<PAGE>
BANKAMERICA CORPORATION ANALYTICAL REVIEW AND FORM 10-Q
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
1996
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, 1996
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 ------ 364,081,553 shares outstanding on
March 31, 1996./*/
/*/In addition, 22,209,930 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, 1995.
<PAGE>
CONTENTS
================================================================================
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.................................. 19
Noninterest Income................................... 21
Noninterest Expense.................................. 22
Income Taxes......................................... 23
Balance Sheet Review................................... 24
Credit Risk Management:
Loan Portfolio Management............................ 25
Domestic Consumer Loans............................ 26
Domestic Commercial Loans.......................... 27
Foreign Loans...................................... 28
Emerging Market Exposure............................. 28
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
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1
<PAGE>
FINANCIAL STATEMENTS
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
==================================================================================================================
1996 1995
------- ----------------------------------------
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 $3,297 $3,287 $3,244 $3,172 $3,004
Interest-bearing deposits in banks 117 119 115 120 112
Federal funds sold 6 5 10 9 8
Securities purchased under resale agreements 155 147 160 176 135
Trading account assets 216 200 189 189 163
Available-for-sale and held-to-maturity securities 298 313 326 323 314
- ------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 4,089 4,071 4,044 3,989 3,736
INTEREST EXPENSE
Deposits 1,314 1,307 1,262 1,240 1,114
Federal funds purchased 22 35 27 30 39
Securities sold under repurchase agreements 163 147 154 150 130
Other short-term borrowings 178 168 162 168 132
Long-term debt 254 265 272 266 264
Subordinated capital notes 12 12 11 12 11
- ------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 1,943 1,934 1,888 1,866 1,690
- ------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 2,146 2,137 2,156 2,123 2,046
PROVISION FOR CREDIT LOSSES 180 130 110 100 100
- ------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 1,966 2,007 2,046 2,023 1,946
NONINTEREST INCOME
Deposit account fees 344 334 329 323 317
Credit card fees 79 84 82 74 75
Trust fees 63 72 72 78 78
Other fees and commissions 320 304 323 342 300
Trading income 165 115 132 151 129
Venture capital activities 110 93 54 103 87
Net gain on sales of assets 49 29 27 14 1
Net gain on available-for-sale securities 30 7 17 9 1
Other income 114 120 121 44 105
- ------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 1,274 1,158 1,157 1,138 1,093
NONINTEREST EXPENSE
Salaries 821 819 839 842 809
Employee benefits 202 147 195 183 193
Occupancy 190 198 185 182 173
Equipment 163 169 170 165 159
Amortization of intangibles 95 99 110 110 109
Communications 92 93 89 91 86
Regulatory fees and related expenses 13 23 7 74 72
Other expense 437 418 398 406 388
- ------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 2,013 1,966 1,993 2,053 1,989
- ------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 1,227 1,199 1,210 1,108 1,050
PROVISION FOR INCOME TAXES 507 495 506 463 439
- ------------------------------------------------------------------------------------------------------------------
NET INCOME $ 720 $ 704 $ 704 $ 645 $ 611
- ----------------------------------------------------------------==================================================
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ 1.79 $ 1.74 $ 1.72 $ 1.56 $ 1.46
EARNINGS PER COMMON SHARE--ASSUMING FULL DILUTION 1.79 1.74 1.72 1.55 1.45
DIVIDENDS DECLARED PER COMMON SHARE 0.54 0.46 0.46 0.46 0.46
==================================================================================================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
===================================================================================================================
1996 1995
-------- -----------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 12,870 $ 14,312 $ 12,532 $ 12,656 $ 12,404
Interest-bearing deposits in banks 5,585 5,761 5,832 5,620 6,122
Federal funds sold 143 721 229 467 793
Securities purchased under resale agreements 6,198 4,962 6,811 6,131 5,969
Trading account assets 11,215 9,516 9,883 8,133 7,941
Available-for-sale securities 11,287 12,043 9,979 9,868 9,268
Held-to-maturity securities 4,523 4,656 6,927 7,186 7,335
Loans 156,155 155,373 151,212 148,766 144,159
Less: Allowance for credit losses 3,496 3,554 3,655 3,695 3,725
- -------------------------------------------------------------------------------------------------------------------
Net loans 152,659 151,819 147,557 145,071 140,434
Customers' acceptance liability 2,761 2,295 2,268 2,076 1,977
Accrued interest receivable 1,469 1,458 1,448 1,335 1,371
Goodwill, net 4,115 4,192 4,263 4,303 4,323
Identifiable intangibles, net 1,753 1,806 2,134 2,172 2,176
Unrealized gains on off-balance-sheet instruments 7,551 7,801 8,843 9,323 11,577
Premises and equipment, net 4,010 3,985 4,011 4,009 3,973
Other assets 8,104 7,119 7,209 8,249 7,525
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $234,243 $232,446 $229,926 $226,599 $223,188
- ---------------------------------------------------------------====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits in domestic offices:
Interest-bearing $ 84,314 $ 84,097 $ 84,345 $ 85,573 $ 87,140
Noninterest-bearing 34,570 36,820 34,231 34,458 32,712
Deposits in foreign offices:
Interest-bearing 40,127 37,886 35,525 33,985 30,718
Noninterest-bearing 1,506 1,691 1,536 1,764 1,698
- -------------------------------------------------------------------------------------------------------------------
Total deposits 160,517 160,494 155,637 155,780 152,268
Federal funds purchased 2,125 5,160 3,110 2,274 2,174
Securities sold under repurchase agreements 7,640 6,383 7,187 5,833 6,570
Other short-term borrowings 11,523 7,627 10,289 9,730 8,500
Acceptances outstanding 2,761 2,295 2,268 2,076 1,977
Accrued interest payable 842 848 811 706 739
Unrealized losses on off-balance-sheet instruments 7,719 8,227 9,547 9,939 11,848
Other liabilities 5,875 5,862 5,334 4,563 4,435
Long-term debt 14,718 14,723 15,277 15,473 14,846
Subordinated capital notes 356 605 605 605 605
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 214,076 212,224 210,065 206,979 203,962
STOCKHOLDERS' EQUITY
Preferred stock 2,423 2,623 2,623 2,723 3,068
Common stock 604 602 600 598 587
Additional paid-in capital 8,384 8,328 8,271 8,213 7,912
Retained earnings 10,067 9,606 9,133 8,663 8,230
Net unrealized gain (loss) on available-for-sale securities (56) 1 (51) (69) (275)
Common stock in treasury, at cost (1,255) (938) (715) (508) (296)
- -------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 20,167 20,222 19,861 19,620 19,226
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $234,243 $232,446 $229,926 $226,599 $223,188
- ---------------------------------------------------------------====================================================
</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) 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S>
CASH FLOWS FROM OPERATING ACTIVITIES <C> <C>
Net income $ 720 $ 611
Adjustments to net income to arrive at net cash provided (used) by operating
activities:
Provision for credit losses 180 100
Net gain on sales of assets and subsidiaries and operations (100) (1)
Net amortization of loan fees and discounts (16) (33)
Depreciation and amortization of premises and equipment 143 130
Amortization of intangibles 95 109
Provision for (benefit from) deferred income taxes 109 (18)
Change in assets and liabilities net of effects from acquisitions
and pending dispositions:
(Increase) decrease in accrued interest receivable (11) 78
Decrease in accrued interest payable (6) (92)
Increase in trading account assets (1,699) (1,002)
Increase in current income taxes payable 254 473
Deferred fees received from lending activities 51 37
Net cash used by loans held for sale (346) (82)
Other, net (1,398) 90
- ----------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (2,024) 400
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Sales proceeds 200 1,107
Maturities, prepayments, and calls 1,437 1,297
Purchases (925) (1,602)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 348 937
Purchases (215) (87)
Proceeds from sales of loans 255 294
Purchases of loans (620) (489)
Purchases of premises and equipment (186) (148)
Proceeds from sales of other real estate owned 105 151
Net cash provided (used) by:
Loan originations and principal collections (588) (2,908)
Interest-bearing deposits in banks 176 249
Federal funds sold 578 (153)
Securities purchased under resale agreements (1,236) (710)
Cash used by acquisitions (54) --
Other, net 107 (43)
- ----------------------------------------------------------------------------------------------------------
Net cash used by investing activities (618) (2,105)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 571 1,033
Principal payments and retirements of long-term debt and subordinated capital
notes (823) (1,004)
Proceeds from issuance of common stock 44 31
Preferred stock repurchased (211) --
Treasury stock purchased (289) (264)
Common stock dividends (198) (172)
Preferred stock dividends (53) (62)
Net cash provided (used) by:
Deposits 23 (2,127)
Federal funds purchased (3,035) (1,109)
Securities sold under repurchase agreements 1,257 1,065
Other short-term borrowings 3,896 3,155
Other, net 17 (27)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,199 519
Effect of exchange rate changes on cash and due from banks 1 12
- ----------------------------------------------------------------------------------------------------------
Net decrease in cash and due from banks (1,442) (1,174)
Cash and due from banks at beginning of period 14,312 13,578
- ----------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD $12,870 $12,404
- -------------------------------------------------------------------------------===========================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
==================================================================================================================================
1996 1995
-------- -------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PREFERRED STOCK
Balance, beginning of quarter $ 2,623 $ 2,623 $ 2,723 $ 3,068 $ 3,068
Preferred stock repurchased (200) - (100) (97) -
Convertible preferred stock converted to common stock - - - (248) -
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter 2,423 2,623 2,623 2,723 3,068
COMMON STOCK
Balance, beginning of quarter 602 600 598 587 581
Common stock issued 2 2 2 11 6
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter 604 602 600 598 587
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of quarter 8,328 8,271 8,213 7,912 7,743
Common stock issued 74 57 67 301 169
Preferred stock repurchased (18) - (9) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter 8,384 8,328 8,271 8,213 7,912
RETAINED EARNINGS
Balance, beginning of quarter 9,606 9,133 8,663 8,230 7,854
Net income 720 704 704 645 611
Common stock dividends (198) (169) (171) (172) (172)
Preferred stock dividends (53) (53) (56) (56) (62)
Foreign currency translation adjustments,
net of related income taxes (8) (9) (7) 16 (1)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter 10,067 9,606 9,133 8,663 8,230
NET UNREALIZED GAIN (LOSS) ON AVAILABLE-FOR-SALE SECURITIES
Balance, beginning of quarter 1 (51) (69) (275) (326)
Valuation adjustments, net of related income taxes (57) 52 18 206 51
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter (56) 1 (51) (69) (275)
COMMON STOCK IN TREASURY, AT COST
Balance, beginning of quarter (938) (715) (508) (296) (29)
Treasury stock purchased (316) (222) (230) (210) (264)
Treasury stock issued - - 29 - -
Other (1) (1) (6) (2) (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter (1,255) (938) (715) (508) (296)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $20,167 $20,222 $19,861 $19,620 $19,226
- ----------------------------------------------------------------------------------================================================
</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 prepared
PRESENTATION 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, 1995.
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 NW, National Association
(formerly Seattle-First National Bank), Bank of America
Illinois, 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 inter-company accounts and transactions.
Certain amounts in prior periods have been reclassified to
conform to the current presentation.
- --------------------------------------------------------------------------------
NOTE 2. During the three-month periods ended March 31, 1996 and
SUPPLEMENTAL 1995, BAC made interest payments on deposits and other
DISCLOSURE OF CASH interest-bearing liabilities of $1,949 million and
FLOW INFORMATION $1,782 million, respectively, and made net income tax
payments of $144 million and $11 million, respectively.
During the three-month periods ended March 31, 1996 and
1995, there were foreclosures of loans with carrying values
of $124 million and $145 million, respectively. Loans made
to facilitate the sale of other real estate owned (OREO)
totaled $2 million during the three-month period ended
March 31, 1996. There were no loans made to facilitate the
sale of OREO during the three-month period ended March 31,
1995.
- --------------------------------------------------------------------------------
NOTE 3. During the three-month period ended March 31, 1996, BAC
AVAILABLE-FOR-SALE sold available-for-sale securities for aggregate proceeds
AND HELD-TO-MATURITY of $200 million, resulting in gross realized gains of
SECURITIES $37 million and gross realized losses of $7 million. During
the three-month period ended March 31, 1995, BAC sold
available-for-sale securities for aggregate proceeds of
$1,107 million, resulting in gross realized gains of
$15 million and gross realized losses of $14 million.
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, 1996 $11,287 $11,380 $4,143 $4,523
December 31, 1995 12,043 12,042 4,332 4,656
September 30, 1995 9,979 10,064 6,444 6,927
June 30, 1995 9,868 9,983 6,725 7,186
March 31, 1995 9,268 9,726 6,552 7,335
</TABLE>
6
<PAGE>
================================================================================
During the three-month periods ended March 31, 1996 and
1995, trading income included net unrealized holding gains
on trading securities of $3 million and $1 million,
respectively. These amounts exclude the net unrealized
trading results of the Parent's securities broker and
dealer subsidiaries.
During the fourth quarter of 1995, the Financial Accounting
Standards Board allowed financial statement preparers a
one-time opportunity to reassess the classifications of
securities accounted for under Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." As a
result of this reassessment, BAC reclassified $2.1 billion
of held-to-maturity securities to available-for-sale
securities. In connection with this reclassification, gross
unrealized gains of $28 million and gross unrealized losses
of $42 million were recorded in available-for-sale
securities and in stockholders' equity (on a net-of-tax
basis).
- --------------------------------------------------------------------------------
NOTE 4. During the first quarter of 1996, BAC's Board of Directors
STOCK REPURCHASE authorized a new stock repurchase program. This new
PROGRAM program enables the Parent to buy back up to $2.0 billion
of its common stock by the end of 1997. The new program,
which replaces the stock repurchase program announced in
February 1995, also enables the Parent to buy back or
redeem up to $1.0 billion of its preferred stock by the end
of 1997. During the three months ended March 31, 1996, the
Parent repurchased 4.6 million shares of its common stock
under the current and pre-existing stock repurchase
programs at an average per-share price of $68.24. These
transactions reduced stockholders' equity by $316 million,
of which $27 million was accrued at March 31, 1996. The
remaining buyback and redemption authorities for common
stock and preferred stock under the current program totaled
$1.84 billion and $1.0 billion, respectively, at March 31,
1996.
- --------------------------------------------------------------------------------
NOTE 5. On March 31, 1996, the Parent redeemed all 400,000
PREFERRED STOCK outstanding shares of its 11% Preferred Stock, Series J
(Preferred Stock, Series J) under terms of a stock
repurchase program that was replaced during the first
quarter of 1996. This transaction reduced stockholders'
equity by $218 million. The shares were represented by 8
million depositary shares, each corresponding to a one-
twentieth interest in a share of Preferred Stock, Series J.
The redemption price was $26.375 per depositary share. The
quarterly dividend of $0.6875 per depositary share was paid
on March 31, 1996 to holders of record on March 15, 1996.
In addition, on March 4, 1996, the Parent announced its
intention to redeem all 7,250,000 outstanding shares of its
9 5/8% Cumulative Preferred Stock, Series F, on April 16,
1996 at $25.00 per share, plus dividends of $0.30747 per
share accrued and unpaid to the redemption date.
7
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT continued
================================================================================
NOTE 6. The following is a summary of the components of income
INCOME TAXES tax expense:
<TABLE>
<CAPTION>
1996 1995
-------- ----------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROVISION FOR INCOME TAXES
Federal $362 $355 $354 $331 $319
State and local 93 74 91 86 83
Foreign 52 66 61 46 37
-------------------------------------------------------------------------
$507 $495 $506 $463 $439
---------------------------------========================================
</TABLE>
BAC's estimated annual effective income tax rates for the
three-month periods ended March 31, 1996 and 1995 were 41.3
percent and 41.8 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 nondeductible goodwill.
- --------------------------------------------------------------------------------
NOTE 7. Earnings per common share have been computed based on the
EARNINGS PER following:
COMMON SHARE
<TABLE>
<CAPTION>
1996 1995
------- -------------------------------------
(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 $ 667 $ 651 $ 648 $ 589 $ 549
Average number of common
shares outstanding 366,067 368,300 371,871 371,992 371,764
Average number of common
and common equivalent
shares outstanding 372,385 374,283 376,643 376,213 375,084
Average number of common
shares outstanding--
assuming full dilution 373,548 374,669 377,421 379,182 381,141
</TABLE>
- -------------------------------------------------------------------------------
NOTE 8. In the ordinary course of business, BAC enters into
OFF-BALANCE-SHEET various types of transactions that involve 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 in managing interest rate and foreign exchange
risk.
CREDIT-RELATED FINANCIAL INSTRUMENTS
The table on page 9 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.
8
<PAGE>
================================================================================
<TABLE>
<CAPTION>
1996 1995
-------- --------------------------------------------------------
(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 $35,982 $34,465 $34,445 $32,176 $30,026
Other commitments to
extend credit/a/ 95,790 94,524 95,517 92,896 85,112
Standby letters of credit
and financial guarantees/b/ 16,344 16,336 15,675 15,598 15,202
Commercial letters of credit 4,236 4,128 4,342 4,650 3,977
------------------------------------------------------------------------------------------------------------
</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 $2,619 million at
March 31, 1996, $2,383 million at December 31, 1995,
$2,607 million at September 30, 1995, $2,238 million at
June 30, 1995, and $2,301 million at March 31, 1995.
FOREIGN EXCHANGE AND DERIVATIVES CONTRACTS
The tables on page 10 summarize the notional amounts,
credit risk, and credit exposure for each significant class
of foreign exchange and derivative contract outstanding in
BAC's trading portfolio and the notional amounts and credit
risk 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 27-29, 38-41, and 70-79 of
BAC's 1995 Annual Report to Shareholders.
9
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
----------------------------------------------------------------------------------------------------------
MARCH 31, 1996 DECEMBER 31, 1995
------------------------------------- ---------------------------------
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 $ 412,128 $ 7,358 $2,898/c/ $ 418,240 $ 8,647 $2,787/c/
Futures and forward rate
contracts:
Commitments to purchase 178,827 129 129 160,126 9 9
Commitments to sell 202,014 189 189 190,538 381 381
Written options 34,961 -/d/ -/d/ 35,217 -/d/ -/d/
Purchased options 47,321 444 336 45,351 494 390
----------------------------------------------------------------------------------------------------------
875,251 8,120 3,552 849,472 9,531 3,567
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures
contracts 733,878 8,680 2,404 592,441 8,781 2,553
Written options 27,183 -/d/ -/d/ 21,095 -/d/ -/d/
Purchased options 25,531 415 306 20,244 395 268
Currency swaps 23,988 1,324 1,271 23,085 1,517 1,403
----------------------------------------------------------------------------------------------------------
810,580 10,419 3,981 656,865 10,693 4,224
Stock index options and
commodity contracts 1,065 19 18 878 12 10
----------------------------------------------------------------------------------------------------------
$1,686,896/e/ $18,558 $7,551 $1,507,215/f/ $20,236 $7,801
-------------------------------===========================================================================
</TABLE>
<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND LIABILITY MANAGEMENT PURPOSES
------------------------------------------------------------------------------------------------
MARCH 31, 1996 DECEMBER 31, 1995
--------------------- ----------------------
NOTIONAL CREDIT NOTIONAL CREDIT
(IN MILLIONS) AMOUNT RISK/a/ AMOUNT RISK/a/
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $35,280 $157 $33,543 $155
Futures and forward rate
contracts 28,813 - 28,702 -
Purchased options 8,575 55 9,200 60
------------------------------------------------------------------------------------------------
72,668 212 71,445 215
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures
contracts 1,897 - 1,900 -
Currency swaps 182 - 430 61
------------------------------------------------------------------------------------------------
2,079 - 2,330 61
------------------------------------------------------------------------------------------------
$74,747/e/ $212 $73,775/f/ $276
-----------------------------------------=======================================================
</TABLE>
/a/ Excluding the effects of legally enforceable master netting
agreements.
/b/ Including the effects of legally enforceable master netting
agreements.
/c/ Including the effects 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, interest rate futures and forward
contracts, and interest rate options in both the trading and
asset and liability management portfolios include $14.9
billion, $0.9 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 $1.8 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 $14.2 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 $1.9 billion of intercompany
hedging-related contracts.
For most contracts, notional amounts are used solely to
determine cash flows to be exchanged. However, certain
foreign exchange contracts are designed for principal
amounts to be exchanged on a common settlement date. The
notional or contract amounts associated with foreign
exchange and derivative financial instruments are not
recorded as assets or liabilities on the balance sheet and
do not represent the potential for gain or loss associated
with such transactions. Credit risk represents BAC's
potential loss on these transactions if all counterparties
failed to perform according to the terms of the contract
10
<PAGE>
================================================================================
and the value of any existing collateral became worthless,
based on then-current currency exchange and interest rates at
each respective date. Credit exposure represents the
potential loss to which BAC is exposed, after taking into
consideration legally enforceable master netting agreements.
Historically, losses associated with counterparty
nonperformance on derivative and foreign exchange instruments
have been immaterial.
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, 1996 DECEMBER 31, 1995
------------------------------ -----------------------------
AVERAGE AVERAGE
FAIR VALUE FAIR VALUE
FOR THE PERIOD END FOR THE PERIOD END
(IN MILLIONS) QUARTER ENDED/a/ FAIR VALUE YEAR ENDED/a/ FAIR VALUE
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps:
Assets $ 3,043 $ 2,898 $ 2,522 $ 2,787
Liabilities (2,664) (2,307) (2,258) (2,605)
Futures and forward rate
contracts:
Assets 399 318 319 390
Liabilities (363) (303) (291) (373)
Written options (239) (224) (222) (237)
Purchased options 328 336 263 390
-------------------------------------------------------------------------------------------
504 718 333 352
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures
contracts:
Assets 2,682 2,404 3,979 2,553
Liabilities (3,117) (2,857) (4,429) (3,048)
Written options (414) (387) (431) (355)
Purchased options 347 306 403 268
Currency swaps:
Assets 1,249 1,271 1,762 1,403
Liabilities (1,472) (1,626) (2,062) (1,600)
--------------------------------------------------------------------------------------------
(725) (889) (778) (779)
Stock index options and commodity
contracts:
Assets 16 18 13 10
Liabilities (12) (15) (8) (9)
-------------------------------------------------------------------------------------------
4 3 5 1
-------------------------------------------------------------------------------------------
$ (217) $ (168) $ (440) $ (426)
-------------------------------============================================================
</TABLE>
<TABLE>
<CAPTION>
FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND
LIABILITY MANAGEMENT PURPOSES
-----------------------------------------------------------------------------------------
(IN MILLIONS) MARCH 31, 1996 DECEMBER 31, 1995
-----------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $(311) $ 33
Futures and forward rate contracts 28 56
Purchased options (7) 3
-----------------------------------------------------------------------------------------
(290) 92
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts - -
Currency swaps (19) 47
-----------------------------------------------------------------------------------------
(19) 47
-----------------------------------------------------------------------------------------
$(309) $139
----------------------------------------------------=====================================
</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 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 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 are considered in evaluating the overall
profitability of those activities.
<TABLE>
<CAPTION>
TRADING-RELATED INCOME
------------------------------------------------------------------------------
1996 1995
------- -----------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRADING INCOME
Interest rate $ 12 $ 20 $ 13 $ 9 $ 25
Foreign exchange 98 66 74 80 83
Debt instruments 55 29 45 62 21
------------------------------------------------------------------------------
$165 $115 $132 $151 $129
---------------------------------=============================================
OTHER TRADING-RELATED INCOME/a/
Interest rate $ 6 $ 18 $ 7 $ 2 $ 3
Foreign exchange 6 9 10 7 2
Debt instruments 44 38 37 49 28
------------------------------------------------------------------------------
$ 56 $ 65 $ 54 $ 58 $ 33
---------------------------------=============================================
</TABLE>
/a/ Primarily includes the net interest revenue and expense
associated with these contracts.
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-related income from
interest rate instruments primarily includes results from
transactions using interest rate and currency swaps, interest
rate futures, option contracts, and forward rate agreements,
as well as cash instruments used in the management of this
function. Foreign exchange trading-related income primarily
includes the results from transactions using foreign exchange
spot, forward, futures, and option contracts. Trading-related
income from debt instruments primarily represents the results
from trading activities in various debt securities, including
U.S. government and government agency securities, foreign
government securities, mortgage-backed securities, municipal
bonds, and corporate debt.
12
<PAGE>
================================================================================
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 75
of BAC's 1995 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, 1996 were not significantly
different from those at year-end 1995.
SECURITIES LENDING
BAC conducts securities lending transactions primarily for
institutional trust 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 by a customer
combined with a decline in the value of the associated
collateral, BAC may be exposed to risk of loss. During 1995,
BAC made a decision to exit, and, by the end of the first
quarter of 1996, had substantially divested its institutional
trust and securities services business.
The following summarizes indemnified securities lending
transactions and the associated collateral:
<TABLE>
<CAPTION>
1996 1995
--------- ------------------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Indemnified securities lent $ 134 $ 207 $ 894 $4,220 $6,350
Associated collateral 135 209 909 4,321 6,501
----------------------------------------------------------------------------------------------
</TABLE>
NOTE 9. Congress is currently considering proposals that would
SPECIAL DEPOSIT impose a one-time assessment on deposits insured by the
ASSESSMENT Savings Association Insurance Fund (SAIF). If imposed, this
assessment would recapitalize SAIF to 1.25% of insured
deposits as prescribed by the Federal Deposit Insurance
Corporation Improvement Act. At this time it is not possible
to predict the ultimate provisions of any final legislation
or their effect on BAC.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
================================================================================
The following is a summary of first-quarter 1996 financial
information for BankAmerica Corporation and subsidiaries
(BAC).
. BAC reported first-quarter 1996 earnings per share of
$1.79, an increase of 23 percent from $1.46 for the same
period a year ago. Net income for the first quarter of
1996 was $720 million, up 18 percent from $611 million
for the first quarter of 1995.
. The return on average common equity was 15.19 percent
for the first quarter of 1996, an increase of 133 basis
points from the same period in 1995. In addition, the
return on average total assets increased 8 basis points
from a year ago to 1.22 percent for the first quarter of
1996.
. Net interest income was up $100 million, or 5 percent,
from the amount reported for the first quarter of 1995.
BAC's net interest margin for the first quarter of 1996
was 4.36 percent, down 19 basis points from the amount
reported in the comparable period a year ago, and down 8
basis points from the previous quarter.
. Noninterest income increased $181 million, or 17
percent, from the first quarter of 1995 due to growth in
several categories. In particular, results from trading
and venture capital activities improved. In addition,
noninterest income for the first quarter of 1996
included a pre-tax gain of $50 million associated with
the completed components of the previously announced
divestiture of BAC's Institutional Trust and Securities
Services (ITSS) business.
. Noninterest expense increased $24 million, or 1
percent, from the first quarter of 1995. Expenses for
the first quarter of 1996 included the effects of higher
performance-based pay and retirement program benefits,
charitable contributions, and lower FDIC fees.
. BAC's expense to revenue ratio decreased 74 basis
points from the previous quarter to 55.83 percent in the
first quarter of 1996. This is the sixth consecutive
quarter that this measure of operating efficiency has
improved.
. Average loans increased $3.0 billion from the previous
quarter, reflecting broad-based growth in the loan
portfolio.
. The provision for credit losses was $180 million, up
$80 million from the first quarter of 1995. Net credit
losses were $239 million for the first quarter of 1996,
up $162 million from the comparable period a year ago,
while nonaccrual assets decreased $194 million, or 10
percent, between year-end 1995 and March 31, 1996.
. In connection with BAC's ongoing efforts to return
excess capital to its shareholders, BAC repurchased 4.6
million shares of its common stock during the first
quarter of 1996 at an average per-share price of $68.24.
. On March 31, 1996, BAC redeemed all 400,000 outstanding
shares of its 11 percent Cumulative Fixed Preferred
Stock, Series J.
14
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
1996 1995
-------- --------------------------------------------------------
(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 $ 4,089 $ 4,071 $ 4,044 $ 3,989 $ 3,736
Interest expense 1,943 1,934 1,888 1,866 1,690
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income 2,146 2,137 2,156 2,123 2,046
Provision for credit losses 180 130 110 100 100
Noninterest income 1,274 1,158 1,157 1,138 1,093
Noninterest expense 2,013 1,966 1,993 2,053 1,989
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,227 1,199 1,210 1,108 1,050
Provision for income taxes 507 495 506 463 439
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 720 $ 704 $ 704 $ 645 $ 611
- ------------------------------------------------------=======================================================================
PER SHARE DATA
Earnings per common and common
equivalent share $ 1.79 $ 1.74 $ 1.72 $ 1.56 $ 1.46
Earnings per common share - assuming
full dilution 1.79 1.74 1.72 1.55 1.45
Dividends declared per common share 0.54 0.46 0.46 0.46 0.46
- -----------------------------------------------------------------------------------------------------------------------------
STOCK DATA
Book value per common share at period end $ 48.74 $ 47.90 $ 46.59 $ 45.38 $ 43.72
Common stock price range:
High 79 1/8 68 1/2 61 1/8 55 1/4 49 5/8
Low 58 3/4 57 52 1/2 48 3/8 39 1/2
Closing common stock price 77 1/2 64 3/4 59 7/8 52 5/8 48 1/4
Average number of common and common
equivalent shares outstanding (in thousands) 372,385 374,283 376,643 376,213 375,084
Average number of common shares outstanding
-- assuming full dilution (in thousands) 373,548 374,669 377,421 379,182 381,141
Number of common shares outstanding at period
end (in thousands) 364,082 367,447 369,998 372,336 369,543
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA AT PERIOD END
Loans $156,155 $155,373 $151,212 $148,766 $144,159
Total assets 234,243 232,446 229,926 226,599 223,188
Deposits 160,517 160,494 155,637 155,780 152,268
Long-term debt and subordinated capital notes 15,074 15,328 15,882 16,078 15,451
Common equity 17,744 17,599 17,238 16,897 16,158
Total equity 20,167 20,222 19,861 19,620 19,226
- -----------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Rate of return (based on net income) on:
Average common equity 15.19% 14.96% 15.09% 14.30% 13.86%
Average total equity 14.28 14.05 14.14 13.29 12.95
Average total assets 1.22 1.20 1.21 1.13 1.14
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS
Ratio of common equity to total assets 7.58% 7.57% 7.50% 7.46% 7.24%
Ratio of total equity to total assets 8.61 8.70 8.64 8.66 8.61
Ratio of average total equity to average
total assets 8.55 8.55 8.59 8.51 8.79
=============================================================================================================================
</TABLE>
15
<PAGE>
BUSINESS SECTORS
<TABLE>
<CAPTION>
===============================================================================================================================
SELECTED BUSINESS SECTOR DATA
- -------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31/a/
--------------------------------------------------------------------------------
U.S. CORPORATE AND
TOTAL INTERNATIONAL BANKING CONSUMER BANKING MIDDLE MARKET BANKING
--------------- --------------------- ---------------- ---------------------
(DOLLAR AMOUNTS IN MILLIONS) 1996 1995 1996 1995 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $2,146 $2,046 $ 382 $ 318 $1,373 $1,292 $ 215 $223
Provision for credit losses 180 100 (43) 29 238 162 4 18
Noninterest income 1,274 1,093 557 434 539 466 55 52
Noninterest expense 2,013 1,989 467 430 1,162 1,157 130 130
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 1,227 1,050 515 293 512 439 136 127
Provision for (benefit from) income taxes 507 439 197 118 216 189 55 52
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) 720 611 318 175 296 250 81 75
Preferred stock dividends 53 62 19 23 20 22 4 5
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON EQUITY $ 667 $ 549 $ 299 $ 152 $ 276 $ 228 $ 77 $ 70
- -----------------------------------------------================================================================================
<CAPTION>
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $154,929 $141,050 $41,078 $37,511 $80,800 $72,801 $18,588 $16,713
Earning assets 197,712 181,296 69,126 62,024 81,480 73,423 18,605 16,732
Total assets 237,083 217,744 89,230 80,052 89,797 80,892 21,009 19,170
Deposits 159,543 149,902 43,379 31,608 94,910 95,951 7,421 8,001
Common equity 17,665 16,070 6,155 5,740 6,465 5,645 1,473 1,338
SELECTED FINANCIAL RATIOS
Return on average common equity 15.2% 13.9% 19.6% 10.8% 17.2% 16.4% 21.0% 21.3%
Expense to revenue/b/ 55.8 59.8 47.9 54.4 55.6 59.5 43.8 43.1
================================================================================================================================
</TABLE>
For reporting purposes, BAC segregates its operations into
business or operating sectors. BAC's Vice Chairmen oversee
the operations of the businesses that comprise the sectors
and are responsible for their financial performance. The
Vice Chairmen regularly review their respective businesses
to evaluate past performance and make decisions regarding
the future allocation of resources. All Vice Chairmen are
accountable to the Chief Executive Officer.
BAC determines its business sector results based on an
internal management reporting system, which allocates
revenues, expenses, assets, and liabilities to each business
sector. Furthermore, for internal business sector
monitoring, the unallocated allowance for credit losses and
related provision for credit losses are assigned to the
business sectors. Equity is assigned to each internal
business sector on a risk-adjusted basis. While BAC manages
its hedging activities centrally, the effects of hedging are
allocated to the business sectors through a transfer pricing
process. As a result, the effects of hedging interest rate
risk are reflected in the appropriate business sectors.
The information set forth in the tables on pages 16-17
reflects the condensed income statements and selected
average balance sheet line items and financial ratios by
business sectors. The information presented does not
necessarily represent the business sectors' financial
condition and results of operations as if they were
independent entities. For a detailed discussion of the
composition of each business sector, refer to pages 6-15 of
BAC's 1995 Annual Report to Shareholders.
16
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
- ------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31/a/
------------------------------------------------------------------
PRIVATE BANKING AND
COMMERCIAL REAL ESTATE INVESTMENT SERVICES OTHER
---------------------- ------------------- ---------------------
(DOLLAR AMOUNTS IN MILLIONS) 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Net interest income $106 $120 $ 43 $ 41 $ 27 $ 52
Provision for credit losses (33) (97) 1 (4) 13 (8)
Noninterest income 7 10 92 81 24 50
Noninterest expense 30 31 105 100 119 141
- ------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 116 196 29 26 (81) (31)
Provision for (benefit from) income taxes 47 81 11 10 (19) (11)
- ------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) 69 115 18 16 (62) (20)
Preferred stock dividends 5 5 1 1 4 6
- ------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON EQUITY $ 64 $110 $ 17 $ 15 $(66) $ (26)
- --------------------------------------------------================================================================
<CAPTION>
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
<S> <C> <C> <C> <C> <C> <C>
Loans $10,049 $10,115 $ 4,132 $3,612 $ 282 $ 298
Earning assets 10,049 10,116 4,169 3,658 14,283 15,343
Total assets 10,058 9,813 4,741 4,150 22,248 23,667
Deposits 1,794 1,417 6,888 5,316 5,151 7,609
Common equity 1,334 1,257 373 323 1,865 1,767
SELECTED FINANCIAL RATIOS
Return on average common equity 19.5% 35.5% 17.8% 18.4% NM NM
Expense to revenue/b/ 26.5 26.0 72.6 76.1 NM NM
=====================================================================================================================
</TABLE>
/a/ For comparability purposes, both 1996 and 1995 amounts reflect BAC's
business-sector allocation methodologies at March 31, 1996.
/b/ Excludes net other real estate owned expense and amortization of
intangibles.
NM - Not meaningful.
U.S Corporate and International Banking--U.S. Corporate and
International Banking's net income for the first three months
of 1996 increased $143 million, or 82 percent, from that of
the same period a year ago. This increase reflected higher
net interest and noninterest income levels and a reduction in
the provision for credit losses, partially offset by higher
noninterest expense. The increase in net interest income
resulted from higher interest recoveries, an increase in
commercial and industrial and foreign loans, and higher
spreads on foreign loans. The reduction in the provision for
credit losses was primarily a result of improved asset
quality in Latin America. Noninterest income was up $123
million predominantly due to higher trading and venture
capital profits, increased securities gains, and gains on
asset sales. Noninterest expense increased due to higher
variable-based pay that resulted from improved performance in
BAC's global capital market operations. Average deposits
increased $11.8 billion, or 37 percent, reflecting growth in
foreign interest-bearing deposits. This sector's expense to
revenue ratio improved from 54.4 percent in the first
quarter of 1995 to 47.9 percent for the first quarter of
1996.
Consumer Banking--Consumer Banking's net income for the
first three months of 1996 was up $46 million, or 18 percent,
from the amount for the same period last year. This increase
largely reflected improved results in BAC's residential and
consumer installment loan businesses as well as its non-
California banks. Net interest income was up from the first
three months of 1995 due to increased loan volumes and higher
spreads on residential real estate loans. Partially
offsetting this increase were lower spreads on credit card
loans and retail deposits.
17
<PAGE>
================================================================================
Noninterest income increased due to increased revenues from
service charges on deposit accounts. Noninterest expense was
essentially unchanged, as increased advertising expenses
offset reduced FDIC assessment fees. The increases in net
interest and noninterest income, coupled with BAC's efforts
to keep noninterest expense at targeted levels, resulted in
an expense-to-revenue ratio of 55.6 percent for the first
quarter of 1996, a decrease from 59.5 percent for the first
quarter of 1995. The provision for credit losses increased
$76 million primarily as a result of strong growth in the
consumer loan portfolio. Average loan outstandings grew $8.0
billion, or 11 percent, from the first three months of 1995,
primarily representing growth in the manufactured housing,
residential first mortgage, and credit card portfolios.
Average deposits declined $1.0 billion, reflecting decreases
in most deposit categories.
Middle Market Banking -- Middle Market Banking's net income
for the first three months of 1996 grew $6 million, or 8
percent, from the first three months of 1995. This growth was
primarily a result of a decrease in the provision for credit
losses. Average loan outstandings increased $1.9 billion
largely due to increased demand in several regions of the
U.S. However, net interest income decreased $8 million from
the first quarter of 1995 as continued price competition
resulted in a shift from higher priced loans, such as those
tied to the reference-rate, to lower priced loans, such as
those that are LIBOR-based.
Commercial Real Estate -- Net income for the first three
months of 1996 decreased $46 million, or 40 percent, from the
first three months of 1995 primarily due to an increase in
the provision for credit losses. Net interest income
decreased $14 million from the first three months of 1995
primarily due to lower interest recoveries and declining
spreads on construction real estate loans.
Private Banking and Investment Services -- Net income for
Private Banking and Investment Services was $18 million in
the first three months of 1996, a 13 percent increase from
the comparable period of 1995. Noninterest income increased
due to growth in mutual fund and annuity revenues.
Other -- "Other" amounts are primarily associated with BAC's
ITSS business, certain corporate expenses, and various other
support services. "Other" also includes the results from
corporate liquidity management activities, along with any
residual differences between actual centrally managed
external hedging results and the transfer of interest rate
risk hedging to the appropriate business sectors.
This sector had a net loss of $62 million in the first
quarter of 1996, compared with a net loss of $20 million in
the same period last year. The increase in the net loss was
primarily attributable to lower results from corporate
liquidity management activities and increased charitable
contributions. Partially offsetting this decrease was the
first-quarter 1996 recognition of a $50 million pre-tax gain
associated with the completed components of the previously
announced divestiture of BAC's ITSS business.
18
<PAGE>
RESULTS OF OPERATIONS
================================================================================
NET INTEREST Taxable-equivalent net interest income was $2,151 million for
INCOME the first quarter of 1996, up $99 million from the amount
reported for the first quarter of 1995. This increase
primarily resulted from broad-based growth in the loan
portfolio as average loans for the first quarter of 1996
increased $13.9 billion, or 10 percent, from the comparable
period a year ago. In addition, net interest income for the
first quarter of 1996 included $66 million of interest
recoveries, up $12 million from the first quarter of 1995.
BAC's net interest margin for the first quarter of 1996 was
4.36 percent, down 19 basis points from the comparable period
a year ago. This decline was due to increased reliance on
wholesale funding sources, a $2.1 billion increase in average
financial assets, and heightened price competition for loan
volume. Wholesale sources, which include foreign interest-
bearing deposits and domestic purchased funds, are more
costly than traditional core deposits. Funds raised through
wholesale sources have replaced the decline in retail
deposits and helped support balance sheet growth. If these
trends continue, the net interest margin may be negatively
influenced in future quarters.
BAC's net interest income and margin include the results of
hedging with certain on- and off-balance-sheet financial
instruments. For the first three months of 1996 and 1995,
BAC's net interest income included approximately $20 million
attributable to hedging with derivative instruments. The
hedging amounts accounted for approximately 5 basis points of
the net interest margins for both of those periods.
19
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- -------------------------------------------------------------------------------------------------------------------------------
FIRST QUARTER 1996 FIRST QUARTER 1995
----------------------------------- -------------------------------
(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 $ 5,998 $ 117 7.83% $ 5,647 $ 112 8.02%
Federal funds sold 434 6 5.32 546 8 5.95
Securities purchased under resale agreements 9,312 155 6.71 8,164 135 6.71
Trading account assets 11,008 217 7.92 8,379 164 7.99
Available-for-sale securities/cd/ 11,419 214 7.51 9,597 171 7.18
Held-to-maturity securities/c/ 4,612 86 7.51 7,913 146 7.37
Domestic loans:
Consumer--residential first mortgages 36,861 691 7.50 34,308 568 6.62
Consumer--residential junior mortgages 13,829 301 8.75 13,642 312 9.29
Consumer--credit card 8,943 334 14.92 7,807 295 15.11
Other consumer 16,424 404 9.89 12,974 306 9.55
Commercial and industrial 32,870 647 7.91 29,228 630 8.75
Commercial loans secured by real estate 10,990 244 8.89 10,359 231 8.93
Construction and development loans
secured by real estate 3,162 81 10.31 3,528 95 10.88
Financial institutions 2,786 32 4.58 2,454 37 6.04
Lease financing 1,910 26 5.55 1,791 26 5.97
Agricultural 1,654 37 9.03 1,710 41 9.80
Loans for purchasing or carrying securities 1,239 21 6.72 1,396 24 7.05
Other 1,208 17 6.00 1,392 23 6.60
------- ----- ------- -----
Total domestic loans 131,876 2,835 8.63 120,589 2,588 8.65
Foreign loans 23,053 464 8.09 20,461 418 8.29
------- ----- ------- -----
Total loans/d/ 154,929 3,299 8.55 141,050 3,006 8.60
------- ----- ------- -----
Total earning assets 197,712 $4,094 8.31 181,296 $3,742 8.33
====== ======
Nonearning assets 42,917 40,144
Less: Allowance for credit losses 3,546 3,696
-------- --------
TOTAL ASSETS $237,083 $217,744
======== --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,230 $ 40 1.20% $ 13,493 $ 40 1.20%
Savings 13,031 67 2.06 13,793 70 2.07
Money market 27,714 217 3.15 30,356 213 2.85
Time 29,676 371 5.03 30,503 337 4.48
------- ------ ------ -----
Total domestic interest-bearing deposits 83,651 695 3.34 88,145 660 3.04
Foreign interest-bearing deposits:
Banks located in foreign countries 13,972 216 6.21 7,935 139 7.09
Governments and official institutions 7,890 103 5.27 6,050 89 5.95
Time, savings, and other 18,638 300 6.48 13,616 226 6.74
------- ----- ------- -----
Total foreign interest-bearing deposits 40,500 619 6.15 27,601 454 6.67
------- ----- ------- -----
Total interest-bearing deposits 124,151 1,314 4.26 115,746 1,114 3.90
Federal funds purchased 1,661 22 5.25 2,459 39 6.43
Securities sold under repurchase agreements 10,819 163 6.06 8,592 130 6.14
Other short-term borrowings 11,766 178 6.09 7,719 132 6.93
Long-term debt 14,850 254 6.87 14,922 264 7.17
Subordinated capital notes 595 12 8.09 605 11 7.66
------- ----- ------- -----
Total interest-bearing liabilities 163,842 $1,943 4.77 150,043 $1,690 4.57
====== ======
Domestic noninterest-bearing deposits 33,811 32,548
Foreign noninterest-bearing deposits 1,581 1,608
Other noninterest-bearing liabilities 17,568 14,407
------- -------
Total liabilities 216,802 198,606
Stockholders' equity 20,281 19,138
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $237,083 $217,744
======== ========
Interest income as a percentage of average earning assets 8.31% 8.33%
Interest expense as a percentage of average earning assets (3.95) (3.78)
---- ----
NET INTEREST MARGIN 4.36% 4.55%
==== ====
=================================================================================================================================
</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 24 of the Balance Sheet Review section for more
detail on available-for-sale and held-to-maturity securities.
/d/ Average balances include nonaccrual assets.
20
<PAGE>
================================================================================
NONINTEREST Noninterest income for the first quarter of 1996 increased
INCOME $181 million, or 17 percent, from the amount reported in the
comparable period of 1995. Fees and commissions, the largest
component of noninterest income, increased $36 million from
the amount reported in the first quarter of 1995. Retail
deposit account fees increased as a result of higher revenues
from service charges on deposit accounts and transactions.
Financial services fees increased largely as a result of
expanded loan syndication volume. The above increases were
partially offset by a decline in trust fees, which resulted
from the divestiture of ITSS and a reduction in fee revenue
from personal trust activities.
Income from loan fees and charges increased $11 million
largely due to higher revenues from late payment charges on
credit card accounts. This increase was offset by a $14
million decline in loan servicing fees that primarily
resulted from amortization expense and valuation adjustments
on mortgage servicing rights recognized in connection with
the fourth-quarter 1995 adoption of Statement of Financial
Accounting Standards (SFAS) No. 122, "Accounting for Mortgage
Servicing Rights." During the first quarter of 1996, BAC
purchased the rights to service mortgage loans of
approximately $14 billion from First Bank System bringing
its nationwide mortgage servicing portfolio to approximately
$77 billion.
Trading income for the first quarter of 1996 increased $36
million from the same period a year ago. Improved performance
in BAC's debt securities trading operations was largely
attributable to a strong bond market in Europe, as well as
gains on Latin American and other emerging market debt
securities. Foreign exchange trading-related income increased
due to higher transaction volume that resulted from strong
global demand for those products. For more information on the
functional components of trading income, refer to Note 8 of
the Notes to Consolidated Financial Statements on pages 8-13.
Other noninterest income for the first three months of 1996
increased $109 million from the amount reported in the
comparable period of 1995. Net gain on sales of assets
increased primarily due to higher gains on loan sales and
sales of leased personal property, primarily airplanes. In
addition, net gain on available-for-sale securities increased
$29 million primarily due to gains realized on the sale of
Latin American debt securities and certain domestic equity
securities. Income from venture capital activities increased
$23 million due to higher realized capital gains and
partnership distributions. Other income for the first quarter
of 1996 included a $50 million gain associated with the
completed components of the previously announced divestiture
of BAC's ITSS business.
21
<PAGE>
<TABLE>
<CAPTION>
============================================================================
NONINTEREST INCOME
- ----------------------------------------------------------------------------
FIRST QUARTER
---------------------
(IN MILLIONS) 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
FEES AND COMMISSIONS
Deposit account fees:
Retail $ 251 $ 216
Commercial 93 101
Credit card fees:
Membership 10 15
Other 69 60
Trust fees:
Corporate and employee benefit 9 15
Personal and other 54 63
Other fees and commissions:
Loan fees and charges 79 82
Off-balance-sheet credit-related instrument fees 87 85
Financial services fees 42 28
Mutual fund and annuity commissions 25 19
Other 87 86
- ----------------------------------------------------------------------------
806 770
- ----------------------------------------------------------------------------
TRADING INCOME 165 129
- ----------------------------------------------------------------------------
OTHER NONINTEREST INCOME
Venture capital activities 110 87
Net gain on sales of assets/a/ 49 1
Net gain on available-for-sale securities 30 1
Other income 114 105
- ----------------------------------------------------------------------------
303 194
- ----------------------------------------------------------------------------
$1,274 $1,093
- ------------------------------------------------------======================
</TABLE>
/a/ Net gain on sales of assets includes gains and losses from the disposition
of loans, premises and equipment, and certain other assets.
NONINTEREST Noninterest expense for the first quarter of 1996 increased
EXPENSE $24 million, or 1 percent, from the amount reported in the
corresponding period in 1995.
Personnel expense (salaries and employee benefits), the
largest component of noninterest expense, totaled $1,023
million in the first quarter of 1996, up $21 million from the
amount reported in the corresponding period of 1995. This
increase was largely due to higher performance-based pay and
retirement program benefits. The increase in retirement
program benefits was largely attributable to amendments to
BAC's employee benefit plans that became effective January 1,
1996. BAC's staff level on a full-time-equivalent (FTE) basis
was approximately 78,700 at March 31, 1996, down from
approximately 81,200 at March 31, 1995. FTE is a measurement
equal to one full-time employee working a standard day. BAC
had approximately 94,100 employees at March 31, 1996, down
from approximately 97,500 at this same date a year earlier.
These amounts include both full-time and part-time employees.
22
<PAGE>
================================================================================
Regulatory fees and related expenses for the first quarter of
1996 decreased $59 million from the comparable period in 1995
as a result of the reduction in FDIC deposit premium
assessment rates announced last year.
Other expense for the first quarter of 1996 increased $41
million over the same period last year. This growth resulted
from higher contributions to the BankAmerica Foundation and
increased advertising expenditures incurred to promote
certain consumer products.
<TABLE>
<CAPTION>
================================================================================
NONINTEREST EXPENSE
- --------------------------------------------------------------------------------
FIRST QUARTER
---------------------------
(IN MILLIONS) 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Salaries $ 821 $ 809
Employee benefits 202 193
Occupancy 190 173
Equipment 163 159
Amortization of intangibles 95 109
Communications 92 86
Regulatory fees and related expenses 13 72
Net OREO expense 10 2
Other expense 427 386
- --------------------------------------------------------------------------------
$2,013 $1,989
- -----------------------------------------------------===========================
</TABLE>
- --------------------------------------------------------------------------------
INCOME The provision for income taxes was $507 million and $439
TAXES million for the quarters ended March 31, 1996 and 1995,
respectively, reflecting forecasted annual effective income
tax rates of 41.3 percent and 41.8 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 6 of the Notes to Consolidated
Financial Statements on page 8.
23
<PAGE>
BALANCE SHEET REVIEW
================================================================================
Earning assets totaled $195.1 billion at March 31, 1996, up
$2.1 billion from year-end 1995. Growth in earning assets was
largely supported by increased reliance on wholesale funding
sources, including issuances of bank notes and commercial
paper, and increased foreign deposits. Average deposits for
the first quarter of 1996 increased $2.2 billion from the
previous quarter. Domestic deposits decreased $1.3 billion,
while foreign deposits increased $3.5 billion. The decline in
domestic deposits primarily resulted from lower money market
and demand deposits. The increase in foreign deposits was
largely due to BAC's continued expansion into certain global
markets and shift from domestic to foreign funding sources to
support balance sheet growth. Management anticipates that
this trend will continue in future quarters.
<TABLE>
<CAPTION>
================================================================================
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES AVERAGE BALANCES, INTEREST,
AND AVERAGE RATES
- --------------------------------------------------------------------------------
FIRST QUARTER 1996 FIRST QUARTER 1995
--------------------------------------------- ---------------------------------------------
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 $ 1,437 $ 24 6.57% 6.67% $1,864 $ 32 6.84% 6.71%
Mortgage-backed securities 6,549 110 6.72 6.79 5,186 89 6.89 6.68
Other domestic securities 722 10 5.58 6.49 552 7 5.41 5.78
Foreign securities 2,711/c/ 70 10.43/d/ 9.76/d/ 1,995/c/ 43 8.75 7.45
- ---------------------------------------------------------------------------------------------------------------------------------
$11,419 $214 7.51% 7.51% $9,597 $171 7.18% 6.82%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FIRST QUARTER 1996 FIRST QUARTER 1995
--------------------------------- ---------------------------------
(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 $ 72 $ 1 4.61% $ 438 $ 7 6.83%
Mortgage-backed securities 2,439 47 7.64 4,697 84 7.12
State, county, and
municipal securities 433 8 7.56 449 9 8.14
Other domestic securities 146 2 7.38 188 4 7.20
Foreign securities 1,522 28 7.44 2,141 42 7.97
- ---------------------------------------------------------------------------------------------------------------------------------
$4,612 $ 86 7.51% $7,913 $146 7.37%
- ---------------------------------------------------------------------------------------------------------------------------------
</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.
/d/ Rates reflect interest received on nonaccrual debt-restructuring par
bonds.
24
<PAGE>
CREDIT RISK MANAGEMENT
================================================================================
LOAN PORTFOLIO Total loans at March 31, 1996 were up $0.8 billion from year-
MANAGEMENT end 1995. Average loans for the first quarter of 1996
increased $3.0 billion from the previous quarter, reflecting
continued growth in both the domestic and foreign sectors.
This is the eighth consecutive quarter that average loans
have increased. Continuation of this trend in loan growth
depends on both future economic conditions and customer
demand.
<TABLE>
<CAPTION>
=====================================================================================================
LOANS OUTSTANDING
- -----------------------------------------------------------------------------------------------------
1996 1995
-------- ---------------------------------------
(IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
CONSUMER:
Residential first mortgages $ 37,701 $ 36,572 $ 36,082 $ 35,564 $ 34,791
Residential junior mortgages 13,889 13,777 14,162 14,072 13,808
Other installment 14,682 13,834 12,728 11,819 10,989
Credit card 8,919 9,139 8,622 8,237 7,757
Other individual lines of credit 1,845 1,847 1,816 1,811 1,691
Other 304 319 289 305 409
- -----------------------------------------------------------------------------------------------------
77,340 75,488 73,699 71,808 69,445
COMMERCIAL:
Commercial and industrial 32,193 32,745 31,896 31,436 30,481
Loans secured by real estate 11,052 10,975 10,776 10,717 10,504
Construction and development loans
secured by real estate 3,107 3,153 3,214 3,308 3,526
Financial institutions 2,705 2,834 2,561 2,520 2,211
Lease financing 1,941 1,927 1,910 1,840 1,786
Agricultural 1,585 1,737 1,591 1,607 1,658
Loans for purchasing or carrying securities 1,402 1,458 1,236 1,383 1,348
Other 1,211 1,574 1,409 1,569 1,639
- -----------------------------------------------------------------------------------------------------
55,196 56,403 54,593 54,380 53,153
- -----------------------------------------------------------------------------------------------------
132,536 131,891 128,292 126,188 122,598
FOREIGN
Commercial and industrial 15,183 15,003 15,314 14,948 14,417
Banks and other financial institutions 2,916 3,386 2,795 2,941 2,871
Governments and official institutions 1,334 1,020 1,077 1,131 866
Other 4,186 4,073 3,734 3,558 3,407
- -----------------------------------------------------------------------------------------------------
23,619 23,482 22,920 22,578 21,561
- -----------------------------------------------------------------------------------------------------
TOTAL LOANS 156,155 155,373 151,212 148,766 144,159
Less: Allowance for credit losses 3,496 3,554 3,655 3,695 3,725
- -----------------------------------------------------------------------------------------------------
$152,659 $151,819 $147,557 $145,071 $140,434
- -----------------------------------------------------================================================
</TABLE>
25
<PAGE>
================================================================================
Domestic Consumer Loans -- The growth in domestic consumer
loans during the first three months of 1996 from year-end
1995 included increases in residential first mortgages and
other installment loans of $1.1 billion and $0.8 billion,
respectively. The increase in residential first mortgages
reflected BAC's continued efforts to diversify its nationwide
lending activities. In particular, residential first mortgage
origination levels grew in the midwest, southwest, and
northeast regions of the country.
The increase in other installment loans was largely due to an
increase in manufactured housing loans in the South that
resulted from strong customer demand and BAC's continued
expansion in this region. For information regarding BAC's
domestic consumer loans by geographic area and loan type and
domestic consumer loan delinquencies, refer to the tables
below.
<TABLE>
<CAPTION>
===============================================================================================================
DOMESTIC CONSUMER LOANS BY GEOGRAPHIC AREA AND LOAN TYPE AS OF MARCH 31, 1996
- ---------------------------------------------------------------------------------------------------------------
RESIDENTIAL RESIDENTIAL
FIRST JUNIOR CREDIT MANUFACTURED OTHER TOTAL
(IN MILLIONS) MORTGAGES MORTGAGES CARD HOUSING AUTO CONSUMER CONSUMER
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $28,033 $ 9,398 $4,649 $1,044 $2,039 $2,488 $47,651
Washington 1,721 1,628 1,259 329 1,336 399 6,672
Arizona 1,247 800 287 188 549 176 3,247
Texas 699 147 380 460 585 298 2,569
Oregon 1,249 470 248 134 308 130 2,539
Other/a/ 4,752 1,446 2,096 4,441 436 1,491 14,662
- ---------------------------------------------------------------------------------------------------------------
$37,701 $13,889 $8,919 $6,596 $5,253 $4,982 $77,340
- ---------------------==========================================================================================
</TABLE>
/a/ No other state individually exceeded 2 percent of total domestic residential
consumer loans.
<TABLE>
<CAPTION>
==================================================================================================
DOMESTIC CONSUMER LOAN DELINQUENCY INFORMATION/a/
- --------------------------------------------------------------------------------------------------
1996 1995
-------- -------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DELINQUENT CONSUMER LOANS
Residential first mortgages $ 609 $ 642 $ 644 $ 616 $ 595
Resdential junior mortgages 82 90 92 95 95
Credt card 199 190 164 165 166
Other 94 100 81 65 72
- --------------------------------------------------------------------------------------------------
$ 984 $1,022 $ 981 $ 941 $ 928
- --------------------------------------------======================================================
DELINQUENT CONSUMER LOAN RATIOS/b/
Residential first mortgages 1.61% 1.76% 1.79% 1.73% 1.71%
Residential junior mortgages 0.59 0.67 0.65 0.68 0.69
Credit card 2.23 2.08 1.91 2.00 2.14
Other 0.56 0.62 0.55 0.46 0.56
- --------------------------------------------------------------------------------------------------
1.27% 1.36% 1.33% 1.31% 1.34%
- ---------------------------------------------=====================================================
</TABLE>
/a/ 60 days or more past due.
/b/ Ratios represent delinquency balances expressed as a percentage of total
loans for that loan category.
26
<PAGE>
================================================================================
Domestic Commercial Loans--Commercial and industrial loans,
the largest sector of BAC's domestic commercial loan
portfolio, decreased by $0.6 billion between December 31,
1995 and March 31, 1996. However, average commercial and
industrial loans for the first quarter of 1996 increased $0.9
billion from the previous quarter. This increase was due to
strong loan demand from corporate borrowers.
<TABLE>
<CAPTION>
================================================================================
DOMESTIC COMMERCIAL LOANS SECURED BY REAL ESTATE BY GEOGRAPHIC AREA AND PROJECT
TYPE AT MARCH 31, 1996
- --------------------------------------------------------------------------------
Light Apartment &
(IN MILLIONS) Retail Office Industry Condominium Hotel Other Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $1,759 $1,149 $1,170 $ 814 $151 $ 583 $ 5,626
Washington 376 385 461 435 163 492 2,312
Nevada 448 62 51 108 30 120 819
Arizona 192 27 23 61 61 76 440
Oregon 115 42 68 129 34 49 437
Texas 42 6 33 83 6 59 229
Other/a/ 222 463 68 104 256 76 1,189
- -----------------------------------------------------------------------------------------
$3,154 $2,134 $1,874 $1,734 $701 $1,455 $11,052
- --------------------=====================================================================
</TABLE>
/a/ 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, 1996
- --------------------------------------------------------------------------------
Apartment & Light
(IN MILLIONS) Subdivision Retail Office Condominium Industry Hotel Other Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $332 $247 $337 $126 $ 87 $ 76 $ 73 $1,278
Washington 241 85 74 65 16 10 83 574
Nevada 58 68 34 70 10 16 38 294
Pennsylvania - - 182 - - - - 182
Arizona 44 30 7 54 4 - 4 143
Texas 24 22 5 82 1 - 4 138
Florida 4 108 - 7 - - - 119
Oregon 1 36 8 31 2 4 3 85
Illinois 12 13 38 12 - - - 75
Georgia 5 51 -- 7 - 1 - 64
Other/a/ 21 55 14 32 2 - 31 155
- -----------------------------------------------------------------------------------------
$742 $715 $699 $486 $122 $107 $236 $3,107
- ------------------------=================================================================
</TABLE>
/a/ No other state individually exceeded 2 percent of total domestic
construction and development loans.
27
<PAGE>
================================================================================
Foreign Loans -- Foreign loans increased $0.1 billion
between year-end 1995 and March 31, 1996. Loan outstandings
to banks and other financial institutions for the first
quarter 1996 decreased $0.5 billion from year-end 1995,
primarily resulting from payments by financial institutions
in certain Asian countries.
- --------------------------------------------------------------------------------
EMERGING MARKET In connection with its effort to maintain a diversified
EXPOSURE portfolio, BAC limits its exposure to any one country. In
particular, BAC strives to monitor its exposure to economies
that are considered emerging markets. As indicated in the
table below, at March 31, 1996, BAC's emerging market
exposure totaled $9,139 million, or 4 percent of total
assets, compared to $8,843 million, or 4 percent, at year-
end 1995. This exposure represents loans, restructured debt,
which is included in the securities portfolios, and other
monetary assets. BAC's investments in emerging markets are
predominantly concentrated in Latin America and Asia. As
developing countries in these regions improve their
infrastructure and regional trade capabilities, BAC plans to
continue to expand its investment in these regions.
================================================================================
EMERGING MARKET EXPOSURE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 1996
---------------------------------------------------------------------------------------------------------------------
LOANS AVAILABLE-FOR-SALE SECURITIES/a/ HELD-TO-MATURITY SECURITIES/a/ OTHER/b/
------------------ -------------------------------- -------------------------------- --------------
MEDIUM-
AND
SHORT- MEDIUM-AND SHORT- LONG-
(IN MILLIONS) TOTAL/c/ TERM LONG-TERM COLLATERALIZED UNCOLLATERALIZED COLLATERALIZED UNCOLLATERALIZED TERM TERM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mexico $2,727 $ 374 $ 512/d/ $298 $15 $ 856 $148 $ 512 $ 12
Brazil 1,320 589 16 - 16 - 42 640 17
India 968 102 81 - - - - 784 1
Chile 730 178 198 - - - - 270 84
Argentina 527 164 23 - 3 - 48 254 35
China 514 170 27 - - - - 315 2
Indonesia 433 207 15 - - - - 211 -
Colombia 384 160 175 - - - 6 43 -
Venezuela 385 1 10 45 - 288 21 1 19
Philippines 317 71 19 20 31 - - 159 17
Pakistan 281 26 14 - - - - 241 -
Other/e/ 553 152 141 125 - - - 135 -
- ------------------------------------------------------------------------------------------------------------------------------------
$9,139 $2,194/f/ $1,231/f/ $488/d/ $65/g/ $1,144/h/ $265/h/ $3,565 $187
- --------------======================================================================================================================
</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: $42 million for Mexico, $56 million for Brazil, $336
million for India, $178 million for Chile, $9 million for Argentina, $57
million for Indonesia, $38 million for Philippines, and $87 million for
Pakistan.
/d/ Includes a $30 million loan that is 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 $21 million.
/g/ Total available-for-sale securities includes $5 million of nonaccrual debt-
restructuring bonds.
/h/ Total fair value of held-to-maturity securities was approximately
$996 million.
28
<PAGE>
================================================================================
ALLOWANCE The allowance for credit losses at March 31, 1996 was $3,496
FOR CREDIT LOSSES million, or 2.24 percent of loan outstandings, compared with
$3,554 million, or 2.29 percent, at December 31, 1995. In
addition, BAC's ratio of the allowance for credit losses to
total nonaccrual assets was 206 percent at March 31, 1996, up
from 188 percent at December 31, 1995.
Management develops the allowance for credit losses using a
"building block approach" for various portfolio segments.
Significant loans, particularly those considered to be
impaired, are individually analyzed while other loans are
analyzed by portfolio segment. While management has allocated
the allowance to various portfolio segments, it is general in
nature and is available for the loan portfolio in its
entirety.
================================================================================
<TABLE>
<CAPTION>
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES
- ----------------------------------------------------------------------------------------
1996 1995
-------- ------------------------------------
(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 $ 471 $ 506 $ 483 $ 472 $ 473
Credit management allocated component 380 377 439 410 410
- ----------------------------------------------------------------------------------------
Total special mention and classified 851 883 922 882 883
Other:
Domestic consumer 1,288 1,247 1,189 1,143 1,081
Domestic commercial 237 229 231 219 224
Foreign 283 300 317 331 324
- ----------------------------------------------------------------------------------------
Total allocated 2,659 2,659 2,659 2,575 2,512
Unallocated 837 895 996 1,120 1,213
- ----------------------------------------------------------------------------------------
$3,496 $3,554 $3,655 $3,695 $3,725
- --------------------------------------------============================================
</TABLE>
Net credit losses for the first quarter of 1996 increased
$162 million from the amount reported in the same period a
year ago. Net credit losses in the domestic consumer loan
portfolio increased $55 million from the first quarter of
1995 largely due to higher charge-offs on credit card loans.
Increased charge-offs on the credit card portfolio resulted
from loan growth coupled with a higher level of personal
bankruptcy filings.
Net credit losses in the domestic commercial loan portfolio
amounted to $60 million in the first quarter of 1996,
compared with net credit recoveries of $7 million in the
comparable period a year ago. This increase was primarily due
to higher charge-offs on loans to financial institutions and
large corporate borrowers within the commercial and
industrial sector. The higher charge-offs on loans to
financial institutions resulted from a decline in the
collateral value of a loan to a particular borrower.
Net credit recoveries in the foreign loan portfolio amounted
to $12 million in the first quarter of 1996, compared to net
credit recoveries of $52 million in the first quarter of
1995. The first-quarter 1995 amounts reflect significant
recoveries on loans to borrowers in Brazil and Ecuador.
29
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================
QUARTERLY CREDIT LOSS EXPERIENCE
- ---------------------------------------------------------------------------------------------------
1996 1995
------- -------------------------------------------
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 $3,554 $3,655 $3,695 $3,725 $3,690
CREDIT LOSSES
Domestic consumer:
Residential first mortgages 11 12 12 11 14
Residential junior mortgages 20 19 19 19 17
Credit card 113 100 101 99 86
Other consumer 98 83 61 54 54
Domestic commercial:
Commercial and industrial 40 82 19 20 18
Loans secured by real estate 12 10 7 24 9
Construction and
development loans secured
by real estate 26 6 8 11 11
Financial institutions 23 - 1 - -
Lease financing - 1 - - -
Agricultural - - - 1 2
Loans for purchasing or
carrying securities - 5 - - -
Foreign 4 13 27 (26)/a/ 1
- ---------------------------------------------------------------------------------------------------
Total credit losses 347 331 255 213 212
CREDIT LOSS RECOVERIES
Domestic consumer:
Residential first mortgages - - - 1 -
Residential junior mortgages 4 4 3 5 4
Credit card 10 7 10 12 12
Other consumer 37 28 18 19 19
Domestic commercial:
Commercial and industrial 28 22 13 16 32
Loans secured by real estate 4 6 3 4 3
Construction and
development loans secured
by real estate 6 3 41 14 8
Financial institutions 2 1 2 2 -
Lease financing 1 - 1 1 2
Agricultural - 2 2 1 2
Loans for purchasing or
carrying securities - - - - -
Foreign 16 27 11 8 53
- ---------------------------------------------------------------------------------------------------
Total credit loss recoveries 108 100 104 83 135
- ---------------------------------------------------------------------------------------------------
Total net credit losses 239 231 151 130 77
Provision for credit losses 180 130 110 100 100
Allowance related to
mergers and acquisitions - - - - 3/b/
Other net additions (deductions) 1 - 1 - 9
- ---------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $3,496 $3,554 $3,655 $3,695 $3,725
- -----------------------------------------==========================================================
ANNUALIZED RATIO OF NET
CREDIT LOSSES (RECOVERIES)
TO AVERAGE LOAN OUTSTANDINGS
Domestic consumer:
Residential first mortgages 0.11% 0.13% 0.13% 0.12% 0.16%
Residential junior mortgages 0.48 0.41 0.45 0.42 0.38
Credit card 4.62 4.20 4.28 4.41 3.84
Other consumer 1.49 1.40 1.20 1.01 1.10
Domestic commercial:
Commercial and industrial 0.15 0.76 0.07 0.06 (0.20)
Loans secured by real estate 0.29 0.13 0.16 0.74 0.24
Construction and
development loans secured
by real estate 2.46 0.40 (3.97) (0.36) 0.33
Financial institutions 3.08 (0.10) (0.26) (0.31) -
Lease financing (0.16) 0.03 (0.17) (0.16) (0.36)
Agricultural - (0.31) (0.42) - -
Loans for purchasing or
carrying securities - 1.50 - - -
Total domestic 0.76 0.75 0.42 0.53 0.43
Foreign (0.21) (0.26) 0.29 (0.62) (1.03)
TOTAL 0.62 0.60 0.40 0.36 0.22
RATIO OF ALLOWANCE TO
LOANS AT QUARTER END 2.24 2.29 2.42 2.48 2.58
EARNINGS COVERAGE OF NET CREDIT LOSSES/c/ 5.89x 5.77x 8.75x 9.25x 14.96x
===================================================================================================
</TABLE>
/a/ Represents an allocated transfer risk reserve adjustment.
/b/ Represents the addition of consummation date allowance for credit losses of
Arbor National Holdings, Inc.
/c/ 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 $194 million, or 10 percent,
ASSETS between year-end 1995 and March 31, 1996. This decrease
reflected nonaccrual reductions in most segments of the loan
portfolio, particularly in construction and development loans
secured by real estate and in commercial and industrial loans.
These reductions resulted primarily from full or partial
payments on nonaccrual loans, and, to a lesser degree, charge-
offs, sales of nonaccrual loans, and the restoration of certain
nonaccrual loans to accrual status.
The improvement in BAC's credit quality during the first three
months of 1996 was also reflected in BAC's nonperforming assets
ratios. The ratio of nonperforming assets (comprised of
nonaccrual assets and other real estate owned) to total assets
declined 10 basis points from year-end 1995 to 0.93 percent at
March 31, 1996. In addition, at March 31, 1996, the ratio of
nonaccrual loans to total loans was 1.08 percent, down from 1.22
percent at December 31, 1995.
For further information concerning nonaccrual assets, refer to
the tables below and on pages 32 and 33.
================================================================================
<TABLE>
<CAPTION>
ANALYSIS OF CHANGE IN NONACCRUAL ASSETS
- --------------------------------------------------------------------------------------------
1996 1995
------- ------------------------------------------
FIRST FOURTH THIRD SECOND FIRST
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of quarter $1,891 $1,855 $1,962 $1,935 $2,080
Additions:
Loans placed on nonaccrual status 191 532 392 333 175
Deductions:
Sales (67) (21) (8) (1) (5)
Restored to accrual status (60) (70) (151) (86) (92)
Foreclosures (11) (32) (55) (11) (15)
Charge-offs (90) (92) (35) (42) (19)
Other, primarily payments (157) (281) (250) (166) (189)
- --------------------------------------------------------------------------------------------
BALANCE, END OF QUARTER $1,697 $1,891 $1,855 $1,962 $1,935
- --------------------------------------======================================================
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
NONACCRUAL ASSETS, RESTRUCTURED LOANS, AND LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
- ------------------------------------------------------------------------------------------------------------------------
1996 1995
-------- --------------------------------------------------------
(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 $ 301 $ 311 $ 314 $ 310 $ 311
Residential junior mortgages 69 72 67 67 65
Other consumer 3 2 3 4 10
Domestic commercial loans:
Commercial and industrial 457 511 612 576 396
Loans secured by real estate 251 280 329 336 341
Construction and development loans
secured by real estate 417 495 304 451 582
Financial institutions 25 46 2 3 4
Lease financing - - 1 1 1
Agricultural 33 29 35 32 36
- ------------------------------------------------------------------------------------------------------------------------
1,556 1,746 1,667 1,780 1,746
Foreign loans:
Commercial and industrial 111 117 151 134 133
Banks and other financial
institutions 4 - - 11 19
Governments and official
institutions 17 17 24 27 28
Other 6 8 10 10 9
- ------------------------------------------------------------------------------------------------------------------------
138 142 185 182 189
Other interest-bearing assets 3 3 3 - -
- ------------------------------------------------------------------------------------------------------------------------
$1,697/a/ $1,891/a/ $1,855/a/ $1,962/a/ $1,935/a/
- -------------------------------------------------=======================================================================
RESTRUCTURED LOANS
Domestic commercial:
Commercial and industrial $ 29 $ 78 $ 78 $ 72 $ 73
Loans secured by real estate 60 18 19 16 13
Construction and development loans
secured by real estate 1 15 3 1 9
Lease financing - - - - -
Agricultural - 1 1 9 13
- ------------------------------------------------------------------------------------------------------------------------
90 112 101 98 108
Foreign/b/ 1 1 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
$ 91 $ 113 $ 102 $ 99 $ 109
- -------------------------------------------------=======================================================================
LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
Domestic consumer:
Residential first mortgages $ 163 $ 180 $ 181 $ 172 $ 142
Residential junior mortgages 8 12 19 7 10
Other consumer 165 162 141 142 137
Domestic commercial:
Commercial and industrial 10 20 30 65 15
Loans secured by real estate 8 1 62 19 20
Construction and development loans
secured by real estate - - 4 33 35
Financial institutions 1 16 1 19 -
Agricultural - - - 1 -
Lease financing 1 1 - - -
- ------------------------------------------------------------------------------------------------------------------------
356 392 438 458 359
Foreign 4 19 1 1 10
- ------------------------------------------------------------------------------------------------------------------------
$ 360 $ 411 $ 439 $ 459 $ 369
- -------------------------------------------------=======================================================================
</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 $5 million at March 31, 1996, $62 million at December 31,
1995, $189 million at September 30, 1995, $296 million at June 30, 1995, and
$367 million at March 31, 1995.
/b/ Excludes debt restructurings with countries that have experienced liquidity
problems of $1.6 billion at March 31, 1996, $1.6 billion at December 31,
1995, $1.9 billion at September 30, 1995, $2.1 billion at June 30, 1995, and
$1.8 billion at March 31, 1995. 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, 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
DOMESTIC
Interest income that would have been recognized had the assets
performed in accordance with their original terms $68
Less: Interest income included in the results of operations 18
- ------------------------------------------------------------------------------------------------------------------------------
Domestic interest income foregone 50
FOREIGN
Interest income that would have been recognized had the assets
performed in accordance with their original terms 7
Less: Interest income included in the results of operations 2
- ------------------------------------------------------------------------------------------------------------------------------
Foreign interest income foregone 5
- ------------------------------------------------------------------------------------------------------------------------------
$55
- ---------------------------------------------------------------------------------------------------------------------------===
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
CASH INTEREST PAYMENTS ON NONACCRUAL ASSETS BY LOAN TYPE/a/
- ----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 1996 MARCH 31, 1996
--------------------------------------------------------------- -------------------------------------
CASH INTEREST
PAYMENTS APPLIED
CUMULATIVE BOOK AS A AVERAGE -------------------------
CONTRACTUAL INTEREST NONACCRUAL PERCENTAGE NONACCRUAL AS
(DOLLAR AMOUNTS PRINCIPAL CUMULATIVE APPLIED BOOK OF BOOK INTEREST
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 $ 304 $ 1 $ 2 $ 301 99% $ 306 $ 4 $ - $ 4
Residential junior
mortgages 71 2 - 69 97 71 1 - 1
Other consumer 15 10 2 3 17 3 - 1 1
Commercial:
Commercial and industrial 898 344 97 457 51 473 5 7 12
Loans secured by real
estate 404 126 27 251 62 269 4 2 6
Construction and
development loans secured
by real estate 559 123 19 417 75 458 3 8 11
Financial institutions 60 32 3 25 41 39 - - -
Lease financing - - - - - - - - -
Agricultural 48 9 6 33 69 33 1 1 2
- ----------------------------------------------------------------------------------------------------------------------------------
2,359 647 156 1,556 66 1,652 18 19 37
FOREIGN
Commercial and industrial 252 118 23 111 44 106 1 3 4
Banks and other financial
institutions 9 1 1 7 80 7 1 - 1
Governments and official
institutions 17 - - 17 98 17 - - -
Other 23 15 2 6 25 6 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
301 134 26 141 47 136 2 3 5
- ----------------------------------------------------------------------------------------------------------------------------------
$2,660 $ 781 $ 182 $1,697 64% $1,788 $ 20 $22 $ 42
- ---------------------------------=================================================================================================
CASH YIELD ON AVERAGE TOTAL NONACCRUAL BOOK BALANCE 9.58%
- ----------------------------------------------------------------------------------------------------------------------------------
</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 swaps, futures, forwards, and option contracts, all
of which derive their value from underlying interest rates,
foreign exchange rates, commodity values, or equity
instruments. Certain transactions involve standardized
contracts executed on organized exchanges, while others are
negotiated over-the-counter (OTC), with the terms tailored to
meet the needs of BAC and its customers.
BAC executes transactions to aid its customers in managing
exposures to interest rates, foreign exchange rates, prices
of securities, and financial or commodity indices.
Counterparties to BAC's foreign exchange and derivative
transactions generally include U.S. and foreign banks,
nonbank financial institutions, corporations, domestic and
foreign governments, and asset managers.
BAC generates trading revenue by executing transactions to
support customers' risk management needs, by efficiently
managing the positions that result from these transactions,
and by making markets in a wide variety of products.
As an end-user, BAC employs foreign exchange and derivatives
contracts to hedge interest rate risk in connection with its
own asset and liability management 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 subject BAC 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
may result in unexpected losses). For a detailed discussion
of these risks and how they are managed, refer to pages 27-
29, and 38-42 of BAC's 1995 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 8 of the Notes to Consolidated Financial Statements
on pages 8-13.
34
<PAGE>
INTEREST RATE RISK MANAGEMENT
================================================================================
BAC's governing objective in interest rate risk management is
to minimize the potential for significant loss as a result of
changes in interest rates. 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,
comprised of gap, options, and index mismatches. To minimize
exposures to declines in economic value due to gap
mismatches, BAC's policy is that assets and liabilities must
have approximately equal total duration. This policy protects
against losses of economic value in the event of major upward
and downward interest rate movements. BAC uses an internally
developed model to translate the mismatch in each repricing
period (i.e., the "gap") into a one-year mismatch with the
same economic risk.
<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 12/31/95 3/31/96
<S> <C> <C> <C> <C> <C> <C>
Net Interest Rate Risk Position $ (8.1) $ (6.9) $ 1.0 $ (2.8) $ 0.0 $ 7.7
</TABLE>
Graph indicates the composite net asset (+) or net liability
(-) repricing position measured across the entire maturity
mismatch profile and expressed as a one-year mismatch
position bearing the same aggregate level of risk.
For example, a six-month gap of $200 million is treated as
having approximately the same economic risk as a one-year gap
of $100 million. As shown in the above graph, BAC's net one-
year position has been essentially balanced throughout the
last four years.
Gap mismatches result from timing differences in the
repricing of assets, liabilities, 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, 1996 is shown in the table on
page 36.
35
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
U.S. DOLLAR DENOMINATED INTEREST RATE SENSITIVITY BY REPRICING OR MATURITY DATES
- ---------------------------------------------------------------------------------------------------------
MARCH 31, 1996
----------------------------------------------------------------------------
(GREATER THAN) (GREATER THAN) OVER
(IN MILLIONS) 0-6 MONTHS 6-12 MONTHS 1-5 YEARS 5 YEARS TOTAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC ASSETS
Federal funds sold and
securities purchased under resale
agreements $ 492 $ -- $ -- $ -- $ 492
Trading account securities 1,374 -- -- -- 1,374
Loans:
Prime indexed 17,270 -- -- -- 17,270
Adjustable rate residential first
mortgages 11,369 4,402 5,886 4,807 26,464
Other loans, net 42,509 5,863 17,850 11,223 77,445
Other assets 20,234 378 13,296 10,569 44,477
- ---------------------------------------------------------------------------------------------------------
DOMESTIC ASSETS 93,248 10,643 37,032 26,599 167,522
- ---------------------------------------------------------------------------------------------------------
DOMESTIC LIABILITIES AND
STOCKHOLDERS' EQUITY
Domestic deposits (64,545) (9,511) (22,678) (18,434) (115,168)
Other short-term borrowings (9,875) (1,244) (200) (30) (11,349)
Long-term debt and subordinated
capital notes (6,718) (695) (2,330) (5,077) (14,820)
Other liabilities and stockholders'
equity (11,281) (395) (10,136) (17,039) (38,851)
- ---------------------------------------------------------------------------------------------------------
Domestic Liabilities and
Stockholders' Equity (92,419) (11,845) (35,344) (40,580) (180,188)
OFFSHORE FUNDING BOOKS, NET (1,740) 353 218 1,169 --
- ---------------------------------------------------------------------------------------------------------
Core Gap Before Risk Management
Positions (911) (849) 1,906 (12,812) (12,666)
INTEREST RATE RISK MANAGEMENT
POSITIONS
- ---------------------------------------------------------------------------------------------------------
Investment securities/a/ 1,676 1,288 4,421 5,281 12,666
Off-balance-sheet financial
instruments/b/ (7,457) 1,836 (3,263) 8,884 --
- ---------------------------------------------------------------------------------------------------------
Total Interest Rate Risk
Management Positions (5,781) 3,124 1,158 14,165 12,666
- ---------------------------------------------------------------------------------------------------------
Net Gap (6,692) 2,275 3,064 1,353 --
- ---------------------------------------------------------------------------------------------------------
Cumulative Gap $ (6,692) $ (4,417) $ (1,353) $ -- $ --
- ---------------------------------------------------------------------------------------------------------
</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, 1996, BAC had a "core" imbalance before risk
management positions as liabilities and equity exceeded
assets by approximately $13 billion. BAC's risk management
activities eliminated this imbalance while containing the
size of net gap mismatches in individual repricing periods.
Investment securities and "received fixed" swaps essentially
neutralized core gaps beyond five years.
36
<PAGE>
FUNDING AND CAPITAL
================================================================================
LIQUIDITY BAC's 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, 1996,
liquid assets totaled $47.3 billion, essentially unchanged
from the amount reported at year-end 1995.
- --------------------------------------------------------------------------------
CAPITAL At March 31, 1996, stockholders' equity totaled $20.2
MANAGEMENT billion, essentially unchanged from year-end 1995. Common
equity increased $0.2 billion during the first three months
of 1996, while preferred stock declined by the same amount.
Common equity increased $0.5 billion due to first-quarter
1996 earnings net of preferred and common stock dividends.
This increase was partially offset by the common stock
repurchases discussed below.
In connection with its ongoing efforts to return excess
capital to its shareholders, BAC repurchased 4.6 million
shares of its common stock during the first quarter of 1996
at an average per-share price of $68.24, which reduced common
equity by $0.3 billion. The shares were repurchased on the
open market over 30 trading days and represented
approximately 11 percent of the total volume of BAC common
stock traded on those days. Remaining buyback authority for
common stock under its current repurchase program totaled
$1.84 billion at March 31, 1996. For additional information
regarding the stock repurchase program, refer to Note 4 of
the Notes to Consolidated Financial Statements on page 7.
The decline in BAC's preferred stock resulted from the
redemption of all 400,000 outstanding shares of BAC's 11%
Cumulative Fixed Preferred Stock, Series J (Series J), on
March 31, 1996. In addition, on March 4, 1996, BAC announced
its intention to redeem all 7,250,000 outstanding shares of
it's 9 5/8 Cumulative Preferred Stock, Series F (Series F),
on April 16, 1996. For additional information regarding
preferred stock, refer to Note 5 of the notes to Consolidated
Financial Statements on page 7.
BAC's risk-based capital ratios continued to exceed
regulatory guidelines for "well-capitalized" status. BAC's
Tier 1 risk-based capital ratio decreased 5 basis points
between December 31, 1995 and March 31, 1996 primarily due to
an increase in total risk-weighted assets and to a reduction
in preferred stock. The reduction in preferred stock was
attributable to the redemption of Series J and the
announcement of the redemption of Series F, as discussed
above. BAC's Tier 1 leverage ratio was 6.77 percent at
March 31, 1996, compared with 6.92 percent at December 31,
1995.
37
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
RISK-BASED CAPITAL, RISK-WEIGHTED ASSETS, AND RISK-BASED CAPITAL RATIOS
- ------------------------------------------------------------------------------------------------------------------------
1996 1995
-------- --------------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RISK-BASED CAPITAL
Common stockholders' equity $ 17,800 $ 17,598 $ 17,289 $ 16,966 $ 16,433
Qualified perpetual preferred stock 2,242 2,623 2,623 2,723 3,068
Less: Goodwill, nongrandfathered core
deposit and other identifiable
intangibles, and other
deductions/a/ (5,114) (5,230) (5,352) (5,409) (5,550)
- ------------------------------------------------------------------------------------------------------------------------
Tier 1 capital 14,928 14,991 14,560 14,280 13,951
Eligible portion of the allowance
for credit losses 2,571 2,566 2,526 2,506 2,419
Hybrid capital instruments 214 214 214 264 336
Subordinated notes and
debentures 5,934 5,798 5,865 5,717 5,724
Less: Other deductions (135) (153) (148) (142) (145)
- ------------------------------------------------------------------------------------------------------------------------
Tier 2 capital 8,584 8,425 8,457 8,345 8,334
- ------------------------------------------------------------------------------------------------------------------------
Total 23,512 23,416 23,017 22,625 22,285
- ------------------------------------------------------------------------------------------------------------------------
Less: Investment in unconsolidated
subsidiaries/b/ (47) - - - -
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-BASED CAPITAL $ 23,465 $ 23,416 $ 23,017 $ 22,625 $ 22,285
- -----------------------------------------------=========================================================================
RISK-WEIGHTED ASSETS
Balance sheet assets:
Trading account assets $ 3,771 $ 3,506 $ 3,457 $ 3,384 $ 2,768
Available-for-sale and
held-to-maturity securities 5,029 5,007 5,238 5,314 5,157
Loans 132,256 132,504 128,826 126,437 123,443
Other assets 17,667 16,725 17,026 17,929 16,512
- ------------------------------------------------------------------------------------------------------------------------
Total balance sheet assets 158,723 157,742 154,547 153,064 147,880
- ------------------------------------------------------------------------------------------------------------------------
Off-balance-sheet items:
Unused commitments 24,991 26,268 25,269 24,577 22,669
Standby letters of credit 13,675 12,888 13,138 12,675 12,144
Foreign exchange and derivatives
contracts 4,617 4,530 4,927 5,543 6,225
Other 2,474 2,567 2,783 3,190 3,044
- ------------------------------------------------------------------------------------------------------------------------
Total off-balance-sheet items 45,757 46,253 46,117 45,985 44,082
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-WEIGHTED ASSETS $204,480 $203,995 $200,664 $199,049 $191,962
- -----------------------------------------------=========================================================================
RISK-BASED CAPITAL RATIOS
TIER 1 CAPITAL RATIO 7.30% 7.35% 7.26% 7.17% 7.27%
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL RATIO 11.48% 11.48% 11.47% 11.37% 11.61%
- ------------------------------------------------------------------------------------------------------------------------
TIER 1 LEVERAGE RATIO 6.77% 6.92% 6.80% 6.68% 6.84%
- -----------------------------------------------=========================================================================
</TABLE>
/a/ Includes nongrandfathered CDI and other identifiable intangibles acquired
after February 19, 1992 of $830 million and $75 million, respectively, at
March 31, 1996, $856 million and $78 million, respectively, at December 31,
1995, $877 million and $90 million, respectively, at September 30, 1995,
$897 million and $93 million, respectively, at June 30, 1995, and
$915 million and $97 million, respectively, at March 31, 1995. Also includes
$9 million, $1 million, $24 million, $24 million, and $122 million, at
March 31, 1996, December 31, 1995, September 30, 1995, June 30, 1995, and
March 31, 1995, 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.
/b/ Reflects the Federal Reserve Board's adoption of the Office of the
Comptroller of the Currency's treatment of investment in unconsolidated
subsidiaries. In prior periods, half of the amount for each respective
period was included in other deductions from Tier 1 Capital and half was
included in other deductions from Tier 2 Capital.
38
<PAGE>
OTHER INFORMATION
================================================================================
ITEM 6. (a) Exhibits:
EXHIBITS AND
REPORTS ON Exhibit
FORM 8-K Number Exhibit
------- -------
27 Financial Data Schedule
(b) Reports on Form 8-K:
During the first quarter of 1996, the Parent filed reports on
Form 8-K dated January 17, 1996, February 5, 1996, and
March 4, 1996. The January 17, 1996 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
February 5, 1996 report disclosed, pursuant to Item 5 of the
report, the Parent board of directors' decision to increase
the quarterly dividend on its common stock. The March 4, 1996
report filed, pursuant to Items 5 and 7 of the report, a copy
of the Parent's press release titled "BankAmerica Increases
Stock Repurchase Program."
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/ MICHAEL E. O'NEILL
Michael E. O'Neill
Vice Chairman and
Chief Financial Officer
May 9, 1996
By Chief Accounting Officer and
Duly Authorized Signatory:
/s/ JAMES H. WILLIAMS
James H. Williams
Executive Vice President
and Chief Accounting Officer
May 9, 1996
40
<PAGE>
[BANKAMERICA 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:
BANK OF AMERICA
CORPORATE PUBLIC RELATIONS #13124
P.O. BOX 37000
SAN FRANCISCO, CA 94137
Information Online -- To keep
current online via the Internet,
visit BankAmerica Corporation's home
page on the World Wide Web
(http://www.bankamerica.com)
to view the latest information about
the corporation and its products and
services, or apply for a loan or credit
card. Corporate disclosure documents
filed with the Securities and Exchange
Commission by BankAmerica
Corporation and other companies
can be obtained from the Securities
and Exchange Commission's home
page on the World Wide Web
(http://www.sec.gov).
[RECYCLED PAPER LOGO APPEARS HERE] Recycled
Paper
NL-9 5/96
<PAGE>
GRAPHICS APPENDIX INDEX
<TABLE>
<CAPTION>
BankAmerica Corporation
First Quarter 1996 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
Exhibit
Reference Description
- --------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS FINANCIAL DATA SCHEDULE ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31,
1996 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 the 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,870
<INT-BEARING-DEPOSITS> 5,585
<FED-FUNDS-SOLD> 6,341
<TRADING-ASSETS> 11,215
<INVESTMENTS-HELD-FOR-SALE> 11,287
<INVESTMENTS-CARRYING> 4,523
<INVESTMENTS-MARKET> 4,143
<LOANS> 156,155
<ALLOWANCE> 3,496
<TOTAL-ASSETS> 234,243
<DEPOSITS> 160,517
<SHORT-TERM> 21,288
<LIABILITIES-OTHER> 17,197
<LONG-TERM> 15,074<F1>
604
0
<COMMON> 2,423
<OTHER-SE> 17,140
<TOTAL-LIABILITIES-AND-EQUITY> 234,243
<INTEREST-LOAN> 3,297
<INTEREST-INVEST> 298
<INTEREST-OTHER> 494<F2>
<INTEREST-TOTAL> 4,089
<INTEREST-DEPOSIT> 1,314
<INTEREST-EXPENSE> 1,943
<INTEREST-INCOME-NET> 2,146
<LOAN-LOSSES> 180
<SECURITIES-GAINS> 30
<EXPENSE-OTHER> 2,013
<INCOME-PRETAX> 1,227
<INCOME-PRE-EXTRAORDINARY> 1,227
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720
<EPS-PRIMARY> 1.79
<EPS-DILUTED> 1.79
<YIELD-ACTUAL> 4.36
<LOANS-NON> 1,697
<LOANS-PAST> 360
<LOANS-TROUBLED> 91
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,554
<CHARGE-OFFS> 347
<RECOVERIES> 108
<ALLOWANCE-CLOSE> 3,496
<ALLOWANCE-DOMESTIC> 0<F3>
<ALLOWANCE-FOREIGN> 0<F3>
<ALLOWANCE-UNALLOCATED> 837
<FN>
<F1>Includes subordinated capital notes of $356 million.
<F2>Includes interest income on trading account assets of $216 million.
<F3>These amounts are not reported in our interim filing.
</FN>
</TABLE>
