corporation had certain stock-based compensation
plans (the Plans) which are described below. The Corporation has elected to
provide SFAS 123 disclosures as if the Corporation had adopted the fair-value
based method of measuring employee stock options in 1996 and 1995 as indicated
below (dollars in millions except per share data):
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
------------------------------------
1996 1995 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income.................................... $2,375 $1,950 $2,282 $1,933
Net income available to common shareholders... 2,360 1,942 2,267 1,925
Earnings per common share..................... 4.00 3.56 3.84 3.53
Fully diluted earnings per common share....... 3.92 3.52 3.77 3.49
</TABLE>
The table above does not include the 1997 stock awards disclosed on the
next page.
Notes To Consolidated Financial Statements 65
<PAGE>
In determining the pro forma disclosures on the previous page, the fair
value of options granted under the 1996 Associates Stock Option Award Plan
and the Key Employee Stock Plan was estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
RISK FREE DIVIDEND EXPECTED
INTEREST RATES YIELD LIVES VOLATILITY
------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 Associates Stock Option Award Plan... 6.44% -% 3.55% -% 4 years - 20.8% -%
Key Employee Stock Plan................... 5.52 6.15 3.55 3.55 7 years 7 years 24.6 25.3
</TABLE>
The effects of applying SFAS 123 in the pro forma disclosures are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995.
1996 ASSOCIATES STOCK OPTION AWARD PLAN:
On June 26, 1996, the Corporation's Board of Directors approved the 1996
Associates Stock Option Award Plan. Under the plan, eligible full-time and part-
time employees at the level of Vice President and below received an award of a
predetermined number of stock options entitling them to purchase shares of the
Corporation's common stock at the closing price of $42 1/8 per share on July 1,
1996. Options to purchase approximately 32 million shares of the Corporation's
common stock were granted on July 1, 1996. Options to purchase approximately 10
million shares were granted on January 7, 1997 to eligible Boatmen's associates.
One-half of the options became exercisable after the Corporation's common stock
closed at or above $50 per share for ten consecutive trading days, which
occurred in January 1997. The remainder of the options are exercisable after the
Corporation's common stock closes at or above $60 per share for ten consecutive
trading days. Regardless of the stock price, all options will be fully
exercisable July 1, 2000. No option could be exercised before January 1, 1997.
The options expire on July 1, 2001.
KEY EMPLOYEE STOCK PLAN:
The Key Employee Stock Plan provides for different types of awards including
stock options, restricted stock and performance shares. Under this plan, certain
key employees received stock options effective July 1, 1995, entitling them to
purchase shares of the Corporation's common stock at the previous day's closing
market price of $26 13/16 per share. Options to purchase 7.92 million shares of
common stock were granted. Fifty percent of the options are currently vested and
exercisable. The remaining fifty percent vest and become exercisable in two
equal installments on July 1, 1997 and 1998. Any unexercised options will expire
on July 1, 2005.
Under the Key Employee Stock Plan, on January 2, 1996, ten-year options to
purchase 3.6 million shares of common stock at $34 11/16 per share were granted
to certain employees. On February 1, 1996, ten-year options to purchase 1.8
million shares of common stock at $34 3/8 per share were granted to certain
employees. In January 1997, ten-year options to purchase 2.31 million shares of
common stock at $49 7/16 were granted to certain employees. For these grants,
twenty-five percent of the options immediately vested and became exercisable.
The remainder vest and become exercisable in three equal annual installments. In
addition, in January 1997, 620,000 shares of restricted stock were granted to
certain former Boatmen's executives in connection with their employment with the
Corporation. These shares vest in three substantially equal installments
beginning January 1998.
RESTRICTED STOCK AWARD PLAN:
Under the Corporation's Restricted Stock Award Plan, key employees were
awarded shares of the Corporation's common stock subject to certain vesting
requirements. Generally, vesting occurred in five equal annual installments with
related deferred compensation expensed over the same period.
OTHER PLANS:
Additional options under former plans and restricted stock and stock options
assumed in connection with various acquisitions remain outstanding and are
insignificant in amount. No further options or rights will be granted under such
plans.
The following tables present the status of the Plans as of December 31,
1996, 1995 and 1994, and changes during the years then ended:
<TABLE>
<CAPTION>
1996 1995 1994
----------------------------------------------------------------------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE WEIGHTED-AVERAGE
Employee Stock Option Plans SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.... 12,788,762 $23.52 12,741,502 $20.34 17,179,992 $20.44
Shares due to acquisitions.......... 1,098,580 17.26 264,446 19.55 39,192 14.76
Granted............................. 38,259,496 41.08 7,920,000 26.82 - -
Exercised........................... (3,783,170) 20.69 (7,691,186) 21.39 (3,570,562) 19.47
Forfeited........................... (3,823,518) 40.57 (446,000) 25.43 (907,120) 25.44
---------------------------------------------------------------------------------------
Outstanding at end of year.......... 44,540,150 37.22 12,788,762 23.52 12,741,502 20.34
=======================================================================================
Options exercisable at year end..... 7,591,598 24.38 6,805,944 20.66 12,716,302 20.35
Weighted-average fair value of
options granted during the year... $ 7.82 $ 6.91
=========== ===========
</TABLE>
66 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------------------------------------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE WEIGHTED-AVERAGE
Restricted Stock Award Plan SHARES GRANT PRICE SHARES GRANT PRICE SHARES GRANT PRICE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding unvested grants at
beginning of year........... 2,520,892 $23.23 3,633,704 $22.93 4,301,140 $22.29
Granted....................... - - 125,000 24.50 574,000 25.94
Vested........................ (1,106,062) 22.76 (1,136,732) 22.39 (1,188,716) 22.03
Canceled...................... (73,280) 24.36 (101,080) 22.75 (52,720) 23.44
-------------------------------------------------------------------------------
Outstanding unvested grants
at end of year.............. 1,341,550 23.55 2,520,892 23.23 3,633,704 22.93
===============================================================================
</TABLE>
The following table summarizes information about stock options outstanding
on December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------------------------------------
NUMBER WEIGHTED-AVERAGE WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT DECEMBER 31 CONTRACTUAL LIFE EXERCISE PRICE AT DECEMBER 31 EXERCISE PRICE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 6.00 - $30.00....... 9,941,194 6.9 years $23.93 6,335,694 $22.31
$30.01 - $46.50....... 34,598,956 5.2 years 41.03 1,255,904 34.84
-------------- ---------
$ 6.00 - $46.50....... 44,540,150 5.6 years 37.22 7,591,598 24.38
============== =========
</TABLE>
NOTE ELEVEN. 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>
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
NONINTEREST INCOME
Service charges on deposit accounts............ $1,121 $ 884 $ 797
Mortgage servicing and mortgage-related fees... 213 138 86
Fees on factored accounts receivable........... 64 68 74
Investment banking income...................... 356 192 138
Other nondeposit-related service fees.......... 198 156 138
Asset management and fiduciary service fees.... 432 444 435
Credit card income............................. 314 277 280
Trading account profits and fees............... 274 306 273
Other income................................... 674 613 376
---------------------------
$3,646 $3,078 $2,597
---------------------------
- -----------------------------------------------------------------------------
NONINTEREST EXPENSE
Personnel...................................... $2,731 $2,491 $2,311
Occupancy, net................................. 523 495 487
Equipment...................................... 451 397 364
Marketing...................................... 252 217 161
Professional fees.............................. 256 182 171
Amortization of intangibles.................... 128 119 141
Credit card.................................... 64 55 71
Deposit insurance.............................. 26 118 211
Data processing................................ 237 229 235
Telecommunications............................. 172 150 137
Postage and courier............................ 148 135 126
Other general operating........................ 490 411 388
General administrative and miscellaneous....... 187 164 139
--------------------------
$5,665 $5,163 $4,942
==========================
</TABLE>
Notes To Consolidated Financial Statements 67
<PAGE>
NOTE TWELVE. INCOME TAXES
The components of income tax expense for the years ended December 31 were
(dollars in millions):
1996 1995 1994
- ---------------------------------------------------------------
Current portion - expense
Federal........................... $ 889 $ 814 $451
State............................. 45 55 37
Foreign........................... 21 13 5
-------------------------
955 882 493
-------------------------
Deferred portion - expense (benefit)
Federal........................... 299 147 350
State............................. 19 12 21
Foreign........................... (14) - 1
-------------------------
304 159 372
-------------------------
Total tax expense............... $1,259 $1,041 $865
=========================
The Corporation's current income tax expense of $955 million, $882 million
and $493 million for 1996, 1995 and 1994, respectively, approximates the amounts
payable for those years.
Deferred expense represents the change in the deferred tax asset or
liability and is discussed further below.
A reconciliation of the expected federal tax expense, based on the federal
statutory rate of 35 percent for 1996, 1995 and 1994, to the actual consolidated
tax expense for the years ended December 31 is as follows (dollars in millions):
1996 1995 1994
- --------------------------------------------------------------------------
Expected federal tax expense.................. $1,272 $1,047 $894
Increase (decrease) in taxes resulting from
Tax-exempt income........................... (35) (32) (35)
State tax expense, net of federal benefit... 48 55 46
Other....................................... (26) (29) (40)
----------------------------
Total tax expense......................... $1,259 $1,041 $865
============================
Significant components of the Corporation's deferred tax (liabilities) and
assets on December 31 are as follows (dollars in millions):
1996 1995
- --------------------------------------------------------------
Deferred tax liabilities
Securities available for sale.......... $ (45) $ (192)
Equipment lease financing.............. (1,008) (750)
Depreciation........................... (132) (140)
Intangibles............................ (84) (66)
Employee retirement benefits........... (108) (109)
Other, net...,......................... (255) (180)
--------------------
Gross deferred tax liabilities....... (1,632) (1,437)
--------------------
Deferred tax assets
Employee benefits...................... 118 89
Net operating loss carryforwards....... 42 16
Allowance for credit losses............ 773 754
Other real estate owned................ 16 16
Loan fees and expenses................. 33 26
General business credit carryforwards.. 6 11
Other, net............................. 193 154
---------------------
Gross deferred tax assets............ 1,181 1,066
Valuation allowance.................... (15) (16)
---------------------
Deferred tax assets, net of valuation
allowance.......................... 1,166 1,050
---------------------
Net deferred tax liabilities............. $ (466) $ (387)
=====================
The Corporation's deferred tax assets on December 31, 1996 include a
valuation allowance of $15 million representing primarily state net operating
loss carryforwards for which it is more likely than not that realization will
not occur. The net change in the valuation allowance for deferred tax assets was
a decrease of $1 million, due to the realization of certain state deferred tax
assets.
68 NationsBank Corporation Annual Report 1996
<PAGE>
NOTE THIRTEEN. 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, the amount
and timing of future cash flows and estimated discount rates. The estimation
methods for individual classifications of financial instruments are described
more fully 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 the value of individual
financial instruments 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 values of short-term financial instruments, including cash and
cash equivalents, federal funds sold and purchased, resale and repurchase
agreements, and commercial paper and short-term borrowings, approximate the fair
values of these instruments. 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.
FINANCIAL INSTRUMENTS TRADED
IN THE SECONDARY MARKET
Securities held for investment, securities available for sale, loans held
for sale, trading account instruments, long-term debt and trust preferred
securities traded actively 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
determined by discounting estimated cash flows using interest rates
approximating the Corporation's December 31 origination rates for similar loans.
Where quoted market prices were available, primarily for certain residential
mortgage loans, such market prices were utilized as estimates for fair values.
Contractual cash flows for residential mortgage loans were adjusted for
estimated prepayments using published industry data. For most variable-rate
loans, the carrying amounts were considered to approximate fair value. Where
credit deterioration has occurred, estimated cash flows for fixed- and variable-
rate loans have been reduced to incorporate estimated losses.
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 for which book and fair
value differed on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1996 1995
-----------------------------------------------
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Loans, net of unearned income............................. $116,711 $117,525 $112,244 $112,785
Allowance for credit losses............................... (2,315) - (2,163) -
FINANCIAL LIABILITIES
Deposits.................................................. 106,498 106,512 100,691 100,843
Long-term debt (excluding obligations under capital
leases)................................................. 22,689 22,739 17,753 18,077
</TABLE>
For all other financial instruments, book value approximates fair value.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The fair value of the Corporation's asset and liability management and other
interest rate contracts is presented in TABLE ELEVEN on page 33 and in the
second full paragraph in the mortgage servicing discussion in the Noninterest
Income section on page 24. 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 approximately $190 million and
$111 million on December 31, 1996 and 1995, respectively.
Notes To Consolidated Financial Statements 69
<PAGE>
NOTE FOURTEEN. PARENT COMPANY FINANCIAL INFORMATION
The following tables present consolidated parent company financial
information:
<TABLE>
<CAPTION>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS)
YEAR ENDED DECEMBER 31
-----------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income
Dividends from consolidated
Subsidiary banks and bank holding companies.... $2,309 $ 999 $1,864
Other subsidiaries............................. 210 7 5
Interest from consolidated subsidiaries.......... 799 635 355
Other income..................................... 593 547 501
-----------------------------
3,911 2,188 2,725
-----------------------------
Expenses
Interest on borrowed funds....................... 1,051 835 582
Noninterest expense.............................. 519 462 442
-----------------------------
1,570 1,297 1,024
-----------------------------
Earnings
Income before equity in undistributed earnings of
consolidated subsidiaries and taxes............ 2,341 891 1,701
-----------------------------
Equity in undistributed earnings of consolidated
Subsidiary banks and bank holding companies.... (63) 830 (247)
Other subsidiaries............................. 34 208 140
------------------------------
(29) 1,038 (107)
------------------------------
Income before income taxes......................... 2,312 1,929 1,594
Income tax benefit................................. (63) (21) (96)
------------------------------
Net income......................................... $2,375 $1,950 $1,690
==============================
Net income available to common shareholders........ $2,360 $1,942 $1,680
==============================
</TABLE>
<TABLE>
<CAPTION>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
DECEMBER 31
-------------------
1996 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Assets
Cash held at subsidiary banks................... $ 8 $ 8
Temporary investments........................... 4,250 396
Receivables from consolidated
Subsidiary banks and bank holding companies... 2,936 3,116
Other subsidiaries............................ 8,851 8,633
Investment in consolidated
Subsidiary banks and bank holding companies... 13,985 12,255
Other subsidiaries............................ 1,705 1,728
Other assets.................................... 1,176 1,095
--------------------
$32,911 $27,231
====================
Liabilities and Shareholders' Equity
Commercial paper and other notes payable........ $ 2,344 $ 2,494
Accrued expenses and other liabilities.......... 678 737
Payables to consolidated susidiaries............ 995 -
Long-term debt.................................. 15,250 11,199
Shareholders' equity............................ 13,644 12,801
--------------------
$32,911 $27,231
====================
</TABLE>
70 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
YEAR ENDED DECEMBER 31
---------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income................................................ $ 2,375 $ 1,950 $ 1,690
Reconciliation of net income to net cash provided by
operating activities
Equity in undistributed earnings of consolidated
subsidiaries.......................................... 29 (1,038) 107
Other operating activities.............................. 802 (380) 142
---------------------------------
Net cash provided by operating activities............. 3,206 532 1,939
---------------------------------
Investing Activities
Net (increase) decrease in temporary investments.......... (3,854) 187 (271)
Net increase in receivables from consolidated
subsidiaries............................................ (38) (3,155) (1,416)
Additional capital investment in subsidiaries............. (424) (384) (764)
(Acquisitions) sales of subsidiaries, net of cash......... (726) - 101
---------------------------------
Net cash used by investing activities................... (5,042) (3,352) (2,350)
---------------------------------
Financing Activities
Net (decrease) increase in commercial paper and other
notes payable........................................... (150) 68 144
Proceeds from issuance of long-term debt.................. 5,560 4,606 1,159
Retirement of long-term debt.............................. (1,509) (1,005) (438)
Preferred stock repurchased and redeemed.................. - - (94)
Proceeds from issuance of common stock.................... 136 239 267
Common stock repurchased.................................. (1,503) (522) (180)
Cash dividends paid....................................... (715) (575) (527)
Other financing activities................................ 17 13 73
---------------------------------
Net cash provided by financing activities............... 1,836 2,824 404
---------------------------------
Net increase (decrease) in cash held at subsidiary
banks..................................................... - 4 (7)
Cash held at subsidiary banks on January 1.................. 8 4 11
---------------------------------
Cash held at subsidiary banks on December 31................ $ 8 $ 8 $ 4
==================================
</TABLE>
Notes To Consolidated Financial Statements 71
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation And Subsidiaries
SIX-YEAR CONSOLIDATED STATISTICAL SUMMARY
1996 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TAXABLE-EQUIVALENT YIELDS EARNED
Loans and leases, net of unearned income
Commercial............................................ 8.16% 8.19% 7.56% 6.96% 7.08% 8.70%
Real estate commercial................................ 9.03 9.30 8.18 7.59 7.78 9.13
Real estate construction.............................. 8.89 9.73 8.49 7.50 7.17 8.82
Total commercial.................................... 8.29 8.42 7.71 7.09 7.20 8.78
Residential mortgage.................................. 7.80 7.78 7.62 8.27 9.33 10.47
Credit card........................................... 11.77 12.78 12.84 13.62 14.45 15.22
Other consumer........................................ 9.87 10.07 9.26 9.24 10.07 11.13
Total consumer...................................... 9.06 9.37 8.99 9.51 10.50 11.47
Foreign............................................... 6.87 7.71 6.10 5.49 6.63 8.47
Lease financing....................................... 7.58 7.59 7.50 7.96 8.25 10.89
Total loans and leases, net......................... 8.59 8.79 8.20 8.06 8.49 9.83
Securities
Held for investment................................... 5.59 5.57 5.06 5.54 6.84 8.61
Available for sale.................................... 6.63 6.25 5.20 4.80 5.77 -
Total securities.................................... 6.46 5.84 5.12 5.51 6.76 8.61
Loans held for sale..................................... 7.30 7.47 6.63 6.73 7.22 8.74
Federal funds sold and securities
purchased under agreements to resell.................. 5.19 6.18 4.09 3.21 3.77 5.89
Time deposits placed and other short-term investments... 5.54 6.87 5.12 3.91 5.09 6.89
Trading account securities.............................. 6.44 7.76 7.32 5.43 4.64 6.99
Total earning assets................................ 7.83 7.98 7.16 7.06 7.70 9.25
RATES PAID
Savings................................................. 2.22 2.37 2.33 2.38 2.86 4.55
NOW and money market deposit accounts................... 2.52 2.68 2.34 2.24 2.82 4.96
Consumer CDs and IRAs................................... 5.28 5.19 4.17 4.52 5.58 7.01
Negotiated CDs, public funds and other time deposits.... 5.49 5.56 4.02 3.97 4.93 7.08
Foreign time deposits................................... 5.38 6.25 4.98 4.05 5.52 6.70
Borrowed funds and trading account liabilities.......... 5.65 6.40 4.87 3.45 3.33 5.64
Long-term debt.......................................... 6.51 7.00 6.85 7.44 8.92 8.88
Special Asset Division net funding allocation........... - - - - - (6.20)
Total interest-bearing liabilities.................. 4.85 5.28 4.09 3.53 4.12 6.09
PROFIT MARGINS
Net interest spread..................................... 2.98 2.70 3.07 3.53 3.58 3.16
Net interest yield...................................... 3.62 3.33 3.58 3.96 4.10 3.82
YEAR-END DATA
(DOLLARS IN MILLIONS)
Loans, leases and factored accounts
receivable, net of unearned income.................... $122,630 $117,033 $103,371 $ 92,007 $ 72,714 $ 69,108
Securities held for investment.......................... 2,110 4,432 17,800 13,584 23,355 16,275
Securities available for sale........................... 12,277 19,415 8,025 15,470 1,374 8,904
Loans held for sale..................................... 1,215 1,663 318 1,697 1,236 585
Time deposits placed and other short-term investments... 1,843 1,296 2,159 1,479 1,994 1,622
Total earning assets.................................... 164,676 167,945 151,722 140,890 103,872 96,491
Total assets (1)........................................ 185,794 187,298 169,604 157,686 118,059 110,319
Noninterest-bearing deposits............................ 25,738 23,414 21,380 20,723 17,702 16,356
Domestic savings and time deposits...................... 72,707 64,388 66,487 66,356 62,988 70,359
Foreign time deposits................................... 8,053 12,889 12,603 4,034 2,037 1,360
Total savings and time deposits......................... 80,760 77,277 79,090 70,390 65,025 71,719
Total deposits.......................................... 106,498 100,691 100,470 91,113 82,727 88,075
Borrowed funds and trading account liabilities.......... 35,753 51,067 45,555 44,248 21,957 9,846
Long-term debt.......................................... 22,985 17,775 8,488 8,352 3,066 2,876
Total shareholders' equity.............................. 13,709 12,801 11,011 9,979 7,814 6,518
</TABLE>
(1) EXCLUDES ASSETS OF NATIONSBANK OF TEXAS SPECIAL ASSET DIVISION IN 1991.
72 NationsBank Corporation Annual Report 1996
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS RATIOS
Return on average
Total assets (1)......................................... 1.18% 1.03% 1.02% .97% 1.00% .17%
Earning assets (1)....................................... 1.34 1.17 1.14 1.09 1.12 .20
Common shareholders' equity.............................. 17.95 17.01 16.10 15.00 15.83 2.70
EARNINGS ANALYSIS (TAXABLE-EQUIVALENT)
Noninterest income as a percentage of net interest
income................................................... 56.76 55.36 48.96 44.48 45.65 44.22
Noninterest expense, excluding merger-related charge,
as a percentage of net interest income................... 88.20 92.85 93.16 90.90 94.64 97.62
Efficiency ratio: noninterest expense, excluding
merger-related charge, divided by the sum of net
interest income and noninterest income................. 56.3 59.8 62.5 62.9 65.0 67.7
Overhead ratio: noninterest expense, excluding
merger-related charge, less noninterest income
divided by net interest income........................... 31.44 37.50 44.20 46.42 48.99 53.40
Net income as a percentage of net
interest income.......................................... 36.98 35.07 31.86 31.79 27.33 5.12
ASSET QUALITY
FOR THE YEAR
Net charge-offs as a percentage of average
loans, leases and factored accounts receivable........... .48 .38 .33 .51 1.25 1.86
Net charge-offs as a percentage of the
provision for credit losses.............................. 98.84 110.21 101.79 95.76 121.15 82.70
AT YEAR END
Allowance for credit losses as a percentage of net
loans, leases and factored accounts receivable........... 1.89 1.85 2.11 2.36 2.00 2.32
Allowance for credit losses as a percentage of
nonperforming loans...................................... 260.02 306.49 273.07 193.38 103.11 81.82
Nonperforming assets as a percentage of net
loans, leases, factored accounts receivable
and other real estate owned.............................. .85 .73 1.10 1.92 2.72 4.01
Nonperforming assets as a percentage of total assets (1)... .56 .46 .67 1.13 1.69 2.54
Nonperforming assets (in millions)......................... $ 1,043 $ 853 $ 1,138 $ 1,783 $ 1,997 $ 2,804
RISK-BASED CAPITAL RATIOS
Tier 1..................................................... 7.76% 7.24% 7.43% 7.41% 7.54% 6.38%
Total...................................................... 12.66 11.58 11.47 11.73 11.52 10.30
OTHER CAPITAL RATIOS
Common shareholders' equity as a
percentage of total assets at year end (1)............... 7.31 6.81 6.47 6.25 6.60 5.67
Dividend payout ratio (per common share)................... 29.95 29.17 30.78 28.38 33.07 215.36
Shareholders' equity per common share
Average.................................................. $ 22.28 $ 20.95 $ 19.00 $ 16.68 $ 14.53 $ 13.98
At year end.............................................. 23.69 23.26 19.85 18.20 15.40 13.52
OTHER STATISTICS
Number of full-time equivalent employees................... 62,971 58,322 61,484 57,742 50,828 57,177
Rate of increase (decrease) in average
Total loans and leases, net of unearned income........... 11.67% 15.24% 20.29% 15.83% (1.70)% 1.82%
Earning assets........................................... 6.23 12.55 24.50 16.59 (.84) 2.42
Total assets (1)......................................... 6.54 13.36 23.75 16.82 (.64) 1.85
Total deposits........................................... 8.37 5.91 12.30 .97 (5.59) 3.44
Total shareholders' equity............................... 15.82 9.22 21.19 18.73 10.31 6.16
COMMON STOCK INFORMATION
Market price per share
High for the year........................................ $ 52 5/8 $37 3/8 $28 11/16 $ 29 $26 11/16 $21 3/8
Low for the year......................................... 32 3/16 22 5/16 21 11/16 22 1/4 19 13/16 10 3/4
Close at the end of the year............................. 48 7/8 34 13/16 22 9/16 24 1/2 25 11/16 20 5/16
Daily average trading volume............................... 1,937,938 1,452,934 1,507,030 1,333,182 1,455,156 794,108
Number of shareholders of record........................... 106,345 103,137 105,774 108,435 89,371 102,209
</TABLE>
Six-Year Consolidated Statistical Summary 73
<PAGE>
EXHIBIT 21
Subsidiaries of NationsBank Corporation and Its Subsidiaries at 02/28/97
(100% Owned by NationsBank Corporation Unless Otherwise Noted)
*indicates location of corporate records
ASB Capital Management, Inc.
Atlantic Equity Corporation
GLM Investments, Inc. 1
Blue Ridge Investments, L.L.C. 2
Carolina Mountain Holding Company
CSF Holdings, Inc.
Citizens Travel, Inc. 3
Citizens Financial Services, Inc. 3
Equitable Service Corporation 4
Transtex Management Company 4
Equitable Bancorporation Overseas Finance N.V.
Export Funding Corporation
MAR, Inc.
MN World Trade Corporation
MNC Affiliates Group, Inc.
MNC American Corporation 5
MNC Credit Corp 5
A/M Properties, Inc. 6
American Financial Service Group, Inc. (LEASEFIRST)6
Maryland National Realty Investors, Inc. 6
Maryland National Leasing Services Corporation 6
MNC Capital Corporation 6
NationsCredit Corporation
NationsCredit Commercial Corporation 7
ALS II, Inc. 8
ALS Superior, Inc. 8
BJCC, Inc. 8
JCCA, Inc. 8
BIRMSON, L.L.C.9
Cape Canterbury, Ltd. 8
LDI Corporation 8
NationsCredit Commercial Corporation of America 8
Ariens Credit Corporation 10
Gravely Credit Corporation 10
Korg Acceptance Corporation 10
Mercury Marine Acceptance Corporation 10
NationsCredit Commercial Corporation Ltd. 10
NationsCredit Marine Funding Corporation 10
NationsCredit Securitization Corporation 10
NIMAC Finance Corp. 10
Sea Ray Credit Corporation 10
Winnebago Acceptance Corporation 10
USW SIS I, Inc. 8
USW SIS II, Inc. 8
NationsCredit Consumer Corporation 7
NationsCredit Acceptance Corporation 11
NationsCredit Consumer Discount Company 11
1
<PAGE>
NationsCredit Consumer Services, Inc. 11
NationsCredit Finance Group Inc. 11
NationsCredit Financial Acceptance Corporation 11
NationsCredit Financial Services Corporation 11
NationsCredit Financial Services Corporation of Alabama 11
NationsCredit Financial Services Corporation of America 11
NationsCredit Financial Services Corporation of Florida 11
NationsCredit Mortgage Corporation of Florida 12
NationsCredit Financial Services Corporation of Nevada 11
NationsCredit Financial Services Corporation of Virginia 11
NationsCredit Home Equity Corporation of Kentucky 11
NationsCredit Home Equity Corporation of Virginia 11
NationsCredit Home Equity Services Corporation 11
Canterbury Indiana Holdings, Inc. 13
NationsCredit Insurance Agency, Inc. 11
NationsCredit Insurance Corporation 11
NationsCredit Manufactured Housing Corporation 11
NationsCredit Management Corporation 7
NationsBanc Business Credit, Inc.
NationsBanc Capital Markets, Inc.
NationsBanc Capital Markets International Limited
NationsBanc-CRT Services, Inc.
NationsBanc Mortgage Capital Corporation
NationsCommercial Corp. 14
NationsLink Funding Corporation 14
Tryon Mortgage Funding, Inc. 14
NB Capital Trust I
NB Capital Trust II
NB Capital Trust III
NB Holdings Corporation
BBI Kansas, Inc. 15
Boatmen's National Bank 16
M & M Realty, Inc. 17
Midwest Realty & Management, Inc. 17
Boatmen's National Bank of Oklahoma 18
Bank IV Securities Inc. 19
Bank Marketing Systems 19
CSI Holdings, Inc. 19
Consolidated Asset Management Company, Inc. 19
Maywell Mark Corporation 19
OA Management, Inc. 19
Quatro I, Inc. 19
Rockwell Resources, Inc. 19
Townsite Plaza Development, Inc. 19
Boatmen's Trust Company of Kansas 16
Bank IV Community Development Corporation 16
Bank IV Affordable Housing Corporation 16
Fourth Investment Advisors, Inc. 16
IV Commercial Acquisition, Inc. 16
IV CB&T Tulsa Holdings Inc. 20
Boatmen's Arkansas, Inc. 15
Boatmen's Bank of Northeast Arkansas 21
Citizens Advisory Group, Inc. 22
2
<PAGE>
Citizens Real Estate, Inc. 22
Boatmen's National Bank of Arkansas 21
Boatmen's Investment Services of Arkansas, Inc. 23
U.N. Service Corporation 23
The Union Modern Mortgage Corporation 23
Worthen Mortgage Company 23
Boatmen's National Bank of Batesville 21
Boatmen's National Bank of Conway 21
Boatmen's National Bank of Hot Springs 21
WHS Appraisal Corp. 24
Boatmen's National Bank of Newark 21
Boatmen's National Bank of North Central Arkansas 21
Boatmen's National Bank of Northwest Arkansas 21
Boatmen's National Bank of Pine Bluff 21
Boatmen's National Bank of Russellville 21
Boatmen's National Bank of South Arkansas 21
Worthen Financial Corporation 21
Boatmen's National Bank of Austin 25
Boatmen's Trust Company of Arkansas 21
National Credit Corporation 21
Worthen Development Corporation, Inc. 21
Boatmen's Bancshares of Iowa, Inc. 15
Boatmen's Building Corporation of Iowa, Inc. 26
FKF, Inc. 26
Boatmen's Bank Iowa, N.A. 26
Boatmen's of Iowa Investments, Inc. 27
Boatmen's Bank of Fort Dodge 26
Boatmen's of Fort Dodge Investments, Inc. 28
Boatmen's National Bank of Northwest Iowa 26
Boatmen's of Northwest Iowa Investments, Inc. 29
Boatmen's Bank of North Iowa 26
Boatmen's of North Iowa Investments, Inc. 30
Boatmen's Insurance Services of Iowa, Inc. 30
Boatmen's Bank of Franklin County 15
Boatmen's Bank of Kennett 15
Boatmen's Bank of Marshall 15
Boatmen's Bank of Mid-Missouri 15
Boatmen's Bank of Pulaski County 15
Boatmen's Bank of Quincy 15
Boatmen's Bank of Rolla 15
Boatmen's Bank of Southern Missouri 15
Finance Investment Company 31
Boatmen's Bank of Southwest Missouri 15
Boatmen's Bank of Tennessee 15
Boatmen's Financial Services, Inc. 32
200 Madison Ave. Realty Corp. 32
Boatmen's Bank of Troy 15
Boatmen's Bank of Vandalia 15
Boatmen's Credit Card Bank 15
Boatmen's First National Bank of West Plains 15
Boatmen's-Illinois, Inc. 15
3
<PAGE>
Boatmen's Bank of South Central Illinois 33
Boatmen's National Bank of Boonville 15
Boatmen's National Bank of Cape Girardeau 15
Boatmen's National Bank of Central Illinois 15
Boatmen's National Bank of Coles County 15
Boatmen's National Bank of Lebanon 15
The Boatmen's National Bank of St. Louis 15
BNB Auto, Inc. 34
Arkansas Home Loan Company 34
National Home Loan Company, Inc. 34
National Home Loan Company of Mississippi, Inc. 34
4625 Lindell Corp. 34
Guardian Property, Inc. 34
Des Peres Banc Corporation 34
First of St. Louis Commercial Leasing Corp. 34
G.B.C. Properties, Inc. 34
Boatmen's Equipment Finance, Inc.34
First Revitalization Corp. 34
Boatmen's Investment Services, Inc. 34
Market Street Securities, Inc. 35
BBI Merchant Processing Company, LLC 36
Boatmen's POS Merchant Processing Company, LLC 37
Plaza Associates 34
St. Louis Investment Properties, Inc. 34
Bonhomme Place Associates, Inc. 38
Marbel Homes, Inc. 34
Boatmen's National Mortgage, Inc. 39
Boatmen's Foreign Investment Corporation 34
Savannah International Sales, Inc. 40
Tyler International Sales, Inc. 40
Boatmen's Osage Bank 15
Boatmen's River Valley Bank 15
Boatmen's Sunwest, Inc. 15
Sunwest Bank of Albuquerque, N.A. 41
Sunwest Bank of Clovis, N.A. 41
Sunwest Bank of Farmington 41
Sunwest Bank of Gallup 41
Sunwest Bank of Grant County 41
Sunwest Bank of Hobbs, N.A. 41
Sunwest Bank of Las Cruces, N.A. 41
Sunwest Bank of Raton, N.A. 41
Sunwest Bank of Rio Arriba, N.A. 41
Sunwest Bank of Roswell, N.A. 41
Sunwest Bank of Santa Fe 41
Sunwest Texas, Inc. 41
Sunwest Bank of El Paso 42
Boatmen's Texas, Inc. 15
Boatmen's First National Bank of Amarillo 43
Centerre Bancorporation, Inc.15
Founders Bancorporation, Inc. 15
NationsBank, N.A. 15
American Security (Louisiana) Ltd. 44
4
<PAGE>
Ashburn A Corp. 44
Baltic M Corp. 44
BT Building Corporation 44
Central City General, L.P. 45
Carolina Pacific, Inc. 44
CC Plaza M Corp. 44
Chesapeake M Corp. 44
Courtcom M Corp. 44
Devon A Corp. 44
Down Under Finance Corporation 44
Dulaney Valley Corporation 44
Education Financing Services, LLC 46
Elwin Company, Inc. 44
Federal Properties I, Inc. 44
First Development Corporation 44
Fountain Square Corporation of Maryland 44
Harper Farm M Corp. 44
HICO Park M Corp. 44
Madison Park A Corp. 44
Main Place Holdings Corporation 44
Main Place Real Estate Investment Trust 47
Mar A Lowe Corp. 44
Marco Properties, Inc. 44
Greenburgh Marco, Inc. 48
Reprise, Inc. 48
Maryland National Community Development Corporation 44
Greensides Elderly Limited Partnership 49
The Maryland National/Enterprise Equity Fund
Limited Partnership 49
Montgomery Homes Limited Partnership II 50
Montgomery Homes Limited Partnership III 49
Montgomery Homes Limited Partnership IV 49
Neighborhood Rental Limited Partnership II 51
The Newington Limited Partnership 51
Rosedale Terrace Limited Partnership 51
St. Wenceslaus Limited Partnership 51
Maryland Nationalease Corporation 44
Melwood M Corp. 44
Metropo M Corp. 44
Metropolitan Commercial Properties Corporation I 44
Metropolitan Commercial Properties Corporation VIII 44
Metropolitan Commercial Properties Corporation X 44
MNC Consumer Discount Company 44
MNC Investment Bank, Ltd. 44
Multi-State Properties, Inc. 44
MYM Holdings Corporation 44
NationsBanc Advisors, Inc. 44
NationsBanc Auto Funding Corporation 44
NationsBanc Charlotte Center, Inc. 44
Nations-CRT Options, Inc. 44
NationsBanc Dealer Leasing, Inc. 44
NationsBanc Enterprise, Inc. 44
NationsSecurities 52
5
<PAGE>
NSI Agency, LLC 53
NationsBanc Equity Mortgage Corporation 44
NationsBanc Financial Products, Inc. 44
NationsBanc Insurance Services, Inc. 44
NationsBanc Investments, Inc. 44
NationsBanc Lease Investments, Inc. 44
NationsBanc Leasing Corporation 54
NationsBanc Leasing Corporation of Virginia 44
NationsBanc SBIC Corporation 44
NationsBanc Venture Corporation 44
NationsBank Carolinas Merchant Services, Inc.44
NationsBank Merchant Services 55
Unified Merchant Services 56
NationsBank de Mexico, S.A. 57
NationsBank Europe Limited 44
Carolina Leasing Ltd. 58
Nations Financial Futures Limited 58
Nations Investment Management Limited 58
Commonwealth Securities Limited 59
Nations Investments Limited 58
Nations Securities Services Ltd. 58
NationsBank (Export Finance) Ltd. 58
NationsBank International 44
NationsBank Overseas Corporation 44
AF Funding (1993), Inc. 60
Kill Devil Hills Finance Limited Partnership 61
Air France/NationsBank (Grantor Trust) 62
Wrightbrothers Ltd. 63
AF Funding II (1993), Inc. 60
Kill Devil Hills II Limited Partnership 64
Air France/KDHF II (NGHGI)(Grantor Trust) 65
Florita Finance Ltd. 66
Binfield Ltd. 60
Carolina Investments Limited 60
Cathay Pacific/NationsBank Trust 1 (Grantor Trust) 60
Wanda Finance Ltd. 67
Clenston Ltd. 60
Diamond Shoals Finance Ltd. 60
Friary Leasing Limited 60
Gatwick, Inc. 60
Mayfair Partners 68
Piccadilly, Inc. 69
High Street, Inc. 70
New Broad Street, Inc. 70
Hatteras Finance Ltd. 60
Heathrow, Inc. 71
InterFirst Leasing Ltd. (London) 72
Island Funding, Ltd. 60
Japan Airlines/NCNB 1993-1 (Grantor Trust) 60
First in Flight Finance Ltd. 73
Nations-CRT Asia, Inc. 60
Nations-CRT Hong Kong, Limited 60
Nations-CRT International, Inc. 60
6
<PAGE>
Nations . CRT Japan, Inc. 60
Nations-CRT Overseas, Inc. 60
Nations-CRT U.K. & Co. 60
NationsBank International Trust (Jersey) Limited 74
NCNB Lease Atlantic, Inc. 60
NCNB Lease Finance III 75
Blue Ridge Finance Ltd. 76
NCNB Lease Finance 60
Wingtip Finance Limited 77
NCNB Lease Finance IV 60
Sandhills Finance Ltd. 78
NCNB Lease Finance V 60
Piedmont Finance Ltd. 79
NCNB Lease Finance VI 60
Kitty Hawk Finance Ltd. 80
NCNB Lease International, Inc. 60
Barnesbury, Ltd. 81
NCNB Lease Offshore, Inc. 60
NCNB Lease Finance II 82
Outerbanks Finance Ltd. 83
NCNB Overseas Services, Inc. 60
Phaestos FSC, Inc. 84
Republic Dallas Ltd. (U.K.) 85
TransPacific Funding (1993), Inc. 86
TransPacific Finance Limited Partnership 87
ANA II (Grantor Trust) 88
Fontana Finance Ltd. 89
Uwharrie Finance Ltd. 60
NB Partner Corp. 44
Gartmore Global Partners 90
NB Technology Partner, Inc. 44
Integrion Financial Network, LLC 91
NCNB Community Development Corporation 92
Palisades A Corp. 44
Pratt Management Company 44
Quality A Corp. 44
Ritchie Court M Corporation 44
Rive Gauche A Corp. 44
Rooms-Springfield, Inc. 44
SCRC Carrolltowne, Inc. 44
SCRC Process Service Corp. 44
Service-Wright Corporation 44
Seventeenth Commerce Properties Corporation 44
SOP M Corp. 44
South Charles Realty Corp 44
South Point Shopping Center, Inc. 44
Spotted Horse Holdings, Inc. 44
Sully A Corp. 44
Sunset Hill Corporation 44
Sweitzer M Corp. 44
Sykesville M Corp. 44
TradeStreet Investment Associates, Inc. 44
7
<PAGE>
Vernon M Corp. 44
Washington View, Inc. 44
Washington View (H) Corporation 93
Washington View (NH) Corporation 93
Wellington Land Co., Inc. 44
Wickliffe A Corp. 44
Woods M Corp. 44
NationsBank of Delaware, N.A.15
NationsBank, N.A. (South) 15
Atico Financial Corporation dba Cavalier Properties 94
Atico Investment Management 94
Bank South Investment Services, Inc. 94
Bank South Home Equity, Inc. 94
CFB Holding Corporation 94
Chase Eagle, Inc. 94
Chase Federal Housing Corporation 94
Chase I, Inc. 94
ChaseFed Insurance Co. 94
Chase/Scarborough Group, Inc. 94
Citizens Financial Securities Corporation 94
Community Reinvestment Group, L.C. 95
EXHO Properties, Inc. 94
Financial Automation, Inc. 94
First Financial Real Estate Development, Inc. 94
First Land Sales, Inc. 94
Harbilan Corporation 94
Motift, Inc. 94
NationsBanc Commercial Corporation 94
NationsBanc Leasing Corporation 54
NationsBanc Leasing Corporation of North Carolina 94
NNW Utility Funding I, Inc. 96
NNW Utility Funding II, Inc. 96
NationsBank Florida Merchant Services, Inc. 94
NationsBank Merchant Services 55
Unified Merchant Services 56
The Ocmulgee Corporation 94
Pan American Mortgage Corp. 94
Seabrook Operations, Inc. 94
Seaview of Seabrook, Inc. 94
WAC One, Inc. 94
200 Service Corp. 94
NationsBank of Kentucky, N.A. 15
NationsBank of Tennessee, N.A.15
Commerce Place Company 97
Tennessee Nationalease Corporation 97
NationsBank Texas Bancorporation, Inc. 15
NationsBank of Texas, N.A. 98
APL, Inc. 99
Austin National Realty Corporation 99
Beechnut Holdings, Inc. 99
Capitol Information Networks, Inc. 99
8
<PAGE>
Charter Colonial Securities, Inc. 99
Charter-Houston Securities, Inc. 99
Charter Venture Group, Inc. 99
DPC, Inc. 99
NationsBanc Capital Corporation 99
NationsBanc Energy Group Denver, Inc. 99
NationsBanc Mortgage Corporation 99
NationsBanc Services, Inc. 99
Republic National Corporation 99
Texas Nationalease Corporation 99
RepublicBank Insurance Agency, Inc. 98
Sun World, N.A. 98
Superior Federal Bank, FSB 15
SFS Corporation 100
Premier Management 101
Southwest Protective Life Insurance Company 101
Superior Financial Services of Oklahoma 101
Arch Reinsurance Company, Ltd. 15
Atlantic Credit Corporation 15
Bancshares Properties, Inc.15
Boatmen's Community Development Corporation 15
Boatmen's Insurance Agency, Inc. 15
Boatmen's Life Insurance Company 15
Boatmen's Service Company, Inc. 15
Boatmen's Trust Company 15
Boatmen's Trust Company of Illinois 102
Boatmen's Trust Company of Oklahoma 102
Boatmen's Trust Company of Texas 102
River City Capital Management, Inc. 102
Tower Commercial Realty, Inc. 102
Tower Holdings Limited Partnership 103
Union Realty and Securities Company 102
Cash Flow, Inc. 15
C&S Premises, Inc. 15
C&S Premises-SPE, Inc. 104
First Mortgage Corporation 15
NationsBanc Insurance Agency, Inc. 15
NationsBanc Insurance Company, Inc. 15
NationsBanc Insurance Inc. 15
NationsBanc Investment Corporation 15
NationsBanc Leasing & Finance Corporation 15
NationsBanc Leasing & R.E. Corporation 15
McCormick Realty Limited Partnership 105
NationsBanc Mortgage Corporation of Georgia 15
NationsBanc Retirement Management, Inc. 15
NationsBank Trust Company of New York 15
NB Insurance Services, Inc. 15
Second Land Sales, Inc. 15
Sovran Capital Management Corporation 15
9
<PAGE>
Suburban Service Corporation 15
Three Commercial Place Associates 106
NationsBank Community Development Corporation 107
Atlanta Affordable Housing Fund Limited Partnership 108
Biscayne Apartments, Inc. 109
Capital Crossing Development Corporation 109
The Charlotte Affordable Housing LLC 110
Carlton Court CDC, Inc. 109
Courtyards Apartments, Inc. 109
Coventry Village Apartments, Inc. 109
Tabono Joint Venture 111
Historic District Redevelopment Partnership 112
Kenilworth Industrial Park Limited Liability Company 113
Leon Avenue Redevelopment Company 114
Misty Waters Apartments, Inc. 109
NationsBank CDC Special Holding Company, Inc. 109
The Park at Lakewood L.L.C. dba Campbellton Glen
Apartments LLC 116
Queen City Partnership 109
Sherwood Terrace Apartments, Inc. 109
Southern Oaks Condominium Partners, Ltd. 110
Stanton Road LLC 111
T-Oaks Apartments, Inc. 109
Terry Street Redevelopment Limited Liability Company 112
University Park Shopping Center, LLC 113
NationsBank do Brasil Ltda 114
NationsBank Housing Fund Investment Corporation 115
Nations Housing Fund Limited Partnership 116
Florida City Apartments, Ltd. 117
Owen Brown II Limited Partnership 118
Bellevieu Manchester Limited Partnership 123
Hillcrest House Partnership, Ltd. 119
Oliver Plaza Limited Partnership 120
Broadway Court Limited Partnership 123
Walnut Woods Limited Partnership 123
Roanoke at HOME Limited Partnership 123
Broadway Apartments Limited Partnership 123
San Antonio Master Limited Partnership 121
Vera Cruz Redevelopment Partnership, LTD. 122
Greensboro Elderly Affordable Housing I Limited Partnership 123
Historic East Side Neighborhood Housing L.P. 123
Timber Ridge of Immokalee Limited Partnership 123
Park City, Ltd. 122
King Street Apartments, II, L.P. 123
S.C. Model I Limited Partnership 123
Columbia Hill Partners, L.P. 123
Columbia Mill, I, L.P. 123
The Arbors, Limited Partnership 123
Cranberry Equities Limited Partnership 123
ODC Crossing, Limited Partnership 123
Highlandtown Cooperative Limited Partnership 124
VOA Eastern Avenue Limited Partnership 123
Mt. Pleasant Ventures Limited Partnership 123
10
<PAGE>
Sherwood Park Limited Partnership 123
Etowah, L.P. 125
Dominion Pines Partners L.P. 123
Cheshire Chase Limited Partnership 123
Delowe Place, L.P. 123
Westwood Manor Development, L.P. 123
Elkridge Apartments Limited Partnership 126
Columbia Plaza I, L.P. 123
Ripley Station Limited Partnership 123
BHP/Johnston Square Limited Partnership 127
SPAR S.H.A.R.E. II, Ltd. 130
North Carolina Equity Fund 128
Riverview Townes Limited Partnership 129
Sedgebrook Limited Partnership 134
Willow Pond Limited Partnership 134
St. Andrew's Homes Limited Partnership 130
Carmel Ridge Limited Partnership 134
Bridgewood Square Limited Partnership 134
Hycienda Heights Limited Partnership 134
Nations Housing Fund II Limited Partnership 121
Pine Knoll Limited Partnership 131
NationsBridge, L.L.C.119
NCNB Corporate Services, Inc.
NCNB Properties, Inc.
South Charles Investment Corporation
Tidewater Partners Limited Partnership 132
SCI Holdings Corporation 133
SunStar Acceptance Corporation
DCRS Corporation 139
SunStar Acceptance Corporation (California) 139
SunStar Acceptance Corporation (Hawaii) 139
TIM, Inc.
Tryon Assurance Company, Ltd.
- -----------------------------------------------------------
The following companies are 50% or less owned by NationsBank Corporation or one
of its subsidiaries.
ABB Funding Partners, L.P., Stamford, CT - NationsCredit Commercial
Corporation owns 14.27% of this entity.
Carlton Court Limited Partnership, Dallas, TX - NationsBank Community
Development Corporation ("NBCDC") and Carlton Court CDC, Inc. own 49% and
1%, respectively, of this entity.
Charlotte Transit Center, Inc., Charlotte, NC - NationsBank CDC Special
Holding Company, Inc. has 50% control as one of the two members of this
non-profit corporation.
Church Street Crossing Associates, L.P., Washington, DC - NBCDC owns 50%
of this entity.
Collmain Customer Services Ltd., London - NationsBank Europe Limited owns
22.5% of this entity.
Collmain Services Ltd., London - Carolina Investments Limited holds a 20%
minority interest in this company.
11
<PAGE>
Columbia Community Investment Limited Partnership, Charlotte, NC - NBCDC
has a 20% interest in this entity.
Commonwealth National Bank, Mobile, AL - NationsBank Corporation owns
nonvoting securities representing 47% of this entity, however, does not
exercise any form of control over it.
CSC Associates, L.P., Marietta, GA - C&S Premises, Inc. and C&S
Premises-SPE, Inc. own 49% and 1%, respectively, of this entity.
Danville Community Development Corporation, Danville, VA - NBCDC owns 22%
of this entity.
Factoraje Bancomer, S.A., Mexico - NationsBank Overseas Corporation owns
10% of this entity.
First Housing Development Corporation of Florida, Tampa, FL -
NationsBank, N.A. (South) owns 12.07% of this entity.
Foremost Factors Limited, New Delhi, India - NationsBank Overseas
Corporation owns 35% of this entity.
HONOR Technologies, Inc., Maitland, FL - NationsBank Corporation owns
18.26% of this entity.
Kenilworth-Burroughs Limited Partnership, Washington, DC - Kenilworth
Industrial Park Limited Liability Company is General Partner with a .01%
general partnership interest and a 25.99% limited partnership interest.
Maryland Housing Equity Fund Limited Partnership, Columbia, MD - Maryland
National Community Development Corporation owns 13.12% of this limited
partnership.
MECA Software, L.L.C., Fairfield, CT - MYM Holdings Corporation owns
16.67% of this entity.
Nubia Redevelopment Partnership, Dallas, TX - NBCDC owns 50% of this
entity.
Roanoke Community Development Corporation, Roanoke, VA - NBCDC owns 28%
of this entity.
Savannah Community Development Corporation dba Savannah Regional Small
Business Capital Fund - NationsBank, N.A. (South) owns 21% of this
entity.
Springdale Equity Partners, L.P., Charlotte, NC - NationsBanc Investment
Corporation is a limited partner and has no voting rights, however,
contributed 99.5% of the capital and maintains a veto right over certain
actions.
12
<PAGE>
Springdale Venture Partners, L.P., Charlotte, NC - NationsBanc Venture
Corporation is a limited partner and has no voting rights, however,
contributed 99.5% of the capital and maintains a veto right over certain
actions.
Third Ward Neighborhood Development Association, Charlotte, NC - NCNB
Community Development Association, a subsidiary of NationsBank, N.A. owns
50% of this joint venture.
Tiryns FSC, Inc., Charlotte Amalie, VI - NationsBank Overseas Corporation
owns 50% of this entity.
Tri-Tech, L.P., Baltimore, MD - NationsBank of Delaware, N.A. owns 9.1%
of this entity.
Troy Street Limited Liability Company, Alexandria, VA - NationsBank
Community Development Corporation has a 39.89% interest in this entity,
however, has no right of control over it.
- --------
1 Atlantic Equity Corporation owns 100% of this entity.
2 NationsBank Corporation and NB Holdings Corporation own 99% and 1%,
respectively, of this entity.
3 CSF Holdings, Inc. owns 100% of this entity.
4 Citizens Financial Services, Inc owns 100% of this entity.
5 MNC Affiliates Group, Inc. owns 100% of this entity.
6 MNC Credit Corp owns 100% of this entity.
7 Nations Credit Corporation owns 100% of this entity.
8 NationsCredit Commercial Corporation owns 100% of this entity.
9 BJCC, Inc. and JCCA, Inc. own 40% and 60%, respectively, of this entity.
10 NationsCredit Commercial Corporation of America owns 100% of this entity.
11 NationsCredit Consumer Corporation owns 100% of this entity.
12 NationsCredit Financial Services Corporation of Florida owns 100% of this
entity.
13 NationsCredit Home Equity Services Corporation owns 100% of this entity.
14 NationsBanc Mortgage Capital Corporation owns 100% of this entity.
15 NB Holdings Corporation owns 100% of this entity.
16 BBI Kansas, Inc. owns 100% of this entity.
17 Boatmen's National Bank owns 100% of this entity.
18 BBI Kansas, Inc. and IV Commercial Acquisition, Inc. own 82.7% and 17.3%,
respectively, of this entity.
19 Boatmen's National Bank of Oklahoma owns 100% of this entity.
20 IV Commercial Acquisition, Inc. owns 100% of this entity.
21 Boatmen's Arkansas, Inc. owns 100% of this entity.
22 Boatmen's Bank of Northeast Arkansas owns 100% of this entity.
23 Boatmen's National Bank of Arkansas owns 100% of this entity.
24 Boatmen's National Bank of Hot Springs owns 100% of this entity.
25 Worthen Financial Corporation owns 100% of this entity.
26 Boatmen's Bancshares of Iowa, Inc. owns 100% of this entity.
27 Boatmen's Bank Iowa, N.A. owns 100% of this entity.
28 Boatmen's Bank of Fort Dodge owns 100% of this entity.
29 Boatmen's Bank of Northwest Iowa owns 100% of this entity.
30 Boatmen's Bank of North Iowa owns 100% of this entity.
31 Boatmen's Bank of Southern Missouri owns 100% of this entity.
32 Boatmen's Bank of Tennessee owns 100% of this entity.
33 Boatmen's-Illinois, Inc. owns 100% of this entity.
34 The Boatmen's National Bank of St. Louis owns 100% of this entity.
35 Boatmen's Investment Services, Inc. owns 100% of this entity.
36 A number of Boatmen's banks own percentages of this entity.
37 BBI Merchant Processing Company, LLC owns 50% of this entity.
38 St. Louis Investment Properties, Inc. owns 100% of this entity.
39 Marbel Homes, Inc. owns 100% of this entity
13
<PAGE>
40 Boatmen's Foreign Investment Corporation owns 100% of this entity.
41 Boatmen's Sunwest, Inc. owns 100% of this entity.
42 Sunwest Texas, Inc. owns 100% of this entity.
43 Boatmen's Texas, Inc. owns 100% of this entity.
44 NationsBank, N.A. owns 100% of this entity.
45 BT Building Corporation has a 17% general partnership interest and a 43%
limited partnership interest in this entity.
46 NationsBank, N.A. owns up to 22.26% of this entity; definitive % depends on
total number of participants.
47 Main Place Holdings Corporation owns 100% of this entity.
48 Marco Properties, Inc. owns 100% of this entity.
49 Maryland National Community Development Corporation owns 99% of this entity.
50 Maryland National Community Development Corporation and NationsBank, N.A.,
each, has a 33.3% interest in this entity.
51 Maryland National Community Development Corporation owns 98.99% of this
entity.
52 NationsBanc Enterprise, Inc. and NationsBanc Investments, Inc., each, has a
50% interest in this general partnership.
53 NationsSecurities and NationsBanc Enterprise, Inc. have 99% and 1%
interests, respectively, in this entity.
54 NationsBank, N.A. and NationsBank, N.A. (South) own 63% and 37%,
respectively, of this entity.
55 NationsBank Carolinas Merchant Services, Inc. and NationsBank Florida
Merchant Services, Inc. own 49% and 51%, respectively, of this entity.
56 NationsBank Merchant Services owns 20% of this entity.
57 NationsBank Overseas Corporation and NationsBank, N.A. own 99% and 1%,
respectively, of this entity.
58 NationsBank Europe Limited owns 100% of this entity.
59 Nations Investment Management Limited owns 100% of this entity.
60 NationsBank Overseas Corporation owns 100% of this entity.
61 AF Funding (1993), Inc. holds a 1% general partnership and a 49% limited
partnership interest in this entity.
62 Kill Devil Hills Finance Limited Partnership owns 100% of this entity.
63 Air France/NationsBank (Grantor Trust) owns 100% of this entity.
64 AF Funding II (1993), Inc. holds a 1% general partnership and a 34% limited
partnership interest in this entity.
65 Kill Devil Hills II Limited Partnership owns 100% of this entity.
66 Air France/KDHF II (NGHGI)(Grantor Trust) owns 100% of this entity.
67 Cathay Pacific/NationsBank Trust I (Grantor Trust) owns 100% of this entity.
68 Gatwick, Inc. and Heathrow, Inc. own 75% and 25%, respectively, of this
entity.
69 Mayfair Partners owns 100% of this entity.
70 Piccadilly, Inc. owns 90% of this entity. The remainder is owned by an
unrelated third party.
71 NationsBank Overseas Corporation and Island Funding, Inc. own 75% and 25%,
respectively, of this entity.
72 NationsBank Overseas Corporation owns 99.5% of this entity.
73 Japan Airlines/NCNB 1993-1 (Grantor Trust) owns 100% of this entity.
74 NationsBank Overseas Corporation and NationsBank, N.A. own 99.33% and .67%,
respectively, of this entity.
75 NCNB Lease Atlantic, Inc. owns 100% of this entity.
76 NCNB Lease Finance III owns 100% of this entity.
77 NCNB Lease Finance owns 100% of this entity.
78 NCNB Lease Finance IV owns 100% of this entity.
79 NCNB Lease Finance V owns 100% of this entity.
80 NCNB Lease Finance VI owns 100% of this entity.
81 NCNB Lease International, Inc. owns 99.9% of this entity.
82 NCNB Lease Offshore, Inc. owns 100% of this entity.
83 NCNB Lease Finance II owns 100% of this entity.
84 NationsBank Overseas Corporation owns 50% of this entity.
85 NationsBank Overseas Corporation owns 98% of this entity.
86 NationsBank Overseas Corporation owns 66% of this entity.
14
<PAGE>
87 TransPacific Funding (1993), Inc. holds a 1% general partnership and a 65%
limited partnership interest in this entity.
88 TransPacific Finance Limited Partnership owns 100% of this entity.
89 ANA II (Grantor Trust) owns 100% of this entity.
90 NB Partner Corp. owns 50% of this entity.
91 NB Technology Partner, Inc. owns 5.88% of this entity.
92 NationsBank, N.A. is the sole member of this non-profit corporation.
93 Washington View, Inc. owns 69% of this entity.
94 NationsBank, N.A. (South) owns 100% of this entity.
95 NationsBank, N.A. (South) owns 61.5% of this entity.
96 NationsBanc Leasing Corporation of North Carolina owns 100% of this entity.
97 NationsBank of Tennessee, N.A. owns 100% of this entity.
98 NationsBank Texas Bancorporation, Inc. owns 100% of this entity.
99 NationsBank of Texas, N.A. owns 100% of this entity.
100 Superior Federal Bank, FSB owns 100% of this entity.
101 SFS Corporation owns 100% of this entity.
102 Boatmen's Trust Company owns 100% of this entity.
103 Boatmen's Trust Company owns 99% of this entity.
104 C&S Premises, Inc. owns 100% of this entity.
105 NationsBanc Leasing & R.E. Corporation owns 100% of this entity.
106 NB Holdings Corporation owns 70% of this entity.
107 NationsBank, N.A. (South), NationsBank, N.A. and NationsBank of Texas, N.A.
own, respectively, 31%, 42% and 27% of this entity.
108 NationsBank Community Development Corporation ("NBCDC")has a 95.4% general
partnership interest in this entity.
109 NBCDC owns 100% of this entity.
110 NBCDC and NCNB Community Development Corporation have 99% and 1% interests,
respectively, in this entity.
111 Eban Incorporated owns 5% of this entity, however, has control over it.
112 NBCDC has a 94.89% interest in this entity.
113 NBCDC owns 70% of this entity.
114 NBCDC owns 80% of this entity.
115 NBCDC has a 50.26% interest in this entity.
116 NBCDC owns 99% of this entity.
117 NBCDC owns 98% of this entity.
118 NBCDC owns 81% of this entity.
119 NationsBank Corporation and NB Holdings Corporation own 99% and 1%,
respectively, of this entity.
120 NationsBank, N.A. and NationsBank of Texas, N.A., each, owns 25% of the
voting stock of this entity, and NationsBank, N.A. (South) owns 50%.
121 NationsBank Housing Fund Investment Corporation has a 99% limited
partnership interest in this entity.
122 Nations Housing Fund Limited Partnership ("NHF") has a 51% limited
partnership interest in this entity.
123 NHF has a 99% limited partnership interest in this entity.
124 NHF has an 88% limited partnership interest in this entity.
125 NHF has a 67.5% limited partnership interest in this entity.
126 NHF has a 50.49% limited partnership interest in this entity.
127 San Antonio Master Limited Partnership has a 99% limited partnership
interest in this entity.
128 NHF has a 75.85% limited partnership interest in this entity.
129 NHF has an 88.05% limited partnership interest in this entity.
130 NHF has a 98.99% limited partnership interest in this entity.
131 NHF has a 51.17% limited partnership interest in this entity.
132 NHF has a 32.51% limited partnership interest in this entity.
133 NHF has a 39.6% limited partnership interest in this entity.
134 North Carolina Equity Fund ("NCEF") has a 99% limited partnership interest
in this entity.
135 NCEF has a 98% limited partnership interest in this entity.
136 Nations Housing Fund II Limited Partnership ("NHFII") has a 99% limited
partnership interest in this entity.
137 South Charles Investment Corporation has an 88% limited partnership interest
and SCI Holdings Corporation has a 2% general partnership interest in this
entity
138 South Charles Investment Corporation owns 100% of this entity.
139 SunStar Acceptance Corporation owns 100% of this entity.
15
<PAGE>
136 Nations Housing Fund II Limited Partnership ("NHFII") has a 99% limited
partnership interest in this entity.
137 South Charles Investment Corporation has an 88% limited partnership
interest and SCI Holdings Corporation has a 2% general partnership
interest in this entity.
138 South Charles Investment Corporation owns 100% of this entity.
139 SunStar Acceptance Corporation owns 100% of this entity.
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;
33-57533; 33-63097; 333-7229; 333-13811; 333-15375 and 333-18273); the
Registration Statements on Forms S-8 (Nos. 2-91958; 2-73761; 2-80406; 33-45279;
33-48883; 33-60695; 333-02875 and 333-07105) and the Post-Effective Amendment
No. 1 on form S-8 to Registration Statements on Form S-4 (Nos. 33-43125;
33-55145; 33-63351; 33-62069; 33-62208 and 333-16189) of NationsBank Corporation
of our report dated January 10, 1997 appearing on page 48 of the 1996 Annual
Report to Shareholders which is incorporated in this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Charlotte, North Carolina
March 28, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of NationsBank Corporation
and the several undersigned officers and directors whose signatures appear
below, hereby makes, constitutes and appoints James W. Kiser and Charles M.
Berger, and each of them acting individually, its, his and her true and lawful
attorneys with power to act without any other and with full power of
substitution, to execute, deliver and file in its, his and her name and on its,
his and her behalf, and in each of the undersigned officer's and director's
capacity or capacities as shown below, an Annual Report on Form 10-K for the
year ended December 31, 1996, and all exhibits thereto and all documents in
support thereof or supplemental thereto, and any and all amendments or
supplements to the foregoing, hereby ratifying and confirming all acts and
things which said attorneys or attorney might do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, NationsBank Corporation has caused this power of
attorney to be signed on its behalf, and each of the undersigned officers and
directors, in the capacity or capacities noted, has hereunto set his or her hand
as of the date indicated below.
NATIONSBANK CORPORATION
By: /s/ Hugh L. McColl, Jr.
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
Dated: March 26, 1997
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
Chief Executive Officer and Director March 26, 1997
/s/ Hugh L. McColl, Jr. (Principal Executive Officer)
(HUGH L. MCCOLL, JR.)
Vice Chairman and March 26, 1997
/s/ James H. Hance, Jr. Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
Executive Vice President March 26, 1997
/s/ Marc D. Oken (Principal Accounting Officer)
(MARC D. OKEN)
Chairman of the Board March 26, 1997
/s/ Andrew B. Craig, III
(ANDREW B. CRAIG, III)
/s/ Ronald W. Allen Director March 26, 1997
(RONALD W. ALLEN)
/s/ Ray C. Anderson Director March 26, 1997
(RAY C. ANDERSON)
/s/ William M. Barnhardt Director March 26, 1997
(WILLIAM M. BARNHARDT)
/s/ B.A. Bridgewater, Jr. Director March 26, 1997
(B.A. BRIDGEWATER, JR.)
/s/ Thomas E. Capps Director March 26, 1997
(THOMAS E. CAPPS)
<PAGE>
SIGNATURE TITLE DATE
/s/ Charles W. Coker Director March 26, 1997
(CHARLES W. COKER)
/s/ Thomas G. Cousins Director March 26, 1997
(THOMAS G. COUSINS)
/s/ Alan T. Dickson Director March 26, 1997
(ALAN T. DICKSON)
/s/ W. Frank Dowd, Jr. Director March 26, 1997
(W. FRANK DOWD, JR.)
/s/ Paul Fulton Director March 26, 1997
(PAUL FULTON)
/s/ Timothy L. Guzzle Director March 26, 1997
(TIMOTHY L. GUZZLE)
/s/ C. Ray Holman Director March 26, 1997
(C. RAY HOLMAN)
/s/ W. W. Johnson Director March 26, 1997
(W. W. JOHNSON)
/s/ Russell W. Meyer, Jr. Director March 26, 1997
(RUSSELL W. MEYER, JR.)
Director March , 1997
(JOHN J. MURPHY)
/s/ Richard B. Priory Director March 26, 1997
(RICHARD B. PRIORY)
/s/ John C. Slane Director March 26, 1997
(JOHN C. SLANE)
/s/ O. Temple Sloan, Jr. Director March 26, 1997
(O. TEMPLE SLOAN, JR.)
/s/ John W. Snow Director March 26, 1997
(JOHN W. SNOW)
/s/ Meredity R. Spangler Director March 26, 1997
(MEREDITH R. SPANGLER)
/s/ Robert H. Spilman Director March 26, 1997
(ROBERT H. SPILMAN)
/s/ Albert E. Suter Director March 26, 1997
(ALBERT E. SUTER)
<PAGE>
SIGNATURE TITLE DATE
/s/ Ronald Townsend Director March 26, 1997
(RONALD TOWNSEND)
/s/ Jackie M. Ward Director March 26, 1997
(JACKIE M. WARD)
/s/ Virgil R. Williams Director March 26, 1997
(VIRGIL R. WILLIAMS)
</TABLE>
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTION
March 26, 1997
Annual Report on Form 10-K
RESOLVED, that the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996 (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 over
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.
<PAGE>
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
resolutions duly adopted by a majority of the entire Board of Directors of said
corporation at a meeting of said Board of Directors held March 26, 1997, at
which meeting a quorum was present and acted throughout and that said
resolutions are in full force and effect and have 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 26th day of March, 1997.
(CORPORATE SEAL)
/s/ Allison L. Gilliam
Assistant Secretary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,933
<INT-BEARING-DEPOSITS> 1,843
<FED-FUNDS-SOLD> 6,959
<TRADING-ASSETS> 18,689
<INVESTMENTS-HELD-FOR-SALE> 12,277
<INVESTMENTS-CARRYING> 2,110
<INVESTMENTS-MARKET> 2,110
<LOANS> 122,630
<ALLOWANCE> (2,315)
<TOTAL-ASSETS> 185,794
<DEPOSITS> 106,498
<SHORT-TERM> 35,753
<LIABILITIES-OTHER> 6,849
<LONG-TERM> 22,985
0
171
<COMMON> 3,855
<OTHER-SE> 9,683
<TOTAL-LIABILITIES-AND-EQUITY> 185,794
<INTEREST-LOAN> 10,138
<INTEREST-INVEST> 1,306
<INTEREST-OTHER> 2,352
<INTEREST-TOTAL> 13,796
<INTEREST-DEPOSIT> 3,322
<INTEREST-EXPENSE> 7,467
<INTEREST-INCOME-NET> 6,329
<LOAN-LOSSES> 605
<SECURITIES-GAINS> 67
<EXPENSE-OTHER> 5,803
<INCOME-PRETAX> 3,634
<INCOME-PRE-EXTRAORDINARY> 3,634
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,375
<EPS-PRIMARY> 4.00
<EPS-DILUTED> 3.92
<YIELD-ACTUAL> 3.62
<LOANS-NON> 890
<LOANS-PAST> 245
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,163
<CHARGE-OFFS> 836
<RECOVERIES> 238
<ALLOWANCE-CLOSE> 2,315
<ALLOWANCE-DOMESTIC> 1,728
<ALLOWANCE-FOREIGN> 23
<ALLOWANCE-UNALLOCATED> 564
</TABLE>
