<PAGE>
Filed Pursuant to Rule 424(b)(5)
File Number 333-13811
PROSPECTUS SUPPLEMENT
- ---------------------
(To Prospectus dated December 19, 1996)
$500,000,000
NationsBank(R)
6 3/8% Senior Notes, due 2005
--------------
Interest on the 6 3/8% Senior Notes, due 2005 (the "Notes") will be
payable by NationsBank Corporation ("NationsBank" or the "Corporation")
semiannually on May 15 and November 15, commencing November 15, 1998. The Notes
will mature on May 15, 2005 and are not redeemable prior to maturity. The Notes
will not be listed on any securities exchange.
The Notes will be issued in book-entry only form and will be represented
by one or more global securities (the "Global Notes") registered in the name of
The Depository Trust Company, as depositary ("DTC"), or its nominee. Except as
described herein, the Notes will not be issued in definitive form. The Notes
will be available for purchase in denominations of $1,000 and integral
multiples thereof. Settlement of the Notes will be made in immediately
available funds. So long as the Notes are represented by Global Notes
registered in the name of DTC, the Notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in the Notes will
therefore settle in immediately available funds; however, settlements involving
Cedel Bank, soci-t- anonyme ("Cedel Bank") or Morgan Guaranty Trust Company of
New York, Brussels office, as operators of the Euroclear System (the "Euroclear
Operator" or "Euroclear") and DTC may be dated the business day following the
DTC settlement date. See "REGISTRATION AND SETTLEMENT."
--------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS, ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF THE CORPORATION, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to the
Public (1) Discount (2) Corporation (1) (3)
<S> <C> <C> <C>
Per Note ......... 99.69% .575% 99.115%
Total ............ $498,450,000 $2,875,000 $495,575,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from May 4, 1998.
(2) The Corporation has agreed to indemnify the Underwriters named herein
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "UNDERWRITING."
(3) Before deducting expenses payable by the Corporation estimated to be
$200,000.
--------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of certain legal
matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to reject any order in whole or in part. It is
expected that delivery of the Notes will be made through the facilities of DTC,
Cedel Bank and Euroclear on May 4, 1998.
--------------
NationsBanc Montgomery Securities LLC
BancAmerica Robertson Stephens
Bear, Stearns & Co. Inc.
Lehman Brothers
--------------
The date of this Prospectus Supplement is April 28, 1998.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE
"UNDERWRITING."
DESCRIPTION OF THE NOTES
The information herein concerning the Notes should be read in conjunction
with the statements under "DESCRIPTION OF DEBT SECURITIES" in the accompanying
Prospectus.
General
The Notes will be issued in the aggregate principal amount of $500,000,000
under an Indenture (the "Indenture") dated as of January 1, 1995 between the
Corporation and U.S. Bank Trust National Association (successor to BankAmerica
National Trust Company), as trustee, as set forth in the Prospectus. The Notes
will be available for purchase in denominations of $1,000 and integral
multiples thereof. The Notes are unsecured and constitute a single series of
debt securities under the Indenture. The Notes will bear interest from May 4,
1998 at the annual rate specified on the cover page of this Prospectus
Supplement. Interest on the Notes will be payable semiannually in arrears on
each May 15 and November 15, commencing November 15, 1998. The record date for
the interest payable shall be the close of business on the last day of the
calendar month preceding each interest payment date.
If any interest payment date falls on a day that is not a Business Day,
payment of such interest may be made on the next succeeding Business Day. If
the maturity date of the Notes falls on a day that is not a Business Day, the
payment of principal will be made on the next succeeding Business Day as if it
were made on the date such payment was due and no interest will accrue for the
period after the stated maturity date. The term "Business Day" with respect to
any Note means any day, other than a Saturday or Sunday or a legal holiday in
New York, New York or Charlotte, North Carolina, that is not a day on which
banking institutions in New York, New York, or Charlotte, North Carolina are
authorized or required by law or regulation to be closed. Initially, the
Corporation will make payments of principal and interest at the office of The
Bank of New York, 101 Barclay Street, New York, New York 10286, who has been
appointed as authenticating and paying agent, registrar and transfer agent for
the Notes. The Notes will mature on May 15, 2005 and are not redeemable prior
to maturity. No sinking fund is provided for the Notes. There is no limitation
in the Indenture on the amount of Senior Indebtedness (as described in the
Prospectus) or other obligations which may be issued by the Corporation.
RECENT DEVELOPMENTS
Merger Agreement with BankAmerica Corporation
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and
NationsBank, each registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended, entered into an Agreement and Plan of
Reorganization on April 10, 1998 (the "Merger Agreement") under which, (i)
NationsBank will form a new Delaware subsidiary ("NationsBank (DE)") and will
merge (the "Reincorporation Merger") with and into NationsBank (DE), with
NationsBank (DE) as the surviving corporation in the Reincorporation Merger,
and (ii) BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger. Following the
Reorganization, the name of the surviving corporation will be BankAmerica
Corporation. In connection with the Merger Agreement, BankAmerica and
NationsBank have also entered into cross stock option agreements, each dated
April 10, 1998. Each of those options, if exercised by the respective grantee,
is intended to provide the grantee with the right to acquire approximately
19.9% of the total number of the grantor's shares then issued and outstanding.
In accordance with the terms of the Merger Agreement, (i) with respect to
the capital stock of NationsBank, (A) each share of the common stock, without
par value, of NationsBank ("NationsBank Common Stock") will be converted into
one share of the common stock, without par value, of NationsBank (DE)
("NationsBank (DE) Common Stock"), and (B) each share of the preferred stock of
NationsBank will be converted into the
S-2
<PAGE>
right to receive one share of the preferred stock of NationsBank (DE) on
substantially identical terms, and (ii) with respect to the capital stock of
BankAmerica, (Y) each share of the common stock, par value $1.5625, of
BankAmerica ("BankAmerica Common Stock") will be converted into the right to
receive 1.1316 shares of NationsBank (DE) Common Stock, and (Z) each share of
the preferred stock of BankAmerica will be converted into the right to receive
one share of the preferred stock of NationsBank (DE) on substantially identical
terms. Following consummation of the Reorganization, NationsBank shareholders
will retain their existing shares of NationsBank Common Stock, which will
automatically be deemed to represent shares of NationsBank (DE) Common Stock.
At the effective time of the Reorganization, all rights with respect to
NationsBank Common Stock and BankAmerica Common Stock pursuant to stock options
outstanding at such effective time, whether or not then exercisable, shall be
converted into and shall become rights with respect to NationsBank (DE) Common
Stock on otherwise substantially similar terms.
The Reorganization is intended to constitute a tax-free reorganization
under the Internal Revenue Code of 1986, as amended, and to be accounted for as
a pooling of interests.
Consummation of the Reorganization is subject to various conditions,
including: (i) approval of the Merger Agreement and the Reorganization by the
stockholders of each of the parties thereto; (ii) receipt of requisite
regulatory approvals from the Board of Governors of the Federal Reserve System
and other federal and state regulatory authorities as necessary; (iii) receipt
by each of BankAmerica and NationsBank of an opinion of counsel in reasonably
satisfactory form as to the tax treatment of certain aspects of the
Reorganization; (iv) the registration pursuant to the Securities Act of 1933,
as amended, of the shares of NationsBank (DE) Common Stock to be issued in the
Reorganization; (v) receipt by each of BankAmerica and NationsBank of a letter
from their respective independent public accountants, to the effect that the
Reorganization will qualify for pooling-of-interests accounting treatment; and
(vi) satisfaction or waiver of certain other conditions.
For additional information regarding the BankAmerica Merger, see the
Corporation's Current Report on Form 8-K filed April 17, 1998 (amended by Form
8-K/A dated April 24, 1998) incorporated herein by reference.
Issuance of Additional Notes
On April 28, 1998, the Corporation entered into an underwriting agreement
with various underwriters for the public sale of $300,000,000 aggregate
principal amount of its 6.60% Subordinated Notes, due 2010, (the "Additional
Notes"). The Additional Notes are expected to be issued on May 4, 1998. The
Notes and the Additional Notes constitute separate series of debt securities.
The sale of the Notes is not contingent upon the sale of the Additional Notes.
Recent NationsBank Financial Information
First quarter 1998 net income for NationsBank was $497 million, or $.52
per share, which included $642 million in non-recurring, after-tax merger and
restructuring items resulting from the merger with Barnett Banks, Inc.
("Barnett") completed January 9, 1998 (the "Barnett Merger"). Excluding the
merger and restructuring items, operating earnings were $1.14 billion, or $1.20
per share. 1997 first quarter net income was $855 million, or $.90 per share.
Taxable-equivalent net interest income of $2.56 billion in the first
quarter of 1998 represented a 5% increase compared to $2.44 billion in the same
period of 1997.
Noninterest income in the first quarter of 1998 was $1.78 billion, or 34%
higher than $1.32 billion in the comparable 1997 quarter.
First quarter noninterest expense was $2.45 billion compared to first
quarter 1997 noninterest expense of $2.23 billion.
The provision for credit losses increased to $265 million in the first
quarter of 1998 from $222 million in the first quarter of 1997.
Net charge-offs were $277 million in the first quarter of 1998, or .63% of
average net loans, leases and factored accounts receivable, compared to $215
million, or .49% of average levels, in the first quarter of 1997.
S-3
<PAGE>
The allowance for credit losses was $3.25 billion at March 31, 1998, or 1.81%
of net loans, leases and factored accounts receivable, compared to $3.28
billion, or 1.85% of net loans, leases and factored accounts receivable, at
December 31, 1997. The allowance represented 234% of nonperforming loans at
March 31, 1998 compared to 270% at December 31, 1997.
Total nonperforming assets were $1.54 billion at March 31, 1998, or .86%
of net loans, leases, factored accounts receivable and foreclosed properties,
compared to $1.36 billion, or .77%, at December 31, 1997.
Average deposits were $167.53 billion in the first quarter of 1998
compared to $168.13 billion in the same period in 1997.
Average earning assets were $271.19 billion for the first quarter of 1998,
of which net loans and leases were $176.70 billion and securities were $49.43
billion, compared to average earning assets of $245.10 billion for the first
quarter of 1997.
Total shareholders' equity increased to $25.22 billion at March 31, 1998,
or 8.02% of total assets, from $24.75 billion, or 7.97% of total assets, at
December 31, 1997. Return on average common shareholders' equity was 8.28% in
the first quarter of 1998, down from 14.69% in the year ago quarter due
primarily to the merger and restructuring items. Excluding the merger and
restructuring items, return on average common shareholders' equity was 19.01%.
At March 31, 1998, the Corporation's Tier 1 and total risk-based capital
ratios were 6.80% and 11.19%, respectively. The Corporation's leverage ratio
was 5.64% at March 31, 1998.
S-4
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the
Corporation and its subsidiaries as of December 31, 1997 and as adjusted to
give effect to (i) the issuance of the Notes and the Additional Notes; and (ii)
the issuance and the maturity of certain of the Corporation's and its
subsidiaries' notes during the period beginning January 1, 1998 through the
date of this Prospectus Supplement.
<TABLE>
<CAPTION>
NationsBank As
Actual Adjusted
------------- ---------
(Amounts in millions)
<S> <C> <C>
LONG-TERM DEBT (1):
Senior debt
NationsBank Corporation ...................................................... $11,345 $11,101
6 3/8% Senior Notes, due 2005 ................................................ -- 500
Subsidiaries (2) ............................................................. 9,485 10,499
------- -------
Total senior debt .......................................................... 20,830 22,100
------- -------
Subordinated debt
NationsBank Corporation ...................................................... 7,069 7,890
6.60% Subordinated Notes, due 2010 (3) ....................................... -- 300
Subsidiaries (2) ............................................................. 308 308
------- -------
Total subordinated debt .................................................... 7,377 8,498
------- -------
Total long-term debt ....................................................... 28,207 30,598
------- -------
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Notes (4) ................................................ 2,705 2,705
SHAREHOLDERS' EQUITY:
Preferred stock, authorized -- 45,000,000 shares; issued -- 2,209,784 shares .. 94 94
Common stock, authorized -- 1,250,000,000 shares; issued -- 943,932,530 shares 9,779 9,779
Retained earnings ............................................................. 14,592 14,592
Other, including loan to ESOP trust ........................................... 282 282
------- -------
Total shareholders' equity ................................................. 24,747 24,747
------- -------
$55,659 $58,050
======= =======
</TABLE>
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(1) On January 9, 1998, the Corporation completed the Barnett Merger. On April
16, 1998, the Corporation filed a Current Report on Form 8-K containing
restated consolidated financial statements of the Corporation reflecting
the Barnett Merger (accounted for as a pooling of interests).
(2) These obligations are direct obligations of certain of the subsidiaries of
NationsBank and, as such, constitute claims against such subsidiaries
prior to the Corporation's equity interest therein.
(3) The sale of the Notes is not contingent on the sale of the Additional
Notes, which is also expected to close on May 4, 1998.
(4) The line item "Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Notes" reflects the issuance of $2,715 million
aggregate liquidation amount of preferred undivided beneficial interests
in the assets of seven wholly owned grantor trusts. The sole assets of the
trusts are junior subordinated notes of the Corporation.
As of December 31, 1997, the Corporation had $2.9 billion of commercial
paper and other short-term notes payable outstanding. At December 31, 1997, the
Corporation had unused lines of credit aggregating $1.5 billion, principally to
support commercial paper borrowings. The commercial paper program for Barnett
was discontinued after the Barnett Merger; therefore, information regarding
that program is not included with this description of the Corporation's
commercial paper program.
S-5
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
each of the years in the five-year period ended December 31, 1997:
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits ......... 2.0 2.0 1.8 2.0 2.6
Including interest on deposits ......... 1.5 1.5 1.4 1.5 1.6
</TABLE>
S-6
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for the five years ended December
31, 1997 are derived from financial statements of the Corporation audited by
Price Waterhouse LLP, independent accountants.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1997 1996
------------ ------------
(Amounts in millions
except per share
information and ratios)
<S> <C> <C>
Income statement
Interest income ......................................................... $ 19,687 $ 16,832
Interest expense ........................................................ 9,970 8,608
Net interest income (taxable-equivalent) ................................ 9,848 8,335
Net interest income ..................................................... 9,717 8,224
Provision for credit losses ............................................. 954 760
Gains (losses) on sales of securities ................................... 155 86
Noninterest income ...................................................... 5,929 4,408
Foreclosed properties expense ........................................... 9 21
Merger and restructuring items .......................................... 374 118
Other noninterest expense ............................................... 9,234 7,283
Income before taxes and effect of change in method of
accounting for income taxes ............................................ 5,230 4,536
Income tax expense ...................................................... 1,898 1,597
Income before effect of change in method of
accounting for income taxes ............................................ 3,332 2,939
Effect of change in method of accounting for income taxes ............... -- --
Net income .............................................................. 3,332 2,939
Net income available to common shareholders ............................. 3,321 2,922
Net income (excluding merger and restructuring items) ................... 3,596 3,016
Average common shares issued (in thousands) ............................. 941,992 820,945
Per common share
Earnings before effect of change in method of accounting
for income taxes ....................................................... $ 3.53 $ 3.56
Earnings ................................................................ 3.53 3.56
Earnings (excluding merger and restructuring items) ..................... 3.81 3.65
Diluted earnings ........................................................ 3.44 3.50
Diluted earnings (excluding merger and restructuring items) ............. 3.71 3.59
Cash dividends paid ..................................................... 1.37 1.20
Shareholders' equity (period-end) ....................................... 26.15 21.23
Balance sheet (period-end)
Total loans, leases and factored accounts receivable,
net of unearned income ................................................. 176,778 153,041
Total assets ............................................................ 310,554 226,949
Total deposits .......................................................... 173,643 140,329
Long-term debt .......................................................... 28,890 24,212
Common shareholders' equity ............................................. 24,684 16,956
Total shareholders' equity .............................................. 24,747 17,079
Performance ratios
Return on average assets ................................................ 1.16% 1.22%
Return on average assets (excluding merger and restructuring items) ..... 1.25 1.25
Return on average common shareholders' equity (1) ....................... 14.12 17.74
Return on average common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 15.25 18.21
Efficiency ratio ........................................................ 58.5 57.1
Total equity to total assets ............................................ 7.97 7.53
Risk-based capital ratios (period-end) (2)
Tier 1 .................................................................. 6.50 7.76
Total ................................................................... 10.89 12.66
Leverage capital ratio .................................................. 5.57 7.09
Cash basis financial data (3)
Earnings per common share ............................................... $ 4.06 $ 3.78
Earnings per common share (excluding merger and restructuring
items) ................................................................. 4.34 3.87
Diluted earnings per common share ....................................... 3.96 3.71
Diluted earnings per common share (excluding merger and
restructuring items) ................................................... 4.23 3.80
Return on average tangible assets ....................................... 1.38% 1.30%
Return on average tangible assets (excluding merger and
restructuring items) ................................................... 1.47 1.34
Return on average tangible common shareholders' equity (1) .............. 27.51 22.31
Return on average tangible common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 29.41 22.86
Efficiency ratio ........................................................ 55.3 55.7
Ending tangible equity to tangible assets ............................... 4.73 6.44
Asset quality ratios
Allowance for credit losses as a percentage of loans, leases and
factored accounts receivable, net of unearned income (period-end) ...... 1.85% 1.82%
Allowance for credit losses as a percentage of nonperforming loans
(period-end) ........................................................... 270.05 258.52
Net charge-offs as a percentage of average loans, leases and factored
accounts receivable, net of unearned income ............................ .53 .49
Nonperforming assets as a percentage of net loans, leases, factored
accounts receivable and foreclosed properties (period-end) ............. .77 .83
<CAPTION>
Year Ended December 31,
-------------------------------------
1995 1994 1993
------------ ----------- ------------
(Amounts in millions except per share
information
and ratios)
<S> <C> <C> <C>
Income statement
Interest income ......................................................... $ 16,186 $ 13,084 $ 10,858
Interest expense ........................................................ 8,992 6,239 4,570
Net interest income (taxable-equivalent) ................................ 7,338 6,983 6,423
Net interest income ..................................................... 7,194 6,845 6,288
Provision for credit losses ............................................. 505 384 550
Gains (losses) on sales of securities ................................... 34 (26) 82
Noninterest income ...................................................... 3,787 3,153 2,702
Foreclosed properties expense ........................................... 30 5 170
Merger and restructuring items .......................................... -- -- 30
Other noninterest expense ............................................... 6,670 6,290 5,703
Income before taxes and effect of change in method of
accounting for income taxes ............................................ 3,810 3,293 2,619
Income tax expense ...................................................... 1,327 1,115 897
Income before effect of change in method of
accounting for income taxes ............................................ 2,483 2,178 1,722
Effect of change in method of accounting for income taxes ............... -- -- 200
Net income .............................................................. 2,483 2,178 1,922
Net income available to common shareholders ............................. 2,459 2,150 1,894
Net income (excluding merger and restructuring items) ................... 2,483 2,178 1,942
Average common shares issued (in thousands) ............................. 773,799 782,255 749,122
Per common share
Earnings before effect of change in method of accounting
for income taxes ....................................................... $ 3.18 $ 2.75 $ 2.26
Earnings ................................................................ 3.18 2.75 2.53
Earnings (excluding merger and restructuring items) ..................... 3.18 2.75 2.55
Diluted earnings ........................................................ 3.10 2.70 2.48
Diluted earnings (excluding merger and restructuring items) ............. 3.10 2.70 2.51
Cash dividends paid ..................................................... 1.04 .94 .82
Shareholders' equity (period-end) ....................................... 20.59 17.75 16.19
Balance sheet (period-end)
Total loans, leases and factored accounts receivable,
net of unearned income ................................................. 147,519 131,892 117,937
Total assets ............................................................ 228,852 210,882 196,017
Total deposits .......................................................... 134,925 135,579 123,747
Long-term debt .......................................................... 18,966 9,265 9,034
Common shareholders' equity ............................................. 15,933 13,895 12,518
Total shareholders' equity .............................................. 16,073 14,145 12,853
Performance ratios
Return on average assets ................................................ 1.08% 1.07% 1.00%
Return on average assets (excluding merger and restructuring items) ..... 1.08 1.07 1.01
Return on average common shareholders' equity (1) ....................... 16.91 16.23 15.23
Return on average common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 16.91 16.23 15.41
Efficiency ratio ........................................................ 60.0 62.1 62.5
Total equity to total assets ............................................ 7.02 6.71 6.56
Risk-based capital ratios (period-end) (2)
Tier 1 .................................................................. 7.24 7.43 7.41
Total ................................................................... 11.58 11.47 11.73
Leverage capital ratio .................................................. 6.27 6.18 6.00
Cash basis financial data (3)
Earnings per common share ............................................... $ 3.40 $ 2.95 $ 2.71
Earnings per common share (excluding merger and restructuring
items) ................................................................. 3.40 2.95 2.73
Diluted earnings per common share ....................................... 3.32 2.90 2.66
Diluted earnings per common share (excluding merger and
restructuring items) ................................................... 3.32 2.90 2.68
Return on average tangible assets ....................................... 1.17% 1.15% 1.09%
Return on average tangible assets (excluding merger and
restructuring items) ................................................... 1.17 1.15 1.10
Return on average tangible common shareholders' equity (1) .............. 21.32 19.89 18.56
Return on average tangible common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 21.32 19.89 18.76
Efficiency ratio ........................................................ 58.4 60.5 61.0
Ending tangible equity to tangible assets ............................... 6.09 5.81 5.83
Asset quality ratios
Allowance for credit losses as a percentage of loans, leases and
factored accounts receivable, net of unearned income (period-end) ...... 1.81% 2.04% 2.28%
Allowance for credit losses as a percentage of nonperforming loans
(period-end) ........................................................... 304.57 268.16 188.45
Net charge-offs as a percentage of average loans, leases and factored
accounts receivable, net of unearned income ............................ .39 .33 .52
Nonperforming assets as a percentage of net loans, leases, factored
accounts receivable and foreclosed properties (period-end) ............. .74 1.08 1.89
</TABLE>
- ---------
(1) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
(2) Capital ratios included herein have not been restated to reflect the
Barnett Merger. Under regulatory guidelines, Barnett was considered well
capitalized on December 31, 1997.
(3) Cash basis calculations exclude intangible assets and the related
amortization expense.
S-7
<PAGE>
REGISTRATION AND SETTLEMENT
Same Day Settlement and Payment
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Notes are represented by Global Notes, all
payments of principal and interest will be made by the Corporation in
immediately available funds.
Secondary trading in notes and debentures of corporate issuers is
generally settled in clearing house or next day funds. In contrast, so long as
the Notes are represented by Global Notes registered in the name of DTC or its
nominee, the Notes will trade in DTC's Same Day Fund Settlement System and
secondary market trading activity in the Notes will therefore be required by
DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Notes.
Book-Entry System
The Notes will be issued in book-entry form only and will be represented
by one or more Global Notes registered in the name of Cede & Co., as nominee of
DTC. Cedel Bank and Euroclear will hold omnibus positions on behalf of Cedel
Bank Participants (as described in the Prospectus) and Euroclear Participants
(as described in the Prospectus), respectively, through customers' securities
accounts in Cedel Bank's and Euroclear's names, respectively, on the books of
their respective depositories, which, in turn, will hold such positions on the
books of DTC.
Under the book-entry system of DTC, purchases of Notes must be made by or
through persons that have accounts with DTC ("Participants") or persons that
may hold interests through Participants ("Indirect Participants"). Upon the
issuance and deposit of a Global Note, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
individual Notes represented by such Global Note to the accounts of
Participants as designated by the Underwriters. The ownership of beneficial
interests in such Global Note will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC (with
respect to interests of Participants) and the records of Participants (with
respect to interests of Indirect Participants) and Indirect Participants. So
long as DTC, or its nominee, is the registered holder of a Global Note, DTC or
its nominee will be considered the sole owner or holder of the Notes
represented by such Global Note for all purposes under the applicable
Indenture. Except as provided below, owners of beneficial interests in a Global
Note will not be entitled to have Notes registered in their names, will not
receive or be entitled to receive physical delivery of such Notes in
certificated form and will not be considered the owners or holders thereof
under the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such transfer restrictions and such laws may impair the
ability to own, transfer or pledge beneficial interests in a Global Note.
DTC has advised the Corporation as follows: DTC is a limited-purpose trust
company organized under New York law, a "banking organization" within the
meaning of New York law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect in
the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities deposited by its Participants and to
facilitate the clearance and settlement of securities transactions among
Participants in such securities through electronic computerized book-entry
changes in accounts of the Participants, thereby eliminating the need for
physical movement of securities certificates. DTC's direct Participants include
securities brokers and dealers (including the Underwriters), banks (including
certain subsidiaries of the Corporation), trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) have ownership interests in DTC. DTC is owned by a number of
its Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
Indirect access to DTC's book-entry system is also available to Indirect
Participants, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. The rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
S-8
<PAGE>
To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it such as the Notes; DTC's records reflect
only the identity of the Participants to whose accounts such securities are
credited, which may or may not be the beneficial owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers. Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by Participants and
Indirect Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Neither DTC nor Cede & Co. will consent or vote with
respect to securities held by DTC. Under its usual procedures, DTC mails an
omnibus proxy to an issuer as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the securities are credited on the record date
(identified in a listing attached to the omnibus proxy).
DTC can act only on behalf of Participants, who in turn act on behalf of
Indirect Participants. Owners of beneficial interests in a Global Note that are
not Participants or Indirect Participants but desire to purchase, sell or
otherwise transfer ownership of such interests may do so only through
Participants and Indirect Participants. In addition, the ability of owners of
beneficial interests in a Global Note to pledge such interests to persons or
entities that do not participate in the DTC system may be limited due to the
lack of certificates for the Notes.
Except as otherwise provided herein, the holder of a Global Note shall be
the only person entitled to receive payments with respect to Notes represented
by such Global Note. Accordingly, payments of principal of and any interest on
individual Notes represented by a Global Note will be made only to DTC or its
nominee, as the case may be, as the registered holder of the Global Note
representing such Notes. DTC has advised the Corporation that it is DTC's
practice to credit Participants' accounts on the payable date in accordance
with their respective holdings with respect to a Global Note as shown on DTC's
records, unless DTC has reason to believe that it will not receive payment on
such date. Payments by Participants to beneficial owners are governed by
standing instructions and customary practices, as is the case with securities
held in "street name." Such instructions will be the responsibility of such
Participant and not of DTC, the Underwriters or the Corporation, subject to any
statutory or regulatory requirements as may be in effect from time to time. The
Corporation will in every case be discharged by payment to, or to the order of,
DTC or its nominee, as the holder of such Global Note, of the amount so paid.
Each of the persons shown in the records of DTC or its nominee as an owner of a
beneficial interest therein must look solely to DTC or its nominee, as the case
may be, for its share of any such payment so made by the Corporation. Neither
the Corporation, the trustee for the Notes, nor any Paying Agent, Security
Registrar or Transfer Agent for the Notes will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of owners of beneficial interests in a Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial interests in Global Notes among its Participants, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary and a successor depositary is not appointed by the Corporation
within 90 days, the Corporation will issue registered Notes in certificated
form in exchange for beneficial interests in each Global Note. In addition, the
Corporation may at any time determine not to have Notes represented by Global
Notes and, in such event, will issue registered Notes in certificated form in
exchange for beneficial interests in Global Notes. In any such instance, an
owner of a beneficial interest in a Global Note will be entitled to physical
delivery in certificated form of a Note or Notes equal in principal amount to
such beneficial interest and to have such Note or Notes registered in its name.
Any Notes so issued in certificated form will be issued in denominations of
$1,000 or any integral multiple in excess thereof and will be issued in
registered form only, without coupons.
S-9
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES TO FOREIGN INVESTORS
Holders of the Notes who are not U.S. Persons (as defined below) must
comply with applicable certification requirements in order to receive payments
of interest free of applicable withholding taxes. In no event will any payments
by the Corporation be increased as a result of any such withholding or other
taxes. A holder of a Note that is not a U.S. Person will be subject to the 30%
U.S. withholding tax (or in certain cases a 31% backup withholding tax) that
generally applies to payments of interest on registered debt issued by U.S.
Persons unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business in the chain of intermediaries between such holder of a Note and the
U.S. entity required to withhold tax complies with applicable certification
requirements, and (ii) such holder of a Note takes one of the following steps
to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Holders of the Notes for which
the interest income is not effectively connected with a United States trade or
business, that do not own more than 10% of the stock of the Corporation and
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status). If the
information shown on Form W-8 changes, a new Form W-8 must be filed within 30
days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are holders of the Notes and
reside in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer files Form W-8. Form 1001 may be filed by the holder of a Note or its
agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. A holder of a Note or, in the
case of a Form 1001 or a Form 4224 filer, its agent, files by submitting the
appropriate form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing agency) prior
to the first interest payment occurring after its acquisition of a Note. Form
W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
As used herein, the term "U.S. Person" means a holder of a Note that for
U.S. federal income tax purposes is (i) a citizen or resident of the U.S., (ii)
a corporation, partnership, or other entity treated as such that is created or
organized in or under the laws of the U.S. or of any state thereof (including
Washington, D.C.), (iii) an estate whose income from sources without the United
States is includible in gross income for U.S. federal income tax purposes
regardless of a connection with the conduct of a trade or business within the
United States, or (iv) any trust with respect to which (A) a U.S. court is able
to exercise primary supervision over the administration of such trust and (B)
one or more U.S. persons have the authority to control all substantial
decisions of the trust.
Recently issued Treasury regulations (the "Final Withholding
Regulations"), which are generally effective with respect to payments made
after December 31, 1998, consolidate and modify the current certification
requirements and means by which a holder may claim exemption from the U.S.
federal income tax withholding and provide certain presumptions regarding the
status of holders when payment to the holders cannot be reliably associated
with appropriate documentation provided to the payer. To avoid backup
withholding with respect to payments made after December 31, 1998, holders of
Notes will be required to provide certification, if applicable, that complies
with the procedures in the Final Withholding Regulations by the first payment
date after the effective date of those regulations, subject to certain
transitional rules which
S-10
<PAGE>
may extend until December 31, 1999 certifications previously provided in
accordance with the currently effective Treasury regulations. Because the
application of the Final Withholding Regulations will vary depending on a
holder's particular circumstances, all holders are urged to consult their own
tax advisors regarding the application of the Final Withholding Regulations to
them.
This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Notes. Investors are
advised to consult their own tax advisors for specific tax advice concerning
their holding and disposing of the Notes.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated April 28, 1998 (the "Underwriting Agreement") among the Corporation and
the underwriters named therein (the "Underwriters"), the Corporation has agreed
to sell to each of the Underwriters and each of the Underwriters has severally
agreed to purchase the principal amount of the Notes set forth opposite its
name below at the price set forth on the cover page of this Prospectus
Supplement. The Underwriting Agreement provides that settlement will occur on
May 4, 1998. The Underwriters are committed to purchase all the Notes offered
hereby if any of the Notes are purchased.
<TABLE>
<CAPTION>
Principal
Amount of
Underwriter the Notes
- ---------------------------------------------------- ---------------
<S> <C>
NationsBanc Montgomery Securities LLC ......... $125,000,000
BancAmerica Robertson Stephens ................ 125,000,000
Bear, Stearns & Co. Inc. ...................... 125,000,000
Lehman Brothers Inc. .......................... 125,000,000
------------
Total .................................... $500,000,000
============
</TABLE>
The Underwriters have advised the Corporation that they propose initially
to offer the Notes to the public at the Price to Public set forth on the cover
page of this Prospectus Supplement, and to certain dealers at such price less a
concession not in excess of .35% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .20% of such principal amount on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Underwriting Agreement provides that the Corporation will indemnify
the Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Notes are a new issue of securities with no established trading
market. The Corporation does not intend to apply for listing of the Notes on
any securities exchange. The Corporation has been advised by the Underwriters
that they may make a market in the Notes. The Underwriters, however, are not
obligated to make a market in the Notes and may discontinue any market making
at any time without notice. The Corporation cannot provide any assurance that a
secondary market for the Notes will develop.
In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of Notes.
Specifically, the Underwriters may overallot the offering, creating a syndicate
short position. Underwriters may bid for and purchase Notes in the open market
to cover syndicate short positions or to stabilize the price of the Notes.
These activities may stabilize or maintain the price of Notes at a level above
that which might otherwise prevail in the open market. None of the transactions
described in this paragraph is required, and, if any is undertaken, it may be
discontinued at any time.
NationsBanc Montgomery Securities LLC (formerly NationsBanc Capital
Markets, Inc.) ("NMS") is a direct, wholly-owned subsidiary of NationsBank.
Under Section 2720 of the Conduct Rules ("Section 2720") of the National
Association of Securities Dealers, Inc. (the "NASD"), when an NASD member, such
as NMS, participates in the distribution of an affiliated company's securities,
the offering must be conducted in accordance with the applicable provisions of
Section 2720. NationsBank is considered to be an "affiliate" (as such term is
defined in Section 2720) of NMS. Accordingly, the offer and sale of any Notes
by NMS will comply with the requirements of Section 2720 regarding the
underwriting of securities of affiliates. In addition,
S-11
<PAGE>
under Section 2720, no NASD member participating in offers and sales of the
Notes may execute a transaction in the Notes in a discretionary account without
the specific prior written approval of the member's customer. The offer will
also comply with any restrictions that may be imposed on NMS by the Board of
Governors of the Federal Reserve System.
BancAmerica Robertson Stephens is a wholly owned subsidiary of
BankAmerica. See "RECENT DEVELOPMENTS -- Merger Agreement with BankAmerica
Corporation."
Each of the Underwriters or their affiliates provides or has provided
investment or commercial banking services to NationsBank from time to time in
the ordinary course of business.
S-12
<PAGE>
PROSPECTUS
- ----------
NationsBank(R)
Debt Securities
NationsBank Corporation ("NationsBank" or the "Corporation") may offer
from time to time its unsecured debt securities, which may be either senior
(the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the "Debt
Securities"). NationsBank may sell up to $3,000,000,000 in aggregate initial
offering price of Debt Securities (or the U.S. dollar equivalent thereof if any
of the Debt Securities are denominated in a foreign currency or currency unit),
which may be offered, separately or together, in one or more series, in
amounts, at prices and on terms to be determined at the time of sale and set
forth in an accompanying supplement to this Prospectus (a "Prospectus
Supplement"). Pursuant to the terms of the Registration Statement of which this
Prospectus constitutes a part, NationsBank may also offer and sell shares of
its preferred stock (the "Preferred Stock"), which may be represented by
depositary shares (the "Depositary Shares"), and shares of its common stock
(the "Common Stock"). Any such Preferred Stock, Depositary Shares or Common
Stock will be offered and issued pursuant to the terms of a separate Prospectus
contained in such Registration Statement. The aggregate amount of Debt
Securities that may be offered and sold pursuant hereto is subject to reduction
as the result of the sale of any Preferred Stock, Depositary Shares or Common
Stock pursuant to such separate Prospectus or at the Corporation's discretion.
The Senior Debt Securities will rank equally with all other unsubordinated
and unsecured indebtedness of the Corporation. The Subordinated Debt Securities
will be subordinate in right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Corporation.
The Debt Securities may be denominated in U.S. dollars or in another
currency or currency unit (such as the European Currency Unit), and the
principal of (and premium, if any, on) or any interest on the Debt Securities
may be payable in U.S. dollars or such foreign currency or currency unit. The
specific terms of each series of Debt Securities offered pursuant to this
Prospectus, including the specific designation, aggregate principal amount,
currency or currency unit in which the principal and any premium or interest
may be payable, authorized denominations, maturity, any premium, any interest
rate (which may be fixed or variable), any interest payment dates, any optional
or mandatory redemption terms, any sinking fund provisions, any subordination
terms, any terms for conversion (in the event that such series is convertible
at the option of the holder or NationsBank into Preferred Stock, Depositary
Shares, Common Stock or other Debt Securities), the form of such series, any
securities exchange on which such Debt Securities may be listed, and any other
terms of such series of Debt Securities will be set forth in the Prospectus
Supplement relating to such series.
The Debt Securities may be sold (i) through underwriting syndicates
represented by managing underwriters, or by underwriters without a syndicate,
with such underwriters to be designated at the time of sale; (ii) through
agents designated from time to time; or (iii) directly by the Corporation. The
names of any underwriters or agents of NationsBank involved in the sale of the
Debt Securities, the public offering price or purchase price and any
commissions or discounts will be set forth in the applicable Prospectus
Supplement or a pricing supplement thereto. The net proceeds to the Corporation
from such sale also will be set forth in such Prospectus Supplement or pricing
supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
---------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF NATIONSBANK, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is December 19, 1996.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Corporation with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), are
incorporated herein by reference:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995 as filed March 29, 1996;
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 as filed May 10, 1996, June 30, 1996 as filed August
14, 1996, and September 30, 1996 as filed November 13, 1996;
(c) The Corporation's Current Reports on Form 8-K filed January 12, 1996,
February 1, 1996, March 8, 1996, April 17, 1996, May 16, 1996, July 5,
1996, July 31, 1996, September 6, 1996 (as amended by Form 8-K/A-1 filed
September 11, 1996 and Form 8-K/A-2 filed November 13, 1996), September
20, 1996 (as amended by Form 8-K/A filed September 23, 1996), October 25,
1996, November 14, 1996, December 4, 1996 and December 17, 1996; and
(d) The description of the Corporation's Common Stock contained in its
registration statement filed pursuant to Section 12 of the 1934 Act, as
modified by the Corporation's Current Report on Form 8-K filed on
September 21, 1994.
All reports and any definitive proxy or information statements filed by
the Corporation with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Corporation will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits to such documents which are not specifically incorporated by
reference in such documents). Written requests for such copies should be
directed to John E. Mack, Senior Vice President and Treasurer, NationsBank
Corporation, NationsBank Corporate Center, Corporate Treasury Division,
Charlotte, North Carolina 28255. Telephone requests may be directed to (704)
386-5972.
AVAILABLE INFORMATION
NationsBank is subject to the informational requirements of the 1934 Act
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such material may also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, upon payment of prescribed rates. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding issuers who file electronically with
the Commission. The address of that site is http://www.sec.gov. In addition,
reports, proxy statements and other information concerning NationsBank may be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and at the offices of The Pacific Stock Exchange
Incorporated, 301 Pine Street, San Francisco, California 94104.
2
<PAGE>
NATIONSBANK CORPORATION
General
NationsBank is a multi-bank holding company established as a North
Carolina corporation in 1968 and is registered under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), with its principal assets being the stock
of its subsidiaries. Through its banking subsidiaries (the "Banks") and its
various non-banking subsidiaries, NationsBank provides banking and
banking-related services, primarily throughout the Southeast and Mid-Atlantic
states and Texas. The principal executive offices of NationsBank are located at
NationsBank Corporate Center in Charlotte, North Carolina 28255. Its telephone
number is (704) 386-5000.
Operations
NationsBank provides a diversified range of banking and certain nonbanking
financial services and products through its various subsidiaries. NationsBank
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 commercial and
retail 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 retirement services for defined benefit and
defined contribution plans, full service and discount brokerage services,
investment advisory services, including advising the Nations Fund family of
mutual funds, as well as private banking, fiduciary and investment management
services through subsidiaries of NationsBank. As of September 30, 1996, the
General Bank operated 1,980 banking offices through the following Banks:
NationsBank, N.A. (serving the states of North Carolina, South Carolina,
Maryland and Virginia and the District of Columbia); NationsBank, N.A. (South)
(serving the states of Florida and Georgia); NationsBank of Kentucky, N.A.;
NationsBank of Tennessee, N.A.; NationsBank of Texas, N.A.; and Sun World, N.A.
(serving the state of Texas). The General Bank also provides fully automated,
24-hour cash dispensing and depositing services throughout the states in which
it is located, through 3,609 automated teller machines.
Global Finance provides comprehensive corporate and investment banking as
well as trading and distribution services to domestic and international
customers. The group serves as a principal lender and investor, as well as an
advisor, arranger and underwriter, 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 by the group. Global Finance also
underwrites, trades and distributes a wide range of securities (including
bank-eligible securities and, to a limited extent, bank-ineligible securities
as authorized by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board")), and trades and distributes a wide range of
derivative products in certain interest rate, foreign exchange, commodity and
equity markets. Global Finance provides its services through various offices
located in major United States cities as well as in London, Frankfurt,
Singapore, Bogot-, Mexico City, Grand Cayman, Nassau, Seoul, Tokyo, Osaka,
Taipei and Hong Kong.
Financial Services includes NationsCredit Consumer Corporation, primarily
a consumer finance subsidiary, and NationsCredit Commercial Corporation,
primarily a commercial finance subsidiary. NationsCredit Consumer Corporation,
which has approximately 331 offices located in 36 states, provides personal,
mortgage and automobile loans to consumers and retail finance programs to
dealers. NationsCredit Commercial Corporation consists of seven divisions that
specialize in one or more of the following areas: equipment loans and leasing;
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.
As part of its operations, NationsBank regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, NationsBank 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,
NationsBank publicly announces such material acquisitions when a definitive
agreement has been reached.
3
<PAGE>
Supervision and Regulation
General. As a registered bank holding company, NationsBank is subject to
the supervision of, and to regular inspection by, the Federal Reserve Board.
The Banks are organized as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller"). The Banks are also subject to regulation by the
Federal Deposit Insurance Corporation (the "FDIC") and other federal regulatory
agencies. In addition to banking laws, regulations and regulatory agencies,
NationsBank 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 Corporation's
operations, management and ability to make distributions. The following
discussion summarizes certain aspects of those laws and regulations that affect
NationsBank.
Under the BHCA, the activities of NationsBank, 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 NationsBank, are required
to obtain prior approval of the Federal Reserve Board to engage in any new
activity not previously approved by the Federal Reserve Board or to acquire
more than 5% of any class of voting stock of any company.
The BHCA also requires bank holding companies to obtain the prior approval
of the Federal Reserve Board before acquiring more than 5% of any class of
voting stock of any bank which is not already majority-owned by the bank
holding company. Pursuant to the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking and Branching Act"), a bank
holding company became able to acquire banks in states other than its home
state beginning September 29, 1995, without regard to the permissibility of
such acquisition 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).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, therefore 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
such act, a bank is now able to open new branches in a state in which it does
not already have banking operations if the laws of such state permit such de
novo branching. Of those states in which the Banks are located, Delaware,
Maryland, North Carolina 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).
As previously described, NationsBank 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.
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.
4
<PAGE>
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 Corporation's Tier 1 and total risk-based capital ratios under
these guidelines at September 30, 1996 were 7.05% and 12.05%, 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 Corporation's leverage ratio at September 30, 1996 was
6.30%. Management believes that NationsBank 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 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%, a total capital ratio of at least
10% and a leverage ratio of at least 5% and not be subject to a capital
directive order. An "adequately capitalized" institution must have a Tier 1
capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines, as
of September 30, 1996, each of the Banks was considered well capitalized.
Banking agencies have recently adopted final regulations which mandate
that regulators take into consideration concentrations of credit risk and risks
from non-traditional activities, as well as an institution's ability to manage
those risks, when determining the adequacy of an institution's capital. This
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have recently 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
evaluation 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, these banking agencies intend
to propose further regulations to establish an explicit risk-based capital
charge for interest rate risk.
Distributions. The Corporation'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. The amount of dividends that each Bank may declare in
a calendar year without approval of the Comptroller is the Bank's net profits
for that year, as defined by statute, combined
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<PAGE>
with its net retained profits, as defined, for the preceding two years. In
addition, from time to time NationsBank applies for, and may receive,
permission from the Comptroller for one or more of the Banks to declare special
dividends. As of January 1, 1996, the Banks can initiate dividend payments
without prior regulatory approval of up to $905 million plus an additional
amount equal to their net profits for 1996 up to the date of any such dividend
declaration.
In addition to the foregoing, the ability of NationsBank and the Banks to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under FDICIA as described
above. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of NationsBank, 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. 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
NationsBank 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.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including the Corporation's working capital needs,
the funding of investments in, or extensions of credit to, its banking and
nonbanking subsidiaries, possible acquisitions of other financial institutions
or their assets or liabilities, possible acquisitions of or investments in
other businesses of a type eligible for bank holding companies and possible
reduction of outstanding indebtedness or repurchase of outstanding equity
securities of the Corporation. Pending such use, the Corporation may
temporarily invest the net proceeds in investment grade securities. The
Corporation may, from time to time, engage in additional capital financings of
a character and in amounts to be determined by the Corporation in light of its
needs at such time or times and in light of prevailing market conditions. If
the Corporation elects at the time of issuance of Debt Securities to make
different or more specific use of proceeds other than that set forth herein,
such use will be described in the applicable Prospectus Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the Corporation's consolidated ratios of earnings to
fixed charges for the nine months ended September 30, 1996 and for each of the
years in the five-year period ended December 31, 1995:
<TABLE>
<CAPTION>
Nine Months Year Ended
Ended December 31,
September 30, --------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits ......... 1.8 1.7 1.9 2.3 2.4 1.1
Including interest on deposits ......... 1.5 1.4 1.5 1.5 1.4 1.0
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income of the Corporation plus applicable income taxes and fixed charges, less
capitalized interest and the equity in undistributed earnings of unconsolidated
subsidiaries and associated companies. Fixed charges represent interest expense
(exclusive of interest on deposits in one case and inclusive of such interest
in the other), capitalized interest, amortization of debt discount and
appropriate issuance costs and one-third (the amount deemed to represent an
appropriate interest factor) of net rent expense under all lease commitments.
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<PAGE>
PLAN OF DISTRIBUTION
The Corporation may offer and sell the Debt Securities in one or more of
the following ways: (i) through underwriters or dealers; (ii) through agents;
or (iii) directly by the Corporation to one or more purchasers. Such
underwriters, dealers or agents may be affiliates of NationsBank. The
Prospectus Supplement with respect to a particular offering of a series of Debt
Securities will set forth the terms of the offering of such Debt Securities,
including the name or names of any underwriters or agents with whom NationsBank
has entered into arrangements with respect to the sale of such Debt Securities,
the public offering or purchase price of such Debt Securities and the proceeds
to the Corporation from such sales, and any underwriting discounts, agency fees
or commissions and other items constituting underwriters' compensation, the
initial public offering price, any discounts or concessions to be allowed or
reallowed or paid to dealers and the securities exchange, if any, on which such
Debt Securities may be listed.
If underwriters are used in the offer and sale of Debt Securities, the
Debt Securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The Debt Securities may be offered to the
public either through underwriting syndicates represented by managing
underwriters, or by underwriters without a syndicate, all of which underwriters
in either case will be designated in the applicable Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, under the
terms of the underwriting agreement, the obligations of the underwriters to
purchase Debt Securities will be subject to certain conditions precedent and
the underwriters will be obligated to purchase all the Debt Securities if any
are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Debt Securities also may be offered and sold directly by the Corporation
or through agents designated by the Corporation from time to time. Any agent
involved in the offer or sale of the Debt Securities with respect to which this
Prospectus is delivered will be named in, and any commissions payable by the
Corporation to such agent will be set forth in or calculable from, the
applicable Prospectus Supplement or a pricing supplement thereto. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Corporation
may authorize underwriters, dealers or agents to solicit offers by certain
institutions to purchase Debt Securities from the Corporation at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts ("Delayed Delivery Contracts") providing for payment and
delivery on the date or dates stated in the Prospectus Supplement. Each Delayed
Delivery Contract will be for an amount of Debt Securities not less than and,
unless the Corporation otherwise agrees, the aggregate amount of Debt
Securities sold pursuant to Delayed Delivery Contracts shall be not more than
the respective minimum and maximum amounts stated in the Prospectus Supplement.
Institutions with which Delayed Delivery Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies and educational and charitable institutions, but shall in
all cases be subject to the approval of the Corporation in its sole discretion.
The obligations of the purchaser under any Delayed Delivery Contract to pay for
and take delivery of Debt Securities will not be subject to any conditions
except that (i) the purchase of Debt Securities by such institution shall not
at the time of delivery be prohibited under the laws of the jurisdiction to
which such institution is subject; and (ii) any related sale of Debt Securities
to underwriters shall have occurred. A commission set forth in the Prospectus
Supplement will be paid to underwriters soliciting purchases of Debt Securities
pursuant to Delayed Delivery Contracts accepted by the Corporation. The
underwriters will not have any responsibility in respect of the validity or
performance of Delayed Delivery Contracts.
Any series of Debt Securities offered and sold pursuant to this Prospectus
and the applicable Prospectus Supplement will be new issues of securities with
no established trading market. Any underwriters to whom Debt Securities are
sold by the Corporation for public offering and sale may make a market in such
Debt Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Debt Securities.
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<PAGE>
Any underwriter, dealer or agent participating in the distribution of any
Debt Securities may be deemed to be an underwriter, as that term is defined in
the Securities Act of 1933, as amended (the "1933 Act"), of the Debt Securities
so offered and sold, and any discounts or commissions received by them from
NationsBank and any profit realized by them on the sale or resale of the Debt
Securities may be deemed to be underwriting discounts and commissions under the
1933 Act.
Under agreements entered into with the Corporation, underwriters, dealers
and agents may be entitled to indemnification by the Corporation against
certain civil liabilities, including liabilities under the 1933 Act, or to
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof.
The participation of an affiliate or subsidiary of NationsBank in the
offer and sale of the Debt Securities will comply with the requirements of
Section 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD") regarding the participation in a distribution of
securities by an affiliate. No NASD member participating in offers and sales of
the Debt Securities will execute a transaction in the Debt Securities in a
discretionary account without the prior written specific approval of the
member's customer.
This Prospectus and related Prospectus Supplements may also be used by
direct or indirect wholly-owned subsidiaries of NationsBank in connection with
offers and sales related to secondary market transactions in the Debt
Securities. Such subsidiaries may act as principal or agent in such
transactions. Any such sales will be made at prices related to prevailing
market prices at the time of sale.
Underwriters, dealers and agents also may be customers of, engage in
transactions with, or perform other services for the Corporation in the
ordinary course of business.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain
general terms and provisions of the Debt Securities to which any Prospectus
Supplement may relate. The particular terms of the Debt Securities offered by
any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered will be described in the
Prospectus Supplement relating to such Debt Securities.
Any Senior Debt Securities offered hereby are to be issued under an
Indenture dated as of January 1, 1995 (such Indenture, as it may be amended
from time to time, the "Senior Indenture") between the Corporation and First
Trust of New York, National Association, as successor Trustee to BankAmerica
National Trust Company (the "Senior Trustee"). Any Subordinated Debt Securities
offered hereby are to be issued under an Indenture dated as of January 1, 1995
(such Indenture, as it may be amended from time to time, the "Subordinated
Indenture") between the Corporation and The Bank of New York, Trustee (the
"Subordinated Trustee" and, together with the Senior Trustee, the "Trustees").
Each of the Senior Indenture and the Subordinated Indenture (each, an
"Indenture" and together, the "Indentures") is incorporated by reference in the
Registration Statement of which this Prospectus forms a part.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to and qualified in their entirety by
reference to the provisions of the applicable Indentures. Whenever particular
sections or defined terms of the Indentures are referred to, it is intended
that such sections or defined items shall be incorporated herein by reference.
Unless otherwise indicated, capitalized terms shall have the meanings ascribed
to them in the Indentures.
General
The respective Indentures provide that there is no limitation on the
amount of debt securities that may be issued thereunder from time to time. The
amount of Debt Securities that may be offered and sold pursuant to this
Prospectus, however, is limited to the aggregate initial offering price of the
securities registered under the Registration Statement of which this Prospectus
forms a part, subject to reduction as the result of the sale by the Corporation
of other securities under the Registration Statement.
The Debt Securities will be direct, unsecured obligations of the
Corporation. The Senior Debt Securities of each series will rank equally with
all unsecured senior debt of the Corporation. The Subordinated Debt
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<PAGE>
Securities of each series will be subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness (as hereinafter defined)
of the Corporation. See "DESCRIPTION OF DEBT SECURITIES -- Subordination."
The Debt Securities will be issued in fully registered form without
coupons. The Debt Securities may be denominated in U.S. dollars or in another
currency or currency unit. Unless otherwise set forth in the applicable
Prospectus Supplement, any Debt Securities that are denominated in U.S. dollars
will be issued in denominations of $1,000 or an integral multiple thereof. If
any of the Debt Securities are denominated in a foreign currency or currency
unit, or if principal of (or premium, if any, on) or any interest on any of the
Debt Securities is payable in any foreign currency or currency unit, the
authorized denominations, as well as any investment considerations,
restrictions, tax consequences, specific terms and other information with
respect to such issue of Debt Securities and such foreign currency or currency
unit, will be set forth in the Prospectus Supplement relating thereto.
The Debt Securities may be issued in one or more series with the same or
various maturities. Certain Debt Securities may be issued which provide for an
amount less than the principal amount thereof to be due and payable in the
event of an acceleration of the maturity thereof (each an "Original Issue
Discount Security"). Original Issue Discount Securities may bear no interest or
may bear interest at a rate which at the time of issuance is below market rates
and will be sold at a discount (which may be substantial) below their stated
principal amount. Certain Debt Securities may be deemed to be issued with
original issue discount for United States Federal income tax purposes. The
Prospectus Supplement with respect to any series of Debt Securities issued with
such original issue discount will contain a discussion of Federal income tax
considerations with respect thereto.
The particular terms of each series of Debt Securities to be offered and
sold will be described in the Prospectus Supplement relating to such Debt
Securities, including: (1) the designation of the particular series; (2) the
aggregate principal amount of such series that may be authenticated and
delivered under the applicable Indenture; (3) the person to whom any interest
on any Debt Security of the series shall be payable, if other than the person
in whose name the Debt Security (or one or more predecessor Debt Securities) is
registered at the close of business on the regular record date for such
interest; (4) the date or dates on which the principal of the Debt Securities
of such series is payable; (5) the rate or rates, and if applicable the method
used to determine the rate, at which the Debt Securities of such series shall
bear interest, if any, the date or dates from which such interest shall accrue,
the date or dates on which such interest shall be payable and the record date
or dates for the interest payable on any Debt Securities on any interest
payment date; (6) the place or places at which, subject to the provisions of
the applicable Indenture, the principal of (and premium, if any, on) and any
interest on Debt Securities of such series shall be payable, any Debt
Securities of the series may be surrendered for registration of transfer, and
notices and demands to or upon the Corporation in respect of the Debt
Securities of the series and the Indenture may be served; (7) the obligation,
if any, of the Corporation to redeem or purchase Debt Securities of such
series, at the option of the Corporation or at the option of a holder thereof,
pursuant to any sinking fund or other redemption provisions and the period or
periods within which, the price or prices at which and the terms and conditions
upon which Debt Securities of the series may be so redeemed or purchased, in
whole or in part; (8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Debt Securities of such series
shall be issuable; (9) if other than the principal amount thereof, the portion
of the principal amount of Debt Securities of such series which shall be
payable upon declaration of acceleration of the maturity thereof; (10) the
currency, currencies or currency units in which payment of the principal of
(and premium, if any, on) and any interest on any Debt Securities of the series
shall be payable if other than the currency of the United States of America and
the manner of determining the equivalent thereof in the currency of the United
States of America for purposes of the applicable Indenture; (11) if the
principal of (and premium, if any, on) or any interest on the Debt Securities
of the series is to be payable, at the election of the Corporation or a holder
thereof, in one or more currencies or currency units, other than that or those
in which the Debt Securities are stated to be payable, the currency or
currencies in which payment of the principal of (and premium, if any, on) and
any interest on Debt Securities of such series as to which such election is
made shall be payable, and the periods within which and the terms and
conditions upon which such election is to be made; (12) if the amount of
payments of principal of (and premium, if any, on) or any interest on the Debt
Securities of the series may be determined with reference to an index, the
manner in which such amounts shall be determined; (13) whether the Debt
Securities will be issued in book-entry only form; (14) the identification
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<PAGE>
or method of selection of any interest rate calculation agents, exchange rate
calculation agents or other agents with respect to Debt Securities of such
series; (15) if either or both of Section 14.02 (defeasance) or Section 14.03
(covenant defeasance) of the applicable Indenture do not apply to the Debt
Securities of the series; (16) any provisions relating to the extension of
maturity of, or the renewal of, Debt Securities of such series; and (17) any
other terms of the Debt Securities of such series (which terms shall not be
inconsistent with the provisions of the applicable Indenture).
The ability of NationsBank to make payments of principal of (and premium,
if any, on) and any interest on the Debt Securities may be affected by the
ability of the Banks to pay dividends. The ability of the Banks, as well as of
the Corporation, to pay dividends in the future currently is, and could be
further, influenced by bank regulatory requirements and capital guidelines. See
"NATIONSBANK CORPORATION -- Supervision and Regulation."
Neither the Senior Indenture nor the Subordinated Indenture contains
provisions that would provide protection to holders of Debt Securities against
a decline in credit quality resulting from takeovers, recapitalizations, the
incurrence of additional indebtedness or similar restructurings by the
Corporation. If credit quality declines as a result of such an event, or
otherwise, the ratings of any Debt Securities then outstanding may be withdrawn
or downgraded.
Conversion
The Debt Securities of any series may be convertible, at the option of the
holder or the Corporation, into Preferred Stock, Depositary Shares, Common
Stock or other Debt Securities if the Prospectus Supplement relating to such
series of Debt Securities so provides. In such case, such Prospectus Supplement
will set forth (i) the period(s) during which such conversion may be elected;
(ii) the conversion price payable and the number of shares or amount of
Preferred Stock, Depositary Shares, Common Stock or other Debt Securities
purchaseable upon conversion, and adjustments thereto, if any, in certain
events; (iii) the procedures for electing such conversion; and (iv) all other
terms for such conversion (which terms shall not be inconsistent with the
provisions of the applicable Indenture).
Exchange, Registration and Transfer
At the option of the holder, subject to the terms of the applicable
Indenture, Debt Securities of any series (other than Debt Securities issued in
book-entry form) will be exchangeable for other Debt Securities of the same
series and of an equal aggregate principal amount and tenor of any authorized
denominations.
Debt Securities of a series may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed), at the office of the Security
Registrar or at the office of any transfer agent of the Corporation designated
and maintained for such purpose with respect to such Debt Securities pursuant
to the terms of the applicable Indenture, as referred to in an applicable
Prospectus Supplement. Such transfer or exchange will be effected upon the
Security Registrar or transfer agent, as the case may be, being satisfied with
the documents of title and identity of the person making the request. No
service charge shall be made for any exchange or registration of transfer of
Debt Securities, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
If a Prospectus Supplement refers to any transfer agents (in addition to
the Security Registrar) designated by the Corporation with respect to any
series of Debt Securities, the Corporation may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Corporation will be
required to maintain a transfer agent in each place of payment for such series.
The Corporation may at any time designate additional transfer agents with
respect to any series of Debt Securities.
The Corporation shall not be required to (i) issue, exchange or register
the transfer of any Debt Security of any series to be redeemed for a period of
15 days next preceding any selection of such Debt Securities to be redeemed; or
(ii) exchange or register the transfer of any Debt Security so selected, called
or being called for redemption, except the unredeemed portion of any Debt
Security being redeemed in part.
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For a discussion of restrictions on the exchange, registration and
transfer of Global Securities (hereinafter defined), see "REGISTRATION AND
SETTLEMENT."
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement,
principal of (and premium, if any, on) and any interest on Debt Securities will
be payable, subject to any applicable laws and regulations, at the offices of
such paying agents as the Corporation may designate from time to time pursuant
to the applicable Indenture, except that, at the option of the Corporation,
payment of any interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
interest on a Debt Security on any interest payment date generally will be made
to the person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest payment date. For a
discussion of payment of principal and any premium or interest with respect to
Global Securities, see "REGISTRATION AND SETTLEMENT."
The Corporation initially has designated the principal corporate trust
offices of the Senior Trustee and the Subordinated Trustee in the City of New
York as the places where the Senior Debt Securities and Subordinated Debt
Securities, respectively, may be presented for payment. The Corporation may at
any time designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts. Any other paying agents designated by the Corporation for the Debt
Securities of each series will be named in an applicable Prospectus Supplement.
Subordination
The Subordinated Debt Securities are subordinate and subject, to the
extent and in the manner set forth in the Subordinated Indenture, in right of
payment to the prior payment in full of all Senior Indebtedness of the
Corporation. "Senior Indebtedness" is defined by the Subordinated Indenture as
any indebtedness for money borrowed (including all indebtedness of the
Corporation for borrowed and purchased money of the Corporation, all
obligations of the Corporation arising from off-balance sheet guarantees by the
Corporation and direct credit substitutes, and obligations of the Corporation
associated with derivative products such as interest and foreign exchange rate
contracts and commodity contracts) that is outstanding on the date of execution
of the Subordinated Indenture, or is thereafter created, incurred or assumed,
for the payment of which the Corporation is at the time of determination
responsible or liable as obligor, guarantor or otherwise, and all deferrals,
renewals, extensions and refundings of any such indebtedness or obligations,
other than the Subordinated Debt Securities or any other indebtedness as to
which, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such indebtedness is subordinate
in right of payment to any other indebtedness of the Corporation. The
Prospectus Supplement relating to each series of Subordinated Debt Securities
will set forth the aggregate amount of then outstanding Senior Indebtedness of
the Corporation and any limitation on the issuance of additional Senior
Indebtedness.
No payment on account of principal of (and premium, if any, on) or any
interest on the Subordinated Debt Securities shall be made, and no Subordinated
Debt Securities shall be purchased, either directly or indirectly, by the
Corporation or any of its subsidiaries, if any default or event of default with
respect to any Senior Indebtedness shall have occurred and be continuing and
the Corporation and the Subordinated Trustee shall have received written notice
thereof from the holders of at least 10% in principal amount of any kind or
category of any Senior Indebtedness (or the representative or representatives
of such holders) or the Subordinated Trustee shall have received written notice
thereof from the Corporation.
In the event that any Subordinated Debt Security is declared due and
payable before the date specified therein as the fixed date on which the
principal thereof is due and payable pursuant to the Subordinated Indenture, or
upon any payment or distribution of assets of the Corporation of any kind or
character to creditors upon any dissolution or winding up or total or partial
liquidation or reorganization of the Corporation, all principal of (and
premium, if any, on) and any interest due or to become due upon all Senior
Indebtedness shall first be paid in full before the holders of the Subordinated
Debt Securities (the "Subordinated Debt Holders"), or the Subordinated Trustee,
shall be entitled to retain any assets (other than shares of stock of the
Corporation as reorganized or readjusted or securities of the Corporation or
any other corporation provided for by a plan of reorganization or readjustment,
the payment of which is subordinated, at least to the
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<PAGE>
same extent as the Subordinated Debt Securities, to the payment of all Senior
Indebtedness which may at the time be outstanding, provided that the rights of
the holders of the Senior Indebtedness are not altered by such reorganization
or readjustment), so paid or distributed in respect of the Subordinated Debt
Securities (for principal or interest, if any). Upon such dissolution or
winding up or liquidation or reorganization, any payment or distribution of
assets of the Corporation of any kind or character, whether in cash, property
or securities (other than shares of stock of the Corporation as reorganized or
readjusted or securities of the Corporation or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated, at least to the same extent as the Subordinated Debt Securities,
to the payment of all Senior Indebtedness which may at the time be outstanding,
provided that the rights of the holders of the Senior Indebtedness are not
altered by such reorganization or readjustment), to which the Subordinated Debt
Holders or the Subordinated Trustee would be entitled, except for the
subordination provisions of the Subordinated Indenture, shall be paid by the
Corporation or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, or by the
Subordinated Debt Holders or the Subordinated Trustee if received by them or
it, directly to the holders of the Senior Indebtedness (pro rata to each such
holder on the basis of the respective amounts of Senior Indebtedness held by
such holder) or their representatives, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before any payment
or distribution is made to the Subordinated Debt Holders or to the Subordinated
Trustee.
Subject to the payment in full of all Senior Indebtedness, the
Subordinated Debt Holders shall be subrogated (equally and ratably with the
holders of all indebtedness of the Corporation which, by its express terms,
ranks on a parity with the Subordinated Debt Securities and is entitled to like
rights of subrogation) to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Corporation applicable to
the Senior Indebtedness until the Subordinated Debt Securities shall be paid in
full.
Sale or Issuance of Capital Stock of Banks
The Senior Indenture prohibits the issuance, sale or other disposition of
capital stock, or securities convertible into or options, warrants or rights to
acquire capital stock, of any Principal Subsidiary Bank (as defined below) or
of any subsidiary which owns shares of capital stock, or securities convertible
into or options, warrants or rights to acquire capital stock, of any Principal
Subsidiary Bank, with the following exceptions: (a) sales of directors'
qualifying shares; (b) sales or other dispositions for fair market value, if,
after giving effect to such disposition and to conversion of any shares or
securities convertible into capital stock of a Principal Subsidiary Bank, the
Corporation would own directly or indirectly not less than 80% of each class of
the capital stock of such Principal Subsidiary Bank (or any successor
corporation thereto); (c) sales or other dispositions made in compliance with
an order of a court or regulatory authority of competent jurisdiction; (d) any
sale by a Principal Subsidiary Bank (or any successor corporation thereto) of
additional shares of its capital stock to its shareholders at any price, so
long as (i) prior to such sale the Corporation owns, directly or indirectly,
shares of the same class and (ii) immediately after such sale, the Corporation
owns, directly or indirectly, at least as great a percentage of each class of
capital stock of such Principal Subsidiary Bank as it owned prior to such sale
of additional shares; (e) any sale by a Principal Subsidiary Bank (or any
successor corporation thereto) of additional securities convertible into shares
of its capital stock to its shareholders at any price, so long as (i) prior to
such sale the Corporation owns, directly or indirectly, securities of the same
class and (ii) immediately after such sale the Corporation owns, directly or
indirectly, at least as great a percentage of each class of such securities
convertible into shares of capital stock of such Principal Subsidiary Bank as
it owned prior to such sale of additional securities; (f) any sale by a
Principal Subsidiary Bank (or any successor corporation thereto) of additional
options, warrants or rights to subscribe for or purchase shares of its capital
stock to its shareholders at any price, so long as (i) prior to such sale the
Corporation owns, directly or indirectly, options, warrants or rights, as the
case may be, of the same class and (ii) immediately after such sale, the
Corporation owns, directly or indirectly, at least as great a percentage of
each class of such options, warrants or rights, as the case may be, to
subscribe for or purchase shares of capital stock of such Principal Subsidiary
Bank as it owned prior to such sale of additional options, warrants or rights;
or (g) any issuance of shares of capital stock, or securities convertible into
or options, warrants or rights to subscribe for or purchase shares of capital
stock, of a Principal Subsidiary Bank or any
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<PAGE>
subsidiary which owns shares of capital stock, or securities convertible into
or options, warrants or rights to acquire capital stock, of any Principal
Subsidiary Bank, to the Corporation or a wholly owned subsidiary of the
Corporation.
A Principal Subsidiary Bank is defined in the Senior Indenture as any Bank
(other than NationsBank of Delaware, National Association) with total assets
equal to more than 10% of the Corporation's total consolidated assets.
Waiver of Covenants
Under the terms of either Indenture, compliance with certain covenants or
conditions of such Indenture may be waived by the holders of a majority in
principal amount of the Debt Securities of all series to be affected thereby
and at the time outstanding under that Indenture (including, in the case of
holders of Senior Debt Securities, the covenant described above).
Modification of the Indentures
Each Indenture contains provisions permitting the Corporation and the
applicable Trustee to modify such Indenture or the rights of the holders of
Debt Securities thereunder, with the consent of the holders of not less than
66 2/3% in aggregate principal amount of the Debt Securities of all series at
the time outstanding under that Indenture and to be affected thereby (voting as
one class), except that no such modification shall (a) extend the fixed
maturity of, reduce the principal amount or redemption premium, if any, of, or
reduce the rate of or extend the time of payment of interest on, any Debt
Security without the consent of the holder of each security so affected, or (b)
reduce the aforesaid percentage of Debt Securities, the consent of holders of
which is required for any such modification, without the consent of the holders
of all Debt Securities then outstanding under that Indenture. Each Indenture
also provides that the Corporation and the respective Trustee may, from time to
time, execute supplemental indentures in certain limited circumstances without
the consent of any holders of outstanding Debt Securities.
Each Indenture provides that in determining whether the holders of the
requisite principal amount of the Debt Securities outstanding have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable at such time upon an event of default,
and (ii) the principal amount of a Debt Security denominated in a foreign
currency or currency unit shall be the U.S. dollar equivalent on the date of
original issuance of such Debt Security.
Meetings and Action by Securityholders
Each Indenture contains provisions for convening meetings of the holders
of Debt Securities for certain purposes. A meeting may be called at any time by
the Trustee in its discretion and shall be called by the Trustee upon request
by the Corporation or the holders of at least 10% in aggregate principal amount
of the Debt Securities outstanding of such series, in any case upon notice
given in accordance with "Notices" below. Any resolution passed or decision
taken at any meeting of holders of Debt Securities of any series duly held in
accordance with the applicable Indenture, or such other action taken in
accordance with the terms of the applicable Indenture, will be binding on all
holders of Debt Securities of that series.
Defaults and Rights of Acceleration
An Event of Default is defined in the Subordinated Indenture generally as
bankruptcy of the Corporation under Federal bankruptcy laws. An Event of
Default is defined in the Senior Indenture generally as (i) the Corporation's
failure to pay principal (or premium, if any) when due on any securities of a
series; (ii) the Corporation's failure to pay interest on any securities of a
series, within 30 days after the same becomes due; (iii) the Corporation's
breach of any of its other covenants contained in the Senior Debt Securities or
the Senior Indenture, which breach is not cured within 90 days after written
notice to the Corporation by the Senior Trustee, or to the Corporation and the
Senior Trustee by the holders of at least 25% in principal amount of all Senior
Debt Securities then outstanding under the Senior Indenture and affected
thereby; and (iv) certain events involving the bankruptcy, insolvency or
liquidation of the Corporation.
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Each Indenture provides that if an Event of Default under the respective
Indenture occurs and is continuing, either the respective Trustee or the
holders of 25% in principal amount (or, if any such Debt Securities are
Original Issue Discount Debt Securities, such lesser amounts as may be
described in an applicable Prospectus Supplement) of the Debt Securities then
outstanding under that Indenture (or, with respect to an Event of Default under
the Senior Indenture due to a default in the payment of principal (or premium,
if any) or interest or performance of any other covenant, the outstanding Debt
Securities of all series affected by such default) may declare the principal
amount of all of such Debt Securities to be due and payable immediately.
Payment of principal of the Subordinated Debt Securities may not be accelerated
in the case of a default in the payment of principal (or premium, if any) or
interest or the performance of any other covenant of the Corporation. Upon
certain conditions a declaration of an Event of Default may be annulled and
past defaults may be waived by the holders of a majority in principal amount of
the Debt Securities then outstanding (or of such series affected, as the case
may be).
Collection of Indebtedness, etc.
Each Indenture also provides that in the event of a failure by the
Corporation to make payment of principal of (and premium, if any, on) or any
interest on the Debt Securities (and, in the case of payment of interest, such
failure to pay shall have continued for 30 days) and upon the demand of the
respective Trustee, the Corporation will pay to such Trustee, for the benefit
of the holders of the Debt Securities, the amount then due and payable on the
Debt Securities for principal and interest, with interest on the overdue
principal and, to the extent payment of interest shall be legally enforceable,
upon overdue installments of interest at the rate borne by the Debt Securities.
Each Indenture further provides that if the Corporation fails to pay such
amount forthwith upon such demand, the respective Trustee may, among other
things, institute a judicial proceeding for the collection thereof. However,
each Indenture provides that notwithstanding any other provision of the
Indenture, the holder of any Debt Security shall have the right to institute
suit for the enforcement of any payment of principal of (and premium, if any,
on) and any interest on such Debt Security on the respective stated maturities
expressed in such Debt Security and that such right shall not be impaired
without the consent of such holder.
The holders of a majority in principal amount of the Debt Securities then
outstanding under an Indenture shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
under that Indenture, provided that the holders shall have offered to the
Trustee reasonable indemnity against expenses and liabilities. Each Indenture
requires the annual filing by the Corporation with the respective Trustee of a
certificate as to the absence of default and as to compliance with the terms of
that Indenture.
Notices
Except as otherwise provided in the applicable Indenture, notices to
holders of Debt Securities will be given by first-class mail to the addresses
of such holders as they appear in the Security Register.
Concerning the Trustees
The Corporation and the Banks have from time to time maintained deposit
accounts and conducted other banking transactions with The Bank of New York and
First Trust of New York, National Association, and their affiliated entities in
the ordinary course of business. Each of the Trustees also serves as trustee
for certain series of the Corporation's outstanding indebtedness under other
indentures.
REGISTRATION AND SETTLEMENT
DTC
If so specified in an applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series may be issued in book-entry form represented
by one or more global Debt Securities in registered form (each, a "Global
Security"). Unless otherwise specified in such Prospectus Supplement, each such
Global Security will be held through The Depository Trust Company ("DTC"), as
depositary, and will be registered in the name of Cede & Co., as nominee of
DTC. Accordingly, Cede & Co. is expected to be the holder of record of the Debt
Securities.
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Under the book-entry system of DTC, purchases of Debt Securities of a
series represented by a Global Security must be made by or through persons that
have accounts with DTC ("DTC Participants") or persons that may hold interests
through DTC Participants ("Indirect Participants"). Upon the issuance and
deposit of a Global Security, DTC will credit, on its book-entry registration
and transfer system, the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of DTC
Participants. The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities (or by the Corporation, if such
Debt Securities are offered and sold directly by the Corporation). The
ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records
maintained by DTC (with respect to interests of DTC Participants) and the
records of DTC Participants (with respect to interests of Indirect
Participants) and Indirect Participants. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in certificated form. Such limits and laws may impair the ability to own,
transfer or pledge beneficial interests in a Global Security.
So long as DTC or its nominee is the registered holder of a Global
Security, DTC or its nominee, as applicable, will be considered the sole owner
or holder of the Debt Securities represented by such Global Security for all
purposes under the applicable Indenture. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have Debt
Securities registered in their names, will not receive or be entitled to
receive physical delivery of such Debt Securities in certificated form and will
not be considered the owners or holders thereof under the applicable Indenture.
Accordingly, in order to exercise any rights of a holder of the Debt Securities
under the applicable Indenture, each person owning a beneficial interest in the
Global Security representing such Debt Securities must rely on the procedures
of DTC or, if such person is not a DTC Participant, on the procedures of the
DTC Participant and, if applicable, the Indirect Participant, through which
such person owns its interest.
So long as DTC or its nominee is the registered holder of a Global
Security, Debt Securities of the series represented by such Global Security
will trade in DTC's Same Day Fund Settlement System, and secondary market
trading activity in such Debt Securities will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading
activity in such Debt Securities.
Except as otherwise provided herein, DTC or its nominee, as applicable, as
the registered holder of a Global Security shall be the only person entitled to
receive payments from the Corporation with respect to Debt Securities of the
series represented by such Global Security. Accordingly, payments of principal
of (and premium, if any, on) and any interest on individual Debt Securities of
the series represented by such a Global Security will be made by the
Corporation only to DTC or its nominee, as applicable. DTC has advised the
Corporation that it is DTC's practice to credit DTC Participants' accounts on
the payment date in accordance with their respective holdings with respect to a
Global Security as shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on such date. Payments by DTC Participants to
beneficial owners are governed by standing instructions and customary
practices, as is the case with securities held in "street name." Such
instructions will be the responsibility of such DTC Participant and not of DTC,
the Corporation or any underwriter or agent for the Debt Securities of the
series represented by such Global Security, subject to any statutory or
regulatory requirements as may be in effect from time to time. The Corporation
will in every case be discharged by payment to, or to the order of, DTC or its
nominee, as applicable, as the registered holder of such Global Security, of
the amount so paid. Each of the persons shown in the records of DTC or its
nominee as an owner of a beneficial interest in such Global Security must look
solely to DTC or its nominee, as the case may be, for its share of any such
payment so made by the Corporation. Neither the Corporation, the Trustee for
the Debt Securities of the series represented by such Global Security, any
paying agent or authenticating agent for such Debt Securities nor the Security
Registrar or transfer agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in the Global Security
representing such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
DTC has advised the Corporation as follows: DTC is a limited-purpose trust
company organized under New York law, a "banking organization" within the
meaning of New York law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect in
the state of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the
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1934 Act. DTC was created to hold securities deposited by DTC Participants and
to facilitate the clearance and settlement of securities transactions among DTC
Participants in such securities through electronic computerized book-entry
changes in accounts of the DTC Participants, thereby eliminating the need for
physical movement of securities certificates. Direct Participants in DTC
include securities brokers and dealers, banks (including certain subsidiaries
of the Corporation), trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) have ownership
interests in DTC. DTC is owned by a number of its Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the NASD.
Access to DTC's book-entry system is also available to Indirect Participants,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly. The rules applicable to DTC and DTC Participants are on file with
the Commission.
To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it; DTC's records reflect only the identity
of the DTC Participants to whose accounts such securities are credited, which
may or may not be the beneficial owners. The DTC Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants, by
DTC Participants to Indirect Participants, and by DTC Participants and Indirect
Participants to beneficial owners, will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Neither DTC nor Cede & Co. will consent or vote with respect to
securities held by DTC. Under its usual procedures, DTC mails an omnibus proxy
to an issuer as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those DTC Participants to
whose accounts the securities are credited on the record date (identified in a
listing attached to the omnibus proxy).
DTC can act only on behalf of DTC Participants, who in turn act on behalf
of Indirect Participants. Owners of beneficial interests in a Global Security
that are not DTC Participants or Indirect Participants but desire to purchase,
sell or otherwise transfer ownership of such interests may do so only through
DTC Participants and Indirect Participants. In addition, the ability of owners
of beneficial interests in a Global Security to pledge such interests to
persons or entities that do not participate in the DTC system may be limited
due to the lack of certificates for the Debt Securities of the series
represented by such Global Security.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial interests in Global Securities among DTC Participants,
it is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary with respect to Debt Securities of a particular series and a
successor depositary is not appointed by the Corporation within 90 days, the
Corporation will issue Debt Securities of the series in certificated form in
exchange for beneficial interests in the Global Security representing such Debt
Securities. In addition, the Corporation may at any time determine not to have
Debt Securities of a series represented by Global Securities and, in such
event, will issue Debt Securities of the series in certificated form in
exchange for beneficial interests in the Global Security representing such Debt
Securities. In any such instance, an owner of a beneficial interest in the
Global Security will be entitled to physical delivery in certificated form of a
note or notes representing such Debt Securities equal in principal amount to
such beneficial interest and to have such note or notes registered in its name.
Unless otherwise specified in the applicable Prospectus Supplement, any notes
so issued in certificated form will be issued in denominations of $1,000 or any
integral multiple in excess thereof and will be issued in registered form only,
without coupons.
Cedel Bank and Euroclear
If so specified in the applicable Prospectus Supplement, Debt Securities
of a series to be issued in book-entry form and to be sold or traded in Europe
may be represented by one or more Global Securities held through Cedel Bank,
soci-t- anonyme ("Cedel Bank") or Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System (the "Euroclear Operator"
or "Euroclear"). Cedel Bank and Euroclear will hold omnibus positions on behalf
of Cedel Bank Participants and Euroclear Participants
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(each as defined herein), respectively, on the books of their respective
depositaries (each, a "Depositary"), which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
Transfers between Cedel Bank Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures. Cross-market transfers between persons holding directly
or indirectly through DTC in the United States, on the one hand, and directly
or indirectly through Cedel Bank Participants or Euroclear Participants, on the
other, will be effected by DTC in accordance with DTC rules on behalf of the
relevant European international clearing system by its Depositary; however,
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Bank Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits for securities in Cedel Bank or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, and will be dated the
business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Cedel Bank Participant or Euroclear Participant on such
business day. Cash received in Cedel Bank or Euroclear as a result of sales of
securities by or through a Cedel Bank Participant or a Euroclear Participant to
a DTC Participant will be received with value on the DTC settlement date but
will be available in the relevant Cedel Bank or Euroclear cash account only as
of the business day following settlement in DTC.
Cedel Bank is incorporated under the laws of Luxembourg as a professional
depository. Cedel Bank holds securities for its participating organizations
("Cedel Participants") and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic
book-entry changes in accounts of Cedel Participants, thereby eliminating the
need for physical movement of certificates. Transactions may be settled by
Cedel Bank in any of 28 currencies, including United States dollars. Cedel Bank
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel Bank interfaces with
domestic markets in several countries. As a professional depository, Cedel Bank
is subject to regulation by the Luxembourg Monetary Institute. Cedel
Participants consist of recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
underwriters or agents with respect to a particular series of Debt Securities.
Indirect access to Cedel Bank is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions now may be
settled by Euroclear in any of 32 currencies, including United States dollars.
The Euroclear System includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. The Euroclear System is operated by the Euroclear Operator,
under contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters or agents with respect to a particular series
of Debt Securities. Indirect access to the Euroclear System is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
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The Euroclear Operator is the Brussels branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Federal Reserve Board and the New York State
Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of or relations with persons holding through
Euroclear Participants.
Distributions with respect to Debt Securities of a series held through
Cedel Bank or Euroclear will be credited to the cash accounts of Cedel
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by its respective Depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. The applicable Prospectus Supplement
with respect to a series of Debt Securities held through Cedel Bank or
Euroclear will set forth certain income tax consequences to foreign investors.
Cedel Bank or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by a holder of Debt Securities under the
applicable Indenture on behalf of a Cedel Participant or a Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its respective Depositary's ability to effect such actions on its
behalf through DTC.
Although Cedel Bank and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of applicable Debt Securities among
participants of DTC, Cedel Bank and Euroclear, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for the
Corporation by Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina,
and for the underwriters or agents by Stroock & Stroock & Lavan LLP, New York,
New York. As of the date of this Prospectus, certain members of Smith Helms
Mulliss & Moore, L.L.P. beneficially own approximately 50,000 shares of the
Corporation's Common Stock.
EXPERTS
The consolidated financial statements of the Corporation incorporated in
this Prospectus by reference to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1995, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The supplemental consolidated financial statements of Boatmen's
Bancshares, Inc. at December 31, 1995 and 1994, and for the three years ended
December 31, 1995, incorporated herein by reference from the Corporation's
Current Report on Form 8-K filed on September 6, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in its report thereon
incorporated herein in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
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No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement and Prospectus in connection with the offering made
hereby and, if given or made, such information or representations must not be
relied upon as having been authorized by the Corporation or by the
Underwriters. Neither the delivery of this Prospectus Supplement or Prospectus
nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the Corporation
since the date hereof. This Prospectus Supplement and Prospectus do not
constitute an offer or solicitation by anyone in any state in which such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation.
--------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Prospectus Supplement -----
<S> <C>
Description of the Notes .................... S-2
Recent Developments ......................... S-2
Capitalization .............................. S-5
Ratios of Earnings to Fixed Charges ......... S-6
Selected Financial Data ..................... S-7
Registration and Settlement ................. S-8
Certain United States Federal Income
Tax Consequences to Foreign
Investors ................................ S-10
Underwriting ................................ S-11
Prospectus
Incorporation of Certain Documents by
Reference ................................ 2
Available Information ....................... 2
NationsBank Corporation ..................... 3
Use of Proceeds ............................. 6
Ratios of Earnings to Fixed Charges ......... 6
Plan of Distribution ........................ 7
Description of Debt Securities .............. 8
Registration and Settlement ................. 14
Legal Opinions .............................. 18
Experts ..................................... 18
</TABLE>
$500,000,000
NationsBank(R)
6 3/8% Senior Notes,
due 2005
--------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------
NationsBanc Montgomery Securities LLC
BancAmerica Robertson Stephens
Bear, Stearns & Co. Inc.
Lehman Brothers
April 28, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[Alternate Page--Debt]
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 19, 1996)
$500,000,000
NationsBank(R)
6 3/8% Senior Notes, due 2005
---------------
Interest on the 6 3/8% Senior Notes, due 2005 (the "Notes") will be
payable by NationsBank Corporation ("NationsBank" or the "Corporation")
semiannually on May 15 and November 15, commencing November 15, 1998. The Notes
will mature on May 15, 2005 and are not redeemable prior to maturity. The Notes
will not be listed on any securities exchange.
The Notes will be issued in book-entry only form and will be represented
by one or more global securities (the "Global Notes") registered in the name of
The Depository Trust Company, as depositary ("DTC"), or its nominee. Except as
described herein, the Notes will not be issued in definitive form. The Notes
will be available for purchase in denominations of $1,000 and integral
multiples thereof. Settlement of the Notes will be made in immediately
available funds. So long as the Notes are represented by Global Notes
registered in the name of DTC, the Notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in the Notes will
therefore settle in immediately available funds.
---------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS, ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF THE CORPORATION, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
THIS PROSPECTUS SUPPLEMENT IS TO BE USED BY NATIONSBANC MONTGOMERY
SECURITIES LLC ("NMS"), A BROKER-DEALER AND A DIRECT WHOLLY-OWNED
SUBSIDIARY OF NATIONSBANK, IN CONNECTION WITH OFFERS AND SALES
RELATED TO SECONDARY MARKET TRANSACTIONS IN THE NOTES.
NMS OR ITS AFFILIATES MAY ACT AS PRINCIPAL OR AGENT IN
SUCH TRANSACTIONS. ANY SUCH SALES WILL BE MADE AT NEGOTIATED PRICES RELATING TO
PREVAILING MARKET PRICES AT THE TIME OF SALE OR OTHERWISE.
---------------
NationsBanc Montgomery Securities LLC
---------------
The date of this Prospectus Supplement is April 28, 1998.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE
"UNDERWRITING."
DESCRIPTION OF THE NOTES
The information herein concerning the Notes should be read in conjunction
with the statements under "DESCRIPTION OF DEBT SECURITIES" in the accompanying
Prospectus.
General
The Notes will be issued in the aggregate principal amount of $500,000,000
under an Indenture (the "Indenture") dated as of January 1, 1995 between the
Corporation and U.S. Bank Trust National Association (successor to BankAmerica
National Trust Company), as trustee, as set forth in the Prospectus. The Notes
will be available for purchase in denominations of $1,000 and integral
multiples thereof. The Notes are unsecured and constitute a single series of
debt securities under the Indenture. The Notes will bear interest from May 4,
1998 at the annual rate specified on the cover page of this Prospectus
Supplement. Interest on the Notes will be payable semiannually in arrears on
each May 15 and November 15, commencing November 15, 1998. The record date for
the interest payable shall be the close of business on the last day of the
calendar month preceding each interest payment date.
If any interest payment date falls on a day that is not a Business Day,
payment of such interest may be made on the next succeeding Business Day. If
the maturity date of the Notes falls on a day that is not a Business Day, the
payment of principal will be made on the next succeeding Business Day as if it
were made on the date such payment was due and no interest will accrue for the
period after the stated maturity date. The term "Business Day" with respect to
any Note means any day, other than a Saturday or Sunday or a legal holiday in
New York, New York or Charlotte, North Carolina, that is not a day on which
banking institutions in New York, New York, or Charlotte, North Carolina are
authorized or required by law or regulation to be closed. Initially, the
Corporation will make payments of principal and interest at the office of The
Bank of New York, 101 Barclay Street, New York, New York 10286, who has been
appointed as authenticating and paying agent, registrar and transfer agent for
the Notes. The Notes will mature on May 15, 2005 and are not redeemable prior
to maturity. No sinking fund is provided for the Notes. There is no limitation
in the Indenture on the amount of Senior Indebtedness (as described in the
Prospectus) or other obligations which may be issued by the Corporation.
RECENT DEVELOPMENTS
Merger Agreement with BankAmerica Corporation
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and
NationsBank, each registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended, entered into an Agreement and Plan of
Reorganization on April 10, 1998 (the "Merger Agreement") under which, (i)
NationsBank will form a new Delaware subsidiary ("NationsBank (DE)") and will
merge (the "Reincorporation Merger") with and into NationsBank (DE), with
NationsBank (DE) as the surviving corporation in the Reincorporation Merger,
and (ii) BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger. Following the
Reorganization, the name of the surviving corporation will be BankAmerica
Corporation. In connection with the Merger Agreement, BankAmerica and
NationsBank have also entered into cross stock option agreements, each dated
April 10, 1998. Each of those options, if exercised by the respective grantee,
is intended to provide the grantee with the right to acquire approximately
19.9% of the total number of the grantor's shares then issued and outstanding.
In accordance with the terms of the Merger Agreement, (i) with respect to
the capital stock of NationsBank, (A) each share of the common stock, without
par value, of NationsBank ("NationsBank Common Stock") will be converted into
one share of the common stock, without par value, of NationsBank (DE)
("NationsBank (DE) Common Stock"), and (B) each share of the preferred stock of
NationsBank will be converted into the
S-2
<PAGE>
right to receive one share of the preferred stock of NationsBank (DE) on
substantially identical terms, and (ii) with respect to the capital stock of
BankAmerica, (Y) each share of the common stock, par value $1.5625, of
BankAmerica ("BankAmerica Common Stock") will be converted into the right to
receive 1.1316 shares of NationsBank (DE) Common Stock, and (Z) each share of
the preferred stock of BankAmerica will be converted into the right to receive
one share of the preferred stock of NationsBank (DE) on substantially identical
terms. Following consummation of the Reorganization, NationsBank shareholders
will retain their existing shares of NationsBank Common Stock, which will
automatically be deemed to represent shares of NationsBank (DE) Common Stock.
At the effective time of the Reorganization, all rights with respect to
NationsBank Common Stock and BankAmerica Common Stock pursuant to stock options
outstanding at such effective time, whether or not then exercisable, shall be
converted into and shall become rights with respect to NationsBank (DE) Common
Stock on otherwise substantially similar terms.
The Reorganization is intended to constitute a tax-free reorganization
under the Internal Revenue Code of 1986, as amended, and to be accounted for as
a pooling of interests.
Consummation of the Reorganization is subject to various conditions,
including: (i) approval of the Merger Agreement and the Reorganization by the
stockholders of each of the parties thereto; (ii) receipt of requisite
regulatory approvals from the Board of Governors of the Federal Reserve System
and other federal and state regulatory authorities as necessary; (iii) receipt
by each of BankAmerica and NationsBank of an opinion of counsel in reasonably
satisfactory form as to the tax treatment of certain aspects of the
Reorganization; (iv) the registration pursuant to the Securities Act of 1933,
as amended, of the shares of NationsBank (DE) Common Stock to be issued in the
Reorganization; (v) receipt by each of BankAmerica and NationsBank of a letter
from their respective independent public accountants, to the effect that the
Reorganization will qualify for pooling-of-interests accounting treatment; and
(vi) satisfaction or waiver of certain other conditions.
For additional information regarding the BankAmerica Merger, see the
Corporation's Current Report on Form 8-K filed April 17, 1998 (amended by Form
8-K/A dated April 24, 1998) incorporated herein by reference.
Issuance of Additional Notes
On April 28, 1998, the Corporation entered into an underwriting agreement
with various underwriters for the public sale of $300,000,000 aggregate
principal amount of its 6.60% Subordinated Notes, due 2010 (the "Additional
Notes"). The Additional Notes are expected to be issued on May 4, 1998. The
Notes and the Additional Notes constitute separate series of debt securities.
The sale of the Notes is not contingent upon the sale of the Additional Notes.
Recent NationsBank Financial Information
First quarter 1998 net income for NationsBank was $497 million, or $.52
per share, which included $642 million in non-recurring, after-tax merger and
restructuring items resulting from the merger with Barnett Banks, Inc.
("Barnett") completed January 9, 1998 (the "Barnett Merger"). Excluding the
merger and restructuring items, operating earnings were $1.14 billion, or $1.20
per share. 1997 first quarter net income was $855 million, or $.90 per share.
Taxable-equivalent net interest income of $2.56 billion in the first
quarter of 1998 represented a 5% increase compared to $2.44 billion in the same
period of 1997.
Noninterest income in the first quarter of 1998 was $1.78 billion, or 34%
higher than $1.32 billion in the comparable 1997 quarter.
First quarter noninterest expense was $2.45 billion compared to first
quarter 1997 noninterest expense of $2.23 billion.
The provision for credit losses increased to $265 million in the first
quarter of 1998 from $222 million in the first quarter of 1997.
Net charge-offs were $277 million in the first quarter of 1998, or .63% of
average net loans, leases and factored accounts receivable, compared to $215
million, or .49% of average levels, in the first quarter of 1997.
S-3
<PAGE>
The allowance for credit losses was $3.25 billion at March 31, 1998, or 1.81%
of net loans, leases and factored accounts receivable, compared to $3.28
billion, or 1.85% of net loans, leases and factored accounts receivable, at
December 31, 1997. The allowance represented 234% of nonperforming loans at
March 31, 1998 compared to 270% at December 31, 1997.
Total nonperforming assets were $1.54 billion at March 31, 1998, or .86%
of net loans, leases, factored accounts receivable and foreclosed properties,
compared to $1.36 billion, or .77%, at December 31, 1997.
Average deposits were $167.53 billion in the first quarter of 1998
compared to $168.13 billion in the same period in 1997.
Average earning assets were $271.19 billion for the first quarter of 1998,
of which net loans and leases were $176.70 billion and securities were $49.43
billion, compared to average earning assets of $245.10 billion for the first
quarter of 1997.
Total shareholders' equity increased to $25.22 billion at March 31, 1998,
or 8.02% of total assets, from $24.75 billion, or 7.97% of total assets, at
December 31, 1997. Return on average common shareholders' equity was 8.28% in
the first quarter of 1998, down from 14.69% in the year ago quarter due
primarily to the merger and restructuring items. Excluding the merger and
restructuring items, return on average common shareholders' equity was 19.01%.
At March 31, 1998, the Corporation's Tier 1 and total risk-based capital
ratios were 6.80% and 11.19%, respectively. The Corporation's leverage ratio
was 5.64% at March 31, 1998.
S-4
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the
Corporation and its subsidiaries as of December 31, 1997 and as adjusted to
give effect to (i) the issuance of the Notes and the Additional Notes; and (ii)
the issuance and the maturity of certain of the Corporation's and its
subsidiaries' notes during the period beginning January 1, 1998 through the
date of this Prospectus Supplement.
<TABLE>
<CAPTION>
NationsBank As
Actual Adjusted
------------- ---------
(Amounts in millions)
<S> <C> <C>
LONG-TERM DEBT (1):
Senior debt
NationsBank Corporation ...................................................... $11,345 $11,101
6 3/8% Senior Notes, due 2005 ................................................ -- 500
Subsidiaries (2) ............................................................. 9,485 10,499
------- -------
Total senior debt .......................................................... 20,830 22,100
------- -------
Subordinated debt
NationsBank Corporation ...................................................... 7,069 7,890
6.60% Subordinated Notes, due 2010 (3) ....................................... -- 300
Subsidiaries (2) ............................................................. 308 308
------- -------
Total subordinated debt .................................................... 7,377 8,498
------- -------
Total long-term debt ....................................................... 28,207 30,598
------- -------
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Notes (4) ................................................ 2,705 2,705
SHAREHOLDERS' EQUITY:
Preferred stock, authorized -- 45,000,000 shares; issued -- 2,209,784 shares .. 94 94
Common stock, authorized -- 1,250,000,000 shares; issued -- 943,932,530 shares 9,779 9,779
Retained earnings ............................................................. 14,592 14,592
Other, including loan to ESOP trust ........................................... 282 282
------- -------
Total shareholders' equity ................................................. 24,747 24,747
------- -------
$55,659 $58,050
======= =======
</TABLE>
- ---------
(1) On January 9, 1998, the Corporation completed the Barnett Merger. On April
16, 1998, the Corporation filed a Current Report on Form 8-K containing
restated consolidated financial statements of the Corporation reflecting
the Barnett Merger (accounted for as a pooling of interests).
(2) These obligations are direct obligations of certain of the subsidiaries of
NationsBank and, as such, constitute claims against such subsidiaries
prior to the Corporation's equity interest therein.
(3) The sale of the Notes is not contingent on the sale of the Additional
Notes, which is also expected to close on May 4, 1998.
(4) The line item "Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Notes" reflects the issuance of $2,715 million
aggregate liquidation amount of preferred undivided beneficial interests
in the assets of seven wholly owned grantor trusts. The sole assets of the
trusts are junior subordinated notes of the Corporation.
As of December 31, 1997, the Corporation had $2.9 billion of commercial
paper and other short-term notes payable outstanding. At December 31, 1997, the
Corporation had unused lines of credit aggregating $1.5 billion, principally to
support commercial paper borrowings. The commercial paper program for Barnett
was discontinued after the Barnett Merger; therefore, information regarding
that program is not included with this description of the Corporation's
commercial paper program.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
each of the years in the five-year period ended December 31, 1997:
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits ......... 2.0 2.0 1.8 2.0 2.6
Including interest on deposits ......... 1.5 1.5 1.4 1.5 1.6
</TABLE>
S-5
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for the five years ended December
31, 1997 are derived from financial statements of the Corporation audited by
Price Waterhouse LLP, independent accountants.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1997 1996
------------ ------------
(Amounts in millions
except per share
information and ratios)
<S> <C> <C>
Income statement
Interest income ......................................................... $ 19,687 $ 16,832
Interest expense ........................................................ 9,970 8,608
Net interest income (taxable-equivalent) ................................ 9,848 8,335
Net interest income ..................................................... 9,717 8,224
Provision for credit losses ............................................. 954 760
Gains (losses) on sales of securities ................................... 155 86
Noninterest income ...................................................... 5,929 4,408
Foreclosed properties expense ........................................... 9 21
Merger and restructuring items .......................................... 374 118
Other noninterest expense ............................................... 9,234 7,283
Income before taxes and effect of change in method of
accounting for income taxes ............................................ 5,230 4,536
Income tax expense ...................................................... 1,898 1,597
Income before effect of change in method of
accounting for income taxes ............................................ 3,332 2,939
Effect of change in method of accounting for income taxes ............... -- --
Net income .............................................................. 3,332 2,939
Net income available to common shareholders ............................. 3,321 2,922
Net income (excluding merger and restructuring items) ................... 3,596 3,016
Average common shares issued (in thousands) ............................. 941,992 820,945
Per common share
Earnings before effect of change in method of accounting
for income taxes ....................................................... $ 3.53 $ 3.56
Earnings ................................................................ 3.53 3.56
Earnings (excluding merger and restructuring items) ..................... 3.81 3.65
Diluted earnings ........................................................ 3.44 3.50
Diluted earnings (excluding merger and restructuring items) ............. 3.71 3.59
Cash dividends paid ..................................................... 1.37 1.20
Shareholders' equity (period-end) ....................................... 26.15 21.23
Balance sheet (period-end)
Total loans, leases and factored accounts receivable,
net of unearned income ................................................. 176,778 153,041
Total assets ............................................................ 310,554 226,949
Total deposits .......................................................... 173,643 140,329
Long-term debt .......................................................... 28,890 24,212
Common shareholders' equity ............................................. 24,684 16,956
Total shareholders' equity .............................................. 24,747 17,079
Performance ratios
Return on average assets ................................................ 1.16% 1.22%
Return on average assets (excluding merger and restructuring items) ..... 1.25 1.25
Return on average common shareholders' equity (1) ....................... 14.12 17.74
Return on average common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 15.25 18.21
Efficiency ratio ........................................................ 58.5 57.1
Total equity to total assets ............................................ 7.97 7.53
Risk-based capital ratios (period-end) (2)
Tier 1 .................................................................. 6.50 7.76
Total ................................................................... 10.89 12.66
Leverage capital ratio .................................................. 5.57 7.09
Cash basis financial data (3)
Earnings per common share ............................................... $ 4.06 $ 3.78
Earnings per common share (excluding merger and restructuring
items) ................................................................. 4.34 3.87
Diluted earnings per common share ....................................... 3.96 3.71
Diluted earnings per common share (excluding merger and
restructuring items) ................................................... 4.23 3.80
Return on average tangible assets ....................................... 1.38% 1.30%
Return on average tangible assets (excluding merger and
restructuring items) ................................................... 1.47 1.34
Return on average tangible common shareholders' equity (1) .............. 27.51 22.31
Return on average tangible common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 29.41 22.86
Efficiency ratio ........................................................ 55.3 55.7
Ending tangible equity to tangible assets ............................... 4.73 6.44
Asset quality ratios
Allowance for credit losses as a percentage of loans, leases and
factored accounts receivable, net of unearned income (period-end) ...... 1.85% 1.82%
Allowance for credit losses as a percentage of nonperforming loans
(period-end) ........................................................... 270.05 258.52
Net charge-offs as a percentage of average loans, leases and factored
accounts receivable, net of unearned income ............................ .53 .49
Nonperforming assets as a percentage of net loans, leases, factored
accounts receivable and foreclosed properties (period-end) ............. .77 .83
<CAPTION>
Year Ended December 31,
-------------------------------------
1995 1994 1993
------------ ----------- ------------
(Amounts in millions except per share
information
and ratios)
<S> <C> <C> <C>
Income statement
Interest income ......................................................... $ 16,186 $ 13,084 $ 10,858
Interest expense ........................................................ 8,992 6,239 4,570
Net interest income (taxable-equivalent) ................................ 7,338 6,983 6,423
Net interest income ..................................................... 7,194 6,845 6,288
Provision for credit losses ............................................. 505 384 550
Gains (losses) on sales of securities ................................... 34 (26) 82
Noninterest income ...................................................... 3,787 3,153 2,702
Foreclosed properties expense ........................................... 30 5 170
Merger and restructuring items .......................................... -- -- 30
Other noninterest expense ............................................... 6,670 6,290 5,703
Income before taxes and effect of change in method of
accounting for income taxes ............................................ 3,810 3,293 2,619
Income tax expense ...................................................... 1,327 1,115 897
Income before effect of change in method of
accounting for income taxes ............................................ 2,483 2,178 1,722
Effect of change in method of accounting for income taxes ............... -- -- 200
Net income .............................................................. 2,483 2,178 1,922
Net income available to common shareholders ............................. 2,459 2,150 1,894
Net income (excluding merger and restructuring items) ................... 2,483 2,178 1,942
Average common shares issued (in thousands) ............................. 773,799 782,255 749,122
Per common share
Earnings before effect of change in method of accounting
for income taxes ....................................................... $ 3.18 $ 2.75 $ 2.26
Earnings ................................................................ 3.18 2.75 2.53
Earnings (excluding merger and restructuring items) ..................... 3.18 2.75 2.55
Diluted earnings ........................................................ 3.10 2.70 2.48
Diluted earnings (excluding merger and restructuring items) ............. 3.10 2.70 2.51
Cash dividends paid ..................................................... 1.04 .94 .82
Shareholders' equity (period-end) ....................................... 20.59 17.75 16.19
Balance sheet (period-end)
Total loans, leases and factored accounts receivable,
net of unearned income ................................................. 147,519 131,892 117,937
Total assets ............................................................ 228,852 210,882 196,017
Total deposits .......................................................... 134,925 135,579 123,747
Long-term debt .......................................................... 18,966 9,265 9,034
Common shareholders' equity ............................................. 15,933 13,895 12,518
Total shareholders' equity .............................................. 16,073 14,145 12,853
Performance ratios
Return on average assets ................................................ 1.08% 1.07% 1.00%
Return on average assets (excluding merger and restructuring items) ..... 1.08 1.07 1.01
Return on average common shareholders' equity (1) ....................... 16.91 16.23 15.23
Return on average common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 16.91 16.23 15.41
Efficiency ratio ........................................................ 60.0 62.1 62.5
Total equity to total assets ............................................ 7.02 6.71 6.56
Risk-based capital ratios (period-end) (2)
Tier 1 .................................................................. 7.24 7.43 7.41
Total ................................................................... 11.58 11.47 11.73
Leverage capital ratio .................................................. 6.27 6.18 6.00
Cash basis financial data (3)
Earnings per common share ............................................... $ 3.40 $ 2.95 $ 2.71
Earnings per common share (excluding merger and restructuring
items) ................................................................. 3.40 2.95 2.73
Diluted earnings per common share ....................................... 3.32 2.90 2.66
Diluted earnings per common share (excluding merger and
restructuring items) ................................................... 3.32 2.90 2.68
Return on average tangible assets ....................................... 1.17% 1.15% 1.09%
Return on average tangible assets (excluding merger and
restructuring items) ................................................... 1.17 1.15 1.10
Return on average tangible common shareholders' equity (1) .............. 21.32 19.89 18.56
Return on average tangible common shareholders' equity
(excluding merger and restructuring items) (1) ......................... 21.32 19.89 18.76
Efficiency ratio ........................................................ 58.4 60.5 61.0
Ending tangible equity to tangible assets ............................... 6.09 5.81 5.83
Asset quality ratios
Allowance for credit losses as a percentage of loans, leases and
factored accounts receivable, net of unearned income (period-end) ...... 1.81% 2.04% 2.28%
Allowance for credit losses as a percentage of nonperforming loans
(period-end) ........................................................... 304.57 268.16 188.45
Net charge-offs as a percentage of average loans, leases and factored
accounts receivable, net of unearned income ............................ .39 .33 .52
Nonperforming assets as a percentage of net loans, leases, factored
accounts receivable and foreclosed properties (period-end) ............. .74 1.08 1.89
</TABLE>
- ---------
(1) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
(2) Capital ratios included herein have not been restated to reflect the
Barnett Merger. Under regulatory guidelines, Barnett was considered well
capitalized on December 31, 1997.
(3) Cash basis calculations exclude intangible assets and the related
amortization expense.
S-6
<PAGE>
REGISTRATION AND SETTLEMENT
Same Day Settlement and Payment
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Notes are represented by Global Notes, all
payments of principal and interest will be made by the Corporation in
immediately available funds.
Secondary trading in notes and debentures of corporate issuers is
generally settled in clearing house or next day funds. In contrast, so long as
the Notes are represented by Global Notes registered in the name of DTC or its
nominee, the Notes will trade in DTC's Same Day Fund Settlement System and
secondary market trading activity in the Notes will therefore be required by
DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Notes.
Book-Entry System
The Notes will be issued in book-entry form only and will be represented
by one or more Global Notes registered in the name of Cede & Co., as nominee of
DTC. Cedel Bank and Euroclear will hold omnibus positions on behalf of Cedel
Bank Participants (as described in the Prospectus) and Euroclear Participants
(as described in the Prospectus), respectively, through customers' securities
accounts in Cedel Bank's and Euroclear's names, respectively, on the books of
their respective depositories, which, in turn, will hold such positions on the
books of DTC.
Under the book-entry system of DTC, purchases of Notes must be made by or
through persons that have accounts with DTC ("Participants") or persons that
may hold interests through Participants ("Indirect Participants"). Upon the
issuance and deposit of a Global Note, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
individual Notes represented by such Global Note to the accounts of
Participants as designated by the Underwriters. The ownership of beneficial
interests in such Global Note will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC (with
respect to interests of Participants) and the records of Participants (with
respect to interests of Indirect Participants) and Indirect Participants. So
long as DTC, or its nominee, is the registered holder of a Global Note, DTC or
its nominee will be considered the sole owner or holder of the Notes
represented by such Global Note for all purposes under the applicable
Indenture. Except as provided below, owners of beneficial interests in a Global
Note will not be entitled to have Notes registered in their names, will not
receive or be entitled to receive physical delivery of such Notes in
certificated form and will not be considered the owners or holders thereof
under the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such transfer restrictions and such laws may impair the
ability to own, transfer or pledge beneficial interests in a Global Note.
DTC has advised the Corporation as follows: DTC is a limited-purpose trust
company organized under New York law, a "banking organization" within the
meaning of New York law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect in
the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities deposited by its Participants and to
facilitate the clearance and settlement of securities transactions among
Participants in such securities through electronic computerized book-entry
changes in accounts of the Participants, thereby eliminating the need for
physical movement of securities certificates. DTC's direct Participants include
securities brokers and dealers (including the Underwriters), banks (including
certain subsidiaries of the Corporation), trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) have ownership interests in DTC. DTC is owned by a number of
its Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
Indirect access to DTC's book-entry system is also available to Indirect
Participants, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. The rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
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To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it such as the Notes; DTC's records reflect
only the identity of the Participants to whose accounts such securities are
credited, which may or may not be the beneficial owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers. Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by Participants and
Indirect Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Neither DTC nor Cede & Co. will consent or vote with
respect to securities held by DTC. Under its usual procedures, DTC mails an
omnibus proxy to an issuer as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the securities are credited on the record date
(identified in a listing attached to the omnibus proxy).
DTC can act only on behalf of Participants, who in turn act on behalf of
Indirect Participants. Owners of beneficial interests in a Global Note that are
not Participants or Indirect Participants but desire to purchase, sell or
otherwise transfer ownership of such interests may do so only through
Participants and Indirect Participants. In addition, the ability of owners of
beneficial interests in a Global Note to pledge such interests to persons or
entities that do not participate in the DTC system may be limited due to the
lack of certificates for the Notes.
Except as otherwise provided herein, the holder of a Global Note shall be
the only person entitled to receive payments with respect to Notes represented
by such Global Note. Accordingly, payments of principal of and any interest on
individual Notes represented by a Global Note will be made only to DTC or its
nominee, as the case may be, as the registered holder of the Global Note
representing such Notes. DTC has advised the Corporation that it is DTC's
practice to credit Participants' accounts on the payable date in accordance
with their respective holdings with respect to a Global Note as shown on DTC's
records, unless DTC has reason to believe that it will not receive payment on
such date. Payments by Participants to beneficial owners are governed by
standing instructions and customary practices, as is the case with securities
held in "street name." Such instructions will be the responsibility of such
Participant and not of DTC, the Underwriters or the Corporation, subject to any
statutory or regulatory requirements as may be in effect from time to time. The
Corporation will in every case be discharged by payment to, or to the order of,
DTC or its nominee, as the holder of such Global Note, of the amount so paid.
Each of the persons shown in the records of DTC or its nominee as an owner of a
beneficial interest therein must look solely to DTC or its nominee, as the case
may be, for its share of any such payment so made by the Corporation. Neither
the Corporation, the trustee for the Notes, nor any Paying Agent, Security
Registrar or Transfer Agent for the Notes will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of owners of beneficial interests in a Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial interests in Global Notes among its Participants, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary and a successor depositary is not appointed by the Corporation
within 90 days, the Corporation will issue registered Notes in certificated
form in exchange for beneficial interests in each Global Note. In addition, the
Corporation may at any time determine not to have Notes represented by Global
Notes and, in such event, will issue registered Notes in certificated form in
exchange for beneficial interests in Global Notes. In any such instance, an
owner of a beneficial interest in a Global Note will be entitled to physical
delivery in certificated form of a Note or Notes equal in principal amount to
such beneficial interest and to have such Note or Notes registered in its name.
Any Notes so issued in certificated form will be issued in denominations of
$1,000 or any integral multiple in excess thereof and will be issued in
registered form only, without coupons.
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<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES TO FOREIGN INVESTORS
Holders of the Notes who are not U.S. Persons (as defined below) must
comply with applicable certification requirements in order to receive payments
of interest free of applicable withholding taxes. In no event will any payments
by the Corporation be increased as a result of any such withholding or other
taxes. A holder of a Note that is not a U.S. Person will be subject to the 30%
U.S. withholding tax (or in certain cases a 31% backup withholding tax) that
generally applies to payments of interest on registered debt issued by U.S.
Persons unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business in the chain of intermediaries between such holder of a Note and the
U.S. entity required to withhold tax complies with applicable certification
requirements, and (ii) such holder of a Note takes one of the following steps
to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Holders of the Notes for which
the interest income is not effectively connected with a United States trade or
business, that do not own more than 10% of the stock of the Corporation and
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status). If the
information shown on Form W-8 changes, a new Form W-8 must be filed within 30
days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are holders of the Notes and
reside in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer files Form W-8. Form 1001 may be filed by the holder of a Note or its
agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. A holder of a Note or, in the
case of a Form 1001 or a Form 4224 filer, its agent, files by submitting the
appropriate form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing agency) prior
to the first interest payment occurring after its acquisition of a Note. Form
W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
As used herein, the term "U.S. Person" means a holder of a Note that for
U.S. federal income tax purposes is (i) a citizen or resident of the U.S., (ii)
a corporation, partnership, or other entity treated as such that is created or
organized in or under the laws of the U.S. or of any state thereof (including
Washington, D.C.), (iii) an estate whose income from sources without the United
States is includible in gross income for U.S. federal income tax purposes
regardless of a connection with the conduct of a trade or business within the
United States, or (iv) any trust with respect to which (A) a U.S. court is able
to exercise primary supervision over the administration of such trust and (B)
one or more U.S. persons have the authority to control all substantial
decisions of the trust.
Recently issued Treasury regulations (the "Final Withholding
Regulations"), which are generally effective with respect to payments made
after December 31, 1998, consolidate and modify the current certification
requirements and means by which a holder may claim exemption from the U.S.
federal income tax withholding and provide certain presumptions regarding the
status of holders when payment to the holders cannot be reliably associated
with appropriate documentation provided to the payer. To avoid backup
withholding with respect to payments made after December 31, 1998, holders of
Notes will be required to provide certification, if applicable, that complies
with the procedures in the Final Withholding Regulations by the first payment
date after the effective date of those regulations, subject to certain
transitional rules which
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<PAGE>
may extend until December 31, 1999 certifications previously provided in
accordance with the currently effective Treasury regulations. Because the
application of the Final Withholding Regulations will vary depending on a
holder's particular circumstances, all holders are urged to consult their own
tax advisors regarding the application of the Final Withholding Regulations to
them.
This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Notes. Investors are
advised to consult their own tax advisors for specific tax advice concerning
their holding and disposing of the Notes.
PLAN OF DISTRIBUTION
This Prospectus Supplement and related Prospectus are to be used by
NationsBanc Montgomery Securities LLC (formerly NationsBanc Capital Markets,
Inc.) ("NMS"), a broker-dealer and a direct wholly-owned subsidiary of
NationsBank, in connection with offers and sales of the Notes in secondary
market transactions at negotiated prices relating to prevailing prices at the
time of sale or otherwise. NMS may act as principal or agent in such
transactions. Under Section 2720 of the Conduct Rules ("Section 2720") of the
National Association of Securities Dealers, Inc. (the "NASD"), when an NASD
member, such as NMS, participates in the distribution of an affiliated
company's securities, the offering must be conducted in accordance with the
applicable provisions of Section 2720. NationsBank is considered to be an
"affiliate" (as such term is defined in Section 2720) of NMS. Accordingly, the
offer and sale of any Notes by NMS will comply with the requirements of Section
2720 regarding the underwriting of securities of affiliates. In addition, under
Section 2720, no NASD member participating in offers and sales of the Notes may
execute a transaction in the Notes in a discretionary account without the
specific prior written approval of the member's customer. The offer and sale of
the Notes will also comply with any restrictions that may be imposed on NMS by
the Board of Governors of the Federal Reserve System.
NMS has no obligation to make a market in the Notes, and if commenced, may
discontinue its market-making activities at any time without notice, at its
sole discretion. Furthermore, NMS may be required to discontinue its
market-making activities during periods when the Corporation is seeking to sell
certain of its securities or when NMS, such as by means of its ownership by the
Corporation, learns of material non-public information relating to the
Corporation. NMS would not be able to recommence its market-making activities
until such sale has been completed or such information has become publicly
available. It is not possible to forecast the impact, if any, that any such
discontinuance may have on the market for the Notes. Although other
broker-dealers may make a market in the Notes from time to time, there can be
no assurance that any other broker-dealer will do so at any time when NMS
discontinues its market-making activities. In addition, any such broker-dealer
that is engaged in market-making activities may thereafter discontinue such
activities at any time at its sole discretion.
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<PAGE>
[Alternate Page--Debt]
PROSPECTUS
NationsBank(R)
Debt Securities
NationsBank Corporation ("NationsBank" or the "Corporation") may offer
from time to time its unsecured debt securities, which may be either senior
(the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the "Debt
Securities"). NationsBank may sell up to $3,000,000,000 in aggregate initial
offering price of Debt Securities (or the U.S. dollar equivalent thereof if any
of the Debt Securities are denominated in a foreign currency or currency unit),
which may be offered, separately or together, in one or more series, in
amounts, at prices and on terms to be determined at the time of sale and set
forth in an accompanying supplement to this Prospectus (a "Prospectus
Supplement"). Pursuant to the terms of the Registration Statement of which this
Prospectus constitutes a part, NationsBank may also offer and sell shares of
its preferred stock (the "Preferred Stock"), which may be represented by
depositary shares (the "Depositary Shares"), and shares of its common stock
(the "Common Stock"). Any such Preferred Stock, Depositary Shares or Common
Stock will be offered and issued pursuant to the terms of a separate Prospectus
contained in such Registration Statement. The aggregate amount of Debt
Securities that may be offered and sold pursuant hereto is subject to reduction
as the result of the sale of any Preferred Stock, Depositary Shares or Common
Stock pursuant to such separate Prospectus or at the Corporation's discretion.
The Senior Debt Securities will rank equally with all other unsubordinated
and unsecured indebtedness of the Corporation. The Subordinated Debt Securities
will be subordinate in right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Corporation.
The Debt Securities may be denominated in U.S. dollars or in another
currency or currency unit (such as the European Currency Unit), and the
principal of (and premium, if any, on) or any interest on the Debt Securities
may be payable in U.S. dollars or such foreign currency or currency unit. The
specific terms of each series of Debt Securities offered pursuant to this
Prospectus, including the specific designation, aggregate principal amount,
currency or currency unit in which the principal and any premium or interest
may be payable, authorized denominations, maturity, any premium, any interest
rate (which may be fixed or variable), any interest payment dates, any optional
or mandatory redemption terms, any sinking fund provisions, any subordination
terms, any terms for conversion (in the event that such series is convertible
at the option of the holder or NationsBank into Preferred Stock, Depositary
Shares, Common Stock or other Debt Securities), the form of such series, any
securities exchange on which such Debt Securities may be listed, and any other
terms of such series of Debt Securities will be set forth in the Prospectus
Supplement relating to such series.
The Debt Securities may be sold (i) through underwriting syndicates
represented by managing underwriters, or by underwriters without a syndicate,
with such underwriters to be designated at the time of sale; (ii) through
agents designated from time to time; or (iii) directly by the Corporation. The
names of any underwriters or agents of NationsBank involved in the sale of the
Debt Securities, the public offering price or purchase price and any
commissions or discounts will be set forth in the applicable Prospectus
Supplement or a pricing supplement thereto. The net proceeds to the Corporation
from such sale also will be set forth in such Prospectus Supplement or pricing
supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
---------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF NATIONSBANK, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS AND RELATED PROSPECTUS SUPPLEMENTS ARE TO BE USED BY
NATIONSBANC CAPITAL MARKETS, INC., A BROKER-DEALER AND A DIRECT WHOLLY-OWNED
SUBSIDIARY OF NATIONSBANK, IN CONNECTION WITH OFFERS AND SALES RELATED TO
SECONDARY MARKET TRANSACTIONS IN THE DEBT SECURITIES. NATIONSBANC CAPITAL
MARKETS, INC. OR ITS AFFILIATES MAY ACT AS PRINCIPAL OR AGENT IN SUCH
TRANSACTIONS. ANY SUCH SALES WILL BE MADE AT NEGOTIATED PRICES RELATING TO
PREVAILING MARKET PRICES AT THE TIME OF SALE OR OTHERWISE.
---------------
NationsBanc Capital Markets, Inc.
---------------
The date of this Prospectus is December 19, 1996.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Corporation with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), are
incorporated herein by reference:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995 as filed March 29, 1996;
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 as filed May 10, 1996, June 30, 1996 as filed August
14, 1996, and September 30, 1996 as filed November 13, 1996;
(c) The Corporation's Current Reports on Form 8-K filed January 12, 1996,
February 1, 1996, March 8, 1996, April 17, 1996, May 16, 1996, July 5,
1996, July 31, 1996, September 6, 1996 (as amended by Form 8-K/A-1 filed
September 11, 1996 and Form 8-K/A-2 filed November 13, 1996), September
20, 1996 (as amended by Form 8-K/A filed September 23, 1996), October 25,
1996, November 14, 1996, December 4, 1996 and December 17, 1996; and
(d) The description of the Corporation's Common Stock contained in its
registration statement filed pursuant to Section 12 of the 1934 Act, as
modified by the Corporation's Current Report on Form 8-K filed on
September 21, 1994.
All reports and any definitive proxy or information statements filed by
the Corporation with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Corporation will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits to such documents which are not specifically incorporated by
reference in such documents). Written requests for such copies should be
directed to John E. Mack, Senior Vice President and Treasurer, NationsBank
Corporation, NationsBank Corporate Center, Corporate Treasury Division,
Charlotte, North Carolina 28255. Telephone requests may be directed to (704)
386-5972.
AVAILABLE INFORMATION
NationsBank is subject to the informational requirements of the 1934 Act
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such material may also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, upon payment of prescribed rates. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding issuers who file electronically with
the Commission. The address of that site is http://www.sec.gov. In addition,
reports, proxy statements and other information concerning NationsBank may be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and at the offices of The Pacific Stock Exchange
Incorporated, 301 Pine Street, San Francisco, California 94104.
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<PAGE>
NATIONSBANK CORPORATION
General
NationsBank is a multi-bank holding company established as a North
Carolina corporation in 1968 and is registered under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), with its principal assets being the stock
of its subsidiaries. Through its banking subsidiaries (the "Banks") and its
various non-banking subsidiaries, NationsBank provides banking and
banking-related services, primarily throughout the Southeast and Mid-Atlantic
states and Texas. The principal executive offices of NationsBank are located at
NationsBank Corporate Center in Charlotte, North Carolina 28255. Its telephone
number is (704) 386-5000.
Operations
NationsBank provides a diversified range of banking and certain nonbanking
financial services and products through its various subsidiaries. NationsBank
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 commercial and
retail 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 retirement services for defined benefit and
defined contribution plans, full service and discount brokerage services,
investment advisory services, including advising the Nations Fund family of
mutual funds, as well as private banking, fiduciary and investment management
services through subsidiaries of NationsBank. As of September 30, 1996, the
General Bank operated 1,980 banking offices through the following Banks:
NationsBank, N.A. (serving the states of North Carolina, South Carolina,
Maryland and Virginia and the District of Columbia); NationsBank, N.A. (South)
(serving the states of Florida and Georgia); NationsBank of Kentucky, N.A.;
NationsBank of Tennessee, N.A.; NationsBank of Texas, N.A.; and Sun World, N.A.
(serving the state of Texas). The General Bank also provides fully automated,
24-hour cash dispensing and depositing services throughout the states in which
it is located, through 3,609 automated teller machines.
Global Finance provides comprehensive corporate and investment banking as
well as trading and distribution services to domestic and international
customers. The group serves as a principal lender and investor, as well as an
advisor, arranger and underwriter, 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 by the group. Global Finance also
underwrites, trades and distributes a wide range of securities (including
bank-eligible securities and, to a limited extent, bank-ineligible securities
as authorized by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board")), and trades and distributes a wide range of
derivative products in certain interest rate, foreign exchange, commodity and
equity markets. Global Finance provides its services through various offices
located in major United States cities as well as in London, Frankfurt,
Singapore, Bogota, Mexico City, Grand Cayman, Nassau, Seoul, Tokyo, Osaka,
Taipei and Hong Kong.
Financial Services includes NationsCredit Consumer Corporation, primarily
a consumer finance subsidiary, and NationsCredit Commercial Corporation,
primarily a commercial finance subsidiary. NationsCredit Consumer Corporation,
which has approximately 331 offices located in 36 states, provides personal,
mortgage and automobile loans to consumers and retail finance programs to
dealers. NationsCredit Commercial Corporation consists of seven divisions that
specialize in one or more of the following areas: equipment loans and leasing;
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.
As part of its operations, NationsBank regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, NationsBank 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,
NationsBank publicly announces such material acquisitions when a definitive
agreement has been reached.
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<PAGE>
Supervision and Regulation
General. As a registered bank holding company, NationsBank is subject to
the supervision of, and to regular inspection by, the Federal Reserve Board.
The Banks are organized as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller"). The Banks are also subject to regulation by the
Federal Deposit Insurance Corporation (the "FDIC") and other federal regulatory
agencies. In addition to banking laws, regulations and regulatory agencies,
NationsBank 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 Corporation's
operations, management and ability to make distributions. The following
discussion summarizes certain aspects of those laws and regulations that affect
NationsBank.
Under the BHCA, the activities of NationsBank, 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 NationsBank, are required
to obtain prior approval of the Federal Reserve Board to engage in any new
activity not previously approved by the Federal Reserve Board or to acquire
more than 5% of any class of voting stock of any company.
The BHCA also requires bank holding companies to obtain the prior approval
of the Federal Reserve Board before acquiring more than 5% of any class of
voting stock of any bank which is not already majority-owned by the bank
holding company. Pursuant to the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking and Branching Act"), a bank
holding company became able to acquire banks in states other than its home
state beginning September 29, 1995, without regard to the permissibility of
such acquisition 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).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, therefore 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
such act, a bank is now able to open new branches in a state in which it does
not already have banking operations if the laws of such state permit such de
novo branching. Of those states in which the Banks are located, Delaware,
Maryland, North Carolina 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).
As previously described, NationsBank 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.
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.
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<PAGE>
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 Corporation's Tier 1 and total risk-based capital ratios under
these guidelines at September 30, 1996 were 7.05% and 12.05%, 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 Corporation's leverage ratio at September 30, 1996 was
6.30%. Management believes that NationsBank 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 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%, a total capital ratio of at least
10% and a leverage ratio of at least 5% and not be subject to a capital
directive order. An "adequately capitalized" institution must have a Tier 1
capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines, as
of September 30, 1996, each of the Banks was considered well capitalized.
Banking agencies have recently adopted final regulations which mandate
that regulators take into consideration concentrations of credit risk and risks
from non-traditional activities, as well as an institution's ability to manage
those risks, when determining the adequacy of an institution's capital. This
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have recently 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
evaluation 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, these banking agencies intend
to propose further regulations to establish an explicit risk-based capital
charge for interest rate risk.
Distributions. The Corporation'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. The amount of dividends that each Bank may declare in
a calendar year without approval of the Comptroller is the Bank's net profits
for that year, as defined by statute, combined
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with its net retained profits, as defined, for the preceding two years. In
addition, from time to time NationsBank applies for, and may receive,
permission from the Comptroller for one or more of the Banks to declare special
dividends. As of January 1, 1996, the Banks can initiate dividend payments
without prior regulatory approval of up to $905 million plus an additional
amount equal to their net profits for 1996 up to the date of any such dividend
declaration.
In addition to the foregoing, the ability of NationsBank and the Banks to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under FDICIA as described
above. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of NationsBank, 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. 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
NationsBank 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.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including the Corporation's working capital needs,
the funding of investments in, or extensions of credit to, its banking and
nonbanking subsidiaries, possible acquisitions of other financial institutions
or their assets or liabilities, possible acquisitions of or investments in
other businesses of a type eligible for bank holding companies and possible
reduction of outstanding indebtedness or repurchase of outstanding equity
securities of the Corporation. Pending such use, the Corporation may
temporarily invest the net proceeds in investment grade securities. The
Corporation may, from time to time, engage in additional capital financings of
a character and in amounts to be determined by the Corporation in light of its
needs at such time or times and in light of prevailing market conditions. If
the Corporation elects at the time of issuance of Debt Securities to make
different or more specific use of proceeds other than that set forth herein,
such use will be described in the applicable Prospectus Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the Corporation's consolidated ratios of earnings to
fixed charges for the nine months ended September 30, 1996 and for each of the
years in the five-year period ended December 31, 1995:
<TABLE>
<CAPTION>
Nine Months Year Ended
Ended December 31,
September 30, --------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits ......... 1.8 1.7 1.9 2.3 2.4 1.1
Including interest on deposits ......... 1.5 1.4 1.5 1.5 1.4 1.0
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income of the Corporation plus applicable income taxes and fixed charges, less
capitalized interest and the equity in undistributed earnings of unconsolidated
subsidiaries and associated companies. Fixed charges represent interest expense
(exclusive of interest on deposits in one case and inclusive of such interest
in the other), capitalized interest, amortization of debt discount and
appropriate issuance costs and one-third (the amount deemed to represent an
appropriate interest factor) of net rent expense under all lease commitments.
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<PAGE>
PLAN OF DISTRIBUTION
This Prospectus and related Prospectus Supplements are to be used by
NationsBanc Capital Markets, Inc. ("NCMI"), a broker-dealer and a direct
wholly-owned subsidiary of NationsBank, in connection with offers and sales of
the Debt Securities in secondary market transactions at negotiated prices
relating to prevailing prices at the time of sale or otherwise. NCMI may act as
principal or agent in such transactions. The participation of NCMI in the offer
and sale of the Debt Securities complies with the requirements of Section 2720
of the Conduct Rules of the National Association of Securities Dealers, Inc.
(the "NASD") regarding underwriting of securities of an affiliate. NCMI will
not execute a transaction in the Debt Securities in a discretionary account
without the prior written specific approval of NCMI's customer. NCMI has no
obligation to make a market in the Debt Securities and may discontinue its
market-making activities at any time without notice, at its sole discretion.
Furthermore, NCMI may be required to discontinue its market-making activities
during periods when the Corporation is involved in a distribution of certain of
its securities or when NCMI, by virtue of its affiliation with the Corporation,
is aware of material non-public information relating to the Corporation. In
such instance, NCMI would not be able to recommence its market-making
activities until such distribution has been completed or such information has
become publicly available. It is not possible to determine the impact, if any,
that any such discontinuance may have on the market for the Debt Securities.
While other broker-dealers may make a market in the Debt Securities from time
to time, there can be no assurance that any other broker-dealer will do so at
any time when NCMI discontinues its market-making activities.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain
general terms and provisions of the Debt Securities to which any Prospectus
Supplement may relate. The particular terms of the Debt Securities offered by
any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered will be described in the
Prospectus Supplement relating to such Debt Securities.
Any Senior Debt Securities offered hereby are to be issued under an
Indenture dated as of January 1, 1995 (such Indenture, as it may be amended
from time to time, the "Senior Indenture") between the Corporation and First
Trust of New York, National Association, as successor Trustee to BankAmerica
National Trust Company (the "Senior Trustee"). Any Subordinated Debt Securities
offered hereby are to be issued under an Indenture dated as of January 1, 1995
(such Indenture, as it may be amended from time to time, the "Subordinated
Indenture") between the Corporation and The Bank of New York, Trustee (the
"Subordinated Trustee" and, together with the Senior Trustee, the "Trustees").
Each of the Senior Indenture and the Subordinated Indenture (each, an
"Indenture" and together, the "Indentures") is incorporated by reference in the
Registration Statement of which this Prospectus forms a part.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to and qualified in their entirety by
reference to the provisions of the applicable Indentures. Whenever particular
sections or defined terms of the Indentures are referred to, it is intended
that such sections or defined items shall be incorporated herein by reference.
Unless otherwise indicated, capitalized terms shall have the meanings ascribed
to them in the Indentures.
General
The respective Indentures provide that there is no limitation on the
amount of debt securities that may be issued thereunder from time to time. The
amount of Debt Securities that may be offered and sold pursuant to this
Prospectus, however, is limited to the aggregate initial offering price of the
securities registered under the Registration Statement of which this Prospectus
forms a part, subject to reduction as the result of the sale by the Corporation
of other securities under the Registration Statement.
The Debt Securities will be direct, unsecured obligations of the
Corporation. The Senior Debt Securities of each series will rank equally with
all unsecured senior debt of the Corporation. The Subordinated Debt Securities
of each series will be subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness (as hereinafter defined) of the
Corporation. See "DESCRIPTION OF DEBT SECURITIES -- Subordination."
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<PAGE>
The Debt Securities will be issued in fully registered form without
coupons. The Debt Securities may be denominated in U.S. dollars or in another
currency or currency unit. Unless otherwise set forth in the applicable
Prospectus Supplement, any Debt Securities that are denominated in U.S. dollars
will be issued in denominations of $1,000 or an integral multiple thereof. If
any of the Debt Securities are denominated in a foreign currency or currency
unit, or if principal of (or premium, if any, on) or any interest on any of the
Debt Securities is payable in any foreign currency or currency unit, the
authorized denominations, as well as any investment considerations,
restrictions, tax consequences, specific terms and other information with
respect to such issue of Debt Securities and such foreign currency or currency
unit, will be set forth in the Prospectus Supplement relating thereto.
The Debt Securities may be issued in one or more series with the same or
various maturities. Certain Debt Securities may be issued which provide for an
amount less than the principal amount thereof to be due and payable in the
event of an acceleration of the maturity thereof (each an "Original Issue
Discount Security"). Original Issue Discount Securities may bear no interest or
may bear interest at a rate which at the time of issuance is below market rates
and will be sold at a discount (which may be substantial) below their stated
principal amount. Certain Debt Securities may be deemed to be issued with
original issue discount for United States Federal income tax purposes. The
Prospectus Supplement with respect to any series of Debt Securities issued with
such original issue discount will contain a discussion of Federal income tax
considerations with respect thereto.
The particular terms of each series of Debt Securities to be offered and
sold will be described in the Prospectus Supplement relating to such Debt
Securities, including: (1) the designation of the particular series; (2) the
aggregate principal amount of such series that may be authenticated and
delivered under the applicable Indenture; (3) the person to whom any interest
on any Debt Security of the series shall be payable, if other than the person
in whose name the Debt Security (or one or more predecessor Debt Securities) is
registered at the close of business on the regular record date for such
interest; (4) the date or dates on which the principal of the Debt Securities
of such series is payable; (5) the rate or rates, and if applicable the method
used to determine the rate, at which the Debt Securities of such series shall
bear interest, if any, the date or dates from which such interest shall accrue,
the date or dates on which such interest shall be payable and the record date
or dates for the interest payable on any Debt Securities on any interest
payment date; (6) the place or places at which, subject to the provisions of
the applicable Indenture, the principal of (and premium, if any, on) and any
interest on Debt Securities of such series shall be payable, any Debt
Securities of the series may be surrendered for registration of transfer, and
notices and demands to or upon the Corporation in respect of the Debt
Securities of the series and the Indenture may be served; (7) the obligation,
if any, of the Corporation to redeem or purchase Debt Securities of such
series, at the option of the Corporation or at the option of a holder thereof,
pursuant to any sinking fund or other redemption provisions and the period or
periods within which, the price or prices at which and the terms and conditions
upon which Debt Securities of the series may be so redeemed or purchased, in
whole or in part; (8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Debt Securities of such series
shall be issuable; (9) if other than the principal amount thereof, the portion
of the principal amount of Debt Securities of such series which shall be
payable upon declaration of acceleration of the maturity thereof; (10) the
currency, currencies or currency units in which payment of the principal of
(and premium, if any, on) and any interest on any Debt Securities of the series
shall be payable if other than the currency of the United States of America and
the manner of determining the equivalent thereof in the currency of the United
States of America for purposes of the applicable Indenture; (11) if the
principal of (and premium, if any, on) or any interest on the Debt Securities
of the series is to be payable, at the election of the Corporation or a holder
thereof, in one or more currencies or currency units, other than that or those
in which the Debt Securities are stated to be payable, the currency or
currencies in which payment of the principal of (and premium, if any, on) and
any interest on Debt Securities of such series as to which such election is
made shall be payable, and the periods within which and the terms and
conditions upon which such election is to be made; (12) if the amount of
payments of principal of (and premium, if any, on) or any interest on the Debt
Securities of the series may be determined with reference to an index, the
manner in which such amounts shall be determined; (13) whether the Debt
Securities will be issued in book-entry only form; (14) the identification or
method of selection of any interest rate calculation agents, exchange rate
calculation agents or other agents with respect to Debt Securities of such
series; (15) if either or both of Section 14.02 (defeasance) or Section 14.03
(covenant defeasance) of the applicable Indenture do not apply to the Debt
Securities of the
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<PAGE>
series; (16) any provisions relating to the extension of maturity of, or the
renewal of, Debt Securities of such series; and (17) any other terms of the
Debt Securities of such series (which terms shall not be inconsistent with the
provisions of the applicable Indenture).
The ability of NationsBank to make payments of principal of (and premium,
if any, on) and any interest on the Debt Securities may be affected by the
ability of the Banks to pay dividends. The ability of the Banks, as well as of
the Corporation, to pay dividends in the future currently is, and could be
further, influenced by bank regulatory requirements and capital guidelines. See
"NATIONSBANK CORPORATION -- Supervision and Regulation."
Neither the Senior Indenture nor the Subordinated Indenture contains
provisions that would provide protection to holders of Debt Securities against
a decline in credit quality resulting from takeovers, recapitalizations, the
incurrence of additional indebtedness or similar restructurings by the
Corporation. If credit quality declines as a result of such an event, or
otherwise, the ratings of any Debt Securities then outstanding may be withdrawn
or downgraded.
Conversion
The Debt Securities of any series may be convertible, at the option of the
holder or the Corporation, into Preferred Stock, Depositary Shares, Common
Stock or other Debt Securities if the Prospectus Supplement relating to such
series of Debt Securities so provides. In such case, such Prospectus Supplement
will set forth (i) the period(s) during which such conversion may be elected;
(ii) the conversion price payable and the number of shares or amount of
Preferred Stock, Depositary Shares, Common Stock or other Debt Securities
purchaseable upon conversion, and adjustments thereto, if any, in certain
events; (iii) the procedures for electing such conversion; and (iv) all other
terms for such conversion (which terms shall not be inconsistent with the
provisions of the applicable Indenture).
Exchange, Registration and Transfer
At the option of the holder, subject to the terms of the applicable
Indenture, Debt Securities of any series (other than Debt Securities issued in
book-entry form) will be exchangeable for other Debt Securities of the same
series and of an equal aggregate principal amount and tenor of any authorized
denominations.
Debt Securities of a series may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed), at the office of the Security
Registrar or at the office of any transfer agent of the Corporation designated
and maintained for such purpose with respect to such Debt Securities pursuant
to the terms of the applicable Indenture, as referred to in an applicable
Prospectus Supplement. Such transfer or exchange will be effected upon the
Security Registrar or transfer agent, as the case may be, being satisfied with
the documents of title and identity of the person making the request. No
service charge shall be made for any exchange or registration of transfer of
Debt Securities, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
If a Prospectus Supplement refers to any transfer agents (in addition to
the Security Registrar) designated by the Corporation with respect to any
series of Debt Securities, the Corporation may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Corporation will be
required to maintain a transfer agent in each place of payment for such series.
The Corporation may at any time designate additional transfer agents with
respect to any series of Debt Securities.
The Corporation shall not be required to (i) issue, exchange or register
the transfer of any Debt Security of any series to be redeemed for a period of
15 days next preceding any selection of such Debt Securities to be redeemed; or
(ii) exchange or register the transfer of any Debt Security so selected, called
or being called for redemption, except the unredeemed portion of any Debt
Security being redeemed in part.
For a discussion of restrictions on the exchange, registration and
transfer of Global Securities (hereinafter defined), see "REGISTRATION AND
SETTLEMENT."
9
<PAGE>
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement,
principal of (and premium, if any, on) and any interest on Debt Securities will
be payable, subject to any applicable laws and regulations, at the offices of
such paying agents as the Corporation may designate from time to time pursuant
to the applicable Indenture, except that, at the option of the Corporation,
payment of any interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
interest on a Debt Security on any interest payment date generally will be made
to the person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest payment date. For a
discussion of payment of principal and any premium or interest with respect to
Global Securities, see "REGISTRATION AND SETTLEMENT."
The Corporation initially has designated the principal corporate trust
offices of the Senior Trustee and the Subordinated Trustee in the City of New
York as the places where the Senior Debt Securities and Subordinated Debt
Securities, respectively, may be presented for payment. The Corporation may at
any time designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts. Any other paying agents designated by the Corporation for the Debt
Securities of each series will be named in an applicable Prospectus Supplement.
Subordination
The Subordinated Debt Securities are subordinate and subject, to the
extent and in the manner set forth in the Subordinated Indenture, in right of
payment to the prior payment in full of all Senior Indebtedness of the
Corporation. "Senior Indebtedness" is defined by the Subordinated Indenture as
any indebtedness for money borrowed (including all indebtedness of the
Corporation for borrowed and purchased money of the Corporation, all
obligations of the Corporation arising from off-balance sheet guarantees by the
Corporation and direct credit substitutes, and obligations of the Corporation
associated with derivative products such as interest and foreign exchange rate
contracts and commodity contracts) that is outstanding on the date of execution
of the Subordinated Indenture, or is thereafter created, incurred or assumed,
for the payment of which the Corporation is at the time of determination
responsible or liable as obligor, guarantor or otherwise, and all deferrals,
renewals, extensions and refundings of any such indebtedness or obligations,
other than the Subordinated Debt Securities or any other indebtedness as to
which, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such indebtedness is subordinate
in right of payment to any other indebtedness of the Corporation. The
Prospectus Supplement relating to each series of Subordinated Debt Securities
will set forth the aggregate amount of then outstanding Senior Indebtedness of
the Corporation and any limitation on the issuance of additional Senior
Indebtedness.
No payment on account of principal of (and premium, if any, on) or any
interest on the Subordinated Debt Securities shall be made, and no Subordinated
Debt Securities shall be purchased, either directly or indirectly, by the
Corporation or any of its subsidiaries, if any default or event of default with
respect to any Senior Indebtedness shall have occurred and be continuing and
the Corporation and the Subordinated Trustee shall have received written notice
thereof from the holders of at least 10% in principal amount of any kind or
category of any Senior Indebtedness (or the representative or representatives
of such holders) or the Subordinated Trustee shall have received written notice
thereof from the Corporation.
In the event that any Subordinated Debt Security is declared due and
payable before the date specified therein as the fixed date on which the
principal thereof is due and payable pursuant to the Subordinated Indenture, or
upon any payment or distribution of assets of the Corporation of any kind or
character to creditors upon any dissolution or winding up or total or partial
liquidation or reorganization of the Corporation, all principal of (and
premium, if any, on) and any interest due or to become due upon all Senior
Indebtedness shall first be paid in full before the holders of the Subordinated
Debt Securities (the "Subordinated Debt Holders"), or the Subordinated Trustee,
shall be entitled to retain any assets (other than shares of stock of the
Corporation as reorganized or readjusted or securities of the Corporation or
any other corporation provided for by a plan of reorganization or readjustment,
the payment of which is subordinated, at least to the same extent as the
Subordinated Debt Securities, to the payment of all Senior Indebtedness which
may at the time be outstanding, provided that the rights of the holders of the
Senior Indebtedness are not altered
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<PAGE>
by such reorganization or readjustment), so paid or distributed in respect of
the Subordinated Debt Securities (for principal or interest, if any). Upon such
dissolution or winding up or liquidation or reorganization, any payment or
distribution of assets of the Corporation of any kind or character, whether in
cash, property or securities (other than shares of stock of the Corporation as
reorganized or readjusted or securities of the Corporation or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the same extent as the
Subordinated Debt Securities, to the payment of all Senior Indebtedness which
may at the time be outstanding, provided that the rights of the holders of the
Senior Indebtedness are not altered by such reorganization or readjustment), to
which the Subordinated Debt Holders or the Subordinated Trustee would be
entitled, except for the subordination provisions of the Subordinated
Indenture, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the Subordinated Debt Holders or the Subordinated Trustee
if received by them or it, directly to the holders of the Senior Indebtedness
(pro rata to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the Subordinated
Debt Holders or to the Subordinated Trustee.
Subject to the payment in full of all Senior Indebtedness, the
Subordinated Debt Holders shall be subrogated (equally and ratably with the
holders of all indebtedness of the Corporation which, by its express terms,
ranks on a parity with the Subordinated Debt Securities and is entitled to like
rights of subrogation) to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Corporation applicable to
the Senior Indebtedness until the Subordinated Debt Securities shall be paid in
full.
Sale or Issuance of Capital Stock of Banks
The Senior Indenture prohibits the issuance, sale or other disposition of
capital stock, or securities convertible into or options, warrants or rights to
acquire capital stock, of any Principal Subsidiary Bank (as defined below) or
of any subsidiary which owns shares of capital stock, or securities convertible
into or options, warrants or rights to acquire capital stock, of any Principal
Subsidiary Bank, with the following exceptions: (a) sales of directors'
qualifying shares; (b) sales or other dispositions for fair market value, if,
after giving effect to such disposition and to conversion of any shares or
securities convertible into capital stock of a Principal Subsidiary Bank, the
Corporation would own directly or indirectly not less than 80% of each class of
the capital stock of such Principal Subsidiary Bank (or any successor
corporation thereto); (c) sales or other dispositions made in compliance with
an order of a court or regulatory authority of competent jurisdiction; (d) any
sale by a Principal Subsidiary Bank (or any successor corporation thereto) of
additional shares of its capital stock to its shareholders at any price, so
long as (i) prior to such sale the Corporation owns, directly or indirectly,
shares of the same class and (ii) immediately after such sale, the Corporation
owns, directly or indirectly, at least as great a percentage of each class of
capital stock of such Principal Subsidiary Bank as it owned prior to such sale
of additional shares; (e) any sale by a Principal Subsidiary Bank (or any
successor corporation thereto) of additional securities convertible into shares
of its capital stock to its shareholders at any price, so long as (i) prior to
such sale the Corporation owns, directly or indirectly, securities of the same
class and (ii) immediately after such sale the Corporation owns, directly or
indirectly, at least as great a percentage of each class of such securities
convertible into shares of capital stock of such Principal Subsidiary Bank as
it owned prior to such sale of additional securities; (f) any sale by a
Principal Subsidiary Bank (or any successor corporation thereto) of additional
options, warrants or rights to subscribe for or purchase shares of its capital
stock to its shareholders at any price, so long as (i) prior to such sale the
Corporation owns, directly or indirectly, options, warrants or rights, as the
case may be, of the same class and (ii) immediately after such sale, the
Corporation owns, directly or indirectly, at least as great a percentage of
each class of such options, warrants or rights, as the case may be, to
subscribe for or purchase shares of capital stock of such Principal Subsidiary
Bank as it owned prior to such sale of additional options, warrants or rights;
or (g) any issuance of shares of capital stock, or securities convertible into
or options, warrants or rights to subscribe for or purchase shares of capital
stock, of a Principal Subsidiary Bank or any subsidiary which owns shares of
capital stock, or securities convertible into or options, warrants or rights to
acquire capital stock, of any Principal Subsidiary Bank, to the Corporation or
a wholly owned subsidiary of the Corporation.
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A Principal Subsidiary Bank is defined in the Senior Indenture as any Bank
(other than NationsBank of Delaware, National Association) with total assets
equal to more than 10% of the Corporation's total consolidated assets.
Waiver of Covenants
Under the terms of either Indenture, compliance with certain covenants or
conditions of such Indenture may be waived by the holders of a majority in
principal amount of the Debt Securities of all series to be affected thereby
and at the time outstanding under that Indenture (including, in the case of
holders of Senior Debt Securities, the covenant described above).
Modification of the Indentures
Each Indenture contains provisions permitting the Corporation and the
applicable Trustee to modify such Indenture or the rights of the holders of
Debt Securities thereunder, with the consent of the holders of not less than
66 2/3% in aggregate principal amount of the Debt Securities of all series at
the time outstanding under that Indenture and to be affected thereby (voting as
one class), except that no such modification shall (a) extend the fixed
maturity of, reduce the principal amount or redemption premium, if any, of, or
reduce the rate of or extend the time of payment of interest on, any Debt
Security without the consent of the holder of each security so affected, or (b)
reduce the aforesaid percentage of Debt Securities, the consent of holders of
which is required for any such modification, without the consent of the holders
of all Debt Securities then outstanding under that Indenture. Each Indenture
also provides that the Corporation and the respective Trustee may, from time to
time, execute supplemental indentures in certain limited circumstances without
the consent of any holders of outstanding Debt Securities.
Each Indenture provides that in determining whether the holders of the
requisite principal amount of the Debt Securities outstanding have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable at such time upon an event of default,
and (ii) the principal amount of a Debt Security denominated in a foreign
currency or currency unit shall be the U.S. dollar equivalent on the date of
original issuance of such Debt Security.
Meetings and Action by Securityholders
Each Indenture contains provisions for convening meetings of the holders
of Debt Securities for certain purposes. A meeting may be called at any time by
the Trustee in its discretion and shall be called by the Trustee upon request
by the Corporation or the holders of at least 10% in aggregate principal amount
of the Debt Securities outstanding of such series, in any case upon notice
given in accordance with "Notices" below. Any resolution passed or decision
taken at any meeting of holders of Debt Securities of any series duly held in
accordance with the applicable Indenture, or such other action taken in
accordance with the terms of the applicable Indenture, will be binding on all
holders of Debt Securities of that series.
Defaults and Rights of Acceleration
An Event of Default is defined in the Subordinated Indenture generally as
bankruptcy of the Corporation under Federal bankruptcy laws. An Event of
Default is defined in the Senior Indenture generally as (i) the Corporation's
failure to pay principal (or premium, if any) when due on any securities of a
series; (ii) the Corporation's failure to pay interest on any securities of a
series, within 30 days after the same becomes due; (iii) the Corporation's
breach of any of its other covenants contained in the Senior Debt Securities or
the Senior Indenture, which breach is not cured within 90 days after written
notice to the Corporation by the Senior Trustee, or to the Corporation and the
Senior Trustee by the holders of at least 25% in principal amount of all Senior
Debt Securities then outstanding under the Senior Indenture and affected
thereby; and (iv) certain events involving the bankruptcy, insolvency or
liquidation of the Corporation.
Each Indenture provides that if an Event of Default under the respective
Indenture occurs and is continuing, either the respective Trustee or the
holders of 25% in principal amount (or, if any such Debt Securities are
Original Issue Discount Debt Securities, such lesser amounts as may be
described in an applicable Prospectus Supplement) of the Debt Securities then
outstanding under that Indenture (or, with respect to an Event of Default under
the Senior Indenture due to a default in the payment of principal (or premium,
if any)
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<PAGE>
or interest or performance of any other covenant, the outstanding Debt
Securities of all series affected by such default) may declare the principal
amount of all of such Debt Securities to be due and payable immediately.
Payment of principal of the Subordinated Debt Securities may not be accelerated
in the case of a default in the payment of principal (or premium, if any) or
interest or the performance of any other covenant of the Corporation. Upon
certain conditions a declaration of an Event of Default may be annulled and
past defaults may be waived by the holders of a majority in principal amount of
the Debt Securities then outstanding (or of such series affected, as the case
may be).
Collection of Indebtedness, etc.
Each Indenture also provides that in the event of a failure by the
Corporation to make payment of principal of (and premium, if any, on) or any
interest on the Debt Securities (and, in the case of payment of interest, such
failure to pay shall have continued for 30 days) and upon the demand of the
respective Trustee, the Corporation will pay to such Trustee, for the benefit
of the holders of the Debt Securities, the amount then due and payable on the
Debt Securities for principal and interest, with interest on the overdue
principal and, to the extent payment of interest shall be legally enforceable,
upon overdue installments of interest at the rate borne by the Debt Securities.
Each Indenture further provides that if the Corporation fails to pay such
amount forthwith upon such demand, the respective Trustee may, among other
things, institute a judicial proceeding for the collection thereof. However,
each Indenture provides that notwithstanding any other provision of the
Indenture, the holder of any Debt Security shall have the right to institute
suit for the enforcement of any payment of principal of (and premium, if any,
on) and any interest on such Debt Security on the respective stated maturities
expressed in such Debt Security and that such right shall not be impaired
without the consent of such holder.
The holders of a majority in principal amount of the Debt Securities then
outstanding under an Indenture shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
under that Indenture, provided that the holders shall have offered to the
Trustee reasonable indemnity against expenses and liabilities. Each Indenture
requires the annual filing by the Corporation with the respective Trustee of a
certificate as to the absence of default and as to compliance with the terms of
that Indenture.
Notices
Except as otherwise provided in the applicable Indenture, notices to
holders of Debt Securities will be given by first-class mail to the addresses
of such holders as they appear in the Security Register.
Concerning the Trustees
The Corporation and the Banks have from time to time maintained deposit
accounts and conducted other banking transactions with The Bank of New York and
First Trust of New York, National Association, and their affiliated entities in
the ordinary course of business. Each of the Trustees also serves as trustee
for certain series of the Corporation's outstanding indebtedness under other
indentures.
REGISTRATION AND SETTLEMENT
DTC
If so specified in an applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series may be issued in book-entry form represented
by one or more global Debt Securities in registered form (each, a "Global
Security"). Unless otherwise specified in such Prospectus Supplement, each such
Global Security will be held through The Depository Trust Company ("DTC"), as
depositary, and will be registered in the name of Cede & Co., as nominee of
DTC. Accordingly, Cede & Co. is expected to be the holder of record of the Debt
Securities.
Under the book-entry system of DTC, purchases of Debt Securities of a
series represented by a Global Security must be made by or through persons that
have accounts with DTC ("DTC Participants") or persons that may hold interests
through DTC Participants ("Indirect Participants"). Upon the issuance and
deposit of a Global Security, DTC will credit, on its book-entry registration
and transfer system, the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of DTC
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<PAGE>
Participants. The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities (or by the Corporation, if such
Debt Securities are offered and sold directly by the Corporation). The
ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records
maintained by DTC (with respect to interests of DTC Participants) and the
records of DTC Participants (with respect to interests of Indirect
Participants) and Indirect Participants. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in certificated form. Such limits and laws may impair the ability to own,
transfer or pledge beneficial interests in a Global Security.
So long as DTC or its nominee is the registered holder of a Global
Security, DTC or its nominee, as applicable, will be considered the sole owner
or holder of the Debt Securities represented by such Global Security for all
purposes under the applicable Indenture. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have Debt
Securities registered in their names, will not receive or be entitled to
receive physical delivery of such Debt Securities in certificated form and will
not be considered the owners or holders thereof under the applicable Indenture.
Accordingly, in order to exercise any rights of a holder of the Debt Securities
under the applicable Indenture, each person owning a beneficial interest in the
Global Security representing such Debt Securities must rely on the procedures
of DTC or, if such person is not a DTC Participant, on the procedures of the
DTC Participant and, if applicable, the Indirect Participant, through which
such person owns its interest.
So long as DTC or its nominee is the registered holder of a Global
Security, Debt Securities of the series represented by such Global Security
will trade in DTC's Same Day Fund Settlement System, and secondary market
trading activity in such Debt Securities will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading
activity in such Debt Securities.
Except as otherwise provided herein, DTC or its nominee, as applicable, as
the registered holder of a Global Security shall be the only person entitled to
receive payments from the Corporation with respect to Debt Securities of the
series represented by such Global Security. Accordingly, payments of principal
of (and premium, if any, on) and any interest on individual Debt Securities of
the series represented by such a Global Security will be made by the
Corporation only to DTC or its nominee, as applicable. DTC has advised the
Corporation that it is DTC's practice to credit DTC Participants' accounts on
the payment date in accordance with their respective holdings with respect to a
Global Security as shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on such date. Payments by DTC Participants to
beneficial owners are governed by standing instructions and customary
practices, as is the case with securities held in "street name." Such
instructions will be the responsibility of such DTC Participant and not of DTC,
the Corporation or any underwriter or agent for the Debt Securities of the
series represented by such Global Security, subject to any statutory or
regulatory requirements as may be in effect from time to time. The Corporation
will in every case be discharged by payment to, or to the order of, DTC or its
nominee, as applicable, as the registered holder of such Global Security, of
the amount so paid. Each of the persons shown in the records of DTC or its
nominee as an owner of a beneficial interest in such Global Security must look
solely to DTC or its nominee, as the case may be, for its share of any such
payment so made by the Corporation. Neither the Corporation, the Trustee for
the Debt Securities of the series represented by such Global Security, any
paying agent or authenticating agent for such Debt Securities nor the Security
Registrar or transfer agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in the Global Security
representing such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
DTC has advised the Corporation as follows: DTC is a limited-purpose trust
company organized under New York law, a "banking organization" within the
meaning of New York law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect in
the state of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the 1934 Act. DTC was created to hold securities
deposited by DTC Participants and to facilitate the clearance and settlement of
securities transactions among DTC Participants in such securities through
electronic computerized book-entry changes in accounts of the DTC Participants,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants in DTC include securities brokers and dealers, banks
(including certain subsidiaries of the Corporation), trust companies, clearing
corporations and certain other
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<PAGE>
organizations, some of whom (and/or their representatives) have ownership
interests in DTC. DTC is owned by a number of its Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the NASD.
Access to DTC's book-entry system is also available to Indirect Participants,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly. The rules applicable to DTC and DTC Participants are on file with
the Commission.
To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it; DTC's records reflect only the identity
of the DTC Participants to whose accounts such securities are credited, which
may or may not be the beneficial owners. The DTC Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants, by
DTC Participants to Indirect Participants, and by DTC Participants and Indirect
Participants to beneficial owners, will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Neither DTC nor Cede & Co. will consent or vote with respect to
securities held by DTC. Under its usual procedures, DTC mails an omnibus proxy
to an issuer as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those DTC Participants to
whose accounts the securities are credited on the record date (identified in a
listing attached to the omnibus proxy).
DTC can act only on behalf of DTC Participants, who in turn act on behalf
of Indirect Participants. Owners of beneficial interests in a Global Security
that are not DTC Participants or Indirect Participants but desire to purchase,
sell or otherwise transfer ownership of such interests may do so only through
DTC Participants and Indirect Participants. In addition, the ability of owners
of beneficial interests in a Global Security to pledge such interests to
persons or entities that do not participate in the DTC system may be limited
due to the lack of certificates for the Debt Securities of the series
represented by such Global Security.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial interests in Global Securities among DTC Participants,
it is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary with respect to Debt Securities of a particular series and a
successor depositary is not appointed by the Corporation within 90 days, the
Corporation will issue Debt Securities of the series in certificated form in
exchange for beneficial interests in the Global Security representing such Debt
Securities. In addition, the Corporation may at any time determine not to have
Debt Securities of a series represented by Global Securities and, in such
event, will issue Debt Securities of the series in certificated form in
exchange for beneficial interests in the Global Security representing such Debt
Securities. In any such instance, an owner of a beneficial interest in the
Global Security will be entitled to physical delivery in certificated form of a
note or notes representing such Debt Securities equal in principal amount to
such beneficial interest and to have such note or notes registered in its name.
Unless otherwise specified in the applicable Prospectus Supplement, any notes
so issued in certificated form will be issued in denominations of $1,000 or any
integral multiple in excess thereof and will be issued in registered form only,
without coupons.
Cedel Bank and Euroclear
If so specified in the applicable Prospectus Supplement, Debt Securities
of a series to be issued in book-entry form and to be sold or traded in Europe
may be represented by one or more Global Securities held through Cedel Bank,
soci-t- anonyme ("Cedel Bank") or Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System (the "Euroclear Operator"
or "Euroclear"). Cedel Bank and Euroclear will hold omnibus positions on behalf
of Cedel Bank Participants and Euroclear Participants (each as defined herein),
respectively, on the books of their respective depositaries (each, a
"Depositary"), which in turn will hold such positions in customers' securities
accounts in the Depositaries' names on the books of DTC.
Transfers between Cedel Bank Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures. Cross-market transfers between persons
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<PAGE>
holding directly or indirectly through DTC in the United States, on the one
hand, and directly or indirectly through Cedel Bank Participants or Euroclear
Participants, on the other, will be effected by DTC in accordance with DTC
rules on behalf of the relevant European international clearing system by its
Depositary; however, cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC,
and making or receiving in accordance with normal procedures for same-day funds
settlement applicable to DTC. Cedel Bank Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits for securities in Cedel Bank or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, and will be dated the
business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Cedel Bank Participant or Euroclear Participant on such
business day. Cash received in Cedel Bank or Euroclear as a result of sales of
securities by or through a Cedel Bank Participant or a Euroclear Participant to
a DTC Participant will be received with value on the DTC settlement date but
will be available in the relevant Cedel Bank or Euroclear cash account only as
of the business day following settlement in DTC.
Cedel Bank is incorporated under the laws of Luxembourg as a professional
depository. Cedel Bank holds securities for its participating organizations
("Cedel Participants") and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic
book-entry changes in accounts of Cedel Participants, thereby eliminating the
need for physical movement of certificates. Transactions may be settled by
Cedel Bank in any of 28 currencies, including United States dollars. Cedel Bank
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel Bank interfaces with
domestic markets in several countries. As a professional depository, Cedel Bank
is subject to regulation by the Luxembourg Monetary Institute. Cedel
Participants consist of recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
underwriters or agents with respect to a particular series of Debt Securities.
Indirect access to Cedel Bank is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions now may be
settled by Euroclear in any of 32 currencies, including United States dollars.
The Euroclear System includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. The Euroclear System is operated by the Euroclear Operator,
under contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters or agents with respect to a particular series
of Debt Securities. Indirect access to the Euroclear System is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Brussels branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Federal Reserve Board and the New York State
Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System
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<PAGE>
and applicable Belgian law (collectively, the "Terms and Conditions"). The
Terms and Conditions govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear System
and receipts of payments with respect to securities in the Euroclear System.
All securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relations with persons holding
through Euroclear Participants.
Distributions with respect to Debt Securities of a series held through
Cedel Bank or Euroclear will be credited to the cash accounts of Cedel
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by its respective Depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. The applicable Prospectus Supplement
with respect to a series of Debt Securities held through Cedel Bank or
Euroclear will set forth certain income tax consequences to foreign investors.
Cedel Bank or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by a holder of Debt Securities under the
applicable Indenture on behalf of a Cedel Participant or a Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its respective Depositary's ability to effect such actions on its
behalf through DTC.
Although Cedel Bank and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of applicable Debt Securities among
participants of DTC, Cedel Bank and Euroclear, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for the
Corporation by Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina,
and for the underwriters or agents by Stroock & Stroock & Lavan LLP, New York,
New York. As of the date of this Prospectus, certain members of Smith Helms
Mulliss & Moore, L.L.P. beneficially own approximately 50,000 shares of the
Corporation's Common Stock.
EXPERTS
The consolidated financial statements of the Corporation incorporated in
this Prospectus by reference to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1995, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The supplemental consolidated financial statements of Boatmen's
Bancshares, Inc. at December 31, 1995 and 1994 and for the three years ended
December 31, 1995, incorporated herein by reference from the Corporation's
Current Report on Form 8-K filed on September 6, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in its report thereon
incorporated herein in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
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[Alternate Page--Debt]
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No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement and Prospectus in connection with the offering made
hereby and, if given or made, such information or representations must not be
relied upon as having been authorized by the Corporation, the Underwriters or
NationsBanc Montgomery Securities LLC. Neither the delivery of this Prospectus
Supplement or Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Corporation since the date hereof. This Prospectus does not
constitute an offer or solicitation by anyone in any state in which such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation. This Prospectus Supplement and the related
Prospectus are to be used by NationsBanc Montgomery Securities LLC, a broker-
dealer and a direct wholly-owned subsidiary of the Corporation, in connection
with offers and sales related to secondary market transactions.
--------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Prospectus Supplement
Description of Notes ........................ S-2
Recent Developments ......................... S-2
Capitalization .............................. S-5
Ratios of Earnings to Fixed Charges ......... S-5
Selected Financial Data ..................... S-6
Registration and Settlement ................. S-7
Certain United States Federal Income
Tax Consequences to Foreign
Investors ................................ S-9
Plan of Distribution ........................ S-10
Prospectus
Incorporation of Certain Documents by
Reference ................................ 2
Available Information ....................... 2
NationsBank Corporation ..................... 3
Use of Proceeds ............................. 6
Ratios of Earnings to Fixed Charges ......... 6
Plan of Distribution ........................ 7
Description of Debt Securities .............. 7
Registration and Settlement ................. 13
Legal Opinions .............................. 17
Experts ..................................... 17
</TABLE>
$500,000,000
NationsBank(R)
6 3/8% Senior Notes,
due 2005
--------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------
NationsBanc Montgomery
Securities LLC
April 28, 1998
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