SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
January 19, 1999
BANKAMERICA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
1-6523
(Commission File Number)
56-0906609
(IRS Employer Identification No.)
100 North Tryon Street
Charlotte, North Carolina
(Address of principal executive offices)
28255
(Zip Code)
(704) 386-5000
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
Release of Fourth Quarter Earnings. On January 19, 1999, BankAmerica
Corporation, the registrant (the "Registrant"), announced financial results for
the fourth quarter of fiscal 1998, reporting operating earnings of $1.60 billion
and operating earnings per common share of $.92 ($.91 diluted). As a result of
a $441 million after-tax charge to cover costs associated with the merger of
NationsBank Corporation and BankAmerica Corporation, net income for the fourth
quarter of fiscal 1998 was $1.16 billion, or $.67 ($.66 diluted) per share. A
copy of the press release announcing the results of the Registrant's fiscal
quarter ended December 31, 1998 is filed as Exhibit 99.1 to this Current Report
on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99.1 Press Release dated January 19, 1999 with respect to the
Registrant's financial results for the fiscal
quarter ended December 31, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BANKAMERICA CORPORATION
By: /s/ Marc D. Oken
-----------------------------------
Marc D. Oken
Executive Vice President and
Principal Financial Executive
Dated: January 21, 1999
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
99.1 Press Release dated January 19, 1999 with respect to the
Registrant's financial results for the fiscal quarter
ended December 31, 1998.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
January 19, 1999
Contact: Investors Susan Carr (704-386-8059) or Kevin Stitt (704-386-5667)
Media Bob Stickler (704-386-8465)
BANKAMERICA REPORTS FOURTH QUARTER OPERATING EARNINGS OF $1.6 BILLION;
EARNS $6.5 BILLION FOR 1998
CHARLOTTE, NC, January 19, 1999 - BankAmerica Corporation today reported
operating earnings of $1.60 billion, or $.92 ($.91 diluted) per share, for the
fourth quarter of 1998. That compared to $1.68 billion, or $.96 ($.94 diluted)
per share, a year earlier. Historical results reflect both the former
BankAmerica and NationsBank corporations, which merged on September 30, 1998.
The company recorded a $441 million after-tax charge to cover costs associated
with the merger of NationsBank and BankAmerica. As a result, net income for the
fourth quarter of 1998 was $1.16 billion, or $.67 ($.66 diluted) per share,
compared to $1.46 billion, or $.84 ($.81 diluted) per share, a year earlier,
when the company took an after-tax charge related to its merger with Barnett
Banks of $220 million.
"We enter 1999 with renewed momentum, having rebounded from the third quarter,"
said Hugh L. McColl, Jr., BankAmerica chairman and chief executive officer. "The
major components of our business are reporting solid results. Our challenge now
is to unlock the huge potential of the unmatched growth franchise we have
built."
more
<PAGE>
Page 2
For all of 1998, BankAmerica's operating earnings totaled $6.49 billion, or
$3.73 per share ($3.64 diluted), compared to $6.81 billion, or $3.86 per share
($3.76 diluted), in 1997. Net income in 1998 was $5.17 billion, or $2.97 per
share ($2.90 diluted), compared to $6.54 billion, or $3.71 per share ($3.61
diluted) a year earlier.
Fourth Quarter Earnings (compared to a year ago)
- -----------------------------------------------
While the company benefited from strong performance in its core consumer and
commercial banking franchise, reduced revenues primarily from investment
banking, trading and other market-related sources caused income to fall below
the level of a year earlier. Operating earnings represented a 14.12 percent
return on equity.
Net Interest Income
- -------------------
Taxable-equivalent net interest income increased 1 percent from a year earlier
to $4.65 billion, as loan and deposit growth offset the impact of asset
securitizations and loan sales and continued pressure on the company's margin.
Average managed loans grew 11 percent to $382 billion, reflecting increases in
both consumer and commercial loans. The net yield on earning assets declined by
27 basis points to 3.58 percent due to a higher level of investment securities
and lower loan and deposit spreads.
Noninterest Income
- ------------------
Noninterest income declined 18 percent to $2.66 billion, as turbulence in the
financial markets affected the company's capital markets businesses. The primary
factors were a $286 million reduction in investment banking fees and a $255
million decline in other income from a year earlier. Credit card and brokerage
registered healthy gains.
At the same time, strong investor demand for U.S. Treasury securities led to a
significant increase in the value of the company's securities portfolio. The
company recorded realized securities gains of $404 million in the fourth
quarter, up from $111 million a year earlier.
more
<PAGE>
Page 3
D.E. Shaw
- ---------
The company significantly reduced its exposure to D.E. Shaw, a New York trading
and investment company, during the fourth quarter and sharply reduced its losses
derived from that relationship below third quarter levels.
The company acquired a $20 billion fixed-income portfolio and related hedge
positions from Shaw, effective October 7, 1998. More than $13 billion of that
portfolio was liquidated. Another $6 billion was absorbed into the company's
trading portfolio because the securities were attractive and met the company's
portfolio strategies and risk parameters. The company now considers those
positions as part of its operations and does not anticipate reporting on them
separately in the future. Trading losses incurred from the fixed-income
portfolio and related hedge positions acquired from Shaw totaled $43 million
during the fourth quarter.
As previously reported, the company is carrying the original loan to Shaw as an
investment on its books and marking it to market value each quarter. During the
fourth quarter, the company marked down the investment by $158 million, mainly
as a result of trading losses early in the quarter and, to a lesser extent,
expenses connected with the restructuring of the strategic alliance. In
addition, Shaw made a regularly scheduled $100 million repayment. As a result of
the revaluation and repayment, the investment was valued at $770 million on
December 31, 1998, down from approximately $1 billion on September 30.
The $43 million in trading losses and $158 million markdown in the company's
investment meant the total impact on the company from the Shaw relationship in
the fourth quarter was a pre-tax loss of $201 million, equal to $.07 per diluted
share.
Efficiency
- ----------
Noninterest expense decreased 1 percent to $4.69 billion, reflecting cost
reductions resulting from recent mergers somewhat offset by continued spending
on transition projects associated with the merger of NationsBank and
BankAmerica. Personnel expenses dropped by more than 2 percent, and other
operating expenses were generally flat.
more
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Page 4
Credit Quality
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Nonperforming assets were $2.76 billion, or .77 percent of net loans, leases and
foreclosed properties on December 31, 1998, up from $2.42 billion, or .71
percent a year earlier. The allowance for credit losses totaled $7.12 billion on
December 31, 1998, equal to 287 percent of nonperforming loans and 1.99 percent
of net loans and leases. The allowance was $6.78 billion, or 1.98 percent of net
loans and leases, a year earlier.
The provision for credit losses in the fourth quarter was $510 million, up from
$498 million a year earlier. Net charge-offs rose to $544 million, equal to an
annualized .60 percent of average net loans and leases, from $491 million, or
.58 percent, a year earlier.
Full-Year Earnings
- ------------------
Results for the year also reflected solid gains in the company's core consumer
and commercial banking businesses offset by the impact of volatile financial
markets on the corporate banking and capital markets businesses as well as
higher credit costs.
Taxable-equivalent net interest income declined less than 1 percent to $18.46
billion, as an 8 percent increase in average managed loans was offset by a 31
basis point reduction in the company's net yield on earning assets.
Noninterest income rose 4 percent to $12.19 billion. Investment banking, which
included results from investment banking units acquired late in 1997, credit
card and brokerage registered significant year-over-year gains which were
somewhat offset by lower trading results.
Noninterest expense increased 6 percent, reflecting the addition of NationsBanc
Montgomery Securities which was acquired on October 1, 1997 and Robertson
Stephens, acquired in the fourth quarter of 1997, and spending on transition
projects.
more
<PAGE>
Page 5
The provision for credit losses was $2.92 billion, up from $1.90 billion a year
earlier. Net charge-offs rose to $2.47 billion, equal to an annualized .71
percent of average net loans and leases, from $1.85 billion, or .54 percent, a
year earlier.
Capital Strength
- ----------------
Total shareholders' equity was $45.9 billion at December 31, 1998. This
represented 7.44 percent of period-end assets, compared to 7.81 percent on
December 31, 1997. Book value per common share rose 4 percent to $26.60 at
December 31, 1998, from a year earlier.
BankAmerica Corporation, with $618 billion in total assets, is the largest bank
in the United States. It has full-service operations in 22 states and the
District of Columbia and provides financial products and services to 30 million
households and 2 million businesses, as well as providing international
corporate financial services for business transactions in 190 countries.
BankAmerica Corporation stock (ticker: BAC) is listed on the New York, Pacific
and London stock exchanges and certain shares are listed on the Tokyo Stock
Exchange.
www.nationsbank.com
www.bankamerica.com
<PAGE>
BANKAMERICA CORPORATION
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31 ENDED DECEMBER 31
----------------- ------------------
1998 1997 1998 1997
------ ------ ------ ------
FINANCIAL SUMMARY
-----------------
(In millions except per-share data)
<S> <C> <C> <C> <C>
Operating net income $1,603 $1,679 $6,490 $6,806
Operating earnings
per common share .92 .96 3.73 3.86
Diluted operating earnings
per common share .91 .94 3.64 3.76
Cash basis earnings (1) 1,825 1,903 7,391 7,661
Cash basis earnings per
common share 1.05 1.09 4.25 4.36
Cash basis diluted earnings
per common share 1.04 1.06 4.15 4.24
Dividends paid per common share .45 .38 1.59 1.37
Price per share of common stock
at period end 60.13 60.81 60.13 60.81
Average common shares 1,731.314 1,723.404 1,732.057 1,733.194
Average diluted common shares 1,763.055 1,774.572 1,775.760 1,782.172
SUMMARY INCOME STATEMENT (Operating Basis)
------------------------
(Taxable-equivalent in millions)
Net interest income $4,650 $4,598 $18,461 $18,589
Provision for credit losses (510) (498) (2,920) (1,904)
Gains on sales of securities 404 111 1,017 271
Noninterest income 2,655 3,225 12,189 11,756
Other noninterest expense (4,687) (4,736) (18,741) (17,625)
Income before income taxes 2,512 2,700 10,006 11,087
Income taxes - including
FTE adjustment 909 1,021 3,516 4,281
Operating net income $1,603 $1,679 $6,490 $6,806
SUMMARY BALANCE SHEET
---------------------
(Average balances in billions)
Loans and leases, net $357.636 $337.881 $347.840 $343.151
Managed loans and
leases, net (2) 381.853 342.758 371.183 344.003
Securities 72.302 60.724 66.684 48.269
Earning assets 517.066 474.321 499.739 464.962
Total assets 606.541 556.595 584.487 543.796
Deposits 351.766 338.331 345.485 336.883
Shareholders' equity 45.051 43.807 44.829 43.610
Common shareholders' equity 44.989 42.947 44.467 42.151
PERFORMANCE INDICES (Operating Basis)
-------------------
Return on average common
shareholders' equity 14.12% 15.36% 14.54% 15.88%
Return on average tangible
common shareholders' equity 23.97 27.59 25.24 27.77
Return on average assets 1.05 1.20 1.11 1.25
Return on average tangible
assets 1.22 1.40 1.30 1.45
Net interest yield 3.58 3.85 3.69 4.00
Efficiency ratio 64.16 60.55 61.15 58.08
Cash basis efficiency ratio 61.12 57.69 58.20 55.27
Net charge-offs (in millions) $544 $491 $2,467 $1,851
% of average loans and
leases, net .60% .58% .71% .54%
Managed credit card net charge-offs
as a % of average managed credit
card receivables 5.83 6.58 6.27 6.19
REPORTED RESULTS (Including Merger and Restructuring Items)
----------------
(In millions except per-share data)
Net income $1,162 $1,459 $5,165 $6,542
Earnings per common share .67 .84 2.97 3.71
Diluted earnings
per common share .66 .81 2.90 3.61
Return on average common
shareholders' equity 10.23 13.33 11.56 15.26
</TABLE>
(1) Cash basis earnings equal operating net income excluding amortization of
intangibles.
(2) Prior periods are restated for comparison (e.g. acquisitions,
divestitures and securitizations).
(3) Ratios and amounts for 1997 have not been restated to reflect the impact
of the Barnett Banks, Inc. and BankAmerica mergers.
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
------ ------
BALANCE SHEET HIGHLIGHTS
------------------------
(In billions except per-share data)
<S> <C> <C>
Loans and leases, net $357.328 $342.140
Securities 80.587 67.031
Earning assets 525.149 479.763
Total assets 617.679 570.983
Deposits 357.260 346.297
Shareholders' equity 45.938 44.584
Common shareholders' equity 45.866 43.907
Per share 26.60 25.49
Total equity to assets ratio
(period-end) 7.44% 7.81%
Risk-based capital(3)
Tier 1 capital ratio 7.06 6.50
Total capital ratio 10.94 10.89
Leverage ratio(3) 6.22 5.57
Common shares issued (in millions) 1,724.484 1,722.538
Allowance for credit losses $7.122 $6.778
Allowance for credit losses
as a % of net loans and leases 1.99% 1.98%
Allowance for credit losses
as a % of nonperforming loans 287.01 321.03
Nonperforming loans $2.482 $2.111
Nonperforming assets 2.764 2.420
Nonperforming assets as a % of:
Total assets .45% .42%
Net loans, leases and
foreclosed properties .77 .71
OTHER DATA
Full-time equivalent headcount 170,975 181,265
Banking centers 4,708 5,104
ATMs 14,327 14,867
</TABLE>
BUSINESS SEGMENT RESULTS - Three months ended DECEMBER 31, 1998
-------------------------
(In millions)
<TABLE>
<CAPTION>
OPERATING AVERAGE RETURN ON
TOTAL NET LOANS RISK ADJUSTED
REVENUE INCOME & LEASES, NET TANGIBLE EQUITY
-------- --------- ------------- ---------------
<S> <C> <C> <C> <C>
Consumer Banking $4,530 $926 $174,673 28%
Commercial Banking 654 184 52,844 22
Global Corporate and
Investment Banking 1,505 114 113,267 6
Wealth Management and
Principal Investing
Group 545 60 17,089 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 Quarters
-----------------------------------
Fourth Third Second First
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net Income $1,162 $374 $2,298 $1,331
Net Income (excluding
merger and
restructuring items) 1,603 893 2,021 1,973
Earnings per common share .67 .21 1.32 .77
Earnings per common share
(excluding merger and
restructuring items) .92 .51 1.16 1.14
Diluted earnings per
common share .66 .21 1.28 .75
Diluted earnings per
common share (excluding
merger and restructuring
items) .91 .50 1.13 1.11
</TABLE>
<TABLE>
<CAPTION>
1997 Quarters
------------------------------------
Fourth Third Second First
------- ------ ------ ------
<S> <C> <C> <C> <C>
Net Income $1,459 $1,730 $1,718 $1,635
Net Income (excluding
merger and
restructuring items) 1,679 1,774 1,718 1,635
Earnings per common share .84 .99 .97 .91
Earnings per common share
(excluding merger and
restructuring items) .96 1.02 .97 .91
Diluted earnings per
common share .81 .96 .94 .89
Diluted earnings per
common share (excluding
merger and restructuring
items) .94 .99 .94 .89
</TABLE>
