<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
August 11, 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 June 30, 1994 (unaudited).
(2) BankAmerica Corporation and Subsidiaries and Continental
Bank Corporation and Subsidiaries Pro Forma Combined
Statement of Operations for the six months ended
June 30, 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 six months ended
June 30, 1994 and for the year ended December 31, 1993 (unaudited).
Portions of CBC's quarterly report on Form 10-Q for the quarter
ended June 30, 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 - June 30, 1994.
(2) Consolidated Income Statement - three months and six
months ended June 30, 1994.
(3) Consolidated Statement of Cash Flows - six months
ended June 30, 1994.
(4) Consolidated Statement of Changes in Stockholders'
Equity - six months ended June 30, 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 June 30, 1994 (File No. 1-5872):
Consolidated Balance Sheet - June 30, 1994,
Consolidated Income Statement for the three
months and six months ended June 30, 1994,
Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in
Stockholders' Equity for the six months ended
June 30, 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/ James H. Williams
Date: August 11, 1994 By: ________________________
James H. Williams
Group 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 June 30, 1994 (File No. 1-5872):
Consolidated Balance Sheet - June 30, 1994,
Consolidated Income Statement for the three
months and six months ended June 30, 1994,
Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in
Stockholders' Equity for the six months ended
June 30, 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
June 30, 1994 combines the historical consolidated balance sheets of BAC and
subsidiaries and Continental and subsidiaries as if the Merger had been
effective on June 30, 1994 after giving effect to the purchase accounting
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 six months ended June 30, 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 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 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 June 30, 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 June 30,
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 June 30, 1994. Portions of Continental's quarterly report on
Form 10-Q for the quarter ended June 30, 1994 are incorporated by
reference and filed as part of BAC's report on Form 8-K, which includes this
Exhibit, dated August 11, 1994.
1
<PAGE> 2
BANKAMERICA CORPORATION AND SUBSIDIARIES AND
CONTINENTAL BANK CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
DEBIT PRO FORMA
(IN MILLIONS) BAC CONTINENTAL (CREDIT) COMBINED
-------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks................ $ 10,137 $ 1,833 $ (948)(A) $ 11,022
Available-for-sale and held-to-maturity
securities........................... 20,672 1,278 (4)(C) 21,946
Loans.................................. 124,874 11,771 (59)(D) 136,586
Less: Allowance for credit losses...... 3,414 312 -- (E) 3,726
-------- ------- ------- --------
Net loans............................ 121,460 11,459 (59) 132,860
Goodwill, net.......................... 3,886 -- -- 3,886
Identifiable intangibles, net.......... 2,078 -- -- 2,078
Unallocated portion of purchase
price................................ -- -- 616 (B) 616
Other assets........................... 39,310 7,073 218 (F) 46,601
-------- ------- ------- --------
Total Assets.................... $197,543 $21,643 $ (177) $219,009
-------- ------- ------- --------
-------- ------- ------- --------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits............................... $142,035 $12,703 $ (97)(G) $154,835
Other liabilities...................... 24,198 5,771 (263)(H) 30,232
Long-term debt and subordinated capital
notes................................ 14,217 1,189 (65)(I) 15,471
-------- ------- ------- --------
Total Liabilities.................... 180,450 19,663 (425) 200,538
STOCKHOLDERS' EQUITY
Preferred stock........................ 2,979 389 389 (J)
(389)(J) 3,368
Common stock........................... 561 216 216 (J)
(15)(J) 576
Additional paid-in capital............. 7,150 1,000 1,000 (J)
(427)(J)
(26)(J)
(39)(J) 7,642
Retained earnings...................... 7,131 461 461 (J)
18 (K) 7,113
Net unrealized losses on available-
for-sale securities, net of
income tax effect.................... (210) (23) (23)(J) (210)
Common stock in treasury, at cost...... (518) (58) (58)(J)
(500)(J) (18)
Loans to ESOP trust.................... -- (5) (5)(J) --
-------- ------- ------- --------
Total stockholders' equity........... 17,093 1,980 602 18,471
-------- ------- ------- --------
Total Liabilities and
Stockholders' Equity......... $197,543 $21,643 $ 177 $219,009
-------- ------- ------- --------
-------- ------- ------- --------
</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 SIX MONTHS ENDED JUNE 30, 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...................................... $4,500 $375 $ (7)(D) $4,882
Trading account assets..................................... 233 37 -- 270
Available-for-sale and held-to-maturity securities......... 700 38 (1)(C) 739
Other...................................................... 319 121 -- 440
------ ---- ---- ------
Total interest income.................................... 5,752 571 (8) 6,331
INTEREST EXPENSE:
Deposits................................................... 1,450 194 (7)(G) 1,637
Long-term debt and subordinated capital notes.............. 374 37 (7)(I) 404
Other...................................................... 302 114 -- 416
------ ---- ---- ------
Total interest expense................................... 2,126 345 (14) 2,457
------ ---- ---- ------
Net interest income...................................... 3,626 226 (22) 3,874
Provision for credit losses................................ 250 50 -- 300
------ ---- ---- ------
Net interest income after provision for credit
losses.......................................... 3,376 176 (22) 3,574
NONINTEREST INCOME:
Deposit account fees....................................... 584 -- -- 584
Credit card fees........................................... 167 -- -- 167
Trust fees................................................. 133 52 -- 185
Other fees and commissions................................. 528 98 -- 626
Trading income............................................. 180 33 -- 213
Other income............................................... 429 110 -- 539
------ ---- ---- ------
Total noninterest income................................. 2,021 293 -- 2,314
NONINTEREST EXPENSE:
Salaries................................................... 1,410 132 -- 1,542
Employee benefits.......................................... 338 28 -- 366
Occupancy.................................................. 332 24 (1)(F)
(4)(H) 351
Equipment.................................................. 284 10 -- 294
Amortization of intangibles................................ 204 -- 20(B) 224
Communications............................................. 158 -- -- 158
Regulatory fees and related expenses....................... 142 -- -- 142
Professional services...................................... 111 -- -- 111
Other expense.............................................. 626 126 -- 752
------ ---- ---- ------
Total noninterest expense................................ 3,605 320 15 3,940
------ ---- ---- ------
Income from continuing operations before income
taxes........................................... 1,792 149 (7) 1,948
Provision for income taxes................................. 754 9 50(L) 813
------ ---- ---- ------
Income from continuing operations............. $1,038 $140 $ 43 $1,135
------ ---- ---- ------
------ ---- ---- ------
EARNINGS PER SHARE(M)
Average number of shares (in thousands):
Primary.................................................. 353,645 379,872
Fully diluted............................................ 359,125 385,352
Income from continuing operations per common share
Primary.................................................. $2.59 $2.62(M)
Fully diluted............................................ 2.58 2.59(M)
</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 $ (8) (D) $10,237
Trading account assets..................................... 372 73 -- 445
Securities available for sale and securities held
for investment........................................... 1,389 66 (2)(C) 1,457
Other...................................................... 403 216 -- 619
------ ------- ---- -------
Total interest income.................................... 11,627 1,121 (10) 12,758
INTEREST EXPENSE:
Deposits................................................... 2,971 391 (37)(G) 3,325
Long-term debt and subordinated capital notes.............. 840 78 (9)(I) 909
Other...................................................... 375 188 -- 563
------ ------- ---- -------
Total interest expense................................... 4,186 657 (46) 4,797
------ ------ ---- -------
Net interest income...................................... 7,441 464 (56) 7,961
Provision for credit losses................................ 803 181 -- 984
------ ------ ---- -------
Net interest income after provision for credit
losses.......................................... 6,638 283 (56) 6,977
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)(F)
(2)(H) 730
Equipment.................................................. 610 19 -- 629
Amortization of intangibles................................ 421 -- 43 (B) 464
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 39 8,205
------ ------ ---- -------
Income from continuing operations before income
taxes........................................... 3,428 240 (17) 3,685
Provision for (benefit from) income taxes.................. 1,474 (18) 121 (L) 1,577
------ ------ ---- -------
Income from continuing operations............. $1,954 $ 258 $104 $ 2,108
------ ------ ---- -------
------ ------ ---- -------
EARNINGS PER SHARE(M)
Average number of shares (in thousands):
Primary.................................................. 357,680 383,907
Fully diluted............................................ 363,244 389,471
Income from continuing operations per common share
Primary.................................................. $4.79 $4.77(M)
Fully diluted............................................ 4.76 4.71(M)
</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
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 21,450,000 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 51,600,000 shares of
Continental Common Stock outstanding as of June 30, 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 51,600,000 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 $948 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")
5
<PAGE> 6
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
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)........... $ 981
Estimated cash to be paid..................... 948
Estimated fair value of BAC Mirror
Preferred................................... 415
Estimated BAC legal, investment banking and
issuance costs.............................. 5
-------
Total purchase price................ $2,349
-------
-------
</TABLE>
The closing of the Merger is subject to the satisfaction of certain
conditions set forth in the Merger Agreement. The parties presently
anticipate that the closing will take place on or about August 31, 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 June 30, 1994 have been combined with the recorded
June 30, 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 June 30, 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 six months ended June 30, 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 June 30, 1994...................... $1,980
Increase (decrease) to Continental's net asset value at
June 30, 1994 as a result of estimated fair value adjustments:
Available-for-sale and held-to-maturity securities......... (4)
Loans...................................................... (59)
Other assets............................................... 206
Deposits................................................... (97)
Other liabilities.......................................... (204)
Long-term debt and subordinated capital notes.............. (65)
-------
Total estimated fair value adjustments................ (223)
Accrual of liability for Continental Merger-related costs....... (24)
-------
Total preliminary allocation of the purchase price.... 1,733
Unallocated portion of the purchase price....................... 616
-------
Total purchase price.................................. $2,349
-------
-------
</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 $616 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 June 30, 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 customer list 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 $20 million for the six months ended June 30,
1994 and $43 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 six months ended
June 30, 1994 and for the year ended December 31, 1993 and the related pro
forma combined per share amounts will change.
NOTE C: AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES
Continental's available-for-sale and held-to-maturity securities,
primarily debt securities, have been valued at their estimated fair values
as of June 30, 1994, resulting in a discount on held-to-maturity securities
of $4 million from their recorded values. The amortization of this discount
has been included in the unaudited Pro Forma Combined Statement of Operations
based on the remaining maturities of the held-to-maturity securities as of
June 30, 1994.
7
<PAGE> 8
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
NOTE D: LOANS
Continental's carrying value of loans has been adjusted to its estimated
fair value based on interest rates as of June 30, 1994, resulting in a
discount of $59 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 seven years.
NOTE E: ALLOWANCE FOR CREDIT LOSSES
Under the terms of the Merger Agreement, and consistent with generally
accepted accounting principles ("GAAP") and Securities and Exchange Commission
("SEC") accounting procedures, Continental's reserving policies and practices
will be modified prior to the Effective Time to the degree necessary to make
them consistent with those of BAC. 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 June 30, 1994 but prior to the
Effective Time.
NOTE F: 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 trading account assets and equity
investments................................................... $ 54
Fair value adjustment for owned premises........................ (91)
Net adjustment of prepaid pension expenses...................... (20)
Net deferred tax asset resulting from purchase accounting
adjustments................................................... 263
------
Subtotal................................................... 206
Income tax effect of BAC Merger-related expenses (see Note K)... 12
------
$ 218
------
------
</TABLE>
A fair value adjustment for trading account assets of $6 million was
recorded for those trading account assets that are traded in illiquid markets.
These trading account assets were generally carried by Continental at the lower
of cost or market value as of June 30, 1994. In addition, a fair value
adjustment for equity investments of $48 million was recorded for those equity
investments that are traded in illiquid markets. As of June 30, 1994,
Continental generally carried these equity investments at cost.
Continental's owned premises have been adjusted to their estimated fair
values as of June 30, 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 six months
ended June 30, 1994 and by $2 million for the year ended December 31, 1993 to
reflect amortization of the fair value adjustment to owned 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 G: DEPOSITS
Continental's total deposits have been adjusted to their estimated fair
values as of June 30, 1994 based on interest rates as of that date. The
estimated fair value premium of $97 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 H: OTHER LIABILITIES
Other liabilities have been adjusted as described in the table below.
<TABLE>
<CAPTION>
(IN MILLIONS) (CREDIT)
-------------
<S> <C>
Accrual of stock option liability................................ $(104)
Accrual of pension and postretirement benefit liability.......... (82)
Fair value adjustment for lease commitments...................... (12)
Accrual of legal costs........................................... (4)
Accrual of vacation liability.................................... (2)
-------------
Subtotal.................................................... (204)
Accrual of Continental Merger-related costs...................... (24)
Accrual of BAC Merger-related expenses (see Note K).............. (30)
Accrual of estimated BAC legal, investment banking and issuance
costs.......................................................... (5)
-------------
$(263)
-------------
-------------
</TABLE>
A liability of $104 million was recorded for the intrinsic value of
Continental stock options outstanding at June 30, 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.
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.
Continental's lease commitments have been adjusted to their estimated
fair values based on market rental rates as of June 30, 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 $4 million for the six months ended
June 30, 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.
In addition, a liability for Continental Merger-related costs of $24
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 I: LONG-TERM DEBT AND SUBORDINATED CAPITAL NOTES
Continental's long-term debt has been adjusted to its estimated fair value
as of June 30, 1994 based on interest rates as of that date. The estimated
fair value premium of $65 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 J: 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.
As explained in Note A, Continental's Common Stock will be converted
into approximately 21,450,000 shares of BAC Common Stock at the Effective Time
at an aggregate market value of approximately $981 million based on the market
price of BAC Common Stock as of January 27, 1994. In addition, BAC repurchased
approximately 11,780,000 shares of BAC Common Stock for $500 million prior to
June 30, 1994. The unaudited Pro Forma Combined Balance Sheet assumes these
treasury shares will be issued, resulting in a decrease to treasury stock of
$500 million and an increase to additional paid-in capital of $39 million.
After consideration of treasury stock, the number of shares of newly issued BAC
Common Stock will be reduced to approximately 9,670,000 shares. Common stock
and additional paid-in capital have been increased by $15 million and $427
million, respectively, representing the value of the approximately 9,670,000
shares of newly issued BAC Common Stock.
BAC's retained earnings have been reduced by $18 million for BAC
Merger-related expenses, net of applicable income taxes (see Note K).
NOTE K: BAC MERGER-RELATED EXPENSES
A Merger-related liability of $30 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 expenses of BAC associated with the Merger. This liability resulted in a
$18 million charge (after applicable income tax effects of $12 million) to
retained earnings in the unaudited Pro Forma Combined Balance Sheet (see Notes
F, H, and J). These BAC Merger-related expenses are subject to change as
further information becomes available. BAC Merger-related 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 L: PROVISION FOR (BENEFIT FROM) INCOME TAXES
The provision for (benefit from) income taxes has been increased by $50
million for the six months ended June 30, 1994 and by $121 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. The related tax provision for the amortization of fair value
adjustments for the six months ended June 30, 1994 and for the year ended
December 31, 1993 has been included in the unaudited Pro Forma Combined
Statements of Operations.
NOTE M: 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 six months
ended June 30, 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 21,450,000 shares of BAC Common Stock at the Effective Time. In
addition, BAC repurchased approximately 11,780,000 shares of BAC Common Stock
for $500 million prior to June 30, 1994. The unaudited Pro Forma Combined
Balance Sheet assumes that these treasury shares will be issued to Continental
Common Stockholders. After consideration of treasury stock, the number of
shares of newly issued BAC Common Stock will be reduced to approximately
9,670,000 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 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
six months ended June 30,1994 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 August 11, 1994, and the consolidated financial statements,
including the accompanying notes, of BAC and Continental included in their
respective 1993 Form 10-Ks and second quarter 1994 Form 10-Qs and elsewhere in
BAC's report on Form 8-K dated August 11, 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 June 30, 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>
Six Months Ended June 30, 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) $ 676 $ 151 $ 820
Interest factor in rent expense 53 4 57
Other 2 - 2
--------- --------- ---------
$ 731 $ 155 $ 879
====== ====== ======
Earnings:
Income from operations $1,038 $ 140 $1,135
Applicable income taxes 754 9 813
Fixed charges 731 155 879
Other (35) - (35)
------- -------- -------
$2,488 $ 304 $2,792
====== ====== ======
Ratio of earnings to fixed charges,
excluding interest on deposits 3.40 1.96 3.18
INCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense $2,126 $ 345 $2,455
Interest factor in rent expense 53 4 57
Other 2 - 2
-------- -------- --------
$2,181 $ 349 $2,514
====== ====== ======
Earnings:
Income from operations $1,038 $ 140 $1,135
Applicable income taxes 754 9 813
Fixed charges 2,181 349 2,514
Other (35) - (35)
-------- -------- --------
$3,938 $ 498 $4,427
====== ====== ======
Ratio of earnings to fixed charges,
including interest on deposits 1.81 1.43 1.76
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>
Six Months Ended June 30, 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) $ 676 $ 151 $ 820
Interest factor in rent expense 53 4 57
Preferred dividend requirements(a) 209 17 237
Other 2 - 2
--------- -------- ---------
$ 940 $ 172 $1,116
====== ====== ======
Earnings:
Income from operations $1,038 $ 140 $1,135
Applicable income taxes 754 9 813
Fixed charges 731(b) 172(c) 879(b)
Other (35) - (35)
------- ------ ------
$2,488 $ 321 $2,792
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends, excluding
interest on deposits 2.65 1.87 2.50
INCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense $2,126 $ 345 $2,455
Interest factor in rent expense 53 4 57
Preferred dividend requirements(a) 209 17 237
Other 2 - 2
------- ------- -------
$2,390 $ 366 $2,751
====== ====== ======
Earnings:
Income from operations $1,038 $ 140 $1,135
Applicable income taxes 754 9 813
Fixed charges 2,181(b) 366(c) 2,514(b)
Other (35) - (35)
--------- ------- --------
$3,938 $ 515 $4,427
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends, including
interest on deposits 1.65 1.41 1.61
</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 $1,472
Interest factor in rent expense 112 7 119
Other 2 - 2
------ ------ ------
$1,329 $ 273 $1,593
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,108
Applicable income taxes 1,474 (18) 1,577
Fixed charges 1,329 273 1,593
Other (39) - (39)
------ ------ ------
$4,718 $ 513 $5,239
====== ====== ======
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 $4,797
Interest factor in rent expense 112 7 119
Other 2 - 2
------ ------ ------
$4,300 $ 664 $4,918
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,108
Applicable income taxes 1,474 (18) 1,577
Fixed charges 4,300 664 4,918
Other (39) - (39)
------ ------ ------
$7,689 $ 904 $8,564
====== ====== ======
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 $1,472
Interest factor in rent expense 112 7 119
Preferred dividend requirements(a) 423 34 481
Other 2 - 2
--------- -------- ---------
$1,752 $ 307 $2,074
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,108
Applicable income taxes 1,474 (18) 1,577
Fixed charges 1,329(b) 307(c) 1,593(b)
Other (39) - (39)
------- ------ ------
$4,718 $ 547 $5,239
====== ====== ======
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 $4,797
Interest factor in rent expense 112 7 119
Preferred dividend requirements(a) 423 34 481
Other 2 - 2
------- ------- -------
$4,723 $ 698 $5,399
====== ====== ======
Earnings:
Income from operations $1,954 $ 258 $2,108
Applicable income taxes 1,474 (18) 1,577
Fixed charges 4,300(b) 698(c) 4,918(b)
Other (39) - (39)
--------- ------- --------
$7,689 $ 938 $8,564
====== ====== ======
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 six months ended June 30, 1994 of
$121 million by BAC, $17 million by Continental, and $138 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
