<PAGE> 1
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
May 12, 1994
------------------------------------------
(Date of earliest event reported)
BankAmerica Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-7377 94-1681731
- - ---------------------------- --------------- ------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
</TABLE>
<TABLE>
<S> <C>
Bank of America Center
555 California Street
San Francisco, California 94104
- - -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
415-622-3530
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events.
As previously reported, BankAmerica Corporation ("BAC") and
Continental Bank Corporation ("CBC") have entered into a Restated Agreement and
Plan of Merger dated as of January 27, 1994 (the "Agreement"), pursuant to
which CBC will be merged with and into BAC in a transaction in which BAC will
be the surviving entity (such transaction, the "Merger").
The following pro forma combined financial information is set
forth in Exhibit 99.a:
BankAmerica Corporation and Continental Bank Corporation.
(1) BankAmerica Corporation and Subsidiaries and Continental
Bank Corporation and Subsidiaries Pro Forma Combined
Balance Sheet at March 31, 1994 (unaudited).
(2) BankAmerica Corporation and Subsidiaries and Continental
Bank Corporation and Subsidiaries Pro Forma Combined
Statement of Operations for the quarter ended
March 31, 1994 (unaudited).
(3) BankAmerica Corporation and Subsidiaries and Continental
Bank Corporation and Subsidiaries Pro Forma Combined
Statement of Operations for the year ended
December 31, 1993 (unaudited).
(4) BankAmerica Corporation and Subsidiaries and Continental
Bank Corporation and Subsidiaries Notes to Pro Forma
Combined Financial Information (unaudited).
Also, set forth in Exhibit 99.b are historical and pro forma
combined ratios of earnings to fixed charges and ratios of earnings to
combined fixed charges and preferred stock dividends for the quarter ended
March 31, 1994 and for the year ended December 31, 1993 (unaudited).
Portions of CBC's quarterly report on Form 10-Q for the quarter
ended March 31, 1994 previously filed with the Securities and Exchange
Commission are hereby incorporated by reference in this Current Report at
Exhibit 99.c. The following unaudited consolidated financial statements and
accompanying notes of CBC and its subsidiaries are incorporated:
1
<PAGE> 3
Continental Bank Corporation.
<TABLE>
<S> <C>
(1) Consolidated Balance Sheet - March 31, 1994.
(2) Consolidated Income Statement - three months ended
March 31, 1994.
(3) Consolidated Statement of Cash Flows - three months
ended March 31, 1994.
(4) Consolidated Statement of Changes in Stockholders'
Equity - three months ended March 31, 1994.
(5) Notes to Consolidated Financial Statements
(to the extent applicable to the foregoing
financial statements).
</TABLE>
Information relating to CBC and its subsidiaries has been supplied
by CBC and not by BAC, and BAC does not warrant the accuracy or
completeness of such information.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
The following exhibits are filed with this Current Report,
except for Exhibit 99.c, which is incorporated by reference from CBC's
filing as indicated.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
99.a. Pro Forma Combined Financial Information
for BankAmerica Corporation and Subsidiaries and
Continental Bank Corporation and Subsidiaries
(unaudited).
99.b. BankAmerica Corporation and Subsidiaries and
Continental Bank Corporation and Subsidiaries
Historical and Pro Forma Combined Ratios of
Earnings to Fixed Charges and Ratios of Earnings
to Combined Fixed Charges and Preferred Stock
Dividends (unaudited).
99.c. The following unaudited financial statements
of CBC and its subsidiaries and accompanying
notes
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C>
are incorporated by reference from CBC's
quarterly report on Form 10-Q for the
quarter ended March 31, 1994 (File
No. 1-5872): Consolidated Balance Sheet -
March 31, 1994, Consolidated Income Statement,
Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in
Stockholders' Equity for the three months
ended March 31, 1994; Notes to Consolidated
Financial Statements (to the extent applicable
to the foregoing financial statements).
(Portions of CBC's Form 10-Q not specifically
incorporated by reference are not required for
this Current Report and are not incorporated
by reference herein).
</TABLE>
3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANKAMERICA CORPORATION
____________________________
(Registrant)
/s/ Paul R. Ogorzelec
Date: May 12, 1994 By: ________________________
Paul R. Ogorzelec
Executive Vice President
4
<PAGE> 6
EXHIBIT INDEX*
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
99.a. Pro Forma Combined Financial Information
for BankAmerica Corporation and Subsidiaries
and Continental Bank Corporation and
Subsidiaries (unaudited).
99.b. BankAmerica Corporation and Subsidiaries and
Continental Bank Corporation and
Subsidiaries Historical and Pro Forma
Combined Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
(unaudited).
99.c. The following unaudited financial statements
of CBC and its subsidiaries and accompanying
notes are incorporated by reference from
CBC's quarterly report on Form 10-Q for the
quarter ended March 31, 1994 (File
No. 1-5872): Consolidated Balance Sheet -
March 31, 1994, Consolidated Income Statement,
Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in
Stockholders' Equity for the three months ended
March 31, 1994; Notes to Consolidated Financial
Statements (to the extent applicable to the
foregoing financial statements). (Portions of
CBC's Form 10-Q not specifically incorporated by
reference are not required for this Current Report
and are not incorporated by reference herein.)
</TABLE>
__________________________________
* These exhibits are filed with this Current Report, except for Exhibit
99.c, which is incorporated by reference from CBC's filing as indicated.
5
<PAGE> 1
Exhibit 99.a
PRO FORMA COMBINED FINANCIAL INFORMATION
On January 27, 1994, BankAmerica Corporation ("BAC") and Continental
Bank Corporation ("Continental") entered into a definitive agreement to merge
(the "Merger"), as more fully explained in Note A of the Notes to Pro Forma
Combined Financial Information.
The following unaudited Pro Forma Combined Balance Sheet as of March
31, 1994 combines the historical consolidated balance sheets of BAC and
subsidiaries and Continental and subsidiaries as if the Merger had been
effective on March 31, 1994 after giving effect to the purchase accounting and
other Merger-related adjustments described in the Notes to Pro Forma Combined
Financial Information. The unaudited Pro Forma Combined Statements of
Operations present the combined results of operations of BAC and subsidiaries
and Continental and subsidiaries for the quarter ended March 31, 1994 and for
the year ended December 31, 1993 as if the Merger had been effective on January
1, 1993 after giving effect to the purchase accounting and other Merger-related
adjustments described in the accompanying notes. These pro forma combined
financial statements do not give effect to the proposed BAC acquisitions of
Liberty Bank and United Mortgage Holding Company and subsidiaries that were
pending at March 31, 1994 as these transactions were not considered significant
to BAC and subsidiaries.
The unaudited pro forma combined financial statements and accompanying
notes reflect the application of the purchase method of accounting. Under this
method of accounting, the purchase price will be allocated to the assets
acquired and liabilities assumed based on their estimated fair values at the
effective time of the Merger (the "Effective Time"). As described in the
accompanying notes, estimates of the fair values of Continental and
subsidiaries' assets and liabilities have been combined with the recorded values
of the assets and liabilities of BAC and subsidiaries. However, changes to the
adjustments included in the unaudited pro forma combined financial statements
are expected as evaluations of assets and liabilities are completed and as
additional information becomes available. In addition, the results of
operations of Continental subsequent to March 31, 1994 will affect the
allocation of the purchase price. Accordingly, the final pro forma combined
amounts will differ from those set forth in the unaudited pro forma combined
financial statements.
The unaudited pro forma combined financial statements are intended for
informational purposes only and are not necessarily indicative of the future
financial position or future results of operations of the combined company, or
of the financial position or results of operations of the combined company that
would have actually occurred had the Merger been in effect as of the date or for
the periods presented.
These unaudited pro forma combined financial statements and the
accompanying notes should be read in conjunction with and are qualified in
their entirety by the consolidated financial statements, including accompanying
notes, of BAC in its Annual Report on Form 10-K for the year ended December 31,
1993 and in its quarterly report on Form 10-Q for the quarter ended March 31,
1994. These unaudited pro forma combined financial statements and the
accompanying notes should also be read in conjunction with and are also
qualified in their entirety by the consolidated financial statements, including
the accompanying notes, of Continental in its Annual Report on Form 10-K for
the year ended December 31, 1993 and in its quarterly report on Form 10-Q for
the quarter ended March 31, 1994. Portions of Continental's quarterly report on
Form 10-Q for the quarter ended March 31, 1994 are incorporated by
reference and filed as part of BAC's report on Form 8-K, which includes this
Exhibit, dated May 12, 1994.
1
<PAGE> 2
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
OTHER
MERGER-
RELATED PRO FORMA
ADJUSTMENTS ADJUSTMENTS
DEBIT DEBIT PRO FORMA
(IN MILLIONS) BAC CONTINENTAL (CREDIT) (CREDIT) COMBINED
-------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks................ $ 10,455 $ 1,786 $(155)(I) $ (946)(A) $ 11,140
Available-for-sale and held-to-maturity
securities........................... 21,392 1,395 -- -- 22,787
Loans.................................. 123,406 11,714 -- (12)(C) 135,108
Less: Allowance for credit losses...... 3,445 320 -- -- (D) 3,765
-------- ------- ------- ---------
Net loans............................ 119,961 11,394 -- (12) 131,343
Goodwill, net.......................... 3,931 -- -- -- 3,931
Identifiable intangibles, net.......... 2,133 -- -- -- 2,133
Unallocated portion of purchase
price................................ -- -- -- 578(B) 578
Other assets........................... 39,340 8,185 -- 274(E) 47,799
-------- ------- ----- ------- ---------
Total Assets.................... $197,212 $22,760 $(155) $ (106) $ 219,711
-------- ------- ----- ------- ---------
-------- ------- ----- ------- ---------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits............................... $142,589 $12,869 $ -- $ (133)(F) $ 155,591
Other liabilities...................... 23,326 6,767 -- (250)(G) 30,343
Long-term debt and subordinated capital
notes................................ 14,434 1,190 -- (57)(H) 15,681
-------- ------- ------- ---------
Total Liabilities.................... 180,349 20,826 -- (440) 201,615
STOCKHOLDERS' EQUITY
Preferred stock........................ 2,979 389 -- 389(I)
(389)(I) 3,368
Common stock........................... 561 216 -- 216(I)
(16)(I) 577
Additional paid-in capital............. 7,130 1,000 -- 1,000(I)
(463)(I)
(26)(I) 7,619
Retained earnings...................... 6,807 401 -- 401(I)
6(J) 6,801
Net unrealized losses on available-
for-sale securities, net of
income tax effect.................... (252) (6) -- (6)(I) (252)
Common stock in treasury, at cost...... (362) (61) 155(I) (61)(I)
(500)(I) (17)
Loans to ESOP trust.................... -- (5) -- (5)(I) --
-------- ------- ----- ------- ---------
Total stockholders' equity........... 16,863 1,934 155 546 18,096
-------- ----------- ----- ------- ---------
Total Liabilities and
Stockholders' Equity......... $197,212 $22,760 $ 155 $ 106 $ 219,711
-------- ------- ----- ------- ---------
-------- ------- ----- ------- ---------
</TABLE>
See notes to unaudited Pro Forma Combined Financial Information.
2
<PAGE> 3
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
DEBIT PRO FORMA
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) BAC CONTINENTAL (CREDIT) COMBINED
------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees...................................... $ 2,206 $ 176 $ (1)(C) $ 2,383
Trading account assets..................................... 111 20 -- 131
Available-for-sale and held-to-maturity securities......... 355 20 -- 375
Other...................................................... 141 60 -- 201
------- ----------- ----- ---------
Total interest income.................................... 2,813 276 (1) 3,090
INTEREST EXPENSE:
Deposits................................................... 697 92 (4)(F) 785
Long-term debt and subordinated capital notes.............. 179 17 (3)(H) 193
Other...................................................... 143 59 -- 202
------- ----------- ----- ---------
Total interest expense................................... 1,019 168 (7) 1,180
------- ----------- ----- ---------
Net interest income...................................... 1,794 108 (8) 1,910
Provision for credit losses................................ 125 30 -- 155
------- ----------- ----- ---------
Net interest income after provision for credit
losses.......................................... 1,669 78 (8) 1,755
NONINTEREST INCOME:
Deposit account fees....................................... 294 -- -- 294
Credit card fees........................................... 82 -- -- 82
Trust fees................................................. 67 26 -- 93
Other fees and commissions................................. 266 51 -- 317
Trading income............................................. 74 14 -- 88
Other income............................................... 220 53 -- 273
------- ----------- ----- ---------
Total noninterest income................................. 1,003 144 -- 1,147
NONINTEREST EXPENSE:
Salaries................................................... 710 65 -- 775
Employee benefits.......................................... 158 14 -- 172
Occupancy.................................................. 165 12 (1)(E)
(2)(G) 174
Equipment.................................................. 146 5 -- 151
Amortization of intangibles................................ 105 -- 9(B) 114
Communications............................................. 78 -- -- 78
Regulatory fees and related expenses....................... 70 -- -- 70
Professional services...................................... 58 -- -- 58
Other expense.............................................. 294 60 -- 354
------- ----------- ----- ---------
Total noninterest expense................................ 1,784 156 6 1,946
------- ----------- ----- ---------
Income from continuing operations before income
taxes........................................... 888 66 (2) 956
Provision for (benefit from) income taxes.................. 375 3 21(K) 399
------- ----------- ----- ---------
Income from continuing operations............. $ 513 $ 63 $ 19 $ 557
------- ----------- ----- ---------
------- ----------- ----- ---------
EARNINGS PER SHARE(L)
Average number of shares (in thousands):
Primary.................................................. 357,569 368,040
Fully diluted............................................ 363,049 373,520
Income from continuing operations per common share
Primary.................................................. $1.27 $1.33(L)
Fully diluted............................................ 1.26 1.31(L)
</TABLE>
See notes to unaudited Pro Forma Combined Financial Information.
3
<PAGE> 4
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
DEBIT PRO FORMA
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) BAC CONTINENTAL (CREDIT) COMBINED
------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees...................................... $ 9,463 $ 766 $ 24 (C) $10,205
Trading account assets..................................... 372 73 -- 445
Securities available for sale and securities held
for investment........................................... 1,389 66 -- 1,455
Other...................................................... 403 216 2 (E) 617
------- ----------- ----- ---------
Total interest income.................................... 11,627 1,121 26 12,722
INTEREST EXPENSE:
Deposits................................................... 2,971 391 (51)(F) 3,311
Long-term debt and subordinated capital notes.............. 840 78 (11)(H) 907
Other...................................................... 375 188 (6)(G) 557
------- ----------- ----- ---------
Total interest expense................................... 4,186 657 (68) 4,775
------- ----------- ----- ---------
Net interest income...................................... 7,441 464 (42) 7,947
Provision for credit losses................................ 803 181 -- 984
------- ----------- ----- ---------
Net interest income after provision for credit
losses.......................................... 6,638 283 (42) 6,963
NONINTEREST INCOME:
Deposit account fees....................................... 1,198 -- -- 1,198
Credit card fees........................................... 354 -- -- 354
Trust fees................................................. 294 98 -- 392
Other fees and commissions................................. 1,083 194 -- 1,277
Trading income............................................. 569 102 -- 671
Other income............................................... 775 246 -- 1,021
------- ----------- ----- ---------
Total noninterest income................................. 4,273 640 -- 4,913
NONINTEREST EXPENSE:
Salaries................................................... 2,886 259 -- 3,145
Employee benefits.......................................... 573 54 -- 627
Occupancy.................................................. 684 50 (2)(E)
(2)(G) 730
Equipment.................................................. 610 19 -- 629
Amortization of intangibles................................ 421 -- 41(B) 462
Communications............................................. 330 -- -- 330
Regulatory fees and related expenses....................... 309 -- -- 309
Professional services...................................... 268 -- -- 268
Other expense.............................................. 1,402 301 -- 1,703
------- ----------- ----- ---------
Total noninterest expense................................ 7,483 683 37 8,203
------- ----------- ----- ---------
Income from continuing operations before income
taxes........................................... 3,428 240 (5) 3,673
Provision for (benefit from) income taxes.................. 1,474 (18) 115(K) 1,571
------- ----------- ----- ---------
Income from continuing operations............. $ 1,954 $ 258 $ 110 $ 2,102
------- ----------- ----- ---------
------- ----------- ----- ---------
EARNINGS PER SHARE(L)
Average number of shares (in thousands):
Primary.................................................. 357,680 368,151
Fully diluted............................................ 363,244 373,715
Income from continuing operations per common share
Primary.................................................. $4.79 $4.96(L)
Fully diluted............................................ 4.76 4.89(L)
</TABLE>
See notes to unaudited Pro Forma Combined Financial Information.
4
<PAGE> 5
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
NOTE A: BASIS OF PRESENTATION
The Restated Agreement and Plan of Merger dated as of January 27, 1994
(the "Merger Agreement") provides that, at the Effective Time and subject to
the election and allocation procedures provided for therein, each share of
Continental common stock, par value $4 per share ("Continental Common Stock")
outstanding at the Effective Time (other than shares for which appraisal rights
are perfected), subject to certain exceptions, will be converted into either a
number of shares of common stock of BAC, par value $1.5625 per share (the
"Stock Consideration") or an amount in cash without interest (the "Cash
Consideration").
Under the Merger Agreement, the aggregate number of shares of common
stock of BAC, par value $1.5625 per share (the "BAC Common Stock") to be issued
in the Merger (the "Stock Amount") is equal to the product of (x) 0.8152 and
(y) 51% of the total number of shares of Continental Common Stock outstanding
ending on the tenth calendar day prior to the anticipated Effective Time (the
"Determination Date"). The Merger Agreement also provides that if, at the
Effective Time of the Merger, more shares of Continental Common Stock are
outstanding than are contemplated to be outstanding or subject to option
pursuant to the representations and warranties of Continental in the Merger
Agreement, then, at BAC's election, the Stock Amount, the Cash Consideration
and the Stock Consideration will be adjusted downward to reflect the greater
number of shares outstanding. In the unaudited Pro Forma Combined Balance
Sheet, the Stock Amount is assumed to be approximately 21,400,000 shares of BAC
Common Stock which, in turn, assumes that the number of shares outstanding as
of the Determination Date is the same as the approximately 51,470,000 shares of
Continental Common Stock outstanding as of March 31, 1994. Under the Merger
Agreement, in addition to the impact of the number of shares of Continental
Common Stock outstanding or subject to option at the Determination Date, the
Stock Amount (i) will not change if the average of the closing prices per share
of BAC Common Stock as reported on the New York Stock Exchange, Inc. ("NYSE")
composite transactions tape for the ten consecutive days on which shares of BAC
Common Stock are traded on the NYSE ending on the Determination Date (such
average price, the "Final BAC Stock Price") is between $36.16 (the "Floor
Price") and $55.84 (the "Ceiling Price"), (ii) will be adjusted downward if
the Final BAC Stock Price is greater than the Ceiling Price, and (iii) is
subject to possible adjustment upward if the Final BAC Stock Price is less than
the Floor Price and if BAC elects to make the per share stock and cash
adjustments set forth in the Merger Agreement.
Under the Merger Agreement, the aggregate cash payable by BAC to holders of
record of Continental Common Stock ("Continental Common Stockholders") pursuant
to the Merger will equal a fixed amount regardless of the Final BAC Stock Price
(except for immaterial changes due to rounding) and will vary only according to
the total number of shares of Continental Common Stock outstanding at the
Determination Date. For example, if there are 51,470,000 shares of Continental
Common Stock outstanding at the Determination Date, then the aggregate cash
payable by BAC to Continental Common Stockholders who are to receive cash
will equal approximately $946 million and this will not change (except for
immaterial changes due to rounding) regardless of changes in the Final BAC
Stock Price.
Under the Merger Agreement, if the Final BAC Stock Price is less than the
Floor Price, Continental will have the ability to terminate the Merger Agreement
prior to the Effective Time unless BAC, within five days of Continental's
election to terminate the Merger Agreement, exercises its option to adjust
upward the Stock Consideration, the Cash Consideration and the Stock Amount so
that the Stock Amount will be increased and the Stock Consideration and the Cash
Consideration will be at least equal in value to the per share stock and cash
consideration that would have been received if the Final BAC Stock Price had
been equal to the Floor Price. This adjustment will only be made, at BAC's
option, if the Final BAC Stock Price is less than the Floor Price, and may be
made whether or not Continental has exercised its rights to terminate the Merger
Agreement. If BAC elects to increase the Cash Consideration, the Stock
Consideration and the Stock Amount, then such right of Continental to terminate
the Merger Agreement will be extinguished.
Under the Merger Agreement, if the Final BAC Stock Price is greater than
the Ceiling Price, then the Cash Consideration, the Stock Consideration and the
Stock Amount will be decreased so that the value of the per share cash and stock
consideration that would be receivable by Continental Common Stockholders will
be the same as if the Final BAC Stock Price were equal to the Ceiling Price.
Under the Merger Agreement, such downward adjustment in the Cash Consideration,
the Stock Consideration and the Stock Amount will automatically be made if the
Final BAC Stock Price is greater than the Ceiling Price.
At the Effective Time, subject to certain exceptions, each outstanding
share of Continental Adjustable Rate Preferred Stock, Series 1, $50 stated
value (the "Continental Series 1 Preferred Stock"), and Continental Adjustable
Rate Cumulative Preferred Stock, Series 2, $100 stated value (the "Continental
Series 2 Preferred Stock," and collectively with the Continental Series 1
Preferred Stock, the "Continental Preferred Stock"), except for shares of
Continental Series 2 Preferred Stock
5
<PAGE> 6
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
as to which appraisal rights are perfected, will be converted into one share
of BAC Adjustable Rate Preferred Stock, Series 1, $50 stated value (the "BAC
Series 1 Preferred Stock") and one share of BAC Adjustable Rate Cumulative
Preferred Stock, Series 2, $100 stated value (the "BAC Series 2 Preferred
Stock," and together with the BAC Series 1 Preferred Stock, the "BAC Mirror
Preferred"), respectively. The BAC Series 1 Preferred Stock and the BAC Series
2 Preferred Stock will have substantially the same terms as the Continental
Series 1 Preferred Stock and the Continental Series 2 Preferred Stock,
respectively.
BAC currently anticipates that, after the Effective Time, it may redeem
all or a portion of the BAC Mirror Preferred. The decision to redeem, and the
amount of BAC Mirror Preferred to be so redeemed, are dependent upon receipt of
regulatory approval, interest rates at the time such decision is made and the
aggregate amount of cash and the aggregate value of shares of BAC Common Stock
to be issued in the Merger, among other things.
The following summarizes the total purchase price:
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C>
Total market price of the Stock Amount (based
on market price per share of $45.75 of BAC
Common Stock on January 27, 1994)........... $ 979
Estimated cash to be paid..................... 946
Estimated fair value of BAC Mirror
Preferred................................... 415
Estimated BAC legal, investment banking and
issuance costs.............................. 5
-------
Total purchase price................ $2,345
-------
-------
</TABLE>
The closing of the Merger is subject to the satisfaction of certain
conditions, including the approval of the transaction by the holders of a
majority of the outstanding shares of Continental Common Stock and the obtaining
of certain regulatory approvals. While the precise time of the Merger closing
cannot be determined with certainty, the parties presently anticipate that
the closing will take place in the third quarter of 1994.
The Merger will be accounted for by BAC under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations" ("APB No. 16"), and accordingly, this method has been
applied in the unaudited pro forma combined financial statements. Under this
method of accounting, the purchase price will be allocated to assets acquired
and liabilities assumed based on their estimated fair values at the Effective
Time. Estimates of the fair values of Continental and subsidiaries' assets and
liabilities as of March 31, 1994 have been combined with the recorded
March 31, 1994 values of the assets and liabilities of BAC and subsidiaries
in the unaudited pro forma combined financial statements. However, purchase
accounting adjustment amounts included in these unaudited pro forma combined
financial statements will change as additional information becomes available.
Based upon the available information, management of BAC currently estimates
that the combined company's results of operations in any of the next five
years will not be significantly affected as a result of purchase accounting.
The unaudited Pro Forma Combined Balance Sheet is based on the
consolidated balance sheet of BAC and subsidiaries and on the consolidated
balance sheet of Continental and subsidiaries as of March 31, 1994. The
unaudited Pro Forma Combined Statements of Operations are based on the
consolidated statements of operations of BAC and subsidiaries and of
Continental and subsidiaries for the quarter ended March 31, 1994 and for the
year ended December 31, 1993. In addition, the unaudited Pro Forma Combined
Statement of Operations for the year ended December 31, 1993 presents
Continental's income before cumulative effect of accounting change for
income taxes.
6
<PAGE> 7
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
NOTE B: ALLOCATION OF THE PURCHASE PRICE
The purchase price has been allocated as described in the table below.
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Net assets of Continental at March 31, 1994..................... $1,934
Increase (decrease) to Continental's net asset value at March
31, 1994 as a result of estimated fair value adjustments:
Loans...................................................... (12)
Other assets............................................... 270
Deposits................................................... (133)
Other liabilities.......................................... (217)
Long-term debt and subordinated capital notes.............. (57)
-------
Total estimated fair value adjustments................ (149)
Accrual of liability for Merger-related costs................... (18)
-------
Total preliminary allocation of the purchase price.... 1,767
Unallocated portion of the purchase price....................... 578
-------
Total purchase price.................................. $2,345
-------
-------
</TABLE>
Each of the allocations in the table above is described in more detail in
the following Notes to Pro Forma Combined Financial Information.
As explained in Note A, purchase accounting adjustments will change as
additional information becomes available, which will have an effect on the
ultimate allocation of the purchase price. Accordingly, the allocation of the
purchase price has not been finalized and the unallocated portion of the
purchase price of $578 million has been separately disclosed in the unaudited
Pro Forma Combined Balance Sheet. In addition, the unallocated portion of the
purchase price will change as a result of Continental's results of operations
for periods subsequent to March 31, 1994.
When the ultimate allocation of the purchase price is made, identifiable
intangible assets and goodwill will be recorded and the unallocated portion of
the purchase price will be eliminated from the unaudited Pro Forma Combined
Balance Sheet. For purposes of calculating the amortization of identifiable
intangibles and goodwill, BAC's management has preliminarily estimated that the
amount of identifiable intangibles, including core deposit intangibles, will be
approximately $200 million. The remaining amount of the current unallocated
portion of the purchase price has been considered goodwill.
Amortization expense of $9 million for the quarter ended March 31, 1994
and $41 million for the year ended December 31, 1993 related to the unallocated
portion of the purchase price has been included in the unaudited Pro Forma
Combined Statements of Operations. These amounts were calculated based on an
accelerated method of amortization over a 10-year life for the estimated
identifiable intangible balance and on the straight-line method of amortization
over a 25-year life for the estimated goodwill balance. However, the final
amounts and periods of benefit of intangible assets, as well as the final
methods of amortization, have not been determined. An increase in the amount of
the unallocated portion of the purchase price will result in a greater final
allocation to goodwill, which will have a corresponding impact on amortization
expense and will reduce tangible common equity. Accordingly, pro forma combined
income from continuing operations for the quarter ended March 31, 1994 and for
the year ended December 31, 1993 and the related pro forma combined per share
amounts will change.
7
<PAGE> 8
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
NOTE C: LOANS
Continental's carrying value of loans has been adjusted to its estimated
fair value based on interest rates as of March 31, 1994, resulting in a
discount of $12 million.
The discount related to changes in interest rates includes the
effect resulting from futures contracts and interest rate swaps used to hedge
certain loans. The total fair value discount resulting from changes in interest
rates has been amortized to interest income on loans over the estimated
remaining maturities of the related loans, which range from one to five years.
NOTE D: ALLOWANCE FOR CREDIT LOSSES
Under the terms of the Merger Agreement, Continental's reserving
policies and practices will be modified prior to the Effective Time to the
degree necessary, consistent with generally accepted accounting principles
("GAAP") and Securities and Exchange Commission ("SEC") accounting procedures,
to make them consistent with those of BAC. Continental will also adjust its
loan loss and other real estate owned reserves prior to the Effective Time to
the degree necessary, consistent with GAAP and SEC accounting procedures, in
light of then anticipated post-Merger disposition of certain Continental
assets. Any resulting adjustments to Continental's allowance for
credit losses are not expected to be significant, will be recognized in
Continental's statement of operations prior to the Effective Time and,
therefore, have not been included in the pro forma combined financial
statements. The pro forma combined allowance for credit losses will also be
affected by other provisions for credit losses or net charge-offs of loans
recorded by BAC or Continental subsequent to March 31, 1994 but prior to the
Effective Time.
NOTE E: OTHER ASSETS
Continental's other assets have been adjusted as described in the table
below.
<TABLE>
<CAPTION>
(IN MILLIONS) DEBIT (CREDIT)
<S> <C>
Fair value adjustment for interest-bearing deposits in banks.... $ 2
Fair value adjustment for trading account assets and equity
investments................................................... 87
Fair value adjustment for premises.............................. (91)
Net adjustment of prepaid pension expenses...................... (20)
Net deferred tax asset resulting from purchase accounting
adjustments................................................... 292
------
Subtotal................................................... 270
Income tax effect of BAC restructuring expenses (see Note J).... 4
------
$274
------
------
</TABLE>
The fair value premium on interest-bearing deposits in banks has been
amortized to offset interest income over one year.
A fair value adjustment for trading account assets of $29 million was
recorded for those trading account assets that are traded in an illiquid market.
These trading account assets were generally carried by Continental at the lower
of cost or market value as of March 31, 1994. In addition, a fair value
adjustment for equity investments of $58 million was recorded for those equity
investments that are traded in an illiquid market. As of March 31, 1994,
Continental generally carried these equity investments at cost.
Continental's premises have been adjusted to their estimated fair values as
of March 31, 1994 based on preliminary appraisals, valuations and other
review procedures. Occupancy expense in the unaudited Pro Forma Combined
Statements of Operations has been decreased by $1 million for the quarter ended
March 31, 1994 and by $2 million for the year ended December 31, 1993 to
reflect amortization of the fair value adjustment to premises using the
straight-line method over 33 years.
A net deferred tax asset was recorded related to the book and tax bases
differences of assets acquired and liabilities assumed that resulted from
purchase accounting adjustments. Also, additional deferred tax assets were
recorded for previously unrecognized
8
<PAGE> 9
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
tax benefits of Continental that are expected to be realized in the future from
the combined results of operations.
NOTE F: DEPOSITS
Continental's total deposits have been adjusted to their estimated fair
values as of March 31, 1994 based on interest rates as of that date. The
estimated fair value premium of $133 million relates to both domestic and
foreign deposits and includes futures contracts and interest rate swaps used to
hedge certain of these deposits. The premium has been amortized to offset
interest expense over the estimated lives of the deposits, which range from one
to ten years.
NOTE G: OTHER LIABILITIES
Other liabilities have been adjusted as described in the table below.
<TABLE>
<CAPTION>
(IN MILLIONS) (CREDIT)
-------------
<S> <C>
Accrual of pension and postretirement benefit liability.......... $ (82)
Accrual of stock option liability................................ (115)
Fair value adjustment for lease commitments...................... (12)
Accrual of vacation liability.................................... (2)
Fair value adjustment for short-term borrowings.................. (6)
-------------
Subtotal.................................................... (217)
Accrual of Merger-related costs.................................. (18)
Accrual of BAC restructuring expenses (see Note J)............... (10)
Accrual of estimated BAC legal, investment banking and issuance
costs.......................................................... (5)
-------------
$(250)
-------------
-------------
</TABLE>
The accrual of the pension and postretirement benefit liability represents
the recognition of the existing benefit obligation related to Continental's
supplemental retirement plan and postretirement healthcare plan.
A liability of $115 million was recorded for the intrinsic value of
Continental stock options outstanding at March 31, 1994. This liability
represents the total of the differences between the option exercise prices
and the value of the anticipated per share consideration to be received by
Continental Common Stockholders in the Merger. This liability will be adjusted
downward at the Effective Time to reflect the number of Continental stock
options outstanding that will be converted to BAC stock options.
Continental's lease commitments have been adjusted to their estimated
fair values based on market rental rates as of March 31, 1994. The fair
value adjustment resulted in a liability of $12 million related to leased
premises. The fair value adjustment related to these leased premises has been
amortized to offset occupancy expense using the straight-line method over the
remaining lives of the respective lease terms, which range from one to twenty
years. A reduction to occupancy expense of $2 million for the quarter ended
March 31, 1994 and of $2 million for the year ended December 31, 1993 has been
included in the unaudited Pro Forma Combined Statements of Operations related
to the estimated amortization of this fair value adjustment.
Continental's short-term borrowings have been adjusted to their estimated
fair values as of March 31, 1994 based on interest rates as of that date. The
estimated fair value premium of $6 million has been amortized to offset
interest expense over an estimated life of one year.
In addition, a liability for Merger-related costs of $18 million has been
recorded in the unaudited Pro Forma Combined Balance Sheet, reflecting
management's best estimate of separation and benefits costs related to
Continental employees and employment assistance costs for separated Continental
employees.
NOTE H: LONG-TERM DEBT AND SUBORDINATED CAPITAL NOTES
Continental's long-term debt has been adjusted to its estimated fair value
as of March 31, 1994 based on interest rates as of that date. The estimated
fair value premium of $57 million includes the effect of futures
9
<PAGE> 10
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
contracts and interest rate swaps used to hedge certain long-term debt
instruments. The total fair value premium has been amortized to offset interest
expense over the estimated lives of the instruments, which range from one to ten
years.
NOTE I: STOCKHOLDERS' EQUITY
Continental's stockholders' equity balances have been eliminated.
At the Effective Time, the Continental Preferred Stock will be converted
into an equal number of shares of BAC Mirror Preferred. The BAC Mirror
Preferred is included in the unaudited Pro Forma Combined Balance Sheet at its
estimated market value as of January 27, 1994. The fair value premium of $26
million over the $389 million stated value of the BAC Mirror Preferred has been
included in additional paid-in capital.
BAC expects to repurchase approximately $500 million of BAC Common Stock
prior to the Effective Time. At March 31, 1994, BAC had repurchased 8,161,000
shares of its common stock on the open market for $345 million. In the Other
Merger-Related Adjustments column in the unaudited Pro Forma Combined Balance
Sheet, treasury stock has been increased by $155 million, the remaining amount
of BAC Common Stock presently expected to be repurchased prior to the
Effective Time.
As explained in Note A, Continental's Common Stock will be converted into
approximately 21,400,000 shares of BAC Common Stock at the Effective Time at an
aggregate market value of approximately $979 million based on the market price
of BAC Common Stock as of January 27, 1994. In the unaudited Pro Forma
Combined Balance Sheet, treasury stock has been reduced by $500 million, the
amount of BAC Common Stock expected to be repurchased prior to the Effective
Time. The Pro Forma Combined Balance Sheet assumes $500 million in value of
treasury shares will be issued, thus reducing the number of shares of newly
issued BAC Common Stock to approximately 10,471,000 shares. Common stock
and additional paid-in capital have been increased by $16 million and $463
million, respectively, representing the value of the approximately 10,471,000
shares of newly issued BAC Common Stock.
BAC's retained earnings have been reduced by $6 million for BAC
restructuring expenses, net of applicable income taxes (see Note J).
NOTE J: BAC RESTRUCTURING EXPENSES
A restructuring liability of $10 million has been recorded in the unaudited
Pro Forma Combined Balance Sheet to reflect management's best estimate of
separation and benefits costs related to BAC employees, employment assistance
costs for separated BAC employees, systems conversion costs, and other
restructuring expenses of BAC associated with the Merger. This liability
resulted in a $6 million charge (after applicable income tax effects of $4
million) to retained earnings in the unaudited Pro Forma Combined Balance Sheet
(see Notes E, G, and I). These BAC restructuring expenses are subject to change
as further information becomes available. BAC restructuring expenses will be
recorded at or immediately prior to the Effective Time and have not been
included in the unaudited Pro Forma Combined Statements of Operations.
NOTE K: PROVISION FOR (BENEFIT FROM) INCOME TAXES
The provision for (benefit from) income taxes has been increased by $21
million for the quarter ended March 31, 1994 and by $115 million for the year
ended December 31, 1993 in the unaudited Pro Forma Combined Statements of
Operations to remove tax benefits that would not be reflected in the
statement of operations under purchase accounting and to reflect the tax
provision for purchase accounting adjustments and for state tax expense on
Continental's results of operations if the Merger had been effective
on January 1, 1993.
In addition, the related tax provision for the amortization of fair value
adjustments for the quarter ended March 31, 1994 and for the year ended
December 31, 1993 has been included in the unaudited Pro Forma Combined
Statements of Operations.
NOTE L: EARNINGS PER SHARE
Primary earnings per share are computed by dividing income from continuing
operations applicable to common shareholders (income from continuing operations
reduced by dividends on preferred stock) by the
10
<PAGE> 11
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
total of the average number of common shares outstanding and the additional
dilutive effect of the stock options and warrants outstanding during the period.
The dilutive effect of the stock options and warrants is computed using the
average market price of BAC Common Stock for the period.
Fully-diluted earnings per share are computed based on the average number
of common shares outstanding during the period and the additional dilutive
effect of stock options and warrants outstanding during the period. The dilutive
effect of outstanding stock options and warrants is computed using the greater
of the closing market price or the average market price of BAC Common Stock for
the period. In addition, fully-diluted earnings per share for the quarter ended
March 31, 1994 and for the year ended December 31, 1993 for BAC included the
additional dilution that would result if BAC's outstanding shares of 6 1/2%
Cumulative Convertible Preferred Stock, Series G (the "BAC Series G Preferred")
had been converted at the beginning of the period. Correspondingly, income
from continuing operations applicable to common stock was adjusted for
dividends declared on the BAC Series G Preferred.
As explained in Note A, Continental's Common Stock will be converted into
approximately 21,400,000 shares of BAC Common Stock at the Effective Time. In
addition, BAC expects to repurchase approximately $500 million of BAC Common
Stock prior to the Effective Time. At March 31, 1994, BAC had repurchased $345
million of BAC Common Stock. The Pro Forma Combined Balance Sheet assumes that
$500 million in value of treasury shares will be issued to Continental Common
Stockholders, thus reducing the number of shares of newly issued BAC Common
Stock to approximately 10,471,000 shares.
11
<PAGE> 1
Exhibit 99.b
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
HISTORICAL AND PRO FORMA COMBINED RATIOS OF EARNINGS
TO FIXED CHARGES AND RATIOS OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. The ratio of earnings to combined fixed charges and preferred
stock dividends is computed by dividing earnings by the sum of fixed charges
and preferred stock dividend requirements. Earnings consist primarily of income
(loss) before income taxes adjusted for fixed charges. Fixed charges consist
primarily of interest expense on short- and long-term borrowings and one-third
(the portion deemed representative of the interest factor) of net rents under
long-term leases.
The following table sets forth (i) the historical ratios of earnings to
fixed charges and the ratios of earnings to combined fixed charges and
preferred stock dividends for the periods indicated for BankAmerica Corporation
and its consolidated subsidiaries ("BAC") and for Continental Bank Corporation
and its consolidated subsidiaries ("Continental") and (ii) the pro forma
combined ratios of earnings to fixed charges and ratios of earnings to combined
fixed charges and preferred stock dividends for the periods indicated, giving
effect to the merger provided for in the Restated Agreement and Plan of Merger
dated as of January 27, 1994 between BAC and Continental (the "Merger") as if
it had been consummated on January 1, 1993. The pro forma combined ratios do
not give effect to the proposed BAC acquisitions of Liberty Bank and United
Mortgage Holding Company and subsidiaries that were pending at March 31, 1994
as these transactions were not considered significant to BAC and subsidiaries.
The pro forma combined ratios have been calculated using the pro forma combined
financial information for the quarter ended March 31, 1994 and for the year
ended December 31, 1993, and should be read in conjunction with and are
qualified in their entirety by such pro forma combined financial information at
Exhibit 99.a of BAC's report on Form 8-K dated May 12, 1994, and the
consolidated financial statements, including the accompanying notes, of BAC and
Continental included in their respective 1993 Form 10-Ks and first quarter 1994
Form 10-Qs and elsewhere in BAC's report on Form 8-K dated May 12, 1994. Pro
forma adjustments made to arrive at the pro forma combined ratios are based on
the purchase method of accounting and a preliminary allocation of the purchase
price. However, changes to the adjustments already included in the pro forma
combined ratios set forth on the following pages are expected as evaluations of
assets and liabilities are completed and additional information becomes
available. In addition, the results of operations of Continental subsequent to
March 31, 1994 will affect the allocation of the purchase price. Accordingly,
the final pro forma combined ratios are expected to differ from those set forth
on the following pages.
The pro forma combined ratios are intended for informational purposes and
are not necessarily indicative of the future ratios of earnings to fixed
charges and ratios of earnings to combined fixed charges and preferred stock
dividends of the combined company or the ratios of earnings to fixed charges
and ratios of earnings to combined fixed charges and preferred stock dividends
of the combined company that would have actually occurred had the Merger been
effective on January 1, 1993.
1
<PAGE> 2
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
Historical and Pro Forma Combined Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Quarter Ended March 31, 1994
---------------------------------------
Historical
--------------------------------- Pro Forma
(dollar amounts in millions) BAC Continental Combined
-------- ----------- --------
<S> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense (other
than interest on deposits) $ 322 $ 76 $ 395
Interest factor in rent expense 27 2 29
Other - - -
--------- --------- ---------
$ 349 $ 78 $ 424
====== ====== ======
Earnings:
Income from operations $ 513 $ 63 $ 557
Applicable income taxes 375 3 399
Fixed charges 349 78 424
Other (13) - (13)
------- -------- -------
$1,224 $ 144 $1,367
====== ====== ======
Ratio of earnings to fixed charges,
excluding interest on deposits 3.51 1.85 3.22
INCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense $1,019 $ 168 $1,180
Interest factor in rent expense 27 2 29
Other - - -
-------- -------- --------
$1,046 $ 170 $1,209
====== ====== ======
Earnings:
Income from operations $ 513 $ 63 $ 557
Applicable income taxes 375 3 399
Fixed charges 1,046 170 1,209
Other (13) - (13)
-------- -------- --------
$1,921 $ 236 $2,152
====== ====== ======
Ratio of earnings to fixed charges,
including interest on deposits 1.84 1.39 1.78
See notes attached to this exhibit.
</TABLE>
2
<PAGE> 3
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
Historical and Pro Forma Combined Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
<TABLE>
<CAPTION>
Quarter Ended March 31, 1994
---------------------------------------
Historical
------------------------------------ Pro Forma
(dollar amounts in millions) BAC Continental Combined
-------- ----------- --------
<S> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense (other
than interest on deposits) $ 322 $ 76 $ 395
Interest factor in rent expense 27 2 29
Preferred dividend requirements(a) 104 8 117
Other - - -
--------- -------- ---------
$ 453 $ 86 $ 541
====== ====== ======
Earnings:
Income from operations $ 513 $ 63 $ 557
Applicable income taxes 375 3 399
Fixed charges 349(b) 86(c) 424(b)
Other (13) - (13)
------- ------ ------
$1,224 $ 152 $1,367
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends, excluding
interest on deposits 2.70 1.77 2.53
INCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense $1,019 $ 168 $1,180
Interest factor in rent expense 27 2 29
Preferred dividend requirements(a) 104 8 117
Other - - -
------- ------- -------
$1,150 $ 178 $1,326
====== ====== ======
Earnings:
Income from operations $ 513 $ 63 $ 557
Applicable income taxes 375 3 399
Fixed charges 1,046(b) 178(c) 1,209(b)
Other (13) - (13)
--------- ------- --------
$1,921 $ 244 $2,152
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends, including
interest on deposits 1.67 1.37 1.62
</TABLE>
See notes attached to this exhibit.
3
<PAGE> 4
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
Historical and Pro Forma Combined Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31, 1993
----------------------------------------
Historical
------------------------- Pro Forma
(dollar amounts in millions) BAC Continental Combined
------ ----------- ---------
<S> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense (other
than interest on deposits) $1,215 $ 266 $1,464
Interest factor in rent expense 112 7 119
Other 2 - 2
------ ------ ------
$1,329 $ 273 $1,585
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,102
Applicable income taxes 1,474 (18) 1,571
Fixed charges 1,329 273 1,585
Other (39) - (39)
------ ------ ------
$4,718 $ 513 $5,219
====== ====== ======
Ratio of earnings to fixed charges
excluding interest on deposits 3.55 1.88 3.29
INCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense $4,186 $ 657 $4,775
Interest factor in rent expense 112 7 119
Other 2 - 2
------ ------ ------
$4,300 $ 664 $4,896
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,102
Applicable income taxes 1,474 (18) 1,571
Fixed charges 4,300 664 4,896
Other (39) - (39)
------ ------ ------
$7,689 $ 904 $8,530
====== ====== ======
Ratio of earnings to fixed charges,
including interest on deposits 1.79 1.36 1.74
</TABLE>
See notes attached to this exhibit.
4
<PAGE> 5
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
Historical and Pro Forma Combined Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
<TABLE>
<CAPTION>
Year Ended December 31, 1993
---------------------------------------
Historical
--------------------------------- Pro Forma
(dollar amounts in millions) BAC Continental Combined
-------- ----------- --------
<S> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense (other
than interest on deposits) $1,215 $ 266 $1,464
Interest factor in rent expense 112 7 119
Preferred dividend requirements(a) 423 34 481
Other 2 - 2
--------- -------- ---------
$1,752 $ 307 $2,066
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,102
Applicable income taxes 1,474 (18) 1,571
Fixed charges 1,329(b) 307(c) 1,585(b)
Other (39) - (39)
------- ------ ------
$4,718 $ 547 $5,219
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends, excluding
interest on deposits 2.69 1.78 2.53
INCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense $4,186 $ 657 $4,775
Interest factor in rent expense 112 7 119
Preferred dividend requirements(a) 423 34 481
Other 2 - 2
------- ------- -------
$4,723 $ 698 $5,377
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,102
Applicable income taxes 1,474 (18) 1,571
Fixed charges 4,300(b) 698(c) 4,896(b)
Other (39) - (39)
--------- ------- --------
$7,689 $ 938 $8,530
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends, including
interest on deposits 1.63 1.34 1.59
</TABLE>
See notes attached to this exhibit.
5
<PAGE> 6
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
Notes to
Historical and Pro Forma Combined Ratios of Earnings To Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
(a) Preferred dividend requirements represent pretax earnings necessary to cover
preferred dividends declared during the quarter ended March 31, 1994 of $60
million by BAC, $8 million by Continental, and $68 million on a pro forma
combined basis. In addition, preferred dividends declared during the year
ended December 31, 1993 were $241 million for BAC, $34 million for
Continental, and $275 million on a pro forma combined basis.
(b) Excluding preferred dividend requirements.
(c) Including preferred dividend requirements.
6
