<PAGE>
BANKAMERICA CORPORATION ANALYTICAL REVIEW AND FORM 10-Q
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
1995
1st Quarter
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 1-7377
Exact name of registrant as specified in its charter:
BankAmerica Corporation
State or other jurisdiction of incorporation or organization:
Delaware
I.R.S. Employer Identification Number:
94-1681731
Address of principal executive offices:
Bank of America Center
San Francisco, California 94104
Registrant's telephone number, including area code:
415-622-3530
Former name, former address, and former fiscal year,
if changed since last report:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $1.5625 par value ------ 369,542,712 shares outstanding on March
31, 1995.*
*In addition, 6,340,344 shares were held in treasury.
================================================================================
This document serves both as an analytical review for analysts, shareholders,
and other interested persons, and as the quarterly report on Form 10-Q of
BankAmerica Corporation to the Securities and Exchange Commission, which has
taken no action to approve or disapprove the report or to pass upon its
accuracy or adequacy. Additionally, this document is to be read in conjunction
with the consolidated financial statements and notes thereto included in
BankAmerica Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994.
<PAGE>
CONTENTS
<TABLE>
=============================================================================================
<S> <C> <C>
PART I Item 1.
FINANCIAL Financial Statements:
INFORMATION Consolidated Statement of Operations......................... 2
Consolidated Balance Sheet................................... 3
Consolidated Statement of Cash Flows......................... 4
Consolidated Statement of Changes in Stockholders' Equity.... 5
Notes to Consolidated Financial Statements................... 6
Item 2.
Management's Discussion and Analysis:
Highlights................................................... 14
Business Sectors............................................. 16
Results of Operations:
Net Interest Income........................................ 20
Noninterest Income......................................... 20
Noninterest Expense........................................ 22
Income Taxes............................................... 22
Balance Sheet Review......................................... 23
Credit Risk Management:
Loan Portfolio Management.................................. 24
Domestic Consumer Loans.................................. 25
Domestic Commercial Loans................................ 26
Foreign Loans............................................ 26
Emerging Market Exposure................................... 27
Allowance for Credit Losses................................ 29
Nonperforming Assets....................................... 31
Foreign Exchange and Derivatives Contracts................... 34
Interest Rate Risk Management................................ 35
Funding and Capital:
Liquidity Review........................................... 37
Capital Management......................................... 37
- ---------------------------------------------------------------------------------------------
PART II Item 6.
OTHER INFORMATION Exhibits and Reports on Form 8-K................................. 39
Signatures....................................................... 40
=============================================================================================
</TABLE>
1
<PAGE>
FINANCIAL STATEMENTS
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
====================================================================================================================================
1995 1994
------- ------------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $3,004 $2,796 $2,510 $2,294 $2,206
Interest-bearing deposits in banks 112 108 87 74 56
Federal funds sold 8 11 16 15 13
Securities purchased under resale agreements 135 106 84 89 72
Trading account assets 163 124 116 122 111
Available-for-sale and held-to-maturity securities 314 334 340 345 355
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 3,736 3,479 3,153 2,939 2,813
INTEREST EXPENSE
Deposits 1,114 1,019 868 753 697
Federal funds purchased 39 15 6 3 3
Securities sold under repurchase agreements 130 93 82 97 79
Other short-term borrowings 132 84 71 59 61
Long-term debt 264 245 211 185 169
Subordinated capital notes 11 11 11 10 10
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 1,690 1,467 1,249 1,107 1,019
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 2,046 2,012 1,904 1,832 1,794
PROVISION FOR CREDIT LOSSES 100 100 110 125 125
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 1,946 1,912 1,794 1,707 1,669
NONINTEREST INCOME
Deposit account fees 317 316 301 290 294
Credit card fees 75 90 86 85 82
Trust fees 78 83 69 66 67
Other fees and commissions 300 304 279 262 266
Net trading account related 46 11 57 36 16
Foreign exchange trading related 83 43 63 73 58
Net gain (loss) on available-for-sale securities 1 (1) (2) 7 20
Net gain on sales of assets 1 28 33 20 45
Venture capital activities 87 40 33 32 31
Other income 105 137 156 147 124
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 1,093 1,051 1,075 1,018 1,003
NONINTEREST EXPENSE
Salaries 809 785 741 700 710
Employee benefits 193 179 186 180 158
Occupancy 173 187 171 167 165
Equipment 159 160 145 138 146
Amortization of intangibles 109 107 100 99 105
Communications 86 86 79 80 78
Regulatory fees and related expenses 72 76 72 72 70
Professional services 69 60 54 53 58
Other expense 319 329 390 332 294
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 1,989 1,969 1,938 1,821 1,784
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 1,050 994 931 904 888
PROVISION FOR INCOME TAXES 439 403 384 379 375
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 611 $ 591 $ 547 $ 525 $ 513
- -------------------------------------------------------------------------------=====================================================
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ 1.46 $ 1.41 $ 1.36 $ 1.33 $ 1.27
EARNINGS PER COMMON SHARE -- ASSUMING FULL DILUTION $ 1.45 $ 1.40 $ 1.35 $ 1.32 $ 1.26
- ------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS DECLARED PER COMMON SHARE $ 0.46 $ 0.40 $ 0.40 $ 0.40 $ 0.40
====================================================================================================================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
====================================================================================================================================
1995 1994
------- ------------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 12,404 $ 13,578 $ 12,493 $ 10,137 $ 10,455
Interest-bearing deposits in banks 6,122 6,371 4,884 4,707 3,978
Federal funds sold 793 640 570 2,758 2,549
Securities purchased under resale agreements 5,969 5,259 4,474 4,933 5,995
Trading account assets 7,941 6,941 7,103 5,714 6,648
Available-for-sale securities 9,268 9,849 11,166 8,938 9,413
Held-to-maturity securities 7,335 8,167 8,700 11,734 11,979
Loans 144,159 140,912 138,691 124,874 123,544
Less: Allowance for credit losses 3,725 3,690 3,625 3,414 3,445
- ------------------------------------------------------------------------------------------------------------------------------------
Net loans 140,434 137,222 135,066 121,460 120,099
Customers' acceptance liability 1,977 1,069 833 935 801
Accrued interest receivable 1,371 1,449 1,221 1,097 1,030
Goodwill, net 4,323 4,296 4,394 3,886 3,931
Identifiable intangibles, net 2,176 2,149 2,213 2,078 2,133
Unrealized gains on off-balance-sheet instruments 11,577 6,267 7,783 8,650 7,441
Premises and equipment, net 3,973 3,955 3,935 3,705 3,664
Other assets 7,525 8,263 9,395 6,811 7,096
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $223,188 $215,475 $214,230 $197,543 $197,212
- -----------------------------------------------------------------------------=======================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits in domestic offices:
Interest-bearing $ 87,140 $ 90,374 $ 91,872 $ 86,568 $ 88,139
Noninterest-bearing 32,712 34,956 33,006 31,009 30,920
Deposits in foreign offices:
Interest-bearing 30,718 27,454 25,981 22,898 22,034
Noninterest-bearing 1,698 1,610 1,807 1,560 1,496
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits 152,268 154,394 152,666 142,035 142,589
Federal funds purchased 2,174 3,283 1,690 223 270
Securities sold under repurchase agreements 6,570 5,505 5,278 6,332 6,910
Other short-term borrowings 8,500 5,053 5,796 3,537 3,628
Acceptances outstanding 1,977 1,069 833 935 801
Accrued interest payable 739 831 719 550 529
Unrealized losses on off-balance-sheet instruments 11,848 6,571 8,007 8,727 7,129
Other liabilities 4,435 4,450 5,202 3,894 4,059
Long-term debt 14,846 14,823 14,504 13,611 13,828
Subordinated capital notes 605 605 605 606 606
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 203,962 196,584 195,300 180,450 180,349
STOCKHOLDERS' EQUITY
Preferred stock 3,068 3,068 3,368 2,979 2,979
Common stock 587 581 580 561 561
Additional paid-in capital 7,912 7,743 7,732 7,150 7,130
Retained earnings 8,230 7,854 7,480 7,131 6,807
Net unrealized loss on available-for-sale securities (275) (326) (201) (210) (252)
Common stock in treasury, at cost (296) (29) (29) (518) (362)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 19,226 18,891 18,930 17,093 16,863
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $223,188 $215,475 $214,230 $197,543 $197,212
- -----------------------------------------------------------------------------=======================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
====================================================================================================================================
THREE MONTHS ENDED MARCH 31
----------------------------
(IN MILLIONS) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 611 $ 513
Adjustments to net income to arrive at net cash provided by operating
activities:
Provision for credit losses 100 125
Net gain on sales of assets (1) (45)
Net amortization of loan fees and discounts (97) (26)
Depreciation and amortization of premises and equipment 130 120
Amortization of intangibles 109 105
Provision for (benefit from) deferred income taxes (18) 140
Change in assets and liabilities net of effects from acquisitions,
consolidations, divestitures, and pending dispositions:
(Increase) decrease in accrued interest receivable 78 (48)
Increase (decrease) in accrued interest payable (92) 24
Increase in trading account assets (1,002) (493)
Increase in current income taxes payable 473 243
Deferred fees received from lending activities 37 36
Other, net 49 (673)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 377 21
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Sales proceeds 1,107 599
Maturities, prepayments, and calls 1,297 1,424
Purchases (1,602) (1,673)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 937 767
Purchases (87) (646)
Proceeds from sales of loans 294 524
Purchases of loans (489) (130)
Purchases of premises and equipment (148) (159)
Proceeds from sales of other real estate owned 151 90
Net cash provided (used) by:
Loan originations and principal collections (2,908) (162)
Interest-bearing deposits in banks 249 (992)
Federal funds sold (153) (499)
Securities purchased under resale agreements (710) (2,446)
Proceeds from liquidations of assets identified for disposition 14 117
Other, net (34) 5
- ------------------------------------------------------------------------------------------------------------------------------------
Net Cash Used by Investing Activities (2,082) (3,181)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 1,033 873
Principal payments and retirements of long-term debt and subordinated capital notes (1,004) (898)
Proceeds from issuance of common stock 31 9
Treasury stock purchased (264) (347)
Common stock dividends (172) (143)
Preferred stock dividends (62) (60)
Net cash provided (used) by:
Deposits (2,127) 968
Federal funds purchased (1,109) 50
Securities sold under repurchase agreements 1,065 2,681
Other short-term borrowings 3,155 105
Other, net (27) (109)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 519 3,129
Effect of exchange rate changes on cash and due from banks 12 4
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and due from banks (1,174) (27)
Cash and due from banks at beginning of period 13,578 10,482
- ------------------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 12,404 $ 10,455
- ---------------------------------------------------------------------------------------------------------===========================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
========================================================================================================
1995 1994
------- -------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PREFERRED STOCK
Balance, beginning of quarter $ 3,068 $ 3,368 $ 2,979 $ 2,979 $ 2,979
Preferred stock issued - - 389 - -
Preferred stock repurchased - (300) - - -
- --------------------------------------------------------------------------------------------------------
Balance, end of quarter 3,068 3,068 3,368 2,979 2,979
COMMON STOCK
Balance, beginning of quarter 581 580 561 561 560
Common stock issued 6 1 19 - 1
- --------------------------------------------------------------------------------------------------------
Balance, end of quarter 587 581 580 561 561
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of quarter 7,743 7,732 7,150 7,130 7,118
Common stock issued 169 35 556 20 12
Preferred stock issued - - 26 - -
Preferred stock repurchased - (24) - - -
- --------------------------------------------------------------------------------------------------------
Balance, end of quarter 7,912 7,743 7,732 7,150 7,130
RETAINED EARNINGS
Balance, beginning of quarter 7,854 7,480 7,131 6,807 6,502
Net income 611 591 547 525 513
Common stock dividends (172) (149) (140) (139) (143)
Preferred stock dividends (62) (67) (60) (61) (60)
Foreign currency translation adjustments,
net of related income taxes (1) (1) 2 (1) (5)
- --------------------------------------------------------------------------------------------------------
Balance, end of quarter 8,230 7,854 7,480 7,131 6,807
NET UNREALIZED LOSS ON AVAILABLE-FOR-SALE SECURITIES
Balance, beginning of quarter (326) (201) (210) (252) -
Effect of adoption of SFAS No. 115, net of related
income taxes - - - - (15)
Valuation adjustments, net of related income taxes 51 (125) 9 42 (237)
- --------------------------------------------------------------------------------------------------------
Balance, end of quarter (275) (326) (201) (210) (252)
COMMON STOCK IN TREASURY, AT COST
Balance, beginning of quarter (29) (29) (518) (362) (15)
Treasury stock purchased (264) - - (156) (347)
Treasury stock issued - - 489 - -
Other (3) - - - -
- --------------------------------------------------------------------------------------------------------
Balance, end of quarter (296) (29) (29) (518) (362)
- --------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $19,226 $18,891 $18,930 $17,093 $16,863
- --------------------------------------------------------================================================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 1. The unaudited consolidated financial statements of
FINANCIAL STATEMENT BankAmerica Corporation and subsidiaries (BAC) are
PRESENTATION prepared in conformity with generally accepted accounting
principles for interim financial information, the
instructions to Form 10-Q, and Rule 10-01 of Regulation
S-X. In the opinion of management, all adjustments
necessary for a fair presentation of the financial
position and results of operations for the periods
presented have been included. All such adjustments are of
a normal recurring nature. These unaudited consolidated
financial statements should be read in conjunction with
the audited consolidated financial statements included in
BankAmerica Corporation's (the Parent) Annual Report on
Form 10-K for the year ended December 31, 1994.
The unaudited consolidated financial statements of BAC
include the accounts of the Parent and companies in which
more than 50 percent of the voting stock is owned
directly or indirectly by the Parent, including Bank of
America NT&SA (the Bank), Bank of America Illinois,
Seafirst Corporation, and other banking and nonbanking
subsidiaries. The revenues, expenses, assets, and
liabilities of the subsidiaries are included in the
respective line items in the unaudited consolidated
financial statements after elimination of intercompany
accounts and transactions.
Effective January 1, 1995, BAC adopted Statement of
Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended (SFAS No.
114). For information on the adoption of this Statement,
refer to Note 4 of the Notes to Consolidated Financial
Statements on pages 7 and 8.
BAC's results of operations and financial position
reflect the effects of the merger with Continental Bank
Corporation subsequent to its consummation on August 31,
1994.
Certain amounts in prior periods have been reclassified
to conform to the current presentation.
- --------------------------------------------------------------------------------
NOTE 2. During the three-month periods ended March 31, 1995 and
SUPPLEMENTAL 1994, BAC made interest payments on deposits and other
DISCLOSURE OF CASH interest-bearing liabilities of $1,782 million and $995
FLOW INFORMATION million, respectively, and made net income tax payments
of $11 million and received net income tax refunds of $11
million, respectively.
During the three-month periods ended March 31, 1995 and
1994, there were foreclosures of loans with carrying
values of $145 million and $147 million, respectively.
- --------------------------------------------------------------------------------
NOTE 3. During the three-month period ended March 31, 1995, BAC
AVAILABLE-FOR-SALE sold available-for-sale securities for aggregate proceeds
AND HELD-TO-MATURITY of $1,107 million, resulting in gross realized gains of
SECURITIES $15 million and gross realized losses of $14 million.
During the three-month period ended March 31, 1994, BAC
sold available-for-sale securities for aggregate proceeds
of $599 million, resulting in gross realized gains of $21
million and gross realized losses of $1 million.
At March 31, 1995 and 1994, nonaccrual debt-restructuring
par bonds and other instruments issued primarily by the
governments of Argentina, Brazil, Poland, and Ecuador
with aggregate face values of $780 million and $80
million, respectively, were included in available-for-
sale securities at their fair values of $367 million and
$56 million, respectively, which include net unrealized
gains of $118 million and $26 million, respectively.
6
<PAGE>
================================================================================
The fair values and amortized costs of available-for-sale
and held-to-maturity securities were as follows:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
SECURITIES SECURITIES
------------------- -------------------
FAIR AMORTIZED FAIR AMORTIZED
(IN MILLIONS) VALUE COST VALUE COST
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
MARCH 31, 1995 $ 9,268 $ 9,726 $ 6,552 $ 7,335
December 31, 1994 9,849 10,393 7,292 8,167
September 30, 1994 11,166 11,505 8,018 8,700
June 30, 1994 8,938 9,288 11,544 11,734
March 31, 1994 9,413 9,849 11,976 11,979
</TABLE>
During the three-month period ended March 31, 1995, net
trading account related income included a net unrealized
holding gain on trading securities of $1 million. During
the three-month period ended March 31, 1994, net trading
account related income included a net unrealized holding
loss on trading securities of $58 million. These results
exclude the net unrealized trading results of the
Parent's securities broker and dealer subsidiaries, which
are not subject to the requirements of Statement of
Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS
No. 115).
In connection with the adoption of SFAS No. 115,
effective January 1, 1994, $5.6 billion of held-to-
maturity securities with a fair value of $5.7 billion
were transferred to available-for-sale securities. In
addition, debt-restructuring par bonds and other
instruments were reclassified during the first quarter of
1994 from loans to available-for-sale and held-to-
maturity securities with carrying values of $1.2 billion
and $1.3 billion, respectively, and fair values of $1.0
billion each immediately prior to the transfer.
- --------------------------------------------------------------------------------
NOTE 4. Effective January 1, 1995, BAC adopted SFAS No. 114,
IMPAIRED LOANS which requires loans to be measured for impairment using
one of three methods when it is probable that all
amounts, including principal and interest, will not be
collected in accordance with the contractual terms of the
loan agreement. The amount of impairment and any
subsequent changes are recorded through the provision for
credit losses as an adjustment to the allowance for
credit losses. SFAS No. 114 applies to all loans, whether
collateralized or uncollateralized, except for large
groups of smaller-balance homogeneous loans that are
collectively evaluated for impairment, loans that are
measured at fair value or at the lower of cost or fair
value, leases, and debt securities. In addition, it
applies to all loans that are restructured in a troubled
debt restructuring involving a modification of terms.
However, such loans restructured prior to the effective
date of SFAS No. 114 that are performing in accordance
with their restructured terms are accounted for in
accordance with Statement of Financial Accounting
Standards No. 15, "Accounting by Debtors and Creditors
for Troubled Debt Restructurings."
As required by SFAS No. 114, BAC generally measures
impairment based upon the present value of the loan's
expected future cash flows, except where foreclosure or
liquidation is probable or when the primary source of
repayment is provided by real estate collateral. In these
circumstances, impairment is measured based upon the fair
value of the collateral. In addition, in certain rare
circumstances, impairment may be based on the loan's
observable market value.
Generally, BAC evaluates a loan for impairment in
accordance with SFAS No. 114 when it is placed on
nonaccrual status and a portion is internally risk rated
as substandard or doubtful. Adopting SFAS No. 114 did not
affect BAC's charge-off policy.
7
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
BAC's policy for recognizing interest income on impaired
loans is the same as the policy applied to nonaccrual
loans prior to the adoption of SFAS No. 114.
Substantially all of BAC's impaired loans at March 31,
1995 were on nonaccrual status.
The adoption of SFAS No. 114 did not have a material
effect on BAC's financial position or results of
operations.
The following is a summary of loans considered to be
impaired in accordance with SFAS No. 114 and the related
interest income:
<TABLE>
<CAPTION>
(IN MILLIONS) MARCH 31, 1995
---------------------------------------------------------------------------------------------------
<S> <C>
Recorded investment in impaired loans not requiring an allowance for credit losses
as determined in accordance with SFAS No. 114 $ 948/a/
Recorded investment in impaired loans requiring an allowance for credit losses
as determined in accordance with SFAS No. 114 572
---------------------------------------------------------------------------------------------------
Total recorded investment in impaired loans $1,520/b/
---------------------------------------------------------------------------------------------======
Average recorded investment in impaired loans for the three months ended 1,612
Interest income recognized for the three months ended 22
---------------------------------------------------------------------------------------------------
</TABLE>
/a/ These loans do not require an allowance for credit
losses measured in accordance with SFAS No. 114
since the values of the impaired loans equal or
exceed the recorded investments in the loans.
/b/ This amount was evaluated for impairment using the
three measurement methods as follows: $854 million
was evaluated using the present value of the loan's
expected future cash flows method, $664 million was
evaluated using the fair value of the collateral,
and $2 million was evaluated using the loan's
observable market price.
- --------------------------------------------------------------------------------
NOTE 5. ALLOWANCE The following is a summary of changes in BAC's total
FOR CREDIT LOSSES allowance for credit losses. This reconciliation reflects
activity related to all loans. The allowance for credit
losses on impaired loans as measured in accordance with
SFAS No. 114 was $212 million at March 31, 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(IN MILLIONS) MARCH 31, 1995
--------------------------------------------------------------
<S> <C>
Balance, beginning of period $3,690
Credit losses 212
Credit loss recoveries 135
--------------------------------------------------------------
Net credit losses 77
Provision for credit losses 100
Other net additions 12
--------------------------------------------------------------
Balance, End of Period $3,725
--------------------------------------------------------======
</TABLE>
- --------------------------------------------------------------------------------
NOTE 6. STOCK During the first quarter of 1995, BAC's Board of
REPURCHASE Directors authorized a stock repurchase program. This
PROGRAM program enables the Parent to buy back approximately $1.9
billion of its common stock and to buy back or redeem
approximately $500 million of its preferred stock by the
end of 1997. Under this program, the Parent may purchase
up to $800 million of its common stock by the end of
1996. During each quarter of 1995, 1996, and 1997, the
Parent may purchase additional amounts of common stock up
to the level of amortization of goodwill and core deposit
intangibles for that quarter. During the first quarter of
1995, the Parent repurchased 5.6 million shares of its
common stock in connection with this plan at an average
per-share price of $47.33, which reduced stockholders'
equity by $264 million.
8
<PAGE>
================================================================================
NOTE 7. The following is a summary of the components of income
INCOME TAXES tax expense:
<TABLE>
<CAPTION>
1995 1994
------- ----------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROVISION FOR INCOME TAXES
Federal $ 319 $ 310 $ 269 $ 278 $ 269
State and local 83 66 72 67 72
Foreign 37 27 43 34 34
-------------------------------------------------------------------------
$ 439 $ 403 $ 384 $ 379 $ 375
--------------------------------=========================================
</TABLE>
BAC's effective tax rates for the three-month periods
ended March 31, 1995 and 1994 were 41.8 percent and 42.2
percent, respectively. These rates are higher than the
federal statutory tax rate of 35.0 percent due
principally to state income taxes and the amortization of
non-deductible goodwill.
- --------------------------------------------------------------------------------
NOTE 8. Earnings per common share have been computed based on
EARNINGS PER the following:
COMMON SHARE
<TABLE>
<CAPTION>
1995 1994
------- -------------------------------------
(DOLLAR AMOUNTS IN MILLIONS, FIRST FOURTH THIRD SECOND FIRST
SHARE AMOUNTS IN THOUSANDS) QUARTER QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income applicable to
common stock $549 $524 $487 $464 $453
Average number of common
shares outstanding 371,764 370,698 355,012 347,791 355,749
Average number of common
and common equivalent
shares outstanding 375,084 373,922 357,962 349,721 357,569
Average number of common shares
outstanding -- assuming full dilution 381,141 379,402 363,442 355,201 363,049
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9. In the ordinary course of business, BAC enters into
OFF-BALANCE-SHEET various types of transactions involving credit-related
TRANSACTIONS financial instruments and foreign exchange and
derivatives contracts that contain off-balance-sheet
risk. Credit-related financial instruments are typically
customer-driven while foreign exchange and derivatives
contracts are entered into both on behalf of customers
and for BAC's own account for trading purposes and in
managing interest rate, foreign exchange, and commodity
risk.
CREDIT-RELATED FINANCIAL INSTRUMENTS
The following table is a summary of the contractual
amounts of each significant class of credit-related
financial instruments outstanding. These amounts
represent the amounts at risk should the contract be
fully drawn upon, the client default, and the value of
any existing collateral become worthless.
<TABLE>
<CAPTION>
1995 1994
--------- ----------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commitments to extend credit:
Unutilized credit card lines $30,026 $28,058 $26,141 $24,647 $24,110
Other commitments to extend credit/a/ 85,112 82,929 85,688 60,368 60,690
Standby letters of credit and financial
guarantees/b/ 15,202 15,870 15,669 12,550 11,640
Commercial letters of credit 3,977 4,213 4,228 4,238 3,438
--------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents agreements to extend credit to customers
for which BAC may have received fees. These
commitments have specified interest rates and
generally have fixed expiration dates and may be
terminated by BAC if certain conditions of the
contract are violated.
/b/ Net of participations sold of $2,301 million at March
31, 1995, $2,402 million at December 31, 1994, $2,483
million at September 30, 1994, $4,020 million at
June 30, 1994, and $4,032 million at March 31, 1994.
9
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
FOREIGN EXCHANGE AND DERIVATIVES CONTRACTS
The tables below summarize the notional, credit risk, and
credit exposure amounts for each significant class of
foreign exchange and derivative contract outstanding in
BAC's trading portfolio and the notional and credit risk
amounts for each significant class of foreign exchange
and derivative contract outstanding in BAC's asset and
liability management portfolio. These tables should be
read in conjunction with the descriptions of such
products and their risks included on pages 28, 30, 39-43,
and 71-80 of BAC's 1994 Annual Report to Shareholders.
<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
----------------------------------------------------------------------------------------------------------
MARCH 31, 1995 DECEMBER 31, 1994
------------------------------------ ------------------------------------
NOTIONAL CREDIT CREDIT NOTIONAL CREDIT CREDIT
(IN MILLIONS) AMOUNT RISK/a/ EXPOSURE/b/ AMOUNT RISK/a/ EXPOSURE/b/
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $ 396,151 $ 6,098 $ 2,054/c/ $ 348,515 $ 4,971 $1,960/c/
Futures and forward rate
contracts:
Commitments to purchase 135,436 54 51 95,010 192 192
Commitments to sell 160,061 173 173 116,408 35 35
Written options 50,637 -/d/ -/d/ 35,909 -/d/ -/d/
Purchased options 50,903 377 247 44,779 441 279
----------------------------------------------------------------------------------------------------------
793,188 6,702 2,525 640,621 5,639 2,466
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures
contracts 759,829 18,291 6,406 630,867 6,623 2,234
Written options 27,611 -/d/ -/d/ 19,617 -/d/ -/d/
Purchased options 25,581 684 531 18,861 267 208
Currency swaps 22,746 2,437 2,093 21,943 1,595 1,353
----------------------------------------------------------------------------------------------------------
835,767 21,412 9,030 691,288 8,485 3,795
Stock index options and
commodity contracts 428 22 22 825 9 6
----------------------------------------------------------------------------------------------------------
$1,629,383/e/ $28,136 $11,577 $1,332,734/f/ $14,133 $6,267
-----------------------------=============================================================================
</TABLE>
<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND LIABILITY MANAGEMENT PURPOSES
--------------------------------------------------------------------------------------------------------
MARCH 31, 1995 DECEMBER 31, 1994
----------------------- -------------------------
NOTIONAL CREDIT NOTIONAL CREDIT
(IN MILLIONS) AMOUNT RISK/A/ AMOUNT RISK/A/
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $32,043 $106 $32,864 $120
Futures and forward rate contracts 30,704 - 28,773 -
Purchased options 6,460 54 4,510 43
--------------------------------------------------------------------------------------------------------
69,207 160 66,147 163
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 1,491 - 1,383 -
Currency swaps 368 165 443 129
--------------------------------------------------------------------------------------------------------
1,859 165 1,826 129
--------------------------------------------------------------------------------------------------------
$71,066/e/ $325 $67,973/f/ $292
---------------------------------------------===========================================================
</TABLE>
/a/ Excluding the effects of legally enforceable master
netting agreements.
/b/ Including the effects of legally enforceable master
netting agreements.
/c/ Including the results of cross product netting of
certain interest rate derivatives and currency
swaps.
/d/ Interest rate and foreign exchange options written
have no credit risk or credit exposure.
/e/ Interest rate swaps and interest rate options in
both the trading and asset and liability management
portfolios include $9.5 billion and $0.7 billion,
respectively, of intercompany hedging-related
contracts. Foreign exchange contracts in both the
trading and asset and liability management
portfolios include $1.5 billion of intercompany
hedging-related contracts.
/f/ Interest rate swaps and interest rate options in
both the trading and asset and liability management
portfolios include $9.8 billion and $0.1 billion,
respectively, of intercompany hedging-related
contracts. Foreign exchange contracts in both the
trading and asset and liability management
portfolios include $1.5 billion of intercompany
hedging-related contracts.
Notional amounts represent the principal value on which
calculations of amounts to be exchanged are based, and do
not represent the potential for gain or loss associated
with such transactions. Credit risk amounts represent
BAC's gross replacement value on contracts in a gain
position if all counterparties failed to perform
according to the terms of the contract and the value of
any existing collateral became worthless, based on then-
current currency
10
<PAGE>
================================================================================
exchange and interest rates at each respective date.
Credit exposure represents BAC's net replacement values
after taking into consideration legally enforceable
master netting agreements.
The following tables summarize the average and period-end
fair values of each significant class of foreign exchange
and derivative contract outstanding in BAC's trading
portfolio and the period-end fair values for each
significant class of foreign exchange and derivative
contract in BAC's asset and liability management
portfolio. Fair value amounts were generally calculated
using discounted cash flow models based on current market
yields for similar instruments and the maturity of each
instrument. These amounts include the effects of master
netting agreements.
<TABLE>
<CAPTION>
FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
-------------------------------------------------------------------------------------------------------
MARCH 31, 1995 DECEMBER 31, 1994
------------------------------ ------------------------
AVERAGE AVERAGE
FAIR VALUE FAIR VALUE
PERIOD END FOR THE PERIOD END FOR THE
(IN MILLIONS) FAIR VALUE QUARTER ENDED/a/ FAIR VALUE YEAR ENDED/a/
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps:
Assets $ 2,054 $ 2,497 $ 1,960 $ 2,230
Liabilities (1,992) (2,325) (1,588) (1,659)
Futures and forward rate contracts:
Assets 224 206 227 149
Liabilities (212) (189) (189) (133)
Written options (218) (289) (299) (292)
Purchased options 247 290 279 283
-------------------------------------------------------------------------------------------------------
103 190 390 578
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts:
Assets 6,406 4,230 2,234 3,393
Liabilities (6,431) (4,481) (2,766) (3,744)
Written options (516) (324) (228) (238)
Purchased options 531 328 208 221
Currency swaps:
Assets 2,093 1,689 1,353 1,538
Liabilities (2,470) (1,937) (1,494) (1,729)
-------------------------------------------------------------------------------------------------------
(387) (495) (693) (559)
Stock index options and commodity contracts:
Assets 22 25 6 9
Liabilities (9) (23) (7) (9)
-------------------------------------------------------------------------------------------------------
13 2 (1) -
-------------------------------------------------------------------------------------------------------
$ (271) $ (303) $ (304) $ 19
--------------------------------------------===========================================================
</TABLE>
<TABLE>
<CAPTION>
FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND LIABILITY
MANAGEMENT PURPOSES
---------------------------------------------------------------------------------------------------------
(IN MILLIONS) MARCH 31, 1995 DECEMBER 31, 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $(557) $(693)
Futures and forward rate contracts 16 (42)
Purchased options 69 39
---------------------------------------------------------------------------------------------------------
(472) (696)
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts - -
Currency swaps 179 129
---------------------------------------------------------------------------------------------------------
179 129
---------------------------------------------------------------------------------------------------------
$(293) $(567)
----------------------------------------------------------------------------=============================
</TABLE>
/a/ Average fair value amounts are calculated based on
monthly balances.
11
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
TRADING ACTIVITIES
Trading-related income represents the net amount earned
from BAC's trading activities, which include entering
into transactions to meet customer demand and taking
positions for BAC's own account in a diverse range of
financial instruments and markets. The profitability of
these trading activities depends largely on the volume
and diversity of the transactions BAC executes, the level
of risk it is willing to assume, and the volatility of
price and rate movements. Trading-related income, as
disclosed in BAC's consolidated statement of operations,
does not include the net interest income derived from
foreign exchange contracts and derivatives associated
with trading activities. However, the trading-related net
interest income amounts are presented in the table below
as they should be considered in evaluating the overall
profitability of those activities.
<TABLE>
<CAPTION>
TRADING-RELATED INCOME AND NET INTEREST INCOME (EXPENSE) BY FUNCTION
------------------------------------------------------------------------------------------
1995 1994
------- -------------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRADING-RELATED INCOME
Interest rate $ 25 $ 14 $ 20 $ 15 $14
Foreign exchange 83 43 63 73 58
Debt instruments 21 (3) 37 21 2
------------------------------------------------------------------------------------------
$129 $ 54 $120 $109 $74
-------------------------------------=====================================================
NET INTEREST INCOME (EXPENSE)
Interest rate $ 3 $ (2) $ 2 $ (3) $ -
Foreign exchange 2 1 3 3 -
Debt instruments 28 21 25 23 16
------------------------------------------------------------------------------------------
$ 33 $ 20 $ 30 $ 23 $16
-------------------------------------=====================================================
</TABLE>
To reflect the business purpose and use of the financial
contracts into which BAC enters, trading income and the
related net interest revenue or expense associated with
such contracts have been allocated into three broad
functional categories: interest rate trading, foreign
exchange trading, and debt instruments trading. Trading
income from interest rate instruments primarily includes
income from interest rate and currency swaps and from
interest rate futures, option contracts, and forward rate
agreements as well as debt instruments used in the
management of this function. Foreign exchange trading-
related income primarily includes amounts generated from
foreign exchange spot, forward, futures, and option
contracts. Trading income from debt instruments primarily
includes amounts from debt securities.
ASSET AND LIABILITY MANAGEMENT ACTIVITIES
BAC uses foreign exchange contracts and derivative
instruments, primarily interest rate contracts, to manage
interest rate risk related to specific assets and
liabilities, including fixed rate and adjustable rate
residential mortgages, long-term debt, and deposits.
Foreign exchange contracts are used to hedge net capital
exposure and foreign currency exposures. For a detailed
description of BAC's asset and liability management
objectives and strategies used to achieve those
objectives refer to page 76 of BAC's 1994 Annual Report
to Shareholders.
The expected maturities and weighted average interest
rates associated with BAC's asset and liability
management interest rate swap portfolio at March 31, 1995
were not significantly different from those at year-end
1994.
12
<PAGE>
================================================================================
SECURITIES LENDING
BAC conducts securities lending transactions for certain
customers and, at times, indemnifies these customers
against various losses. All securities lending
transactions are collateralized by U.S. government or
federal agency securities, cash, or letters of credit
with total market value equal to or in excess of the
market value of the securities lent. In the event of
default of a customer combined with a decline in the
value of the associated collateral, BAC may be exposed to
risk of loss.
The following summarizes indemnified securities lending
transactions and the associated collateral:
<TABLE>
<CAPTION>
1995 1994
-------- -------------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Indemnified securities lent $ 6,350 $ 5,910 $ 6,241 $5,185 $6,691
Associated collateral 6,501 6,039 6,613 5,328 6,825
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
================================================================================
The following is a summary of first-quarter 1995
financial information for BankAmerica Corporation and
subsidiaries (BAC).
. BAC reported first-quarter 1995 earnings per share of
$1.46, an increase of 15 percent from $1.27 for the
same period a year ago. Net income for the first
quarter of 1995 was $611 million, up 19 percent from
$513 million for the first quarter of 1994.
. BAC's net interest margin for the first quarter of
1995 was 4.55 percent, up 10 basis points from the
same period a year ago.
. Noninterest income for the first quarter of 1995
increased $90 million from the amount reported in the
same period last year. Income from venture capital
activities for the first quarter of 1995 increased $56
million from the same period a year ago. In addition,
trading-related activities generated profits of $129
million in the first quarter of 1995, an increase of
$55 million from the comparable period a year ago.
. Noninterest expense for the first quarter of 1995
increased $20 million from the previous quarter
primarily due to an increase in personnel expense,
reflecting higher employee benefits and incentive
compensation.
. The return on average common equity was 13.86 percent
for the first quarter of 1995, an increase of 86 basis
points from the same period in 1994. In addition, the
return on average total assets increased 7 basis
points from a year ago to 1.14 percent for the first
quarter of 1995.
. Average loan outstandings increased $2.5 billion from
the previous quarter, reflecting growth in residential
first mortgages and both domestic and foreign
commercial and industrial loans.
. Credit quality in BAC's loan portfolio improved during
the first quarter of 1995. Total nonaccrual assets at
March 31, 1995 decreased $145 million, or 7 percent,
from their year-end 1994 level, resulting in a
nonperforming assets ratio (comprised of total
nonaccrual assets and other real estate owned/total
assets) of 1.12 percent at March 31, 1995.
. In connection with its previously announced stock
repurchase program, BankAmerica Corporation
repurchased 5.6 million shares of its common stock for
$264 million during the first quarter of 1995.
. BAC's Non-California banks, excluding Seafirst
Corporation and Bank of America Illinois, produced
first-quarter 1995 earnings of $34 million, compared
with $4 million in the same period a year earlier.
Note: The information contained in the Management's Discussion and Analysis
section reflects the effects of the merger with Continental Bank
Corporation (Continental) subsequent to its consummation on August 31,
1994.
14
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994
-------- ------------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS, FIRST FOURTH THIRD SECOND FIRST
EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Interest income $ 3,736 $ 3,479 $ 3,153 $ 2,939 $ 2,813
Interest expense 1,690 1,467 1,249 1,107 1,019
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income 2,046 2,012 1,904 1,832 1,794
Provision for credit losses 100 100 110 125 125
Noninterest income 1,093 1,051 1,075 1,018 1,003
Noninterest expense 1,989 1,969 1,938 1,821 1,784
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,050 994 931 904 888
Provision for income taxes 439 403 384 379 375
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 611 $ 591 $ 547 $ 525 $ 513
- -----------------------------------------------------------=====================================================================
PER SHARE DATA
Earnings per common and common equivalent share $ 1.46 $ 1.41 $ 1.36 1.33 $ 1.27
Earnings per common share -- assuming full dilution 1.45 1.40 1.35 1.32 1.26
Dividends declared per common share 0.46 0.40 0.40 0.40 0.40
- --------------------------------------------------------------------------------------------------------------------------------
STOCK DATA
Book value per common share at period end $ 43.72 $ 42.63 $ 42.02 $ 40.69 $ 39.67
Common stock price range:
High 49 5/8 46 1/4 49 5/8 50 1/4 48 7/8
Low 39 1/2 38 5/8 44 38 3/8 38 3/4
Closing common stock price 48 1/4 39 1/2 44 1/8 45 3/4 39 3/8
Average number of common and common
equivalent shares outstanding (in thousands) 375,084 373,922 357,962 349,721 357,569
Average number of common shares outstanding
-- assuming full dilution (in thousands) 381,141 379,402 363,442 355,201 363,049
Number of common shares outstanding at period
end (in thousands) 369,543 371,182 370,206 346,909 350,029
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL CONDITION AND CAPITAL AT PERIOD END
Loans $144,159 $140,912 $138,691 $124,874 $123,544
Total assets 223,188 215,475 214,230 197,543 197,212
Deposits 152,268 154,394 152,666 142,035 142,589
Long-term debt and subordinated capital notes 15,451 15,428 15,109 14,217 14,434
Common equity 16,158 15,823 15,562 14,114 13,884
Total equity 19,226 18,891 18,930 17,093 16,863
- --------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Rate of return (based on net income) on:
Average common equity 13.86% 13.24% 13.12% 13.32% 13.00%
Average total equity 12.95 12.35 12.17 12.41 12.17
Average total assets 1.14 1.09 1.07 1.08 1.07
Ratio of common equity to total assets 7.24 7.34 7.26 7.14 7.04
Ratio of total equity to total assets 8.61 8.77 8.83 8.65 8.55
Ratio of average total equity to average total assets 8.79 8.84 8.77 8.67 8.78
================================================================================================================================
</TABLE>
15
<PAGE>
BUSINESS SECTORS
================================================================================
<TABLE>
<CAPTION>
SELECTED BUSINESS SECTOR DATA
- ----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1995/a/
-------------------------------------------------------------------------------------------------
U.S.
CORPORATE AND MIDDLE PRIVATE BANKING NON-
CONSUMER INTERNATIONAL COMMERCIAL MARKET AND INVESTMENT CALIFORNIA
(DOLLAR AMOUNTS IN MILLIONS) TOTAL BANKING BANKING REAL ESTATE BANKING SERVICES BANKS/b/ OTHER
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 2,046 $ 1,110 $ 322 $ 111 $ 190 $ 40 $ 233 $ 40
Provision for credit losses 100 154 15 (77) 13 (1) (11) 7
Noninterest income 1,093 420 431 9 47 75 81 30
Noninterest expense 1,989 939 424 26 106 92 267 135
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income
taxes 1,050 437 314 171 118 24 58 (72)
Provision for (benefit from)
income taxes 439 189 133 72 50 10 24 (39)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 611 248 181 99 68 14 34 (33)
Preferred stock dividends 62 20 23 3 4 1 6 5
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (Loss) attributable
to common equity $ 549 $ 228 $ 158 $ 96 $ 64 $ 13 $ 28 $ (38)
- ---------------------------------=================================================================================================
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $141,050 $61,875 $37,458 $9,544 $14,279 $3,431 $13,833 $ 630
Earning assets 181,296 62,491 62,063 9,564 14,393 3,483 20,612 8,690
Total assets 217,744 68,497 80,376 9,297 16,450 3,953 23,716 15,455
Deposits 149,902 74,151 31,426 1,383 7,033 5,109 23,139 7,661
Common equity 16,070 5,196 5,840 906 917 338 1,484 1,389
SELECTED FINANCIAL RATIOS
Return on average common equity 13.9% 17.8% 11.0% 42.8% 28.5% 15.6% 7.6% (10.9)%
Expense to revenue/c/ 59.8 58.0 54.9 19.9 43.3 77.9 77.3 166.8
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BAC internally segregates its operations into business
sectors. However, since BAC's operations are highly
integrated, certain non-sector-specific income, expenses,
assets, and liabilities must be allocated to the
appropriate customer and market sectors. Domestic sources
of funds, overhead, and federal and state taxes are
allocated in this process. Furthermore, for internal
business sector monitoring, the unallocated allowance for
credit losses and related provision for credit losses are
allocated to the business sectors. Equity is assigned on
a risk-adjusted basis. The information set forth in the
table on pages 16 and 17 reflects the condensed income
statements and selected average balance sheet components
and financial ratios by business sectors. The information
presented does not represent the business sectors'
financial condition and results of operations as if they
were managed as independent entities.
Consumer Banking -- First-quarter 1995 net income for
Consumer Banking was up $92 million, or 59 percent, from
the amount for the same period last year. This increase
largely reflected improved results in BAC's retail
deposit business, as deposit spreads have widened and
certain service charges have increased. In addition, the
credit card, residential, and consumer lending businesses
have benefited from a lower provision for credit losses.
Average loan outstandings grew $5.1 billion, or 9
percent, from the first quarter of 1994, reflecting
increases in residential first mortgages, other consumer
loans, and credit card loans. Average deposits declined
$2.2 billion, reflecting decreases in all deposit
categories except time deposits.
16
<PAGE>
================================================================================
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1994/a/
--------------------------------------------------------------------------------------------------
U.S.
CORPORATE AND MIDDLE PRIVATE BANKING NON-
CONSUMER INTERNATIONAL COMMERCIAL MARKET AND INVESTMENT CALIFORNIA
(DOLLAR AMOUNTS IN MILLIONS) TOTAL BANKING BANKING REAL ESTATE BANKING SERVICES BANKS/b/ OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 1,794 $ 1,018 $ 241 $ 110 $ 128 $ 29 $ 204 $ 64
Provision for credit losses 125 236 (48) (80) 6 7 6 (2)
Noninterest income 1,003 397 356 17 39 76 81 37
Noninterest expense 1,784 900 320 50 91 76 272 75
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income
taxes 888 279 325 157 70 22 7 28
Provision for (benefit from)
income taxes 375 123 131 66 29 9 3 14
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 513 156 194 91 41 13 4 14
Preferred stock dividends 60 21 20 4 3 1 6 5
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (Loss) attributable
to common equity $ 453 $ 135 $ 174 $ 87 $ 38 $ 12 $ (2) $ 9
- ---------------------------------==================================================================================================
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $122,312 $56,733 $29,062 $10,082 $11,533 $2,571 $11,921 $ 410
Earning assets 162,514 57,448 48,126 10,082 11,561 2,636 20,961 11,700
Total assets 194,880 63,828 62,875 9,934 13,064 3,066 24,094 18,019
Deposits 140,638 76,393 23,109 2,111 6,664 4,828 23,974 3,559
Common equity 14,124 4,918 4,596 942 673 268 1,487 1,240
SELECTED FINANCIAL RATIOS
Return on average common equity 13.0% 11.2% 15.4% 37.4% 23.2% 17.5% (0.7)% 2.9%
Expense to revenue/c/ 59.3 59.9 52.5 37.9 52.7 71.0 85.7 42.2
===================================================================================================================================
</TABLE>
/a/ For comparability purposes, both 1995 and 1994 amounts reflect BAC's
business-sector allocation methodologies at March 31, 1995.
/b/ Excludes Seafirst and Bank of America Illinois, which are reflected within
the applicable business sectors.
/c/ Excludes net other real estate owned expense and amortization of
intangibles.
U.S. Corporate and International Banking -- U.S.
Corporate and International Banking's net income for the
quarter ended March 31, 1995 declined $13 million, or 7
percent, from that of the same period a year ago. This
decrease was partially due to an increase in the
provision for credit losses from ($48) million in the
first quarter of 1994 to $15 million in the first quarter
of 1995. Noninterest income increased $75 million in the
first quarter of 1995 compared to the first quarter of
1994, reflecting increases in trading-related income and
income from venture capital activities, partially offset
by lower gains from sales of certain assets and other
income. Noninterest expense increased $104 million due to
expanded operations from mergers and acquisitions, as
well as continued growth of global capital markets
operations. Higher levels of noninterest expense for the
first quarter of 1995 increased the expense to revenue
ratio to 54.9 percent for the first quarter of 1995 from
52.5 percent for the first quarter of 1994. Average loan
outstandings grew $8.4 billion, largely due to increases
in commercial and industrial and foreign loans,
reflecting the effects of mergers and acquisitions and
core portfolio growth.
17
<PAGE>
================================================================================
Commercial Real Estate -- Commercial Real Estate's net
income for the first quarter of 1995 increased $8
million, or 9 percent, from the amount for the first
quarter of 1994. This increase was primarily attributable
to higher gains on the sale of other real estate owned
(OREO) and lower operating costs associated with
dispositions of foreclosed assets. Noninterest income
declined primarily due to the sale of the sector's
remaining pool of assets pending disposition late in
1994, and reduced income from investments in acquisition,
development, and construction arrangements. Average loan
outstandings declined $0.5 billion from the first quarter
of 1994, reflecting bulk sales of problem assets and
lower volumes in the mortgage warehousing business due to
industry consolidation and a contraction in the mortgage
origination market.
Middle Market Banking -- Middle Market Banking's net
income for the first quarter of 1995 grew $27 million, or
66 percent, from the first quarter of 1994. This growth
primarily reflected an increase in net interest income,
resulting from the addition of Bank of America Illinois,
increased loan volumes, and improved deposit spreads.
Increases in noninterest revenue, noninterest expense,
and average loan outstandings were largely due to BAC's
expanded midwestern banking business.
Private Banking and Investment Services -- Net income for
Private Banking and Investment Services increased $1
million, or 8 percent, in the first quarter of 1995
compared to the same period a year ago. This increase
reflected higher net interest income, which was largely
attributable to Bank of America Illinois, and a decrease
in the provision for credit losses from $7 million for
the first quarter of 1994 to ($1) million for the first
quarter of 1995. Noninterest expense increased primarily
due to Bank of America Illinois' contribution.
Non-California Banks -- Non-California Banks, excluding
Seafirst Corporation and Bank of America Illinois,
produced first-quarter 1995 earnings of $34 million, up
$30 million from the same period a year earlier.
Substantially all of the non-California banks experienced
improved financial results, particularly Nevada, Texas,
Arizona, and Oregon. Net interest income increased due to
an improved mix of earning assets and deposits. The
provision for credit losses declined to ($11) million in
the first quarter of 1995 from $6 million in the first
quarter of 1994, primarily due to improved credit quality
for Oregon and Nevada. Average loan outstandings
increased $1.9 billion from the first quarter of 1994,
reflecting growth in nearly all loan categories.
Other -- Other amounts are primarily associated with
BAC's institutional trust and securities services, asset
and liability management activities, and various other
services.
18
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
====================================================================================================================================
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST QUARTER 1995 FIRST QUARTER 1994
----------------------------------- ---------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,647 $ 112 8.02% $ 3,727 $ 56 6.08%
Federal funds sold 546 8 5.95 1,628 13 3.32
Securities purchased under resale agreements 8,164 135 6.71 5,910 72 4.92
Trading account assets 8,379 164 7.99 7,379 111 6.10
Available-for-sale securities/c/ 9,597/d/ 171 7.18 9,832/d/ 146 5.98
Held-to-maturity securities/c/ 7,913 146 7.37 11,726 213 7.27
Domestic loans:
Consumer-residential first mortgages 34,308 568 6.62 30,854 443 5.75
Consumer-residential junior mortgages 13,642 287 8.54 12,886 254 7.99
Consumer-credit card 7,807 295 15.11 7,205 286 15.90
Other consumer 12,974 331 10.34 11,349 270 9.64
Commercial and industrial 29,228 630 8.75 20,185 303 6.10
Commercial loans secured by real estate 10,359 231 8.93 9,123 172 7.53
Construction and development loans
secured by real estate 3,528 95 10.88 4,275 71 6.75
Financial institutions 2,454 37 6.04 1,820 20 4.36
Agricultural 1,710 41 9.80 1,613 29 7.27
Lease financing 1,791 26 5.97 1,673 41 10.02
Loans for purchasing or carrying securities 1,396 24 7.05 2,480 25 4.06
Other 1,392 23 6.60 1,287 18 5.59
-------- ------ -------- ------
Total domestic loans 120,589 2,588 8.65 104,750 1,932 7.43
Foreign loans 20,461 418 8.29 17,562 276 6.38
-------- ------ -------- ------
Total loans/d/ 141,050 3,006 8.60 122,312 2,208 7.28
-------- ------ -------- ------
Total earning assets 181,296 $3,742 8.33 162,514 $2,819 6.99
====== ======
Nonearning assets 40,144 35,867
Less: Allowance for credit losses 3,696 3,501
-------- --------
TOTAL ASSETS $217,744 $194,880
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,493 $ 40 1.20% $ 13,803 $ 39 1.16%
Savings 13,793 70 2.07 14,266 72 2.03
Money market 30,356 213 2.85 33,673 196 2.37
Time 30,503 337 4.48 26,899 163 2.45
-------- ------ -------- ------
Total domestic interest-bearing deposits 88,145 660 3.04 88,641 470 2.15
Foreign interest-bearing deposits:
Banks located in foreign countries 7,935 139 7.09 5,280 75 5.77
Governments and official institutions 6,050 89 5.95 3,812 37 3.99
Time, savings, and other 13,616 226 6.74 10,442 115 4.47
-------- ------ -------- ------
Total foreign interest-bearing deposits 27,601 454 6.67 19,534 227 4.73
-------- ------ -------- ------
Total interest-bearing deposits 115,746 1,114 3.90 108,175 697 2.61
Federal funds purchased 2,459 39 6.43 362 3 2.99
Securities sold under repurchase agreements 8,592 130 6.14 6,280 79 5.13
Other short-term borrowings 7,719 132 6.93 3,703 61 6.67
Long-term debt 14,922 264 7.17 13,283 169 5.15
Subordinated capital notes 605 11 7.66 607 10 6.69
-------- ------ -------- ------
Total interest-bearing liabilities 150,043 $1,690 4.57 132,410 $1,019 3.12
====== ======
Domestic noninterest-bearing deposits 32,548 30,994
Foreign noninterest-bearing deposits 1,608 1,469
Other noninterest-bearing liabilities 14,407 12,904
-------- --------
Total liabilities 198,606 177,777
Stockholders' equity 19,138 17,103
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $217,744 $194,880
======== ========
Interest income as a percentage of average earning assets 8.33% 6.99%
Interest expense as a percentage of average earning assets (3.78) (2.54)
---- ----
NET INTEREST MARGIN 4.55% 4.45%
==== ====
====================================================================================================================================
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 35 percent.
/c/ Refer to the table on page 23 of the Balance Sheet Review section for more
detail on available-for-sale and held-to-maturity securities.
/d/ Average balances include nonaccrual assets.
<PAGE>
================================================================================
NET INTEREST Taxable-equivalent net interest income was $2,052 million
INCOME for the first quarter of 1995, up $252 million from the
amount reported for the first quarter of 1994. This
increase resulted from growth in average loans and from
an improvement in the net interest margin. Average loans
for the first quarter of 1995 were up 15 percent from the
first quarter of 1994, reflecting the effects of mergers
and acquisitions as well as core portfolio growth. BAC's
net interest margin was 4.55 percent for the quarter
ended March 31, 1995, up 10 basis points from the
comparable period in 1994.
BAC's net interest margin includes the results of hedging
with certain on- and off-balance-sheet financial
instruments. In the first quarter of 1995, BAC's net
interest income included approximately $20 million
attributable to hedging with derivative instruments,
compared with approximately $145 million in the
comparable period in 1994. These amounts accounted for
approximately 5 basis points and 35 basis points,
respectively, of the net interest margins for those
periods.
- --------------------------------------------------------------------------------
NONINTEREST Noninterest income for the first quarter of 1995
INCOME increased $90 million, or 9 percent, from the amount
reported in the same period last year.
Fees and commissions, the largest component of
noninterest income, increased $61 million from the amount
reported in the first quarter of 1994. This growth was
primarily attributable to increases in off-balance-sheet
credit-related instrument fees, retail deposit account
fees, personal and other trust fees, and loan fees and
charges. These increases were partially offset by a
decline in credit card membership fees. The growth in
off-balance-sheet credit-related instrument fees and
personal and other trust fees was primarily due to BAC's
expanded midwestern banking business. The increase in
retail deposit account fees was primarily due to
increased service charges on certain deposit accounts and
transactions. The growth in loan fees and charges was
largely attributable to an increase in loan servicing
fees due to expanded mortgage banking activities. Credit
card membership fees declined in the first quarter of
1995 largely due to fee waivers granted to various
customers in response to a competitive marketplace.
Trading income for the first quarter of 1995 increased
$55 million from the first quarter of 1994, largely due
to improved performance in debt securities trading
operations and increased volume on foreign exchange
products that resulted from strong global customer
demand. For more information on the functional components
of trading income, refer to Note 9 of the Notes to
Consolidated Financial Statements on pages 9-13.
Other noninterest income for the first quarter of 1995
decreased $26 million from the amount reported in the
same period last year primarily due to decreases in
income from assets pending disposition and net gain on
sales of assets. These decreases were partially offset by
an increase in income from venture capital activities,
which was attributable to higher realized gains and
partnership distributions.
20
<PAGE>
<TABLE>
<CAPTION>
====================================================================================
NONINTEREST INCOME
- ------------------------------------------------------------------------------------
FIRST QUARTER
---------------
(IN MILLIONS) 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C>
FEES AND COMMISSIONS
Deposit account fees:
Retail $ 216 $ 200
Commercial 101 94
Credit card fees:
Membership 15 23
Merchant 60 59
Trust fees:
Corporate and employee benefits 15 19
Personal and other 63 48
Other fees and commissions:
Loan fees and charges 82 72
Off-balance-sheet credit-related instrument fees 85 61
Mutual fund and annuity commissions 19 22
Other 114 111
- ------------------------------------------------------------------------------------
770 709
- ------------------------------------------------------------------------------------
TRADING INCOME
Net trading account related 46 16
Foreign exchange trading related 83 58
- ------------------------------------------------------------------------------------
129 74
- ------------------------------------------------------------------------------------
OTHER NONINTEREST INCOME
Income from assets pending disposition 11 61
Net gain on sales of assets/a/ 1 45
Venture capital activities 87 31
Net gain on available-for-sale securities 1 20
Other income 94 63
- ------------------------------------------------------------------------------------
194 220
- ------------------------------------------------------------------------------------
$1,093 $1,003
- ---------------------------------------------------------------------===============
</TABLE>
/a/ Net gain on sales of assets includes gains and losses from the disposition
of loans, premises and equipment, and certain other assets.
21
<PAGE>
===============================================================================
NONINTEREST Noninterest expense for the first quarter of 1995
EXPENSE increased $205 million from the amount reported in the
same period of 1994, primarily due to expanded operations
from mergers and acquisitions.
Personnel expense (salaries and employee benefits) for
the first quarter of 1995 was up $134 million from the
amount reported in the same period last year, partially
due to higher staff levels, as well as to increases in
incentive-based compensation and severance. BAC's staff
level on a full-time-equivalent (FTE) basis was
approximately 81,200 at March 31, 1995, up from
approximately 78,200 at March 31, 1994. FTE is a
measurement equal to one full-time employee working a
standard day. BAC had approximately 97,500 employees at
March 31, 1995, up from approximately 94,700 at this same
date a year earlier. These amounts include both full-time
and part-time employees.
Net OREO expense for the first quarter of 1995 decreased
$20 million from the amount reported in the comparable
period of 1994. This decrease was primarily attributable
to increased gains on sales of OREO and an increase in
OREO-related income.
================================================================================
NONINTEREST EXPENSE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIRST QUARTER
-------------------
(IN MILLIONS) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Salaries $ 809 $ 710
Employee benefits 193 158
Occupancy 173 165
Equipment 159 146
Amortization of intangibles 109 105
Communications 86 78
Regulatory fees and related expenses 72 70
Professional services 69 58
Net OREO expense 2 22
Other expense 317 272
- --------------------------------------------------------------------------------
$1,989 $1,784
- -------------------------------------------------------------===================
</TABLE>
INCOME The provision for income taxes was $439 million and $375
TAXES million for the quarters ended March 31, 1995 and 1994,
respectively, reflecting forecasted annual effective
income tax rates of 41.8 percent and 42.2 percent,
respectively.
For further information concerning BAC's provision for
federal, state and foreign income taxes for the most
recent five quarters, refer to Note 7 of the Notes to
Consolidated Financial Statements on page 9.
22
<PAGE>
BALANCE SHEET REVIEW
================================================================================
Earning assets totaled $181.6 billion at March 31, 1995,
up $3.5 billion from $178.1 billion at year-end 1994.
This increase was primarily attributable to growth in the
loan portfolio, which increased $3.2 billion between
year-end 1994 and March 31, 1995. Growth in earning
assets was primarily funded by an increase in other
short-term borrowings, which resulted from issuances of
term federal funds and commercial paper.
During the first quarter of 1995, interest-bearing
deposits in foreign offices increased $3.3 billion, while
domestic deposits decreased $5.5 billion. The increase in
interest-bearing foreign deposits was due to continued
expansion in global markets and a shift from domestic to
foreign funding sources.
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" (SFAS No.
121). SFAS No. 121 is effective for fiscal years
beginning after December 15, 1995, and is expected to be
adopted by BAC beginning in 1996. BAC does not expect
that, at adoption, SFAS No. 121 will have a material
effect on its financial position or results of
operations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES -- AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST QUARTER 1995 FIRST QUARTER 1994
------------------------------------------------- -------------------------------------------------
RATE RATE
RATE BASED ON RATE BASED ON
BASED ON AMORTIZED BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/ BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
SECURITIES
U.S. Treasury and other
government
agency securities $ 1,864 $ 32 6.84% 6.71% $ 3,547 $ 49 5.54% 5.67%
Mortgage-backed securities 5,186 89 6.89 6.68 4,255 58 5.41 5.47
Other domestic securities 552 7 5.41 5.78 323 3 4.15 4.51
Foreign securities 1,995/c/ 43 8.75 7.45 1,707/c/ 36 8.65 7.38
- ------------------------------------------------------------------------------------------------------------------------------------
$ 9,597 $ 171 7.18% 6.82% $ 9,832 $ 146 5.98% 5.89%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FIRST QUARTER 1995 FIRST QUARTER 1994
------------------------------------- ----------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other
government agency
securities $ 438 $ 7 6.83% $ 821 $ 13 6.37%
Mortgage-backed securities 4,697 84 7.12 8,142 147 7.23
State, county, and
municipal securities 449 9 8.14 501 10 7.98
Other domestic securities 188 4 7.20 252 5 7.75
Foreign securities 2,141 42 7.97 2,010 38 7.67
- ------------------------------------------------------------------------------------------------------------------------------------
$ 7,913 $ 146 7.37% $ 11,726 $ 213 7.27%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 35 percent.
/c/ Average balances include nonaccrual assets.
23
<PAGE>
CREDIT RISK MANAGEMENT
================================================================================
LOAN PORTFOLIO Total loans at March 31, 1995 were up $3.2 billion from
MANAGEMENT year-end 1994, resulting from continued growth in both
the domestic and foreign sectors.
<TABLE>
<CAPTION>
===========================================================================================================
LOAN OUTSTANDINGS
- -----------------------------------------------------------------------------------------------------------
1995 1994
-------- ---------------------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 34,791 $ 33,818 $ 33,033 $ 31,784 $ 30,993
Residential junior
mortgages 13,808 13,589 13,658 13,280 12,927
Other installment 10,989 10,598 9,921 9,439 9,343
Credit card 7,757 8,020 7,420 7,169 7,162
Other individual lines
of credit 1,691 1,736 1,747 1,806 1,874
Other 409 403 470 224 222
- -----------------------------------------------------------------------------------------------------------
69,445 68,164 66,249 63,702 62,521
Commercial:
Commercial and industrial 30,481 28,814 29,021 21,815 20,954
Loans secured by real
estate 10,504 10,277 9,823 9,131 9,050
Construction and
development loans
secured by real estate 3,526 3,616 3,929 3,742 3,991
Financial institutions 2,211 2,872 2,601 1,340 1,751
Agricultural 1,658 1,840 1,721 1,605 1,614
Lease financing 1,786 1,814 1,694 1,678 1,665
Loans for purchasing or
carrying securities 1,348 1,529 1,495 1,683 2,934
Other 1,639 1,623 1,642 1,465 1,332
- -----------------------------------------------------------------------------------------------------------
53,153 52,385 51,926 42,459 43,291
- -----------------------------------------------------------------------------------------------------------
122,598 120,549 118,175 106,161 105,812
FOREIGN
Commercial and industrial 14,417 13,496 13,331 12,388 11,748
Banks and other financial
institutions 2,871 2,516 2,629 2,206 1,955
Governments and official
institutions 866 896 1,220 862 787
Other 3,407 3,455 3,336 3,257 3,242
- -----------------------------------------------------------------------------------------------------------
21,561 20,363 20,516 18,713 17,732
- -----------------------------------------------------------------------------------------------------------
TOTAL LOANS 144,159 140,912 138,691 124,874 123,544
Less: Allowance for credit losses 3,725 3,690 3,625 3,414 3,445
- -----------------------------------------------------------------------------------------------------------
$140,434 $137,222 $135,066 $121,460 $120,099
- --------------------------------------------===============================================================
</TABLE>
24
<PAGE>
================================================================================
Domestic Consumer Loans -- The growth in domestic
consumer loans during the first quarter of 1995 included
increases in residential first mortgages and other
installment loans of $1.0 billion and $0.4 billion,
respectively. These increases were partially offset by a
$0.3 billion decline in credit card loan outstandings
between year-end 1994 and March 31, 1995. The increase in
residential first mortgages reflected BAC's continued
efforts in broadening its origination capabilities
geographically. First residential mortgages increased by
approximately $0.3 billion in the Northeast as a result
of the recent acquisition of Arbor National Holdings,
Inc. (Arbor). The remaining growth occurred in the
Midwest and Southwest regions. Residential first
mortgages in California at March 31, 1995 were
essentially unchanged from the amount reported at year-
end 1994. The increase in other installment loans was
largely due to an increase in manufactured housing loans
nationwide. For information regarding BAC's domestic
residential first mortgages by geographic area and
domestic consumer loan delinquencies, refer to the tables
below.
<TABLE>
<CAPTION>
============================================================================
DOMESTIC RESIDENTIAL FIRST MORTGAGES BY GEOGRAPHIC AREA
- ----------------------------------------------------------------------------
(IN MILLIONS) MARCH 31, 1995
- ----------------------------------------------------------------------------
<S> <C>
California 27,150/a/
Washington 1,459
Oregon 1,184
Hawaii 1,027
Arizona 983
Other/b/ 2,988
- ----------------------------------------------------------------------------
$ 34,791
- --------------------------------------------------------------------========
</TABLE>
/a/ Approximately 50 percent of domestic residential first mortgages in
California at March 31, 1995 were secured by properties in the following
Southern California counties: Los Angeles, Orange, Riverside,
San Bernardino, San Diego, and Ventura.
/b/ No other state individually exceeded 2 percent of total domestic
residential first mortgages.
<TABLE>
<CAPTION>
===============================================================================
DOMESTIC CONSUMER LOAN DELINQUENCY INFORMATION/a/
- -------------------------------------------------------------------------------
1995 1994
-------- ------------------------------------
(DOLLAR AMOUNT IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DELINQUENT CONSUMER LOANS
Residential first mortgages $595 $566 $563 $596 $ 672
Residential junior mortgages 95 92 85 85 99
Credit Card 166 153 149 153 168
Other 72 69 64 61 69
- -------------------------------------------------------------------------------
$928 $880 $861 $895 $1,008
- -------------------------------------==========================================
DELINQUENT CONSUMER LOAN RATIOS/b/
Residential first mortgages 1.71% 1.68% 1.71% 1.88% 2.17%
Residential junior mortgages 0.69 0.68 0.62 0.64 0.77
Credit Card 2.14 1.91 2.01 2.14 2.35
Other 0.56 0.54 0.53 0.53 0.59
- -------------------------------------------------------------------------------
1.34% 1.29% 1.30% 1.40% 1.61%
- -------------------------------------------------------------------------------
</TABLE>
/a/ 60 days or more past due.
/b/ Ratios represent delinquency balances expressed as a percentage of total
loans for that loan category.
25
<PAGE>
================================================================================
Domestic Commercial Loans -- Commercial and industrial
loans, the largest sector of BAC's domestic commercial
loan portfolio, grew $1.7 billion between December 31,
1994 and March 31, 1995. This increase was primarily due
to continued loan demand from large corporate borrowers.
Partially offsetting this growth was a decline in loans
to financial institutions of $0.7 billion during the
first quarter of 1995. This decline was a result of
principal paydowns and loan sales.
<TABLE>
<CAPTION>
===========================================================================================================
DOMESTIC COMMERCIAL LOANS SECURED BY REAL ESTATE BY GEOGRAPHIC AREA AND PROJECT TYPE AT MARCH 31, 1995
- -----------------------------------------------------------------------------------------------------------
MEDICAL &
LIGHT APARTMENT & DENTAL
(IN MILLIONS) RETAIL OFFICE INDUSTRY CONDOMINIUM HOTEL FACILITIES OTHER TOTAL
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $1,982 $ 743 $ 801 $ 540 $111 $ 20 $1,235 $ 5,432/a/
Washington 384 460 444 410 145 124 359 2,326
Nevada 168 108 57 98 112 16 163 722
Arizona 205 24 24 36 2 1 65 357
Oregon 84 42 62 98 33 6 31 356
Other/b/ 191 434 61 136 210 7 272 1,311
- -----------------------------------------------------------------------------------------------------------
$3,014 $1,811 $1,449 $1,318 $613 $174 $2,125 $10,504
- ------------------------===================================================================================
</TABLE>
/a/ Approximately 50 percent of domestic commercial loans secured by real
estate in California at March 31, 1995 were secured by properties in the
following Southern California counties: Los Angeles, Orange,
San Bernardino, San Diego, Riverside, and Ventura.
/b/ No other state individually exceeded 2 percent of total domestic
commercial loans secured by real estate.
<TABLE>
<CAPTION>
===================================================================================================
DOMESTIC CONSTRUCTION AND DEVELOPMENT LOANS BY GEOGRAPHIC AREA AND PROJECT TYPE AT MARCH 31, 1995
- ---------------------------------------------------------------------------------------------------
APARTMENT & LIGHT
(IN MILLIONS) OFFICE SUBDIVISION RETAIL CONDOMINIUM HOTEL INDUSTRY OTHER TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $ 500 $444 $249 $176 $126 $ 98 $123 $1,716/a/
Washington 144 200 102 66 27 19 59 617
Pennsylvania 203 - - - - - - 203
Texas - 36 49 40 - 1 7 133
Arizona 3 48 35 27 1 4 13 131
Georgia 15 14 56 14 - 14 - 113
Nevada 26 17 22 25 - 3 13 106
Illinois 38 32 26 - - - - 96
Massachusetts 48 - 30 - - - - 78
Florida - 6 51 17 - - - 74
Other/b/ 50 33 67 69 - 3 37 259
- ---------------------------------------------------------------------------------------------------
$1,027 $830 $687 $434 $154 $142 $252 $3,526
- -------------------------==========================================================================
</TABLE>
/a/ Approximately 65 percent of domestic construction and development loans
in California at March 31, 1995 were secured by properties in the following
Southern California counties: Los Angeles, Orange, San Bernardino,
San Diego, Riverside, and Ventura.
/b/ No other state individually exceeded 2 percent of total domestic
construction and development loans.
Foreign Loans -- Foreign loan outstandings increased $1.2
billion between December 31, 1994 and March 31, 1995.
This growth was primarily reflected in a $0.9 billion
increase in foreign commercial and industrial loans,
largely resulting from increased loan demand in Asia.
26
<PAGE>
================================================================================
EMERGING MARKET In connection with its effort to maintain a diversified
EXPOSURE portfolio, BAC attempts to limit its exposure to any one
country. BAC also strives to ensure that its exposure to
groups of borrowers that may be similarly affected by
events is limited. One such group is emerging market
countries, as shown in the table below. At March 31,
1995, BAC's emerging market exposure totaled $8,147
million, or 4 percent of total assets, and included
loans, restructured debt, non-restructured debt, and
other monetary assets.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING MARKET EXPOSURE
- ----------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 1995
--------------------------------------------------------------------------------------------------------------------
LOANS AVAILABLE-FOR-SALE SECURITIES/a/ HELD-TO-MATURITY SECURITIES/a/ OTHER/b/
-------------------- -------------------------------- ------------------------------ -------------------
MEDIUM-AND MEDIUM-AND
(IN MILLIONS) TOTAL/c/ SHORT-TERM LONG-TERM COLLATERALIZED UNCOLLATERALIZED COLLATERALIZED UNCOLLATERALIZED SHORT-TERM LONG-TERM
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mexico $2,777 $ 563 $ 572/d/ $221 $ 44 $ 856 $ - $ 462 $ 59
Brazil 963 452 10 102 186 - 36 156 21
India 788 281 - - - - - 507 -
Venezuela 661 47 15/d/ 186 7 373 11 3 19
Chile 456 228 126 - - - - 102 -
Greece 409 55 20 - - - - 334 -
Argentina 365 202 8 10 46 - - 84 15
Colombia 324 111 178 - - - 14 21 -
Indonesia 318 198 10 - - - - 110 -
China 244 49 16 - 22 - - 157 -
Pakistan 208 - - - - - - 208 -
Other/e/ 634 61 125 134 108 - - 195 11
- ----------------------------------------------------------------------------------------------------------------------------------
$8,147 $2,247/f/ $1,080/f/ $653/g/ $413/g/ $1,229/h/ $61/h/ $2,339 $125
- --------------====================================================================================================================
</TABLE>
/a/ Represents medium- and long-term exposure.
/b/ Includes the following assets, primarily in U.S. dollars, with borrowers or
customers in a foreign country: accrued interest receivable, acceptances,
interest-bearing deposits with other banks, trading account assets, other
interest-earning investments, and other monetary assets.
/c/ Excludes local currency outstandings that were funded by local currency
borrowings as follows: $25 million for Brazil, $19 million for Venezuela,
$213 million for India, $32 million for Argentina, $62 million for Chile,
$57 million for Indonesia, and $282 million for other emerging market
countries.
/d/ Mexico and Venezuela include $30 million and $3 million, respectively, of
loans that are collateralized by zero-coupon U.S. Treasury securities.
/e/ No other country individually exceeded 2 percent of total emerging market
exposure.
/f/ Total loans include nonaccrual loans of $87 million.
/g/ Total available-for-securities include $367 million of nonaccrual
debt-restructuring bonds.
/h/ The fair value of total held-to-maturity securities was approximately $640
million.
27
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
CROSS-BORDER OUTSTANDINGS EXCEEDING ONE PERCENT OF TOTAL ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
CROSS-BORDER
TOTAL OUTSTANDINGS
PUBLIC PRIVATE CROSS-BORDER AS A PERCENTAGE
(DOLLAR AMOUNTS IN MILLIONS)/abcd/ DATE REPORTED SECTOR/e/ BANKS/e/ SECTOR/e/ OUTSTANDINGS OF TOTAL ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan MARCH 31, 1995 $ 9 $1,667 $2,558 $4,234 1.90%
December 31, 1994 17 1,248 2,292 3,557 1.65
September 30, 1994 18 1,339 2,131 3,488 1.63
June 30, 1994 17 1,529 2,049 3,595 1.82
March 31, 1994 17 1,596 1,712 3,325 1.69
Spain MARCH 31, 1995 $ 70 $ 33 $1,750 $1,853 0.83%
December 31, 1994 57 108 1,817 1,982 0.92
September 30, 1994 108 196 1,784 2,088 0.97
June 30, 1994 61 110 3,026 3,197 1.62
March 31, 1994 117 85 3,045 3,247 1.65
Hong Kong MARCH 31, 1995 $ - $ 158 $1,208 $1,366 0.61%
December 31, 1994 - 185 1,202 1,387 0.64
September 30, 1994 5 192 1,488 1,685 0.79
June 30, 1994 - 101 2,328 2,429 1.23
March 31, 1994 - 106 2,202 2,308 1.17
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Cross-border outstandings include the following assets, primarily in U.S.
dollars, with borrowers or customers in a foreign country: loans, accrued
interest, acceptances, interest-bearing deposits with other banks, trading
account assets, available-for-sale securities, held-to-maturity securities,
other interest-earning investments, and other monetary assets. Local
currency outstandings that are neither hedged nor funded by local currency
borrowings are included in cross-border outstandings. Guarantees of
outstandings of borrowers of other countries are considered outstandings of
the guarantor. Loans made to, or deposits placed with, a branch of a foreign
bank located outside the foreign bank's home country are considered loans or
deposits with the country in which the foreign bank is headquartered.
Outstandings of a country do not include amounts of principal or interest
that are supported by written, legally enforceable guarantees by guarantors
from other countries or the amount of outstandings to the extent that they
are secured by tangible, liquid collateral held and realizable by BAC
outside the country.
/b/ At March 31, 1995, total unfunded commitments of the countries listed
above, whose unfunded commitments exceeded 10 percent of their respective
cross-border outstandings, were as follows: Japan, $1,364 million and Hong
Kong, $312 million.
/c/ Included in the cross-border outstandings of the countries listed are loans
and other interest-bearing assets on nonaccrual status at March 31, 1995,
December 31, 1994, September 30, 1994, June 30, 1994, and March 31, 1994,
respectively, as follows: $20 million, $18 million, $17 million, $17
million, and $16 million for Japan; $3 million, $3 million, $3 million, $6
million, and $6 million for Spain; and $1 million, $2 million, $4 million,
$6 million, and $6 million for Hong Kong. Also included in cross-border
outstandings are loans past due 90 days or more and still accruing interest
at June 30, 1994 of $1 million for Hong Kong.
/d/ Countries whose cross-border outstandings were between 0.75 percent and 1.00
percent of total assets were as follows: $2,138 million, $1,799 million,
$1,690 million, and $1,522 million for South Korea at March 31, 1995,
December 31, 1994, September 30, 1994, and June 30, 1994, respectively; and
$2,067 million, $1,816 million and $1,738 million for Italy at March 31,
1995, September 30, 1994 and June 30, 1994, respectively.
No other country excluded from this table had cross-border outstandings
between 0.75 percent and 1.00 percent of total assets for any of the periods
presented. However, not included in cross-border outstandings with Mexico
were par bonds issued by the government of Mexico with face values of $1,341
million at March 31, 1995, December 31, 1994, September 30, 1994, June 30,
1994, and March 31, 1994. The par bonds had a carrying value of $1,077
million at March 31, 1995, $1,109 million at December 31, 1994, $1,162
million at September 30, 1994, $1,153 million at June 30, 1994, and $1,178
million at March 31, 1994. At March 31, 1995, the par bonds had a total fair
value of approximately $665 million. In accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," certain of these par bonds were recorded in
available-for-sale securities and carried at their fair value of $221
million at March 31, 1995, while the remainder of these par bonds were
recorded in held-to-maturity securities at their amortized cost. Principal
repayment of these par bonds is collateralized by zero-coupon U.S. Treasury
securities that, at maturity in 2008 and 2019, will have a redemption value
equal to the face value of the par bonds. At March 31, 1995, this collateral
had a fair value of approximately $230 million. Future interest payments for
a rolling eighteen-month period are also collateralized by additional U.S.
dollar-denominated securities permitted by the agreement. The details of the
transaction in which the majority of these par bonds were acquired were
reported in the Parent's Annual Report on Form 10-K for the year ended
December 31, 1990. Mexico's cross-border outstandings also excluded
additional securities of $30 million at March 31, 1995, December 31, 1994
and September 30, 1994, and $45 million at June 30, 1994, and March 31,
1994, which are fully collateralized at maturity by separate zero-coupon
U.S. Treasury securities. Had these par bonds and other instruments been
included, total cross-border outstandings with Mexico would have exceeded
1.00 percent of total assets for all periods presented.
/e/ Sector definitions are based on Federal Financial Institutions
Examination Council Instructions for preparing the Country Exposure Report.
28
<PAGE>
================================================================================
ALLOWANCE The allowance for credit losses at March 31, 1995 was
FOR CREDIT LOSSES $3,725 million, or 2.58 percent of loan outstandings,
compared with $3,690 million, or 2.62 percent, at
December 31, 1994. Excluding outstandings in the
residential first mortgage portfolio and the portion of
the allowance associated with these outstandings, the
ratios were 3.32 percent and 3.36 percent of loans at
March 31, 1995 and December 31, 1994, respectively. In
addition, BAC's ratio of the allowance for credit losses
to total nonaccrual assets was 193 percent at March 31,
1995, up from 177 percent at December 31, 1994.
Management develops the allowance using a "building block
approach" for various portfolio segments. While
management has allocated reserves to various portfolio
segments, the allowance is general in nature and is
available for the loan portfolio in its entirety.
The allowance is established by credit officers for each
portfolio segment. Significant loans, particularly those
considered to be impaired in accordance with Statement of
Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended (SFAS No.
114), are individually analyzed, while other loans are
analyzed by portfolio segment. In establishing the
allowance for the portfolio segments, credit officers
initially employ results obtained from statistical models
using historical loan performance data.
<TABLE>
<CAPTION>
==============================================================================================================================
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES
- ------------------------------------------------------------------------------------------------------------------------------
1995 1994
-------- ------------------------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Special mention and classified:
Historical loss experience component $ 473 $ 516 $ 292 $ 311 $ 401
Credit management allocated component 410 428 626 579 653
- ------------------------------------------------------------------------------------------------------------------------------
Total special mention and classified 883 944 918 890 1,054
Other:
Domestic consumer 1,081 1,059 1,048 1,042 1,079
Domestic commercial 224 223 225 166 148
Foreign 324 270 189 149 144
- ------------------------------------------------------------------------------------------------------------------------------
Total allocated 2,512 2,496 2,380 2,247 2,425
Unallocated 1,213 1,194 1,245 1,167 1,020
- ------------------------------------------------------------------------------------------------------------------------------
$3,725 $3,690 $3,625 $3,414 $3,445
- ---------------------------------------------------------=====================================================================
</TABLE>
Net credit losses for the first quarter of 1995 decreased
$97 million, or 56 percent, from the amount reported in
the first quarter of 1994. Net credit losses in the
domestic consumer portfolio, the largest component of
BAC's net credit losses, decreased $26 million from the
first quarter of 1994. Net credit recoveries in the
foreign portfolio amounted to $52 million in the first
quarter of 1995, compared to net credit losses of $16
million in the same period a year ago. This improvement
was primarily due to recoveries in the first quarter of
1995 on loans to Brazil and Ecuador.
29
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
QUARTERLY CREDIT LOSS EXPERIENCE
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994
------- ---------------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(DOLLAR AMOUNTS IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
Balance, beginning of period $3,690 $3,625 $3,414 $3,445 $3,508
CREDIT LOSSES
Domestic consumer:
Residential first mortgages 14 15 14 13 7
Residential junior mortgages 17 20 18 24 26
Credit card 86 91 93 96 102
Other consumer 54 55 55 57 64
Domestic commercial:
Commercial and industrial 18 9 9 18 11
Loans secured by real estate 9 7 9 21 15
Construction and development
loans secured by real estate 11 9 42 12 23
Financial institutions - 1 - 1 -
Agricultural 2 6 - 1 1
Lease financing - 1 - - -
Foreign 1 2 7 9 24
- --------------------------------------------------------------------------------------------------------------------------------
Total credit losses 212 216 247 252 273
CREDIT LOSS RECOVERIES
Domestic consumer:
Residential first mortgages - 3 1 - -
Residential junior mortgages 4 4 4 6 4
Credit card 12 12 19 11 12
Other consumer 19 19 26 21 21
Domestic commercial:
Commercial and industrial 32 19 34 21 20
Loans secured by real estate 3 8 6 7 4
Construction and development loans secured
by real estate 8 18 22 18 24
Financial institutions - 10 2 2 2
Agricultural 2 2 2 2 2
Lease financing 2 2 1 1 2
Foreign 53 83 24 9 8
- --------------------------------------------------------------------------------------------------------------------------------
Total credit loss recoveries 135 180 141 98 99
- --------------------------------------------------------------------------------------------------------------------------------
Total net credit losses 77 36 106 154 174
Provision for credit losses 100 100 110 125 125
Allowance related to mergers and acquisitions/a/ 3 - 241 - -
Other net additions (deductions) 9 1 (34) (2) (14)
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $3,725 $3,690 $3,625 $3,414 $3,445
- -------------------------------------------------------------------=============================================================
ANNUALIZED RATIO OF NET CREDIT LOSSES (RECOVERIES)
TO AVERAGE LOAN OUTSTANDINGS
Domestic consumer:
Residential first mortgages 0.16% 0.15% 0.16% 0.16% 0.10%
Residential junior mortgages 0.38 0.46 0.41 0.56 0.70
Credit card 3.84 4.11 4.05 4.82 5.07
Other consumer 1.10 1.13 0.98 1.25 1.52
Domestic commercial:
Commercial and industrial (0.20) (0.14) (0.40) (0.05) (0.19)
Loans secured by real estate 0.24 (0.04) 0.11 0.63 0.50
Construction and development loans secured
by real estate 0.33 (0.86) 2.07 (0.62) (0.14)
Financial institutions - (1.22) (0.26) (0.37) (0.47)
Agricultural - 0.79 (0.37) (0.14) (0.33)
Lease financing (0.36) (0.25) (0.31) (0.32) (0.31)
Total domestic 0.43 0.39 0.44 0.59 0.61
Foreign (1.03) (1.62) (0.37) - 0.37
TOTAL 0.22 0.10 0.32 0.50 0.58
RATIO OF ALLOWANCE TO LOANS AT QUARTER END 2.58 2.62 2.61 2.73 2.79
EARNINGS COVERAGE OF NET CREDIT LOSSES/b/ 14.96x 31.00x 9.82x 6.66x 5.83x
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents the addition of consummation date allowances for credit losses of
Arbor in the first quarter of 1995, and Continental and Liberty Bank of $238
million and $3 million, respectively, in the third quarter of 1994.
/b/ Earnings coverage of net credit losses is calculated as income before income
taxes plus the provision for credit losses as a multiple of net credit
losses.
30
<PAGE>
===============================================================================
NONPERFORMING Total nonaccrual assets decreased $145 million, or 7
ASSETS percent, between year-end 1994 and March 31, 1995. This
decrease reflected improvements in most segments of the
credit portfolio, particularly in construction and
development loans secured by real estate, foreign loans,
and domestic commercial and industrial loans. These
improvements were primarily due to full or partial
payments on nonaccrual loans and the restoration of
nonaccrual loans to accrual status.
The improvement in BAC's credit quality during the first
quarter of 1995 was also reflected in BAC's nonperforming
assets ratios. At March 31, 1995, the ratio of nonaccrual
loans to total loans was 1.34 percent, down from 1.48
percent at December 31, 1994. In addition, the
nonperforming assets ratio (nonaccrual assets and
OREO/total assets) declined 10 basis points from year-end
1994 to 1.12 percent at March 31, 1995.
OREO was $559 million at March 31, 1995, essentially
unchanged from $555 million at December 31, 1994.
Effective January 1, 1995, BAC adopted SFAS No. 114. The
adoption of SFAS No. 114 did not have a material effect
on BAC's financial position or results of operations.
Impaired loans amounted to $1,520 million at March 31,
1995 and were comprised of all nonaccrual loans except
for domestic consumer nonaccrual loans and nonaccrual
loans to foreign governments and official institutions,
which were collectively valued for impairment, and
nonaccrual lease financing loans, which are specifically
excluded from the scope of SFAS No. 114. For more
information on the adoption of this Statement, refer to
Note 4 of the Notes to Consolidated Financial Statements
on pages 7 and 8.
For further information concerning nonaccrual assets,
refer to the tables on pages 32 and 33.
<TABLE>
<CAPTION>
==================================================================================================================================
ANALYSIS OF CHANGE IN NONACCRUAL ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
1995 1994
---------- -------------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of quarter $2,080 $2,084 $2,222 $2,498 $2,886
Additions:
Loans placed on nonaccrual status 175 362 200 269 227
Acquired in the Continental merger - - 245 - -
Deductions:
Sales (5) (9) (167) (4) (30)
Restored to accrual status (92) (107) (145) (169) (195)
Foreclosures (15) (32) (19) (32) (72)
Charge-offs (19) (19) (47) (37) (40)
Other, primarily payments (189) (199) (205) (303) (278)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF QUARTER $1,935 $2,080 $2,084 $2,222 $2,498
- ---------------------------------------------------------------------------=======================================================
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
NONACCRUAL ASSETS, RESTRUCTURED LOANS, AND LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
- ----------------------------------------------------------------------------------------------------------------------------------
1995 1994
---------- -------------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NONACCRUAL ASSETS
Domestic consumer loans:
Residential first mortgages $ 311 $ 319 $ 359 $ 383 $ 426
Residential junior mortgages 65 56 44 39 43
Other consumer 10 7 5 2 2
Domestic commercial loans:
Commercial and industrial 429 453 352 236 372
Loans secured by real estate 341 347 412 588 553
Construction and development loans secured
by real estate 549 647 672 724 819
Financial institutions 4 3 12 18 22
Agricultural 36 31 45 44 41
Lease financing 1 1 13 13 13
- ----------------------------------------------------------------------------------------------------------------------------------
1,746 1,864 1,914 2,047 2,291
Foreign loans:
Commercial and industrial 133 157 95 97 119
Banks and other financial institutions 19 22 10 8 9
Governments and official
institutions 28 24 17 17 16
Other 9 12 30 46 36
- ----------------------------------------------------------------------------------------------------------------------------------
189 215 152 168 180
Other interest-bearing assets - 1 18 7 27
- ----------------------------------------------------------------------------------------------------------------------------------
$1,935/a/ $2,080/a/ $2,084/a/ $2,222/a/ $2,498/a/
- ---------------------------------------------------------------------------=======================================================
RESTRUCTURED LOANS
Domestic commercial:
Commercial and industrial $ 73 $ 71 $ 79 $ 86 $ 86
Loans secured by real estate 13 15 11 13 12
Construction and development loans secured
by real estate 9 2 2 2 6
Agricultural 13 7 1 1 1
Lease financing - - 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
108 95 94 103 106
Foreign/b/ 1 2 36 36 36
- ----------------------------------------------------------------------------------------------------------------------------------
$ 109 $ 97 $ 130 $ 139 $ 142
- ---------------------------------------------------------------------------=======================================================
LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
Domestic consumer:
Residential first mortgages $ 142 $ 133 $ 91 $ 108 $ 121
Residential junior mortgages 10 23 21 23 26
Other consumer 137 136 126 129 143
Domestic commercial:
Commercial and industrial 15 25 76 19 3
Loans secured by real estate 20 54 70 122 64
Construction and development loans secured
by real estate 35 38 34 96 113
Financial institutions - 16 - - -
Agricultural - 8 - - 7
Lease financing - 1 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
359 434 418 497 477
Foreign 10 2 2 1 5
- ----------------------------------------------------------------------------------------------------------------------------------
$ 369 $ 436 $ 420 $ 498 $ 482
- ---------------------------------------------------------------------------=======================================================
</TABLE>
/a/ Excludes certain nonaccrual debt-restructuring par bonds and other
instruments that were included in available-for-sale and held-to-maturity
securities of $367 million at March 31, 1995, $441 million at December 31,
1994, $393 million at September 30, 1994, $367 million at June 30, 1994, and
$56 million at March 31, 1994. Also excludes certain other nonaccrual loans
and other instruments issued by various governments of $3 milion at March
31, 1995, $8 million at December 31, 1994, $44 million at September 30, 1994
and June 30, 1994, and $181 million at March 31, 1994 that were included in
other assets at the lower of cost or fair value.
/b/ Excludes debt restructurings with countries that have experienced liquidity
problems of $1.8 billion at March 31, 1995 and December 31, 1994, and $1.9
billion at September 30, 1994, June 30, 1994, and March 31, 1994. The
majority of these instruments were classified as either available-for-sale
or held-to-maturity securities.
32
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
INTEREST INCOME FOREGONE ON NONACCRUAL ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
(IN MILLIONS) MARCH 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
DOMESTIC
Interest income that would have been recognized had the assets
performed in accordance with their original terms $48
Less: Interest income included in the results of operations 24
- ----------------------------------------------------------------------------------------------------------------------------------
Domestic interest income foregone 24
FOREIGN
Interest income that would have been recognized had the assets
performed in accordance with their original terms 4
Less: Interest income included in the results of operations 2
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign interest income foregone 2
- ----------------------------------------------------------------------------------------------------------------------------------
$26
- -------------------------------------------------------------------------------------------------------------------------------===
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
CASH INTEREST PAYMENTS ON NONACCRUAL ASSETS BY LOAN TYPE/a/
- ------------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1995
--------------------------------------------------------------- ---------------------------------------
CASH INTEREST
CUMULATIVE BOOK AS A AVERAGE PAYMENTS APPLIED
CONTRACTUAL INTEREST NONACCRUAL PERCENTAGE NONACCRUAL ---------------------------
PRINCIPAL CUMULATIVE APPLIED BOOK OF BOOK AS INTEREST
(DOLLAR AMOUNT IN MILLIONS) BALANCE CHARGE-OFFS TO PRINCIPAL BALANCE CONTRACTUAL BALANCE INCOME OTHER/b/ TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 314 $ 2 $ 1 $ 311 99% $ 320 $ 2 $ - $ 2
Residential junior mortgages 69 3 1 65 94 59 1 - 1
Other consumer 23 11 2 10 43 7 - - -
Commercial:
Commercial and industrial 1,116 568 119 429 38 433 5 9 14
Loans secured by real estate 546 172 33 341 62 341 6 5 11
Construction and development
loans secured by real estate 976 372 55 549 56 618 9 5 14
Financial institutions 16 9 3 4 25 3 - - -
Agricultural 67 23 8 36 54 37 1 - 1
Lease financing 1 - - 1 100 1 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
3,128 1,160 222 1,746 56 1,819 24 19 43
FOREIGN
Commercial and industrial 262 107 22 133 51 148 1 2 3
Banks and other financial
institutions 43 18 6 19 44 21 - - -
Governments and official
institutions 41 13 - 28 68 25 1 - 1
Other 37 26 2 9 24 11 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
383 164 30 189 49 205 2 2 4
- ------------------------------------------------------------------------------------------------------------------------------------
$3,511 $1,324 $252 $1,935 55% $2,024 $26 $21 $47
- --------------------------------====================================================================================================
CASH YIELD ON AVERAGE TOTAL NONACCRUAL BOOK BALANCE 9.42%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes information related to all nonaccrual loans including those that
are fully charged off or otherwise have a book balance of zero.
/b/ Primarily represents cash interest payments applied to principal. Also
includes cash interest payments accounted for as credit loss recoveries,
which are recorded as increases to the allowance for credit losses.
33
<PAGE>
FOREIGN EXCHANGE AND DERIVATIVES CONTRACTS
================================================================================
BAC uses foreign exchange and derivatives contracts in
both its trading and its asset and liability management
activities. Foreign exchange and derivatives contracts
include futures, forwards, swaps, and options contracts,
all of which derive their value from underlying interest
rates, foreign exchange rates, commodity values, or
equity instruments. Certain foreign exchange and
derivatives transactions involve standardized contracts
executed on organized exchanges, while other transactions
are negotiated over-the-counter, with the terms tailored
to meet the needs of BAC and its clients. Counterparties
to BAC's foreign exchange and derivatives transactions
include U.S. and foreign banks, nonbank financial
institutions, corporations, governments, and asset
managers.
BAC earns trading revenue by executing transactions to
support customers' risk management needs and by making
markets in a wide variety of trading products. Using its
expertise and global presence, BAC executes foreign
exchange and derivatives transactions to aid its
customers in managing their risk exposures to interest
and exchange rates, prices of securities, and financial
or commodity indices.
BAC also acts as an end-user by employing foreign
exchange and derivatives contracts in connection with its
own asset and liability management through hedging
activities. More specifically, BAC primarily uses
interest rate derivatives instruments to manage the
interest rate risk associated with its assets and
liabilities, including residential loans, long-term debt,
and deposits.
Similar to on-balance-sheet financial instruments such as
loans and investment securities, off-balance-sheet
financial instruments are subject to various types of
risks. These risks include credit risk (the risk that a
loss may occur from the failure of a customer to perform
according to the terms of the contract), market risk (the
sensitivity of future earnings to price or rate changes),
liquidity risk (the risk of BAC being unable to meet its
funding requirements or execute a transaction at a
reasonable price), and operational risk (the risk that
inadequate internal controls, procedures, human error,
system failure, or fraud can result in unexpected
losses). For a detailed discussion of these risks and how
they are managed, refer to pages 28, 30, and 39-43 of
BAC's 1994 Annual Report to Shareholders.
For additional information concerning foreign exchange
and derivatives contracts, including their respective
notional, credit risk, credit exposure, and fair value
amounts, refer to Note 9 of the Notes to Consolidated
Financial Statements on pages 9-13.
34
<PAGE>
INTEREST RATE RISK MANAGEMENT
================================================================================
BAC's governing interest rate risk management objective
is to minimize the potential for significant loss. Risk
is measured in terms of potential impact on both its
economic value and reported earnings. Economic value
calculations measure changes in the present value of
future net cash flows from all assets and liabilities
until maturity. Those changes can result from interest
rate movements or from altered expectations of future
market conditions. BAC measures earnings variability by
estimating the potential effect of changes in interest
rates on projected net income over a three-year period.
BAC measures and manages interest rate risk by type of
risk. To minimize exposures to declines in economic value
due to gap risk, BAC's policy is that assets and
liabilities must have approximately equal total duration.
An internally developed methodology is used to translate
each rate maturity mismatch or gap into a one-year
position that would have the same estimated risk content.
For example, a six-month mismatch of $200 million is
treated as having approximately the same risk content as
a $100 million one-year mistmatch. As shown in the
following graph, BAC's net one-year position has been
essentially balanced throughout the last four years.
<TABLE>
<CAPTION>
Net Interest Rate Risk Position (plot point graph in non-EDGAR version)
(in billions of dollars) 12/31/91 12/31/92 12/31/93 12/31/94 3/31/95
<S> <C> <C> <C> <C> <C>
Net Interest Rate Risk Position $(8.1) $(6.9) $1.0 $(2.8) $(2.4)
</TABLE>
Graph indicates the composite long(+) or short(-)
position measured across the entire maturity mismatch
profile and expressed as a one-year mismatch position
bearing the same aggregate level of risk.
Gap mismatches result from timing differences in the
repricing or maturing of asset, liability, and off-
balance-sheet financial instruments. Expected interest
rate sensitivity of individual categories of U.S. dollar-
denominated assets and liabilities as of March 31, 1995
is shown in the table on page 36.
35
<PAGE>
================================================================================
U.S. DOLLAR DENOMINATED INTEREST RATE SENSITIVITY BY REPRICING OR MATURITY DATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, 1995
-------------------------------------------------------------------------
MORE THAN MORE THAN OVER
(DOLLAR AMOUNTS IN MILLIONS) 0-6 MONTHS 6-12 MONTHS 1-5 YEARS 5 YEARS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC ASSETS
Interest-bearing deposits in banks $ 72 $ - $ 1 $ - $ 73
Federal funds sold and securities
purchased under resale agreements 2,124 - - - 2,124
Trading account securities 1,764 - - - 1,764
Loans:
Prime indexed 17,346 - - - 17,346
Adjustable rate residential first mortgages 10,680 4,966 6,821 6,895 29,362
Other loans, net 37,089 4,683 14,429 8,761 64,942
Other assets 21,846 724 12,009 9,007 43,586
- -----------------------------------------------------------------------------------------------------------------------------
Domestic Assets 90,921 10,353 33,260 24,663 159,197
- -----------------------------------------------------------------------------------------------------------------------------
DOMESTIC LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic deposits (57,743) (15,055) (22,510) (18,945) (114,253)
Other short-term borrowings (7,603) (30) - - (7,633)
Long-term debt and subordinated capital notes (7,145) (305) (2,597) (5,290) (15,337)
Other liabilities and stockholders' equity (9,826) (512) (9,962) (14,529) (34,829)
- -----------------------------------------------------------------------------------------------------------------------------
Domestic Liabilities and Stockholders's Equity (82,317) (15,902) (35,069) (38,764) (172,052)
OFFSHORE FUNDING BOOKS, NET (2,497) 509 358 1,630 -
- -----------------------------------------------------------------------------------------------------------------------------
Core Gap Before Risk Management Positions 6,107 (5,040) (1,451) (12,471) (12,855)
- -----------------------------------------------------------------------------------------------------------------------------
INTEREST RATE RISK MANAGEMENT POSITIONS
- -----------------------------------------------------------------------------------------------------------------------------
Investment securities/a/ 1,655 1,011 4,778 5,411 12,855
Off-balance-sheet financial instruments/b/ (11,134) 6,422 (1,748) 6,460 -
- -----------------------------------------------------------------------------------------------------------------------------
Total Interest Rate Risk Management Positions (9,479) 7,433 3,030 11,871 12,855
- -----------------------------------------------------------------------------------------------------------------------------
Net Gap (3,372) 2,393 1,579 (600) -
- -----------------------------------------------------------------------------------------------------------------------------
Cumulative Gap $ (3,372) $ (979) $ 600 $ - $ -
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Available-for-sale and held-to-maturity securities.
/b/ Represents the repricing effect of off-balance-sheet positions, which
include interest rate swaps, futures contracts, and similar agreements.
At March 31, 1995, BAC had a "core" imbalance before risk
management positions, as liabilities and stockholders'
equity exceeded assets by $13 billion. BAC's risk
management activities eliminated this imbalance while
reducing gaps in individual repricing periods. Investment
securities and "receive fixed" swaps essentially
neutralized core gaps beyond one year.
36
<PAGE>
FUNDING AND CAPITAL
================================================================================
LIQUIDITY Liquid assets consist of cash and due from banks,
REVIEW interest-bearing deposits in banks, federal funds sold,
securities purchased under resale agreements, trading
account assets, and available-for-sale securities. At
March 31, 1995, liquid assets totaled $42.5 billion,
essentially unchanged from the amount reported at
year-end 1994.
- --------------------------------------------------------------------------------
CAPITAL At March 31, 1995, stockholders' equity totaled $19.2
MANAGEMENT billion, up from $18.9 billion at December 31, 1994. Of
this increase, $0.4 billion was due to first-quarter 1995
earnings net of preferred and common stock dividends. In
addition, common equity increased $0.2 billion primarily
due to 2.9 million shares issued in connection with the
acquisition of Arbor, which closed on February 1, 1995.
These increases were offset by the stock repurchase
discussed below.
In connection with its previously announced stock
repurchase program, BankAmerica Corporation repurchased
5.6 million shares of its common stock at an average per-
share price of $47.33 during the first quarter of 1995,
which reduced stockholders' equity by $264 million. These
shares were repurchased on the open market over 28 days
and represented approximately 13 percent of the total
volume of BAC common stock traded on those days. For
additional information regarding the stock repurchase
plan, refer to Note 6 of the Notes to Consolidated
Financial Statements on page 8.
37
<PAGE>
================================================================================
RISK-BASED CAPITAL, RISK WEIGHTED ASSETS, AND RISK-BASED CAPITAL RATIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
--------- ----------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS)/a/ MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RISK-BASED CAPITAL
Common stockholders' equity $ 16,433 $ 16,149 $ 15,763 $ 14,324 $ 14,136
Perpetual preferred stock 3,068 3,068 3,368 2,979 2,979
Less: Goodwill, nongrandfathered core deposit
and other identifiable intangibles, and other
deductions/b/ (5,550) (5,559) (5,701) (5,142) (5,178)
- --------------------------------------------------------------------------------------------------------------------------
TIER 1 CAPITAL 13,951 13,658 13,430 12,161 11,937
Eligible portion of the allowance for credit
losses 2,399 2,366 2,355 2,046 1,989
Hybrid capital instruments 336 336 337 478 562
Subordinated notes and
debentures 5,724 5,707 5,558 4,946 4,699
Less: Other deductions (145) (114) (104) (91) (47)
- --------------------------------------------------------------------------------------------------------------------------
TIER 2 CAPITAL 8,314 8,295 8,146 7,379 7,203
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-BASED CAPITAL $ 22,265 $ 21,953 $ 21,576 $ 19,540 $ 19,140
- --------------------------------------------------========================================================================
RISK WEIGHTED ASSETS $190,402 $ 187,810 $ 186,958 $162,216 $ 157,585
- --------------------------------------------------========================================================================
RISK-BASED CAPITAL RATIOS
Tier 1 capital 7.33% 7.27% 7.18% 7.50% 7.57%
Tier 2 capital 4.36 4.42 4.36 4.55 4.58
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-BASED CAPITAL RATIO 11.69% 11.69% 11.54% 12.05% 12.15%
- --------------------------------------------------========================================================================
TIER 1 LEVERAGE RATIO 6.84% 6.74% 6.59%/c/ 6.50% 6.31%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ The Federal Reserve has issued final capital regulations on the adoption
of Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which became effective April 1, 1995. All periods presented
reflect these new regulations.
/b/ Includes nongrandfathered CDI and other identifiable intangibles acquired
after February 19, 1992 of $915 million and $97 million, respectively, at
March 31, 1995, $937 million and $100 million, respectively, at December 31,
1994, $953 million and $110 million, respectively, at September 30, 1994,
$965 million and $63 million, respectively, at June 30, 1994, and $985
million and $67 million, respectively, at March 31, 1994. Also includes
$122 million, $111 million, $140 million, $138 million, and $148 million
at March 31, 1995, December 31, 1994, September 30, 1994, June 30, 1994,
and March 31, 1994, respectively, of the excess of the net book value over
90 percent of the fair value of purchased mortgage servicing rights and
credit card intangibles.
/c/ The leverage ratio is based on period-end total assets rather than average
total assets as this ratio is more indicative of future leverage ratios. The
ratio using Tier 1 capital based on average total assets was 6.96% at
September 30, 1994.
BAC's risk-based capital ratios continued to exceed the
regulatory guidelines for well-capitalized status by a
wide margin. BAC's total and Tier 1 risk-based capital
ratios increased 1 basis point and 6 basis points,
respectively, between December 31, 1994 and March 31,
1995. BAC's Tier 1 leverage ratio was 6.84 percent at
March 31, 1995, an increase of 10 basis points from
December 31, 1994.
38
<PAGE>
OTHER INFORMATION
===============================================================================
<TABLE>
<CAPTION>
ITEM 6. (a) Exhibits:
EXHIBITS AND
REPORTS ON EXHIBIT
FORM 8-K NUMBER EXHIBIT
------- -------
<S> <C>
10.a. 1992 Management Incentive Stock
Plan, Amendment of Section 1.3(r)
Thereto*
10.b. 1992 Management Incentive Stock
Plan, Provisions Adopting the
Performance Share Program*
27 Financial Data Schedule
</TABLE>
---------------------------------------------------------
*Management contract or compensatory plan, contract, or
arrangement.
(b) Reports on Form 8-K:
During the first quarter of 1995, the Parent filed
reports on Form 8-K dated January 6, 1995, January 18,
1995, January 23, 1995, and February 6, 1995. The January
6, 1995 report filed, pursuant to Items 5 and 7 of the
report, a copy of the joint press release from the Parent
and Arbor National Holdings, Inc. titled "Arbor National
Holdings/BankAmerica Merger--Regulatory Approvals." The
January 18, 1995 report filed, pursuant to Items 5 and 7
of the report, a copy of the Parent's press release
titled "BankAmerica Fourth Quarter Earnings." The January
23, 1995 report filed, pursuant to Items 5 and 7 of the
report, a tax opinion and related consent in connection
with offerings of the Parent's debt securities relating
to the shelf registration for such debt securities. The
February 6, 1995 report filed, pursuant to Items 5 and 7
of the report, a copy of the Parent's press release
titled "BankAmerica Board Increases Common Stock Dividend
and Approves Stock Repurchase Program." After the first
quarter of 1995, the Parent filed a report on Form 8-K
dated April 19, 1995. The April 19, 1995 report filed,
pursuant to Items 5 and 7 of the report, a copy of the
Parent's press release titled "BankAmerica First Quarter
Earnings."
39
<PAGE>
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
By Principal Financial Officer and
Duly Authorized Signatory:
/s/ Lewis W. Coleman
-----------------------------------
LEWIS W. COLEMAN
Vice Chairman of the Board and
Chief Financial Officer
May 11, 1995
By Principal Accounting Officer and
Duly Authorized Signatory:
/s/ James H. Williams
-----------------------------------
JAMES H. WILLIAMS
Executive Vice President and
Chief Accounting Officer
May 11, 1995
40
<PAGE>
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
BankAmerica Corporation
Other information about BankAmerica Corporation may be found in its Annual
Report to Shareholders. This report, as well as additional copies of this
Analytical Review and Form 10-Q, may be obtained from:
Corporate Public Relations #3124
Bank of America
P.O. Box 37000
San Francisco, CA 94137
[Recycled Recycled
Paper Logo Paper
Appears Here]
<PAGE>
GRAPHICS APPENDIX INDEX
<TABLE>
<CAPTION>
BankAmerica Corporation
First Quarter 1995 10-Q
page reference Description of omitted graphic
- ----------------------- ------------------------------
<S> <C>
35 Net Interest Rate Risk
Position
(Plot point graph in non-EDGAR
version)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
10.a. 1992 Management Incentive Stock Plan, Amendment of Section
1.3(r) Thereto*
10.b. 1992 Management Incentive Stock Plan, Provisions Adopting the
Performance Share Program*
27 Financial Data Schedule
-----------------------------------------------------------------------------
</TABLE>
*Management contract or compensatory plan, contract, or
arrangement.
<PAGE>
Exhibit 10.a.
-------------
AMENDMENT TO: BANKAMERICA CORPORATION 1992 MANAGEMENT
STOCK PLAN
1. Section 1.3 (r) of the BankAmerica Corporation 1992 Management Stock Plan is
amended (as adopted August 2, 1993) to read in its entirety as follows:
"(r) Retirement means, with respect to grants and awards
made on or after August 2, 1993, the last day of employment with
BankAmerica or one of its Subsidiaries prior to the employee's
retirement at normal retirement age under a retirement program of
BankAmerica or one of its Subsidiaries; and, with respect to
grants and awards made before August 2, 1993, the last day of
employment with BankAmerica or one of its Subsidiaries prior to
the employee's retirement under a retirement program of
BankAmerica or one of its Subsidiaries."
4051655
<PAGE>
Exhibit 10.b.
-------------
1992 MANAGEMENT INCENTIVE STOCK PLAN -
PROVISIONS ADOPTING THE PERFORMANCE SHARE PROGRAM
The BankAmerica Corporation 1992 Management Stock Plan provisions adopting
(as of November 7, 1994) the Performance Share Program follow:
BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
PERFORMANCE SHARE PROGRAM
ARTICLE I
---------
PURPOSE
-------
The purpose of the Performance Share Program is to enhance the long-term
corporate performance of BankAmerica Corporation and to align the interests of
key senior executives more closely with those of shareholders by providing stock
based incentive awards.
ARTICLE II
----------
DEFINITIONS
-----------
2.1 The following terms shall have the meanings set forth below, if
capitalized:
(a) "Award" means an award of Performance Share Units to an
executive.
(b) "Cash-Paid Stock Unit" means a contingent right to receive a
cash payment equal to the Fair Market Value, as defined in Section 1.3(i) of the
1992 MSP, of a share of BankAmerica Corporation common stock on the date the
unit vests.
(c) "Committee" means the Executive Personnel and Compensation
Committee of the Board of Directors of BankAmerica Corporation.
(d) "Company" means BankAmerica Corporation and any subsidiary of
which BankAmerica Corporation owns, directly or indirectly, 20 percent of the
voting stock.
(e) "Executive Officer" means an Executive Officer designated by
the BankAmerica Corporation Board of
-1-
<PAGE>
Directors for federal securities law purposes.
(f) "Participant" means an executive who has received an Award
under this Performance Share Program. Each Participant shall be notified in
writing of the number of Performance Share Units included in the Award and the
target prices for vesting of each installment of the Award. Each Participant
shall also be provided a copy of the Performance Share Program and 1992 MSP.
(g) A "Performance Share Unit" consists of (1) .6 of a share of
Restricted Stock, as defined in Section 1.3(p) of the 1992 MSP and (2) .4 of a
Cash-Paid Stock Unit. The number of Performance Share Units included in each
Award shall be divisible by 10 so that whole shares of Restricted Stock are
issued.
The Committee may in its discretion award Restricted Stock Units, as
described in Section 1.3(q) of the 1992 MSP, in lieu of Restricted Stock if the
Participant resides outside the United States or in other appropriate
circumstances.
(h) "1992 MSP" means the BankAmerica Corporation 1992 Management
Stock Plan, as amended.
ARTICLE III
-----------
DETERMINATION OF AWARDS
-----------------------
3.1 Each Executive Officer who is also a member of the Managing Committee
of Bank of America NT&SA shall be eligible to participate in the Performance
Share Program.
3.2 On November 7, 1994, the Committee shall award Performance Share Units
to each executive eligible to participate. In making the Awards, the Committee
shall take into account such factors as the Committee deems appropriate to
promote the purposes of this Performance Share Program, including, but not
limited to, the level of responsibility of each executive and the ability of
each executive to influence the results of BankAmerica Corporation.
3.3 After November 7, 1994, if an officer is promoted to become an
eligible executive or if an eligible executive commences employment with the
Company, the Committee may award Performance Share Units to the executive in its
discretion.
3.4 All Awards shall be for a term of 3 years from November 7, 1994 and
shall be subject to the restrictions described in Section 4.1.
-2-
<PAGE>
3.5 All dividends paid on BankAmerica Corporation common stock shall be
delivered directly to Participants for the Restricted Stock portion of their
Performance Share Units. Participants who have been awarded Restricted Stock
Units in lieu of Restricted Stock shall receive a payment for each unit equal to
the amount of any dividend paid on BankAmerica Corporation common stock.
Participants shall not receive a dividend equivalent payment for the Cash-Paid
Stock Unit portion of their Performance Share Units.
ARTICLE IV
----------
VESTING OF PERFORMANCE SHARE UNITS
----------------------------------
4.1 Awards shall vest as follows:
(a) The Award shall vest separately in three equal installments
provided the price of BankAmerica Corporation common stock attains the target
price for each installment. The target price for the vesting of each installment
shall be specified by the Committee and shall be equal to (1) the average
closing price on the New York Stock Exchange for the 10 trading days preceding
November 7, 1994, multiplied by (2) a factor representing a 15% compounded
annual increase in such price for one year for the first installment, for 2
years for the second installment and for 3 years for the third installment.
The target price for the vesting of an installment shall be attained only
if the closing price of BankAmerica Corporation common stock on the New York
Stock Exchange remains at or above the target price for at least 10 trading days
in a period of 20 consecutive trading days. The Performance Share Units shall
vest on the last day of the 20 consecutive trading day period.
(b) The Award shall also vest if BankAmerica Corporation ranks 1 or
2 in total shareholder return relative to its peer banks for the term for the
Award, unless within 90 days of the end of the term of the Award the Committee
determines in its discretion that all or part of the Award shall not vest.
Total Shareholder Return (TSR) for the term of the Award for BankAmerica
Corporation and each peer bank shall be determined under the following formula:
TSR = (Ending Stock Price less Starting Stock Price) plus Accrued Dividends
---------------------------------------------------------------------------
Starting Stock Price
For this formula, starting and ending stock price will
-3-
<PAGE>
reflect the average closing price on the New York Stock Exchange for each
trading day during the 10 trading days preceding the Award date and the last 10
trading days of the term of the Award, respectively.
There shall be 14 peer banks consisting of BankAmerica Corporation and the
13 other largest banks or bank holding companies, measured by the amount of
total assets, on the last day of the term of the Award. The 14 peer banks shall
be ranked in order of TSR.
4.2 The following shall apply if a Participant's employment with the
Company ends prior to the date any portion of an Award would otherwise vest:
(a) If a Participant's employment with the Company ends on account
of normal retirement, death or disability, his or her Performance Share Units
shall vest at time or times specified in Section 4.1 as if the Participant
remained in employment.
(b) If a Participant's employment with the Company ends (1)
voluntarily without the consent of BankAmerica Corporation or (2) involuntary
for cause for performance deficiencies, misconduct, dishonesty, negligence or
any other violation of the standards of conduct of the Participant's employment
with the Company, the Performance Share Units awarded to the Participant shall
be immediately forfeited.
(c) If a Participant's employment with the Company ends for any
other reason, the Performance Share Units awarded to the Participant shall be
forfeited unless, within 90 days of such termination of employment, the
Committee determines in its discretion to permit the Participant to retain all
or some of the Performance Share Units. In that event, any Performance Share
Units retained by the Participant shall vest at the time or times specified in
Section 4.1 as if the Participant had remained in employment.
4.3 Performance Share Units which vest shall be delivered and paid to the
Participant as soon as practical after the Committee has certified that the
performance goals have been satisfied. Performance Share Units which do not vest
shall be returned to BankAmerica Corporation.
4.4 Each Participant may designate one or more beneficiaries to receive
any portion of the Participant's Performance Share Units which vest after the
Participant's death by filing a beneficiary designation with the
-4-
<PAGE>
Committee. The beneficiary designation shall be on the form specified by the
Committee and the designation may be changed from time to time by the
Participant. Only one beneficiary designation shall be in effect at any given
time with respect to all Performance Share Units awarded to a Participant.
ARTICLE V
---------
OTHER PROVISIONS
----------------
5.1 This Performance Share Program is governed by and subject to all the
terms and conditions of the 1992 MSP. In case of any inconsistencies between the
provisions of this Performance Share Program and the 1992 MSP, the 1992 MSP
shall prevail. No modification, amendment, suspension or termination of the 1992
MSP shall have a material adverse affect on a Participant's rights to an Award,
except with his or her written consent.
5.2 A Participant may elect to defer the payment of all or part of the
Cash-Paid Stock Unit portion of an Award by filing an irrevocable written
election in the form specified by the Committee with the Committee within 30
days of the date of the Award. The deferral election shall not apply to any
installment of an Award which vests within 30 days of such election. The
deferred payment shall be treated as an Annual Incentive Award for purposes of
the BankAmerica Corporation Deferred Compensation Plan and subject to the
provisions of that plan as in effect from time to time.
[\BAC92STK.PL]
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS FINANCIAL DATA SCHEDULE ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995
CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE
SHEET, CONSOLIDATED STATEMENT OF OPERATIONS, AVERAGE BALANCES, INTEREST AND
AVERAGE RATES, NONPERFORMING ASSETS, QUARTERLY CREDIT LOSS EXPERIENCE, AND
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q FILING.
Any item provided in the schedule, in accordance with the rules governing the
schedule, will not be subject to liability under federal securities laws, except
to the extent that the financial statements and other information from which the
data were extracted violate the federal securities laws. Also, pursuant to
Item 601(c)(1)(iv) of Regulation S-K promulgated by the Securities and Exchange
Commission (SEC), the schedule shall not be deemed filed for purposes of Section
11 of the Securities Act of 1933, Section 18 of the Exchange Act of 1934 and
Section 323 of the Trust Indenture Act, or otherwise be subject to the
liabilities of such sections, nor shall it be deemed a part of any registration
statement to which it relates.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 12,404
<INT-BEARING-DEPOSITS> 6,122
<FED-FUNDS-SOLD> 6,762
<TRADING-ASSETS> 7,941
<INVESTMENTS-HELD-FOR-SALE> 9,268
<INVESTMENTS-CARRYING> 7,335
<INVESTMENTS-MARKET> 6,552
<LOANS> 144,159
<ALLOWANCE> 3,725
<TOTAL-ASSETS> 223,188
<DEPOSITS> 152,268
<SHORT-TERM> 17,244
<LIABILITIES-OTHER> 18,999
<LONG-TERM> 15,451<F1>
<COMMON> 587
0
3,068
<OTHER-SE> 15,571
<TOTAL-LIABILITIES-AND-EQUITY> 223,188
<INTEREST-LOAN> 3,004
<INTEREST-INVEST> 314
<INTEREST-OTHER> 418<F2>
<INTEREST-TOTAL> 3,736
<INTEREST-DEPOSIT> 1,114
<INTEREST-EXPENSE> 1,690
<INTEREST-INCOME-NET> 2,046
<LOAN-LOSSES> 100
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 1,989
<INCOME-PRETAX> 1,050
<INCOME-PRE-EXTRAORDINARY> 1,050
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 611
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.45
<YIELD-ACTUAL> 4.55
<LOANS-NON> 1,935
<LOANS-PAST> 369
<LOANS-TROUBLED> 109
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,690
<CHARGE-OFFS> 212
<RECOVERIES> 135
<ALLOWANCE-CLOSE> 3,725
<ALLOWANCE-DOMESTIC> 0<F3>
<ALLOWANCE-FOREIGN> 0<F3>
<ALLOWANCE-UNALLOCATED> 1,213
<FN>
<F1>Includes subordinated capital notes of $605 million.
<F2>Includes interest income on trading account assets of $163 million.
<F3>These amounts are not reported in our interim filing.
</FN>
</TABLE>
