SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 14, 1998
BANKAMERICA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
1-6523
(Commission File Number)
56-0906609
(IRS Employer Identification No.)
100 North Tryon Street
Charlotte, North Carolina
(Address of principal executive offices)
28255
(Zip Code)
(704) 386-5000
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
Release of Third Quarter Earnings. On October 14, 1998, BankAmerica
Corporation, the registrant (the "Registrant"), announced financial results for
the third quarter of fiscal 1998, reporting earnings of $893 million and
earnings per common share of $0.50. A copy of the press release announcing the
results of the Registrant's fiscal quarter ended September 30, 1998 is filed as
Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99.1 Press Release dated October 14, 1998 with respect to
the Registrant's financial results for the fiscal quarter
ended September 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BANKAMERICA CORPORATION
By: /s/ Paul J. Polking
Paul J. Polking
Executive Vice President and
General Counsel
Dated: October 19, 1998
FOR IMMEDIATE RELEASE
October 14, 1998
Contact: Investors Susan Carr (704-386-8059) or Kevin Stitt (704-386-5667)
Media Bob Stickler (704-386-8465)
NOTE: BankAmerica Corporation and NationsBank Corporation merged on
September 30, 1998, creating the new BankAmerica Corporation. This news
release reports the combined third quarter financial results for the new
company. Historical comparisons represent pooled results of the two former
companies.
BANKAMERICA CORPORATION REPORTS OPERATING EARNINGS
OF $893 MILLION FOR THE THIRD QUARTER
CHARLOTTE, NC, October 14, 1998 - BankAmerica Corporation today reported
third quarter operating earnings of $893 million, or $.51 ($.50 diluted)
per share. That compared to $1.77 billion, or $1.02 ($.99 diluted) per
share a year earlier.
The company recorded a $519 million (after-tax) charge to cover costs
associated with the merger of NationsBank and BankAmerica. As a result, net
income for the third quarter was $374 million, or $.21 ($.21 diluted) per
share, compared to $1.73 billion, or $.99 ($.96 diluted) per share a year
ago.
more
Page 2
The company's core traditional consumer and commercial banking activities,
which are centered in the United States, continued to perform well.
However, fee income in such areas as trading and investment banking was
negatively impacted by the deterioration of overseas economies and the
volatility of U.S. financial markets.
Provision expense rose sharply due to a significant charge-off related to a
single relationship and a $500 million reserve established against
uncertainties in global economic conditions that arose in the third
quarter.
"While we are not satisfied with our bottom line, we are encouraged that
loan growth and consumer banking performance remain positive," said Hugh L.
McColl Jr., chairman and chief executive officer. "Loan growth was strong
across the board. We also experienced growth in our credit card and deposit
businesses. And our overall credit quality continued to be good. In all, we
believe this quarter did not reflect the earnings power we have with the
new Bank of America. We remain incredibly enthusiastic about our company's
future.
"One of the strengths of our new company is that revenues are highly
diversified, by geography and line of business," McColl continued. "In
addition, our franchise is focused on the best growth markets in the U.S.,
providing an unmatched opportunity to grow our earnings power. Since the
merger, we have reviewed our businesses in light of current economic
conditions, particularly overseas. Our expanded earnings power has allowed
us to strengthen our financial position by adding to our reserves as we
move through these uncertain times."
more
Page 3
McColl added that with the final integration of the Barnett Bank franchise
last week into the company's network, the company is now working full time
to combine NationsBank and the former BankAmerica into the nation's premier
bank: Bank of America.
Operating earnings represented a return on average assets of .61 percent
and a return on common equity of 7.73 percent.
For the first nine months of 1998, operating earnings totaled $4.89
billion, or $2.81 ($2.73 diluted) per share, compared to $5.13 billion, or
$2.90 ($2.82 diluted) per share a year earlier. Net income for the first
nine months was $4.00 billion, or $2.30 ($2.24 diluted) per share, compared
to $5.08 billion, or $2.87 ($2.80 diluted) per share, a year earlier.
Net Interest Income
Taxable-equivalent net interest income declined 4 percent to $4.48 billion.
Managed loans grew 9 percent to $372 billion. The net interest yield on
earning assets declined by 41 basis points to 3.60 percent due to a higher
level of investment securities and lower loan and deposit spreads.
Noninterest Income
Noninterest income declined 22 percent to $2.41 billion. The primary factor
was the sharp reversal in results from the company's trading activities due
to weaker markets abroad and in the U.S. The company recorded a $529
million loss from trading in the third quarter compared to $281 million in
revenue a year earlier.
more
Page 4
At the same time, strong investor demand for U.S. Treasury securities led
to a significant increase in the value of the company's securities
portfolio. The company recorded realized gains in that portfolio of $280
million in the third quarter, up from $54 million a year earlier.
Weaker market conditions also affected investment banking income, which
totaled $376 million, up from $315 million a year ago, but down from a
record $664 million in the second quarter of 1998.
Also within noninterest income, the company recorded a $250 million
writedown in the value of a previously unhedged mortgage servicing
portfolio in the West, primarily reflecting the impact of declining
interest rates.
These actions were partially offset by strong increases in credit card,
brokerage and other service fees compared to a year ago. Credit card fees
were up 18 percent to $379 million. Brokerage income nearly tripled to $198
million from $71 million a year earlier, due to the addition of NationsBanc
Montgomery Securities and increased customer trading activity. Other
service fees were up 9 percent to $178 million. Noninterest income also
included a $479 million (pre-tax) gain from the sale of a manufactured
housing finance unit.
Efficiency
Noninterest expense rose 4 percent to $4.58 billion, due primarily to the
addition of NationsBanc Montgomery Securities. The increase was centered in
personnel, data processing, telecommunication and administrative expenses.
Occupancy, equipment, marketing and other general operating expenses
declined from a year ago. Expenses were below the second quarter, primarily
due to lower personnel expense.
more
Page 5
Credit Quality
Nonperforming assets were $2.58 billion, or .73 percent of net loans,
leases, factored accounts receivable and foreclosed properties on September
30, 1998, down slightly from $2.61 billion, or .77 percent a year earlier.
The allowance for credit losses totaled $7.2 billion on September 30, 1998,
equal to 315 percent of nonperforming loans and 2.05 percent of net loans,
leases and factored accounts receivable. The allowance was $6.77 billion,
or 2.01 percent of net loans, leases and factored accounts, a year earlier.
The provision for credit losses in the third quarter was $1.4 billion,
covering net charge-offs of $902 million and adding the $500 million
reserve to the allowance for credit losses. A year ago, provision expense
was $489 million and net charge-offs were $497 million. Net charge-offs
were equal to an annualized 1.03 percent of average net loans, leases and
factored accounts receivable, compared to .59 percent a year earlier.
Charge-offs included a $372 million writedown of a credit to a trading and
investment firm. After the charge-off, the company has a $1 billion
investment in the relationship. Further, because of overlapping
capabilities resulting from the company's recent merger and in an effort to
better manage the associated risk during a period of market turbulence, the
bank is restructuring this relationship by arranging to purchase
approximately $20 billion of fixed-income securities along with the related
hedge positions.
In addition, the company has approximately $400 million in hedge fund
exposure, which is substantially collateralized.
more
Page 6
Capital Strength
Total shareholders' equity was $47.3 billion at September 30, 1998. This
represented 7.96 percent of period-end assets, compared to 8.08 percent on
September 30, 1997. Book value per common share rose 8 percent to $27.12 at
September 30, 1998, from a year earlier.
BankAmerica Corporation, with $595 billion in total assets, is the largest
bank in the United States. It has full-service operations in 22 states and
the District of Columbia and provides financial products and services to 30
million households and 2 million businesses, as well as providing
international corporate financial services for business transactions in 190
countries. BankAmerica Corporation stock (ticker: BAC) is listed on the New
York, Pacific and London stock exchanges and certain shares are listed on
the Tokyo Stock Exchange.
www.nationsbank.com
www.bankamerica.com
more
BANKAMERICA CORPORATION
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1998 1997 1998 1997
FINANCIAL SUMMARY
(In millions except per-share data)
<S> <C> <C> <C> <C>
Operating net income................ $ 893 $ 1,774 $ 4,887 $ 5,127
Operating earnings
per common share.............. .51 1.02 2.81 2.90
Diluted operating earnings
per common share.............. .50 .99 2.73 2.82
Cash basis earnings (1)............. 1,117 1,988 5,566 5,758
Cash basis earnings per
common share.................. .64 1.14 3.20 3.26
Cash basis diluted earnings
per common share.............. .63 1.11 3.11 3.18
Dividends paid per common share..... .38 .33 1.14 .99
Price per share of common stock at
period end........................ 53.50 61.88 53.50 61.88
Average common shares............... 1,740.092 1,722.243 1,732.297 1,736.460
Average diluted common shares....... 1,784.418 1,773.185 1,782.106 1,784.661
SUMMARY INCOME STATEMENT (Operating Basis)
(Taxable-equivalent in millions)
Net interest income................. $ 4,484 $ 4,676 $ 13,811 $ 13,991
Provision for credit losses......... (1,405) (489) (2,410) (1,406)
Gains on sales of securities........ 280 54 613 160
Noninterest income.................. 2,405 3,078 9,534 8,531
Foreclosed properties expense....... (7) (13) (42) (24)
Noninterest expense................. (4,576) (4,406) (14,012) (12,865)
Income before income taxes.......... 1,181 2,900 7,494 8,387
Income taxes - including FTE
adjustment........................ 288 1,126 2,607 3,260
Operating net income................ $ 893 $ 1,774 $ 4,887 $ 5,127
SUMMARY BALANCE SHEET
(Average balances in billions)
Loans and leases, net............... $347.558 $342.765 $343.370 $343.767
Managed loans and leases, net (2)... 371.723 342.047 366.546 342.623
Securities.......................... 65.536 46.203 64.791 44.072
Earning assets...................... 494.684 463.731 492.731 460.649
Total assets........................ 578.353 543.030 577.055 539.482
Deposits............................ 347.783 336.418 343.369 336.394
Shareholders' equity................ 45.756 43.241 44.755 43.543
Common shareholders' equity......... 45.693 41.945 44.291 41.883
PERFORMANCE INDICES (Operating Basis)
Return on average common
shareholders' equity.............. 7.73% 16.55% 14.68% 16.06%
Return on average tangible
common shareholders' equity....... 14.51 28.73 25.69 27.83
Return on average assets............ .61 1.30 1.13 1.27
Return on average tangible assets... .79 1.49 1.33 1.47
Net interest yield.................. 3.60 4.01 3.74 4.06
Efficiency ratio.................... 66.44 56.82 60.02 57.12
Cash basis efficiency ratio......... 63.18 54.07 57.11 54.32
Net charge-offs (in millions)....... $ 902 $ 497 $ 1,923 $ 1,360
% of average loans, leases and
factored accounts receivable, net. 1.03% .57% .75% .53%
Managed credit card net charge-offs
as a % of average managed credit
card receivables................ 5.99 6.31 6.42 5.98
REPORTED RESULTS (Including Merger and Restructuring Items)
(In millions except per-share data)
Net income......................... $ 374 $ 1,730 $ 4,003 $ 5,083
Earnings per common share....... .21 .99 2.30 2.87
Diluted earnings per common
share......................... .21 .96 2.24 2.80
Return on average common
shareholders' equity.......... 3.23 16.13 12.01 15.92
</TABLE>
(1) Cash basis earnings equal operating net income excluding amortization of
intangibles.
(2) Prior periods are restated for comparison (e.g. acquisitions, divestitures
and securitizations).
(3) Ratios and amounts for 1997 have not been restated to reflect the impact of
the Barnett Banks, Inc. and BankAmerica mergers.
<TABLE>
<CAPTION>
SEPTEMBER 30
1998 1997
BALANCE SHEET HIGHLIGHTS
(In billions except per-share data)
<S> <C> <C>
Loans and leases, net.............. $350.687 $335.055
Securities......................... 72.139 55.688
Earning assets..................... 506.034 460.555
Total assets....................... 594.673 543.414
Deposits........................... 345.756 335.574
Shareholders' equity............... 47.307 43.884
Common shareholders' equity........ 47.245 42.981
Per share....................... 27.12 25.00
Total equity to assets ratio
(period-end).................... 7.96% 8.08%
Risk-based capital(3)
Tier 1 capital ratio............ 7.39 7.00
Total capital ratio............. 11.38 11.56
Leverage ratio(3).................. 6.64 6.16
Common shares issued (in millions). 1,742.038 1,719.110
Allowance for credit losses........ $ 7.215 $ 6.770
Allowance for credit losses
as a % of net loans, leases and
factored accounts receivable.... 2.05% 2.01%
Allowance for credit losses
as a % of nonperforming loans... 314.55 304.87
Nonperforming loans................ $ 2.294 $ 2.221
Nonperforming assets............... 2.582 2.605
Nonperforming assets as a % of:
Total assets.................... .43% .48%
Net loans, leases, factored
accounts receivable and
foreclosed properties........... .73 .77
OTHER DATA
Full-time equivalent headcount..... 174,844 175,917
Banking centers.................... 4,870 5,148
ATMs............................... 14,333 14,598
</TABLE>
BUSINESS SEGMENT RESULTS - Three months ended SEPTEMBER 30, 1998
(In millions)
<TABLE>
<CAPTION>
OPERATING AVERAGE RETURN ON
TOTAL NET LOANS RISK ADJUSTED
REVENUE INCOME/(LOSS) & LEASES, NET TANGIBLE EQUITY
<S> <C> <C> <C> <C>
Consumer Banking $4,763 $1,143 $173,645 35%
Commercial Banking 710 243 49,244 32
Global Corporate and
Investment Banking 833 (793) 108,581 (26)
Wealth Management and
Principal Investing
Group 503 72 15,898 16
</TABLE>
