<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
Commission file number: 1-7377.
Exact name of registrant as specified in its charter:
BANKAMERICA CORPORATION
Address and telephone
State of incorporation: of principal executive offices: I.R.S. Employer I.D. No:
Delaware. 94-1681731.
Bank of America Center
San Francisco, California 94104
415-622-3530.
Securities registered pursuant to Section 12(b) of the Act:
New York, Chicago, and Pacific Stock Exchanges: Common Stock, Par Value $1.5625
and Preferred Share Purchase Rights
New York Stock Exchange:
<TABLE>
<S> <C> <C>
Cumulative Adjustable Preferred 9% Cumulative Preferred Stock, Depositary Shares Each Representing a
Stock, Series A Series H One-Twentieth Interest in a Share of:
Cumulative Adjustable Preferred 8 3/8% Cumulative Preferred Stock, 11% Preferred Stock, Series J
Stock, Series B Series K 8.16% Cumulative Preferred Stock,
9 5/8% Cumulative Preferred Stock, Floating Rate Subordinated Capital Series L
Series F Notes Due August 15, 1996 7 7/8% Cumulative Preferred Stock,
Series M
8 1/2% Cumulative Preferred Stock,
Series N
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the closing price on the consolidated
transaction reporting system on January 31, 1996, was in excess of $24.6
billion.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of January 31, 1996.
Common Stock, $1.5625 par value------365,918,099 shares
outstanding on January 31, 1996.*
*In addition, 19,338,165 shares were held in treasury.
Documents incorporated by reference and parts of Form 10-K into
which incorporated:
Portions of the Annual Report to Shareholders for the Year
Ended December 31, 1995 Parts I, II, & IV
Portions of the Proxy Statement for the May 23, 1996 Annual
Meeting of Shareholders Part III
<PAGE>
FORM 10-K
================================================================================
<TABLE>
<S> <C> <C>
PART I Items 1 and 2. Business and Properties
General..................................................................... 2
Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential.................................. 4
Available-for-Sale and Held-to-Maturity Securities.......................... 8
Loan Portfolio.............................................................. 9
Summary of Credit Loss Experience........................................... 12
Deposits.................................................................... 12
Return on Equity and Assets................................................. 13
Short-Term Borrowings....................................................... 13
Competition................................................................. 13
Supervision and Regulation.................................................. 14
Employees................................................................... 17
Item 3. Legal Proceedings........................................................... 17
Item 4. Submission of Matters to a Vote of Security Holders......................... 17
- ---------------------------------------------------------------------------------------------------------
PART II Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................................... 18
Item 6. Selected Financial Data..................................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 18
Item 8. Financial Statements and Supplementary Data................................. 18
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................................. 18
- ---------------------------------------------------------------------------------------------------------
PART III Item 10. Directors and Executive Officers of the Registrant.......................... 19
Item 11. Executive Compensation...................................................... 21
Item 12. Security Ownership of Certain Beneficial Owners and Management.............. 21
Item 13. Certain Relationships and Related Transactions.............................. 21
- ---------------------------------------------------------------------------------------------------------
PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............ 22
- ---------------------------------------------------------------------------------------------------------
SIGNATURES ............................................................................... 25
</TABLE>
1
<PAGE>
PART I
================================================================================
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
________________________________________________________________________________
GENERAL BankAmerica Corporation (the Parent) is a bank holding
company that was incorporated on October 7, 1968, under the
laws of the state of Delaware, and is registered under the
Bank Holding Company Act of 1956, as amended. At December 31,
1995, BankAmerica Corporation and consolidated subsidiaries
(BAC) was one of the three largest bank holding companies in
the United States, based on total assets of $232.4 billion.
During 1994, Continental Bank Corporation (Continental) was
merged with and into the Parent, and Continental's principal
subsidiary, Continental Bank, was renamed Bank of America
Illinois (BAI). In addition, during 1994, BAC acquired United
Mortgage Holding Company in Minnesota and the Virginia
processing operations of Margaretten Mortgage. During 1995,
BAC completed its acquisition of Arbor National Holdings,
Inc., based in New York. Additional information related to
the Continental merger is incorporated by reference from Note
3 on pages 56 through 58 of the 1995 Annual Report to
Shareholders. During 1995, BAC began to divest its
Institutional Trust and Securities Services business.
Additional information related to this divestiture is
incorporated by reference from page 21 of the 1995 Annual
Report to Shareholders.
The Parent's largest subsidiaries, based on total assets at
year-end 1995, are Bank of America NT&SA (the Bank), Seattle-
First National Bank (SFNB), and BAI. The Bank was founded by
A. P. Giannini in San Francisco, California, and began
business as Bank of Italy on October 17, 1904, offering
banking services to individuals and small businesses in the
community. It adopted its present name on November 1, 1930,
and became a subsidiary of the Parent on April 1, 1969. SFNB,
the largest bank in Washington State based on total assets at
December 31, 1995, was acquired by the Parent in 1983. SFNB
has a major presence in the consumer and commercial banking
sectors of the Pacific Northwest. BAI, headquartered in
Chicago, provides corporate, middle market, and private
banking services.
The Parent's subsidiaries also include Bank of America
Arizona, Bank of America Nevada, Bank of America Oregon, and
Bank of America Community Development Bank, all of which have
state charters; Bank of America Alaska, N.A., Bank of America
New Mexico, N.A., and Bank of America Texas, N.A., which are
national banks; and Bank of America, FSB (FSB), a federal
savings bank. In addition, Bank of America National
Association, which holds a national charter, offers credit
card services, primarily to individuals, throughout the
United States.
2
<PAGE>
================================================================================
OPERATIONS
=============================================================
The Parent, through its network of subsidiaries, provides
banking and other financial services throughout the United
States and in selected international markets to consumers and
business customers, including corporations, governments, and
other institutions.
In providing financial products to consumers, BAC offers
retail deposit services, residential first mortgages, credit
card products, manufactured housing financing, investment
services, and other consumer finance products. BAC's consumer
banking operations serve the largest customer base of any
bank in the western United States - approximately 11 million
households in 1995. In the ten western states in which BAC
operates, it offers the largest full-service branch network -
nearly 2,000 branches, approximately 200 of them in
supermarkets and other stores. In addition, BAC's proprietary
network of more than 6,600 ATMs is the nation's largest. In
California, BAC's largest market, the Bank operated
approximately 1,020 branches at December 31, 1995. SFNB had
approximately 270 branches at December 31, 1995.
As a global financial intermediary, BAC provides capital-
raising services, trade finance, cash management, investment
banking, capital markets products, and financial advisory
services to large public- and private-sector institutions
that are part of the global economy.
In addition, BAC provides credit and other financial services
to a variety of real estate market segments, including
developers, investors, pension fund advisors, real estate
investment trusts, and property managers.
The wide range of products and services available to
consumers and large institutions is also provided to middle
market customers (companies with annual revenues between $5
million and $250 million) primarily throughout the West and
in the Midwest.
Furthermore, BAC provides a broad range of private banking
and investment services to customers worldwide, including
personal trust and investment management products, such as
mutual funds, fixed-income securities, annuities, and equity
securities.
Additional information about BAC and its operations is
incorporated by reference from the inside front cover, pages
5 through 15, pages 17 through 21, Note 2 on page 56, and
Note 25 on page 82 of the 1995 Annual Report to Shareholders.
PROPERTIES
=============================================================
BAC's principal offices are located at 555 California Street
in San Francisco, California.
SFNB's principal offices are located at 701 Fifth Avenue in
Seattle, Washington.
BAI's principal offices are located at 231 South LaSalle
Street in Chicago, Illinois.
At December 31, 1995, BAC owned approximately one-half of its
properties. The remaining facilities were leased.
3
<PAGE>
================================================================================
DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY; INTEREST RATES
AND INTEREST DIFFERENTIAL
================================================================================
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1995 Year Ended December 31, 1994
---------------------------------- -----------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,853 $ 466 7.95% $ 4,912 $ 325 6.62%
Federal funds sold 548 32 5.89 1,318 55 4.13
Securities purchased under resale agreements 8,823 618 7.00 6,378 351 5.51
Trading account assets 9,106 745 8.18 6,713 476 7.09
Available-for-sale securities/d/ 9,768/c/ 764 7.83 9,675/c/ 593 6.13
Held-to-maturity securities/d/ 7,192 524 7.29 10,805/c/ 794 7.35
Domestic loans:
Consumer--residential first mortgages 35,407 2,500 7.06 32,012 1,913 5.97
Consumer--residential junior mortgages 13,832 1,252 9.05 13,196 1,009 7.65
Consumer--credit card 8,230 1,230 14.95 7,280 1,139 15.65
Other consumer 14,149 1,399 9.89 11,847 1,217 10.27
Commercial and industrial 30,927 2,619 8.47 23,643 1,665 7.04
Commercial loans secured by real estate 10,586 957 9.04 9,407 757 8.04
Construction and development loans secured by real estate 3,367 373 11.07/e/ 3,948 307 7.78
Financial institutions 2,511 143 5.69 2,142 108 5.06
Lease financing 1,835 111 6.06 1,675 129 7.70
Agricultural 1,619 157 9.67 1,641 129 7.87
Loans for purchasing or carrying securities 1,303 91 7.02 1,814 92 5.06
Other 1,394 91 6.56 1,244 76 6.10
-------- -------- -------- --------
Total domestic loans 125,160 10,923 8.73 109,849 8,541 7.77
Foreign loans 21,754 1,792 8.24 18,572 1,273 6.86
-------- -------- -------- --------
Total loan/c/ 146,914 12,715 8.65 128,421 9,814 7.64
-------- -------- -------- --------
Total earning assets 188,204 $ 15,864 8.43 168,222 $ 12,408 7.38
======== ========
Nonearning assets 42,641 37,366
Less: Allowance for credit losses 3,672 3,520
-------- --------
TOTAL ASSETS/f/ $227,173 $202,068
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,241 $ 159 1.20% $ 13,761 $ 160 1.16%
Savings 13,550 282 2.08 14,427 294 2.04
Money market 29,070 870 2.99 32,625 818 2.51
Time 30,002 1,471 4.90 28,259 864 3.06
-------- -------- -------- --------
Total domestic interest-bearing deposits 85,863 2,782 3.24 89,072 2,136 2.40
Foreign interest-bearing deposits/g/:
Banks located in foreign countries 10,245 679 6.63 6,771 421 6.23
Governments and official institutions 6,845 397 5.80 4,646 217 4.67
Time, savings, and other 16,131 1,065 6.60 11,371 563 4.95
-------- -------- -------- --------
Total foreign interest-bearing deposits 33,221 2,141 6.44 22,788 1,201 5.27
-------- -------- -------- --------
Total interest-bearing deposits 119,084 4,923 4.13 111,860 3,337 2.98
Federal funds purchased 2,222 131 5.89 611 27 4.48
Securities sold under repurchase agreements 9,110 581 6.38 6,455 351 5.44
Other short-term borrowings 9,301 630 6.77 4,231 275 6.50
Long-term debt 15,156 1,067 7.04 13,920 810 5.82
Subordinated capital notes 605 46 7.58 606 42 6.84
-------- -------- -------- --------
Total interest-bearing liabilities 155,478 $ 7,378 4.75 137,683 $ 4,842 3.52
======== ========
Domestic noninterest-bearing deposits 33,272 31,938
Foreign noninterest-bearing deposits 1,630 1,498
Other noninterest-bearing liabilities 17,238 13,258
-------- --------
Total liabilities/f/ 207,618 184,377
Stockholders' equity 19,555 17,691
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $227,173 $202,068
======== ========
Interest income as a percentage of average earning assets 8.43% 7.38%
Interest expense as a percentage of average earning assets (3.92) (2.88)
------ ------
NET INTEREST MARGIN 4.51% 4.50%
====== ======
</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 basis adjustments are based on a marginal tax
rate of 35 percent for 1995, 1994, and 1993.
/c/ Average balances include nonaccrual assets.
/d/ Refer to the table on page 7 for more detail on available-for-sale and held-
to-maturity securities.
/e/ Rate reflects a higher level of interest recoveries on nonaccrual loans
during the year ended December 31, 1995 as compared to the years ended
December 31, 1994 and 1993.
/f/ The percentage of average total assets attributable to foreign operations
for the years ended December 31, 1995, 1994, and 1993 was 18 percent, 18
percent, and 16 percent, respectively. The percentage of average total
liabilities attributable to foreign operations for the same periods was 19
percent, 18 percent, and 16 percent, respectively.
/g/ Primarily consists of time deposits in denominations of $100,000 or more.
4
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1993 Fourth Quarter 1995
- ---------------------------------- ---------------------------------
Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- ---------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,642/c/ $ 194 7.36% $ 5,962 $ 119 7.91%
1,131 35 3.12 392 5 5.51
3,903 174 4.46 8,204 147 7.09
6,341 375 5.91 9,568 200 8.28
4,118 280 6.79 9,951 196 7.86
15,759 1,123 7.13 6,614 120 7.22
29,548 1,858 6.29 36,361 674 7.42
13,388 1,056 7.89 13,691 306 8.85
7,499 1,220 16.26 8,750 318 14.55
11,271 1,174 10.41 15,633 389 9.87
20,580 1,301 6.32 31,940 666 8.27
9,707 729 7.51 10,768 241 8.95
5,718 295 5.17 3,237 84 10.23
1,948 68 3.48 2,786 34 4.89
1,773 219 12.36 1,876 26 5.53
1,605 122 7.62 1,572 37 9.44
1,447 59 4.05 1,284 22 6.83
1,099 55 5.03 1,410 23 6.59
-------- ------- -------- -------
105,583 8,156 7.73 129,308 2,820 8.68
19,531 1,312 6.72 22,588 468 8.22
-------- ------- -------- -------
125,114 9,468 7.57 151,896 3,288 8.62
-------- ------- -------- -------
159,008 $11,649 7.32 192,587 $ 4,075 8.42
30,144 ======= 43,286 =======
3,826 3,604
-------- --------
$185,326 $232,269
========
$ 13,469 $ 181 1.34% $ 13,165 $ 40 1.21%
13,977 312 2.23 13,216 70 2.08
34,182 851 2.49 28,271 221 3.11
30,939 772 2.50 29,776 385 5.12
-------- ------- -------- -------
92,567 2,116 2.29 84,428 716 3.36
3,346 230 6.88 11,856 196 6.54
1,927 78 4.08 7,446 106 5.67
10,276 547 5.32 17,680 289 6.49
-------- ------- -------- -------
15,549 855 5.50 36,982 591 6.34
-------- ------- -------- -------
108,116 2,971 2.75 121,410 1,307 4.27
570 16 2.78 2,492 35 5.60
2,837 158 5.58 9,051 147 6.44
3,088 201 6.52 9,653 168 6.88
14,090 727 5.16 15,100 265 6.98
1,499 113 7.52 605 12 7.50
-------- ------- -------- -------
130,200 $ 4,186 3.22 158,311 $ 1,934 4.84
30,688 ======= 34,350 =======
1,425 1,539
6,728 18,207
-------- --------
169,041 212,407
16,285 19,862
-------- --------
$185,326 $232,269
======== 7.32% ======== 8.42%
(2.63) (3.98)
----- -----
4.69% 4.44%
===== =====
Fourth Quarter 1994
- ------------------------------------
Balance/a/ Interest/b/ Rate/b/
- ------------------------------------
<C> <C> <C>
$ 5,860 $ 108 7.33%
837 11 5.21
6,956 106 6.05
6,770 125 7.31
10,393/c/ 182 6.96
8,427/c/ 156 7.40
33,400 523 6.27
13,397 246 7.30
7,602 289 15.22
12,692 350 10.93
28,523 576 8.02
10,018 212 8.46
3,857 85 8.69
2,761 37 5.32
1,724 26 6.03
1,668 36 8.61
1,590 26 6.47
1,355 21 6.15
-------- -------
118,587 2,427 8.15
19,989 371 7.35
-------- -------
138,576 2,798 8.03
-------- -------
177,819 $ 3,486 7.80
40,478 =======
3,648
--------
$214,649
========
$ 13,674 $ 40 1.17%
14,190 74 2.06
32,050 215 2.67
31,411 310 3.92
-------- -------
91,325 639 2.78
8,737 138 6.26
5,183 69 5.28
12,313 173 5.58
-------- -------
26,233 380 5.75
-------- -------
117,558 1,019 3.44
1,168 15 5.22
6,623 93 5.55
5,094 84 6.53
14,769 245 6.56
605 11 7.08
-------- -------
145,817 $ 1,467 3.99
33,930 =======
1,634
14,286
--------
195,667
18,982
--------
$214,649
========
7.80%
(3.27)
-----
4.53%
=====
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
================================================================================
NET INTEREST INCOME ANALYSIS
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1995 over 1994 Year Ended December 31, 1994 over 1993
--------------------------------------- ---------------------------------------
INCREASE (DECREASE)/a/ INCREASE (DECREASE)/a/
--------------------------------------- ---------------------------------------
(in millions) Volume Rate Net Volume Rate Net
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME/b/
Interest-bearing deposits in banks $ 69 $ 72 $ 141 $ 152 $ (21) $ 131
Federal funds sold (40) 17 (23) 7 13 20
Securities purchased under resale agreements 157 110 267 129 48 177
Trading account assets 188 81 269 23 78 101
Available-for-sale securities:
U.S. Treasury and other government agency
securities (84) 28 (56) 74 4 78
Mortgage-backed securities 35 46 81 171 (26) 145
Other domestic securities 11 2 13 19 (1) 18
Foreign securities 65 68 133 79 (7) 72
------- ------
Total available-for-sale securities 171 313
Held-to-maturity securities:
U.S. Treasury and other government agency
securities (20) - (20) (183) 41 (142)
Mortgage-backed securities (179) (3) (182) (273) (9) (282)
State, county, and municipal securities (3) (1) (4) (6) 1 (5)
Other domestic securities (4) 1 (3) (48) (32) (80)
Foreign securities (56) (5) (61) 180 - 180
------- ------
Total held-to-maturity securities (270) (329)
Domestic loans:
Consumer-residential first mortgages 216 371 587 151 (96) 55
Consumer-residential junior mortgages 51 192 243 (15) (32) (47)
Consumer-credit card 144 (53) 91 (35) (46) (81)
Other consumer 229 (47) 182 59 (16) 43
Commercial and industrial 575 379 954 206 158 364
Commercial loans secured by real estate 100 100 200 (23) 51 28
Construction and development loans
secured by real estate (50) 116 66 (109) 121 12
Financial institutions 20 15 35 7 33 40
Lease financing 11 (29) (18) (12) (78) (90)
Agricultural (2) 30 28 3 4 7
Loans for purchasing or carrying securities (30) 29 (1) 17 16 33
Other 9 6 15 8 13 21
------- ------
Total domestic loans 2,382 385
Foreign loans 239 280 519 (66) 27 (39)
------- ------
Total loans 2,901 346
------- ------
NET INCREASE $ 3,456 $ 759
======= =======
INTEREST EXPENSE
Domestic interest-bearing deposits:
Transaction $ (6) $ 5 $ (1) $ 4 $ (25) $ (21)
Savings (18) 6 (12) 10 (28) (18)
Money market (95) 147 52 (40) 7 (33)
Time 56 551 607 (71) 163 92
------- ------
Total domestic interest-bearing deposits 646 20
Foreign interest-bearing deposits:
Banks located in foreign countries 229 29 258 215 (24) 191
Governments and official institutions 119 61 180 126 13 139
Time, savings, and other 279 223 502 56 (40) 16
------- ------
Total foreign interest-bearing deposits 940 346
------- ------
Total interest-bearing deposits 1,586 366
Federal funds purchased 93 11 104 1 10 11
Securities sold under repurchase agreements 162 68 230 197 (4) 193
Other short-term borrowings 343 12 355 75 (1) 74
Long-term debt 76 181 257 (9) 92 83
Subordinated capital notes - 4 4 (62) (9) (71)
------- ------
NET INCREASE $ 2,536 $ 656
======= =======
===================================================================================================================================
</TABLE>
/a/ Changes that are the result of a joint volume and rate fluctuation are
allocated in proportion to the volume and rate changes.
/b/ Interest income is presented on a taxable-equivalent basis. The taxable-
equivalent basis adjustments are based on a marginal tax rate of 35 percent
for 1995, 1994, and 1993.
6
<PAGE>
================================================================================
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES--AVERAGE BALANCES, INTEREST,
- --------------------------------------------------------------------------------
AND AVERAGE RATES
- -----------------
<TABLE>
<CAPTION>
Year Ended December 31, 1995 Year Ended December 31, 1994
-----------------------------------------------------------------------------------------------------
Rate Rate
Rate based on Rate based on
based on amortized based on amortized
(dollar amounts in millions) Balance/a/ Interest/b/ fair value/b/ cost/b/ Balance/a/ Interest/b/ fair value/b/ cost/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $1,659 $108 6.49% 6.45% $3,029 $164 5.42% 5.41%
Mortgage-backed securities 4,962 344 6.94 6.89 4,410 263 5.96 5.88
Other domestic securities 660 34 5.22 5.84 427 21 4.78 5.00
Foreign securities 2,487/c/ 278 11.17/d/ 10.10/d/ 1,809/c/ 145 8.05 7.09
- ------------------------------------------------------------------------------------------------------------------------------------
$9,768 $764 7.83% 7.64% $9,675 $593 6.13% 5.95%
- --------------------------------====================================================================================================
<CAPTION>
Year Ended December 31, 1993
-----------------------------------------
Rate
based on
amortized
(dollar amounts in millions) Balance/a/ Interest/b/ cost/b/
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $1,646 $86 5.20%
Mortgage-backed securities 1,606 118 7.35
Other domestic securities 39 3 7.19
Foreign securities 827 73 8.83
- -----------------------------------------------------------------------------------
$4,118 $280 6.79%
- --------------------------------------------=======================================
<CAPTION>
Year Ended December 31, 1995 Year Ended December 31, 1994 Year Ended December 31, 1993
(dollar amounts in -------------------------------- -------------------------------- --------------------------------
millions) Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY
SECURITIES
U.S. Treasury and other
government
agency securities $ 388 $ 26 6.72% $ 689 $ 46 6.72% $ 3,554 $ 188 5.28%
Mortgage-backed securities 4,490 321 7.15 6,985 503 7.20 10,784 785 7.28
State, county, and
municipal securities 445 35 7.89 479 39 8.12 553 44 7.93
Other domestic securities 178 13 7.62 224 16 7.11 740 96 13.01/e/
Foreign securities 1,691 129 7.62 2,428/c/ 190 7.83 128 10 7.61
- ------------------------------------------------------------------------------------------------------------------------------------
$7,192 $524 7.29% $10,805 $794 7.35% $15,759 $1,123 7.13%
- ----------------------------========================================================================================================
<CAPTION>
Fourth Quarter 1995 Fourth Quarter 1994
-----------------------------------------------------------------------------------------------------
Rate Rate
Rate based on Rate based on
based on amortized based on amortized
(dollar amounts in millions) Balance/a/ Interest/b/ fair value/b/ cost/b/ Balance/a/ Interest/b/ fair value/b/ cost/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
SECURITIES
U.S. Treasury and other
government agency
securities $1,665 $ 27 6.32% 6.36% $ 2,317 $ 31 5.27% 5.17%
Mortgage-backed securities 4,927 85 6.91 6.97 5,678 98 6.88 6.62
Other domestic securities 720 9 5.31 6.06 491 6 5.09 5.34
Foreign securities 2,639/c/ 75 11.31 10.46 1,907/c/ 47 9.73 8.76
- ------------------------------------------------------------------------------------------------------------------------------------
$9,951 $196 7.86% 7.81% $10,393 $182 6.96% 6.67%
- ---------------------------------===================================================================================================
<CAPTION>
Fourth Quarter 1995 Fourth Quarter 1994
---------------------------------------- ----------------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government
agency securities $ 289 $ 5 6.42% $ 482 $ 9 7.02%
Mortgage-backed securities 4,169 75 7.18 4,782 85 7.11
State, county, and municipal
securities 452 9 7.99 461 9 8.14
Other domestic securities 165 3 7.39 196 3 6.96
Foreign securities 1,539 28 7.24 2,506/c/ 50 7.84
- ------------------------------------------------------------------------------------------------------------------------------------
$6,614 $120 7.22% $8,427 $156 7.40%
- ---------------------------------------=============================================================================================
====================================================================================================================================
</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 basis adjustments are based on a marginal tax
rate of 35 percent for 1995, 1994 and 1993.
/c/ Average balances include nonaccrual assets.
/d/ Rates reflect interest received on nonaccrual debt-restructuring par bonds.
/e/ Rates reflect income recognized on call premiums received and unamortized
discounts related to debentures called prior to maturity.
7
<PAGE>
================================================================================
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES
================================================================================
Carrying Value and Yield by Contractual Maturity Date
================================================================================
<TABLE>
<CAPTION>
Available-for-Sale Securities Held-to-Maturity Securities
----------------------------- ---------------------------
December 31, 1995/a/ December 31, 1995/b/
----------------------------- ---------------------------
(dollar amounts in millions) Amount Yield/b/ Amount Yield/b/
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DUE IN ONE YEAR OR LESS
U.S. Treasury and other government agency securities $ 893 5.61% $ 62 5.01%
Mortgage-backed securities 1 6.84 - -
State, county, and municipal securities - - 87 4.76
Other securities 843 6.16 170 8.49
------- -------
1,737 5.88 319 6.86
DUE AFTER ONE YEAR THROUGH FIVE YEARS
U.S. Treasury and other government agency securities 489 7.96 2 7.62
Mortgage-backed securities 9 7.67 1 10.37
State, county, and municipal securities 1 6.53 132 5.51
Other securities 1,532 9.86 259 7.89
------- -------
2,031 9.39 394 7.10
DUE AFTER FIVE YEARS THROUGH TEN YEARS
U.S. Treasury and other government agency securities 267 5.81 - -
Mortgage-backed securities 110 6.30 195 7.84
State, county, and municipal securities 3 6.56 95 5.37
Other securities 152 6.94 46 5.32
------- -------
532 6.24 336 6.80
DUE AFTER TEN YEARS
U.S. Treasury and other government agency securities 161 9.03 2 7.27
Mortgage-backed securities 6,629 7.05 2,285 7.10
State, county, and municipal securities 3 7.14 153 5.49
Other securities 653 6.58 1,167 6.45
------- -------
7,446 7.05 3,607 6.82
------- -------
$11,746 $ 4,656
======= =======
</TABLE>
- --------------------------------------------------------------------------------
/a/These amounts exclude equity securities, which have no contractual
maturities.
/b/Yields on tax-exempt securities have not been computed on a taxable-
equivalent basis.
Information on the securities portfolios is incorporated by reference from page
52 of Note 1 and Note 6 on pages 58 and 59 of the 1995 Annual Report to
Shareholders.
8
<PAGE>
================================================================================
LOAN PORTFOLIO Loan Outstandings by Type
======================================================
Information on loan outstandings by type is
incorporated by reference from page 29 of the 1995
Annual Report to Shareholders.
Maturity Distribution and Interest Rate
Characteristics of Certain Types of Loans
======================================================
<TABLE>
<CAPTION>
Remaining Maturities as of December 31, 1995
-------------------------------------------------------------
Due after One
Due in One Year through Due after
(in millions) Year or Less Five Years Five Years Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MATURITY DISTRIBUTION OF LOANS
Domestic commercial loans:
Secured by real estate $ 4,025 $ 2,813 $ 4,137 $10,975
Construction and development
secured by real estate 1,867 1,092 194 3,153
Commercial and industrial,
financial institutions,
and agricultural 23,926 10,610 2,780 37,316
Foreign loans 17,892 2,497 3,093 23,482
--------------------------------------------------------------------------------------------------
$47,710 $17,012 $10,204 $74,926
----------------------------------------==========================================================
LOANS DUE AFTER ONE YEAR
Predetermined interest rates $ 4,408 $ 3,510 $ 7,918
Floating or adjustable interest rates 12,604 6,694 19,298
--------------------------------------------------------------------------------------------------
$17,012 $10,204 $27,216
---------------------------------------------------------=========================================
</TABLE>
Principal repayments of loans are reported above in the
maturity category in which remaining payments are due
under the contractual terms of the loan. Certain loan
agreements provide rollover options that may extend the
contractual maturity of these loans. However, these
extensions are not reflected in the table above until
such time as the option is exercised.
9
<PAGE>
================================================================================
CROSS-BORDER OUTSTANDINGS EXCEEDING ONE PERCENT OF TOTAL ASSETS
======================================================================
<TABLE>
<CAPTION>
Cross-Border
Total Outstandings
Public Private Cross-Border as a Percentage
(dollar amounts in millions)/a/b/c/d/ December 31 Sector/e/ Banks/e/ Sector/e/ Outstandings of Total Assets
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan 1995 $ 7 $2,253 $2,546 $4,806 2.07%
1994 17 1,248 2,292 3,557 1.65
1993 10 1,490 2,054 3,554 1.90
Italy 1995 172 101 2,500 2,773 1.19
1994 57 119 1,371 1,547 0.72
1993 44 229 597 870 0.47
South Korea 1995 106 1,189 1,143 2,438 1.05
1994 - 864 935 1,799 0.83
1993 - 512 666 1,178 0.63
Spain 1995 109 24 1,553 1,686 0.73
1994 57 108 1,817 1,982 0.92
1993 56 105 1,941 2,102 1.12
Hong Kong 1995 2 129 837 968 0.42
1994 - 185 1,202 1,387 0.64
1993 - 110 2,181 2,291 1.23
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Cross-border outstandings include the following assets,
primarily in U.S. dollars, with borrowers or customers in a
foreign country: loans, accrued interest, acceptances,
interest-bearing deposits with other banks, trading account
assets, available-for-sale securities, held-to-maturity
securities, other interest-earning investments, and other
monetary assets. Local currency outstandings that are
neither hedged nor funded by local currency borrowings are
included in cross-border outstandings. Guarantees of
outstandings of borrowers of other countries are considered
outstandings of the guarantor. Loans made to, or deposits
placed with, a branch of a foreign bank located outside the
foreign bank's home country are considered loans or deposits
with the country in which the foreign bank is headquartered.
Outstandings of a country do not include amounts of
principal or interest that are supported by written, legally
enforceable guarantees by guarantors from other countries or
the amount of outstandings to the extent that they are
secured by tangible, liquid collateral held and realizable
by BAC outside the country.
/b/ At December 31, 1995, total unfunded commitments of the
countries listed above, whose unfunded commitments exceeded
10 percent of their respective cross-border outstandings,
were as follows: Japan, $558 million; South Korea, $356
million; and Hong Kong, $334 million.
/c/ Included in the cross-border outstandings of the countries
listed are loans and other interest-bearing assets on
nonaccrual status at December 31, 1995, 1994, and 1993,
respectively; as follows: $17 million, $18 million, and
$16 million for Japan, $3 million, $3 million, and $6
million for Spain, $3 million, $2 million and $7 million for
Hong Kong. Also included in cross-border outstandings are
loans which are past due 90 days or more and still accruing
interest of $2 million and $1 million for Hong Kong at
December 31, 1995 and 1993, respectively.
/d/ No country excluded from this table had cross-border
outstandings between 0.75 percent and 1.00 percent of total
assets for any of the periods presented. However, not
included in cross-border outstandings with Mexico were par
bonds issued by the government of Mexico with a face value
of $1,341 million at December 31, 1995, 1994, and 1993. The
par bonds had a carrying value of $1,162 million, $1,109
million, and $1,297 million at December 31, 1995, 1994, and
1993, respectively. At December 31, 1995, the par bonds had
a total fair value of approximately $902 million. Due to the
first-quarter 1994 adoption of SFAS No. 115, certain of
these par bonds were recorded in available-for-sale
securities and carried at their fair value of $306 million
at December 31, 1995, while the remainder of these par bonds
were recorded in held-to-maturity securities at their
amortized cost. Principal repayment of these par bonds is
collateralized by zero-coupon U.S. Treasury securities that,
at maturity in 2008 and 2019, will have a redemption value
equal to the face value of the par bonds. At December 31,
1995, this collateral had a fair value of approximately $335
million. Future interest payments for a rolling eighteen-
month period are also collateralized by additional U.S.
dollar-denominated securities permitted by the agreement.
The details of the transaction in which the majority of
these par bonds were acquired were reported in the Parent's
Annual Report on Form 10-K for the year ended December 31,
1990. Mexico's cross-border outstandings also excluded
additional securities of $30 million, $30 million, and $45
million at December 31, 1995, 1994, and 1993, which were
fully collateralized at maturity by separate zero-coupon
U.S. Treasury securities. Had these par bonds and other
instruments been included, total cross-border outstandings
with Mexico would have exceeded 1.00 percent of total assets
for all periods presented.
/e/ Sector definitions are based on Federal Financial
Institutions Examination Council Instructions for preparing
the Country Exposure Report.
Additional information on cross-border outstandings,
information on countries currently experiencing liquidity
problems, and a discussion of the risks, including credit
risk, inherent in BAC's foreign operations are incorporated
by reference from pages 27 through 29, page 32, and Note 7
on pages 59 and 60 of the 1995 Annual Report to
Shareholders.
10
<PAGE>
================================================================================
Off-Balance-Sheet Credit-Related Financial Instruments
=============================================================
Information on off-balance-sheet credit-related financial
instruments is incorporated by reference from page 27 and
pages 70 and 71 of Note 20 of the 1995 Annual Report to
Shareholders.
Nonperforming Assets
=============================================================
Information on nonperforming assets is incorporated by
reference from pages 35 through 38 of the 1995 Annual Report
to Shareholders.
Interest Income Foregone on Nonaccrual Assets
=============================================================
<TABLE>
<CAPTION>
Year Ended
(in millions) December 31, 1995
---------------------------------------------------------------------------------------------------------------
<S> <C>
DOMESTIC
Interest income that would have been recognized had the assets performed in
accordance with their original terms $310
Less: Interest income included in the results of operations 85
---------------------------------------------------------------------------------------------------------------
Domestic interest income foregone 225
Foreign
Interest income that would have been recognized had the assets performed in
accordance with their original terms 28
Less: Interest income included in the results of operations 17
---------------------------------------------------------------------------------------------------------------
Foreign interest income foregone 11
---------------------------------------------------------------------------------------------------------------
$236
----------------------------------------------------------------------------------------------------------=====
</TABLE>
Information on nonaccrual loan accounting policies and
interest income foregone on restructured loans is
incorporated by reference from page 32, page 53 of Note 1,
and Notes 7 and 8 on pages 59 through 61 of the 1995 Annual
Report to Shareholders.
Other Interest-Bearing Assets on Nonaccrual Status
=============================================================
Information on other interest-bearing assets on nonaccrual
status is incorporated by reference from pages 36 and 38 of
the 1995 Annual Report to Shareholders.
11
<PAGE>
================================================================================
SUMMARY OF ANNUAL CREDIT LOSS EXPERIENCE
CREDIT LOSS ================================================================
EXPERIENCE Information on annual credit loss experience is
incorporated by reference from pages 33 through 35 of
the 1995 Annual Report to Shareholders.
ALLOWANCE FOR FOREIGN CREDIT LOSSES/a/
================================================================
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------
(in millions) 1995 1994 1993 1992 1991
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, BEGINNING OF YEAR $391 $322 $559 $808 $1,665
Credit losses 15 42 36 126 375
Credit loss recoveries 99 124 66 174 54
-------------------------------------------------------------------------------------------
Net credit (losses) recoveries 84 82 30 48 (321)
Provision for credit losses (54) - - 3 -
Losses on the sale or swap of loans
to restructuring countries - - (3) (72) (207)
Other net additions (deductions) 7 (13) (264)/ab/ (228)/a/ (329)/a/
-------------------------------------------------------------------------------------------
BALANCE, END OF YEAR $428 $391 $322 $559 $808
===========================================================================================
</TABLE>
/a/ The allocations of the allowance for credit
losses and the provision for credit losses are
used to measure divisional profitability and are
based on management's judgment of potential
losses in the respective portfolios. This
allocation process resulted in reductions in the
allowance for foreign credit losses of $166
million, $212 million, and $327 million in 1993,
1992, and 1991, respectively. These reductions
primarily related to Latin America. While
management has allocated reserves to various
portfolio segments for purposes of this table,
the allowance is general in nature and is
available for the portfolio in its entirety.
/b/ Includes a $36 million addition related to the
consolidation of subsidiaries and operations
that were held for disposition at December 31,
1992 and a deduction of $128 million related to
the transfer of certain assets net of their
related allowance to other assets, of which $88
million was regulatory-related allocated
transfer risk reserve.
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES
================================================
Information on the allocation of the allowance
for credit losses by loan type is incorporated
by reference from page 34 of the 1995 Annual
Report to Shareholders.
________________________________________________________________________________
DEPOSITS AVERAGE DEPOSIT BALANCES AND AVERAGE RATES
================================================
Average deposit balances, average rates, and
average foreign deposit liabilities are shown on
pages 4 and 5 of this report.
MATURITY DISTRIBUTION OF DOMESTIC TIME DEPOSITS
================================================
OF $100,000 OR MORE
===================
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------------
TIME CERTIFICATES OTHER TIME
OF DEPOSIT DEPOSITS
(in millions) OF $100,000 OR MORE OF $100,000 OR MORE
--------------------------------------------------------------------------------
<S> <C> <C>
TIME REMAINING UNTIL MATURITY
Three months or less $4,500 $185
After three months through six months 1,958 5
After six months through twelve months 1,404 3
After twelve months 2,462 78
--------------------------------------------------------------------------------
$10,324 $271
================================================================================
</TABLE>
12
<PAGE>
================================================================================
RETURN ON EQUITY The ratio of average total equity to average total assets,
AND ASSETS the rates of return on average total assets and average
common and total equity, and the common dividend payout
ratios for the years ended December 31, 1995, 1994, and
1993 are incorporated by reference from page 16 of the 1995
Annual Report to Shareholders.
________________________________________________________________________________
<TABLE>
<CAPTION>
=============================================================================================================
SHORT-TERM DECEMBER 31 AVERAGE DURING YEAR
BORROWINGS ---------------------------- ----------------------------
MAXIMUM WEIGHTED WEIGHTED
OUTSTANDINGS AVERAGE AVERAGE
(DOLLAR AMOUNTS IN MILLIONS) DURING YEAR OUTSTANDINGS INTEREST RATE OUTSTANDINGS INTEREST RATE
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Federal funds purchased/a/ $ 5,160 $5,160 5.62% $2,222 5.89%
Securities sold under repurchase
agreements/a/ 10,730 6,383 6.69 9,110 6.38
Other short-term borrowings 10,800 7,627 6.88 9,301 6.77
---------------------------------------------------------------------------------------------------------------
1994
Federal funds purchased/a/ $ 3,283 $3,283 5.45% $ 611 4.48%
Securities sold under repurchase
agreements/a/ 8,026 5,505 5.90 6,455 5.44
Other short-term borrowings 5,796 5,053 6.58 4,231 6.50
---------------------------------------------------------------------------------------------------------------
1993
Federal funds purchased/a/ $ 1,763 $ 220 2.84% $ 570 2.78%
Securities sold under repurchase
agreements/a/ 4,361 4,229 4.95 2,837 5.58
Other short-term borrowings 3,581 3,523 6.66 3,088 6.52
==============================================================================================================
</TABLE>
/a/ Federal funds purchased and securities sold under
repurchase agreements mature either overnight or weekly.
________________________________________________________________________________
COMPETITION BAC, both domestically and internationally, operates in
intensely competitive environments. Domestically, BAC's
competitors include other banks, financial institutions, and
nonbanking institutions, such as finance companies, leasing
companies, insurance companies, brokerage firms, and
investment banking firms. Internationally, BAC primarily
competes with major foreign banks, domestic banks with
international operations, other financial institutions, and
nonfinancial companies.
In recent years, increased competition has also developed from
predominantly specialized finance and nonfinance companies that
offer wholesale finance, credit card, and other consumer finance
services, including on-line banking services and personal finance
software. Competition for deposit and loan products remains
strong, from both banking and nonbanking firms, and affects the
rates of those products as well as the terms on which they are
offered to customers. Mergers between financial institutions have
placed additional pressure on banks within the industry to
streamline their operations, reduce expenses, and increase
revenues to remain competitive. In addition, competition is
expected to intensify due to recently enacted federal and state
interstate banking laws, which permit banking organizations to
expand geographically. Such laws will allow banks to merge with
other banks across state lines, thereby enabling BAC's competitors
to establish or expand banking operations in BAC's most
significant markets.
Technological innovation continues to contribute to greater
competition in domestic and international financial services
markets. Technological innovation has, for example, made it
possible for nondepository institutions to offer customers
automated transfer payment
13
<PAGE>
================================================================================
services that previously have been traditional banking
products. In addition, customers now expect a choice of
several delivery systems and channels, including telephone,
mail, home computer, ATMs, self-service branches, and
supermarket branches. In addition to other banks, the
sources of competition for such products include savings
associations, credit unions, brokerage firms, money market
and other mutual funds, asset management groups, finance and
insurance companies, and mortgage banking firms.
The competitive environment within the United States is
largely defined by federal and state legislation. Banking
laws have had a substantial impact on the structure and
competitive dynamics of financial services markets in the
United States since, among other things, they limit the
types of financial services that both domestic and foreign
banks can offer and the geographic boundaries within which
they can operate. (See "Supervision and Regulation" below.)
Economic factors, along with legislative and technological
changes, will have an ongoing impact on the competitive
environment within the financial services industry. As a
major and active participant in financial markets, BAC
strives to anticipate and adapt to these changing
competitive conditions, but there can be no assurance as to
their impact on BAC's future business or results of
operations.
________________________________________________________________________________
SUPERVISION The banking and financial services businesses in which BAC
AND REGULATION engages are highly regulated. Such regulation is intended,
among other things, to protect depositors covered by the
Federal Deposit Insurance Corporation ("FDIC") and the
banking system as a whole. The laws, regulations and
policies affecting such businesses are regularly under
review by Congress and state legislatures, and federal and
state regulatory agencies. Changes in the laws, regulations
or policies that impact BAC cannot necessarily be predicted,
but they may have a material effect on the business and
earnings of BAC.
Following is a summary of significant statutes, regulations,
and policies that apply to the operation of banking
institutions. This summary is qualified in its entirety by
reference to the full text of such statutes, regulations or
policies.
A. GENERAL
As a bank holding company, the Parent is subject to
regulation under the Bank Holding Company Act ("BHCA") of
1956, as amended, and is registered as such with, and
subject to examination by, the Board of Governors of the
Federal Reserve System ("FRB"). Pursuant to the BHCA, the
Parent is prohibited, with certain exceptions, from
acquiring direct or indirect ownership or control of more
than 5 percent of any class of voting shares of any
nonbanking corporation, and may not acquire more than 5
percent of the voting shares of any domestic bank without
the prior approval of the FRB. In addition, the Parent may
not engage in any business directly or through a nonbanking
subsidiary other than managing and controlling banks or
furnishing services that the FRB deems to be so closely
related to banking as "to be a proper incident thereto."
The Parent's subsidiaries are also subject to extensive
regulation, supervision, and examination by applicable
federal and state regulatory agencies. The Bank and other
national bank subsidiaries are primarily regulated by the
Office of the Comptroller of the Currency ("OCC"). The
state-chartered bank subsidiaries of the Parent are
primarily regulated by the FDIC and state banking
regulators, except for Bank of America Nevada and Bank of
America Illinois, which, as state bank members of the
Federal Reserve System, are primarily regulated by the FRB
and state banking regulators. FSB is subject to the
regulatory
14
<PAGE>
================================================================================
authority of the Office of Thrift Supervision ("OTS") and
the FRB. Further, all domestic depository institution
subsidiaries of BAC that are insured institutions are
subject to the authority of the FDIC. The activities of the
Parent's broker-dealers, which include BA Securities, Inc.
and BA Futures, Inc., are subject to rules and regulations
promulgated by the Securities and Exchange Commission
("SEC"), the Commodity Futures Trading Commission,
securities industry self regulatory organizations (the New
York Stock Exchange, the National Association of Securities
Dealers, Inc., and the Municipal Securities Rulemaking
Board), the FRB, and various state securities commissions.
Other nonbank subsidiaries of the Parent are regulated under
applicable federal and/or state mortgage lending, insurance,
consumer, and other laws.
B. DIVIDEND RESTRICTIONS
The availability of dividends from the Parent's subsidiaries
is limited by various statutes and regulations. The National
Bank Act and other federal laws prohibit the payment of
dividends by a national bank under certain circumstances,
and limit the amount a national bank can pay without the
prior approval of the OCC. In addition, state-chartered
banking subsidiaries are subject to dividend limitations
imposed by applicable state and federal laws. FSB is subject
to OTS regulatory restrictions on its payment of dividends.
Specific information related to restrictions on funds
available to the Parent and its subsidiaries is incorporated
by Reference from Note 24 on pages 79 through 81 of the 1995
Annual Report to Shareholders.
C. REGULATORY CAPITAL STANDARDS AND RELATED MATTERS
As a result of the enactment of the Financial Institution
Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"),
any insured depository institution owned by the Parent
(i.e., any bank subsidiary) can be assessed for losses
incurred by the FDIC in connection with assistance provided
to, or the failure of, any other depository institution
owned by the Parent. FIRREA also established, in part, new
regulations that raised capital requirements and standards.
The primary emphasis of the capital standards required by
FIRREA is to ensure that financial institutions have
sufficient capital to support the risk levels of their
assets and off-balance-sheet commitments. The risk-based
capital ratios and the leverage ratio, as required by
FIRREA, provide a means to measure financial institutions'
compliance with capital standards.
During 1991, Congress passed the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which
focused primarily on tightening the supervision of banks and
thrifts and recapitalizing the Bank Insurance Fund ("BIF").
Among other things, FDICIA requires federal bank regulatory
authorities to take "prompt corrective action" with respect
to inadequately capitalized banks. FDICIA established five
tiers of capital measurement ranging from "well capitalized"
to "critically undercapitalized." If a bank does not meet
any of the minimum capital requirements set by its
regulators, FDICIA requires certain responses, such as that
the bank submit a plan, guaranteed by its holding company,
to restore its capital to adequate levels. It is BAC's
policy to maintain risk-based capital ratios for both the
Parent and its domestic banking subsidiaries above the "well
capitalized" levels, and as of December 31, 1995, BAC and
all of its banking subsidiaries met the requirements of a
"well capitalized" institution.
BAC is also subject to the risk-based capital and leverage
guidelines of the FRB, which require that BAC's capital-to-
asset ratios meet certain minimum standards. For a detailed
discussion of the FRB guidelines and BAC's risk-based
capital and leverage ratios, refer to pages 44 and 45 of the
1995 Annual Report to Shareholders.
15
<PAGE>
================================================================================
As deposits of BAC's subsidiary banks are insured by the
FDIC, such subsidiary banks are subject to FDIC insurance
assessments. The amount of FDIC assessments paid by
individual insured depository institutions is based on their
relative risk as measured by regulatory capital ratios and
certain other factors. Under this system, in establishing
the insurance premium assessment for each bank, the FDIC
takes into consideration the probability that it will incur
a loss with respect to that bank, and charges a higher
insurance premium to banks with perceived higher inherent
risks. The FDIC also considers the different categories and
concentrations of assets and liabilities of the institution,
the likely amount of such loss, the revenue needs of the
BIF, and any other factors the FDIC deems relevant.
Prior to September 15, 1995, assessment rates ranged from a
minimum of 23 cents per $100 of eligible deposits for the
highest-rated banks to 31 cents per $100 of eligible
deposits for the weakest-rated banks. In May 1995, the FDIC
achieved the ratio of BIF reserves to insured deposits of
BIF members of 1.25 percent as mandated by FDICIA. In June
1995, minimum assessment rates for the highest-rated banks
were reduced to 4 cents per $100 of eligible deposits, while
maximum assessment rates remained unchanged. In November
1995, the FDIC again reduced insurance premiums for most
banks. Under the new rate structure for the BIF, assessment
rates will be reduced by 4 cents per $100 of eligible
deposits as well, leaving a premium range of 0 to 27 cents
per $100 of eligible deposits (and subject to a minimum
assessment) instead of the previous 4 to 31 cents per $100
of eligible deposits.
D. KEY LEGISLATIVE AND REGULATORY DEVELOPMENTS
1. Interstate Banking and Securities Litigation Reform
The Riegle-Neal Interstate Banking and Branching Efficiency
Act (the "Act"), which was enacted in 1994, codifies the
authority of banks to provide specified interstate banking
services on an agency basis to customers of affiliate banks
as of September 1995. Also, under the Act, as of September
1995, bank holding companies may acquire banks in other
states, subject to certain deposit concentration
limitations. Beginning June 1, 1997 and subject to certain
deposit concentration and other limitations, banks may merge
with other banks in states that do not "opt out" of the
interstate legislation prior to June 1, 1997. Interstate
mergers may be conducted prior to June 1, 1997 in states
that specifically permit such mergers. In addition, prior to
June 1, 1997, certain consolidations are possible using the
"30-mile rule," which allows national banks to relocate
their headquarters up to 30 miles away, including across
state lines. The ability to merge with other banks across
state lines will enable BAC to continue to consolidate its
affiliate banking operations, if it so chooses, thereby
potentially reducing operating expenses, expanding customer
service, and enhancing overall operations of the business.
Currently, several states have already "opted in" to the
interstate legislation. However, Texas has "opted out."
In the securities area, Congress enacted the Private
Securities Litigation Reform Act of 1995, which may reduce
the exposure of banks and other companies to certain types
of legal claims by holders of securities, thus saving
litigation costs.
2. Pending Legislation and Regulation
During 1995, Congress considered reform of the Glass-
Steagall Act and the Bank Holding Company Act, which
restrict banks' and bank holding companies' ability to
engage in certain activities, including the underwriting of
and dealing in various securities. If such statutory reform
is enacted in the future, it could cause a significant
change in the makeup of the financial services industry and
expand the ability of BAC to offer a broader range of
financial products.
16
<PAGE>
================================================================================
Congress also is considering a comprehensive bank regulatory
relief package, which if enacted, could reduce the
regulatory burden and accompanying costs imposed on banks in
a variety of discrete regulatory areas.
Legislation was also proposed to restructure the BIF and the
Savings Association Insurance Fund ("SAIF"), which, if
enacted as proposed, could realign the deposit insurance
assessment costs for banks, particularly for Oakar banks
(banks who bought failed savings associations in prior years
pursuant to certain legal provisions), and could eliminate a
special charter for savings associations.
As noted above, it is impossible to predict whether or when
any such legislation and regulation might be enacted, and
there can be no assurance as to the impact of any such
legislation on BAC's future business or results of
operations.
3. Environmental Regulation
Since BAC is not involved with the manufacture or transport
of chemicals or toxins that might have an adverse effect on
the environment, its primary exposure to environmental law
and regulation is through its lending and trust activities.
BAC's lending and trust procedures include controls designed
to identify and monitor this exposure to avoid any
significant loss or liability related to environmental
regulations.
E. MONETARY AND ECONOMIC POLICIES
The operations of bank holding companies and their
subsidiaries are affected by the credit and monetary
policies of the FRB. An important function of the FRB is to
regulate the national supply of bank credit. Among the
instruments of monetary policy used by the FRB to implement
its objectives are open market operations in U.S. Government
securities, changes in the discount rate on bank borrowings,
and changes in reserve requirements on bank deposits. These
instruments of monetary policy are used in varying
combinations to influence the overall level of bank loans,
investments and deposits, the interest rates charged on
loans and paid for deposits, the price of the dollar in
foreign exchange markets, and the level of inflation. The
credit and monetary policies of the FRB have had a
significant effect on the operating results of BAC in the
past and are expected to continue to do so in the future.
________________________________________________________________________________
EMPLOYEES At December 31, 1995, the actual number of persons employed
by BAC was 95,288. On a full-time-equivalent basis, BAC's
staff level was 79,916 at December 31, 1995.
ITEM 3. LEGAL PROCEEDINGS
________________________________________________________________________________
Due to the nature of its business, BAC is subject to various
threatened or filed legal actions. Although the amount of
the ultimate exposure, if any, cannot be determined at this
time, BAC, based upon the advice of counsel, does not expect
the final outcome of threatened or filed suits to have a
material adverse effect on its financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
________________________________________________________________________________
None.
17
<PAGE>
PART II
================================================================================
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
________________________________________________________________________________
Information on dividend restrictions, dividend payments, the
principal market for and trading price of the Parent's
common stock, and the number of holders of such stock is
incorporated by reference from pages 16, 17, and 43, Note 24
on pages 79 through 81, and Note 26 on page 83 of the 1995
Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
________________________________________________________________________________
Selected financial data is incorporated by reference from
pages 16 and 17 of the 1995 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
________________________________________________________________________________
Management's Discussion and Analysis of Financial Condition
and Results of Operations is incorporated by reference from
pages 16 through 45 of the 1995 Annual Report to
Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
________________________________________________________________________________
The Report of Independent Auditors, the consolidated
financial statements, and the notes to consolidated
financial statements are incorporated by reference from
pages 47 through 83 of the 1995 Annual Report to
Shareholders. See Item 14 of this report for information
concerning financial statements and schedules filed with
this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
________________________________________________________________________________
None.
18
<PAGE>
PART III
================================================================================
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
________________________________________________________________________________
Reference is made to the text under the captions, "Executive
Compensation, Benefits and Related Matters" (excluding the
material under the headings "Report of Executive Personnel
and Compensation Committee" and "Shareholder Return
Performance Graph" therein) and "Item No. 1--Election of
Directors" in the Proxy Statement for the May 23, 1996
Annual Meeting of Shareholders of the Parent for
incorporation of information concerning directors and
persons nominated to become directors. Information
concerning executive officers of the Parent as of March 1,
1996 is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH REGISTRANT
<S> <C> <C>
Richard M. Rosenberg 65 Chairman of the Board
David A. Coulter 48 President and Chief Executive Officer
Michael E. O'Neill 49 Vice Chairman and Chief Financial Officer
Kathleen J. Burke 44 Vice Chairman and Personnel Relations Officer
Luke S. Helms 52 Vice Chairman
Jack L. Meyers 53 Vice Chairman
Michael J. Murray 51 Vice Chairman
Thomas E. Peterson 60 Vice Chairman
Michael E. Rossi 51 Vice Chairman
Martin A. Stein 55 Vice Chairman
</TABLE>
RICHARD M. ROSENBERG relinquished his title as Chief
Executive Officer on December 31, 1995 and his title as
President on August 7, 1995. He was previously appointed
Chairman and Chief Executive Officer of the Parent and the
Bank on May 24, 1990, in addition to his title as President.
He was appointed President of the Parent and the Bank on
February 5, 1990. On April 22, 1992, Mr. Rosenberg
relinquished his title as President, but was reappointed
President on October 5, 1992.
DAVID A. COULTER was appointed Chief Executive Officer of
the Parent and the Bank on January 1, 1996, in addition to
his title as President. He was appointed to the Board of
Directors of the Parent and the Bank on October 2, 1995. He
was appointed President of the Parent and the Bank on August
7, 1995. Previously he was Vice Chairman of the Parent and
the Bank from February 1993 to August 1995. He was appointed
Group Executive Vice President of the Bank on April 27,
1992. He was Executive Vice President of the Bank and head
of the Bank's U.S. Corporate Group from 1990 to 1992.
19
<PAGE>
================================================================================
KATHLEEN J. BURKE was appointed Vice Chairman of the Parent
and the Bank on March 14, 1994, in addition to her title as
Personnel Relations Officer of the Parent. She was appointed
Executive Vice President and Personnel Relations Officer of
the Parent and Executive Vice President of the Bank on April
22, 1992 and Group Executive Vice President of the Bank on
April 27, 1992. Previously, she was Executive Vice President
and Director of Human Resources of Security Pacific
Corporation and its principal subsidiary, Security Pacific
National Bank from 1989 to 1992.
LUKE S. HELMS was appointed Vice Chairman of the Parent and
the Bank on August 2, 1993. Previously, he was Chairman and
Chief Executive Officer of Seafirst Corporation and SFNB
from 1990 to 1993.
JACK L. MEYERS was appointed Vice Chairman of the Parent and
the Bank on October 4, 1993. He was appointed Chief Credit
Officer of the Bank on September 3, 1993. He was Group
Executive Vice President responsible for the Bank's
Commercial Business Group from 1991 to 1993.
MICHAEL J. MURRAY was appointed Vice Chairman of the Parent
and the Bank on October 2, 1995. Previously, he was Group
Executive Vice President responsible for the Bank's U.S.
Corporate Group from September 1994 to September 1995. From
1993 to 1994, Mr. Murrary served as Vice Chairman of
Continental. Previously, he was Executive Vice President and
head of Corporate Banking for Continental from 1991 to 1993.
MICHAEL E. O'NEILL was appointed Vice Chairman and Chief
Financial Officer of the Parent and the Bank on December 4,
1995. Previously, he was Group Executive Vice President of
the Bank and head of the Global Equity Investments Group
from September 1994 to November 1995. From 1993 to 1994, Mr.
O'Neill served as Chief Financial Officer of Continental.
Previously, he was Chief of Staff of Capital Markets
Investments and Trading for Continental from 1990 to 1993.
THOMAS E. PETERSON was appointed Vice Chairman of the Parent
and the Bank on February 5, 1990. Previously, he was
Executive Vice President of the Bank and head of Retail
Banking from 1987 to 1990.
MICHAEL E. ROSSI was appointed Vice Chairman of the Parent
and the Bank on October 7, 1991. He was appointed Executive
Vice President of the Parent on December 3, 1990, when he
was also designated as the head of Credit Policy for the
Bank.
MARTIN A. STEIN was appointed Vice Chairman of the Parent
and the Bank on April 27, 1992. He was appointed Executive
Vice President of the Parent and the Bank on June 25, 1990.
At the same time, he was appointed head of the BankAmerica
Systems Engineering Group of the Bank.
The present term of office for the officers named above will
expire on May 23, 1996 or on their earlier retirement,
resignation, or removal. There is no family relationship
among any such officers.
20
<PAGE>
================================================================================
ITEM 11. EXECUTIVE COMPENSATION
________________________________________________________________________________
Information concerning executive compensation is
incorporated by reference from the text under the captions,
"Corporate Governance-Director Remuneration, Stock Ownership
Guidelines, Retirement and Attendance" and "Executive
Compensation, Benefits and Related Matters" (excluding the
material under the headings "Report of the Executive
Personnel and Compensation Committee" and "Shareholder
Return Performance Graph" therein) in the Proxy Statement
for the May 23, 1996 Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
________________________________________________________________________________
Information concerning ownership of equity stock of the
Parent by certain beneficial owners and management is
incorporated by reference from the text under the caption,
"Security Ownership of Certain Beneficial Owners" in the
Proxy Statement for the May 23, 1996 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
________________________________________________________________________________
Information concerning certain relationships and related
transactions with officers and directors is incorporated by
reference from the text under the caption, "Executive
Compensation, Benefits and Related Matters" (excluding the
material under the headings "Report of the Executive
Personnel and Compensation Committee" and "Shareholder
Return Performance Graph" therein) in the Proxy Statement
for the May 23, 1996 Annual Meeting of Shareholders.
21
<PAGE>
PART IV
================================================================================
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
________________________________________________________________________________
(A)(1) FINANCIAL The report of independent auditors and the following
STATEMENTS consolidated financial statements of BAC are incorporated
herein by reference from the 1995 Annual Report to
Shareholders. Page number references are to the 1995 Annual
Report to Shareholders.
<TABLE>
<CAPTION>
PAGE
<S> <C>
BankAmerica Corporation:
Report of Independent Auditors.................................................................. 47
Consolidated Statement of Operations--
Years Ended December 31, 1995, 1994, and 1993................................................ 48
Consolidated Balance Sheet--December 31, 1995 and 1994.......................................... 49
Consolidated Statement of Cash Flows--Years Ended December 31, 1995,
1994, and 1993............................................................................... 50
Consolidated Statement of Changes in Stockholders' Equity--
Years Ended December 31, 1995, 1994, and 1993................................................ 51
Notes to Consolidated Financial Statements...................................................... 52
</TABLE>
________________________________________________________________________________
(A)(2) FINANCIAL Schedules to the consolidated financial statements (Nos. I
STATEMENT and II of Rule 9-07) for which provision is made in the
SCHEDULES applicable accounting regulation of the Securities and
Exchange Commission (Regulation S-X) are inapplicable and
therefore, are not included.
Financial statements and summarized financial information of
unconsolidated subsidiaries or 50% or less owned persons
accounted for by the equity method are not included as such
subsidiaries do not, either individually or in the
aggregate, constitute a significant subsidiary.
________________________________________________________________________________
(A)(3) EXHIBITS
<TABLE>
<CAPTION>
Incorporated by Reference From File
No. 1-7377:
-----------------------------------
Report on Form
--------------------------
10-Q or 10-K
Filed 8-K for the Period Exhibit
No. Description Herewith Dated Ending No.
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
3.a. BankAmerica Corporation Certificate of
Incorporation, as amended. Exhibit 3(a) for the
Parent's Form 8-A Amendment No. 1, filed August 25,
1994 (File No. 33-55225) incorporated herein by reference.
3.b. BankAmerica Corporation By-laws, as amended. 6/30/95 3(b)
</TABLE>
22
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Incorporated by Reference From File
No. 1-7377:
-----------------------------------
Report on Form
------------------------
10-Q or 10-K
Filed 8-K for the Period Exhibit
No. Description Herewith Dated Ending No.
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
4.a. The Parent and certain of its consolidated
subsidiaries have outstanding certain long-term
debt. See Notes 11 and 12 on pages 62 and 63
of the 1995 Annual Report to Shareholders.
None of such debt exceeds 10% of the total
assets of the Corporation; therefore, copies of
constituent instruments defining the rights of
holders of such debt are not included as
exhibits. The Parent agrees to furnish
copies of such instruments to the Securities
and Exchange Commission upon request.
4.b. Rights Agreement dated as of April 11, 1988, 12/31/94 4(b)
between the Parent and Manufacturers Hanover
Trust Company of California, as Rights Agent, as
amended.
10.a. BankAmerica Corporation Retirement Plan for X 9/30/94 10
Nonofficer Directors, as amended. Filed herewith
is an amendment to the plan./a/
10.b. BankAmerica Corporation Deferred 12/31/92 10(b)
Compensation Plan for Directors, 3/31/93 10
as amended./a/ 9/30/95 10(f)
10.c. BankAmerica Corporation Deferred Compensation 12/31/93 10(c)
Plan./a/
10.d. BankAmerica Corporation Senior Management X 12/31/93 10(d)
Incentive Plan (formerly the "Annual Management
Incentive Plan")./a/ Filed herewith is an amendment
to the plan.
10.e. Supplemental CareerAccounts Plan./a/ 3/31/92 10(a)
10.f. BankAmerica Corporation Executive Compensation 12/31/94 10(f)
Program - Benefits/Perquisites Summary./a/
10.g. BankAmerica Corporation 1987 Management Stock 9/30/95 10(b)
Plan, as amended./a/
10.h. Management Incentive Stock Plan, as amended./a/ 9/30/95 10(c)
10.i. 1992 Management Stock Plan, as amended./a/ X 9/30/95 10(a)
Filed herewith is an amendment to the plan.
10.j. BankAmerica Corporation 1991 Stock Appreciation 6/30/92 10(a)
Rights Plan./a/
10.k. Employment Agreement dated April 30, 1987 12/31/92 10(k)
between R.M. Rosenberg and the Parent and the
Bank, and Supplemental Benefits Agreement dated
as of November 21, 1985 between R.M. Rosenberg
and Seafirst Corporation and SFNB./a/
10.l. Supplemental Benefits Agreement dated X
July 9, 1990 and December 6, 1990 between
M.A. Stein and the Parent./a/
</TABLE>
----------------------
/a/Management contract or compensatory plan, contract, or
arrangement.
23
<PAGE>
<TABLE>
<CAPTION>
Incorporated by Reference From File
No. 1-7377:
-----------------------------------
Report on Form
------------------------
10-Q or 10-K
Filed 8-K for the Period Exhibit
No. Description Herewith Dated Ending No.
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
10.m. Security Pacific Corporation Stock-Based Incentive 9/30/95 10(d)
Award Plan, as amended./a/
10.n. Security Pacific Corporation Stock Option 9/30/95 10(e)
Plan, as amended./a/
10.o. Change in Control Severance Pay Program./a/ X
10.p. General Release and Settlement Agreement X
dated December 1 and 4, 1995 between
L. W. Coleman and the Parent.
11. Computation of Earnings Per Common Share. X
12.a. Ratios of Earnings to Fixed Charges and Ratios of X
Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
12.b. Historical and Pro Forma Combined Ratios of X
Earnings to Fixed Charges and Ratios of Earnings
to Combined Fixed Charges and Preferred Stock
Dividends.
13. 1995 Annual Report to Shareholders. Portions not X
incorporated by reference are furnished for
informational purposes and are not filed herewith.
21. BankAmerica Corporation Subsidiaries. X
23. Consent of Ernst & Young LLP. X
24. Powers of Attorney. X
27. Financial Data Schedule. X
</TABLE>
----------------------
/a/Management contract or compensatory plan, contract, or
arrangement.
________________________________________________________________________________
(B)REPORTS ON During the fourth quarter of 1995, the Parent filed reports
FORM 8-K on Form 8-K dated October 2, 1995, October 18, 1995 and
November 14, 1995. The October 2, 1995 report filed,
pursuant to Items 5 and 7 of the report, a copy of the
Parent's press release titled "BankAmerica Board Increases
Preferred Stock Repurchase Authorization to $750 Million
from $500 Million." The October 18, 1995 report filed,
pursuant to Items 5 and 7 of the report, a copy of the
Parent's press release titled "BankAmerica Third Quarter
Earnings." The November 14, 1995 report disclosed, pursuant
to Item 5 of the report, the resignation of an individual as
a member of the Parent's board of directors and as one of
its executive officers. After the fourth quarter of 1995,
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."
24
<PAGE>
SIGNATURES
================================================================================
Pursuant to the requirements of Section 13 or 15(d) 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.
March 15, 1996 BANKAMERICA CORPORATION
By /s/ JAMES H. WILLIAMS
------------------------
(James H. Williams,
Executive Vice President
and Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
<C> <C>
Principal Executive Officer
and Director:
/s/ RICHARD M. ROSENBERG Chairman of the Board
--------------------------------
(Richard M. Rosenberg)
Principal Executive Officer
and Director:
/s/ DAVID A. COULTER President and Chief Executive
-------------------------------- Officer
(David A. Coulter)
Principal Financial Officer:
/s/ MICHAEL E. O'NEILL Vice Chairman and Chief
-------------------------------- Financial Officer
(Michael E. O'Neill)
Principal Accounting Officer:
/s/ JAMES H. WILLIAMS Executive Vice President
-------------------------------- and Chief Accounting Officer
(James H. Williams)
</TABLE>
<TABLE>
Directors:
<S> <C> <C> <C>
JOSEPH F. ALIBRANDI* Director DONALD E. GUINN* Director
JILL E. BARAD* Director PHILIP M. HAWLEY* Director
PETER B. BEDFORD* Director FRANK L. HOPE, JR.* Director
ANDREW F. BRIMMER* Director IGNACIO E. LOZANO, JR.* Director
RICHARD A. CLARKE* Director WALTER E. MASSEY* Director
TIMM F. CRULL* Director JOHN M. RICHMAN* Director
KATHLEEN FELDSTEIN* Director A. MICHAEL SPENCE* Director
</TABLE>
A majority of the members of the Board of Directors.
*By /s/ CHERYL SOROKIN
-----------------------------------
(Cheryl Sorokin, Attorney-in-Fact)
Dated: March 15, 1996
25
<PAGE>
Other information about BankAmerica
Corporation may be found in its quarterly
Analytical Review and Form 10-Q and its
Annual Report to Shareholders. These
reports, as well as additional copies of this
Form 10-K, 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.)
[LOGO OF BANKAMERICA APPEARS HERE]
________________________________________________________________________________
[LOGO OF RECYCLED
NL-9 2-96 PAPER APPEARS HERE]
<PAGE>
================================================================================
EXHIBIT INDEX
<TABLE>
<CAPTION>
Incorporated by Reference From File
No. 1-7377:
-----------------------------------
Report on Form
------------------------
10-Q or 10-K
Filed 8-K for the Period Exhibit
No. Description Herewith Dated Ending No.
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
3.a. BankAmerica Corporation Certificate of
Incorporation, as amended, Exhibit 3(a) for
the Parent's Form 8-A Amendment No. 1, filed
August 25, 1994 (File No. 33-55225)
incorporated herein by reference.
3.b. BankAmerica Corporation By-laws, as amended. 6/30/95 3(b)
4.a. The Parent and certain of its consolidated
subsidiaries have outstanding certain long-term
debt. See Notes 11 and 12 on pages 62 and 63
of the 1995 Annual Report to Shareholders.
None of such debt exceeds 10% of the total
assets of the Corporation; therefore, copies of
constituent instruments defining the rights of
holders of such debt are not included as
exhibits. The Parent agrees to furnish
copies of such instruments to the Securities
and Exchange Commission upon request.
4.b. Rights Agreement dated as of April 11, 1988, 12/31/94 4(b)
between the Parent and Manufacturers Hanover
Trust Company of California, as Rights Agent, as
amended.
10.a. BankAmerica Corporation Retirement Plan for X 9/30/94 10
Nonofficer Directors, as amended. Filed herewith
is an amendment to the plan./a/
10.b. BankAmerica Corporation Deferred 12/31/92 10(b)
Compensation Plan for Directors, 3/31/93 10
as amended./a/ 9/30/95 10(f)
10.c. BankAmerica Corporation Deferred Compensation 12/31/93 10(c)
Plan./a/
10.d. BankAmerica Corporation Senior Management X 12/31/93 10(d)
Incentive Plan (formerly the "Annual Management
Incentive Plan")./a/ Filed herewith is an amendment
to the plan.
10.e. Supplemental CareerAccounts Plan./a/ 3/31/92 10(a)
10.f. BankAmerica Corporation Executive Compensation 12/31/94 10(f)
Program - Benefits/Perquisites Summary./a/
10.g. BankAmerica Corporation 1987 Management Stock 9/30/95 10(b)
Plan, as amended./a/
10.h. Management Incentive Stock Plan, as amended./a/ 9/30/95 10(c)
10.i. 1992 Management Stock Plan, as amended./a/ X 9/30/95 10(a)
Filed herewith is an amendment to the plan.
10.j. BankAmerica Corporation 1991 Stock Appreciation 6/30/92 10(a)
Rights Plan./a/
10.k. Employment Agreement dated April 30, 1987 12/31/92 10(k)
between R.M. Rosenberg and the Parent and the
Bank, and Supplemental Benefits Agreement dated
as of November 21, 1985 between R.M. Rosenberg
and Seafirst Corporation and SFNB./a/
10.l. Supplemental Benefits Agreement dated July 9, 1990 X
and December 6, 1990 between M.A. Stein and the Parent./a/
</TABLE>
----------------------
/a/Management contract or compensatory plan, contract, or
arrangement.
<PAGE>
<TABLE>
<CAPTION>
Incorporated by Reference From File
No. 1-7377:
-----------------------------------
Report on Form
------------------------
10-Q or 10-K
Filed 8-K for the Period Exhibit
No. Description Herewith Dated Ending No.
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
10.m. Security Pacific Corporation Stock-Based Incentive 9/30/95 10(d)
Award Plan, as amended./a/
10.n. Security Pacific Corporation Stock Option 9/30/95 10(e)
Plan, as amended./a/
10.o. Change in Control Severance Pay Program./a/ X
10.p. General Release and Settlement Agreement X
dated December 1 and 4, 1995 between
L. W. Coleman and the Parent.
11. Computation of Earnings Per Common Share. X
12.a. Ratios of Earnings to Fixed Charges and Ratios of X
Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
12.b. Historical and Pro Forma Combined Ratios of X
Earnings to Fixed Charges and Ratios of Earnings
to Combined Fixed Charges and Preferred Stock
Dividends.
13. 1995 Annual Report to Shareholders. Portions not X
incorporated by reference are furnished for
informational purposes and are not filed herewith.
21. BankAmerica Corporation Subsidiaries. X
23. Consent of Ernst & Young LLP. X
24. Powers of Attorney. X
27. Financial Data Schedule. X
</TABLE>
----------------------
/a/Management contract or compensatory plan, contract, or
arrangement.
<PAGE>
EXHIBIT 10.a.
-------------
AMENDMENT TERMINATING
THE AMENDED AND RESTATED BANKAMERICA CORPORATION
RETIREMENT PLAN FOR NONOFFICER DIRECTORS
----------------------------------------
At the March 4, 1996 Board of Directors meeting of BankAmerica Corporation
("BAC") the board resolved certain matters relating to the Amended and Restated
BankAmerica Corporation Retirement Plan for Nonofficer Directors, as originally
adopted effective August 7, 1989 (the "Plan"). The board resolved that the
Plan, is hereby terminated prospectively as of March 31, 1996 and amended as of
such date as follows:
1. The second paragraph of Section 1 is amended by the addition of the
following sentence:
"The Plan shall be terminated prospectively as of March 31, 1996."
2. Section 2(a) is amended to read as follows:
"'Annual Retainer' means (i) for Eligible Directors whose Retirement
occurred prior to August 1, 1994, the current annual retainer paid to
Board members for service on the Board as adjusted from time to time;
(ii) for Eligible Directors whose Retirement occurs between August 1,
1994 and March 31, 1996, the annual retainer paid to Board members for
service on the Board as in effect at the time of the eligible
Director's Retirement and (iii) for Eligible Directors whose
Retirement occurs on or after April 1, 1996, the annual retainer
payable to Board members as of March 31, 1996. In no case shall the
definition include any additional amount paid for service on a Board
committee or as Board committee chairman or any amount specifically
paid for attendance at Board or at Board committee Meetings."
3. Section 2(c) is amended by the addition of the following sentence:
1
Document #4127673.06
<PAGE>
"However, a member of the Board of Directors on March 31, 1996 shall
not be an Eligible Director unless such director (i) had completed 10
or more years of service on the Board on March 31, 1996 and (ii)
elected to retain benefits under the Plan and not have the present
value of the director's retirement benefits credited to the
BankAmerica Corporation Amended and Restated Deferred Compensation
Plan for Directors."
2
Document #4127673.06
<PAGE>
EXHIBIT 10.d.
AMENDMENT TO BANKAMERICA CORPORATION
SENIOR MANAGEMENT INCENTIVE PLAN
The BankAmerica Corporation Senior Management Incentive Plan ("SMIP"), as
adopted effective January 1, 1994, is amended as follows, effective January 1,
1996:
1. Section 5.1 of the SMIP is amended in its entirety to read as follows:
"5.1 The Committee shall allocate a percentage of the Incentive Award Pool
to each Executive Officer who is a Participant for the Plan Year. The
allocation shall be made not later than 90 days after the commencement of the
Plan Year. No Participant may be allocated more than 10 percent of the
Incentive Award Pool. An Executive Officer who becomes a Participant after the
date the Committee has allocated percentages of the Incentive Award Pool for the
Plan Year shall have an allocation of 2 percent of the Incentive Award Pool. No
incentive award shall exceed the Participant's allocated percentage of the
Incentive Award Pool."
2. Section 6.1 of the SMIP is deleted. Sections 6.2, 6.3 and 6.4 are
renumbered 6.1, 6.2 and 6.3, respectively.
3. The first sentence of Section 6.1, as renumbered, shall be amended to
read as follows:
"6.1 After the end of the Plan Year, the performance of each Senior
Officer who is a Participant shall be assessed by the CEO who shall make an
award recommendation to the Committee for the Participant."
4123405
<PAGE>
EXHIBIT 10.i.
AMENDMENT TO
BANKAMERICA CORPORATION 1992 MANAGEMENT STOCK PLAN
--------------------------------------------------
The BankAmerica Corporation 1992 Management Stock Plan is amended as follows,
effective February 5, 1996:
The definition of Change in Control at Section 1.3(e) of the 1992
BankAmerica Corporation Management Stock Plan is hereby amended by
replacing "more than 80% of" in subsection (iii)(A) of Section 1.3(e) with
"more than 70% (80% in the case of any Award made prior to February 5,
1996) of."
4123800.08
<PAGE>
EXHIBIT 10.l.
Supplemental Benefits Agreement
dated July 9, 1990 and December 6, 1990
between M.A. Stein and the Parent
<PAGE>
EXHIBIT 10.l.
Supplemental Benefits Agreement dated July 9, 1990
[Bank of America NT&SA Letterhead]
July 9, 1990
Mr. Martin A. Stein
Executive Vice President
BankAmerica Systems Engineering #3001
San Francisco
Re: Special Annuity
---------------
Dear Marty:
Per the terms of your employment offer, we agree to pay you an annual
benefit of $20,000, payable monthly, commencing at age 65 and ceasing upon your
death.
I just wanted to inform you that the Benefit Department is accruing for
this benefit. As detailed in your offer letter, these payments are separate
from any benefits you may receive from the BankAmeraccount and BankAmerishare
plans.
A copy of this letter is being included in your Personnel file and the
Retirements department for future reference and planning.
Sincerely,
/s/ ROBERT N. BECK
Robert N. Beck
4129352
<PAGE>
EXHIBIT 10.l.
Supplemental Benefits Agreement dated December 6, 1990
[Bank of America NT&SA Letterhead]
December 6, 1990
Marty Stein
Executive Vice President
BASE Executive Office #3789
Dear Marty:
Per the terms of your offer letter, effective September 1990 you became
vested in an equivalent benefit of $20,000 per year (payable monthly) commencing
the month you reach age 65 and with all payments ceasing upon death. These
benefits are separate from the BankAmeraccount and BankAmerishare plans. These
payments were to provide you a benefit equivalent to the retirement benefits
that would have been vested at Paine Webber.
If you have any questions regarding this issue, please let me know.
Sincerely,
/s/ ROBERT N. BECK
Robert N. Beck
4129352
<PAGE>
EXHIBIT 10.o.
CHANGE IN CONTROL
SEVERANCE PAY PROGRAM
In February 1996, the BAC Board of Directors adopted a change in control
executive severance pay program covering executive officers ("Executive
Officers"). These Executive Officers are covered by individual change in control
agreements with BAC ("Agreements").
The form of agreement which is in effect between BAC and each of the Executive
Officers covered by the Agreements is substantially in the form attached hereto.
4128766
<PAGE>
AGREEMENT (form of)
-------------------
AGREEMENT by and between BankAmerica Corporation, a Delaware
corporation ("BANKAMERICA") and __________ _________ (the "EXECUTIVE").
The Executive is currently employed by BankAmerica and/or a direct or
indirect subsidiary of BankAmerica (the "COMPANY"). The Board of Directors of
BankAmerica (the "BOARD"), has determined that it is in the best interests of
BankAmerica and its shareholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change in Control (as defined below) of BankAmerica. The
Board believes it is important to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change in Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon a Change in Control which ensure that the
compensation and benefits expectations and claims of the Executive will be
satisfied and released and which are competitive with those of other financial
institutions. Therefore, in order to accomplish these objectives, the Board has
directed BankAmerica to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
-------------------
(a) The "EFFECTIVE DATE" shall mean the first date during the
Change in Control Period (as defined in Section 1(b)) on which a Change in
Control (as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change in Control occurs and if the Executive's
employment with the Company is terminated (including termination for Good
Reason, as defined in Section 5(c)) prior to the date on which the Change in
Control occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to affect a Change in Control or (ii) otherwise
arose in connection with or anticipation of a Change in Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "CHANGE IN CONTROL PERIOD" shall mean the period
commencing on February 1, 1996 and ending on the second anniversary of such
date, provided, however, that commencing on the date one year after February 1,
1996, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "RENEWAL DATE"),
unless previously terminated, the Change in Control Period shall be
automatically extended so as to terminate two years from such
4114808.14 -1-
<PAGE>
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Change in Control Period shall not
be so extended.
2. Change in Control. For the purpose of this Agreement, a "CHANGE
-----------------
IN CONTROL" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of BankAmerica
(the "OUTSTANDING BANKAMERICA COMMON STOCK") or (ii) the combined voting power
of the then outstanding voting securities of BankAmerica entitled to vote
generally in the election of directors (the "Outstanding BankAmerica Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from BankAmerica (ii) any acquisition by BankAmerica,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
BankAmerica's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or any of its subsidiaries (a "BUSINESS COMBINATION"), in each case,
unless, following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 70% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Out-
4114808.14 -2-
<PAGE>
standing BankAmerica Common Stock and Outstanding BankAmerica Voting Securities,
as the case may be, (provided, however, that, for the purpose of this clause
(i), any shares of common stock or voting securities of such resulting
corporation received by such beneficial owners in such Business Combination
other than as the result of such beneficial owners' ownership of Outstanding
BankAmerica Common Stock or Outstanding BankAmerica Voting Securities
immediately prior to such Business Combination shall not be considered to be
owned by such beneficial owners for the purposes of calculating their percentage
of ownership of the outstanding common stock and voting power of the resulting
corporation), (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation unless such Person owned 20% or more of the
Outstanding BankAmerica Common Stock or Outstanding BankAmerica Voting
Securities immediately prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
3. Employment Period. BankAmerica agrees that the Company is
-----------------
expected, but not obligated, to continue the Executive in its employ, and, in
return for the consideration provided by this Agreement, the Executive hereby
agrees to remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending on the first anniversary of such date (the "EMPLOYMENT PERIOD").
4. Terms of Employment.
-------------------
(a) Position and Duties. (i) During the Employment Period,
-------------------
(A) the Company shall not assign the Executive any duties or responsibilities
substantially inconsistent with the Executive's duties or responsibilities with
the Company immediately preceding the Effective Date nor shall the Company
substantially reduce the Executive's duties or responsibilities as they existed
immediately preceding the Effective Date and (B) the Executive's services shall
be performed primarily at the location where the Executive was primarily
employed immediately preceding the Effective Date or primarily at any office or
location no more than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time to the business and affairs of
the Company and to use the Executive's reasonable best efforts to perform
faithfully and efficiently the responsibilities
4114808.14 -3-
<PAGE>
and duties assigned to the Executive. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities comply with policies and guidelines of
the Company in effect generally with respect to peer executives of the Company
and do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company so long as such activities comply with policies
and guidelines of the Company in effect generally with respect to peer
executives of the Company.
(b) Compensation. (i) Base Salary. During the Employment
------------ -----------
Period, the Executive shall receive an annual base salary ("ANNUAL BASE
SALARY"), which shall be paid at a monthly rate, at least equal to twelve times
the highest monthly base salary paid or payable, including any base salary which
has been earned but deferred, to the Executive by the Company during the period
between the initial public disclosure of the potential Change in Control and the
month in which the Effective Date occurs. During the Employment Period, the
Annual Base Salary shall be reviewed at intervals no less frequent than
customary for the Executive prior to the Effective Date. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced after
any such increase during the Employment Period and the term Annual Base Salary
as utilized in this Agreement shall refer to Annual Base Salary as so increased.
(ii) Annual Bonus. In addition to Annual Base Salary, the
------------
Executive shall have, for each fiscal year ending during the Employment Period,
the opportunity for an annual cash bonus (the "ANNUAL BONUS") equal to that of
other peer executives on the Managing Committee or at Impact Level I as
applicable, but in no event shall such bonus be less than the Executive's lowest
bonus paid to the Executive under the Company's Senior Management Incentive
Plan, or any comparable bonus under any predecessor or successor plan, for the
last three full fiscal years prior to the Effective Date (annualized in the
event that the Executive was not employed by the Company for the whole of such
fiscal year) (the "RECENT LOWEST ANNUAL BONUS"). Each such Annual Bonus shall be
paid no later than the end of the third month of the fiscal year next following
the fiscal year for which the Annual Bonus is awarded, unless the Executive
shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
---------------------------------------
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, policies and programs applicable
generally to other peer executives of the Company on the Managing Committee or
at Impact Level I, as applicable, including the opportunity for
4114808.14 -4-
<PAGE>
cash and stock incentive awards (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such distinction is
applicable) equal to that of peer executives of the Company on the Managing
Committee or at Impact Level I, as applicable.
(iv) Welfare Benefit Plans. During the Employment Period, the
---------------------
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
policies and programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company on the Managing Committee or
at Impact Level I, as applicable.
(v) Expenses. During the Employment Period, the Executive
--------
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies and procedures of the
Company in effect generally with respect to other peer executives of the Company
on the Managing Committee or at Impact Level I, as applicable.
(vi) Fringe Benefits. During the Employment Period, the
---------------
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
use of an automobile, home security system and payment of related expenses, in
accordance with the plans, programs and policies of the Company in effect
generally with respect to other peer executives of the Company on the Managing
Committee or at Impact Level I, as applicable.
(vii) Office and Support Staff. During the Employment Period,
------------------------
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, as provided generally with respect to other peer executives of
the Company on the Managing Committee or at Impact Level I, as applicable.
(viii) Vacation. During the Employment Period, the Executive
--------
shall be entitled to paid vacation in accordance with the plans, policies and
programs in effect generally with respect to other peer executives of the
Company on the Managing Committee or at Impact Level I, as applicable.
5. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment shall
-------------------
terminate automatically upon the Executive's death during the Employment Period.
If the Executive suffers a Disability, the Executive's employment may end
pursuant to the policy of Company governing extended medical absences as in
effect on the date of the Change in Control. For purposes of this Agreement,
"DISABILITY" shall mean the absence of the Executive from the Executive's duties
with the Company as a result of incapacity due to mental or physical illness.
4114808.14 -5-
<PAGE>
(b) Cause. The Company may terminate the Executive's employment
-----
during the Employment Period for Cause. For purposes of this Agreement, "CAUSE"
shall mean:
(i) the willful and continued failure of the Executive
to substantially perform the Executive's duties with the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for such performance is delivered to the
Executive by the Board or the Chief Executive Officer of BankAmerica or of
the subsidiary employing the Executive, which specifically identifies the
manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of legal counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity to submit written comments to the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment may be terminated
-----------
by the Executive for Good Reason during the Employment Period. For purposes of
this Agreement, "GOOD REASON" shall mean:
(i) any failure by the Company to comply with any of
the provisions of Section 4(a) of this Agreement, excluding for this
purpose an isolated, insubstantial and inadvertent failure not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
4114808.14 -6-
<PAGE>
(iii) the Company's requiring the Executive to be
based at any office or location other than as provided in Section
4(a)(i)(B) hereof.
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by BankAmerica to comply with and
satisfy Section 12(c) of this Agreement.
For purposes of this Section 5(c), any determination of "Good Reason" made by
the Executive reasonably and in good faith shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
---------------------
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(b) of
this Agreement. For purposes of this Agreement, a "NOTICE OF TERMINATION" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date. The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "DATE OF TERMINATION" means (i) if
-------------------
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
the later date specified therein, as the case may be, but no more than 30 days
after the giving of such notice absent the mutual agreement of the Executive and
the Company, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability or on account of death, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the date employment ends under the Company policy concerning
extended medical absences, as the case may be.
6. Obligations of the Company upon Termination.
-------------------------------------------
(a) Good Reason; Other Than for Cause, Disability or
------------------------------------------------
Death. If the Company shall terminate the Executive's employment other than
- -----
for Cause or Disability or on account of the Executive's death or the Executive
shall terminate employment for Good Reason, and the Date of Termination shall
occur within the Employment Period:
4114808.14 -7-
<PAGE>
(i) The Company shall pay to the Executive in a lump sum in cash, to
the extent reasonably feasible within 30 days after the Date of Termination
(except for the prorated Annual Bonus described in A.(2)), the aggregate of
the following amounts:
A. The sum of (1) the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid; (2) a prorated Annual
Bonus for the fiscal year in which the Date of Termination occurs equal to
the product of (x) the higher of (I) the Recent Lowest Annual Bonus and
(II) the Annual Bonus paid or payable to peer executives of the Company on
the Managing Committee or at Impact Level I, as applicable, for such fiscal
year if any and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the
denominator of which is 365, which prorated Annual Bonus shall be payable
at the customary time for the Annual Bonus for the fiscal year; and (3) any
accrued vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "ACCRUED OBLIGATIONS").
B. The amount equal to the product of (1) three and (2) the sum of
(x) the Executive's Annual Base Salary and (y) the average of the actual
annual bonus or bonuses received by the Executive for the period of up to
three consecutive fiscal years, commencing with the 1994 fiscal year,
ending immediately preceding the Effective Date.
C. If the Executive forfeits any benefits under the BankAmerica
401(k) Investment Plan or Pension Plan or under any other qualified
retirement plan of the Company, a payment equal to the amount of such
forfeited benefits. The Executive shall also be 100% vested in any
Supplemental Retirement Plan benefits, which shall be payable pursuant to
the terms of such plan.
D. The amount equal to the product of (1) three and (2) the current
annual contribution provided by the Company for the Executive's medical and
dental, long term disability, life and accidental death and dismemberment
insurance, multiplied by 191% to compensate for the payment being taxable.
(ii) If at the time the Executive's employment with the Company ends, the
Executive qualifies as a retiree under the personnel policy of the Company, the
Executive shall be eligible for benefits pursuant to the plans, programs and
policies in effect from time to time for similarly situated retired peer
executives of the Company on the Managing Committee or at Impact Level I, as
applicable.
(iii) The Company shall, at its sole expense as incurred, provide the
Executive with outplacement services, the provider of which shall be selected by
the Company, and financial counseling services for the calendar year in which
the Date of Termination occurs and for one additional year pursuant to the
financial counseling program in effect for peer Executives on the Managing
Committee or at Impact Level I, as applicable. The Company does not
4114808.14 -8-
<PAGE>
warrant that the outplacement services will result in the Executive obtaining
new employment.
(iv) To the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled to receive under any
plan, program, policy or contract or agreement of the Company, other than
severance pay or separation benefits subject to Section 13(g). (The other
amounts or benefits required to be paid shall be hereinafter referred to as the
"OTHER BENEFITS"). To the fullest extent permitted by law, payment under
Section 6(a)(i)B shall be in lieu of any severance pay or pay in lieu of notice
required under applicable law.
(b) Death. If the Executive's employment is terminated by reason of
-----
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination to the extent reasonably feasible. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, without limitation, and the Executive's
estate and/or beneficiaries shall be entitled to receive, benefits equal to
those provided by the Company to the estates and beneficiaries of peer
executives of the Company on the Managing Committee or at Impact Level I, as
applicable, under such plans, programs and policies relating to death benefits,
if any, as in effect at the time of death.
(c) Disability. If the Executive's employment is terminated by
----------
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination to the extent reasonably
feasible. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(c) shall include, and the Executive shall
be entitled after the Date of Termination to receive, disability and other
benefits equal to those generally provided by the Company to disabled executives
and/or their families in accordance with such plans, programs and policies
relating to disability, if any, as in effect generally with respect to other
peer executives on the Managing Committee or at Impact Level I, as applicable,
and their families, to the extent the Executive has enrolled in and paid for
such benefits, as applicable.
(d) Cause; Other than for Good Reason. If the Executive's employment
---------------------------------
shall be terminated for Cause during the Employment Period, or if the Executive
voluntarily terminates employment during the Employment Period without Good
Reason, this Agreement shall terminate without further obligations to the
Executive (other than the obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination and any accrued vacation pay, and (y)
Other Benefits, in each case to the extent theretofore unpaid).
4114808.14 -9-
<PAGE>
(e) Termination as a Result of Divestiture. This Section shall
--------------------------------------
apply if the Executive ceases to be employed within the Company as a result of a
sale of assets or stock of a BankAmerica subsidiary during the Employment
Period. For purposes of this Section, a "COMPARABLE JOB" is a position with the
purchaser with (i) at least the same base salary and substantially equivalent
bonus opportunity as the Executive's then current position, (ii) duties and
responsibilities which are not substantially less than, and with no duties or
responsibilities substantially inconsistent with, the Executive's then current
position, (iii) eligibility for benefits received by similarly situated
executives of the purchaser, and (iv) a primary work location no more than 35
miles from the Executive's then current primary work location. If the Executive
receives an offer for a comparable job with the purchaser, the Executive shall
not receive payments or benefits under this Agreement, whether or not the
Executive accepts the offer, other than payment of Accrued Obligations and the
timely payment or provision of Other Benefits. However, if the Executive accepts
the comparable job, and within one year of the effective date of the sale, the
purchaser terminates the Executive's employment without Cause or the Executive
resigns on account of the failure of the purchaser to fulfill the terms of an
offer for a comparable job as defined above, the Executive shall, subject to
Section 8, receive payment under Section 6(a)(i)B of this Agreement, less any
severance payments paid to the Executive by the purchaser, and the Executive
shall also receive associated payments under Section 9 of this Agreement. If the
Executive accepts a position with the purchaser which is not a comparable job,
which position is accepted on or before the effective date of the sale, the
Executive shall not receive payments or benefits under the Agreement other than
payment of Accrued Obligations and the timely payment or provision of Other
Benefits, unless within one year of the date of the sale, the purchaser
terminates the Executive's employment without Cause or the Executive resigns
because the Executive's primary work location is moved more than 35 miles from
the Executive's initial primary work location with the purchaser, in which case
the Executive shall, subject to Section 8, receive payment under Section
6(a)(i)B of this Agreement, less any severance payments paid to the Executive by
the purchaser, and the Executive shall also receive associated payments under
Section 9 of this Agreement. For purposes of this provision, the Executive's
Date of Termination shall be the date the Executive's employment with the
purchaser ends.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
-------------------------
prevent or limit the Executive's continuing or future participation in any plan,
program, or policy provided by the Company for which the Executive may qualify,
nor, subject to Sections 13(f) and 13(g), shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits, deferred
compensation or which the Executive is otherwise entitled to receive under any
plan, policy, or program of, or any contract or agreement with, the Company at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, or program or contract or agreement except as explicitly
modified by this Agreement.
8. Signing of Release and Full Settlement.
--------------------------------------
4114808.14 -10-
<PAGE>
(a) Execution and non-revocation of Release by Executive. The
-----------------------------------------------------
Company's obligation to make the payments provided for in this Agreement (other
than the obligation to pay to the Executive (x) his Annual Base Salary through
the Date of Termination and any accrued vacation pay, and (y) Other Benefits, in
each case to the extent theretofore unpaid) and otherwise to perform its
obligations hereunder are subject to the Executive's execution, after the Date
of Termination, and delivery to the Company of a general release in the form of
Appendix "A" attached hereto and the delivery to the Company of a statement of
non-revocation in the form of Appendix "B" executed at least 8 days after the
date of execution of the general release.
(b) Right of Set-Off by Company; No Duty to Seek Employment. The
-------------------------------------------------------
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any set-
off, counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others, except that the Company shall
be entitled to deduct from the amounts payable under this Agreement any amounts
outstanding on the Executive's business credit card on the Termination Date
which are not reimbursable under the Expense Guidelines of the Company then in
effect. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other employment.
9. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 9) (a "PAYMENT") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "CODE"), or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "EXCISE
TAX"), then the Executive shall be entitled to receive an additional payment (a
"GROSS-UP PAYMENT") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b)(i) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Ernst & Young or such other nationally recognized certified public accounting
firm as may be designated by the Company (the
4114808.14 -11-
<PAGE>
"ACCOUNTING FIRM") which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days after the Accounting Firm
has been advised that a Payment was made, or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change in Control,
the Company shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All reasonable fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall be paid by the Company
to the Executive promptly following the receipt of the Accounting Firm's
determination, unless the Company requests further calculations. Any
determination made by the Accounting Firm shall be binding upon the Company and
the Executive, although either party may challenge such a determination through
a legal proceeding. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company, should have been made ("UNDERPAYMENT"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(b)(ii) To the extent the Company overpays any Excise Tax or
Gross-Up Payment, the Executive agrees such overpayment(s) will be immediately
returned to the Company by the Executive. As a condition to receipt of a Gross-
Up Payment or Excise Tax Payment, the Executive consents to jurisdiction and
venue in California in an action by Company to recover any overpayments. The
Executive also agrees to provide Company all financial information and data,
including tax information, reasonably requested by Company to calculate such
overpayments. The Executive agrees that the Executive shall not be entitled to
delay or avoid repayment of overpayments (A) based on other types of tax
disputes the Executive may have with tax authorities, (B) based on a change in
the residence of the Executive following receipt of a Gross-Up Payment or Excise
Tax Payment, (C) based on any claim or claims by the Executive against Company
for additional sums or benefits, or (D) based on any claims or claims for offset
by the Executive against Company.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
4114808.14 -12-
<PAGE>
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section
4114808.14 -13-
<PAGE>
9(c), a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after Company's receipt of such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
10. Confidential Information. The Executive shall hold in a
------------------------
fiduciary capacity for the benefit of the Company all secret, confidential or
non-public information, knowledge or data relating to the Company (including its
employees, officers, directors, agents or representatives), which was obtained
by the Executive during the Executive's employment by the Company, unless such
information, data, or knowledge is disclosed to the public by an authorized
Company representative. (If the data, information, or knowledge is disclosed by
the Executive or by representatives of the Executive in violation of this
Agreement, this shall not constitute authorized public disclosure.) However,
nothing herein preventing the disclosure of such information, knowledge or data
shall preclude the Executive from utilizing the general non-confidential
knowledge or expertise of the Executive acquired while at the Company in any
position which the Executive may hereafter hold with another employer outside of
the Company. In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement. However, breach of this Section
by the Executive is a material breach, and the Company reserves all other
remedies both in law and equity against the Executive for breach of this Section
10.
11. Non-Disparagement. The Executive agrees that the Executive will
-----------------
not publicly (e.g., via an interview or speech or presentation available to the
----
public) criticize, defame, or disparage the Company (including its employees,
officers, directors, representatives or agents), its plans or its actions,
orally or in writing, unless compelled by law to do so. However, if the
Executive is publicly criticized, disparaged, or defamed by a representative of
the Company who is speaking on behalf of the Company, the foregoing contractual
limitations on the Executive's ability to criticize or disparage the Company
shall cease to exist and shall be deemed null and void. In no event shall an
asserted violation of the provisions of this Section 11 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement. However, breach of this Section by the Executive is a material
breach, and the Company reserves all other remedies both in law and equity
against the Executive for breach of this Section 11. In addition, an action to
enforce obligations under this Section by either party and statements made in
such litigation itself shall not be deemed to violate this Section 11.
12. Successors.
----------
(a) This Agreement is personal to the Executive and without
the prior written consent of an authorized representative of BankAmerica shall
not be assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
4114808.14 -14-
<PAGE>
(b) This Agreement shall inure to the benefit of and be binding
upon BankAmerica and its successors and assigns.
(c) BankAmerica will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of BankAmerica to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "BankAmerica" shall mean
BankAmerica Corporation as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
13. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
Executive and BankAmerica (or any successor), signed by the Chief Executive
Officer or Personnel Relations Officer of BankAmerica, except as provided in the
following sentence. If the Executive is the Chief Executive Officer of
BankAmerica, the Chairman of the Executive Personnel and Compensation Committee
of the BankAmerica Board of Directors (or its equivalent successor committee)
shall sign the agreement on behalf of BankAmerica.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
- -------------------
If to the Company:
- -----------------
BankAmerica Corporation
Office of the General Counsel #3017
P.O. Box 37000
San Francisco, CA 94137
Street address: 555 California Street, 8th Floor
San Francisco, CA 94104
4114808.14 -15-
<PAGE>
Attention: General Counsel, and a separate copy to the attention of the
BankAmerica Personnel Relations Officer, at:
BankAmerica Corporation
Executive Offices #3001
P.O. Box 37000
San Francisco, CA 94137
Street address: 555 California Street, 40th Floor
San Francisco, CA 94104
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and an authorized representative of the Company, the employment of the
Executive by the Company is "at-will" and, the Executive's employment may be
terminated by either the Executive or the Company at any time. If such
termination or any other termination of employment occurs prior to the Effective
Date, the Executive shall have no further rights under this Agreement. From and
after the Effective Date this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof, although the
employment of the Executive by the Company shall continue to be "at-will" and
may be terminated by the Company or the Executive at any time. If the Executive
is not an employee or officer of BankAmerica, the execution of this Agreement by
BankAmerica shall not cause the Executive to become an employee or officer of
BankAmerica, but rather, the Executive shall remain an employee of the
BankAmerica subsidiary which employs the Executive.
4114808.14 -16-
<PAGE>
(g) If the Executive is eligible to receive severance pay under
this Agreement, the Executive agrees that the Executive shall not be eligible
to receive severance pay or separation benefits under any other plan, program,
policy, guideline, or practice of the Company, including any staff reduction
program of the Company then in effect, or under any agreement between the
Executive and the Company.
(h) "Peer" or "peer executives" as used in this Agreement shall
be as reasonably determined by the Chief Executive Officer or Personnel
Relations Officer of BankAmerica.
(i) The Executive shall not have the right to alienate, assign,
encumber, hypothecate, or pledge the Executive's interest in any payments or
benefits under this Agreement, voluntarily or involuntarily, and any attempt to
so dispose of any such interest shall be void.
(j) This document is a complete statement of the Agreement and as
of the date executed by both parties supersedes all prior plans, proposals,
representations, promises, and inducements, written or oral, relating to its
subject matter. The Company will not be bound by or liable to the Executive for
any representation, promise, or inducement made by any person or entity relating
to its subject matter which is not embodied in this Agreement.
IN WITNESS WHEREOF, the Executive has executed this instrument and
BankAmerica, pursuant to the authorization from its Board of Directors, has
caused this instrument to be executed by its duly authorized officer, on the
dates written below.
Date: ____________________ ______________________________
[Executive]
BANKAMERICA CORPORATION
Dated: ___________________ By ___________________________
______________________
4114808.14 -17-
<PAGE>
APPENDIX A
GENERAL RELEASE
---------------
PLEASE READ THIS ENTIRE AGREEMENT CAREFULLY.
NOTE THAT IT CONTAINS A RELEASE AND WAIVER OF CLAIMS. YOU ARE ENCOURAGED TO
------------------
CONTACT AN ATTORNEY OF YOUR CHOICE FOR ADVICE CONCERNING ITS TERMS AND LEGAL
SIGNIFICANCE BEFORE SIGNING IT. IF YOU AGREE TO ITS TERMS, SIGN BELOW.
------
I have reviewed the terms of my Agreement with BankAmerica Corporation dated
______________ (the "Agreement") and have had the opportunity to read and
understand its provisions. I received the Agreement together with this General
Release more than 45 days prior to the date I am signing this General Release.
In particular, I understand that to receive separation benefits, including
severance pay, provided under the Agreement, I must agree to the terms of this
General Release and to the terms of the Non-Revocation Form, which I have also
received, and properly complete, sign and return both of these documents to the
Company. I understand the Non-Revocation form may not be signed and returned
any sooner than 8 days after I sign this General Release, and that I can revoke
my agreement to this General Release for seven days after I sign the General
Release. If signed by me, this General Release is my voluntary resignation from
any and all directorships or board memberships or committee memberships I hold
with or within BankAmerica Corporation, including its subsidiaries or its
affiliates (hereinafter collectively the "Company") or on the Company's behalf
or for the Company's benefit. I will promptly complete whatever documentation
is required to effect these resignations.
I also agree to make myself reasonably available, provide information and
otherwise cooperate with the Company or its representatives after my employment
ends in connection with any matter, dispute or the like for which the Company
desires my availability or cooperation, or in connection with any data I possess
which the Company wishes to obtain related to my employment with the Company.
The Company will reimburse me for reasonable documented expenses in accord with
then applicable company expense guidelines.
As consideration and in exchange for my receipt and acceptance of the separation
benefits, including severance pay, provided under the Agreement, and to the
extent permitted by law, I hereby waive, release and fully discharge, and agree
not to pursue, any and all claims, claims for relief and/or causes of action I
have or may have as of the date I sign this General Release against BankAmerica
Corporation, Bank of America NT&SA, and/or its or their current or former,
affiliates, subsidiaries, successors, or predecessors, and/or any of the current
or former, officers, directors, shareholders, employees, attorneys, employee
benefit plans, representatives, successors or agents of the foregoing entities
(Released Parties), arising out of and/or connected in any way with my
employment relationship within the
4114808.14 -1-
<PAGE>
Company, and/or the termination of that employment relationship, and/or with
respect to any other claim, matter, or event arising prior to the time I execute
this General Release. I recognize and agree that such released claims, claims
for relief, and/or causes of action include, but are not limited to, age claims
under the federal Age Discrimination in Employment Act, as well as claims under
Title VII of the Civil Rights Act of 1964, Section 1981 of Title 42 of the
United States Code, the Employee Retirement Income Security Act of 1974, the
Racketeer Influenced and Corrupt Organizations Act, the Financial Reform
Recovery and Enforcement Act of 1989, the Americans With Disabilities Act, the
Rehabilitation Act of 1973, the federal Family and Medical Leave Act, the
California Fair Employment and Housing Act, the California Labor Code, the Equal
Pay Act, the Fair Labor Standards Act, and all other laws, whether foreign,
federal, state or local of any jurisdiction. This General Release does not
waive rights or claims based on events that may occur after the date I sign it.
To the extent permitted by law, I further hereby waive all rights under Section
1542 of the California Civil Code or any similar law of any jurisdiction against
the Released Parties. I recognize that Section 1542 provides:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
I understand that should any provision of this General Release be determined to
be invalid by a court or government agency of competent jurisdiction or should I
fail to fulfill my obligations under it, the remainder of this General Release
shall, at the Company's option, remain in full force and effect and/or I shall
be required to return, in full or in part, as determined by the Company, any and
all consideration I received in exchange for my agreeing to this General
Release.
I hereby confirm my promise to adhere to the terms of the confidentiality clause
and non-disparagement clause at Sections 10 and 11 of the Agreement and to
fulfill my obligations and agreements relating to any payment under Section 9 of
the Agreement.
Nothing in this General Release constitutes an admission of liability by the
parties. This General Release constitutes the complete understanding of the
parties concerning its subject matter, and supersedes any and all prior
agreements, promises or inducements, written or oral, except as specifically set
forth in the Agreement. No other promises or agreements, or any modifications
to or of this General Release, shall be binding unless reduced to writing and
signed by an authorized representative of the Company and me.
I acknowledge that I have read this General Release, that I fully understand and
appreciate its meaning, and that I had an opportunity to consult my own
attorney.
This General Release does not release any vested rights I may have under the
pension program or savings program, or any claims I may have for indemnification
under applicable
4114808.14 -2-
<PAGE>
law or applicable by-laws, any claims I may have for workers compensation,
disability, or unemployment insurance benefits, nor does it release any claims
for breach of the Agreement itself. If I am retiring, this General Release also
does not affect my participation in any benefit program made available to
retirees by the Company.
__________________________________
Signature
__________________________________
Printed Name of Executive
__________________________________
Date
__________________________________
Social Security No.
THIS GENERAL RELEASE MAY NOT BE SIGNED AND RETURNED UNTIL AFTER YOUR DATE OF
TERMINATION.
4114808.14 -3-
<PAGE>
APPENDIX B
STATEMENT OF NON-REVOCATION OF GENERAL RELEASE
AS OF THE DATE SHOWN ON THIS FORM
By signing below, I hereby verify that I have chosen not to revoke my
agreement to and execution of the General Release. My signature also confirms
my renewed agreement, as of the date shown below, to the terms of the General
Release, including the release and waiver to the extent permitted by law of any
and all claims I have or may have against BankAmerica Corporation, Bank of
America NT&SA, including its or their subsidiaries and affiliates, and the
officers, employees, directors, representatives and/or agents of any of the
foregoing entities, or any other Released Parties, other than claims
specifically excluded from release by the terms of the General Release itself.
__________________________________
Signature
__________________________________
Printed Name of Executive
__________________________________
Date
__________________________________
Social Security No.
TO BE VALID, THIS DOCUMENT MAY NOT BE SIGNED AND RETURNED UNTIL 8 DAYS OR MORE
AFTER THE DATE THE GENERAL RELEASE IS SIGNED
4114808.14
<PAGE>
EXHIBIT 10.p.
GENERAL RELEASE AND SETTLEMENT AGREEMENT
----------------------------------------
("AGREEMENT")
-------------
For good and valuable consideration, receipt of which is hereby
acknowledged, and in order to resolve and settle finally, fully and completely
all matters or disputes that now or may exist between them, the parties agree as
follows:
1. PARTIES. The parties to this Agreement are Lewis W. Coleman, his
--------
heirs, representatives, successors and assigns (hereinafter referred to
collectively as "Mr. Coleman") and Bank of America National Trust and Savings
Association, BankAmerica Corporation, and/or any of its or their current,
former, or future, subsidiaries or affiliates (hereinafter referred to
collectively as "Bank").
2. VOLUNTARY RESIGNATION. Mr. Coleman hereby voluntarily tenders and
----------------------
Bank hereby accepts the voluntary resignation of his employment effective
December 1, 1995 from all offices, officer positions, and other positions he
holds within Bank except he shall be an employee (not an officer) of BankAmerica
Corporation ("BAC") through February 15, 1996. Mr. Coleman hereby voluntarily
tenders and Bank accepts the voluntary resignation of his employment from BAC
effective February 15, 1996.
3. TIME TO SIGN AGREEMENT. Mr. Coleman acknowledges and agrees he, or
-----------------------
his counsel on his behalf, received the Agreement on or before November 9, 1995.
Mr. Coleman also acknowledges and agrees he had at least twenty-one (21)
calendar days from the date he received this Agreement to decide whether to sign
it. Mr. Coleman understands that for seven (7) calendar days after he signs
this Agreement he has the right to revoke it, and this Agreement shall not
become effective and enforceable until after the expiration of this seven day
period. The Agreement may not be revoked after the seven day period. Mr.
Coleman understands that he will not be entitled to receive or retain any of the
consideration provided by this Agreement, except under Paragraph 4, unless he
-------
signs and returns the fully executed Agreement and unless he signs and returns
Attachment A confirming that he does not revoke the Agreement, and provided that
Attachment A is signed no fewer than eight (8) calendar days after Mr. Coleman
signs this Agreement. Mr. Coleman also understands and agrees that as an
additional condition to receiving or retaining the consideration provided for by
this Agreement, Mr. Coleman must execute and return to Bank the Confirmation of
General Release and Settlement Agreement, attached as Attachment B, which may
not be signed any earlier than February 16, 1996.
4. PAID NOTICE PERIOD. As consideration for the promises contained in
-------------------
this Agreement, and without any other obligation to do so, Bank agrees that
beginning December 1, 1995, and continuing through February 15, 1996, Mr.
Coleman shall be relieved of the regular, day-to-day responsibilities and duties
as an employee of BAC including being
<PAGE>
relieved of all decision-making power or authority and shall not have use of an
office, but Mr. Coleman shall assist the Bank in the transition to a new Chief
Financial Officer during this period. During this period, Mr. Coleman shall
continue to receive the base salary ($58,333.33 per month, less legal deductions
for applicable taxes and other withholdings) and be eligible for the medical,
dental, vision, life, and accidental death and dismemberment insurance benefits
he was receiving from Bank as of the date he first received this Agreement, but
he shall not accrue, be eligible to accrue, or utilize any sickness leave and/or
long-term disability benefits. During this period, he shall also remain subject
to the insider trading rules of the Securities and Exchange Act of 1934, as well
as any Bank policies, practices and procedures required by applicable law or as
required or directed by any regulatory authority.
5. PAYMENTS TO BE MADE. In consideration of the promises of Mr. Coleman
--------------------
as set forth herein, and without any other obligation to do so, the parties
agree that, on January 2, 1996, Bank will pay Mr. Coleman the gross sum of Four
Million Nine Hundred Ninety-Four Thousand Seven Hundred Ninety-One and 67/100
Dollars ($4,994, 791.67), less legal deductions for applicable taxes and other
withholdings.
6. FURTHER CONSIDERATION - BENEFITS. As further consideration, and
---------------------------------
without any other obligation to do so, Bank will pay Mr. Coleman within ten (10)
business days of February 15, 1996, the gross sum of Twenty-Five Thousand
Dollars ($25,000.00), less legal deductions for applicable taxes and other
withholdings, to defray expenses for premiums that may be incurred by Mr.
Coleman with respect to medical, dental, vision, life, long term disability and
accidental death and dismemberment insurance.
7. BONUS ELIGIBILITY. As further consideration, and without any other
------------------
obligation to do so, the parties agree that Mr. Coleman will be eligible to
receive a bonus for his 1995 performance (in lieu of payment under the Senior
Management Incentive Program) in the amount of One Million Five Hundred Thousand
Dollars ($1,500,000.00), less legal deductions for applicable taxes and other
withholdings. This bonus will be payable on January 2, 1996. Except as
specified in this Agreement, as of the date he executes this Agreement, Mr.
Coleman agrees that he is not now nor will he in the future be entitled to any
incentive or bonus payment(s) from Bank based on his employment through February
15, 1996.
8. FURTHER CONSIDERATION - OUTPLACEMENT. As further consideration, and
-------------------------------------
without any other obligation to do so, Bank agrees to pay for Mr. Coleman to be
provided with executive outplacement consulting services by a firm of Bank's
choice, provided that, to be eligible for these services, Mr. Coleman must begin
using such services within 6 months of February 15, 1996. Mr. Coleman
acknowledges and agrees that Bank will expend no other sums in support of his
efforts to obtain employment and that Bank makes no representation or guarantee
that employment for him will be found as a result of its payment for the
outplacement services.
4120669.14 2
<PAGE>
9. STOCK OPTIONS. As further consideration, and without any other
--------------
obligation to do so, the parties agree that, with respect to stock options
previously issued to Mr. Coleman by Bank, Bank has recommended and the Executive
Personnel and Compensation Committee of the BankAmerica Corporation Board of
Directors has approved and agreed, subject to the provisions of Paragraph 3,
that (1) all options and stock appreciation rights (including the DEC account
credits associated therewith) previously granted to Mr. Coleman and outstanding
as of February 15, 1996, shall become 100% vested and immediately exercisable as
of February 16, 1996; and (2) that Mr. Coleman shall have three (3) years from
February 16, 1996, or the expiration of the original option or stock
appreciation rights period, whichever is less, to exercise such options or stock
appreciation rights. Except as specified in this Paragraph and in Paragraph 10,
as of the date he executes this Agreement, Mr. Coleman agrees that he is not now
nor will he in the future be entitled to any further grants of stock options,
restricted stock, credits to DEC accounts, or other stock based incentive
award(s) based on his employment through February 15, 1996 or on any other
basis, and that the Plan documents and Option Agreements shall govern.
10. PERFORMANCE SHARES. As further consideration, and without any other
-------------------
obligation to do so, the parties agree that, with respect to Performance Share
Units (stock and cash components) previously granted to Mr. Coleman, Bank has
recommended and the Executive Personnel and Compensation Committee of the
BankAmerica Corporation Board of Directors has approved and agreed, subject to
the provisions of Paragraph 3, that such Units be retained by Mr. Coleman
notwithstanding the separation of his employment on February 15, 1996, as if he
had remained employed by the Bank, subject to the fulfilling of the stock price
or shareholder return targets with respect to such Units.
11. SUPPLEMENTAL RETIREMENT PROGRAM. As further consideration, and
--------------------------------
without any other obligation to do so, the parties agree that Mr. Coleman shall
make an election under the Supplemental Retirement Program before February 15,
1996, as to whether he wishes to receive an immediate lump sum distribution or
elect, subject to the consent of the BankAmerica Corporation Employee Benefits
Administrative Committee, a different form of distribution.
12. FINANCIAL PLANNING. As further consideration, and without any other
-------------------
obligation to do so, Bank agrees that, for 1996, Mr. Coleman shall continue to
be provided with standard financial counselling services at Bank's expense to be
provided by the Ayco Company, including estate planning advice during 1996 up to
a maximum cost of $3,000 for estate planning. The parties understand and agree
that these services include tax preparation assistance by the Ayco Company in
1997 with respect to Mr. Coleman's 1996 tax returns. Except as provided by this
Paragraph, Mr. Coleman shall not be eligible for any financial counselling
services by Ayco Company or any other company after December 31, 1996.
13. RELEASE OF CLAIMS. In exchange for the promises contained in this
------------------
Agreement, Mr. Coleman hereby waives, releases and forever discharges, and
agrees to the
4120669.14 3
<PAGE>
extent permitted by law that he will not in any manner institute, prosecute or
pursue, any and all complaints, claims, charges, claims for relief, demands,
suits, actions or causes of action, whether in law or in equity, which he
asserts or could assert, at common law or under any statute, rule, regulation,
order or law, whether federal, state, or local, or on any grounds whatsoever,
including without limitation, any age discrimination claims under the federal
Age Discrimination in Employment Act, and any claims under the California Fair
Employment and Housing Act, the California Labor Code, Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the Fair Labor Standards Act, the
Americans with Disabilities Act, the Family and Medical Leave Act, the
Rehabilitation Act of 1973, the Employee Retirement Income Security Act of 1974,
the Racketeer Influenced and Corrupt Organizations Act, the Financial Reform
Recovery and Enforcement Act of 1989, and/or Section 1981 of Title 42 of the
United States Code, against Bank and/or any of its or their current or former,
owners, officials, directors, officers, shareholders, affiliates, agents,
employee benefit plans, representatives, servants, employees, attorneys,
subsidiaries, parents, divisions, branches, units, successors, predecessors, and
assigns (collectively referred to as "Released Parties") with respect to any
event, matter, claim, damage or injury arising out of his employment
relationship with Bank, and/or the termination of such employment relationship,
and/or with respect to any other claim, matter, or event arising prior to
execution of this Agreement by Mr. Coleman. This Agreement includes, but is not
limited to, (i) release of any claims arising from or related to any statements
(written or oral) made or distributed or published by any or all of the Released
Parties, prior to signing of this Agreement by Mr. Coleman, including any
statements by Mr. Coleman himself, and (ii) release of any claims for any type
of wages, commissions, bonus, separation or severance benefits, stock, or any
other form of compensation. This Agreement does not release or waive rights or
claims based on events that may arise after the date the Agreement is executed
by Mr. Coleman. In addition, this Agreement does not release or waive any
rights or claims of Mr. Coleman (1) for indemnification as a director, officer
or agent of the Bank under applicable law, applicable by-laws, or applicable
charter provisions, (2) under this Agreement itself, (3) for health benefits or
life insurance benefits based on claims already submitted or which are covered
claims and are properly submitted in the future, or (4) for any vested rights
under pension or retirement plans.
14. CIVIL CODE (S)1542 WAIVER. As a further consideration and inducement
--------------------------
for this Agreement, to the extent permitted by law, Mr. Coleman hereby waives
and releases any and all rights under Section 1542 of the California Civil Code
or any analogous state, local, or federal law, statute, rule, order or
regulation, he has or may have with respect to the Released Parties. California
Civil Code Section 1542 reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
4120669.14 4
<PAGE>
Mr. Coleman hereby expressly agrees that this Agreement shall extend and apply
to all unknown, unsuspected and unanticipated injuries and damages as well as
those that are now disclosed. The rights and claims released or waived under
Paragraphs 13 and 14 shall be collectively referred to as "Released Claims".
15. BANK'S RELEASE OF CLAIMS. In exchange for the promises contained in
-------------------------
this Agreement, Bank hereby waives, releases and forever discharges, and agrees
to the extent permitted by law that it will not in any manner institute,
prosecute or pursue, any and all complaints, claims, charges, claims for relief,
demands, suits, actions or causes of action, whether in law or in equity, which
it asserts or could assert, at common law or under any statute, rule,
regulation, order or law, whether federal, state, or local, or on any grounds
whatsoever, arising from or attributable to Mr. Coleman's employment
relationship with Bank, or based on any claim, matter, or event occurring prior
to the execution of this Agreement by Bank; provided, however, that the waivers
and releases of this Paragraph shall not extend to any criminal, malicious,
dishonest, or fraudulent acts of Mr. Coleman in violation of any Federal or
state laws or regulations, or in violation of Bank policies or guidelines, or
arising out of a conflict of interest, bad faith actions, violations of public
policy, or claims which are not waivable by law. Further, this release shall
not extend to any banking or customer relationship Mr. Coleman may have with
Bank, including, but not limited to, consumer or residential loans, personal
loans, equity loans, lines of credit, checking, investment, savings, or trust
accounts, business loans, credit cards, credit arrangements or any other
financial agreements or obligations, including, but not limited to, any matters
on which Mr. Coleman is a guarantor or co-signer, and Mr. Coleman represents to
the best of his knowledge after reasonable inquiry that he is current with
respect to all such obligations.
16. NO VACATION. Mr. Coleman acknowledges and agrees that he has no
------------
accrued and unused vacation days, in lieu or personal choice days as of the date
he executes this Agreement and shall not earn or accrue any vacation, in lieu or
personal choice days between the date he executes this Agreement and February
15, 1996.
17. DEFERRED COMPENSATION AMOUNTS. Mr. Coleman understands and agrees
------------------------------
that any and all deferred compensation amounts he has under any deferred
compensation plan(s), if any, will be paid to him pursuant to the terms of such
plan(s) following the effective date of the resignation of his employment on
February 15, 1996.
18. CONFIDENTIAL INFORMATION.
-------------------------
(a) Mr. Coleman agrees and acknowledges that the positions held by him
within Bank gave him significant access to confidential information of
substantial importance to the business of the Bank. Therefore, to the fullest
extent permitted by applicable law, Mr. Coleman agrees that any and all
information ("Confidential Information") obtained by or disclosed to him at any
time during his employment with Bank, and which is treated as
4120669.14 5
<PAGE>
confidential by the Bank and which is not generally known to the public, is
strictly confidential and/or proprietary to Bank, shall be treated as trade
secrets of Bank, and shall not be disclosed, discussed, or revealed to any
persons, entities, or organizations, inside or outside of Bank, without prior
written approval to do so from Kathleen Burke (or her successor or delegee).
Confidential Information shall include, but not be limited to, customer lists,
information concerning Bank's customers to the extent disclosure or use thereof
would violate applicable banking and privacy laws or regulations or reveal
confidential competitive information, strategies, tactics, methods of operation,
processes, practices, policies, programs, marketing information, market research
data, financial information, procedures, and/or personnel information. Further,
to the fullest extent permitted by applicable law, Mr. Coleman agrees he will
not (a) use any Confidential Information to solicit present or potential
business or customers of the Bank or use any Confidential Information to
otherwise compete with the Bank, or (b) use any Confidential Information to
assist any other individual, company or entity to do so. A breach of this
Paragraph 18, including this subparagraph 18(a) or subparagraph 18(b) below, is
a material breach. The parties to this Agreement agree that, should Mr. Coleman
violate the provisions of this Paragraph, Bank shall be relieved of any
obligation it may have to provide any consideration to Mr. Coleman which has not
yet been provided under this Agreement, except Mr. Coleman shall continue to
receive the consideration provided for under Paragraphs 9, 10, and 11. In
addition to any remedy for breach of this Paragraph which is provided by this
Paragraph, Bank retains all other legal and equitable rights or remedies,
including injunctive relief, which may be available under the law.
(b) The parties agree that Confidential Information does not include: (i)
information which was in the public domain at the time it was disclosed or comes
into the public domain through no fault of Mr. Coleman or his agents, (ii)
information as to which Mr. Coleman can carry the burden of proof that it was
known to Mr. Coleman at the time he received it from the Bank, as can be shown
by his files in existence at the time of receipt, (iii) information which is
disclosed with the prior written approval of an authorized representative of the
Bank, (iv) information which is known to Mr. Coleman from a source other than
Bank and without any breach of this Agreement by Mr. Coleman, properly and
legally disclosed to Mr. Coleman without confidentiality restrictions on its
use, and otherwise not disclosed to Mr. Coleman in violation of the Bank's
rights, (v) information which is deliberately disclosed to a third party by an
authorized representative of the Bank without disclosure restrictions similar or
analogous to those contained in this Agreement, other than disclosures to
government regulators, or (vi) information which is disclosed by Mr. Coleman
pursuant to the order or requirement of a court, administrative agency,
regulatory authority or other governmental body, in respect of which Mr. Coleman
shall make best, good faith efforts to promptly notify Bank of the pendency of
such order or requirement so that Bank has a reasonable opportunity to move for
a protective order in advance of any such disclosure.
4120669.14 6
<PAGE>
19. NO RAIDING. As further consideration, to the fullest extent
-----------
permitted by applicable law, Mr. Coleman agrees he will not solicit for
employment or solicit for hire, on behalf of himself or any other person,
company or entity, any employees of Bank, nor will he aid any other person,
entity or company to do so, unless Mr. Coleman receives prior written
authorization to do so from Kathleen Burke (or her successor or delegee), from
the time he signs this Agreement through February 15, 1997, nor has he done so
within the three months prior to the time he signs this Agreement with one
exception with respect to an officer who made an inquiry of him (whose name has
been disclosed to counsel for Bank). A general advertisement through the mass
media soliciting applicants for a position or positions shall not constitute a
violation of this Paragraph. A breach of this Paragraph is a material breach.
The parties to this Agreement agree that, should Mr. Coleman violate the
provisions of this Paragraph, Bank shall be relieved of any obligation it may
have to provide any consideration to Mr. Coleman which has not yet been provided
under this Agreement, except Mr. Coleman shall continue to receive the
consideration provided for under Paragraphs 9, 10, and 11. In addition to any
remedy for breach of this Paragraph which is provided by this Paragraph, Bank
retains all other legal and equitable rights or remedies, including injunctive
relief, which may be available under the law.
20. CONFIDENTIALITY OF AGREEMENT TERMS. To the extent not disclosed to
-----------------------------------
the public by an authorized representative of Bank, Mr. Coleman also agrees that
the terms and conditions of this Agreement and any and all actions by Bank in
accordance therewith, are strictly confidential and, with the exception of Mr.
Coleman's counsel, tax advisor, financial advisor, immediate family, or as
required by applicable law or legal process, or to enforce Mr. Coleman's rights
or secure performance by the Bank under this Agreement, have not been and shall
not be disclosed, discussed, or revealed by Mr. Coleman or his agents or
representatives to any other persons, entities, or organizations, whether within
or outside Bank, without prior written approval by Kathleen Burke (or her
successor or delegee); provided, however, that Mr. Coleman shall not be
prohibited from disclosing the fact or terms of Paragraph 19. Mr. Coleman
further agrees to take all reasonable steps necessary to insure that
confidentiality is maintained by any of the individuals or entities referenced
above to whom disclosure is authorized. Mr. Coleman shall make best, good faith
efforts to promptly notify Bank of the pendency of any legal process or order
which requests or requires disclosure of information governed by this Paragraph
so that Bank has a reasonable opportunity to move for a protective order in
advance of any such disclosure. A breach of this Paragraph is a material
breach. The parties to this Agreement agree that, should Mr. Coleman violate
the provisions of this Paragraph, Bank shall be relieved of any obligation it
may have to provide any consideration to Mr. Coleman which has not yet been
provided under this Agreement, except Mr. Coleman shall continue to receive the
consideration provided for under Paragraphs 9, 10, and 11. In addition to any
remedy for breach of this Paragraph which is provided by this Paragraph, Bank
retains all other legal and equitable rights or remedies, including injunctive
relief, which may be available under the law.
4120669.14 7
<PAGE>
21. RETURN OF BANK PROPERTY. Mr. Coleman further represents and/or
------------------------
agrees that he has returned or, prior to February 15, 1996, will return, or
allow to be returned, to Bank all equipment and/or other material property
belonging to it (including, without limitation, business credit cards, building
passes, building keys, parking passes, fax equipment, computer equipment,
security equipment including the alarm box at his home (except Bank will not
remove magnetic sensors from his home unless Bank compensates Mr. Coleman for
damages to his home caused by such removal), and phone equipment) which has been
or is in his care, custody, possession or control. Mr. Coleman agrees that, as
of February 15, 1996, he will reimburse or reconcile to the Bank's satisfaction
all outstanding expenses or bills charged or chargeable to the Bank under Bank
guidelines, except that the parties understand and agree that there may be
expenses incurred prior to February 15, 1996, for which the bills are received
after such date, and Mr. Coleman shall promptly reimburse or reconcile any such
bills. (Minimal if any such charges or expenses are anticipated after December
1, 1995.) In addition, Mr. Coleman agrees that, as of the date he executes this
Agreement, he has submitted all charges or business expenses incurred by him and
associated with his employment with the Bank and properly charged to Bank,
except for those bills he receives after he signs this Agreement, which he shall
promptly submit to the Bank. (Minimal if any such charges or expenses are
anticipated after December 1, 1995.)
22. FUTURE COOPERATION. Mr. Coleman additionally agrees to make himself
-------------------
reasonably available in connection with any and all claims, disputes,
negotiations, investigations, lawsuits or administrative proceedings involving
the Bank, to provide information or documents, provide declarations or
statements to the Bank, meet with attorneys or other representatives of the
Bank, prepare for and give depositions or testimony, and/or otherwise cooperate
in the investigation, defense or prosecution of such matters. Mr. Coleman
similarly agrees to cooperate with respect to providing information known to him
as a result of his employment with Bank and related to Bank business.
23. NO ADMISSION OF LIABILITY. By entering into this Agreement, neither
--------------------------
party admits any liability whatsoever to the other party or to any other person
arising out of any claims heretofore or hereafter asserted by such party and
both Bank and Mr. Coleman expressly deny any and all such liability.
24. PAYMENTS NOT PART OF PENSION OR RETIREMENT PLANS. Except for the
-------------------------------------------------
amounts payable under Paragraph 4, none of the expenses to be incurred by Bank
and/or payments or reimbursements to be made by Bank to Mr. Coleman pursuant to
this Agreement shall count as earnings for purposes of Mr. Coleman's pension,
regular or supplemental retirement, or regular or supplemental savings plan
benefits, including specifically BankAmerishare or BankAmeraccount, or the
401(k) Investment Plan or the Pension Plan.
25. ATTORNEYS' FEES. As further mutual consideration of the promises set
----------------
forth herein, the Bank and Mr. Coleman agree that they each are responsible for
their own
4120669.14 8
<PAGE>
attorneys' fees and costs, and each agrees that they will not seek from the
other reimbursement for attorneys' fees and/or costs incurred in connection with
this Agreement or relating to any matters addressed in this Agreement.
26. JOINT PARTICIPATION IN PREPARATION OF AGREEMENT. The parties hereto
------------------------------------------------
participated jointly in the negotiation and preparation of this Agreement, and
each party has had the opportunity to obtain the advice of legal counsel and to
review, comment upon, and redraft this Agreement. Accordingly, it is agreed
that no rule of construction shall apply against any party or in favor of any
party. This Agreement shall be construed as if the parties jointly prepared
this Agreement, and any uncertainty or ambiguity shall not be interpreted
against any one party and in favor of the other.
27. NO OTHER CLAIMS.
----------------
(a) Mr. Coleman agrees and represents that he has not filed or otherwise
pursued any charges, complaints or claims of any nature with any local, state or
federal government agency or court with respect to any Released Claims and, to
the extent permitted by law, he will not do so in the future. If any government
agency or court assumes jurisdiction of any Released Claim, Mr. Coleman will
take such actions to ensure that such agency or court withdraws from and/or
dismisses the matter with prejudice, including but not limited to, requesting
such action by such agency or court, and he will not participate or cooperate in
such matter(s) except as required by law or as specified in this Agreement. Mr.
Coleman agrees that the Bank has no obligation to provide any consideration
under this Agreement if, at any time from the date this Agreement is executed by
Mr. Coleman through the date any such payment, payments or other consideration
would otherwise become due or payable, Mr. Coleman has filed any lawsuit,
administrative charge or claim of any nature with any local, state or federal
government agency or court against any Released Party with respect to any
Released Claim, except Mr. Coleman shall continue to receive the consideration
provided for under Paragraphs 9, 10, and 11.
(b) Bank agrees and represents that it has not filed or otherwise pursued
any charges, complaints or claims of any nature with any local, state or federal
government agency or court with respect to claims released or waived under
Paragraph 15 of this Agreement and, to the extent permitted by law, it will not
do so in the future. If any government agency or court assumes jurisdiction of
any claims released or waived under Paragraph 15, Bank will take such actions to
ensure that such agency or court withdraws from and/or dismisses the matter with
prejudice, including but not limited to, requesting such action by such agency
or court, and Bank will not participate or cooperate in such matter(s) except as
required by law or as specified in this Agreement.
28. ASSIGNMENTS. Mr. Coleman represents and warrants that he has not
------------
assigned or transferred to any person, company or entity any of his Released
Claims, including but not limited to any covenant not to sue. Bank represents
and warrants that it has not assigned
4120669.14 9
<PAGE>
or transferred to any person, company or entity any of its claims released or
waived under Paragraph 15, including but not limited to any covenant not to sue.
29. SEVERABILITY. Should any of the clauses or provisions of this
-------------
Agreement be rendered invalid by a court or government agency of competent
jurisdiction, it is agreed that this shall not in any way or manner affect the
enforceability of the other provisions of this Agreement which shall remain in
full force and effect. The parties further agree that California law shall
govern the validity and interpretation of this Agreement and that jurisdiction
and/or venue of any action involving the validity, interpretation or enforcement
of this Agreement or any of its terms, provisions or obligations or claiming
breach thereof, shall exist exclusively in a court or government agency located
within San Francisco, California.
30. SCOPE OF AGREEMENT. Mr. Coleman hereby affirms and acknowledges that
-------------------
he has read the foregoing Agreement, that he has had the opportunity to review
or discuss it and has reviewed or discussed it with the counsel of his choice,
that changes have been made to the Agreement at his request, and that he fully
understands and appreciates the meaning of each of its terms. The parties to
this Agreement represent that this Agreement may be used as evidence in any
subsequent proceeding in which any of the parties alleges a breach of this
Agreement or seeks to enforce its terms, provisions or obligations.
31. RECOVERY OF FEES AND COSTS. In the event of litigation arising under
---------------------------
this Agreement, the prevailing party is entitled to reasonable attorneys' fees
and costs in addition to any other relief to which it is determined the
prevailing party is entitled.
32. FAILURE TO MAKE PAYMENTS. This Agreement shall be null and void at
-------------------------
Mr. Coleman's prompt election if Bank fails to, in fact, provide the payments as
called for by Paragraphs 4, 5, and 7 or the consideration as called for by
Paragraphs 9 and 10, promptly following a demand to do so by Mr. Coleman.
However, a good faith dispute with respect to the number or amount of options,
stock appreciation rights, DEC account credits, or Performance Share Units, or a
good faith dispute with respect to the exercise periods or the terms or
application of the Plan documents or Option Agreements, shall not serve as a
basis for Mr. Coleman to elect to declare the Agreement null and void. Should
Mr. Coleman declare the Agreement null and void, he may retain and continue to
receive the consideration as called for by Paragraphs 9 and 10 but he shall
return and no longer be eligible to receive the payments as called for by
Paragraphs 5 and 7. In addition, should Mr. Coleman declare the Agreement null
and void, in addition to the provisions of this Paragraph, Mr. Coleman may
pursue any remedies against the Bank available under applicable law.
33. ENTIRE AGREEMENT. This Agreement constitutes the complete
-----------------
understanding between Mr. Coleman and Bank and supersedes any and all prior
agreements, promises, representations, or inducements, no matter its or their
form, concerning its subject matter. Section headings in this Agreement are
included for convenience of reference only and shall
4120669.14 10
<PAGE>
not be considered part of this Agreement for any other purpose. No promises or
agreements made subsequent to the execution of this Agreement by these parties
shall be binding unless reduced to writing and signed by Mr. Coleman and
Kathleen Burke (or her successor or delegee).
PLEASE TAKE THIS AGREEMENT HOME AND CAREFULLY CONSIDER ALL OF ITS
PROVISIONS BEFORE SIGNING IT. YOU SHOULD CONSULT AN ATTORNEY OF
YOUR CHOICE ABOUT THIS AGREEMENT BEFORE YOU SIGN THE AGREEMENT.
THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS
TO THE EXTENT PERMITTED BY LAW.
LEWIS W. COLEMAN
DATED: December 1, 1995 /s/ LEWIS W. COLEMAN
---------------- ----------------------------
"BANK"
DATED: December 4, 1995 by /s/ KATHLEEN J. BURKE
---------------- --------------------------
Kathleen J. Burke
Vice Chairman
4120669.14 11
<PAGE>
ATTACHMENT A
STATEMENT OF NON-REVOCATION
AS OF THE DATE SHOWN ON THIS FORM
By signing below, I hereby verify that I have chosen not to revoke my
agreement to and execution of the General Release and Settlement Agreement. My
signature confirms my renewed agreement to the terms of that Agreement,
including the release and waiver of any and all claims relating to my employment
with Bank and/or the termination of that employment, and of all other claims
released or waived under Paragraphs 13 and 14 of the General Release and
Settlement Agreement.
LEWIS W. COLEMAN ###-##-####
- -------------------------- ---------------------------------
Name (Please Print) Social Security Number
/s/ LEWIS W. COLEMAN December 13, 1995
- -------------------------- ----------------------------------
Signature* Date*
*DO NOT SIGN, DATE OR RETURN THIS DOCUMENT UNTIL EIGHT (8) DAYS AFTER YOU SIGN
THE GENERAL RELEASE AND SETTLEMENT AGREEMENT.
4120669.14 12
<PAGE>
ATTACHMENT B
CONFIRMATION OF GENERAL RELEASE AND SETTLEMENT AGREEMENT
By signing below, I hereby acknowledge and confirm my agreement to all the
terms of the General Release and Settlement Agreement ("Agreement"). I also
agree, that as of the date I sign this document, I release and waive any and all
additional employment claims (e.g., statutory employment claims, wrongful
----
discharge types of claims or related claims, breach of employment contract types
of claims, but not claims for breach of the Agreement itself) I may have
relating to my employment within BankAmerica Corporation and/or the termination
of that relationship which I would not have but for my being an employee of
BankAmerica Corporation since the time I signed the Agreement.
/s/ LEWIS W. COLEMAN February 18, 1996
- --------------------------------- -----------------------------
Signature* Date*
*DO NOT SIGN, DATE OR RETURN THIS DOCUMENT BEFORE FEBRUARY 16, 1996
4120669.14 13
<PAGE>
Exhibit 11
BANKAMERICA CORPORATION
Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------
(Dollar amounts in millions, except 1995 1994 1993
per share data) ------------ ------------ ------------
<S> <C> <C> <C>
Net income $2,664 $2,176 $1,954
Less: Preferred stock dividends 227 248 241
------ ------ ------
NET INCOME APPLICABLE TO COMMON STOCK $2,437 $1,928 $1,713
====== ====== ======
Average number of common shares
outstanding 370,981,593 357,312,433 355,106,722
Average number of common and common
equivalent shares outstanding 375,555,919 359,793,169 357,679,670
Average number of common shares
outstanding assuming full dilution 378,103,241 365,273,824 363,243,993
Earnings per common and common
equivalent share $ 6.49 $ 5.36 $ 4.79
Earnings per common share-
assuming full dilution $ 6.45 $ 5.33 $ 4.76
</TABLE>
Earnings per common and common equivalent share are computed by dividing net
income applicable to common stock by the total of the average number of common
shares outstanding and the additional dilutive effect of stock options and
warrants outstanding during the respective period. The dilutive effect of stock
options and warrants is computed using the average market price of BankAmerica
Corporation's common stock for the period.
Earnings per common share, assuming full dilution, are computed based on the
average number of common shares outstanding during the period, and the
additional dilutive effect of stock options and warrants outstanding during the
period. The dilutive effect of outstanding stock options and warrants is
computed using the greater of the closing market price or the average market
price of BankAmerica Corporation's common stock for the period. Earnings per
common share, assuming full dilution, also includes the dilution which would
result if BankAmerica Corporation's outstanding 6 1/2% Cumulative Convertible
Preferred Stock, Series G (Convertible Preferred Stock) had been redeemed or
converted during the period. Net income applicable to common stock was adjusted
for dividends declared on the Convertible Preferred Stock of $3 million, $16
million, and $16 million during the years ended December 31, 1995, 1994 and
1993, respectively. The outstanding shares of the Convertible Preferred Stock
were redeemed or converted during May 1995.
<PAGE>
Exhibit 12(a)
Page 1 of 3
BANKAMERICA CORPORATION
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
(dollar amounts in millions) 1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense (other
than interest on deposits) $ 2,455 $1,505 $1,215 $1,126 $ 743
Interest factor in rent expense 120 109 112 95 82
Other - 3 2 1 1
------- ------ ------ ------ ------
$ 2,575 $1,617 $1,329 $1,222 $ 826
======= ====== ====== ====== ======
Earnings:
Income from operations $ 2,664 $2,176 $1,954 $1,492 $1,124
Applicable income taxes 1,903 1,541 1,474 1,190 749
Fixed charges 2,575 1,617 1,329 1,222 826
Other (12) (55) (39) (14) (15)
------- ------ ------ ------ ------
$ 7,130 $5,279 $4,718 $3,890 $2,684
======= ====== ====== ====== ======
Ratio of earnings to fixed charges,
excluding interest on deposits 2.77 3.26 3.55 3.18 3.25
INCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense $ 7,378 $4,842 $4,186 $4,895 $5,388
Interest factor in rent expense 120 109 112 95 82
Other - 3 2 1 1
------- ------ ------ ------ ------
$ 7,498 $4,954 $4,300 $4,991 $5,471
======= ====== ====== ====== ======
Earnings:
Income from operations $ 2,664 $2,176 $1,954 $1,492 $1,124
Applicable income taxes 1,903 1,541 1,474 1,190 749
Fixed charges 7,498 4,954 4,300 4,991 5,471
Other (12) (55) (39) (14) (15)
------- ------ ------ ------ ------
$12,053 $8,616 $7,689 $7,659 $7,329
======= ====== ====== ====== ======
Ratio of earnings to fixed charges,
including interest on deposits 1.61 1.74 1.79 1.53 1.34
</TABLE>
<PAGE>
Exhibit 12(a)
Page 2 of 3
BANKAMERICA CORPORATION
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
(dollar amounts in millions) 1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends
Interest expense (other
than interest on deposits) $ 2,455 $1,505 $1,215 $1,126 $ 743
Interest factor in rent expense 120 109 112 95 82
Preferred dividend requirements/a/ 389 424 423 304 102
Other - 3 2 1 1
------- ------ ------ ------ ------
$ 2,964 $2,041 $1,752 $1,526 $ 928
======= ====== ====== ====== ======
Earnings:
Income from operations $ 2,664 $2,176 $1,954 $1,492 $1,124
Applicable income taxes 1,903 1,541 1,474 1,190 749
Fixed charges, excluding preferred
dividend requirements 2,575 1,617 1,329 1,222 826
Other (12) (55) (39) (14) (15)
------- ------ ------ ------ ------
$ 7,130 $5,279 $4,718 $3,890 $2,684
======= ====== ====== ====== ======
Ratio of earnings to fixed charges,
and preferred dividends, excluding
interest on deposits 2.41 2.59 2.69 2.55 2.89
INCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends
Interest expense $ 7,378 $4,842 $4,186 $4,895 $5,388
Interest factor in rent expense 120 109 112 95 82
Preferred dividend requirement/a/ 389 424 423 304 102
Other - 3 2 1 1
------- ------ ------ ------ ------
$ 7,887 $5,378 $4,723 $5,295 $5,573
======= ====== ====== ====== ======
Earnings:
Income from operations $ 2,664 $2,176 $1,954 $1,492 $1,124
Applicable income taxes 1,903 1,541 1,474 1,190 749
Fixed charges, excluding preferred
dividend requirements 7,498 4,954 4,300 4,991 5,471
Other (12) (55) (39) (14) (15)
------- ------ ------ ------ ------
$12,053 $8,616 $7,689 $7,659 $7,329
======= ====== ====== ====== ======
Ratio of earnings to fixed charges,
and preferred dividends, including
interest on deposits 1.53 1.60 1.63 1.45 1.32
</TABLE>
SEE NOTES ON PAGE 3 OF THIS EXHIBIT
<PAGE>
Exhibit 12(a)
Page 3 of 3
BANKAMERICA CORPORATION
Notes to
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends
/a/ Preferred stock dividend requirements represent pretax earnings necessary to
cover preferred stock dividends declared during the years ended December 31,
1995, 1994, 1993, 1992, and 1991 of $227 million, $248 million, $241 million,
$169 million, and $61 million, respectively.
<PAGE>
Exhibit 12(b)
Page 1 of 2
BANKAMERICA CORPORATION
HISTORICAL AND PRO FORMA COMBINED RATIO OF EARNINGS
TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. The ratio of earnings to combined fixed charges and preferred
stock dividends is computed by dividing earnings by the sum of fixed charges and
preferred stock dividend requirements. Earnings consist primarily of income
(loss) before income taxes adjusted for fixed charges. Fixed charges consist
primarily of interest expense on short- and long-term borrowings and one-third
(the portion deemed representative of the interest factor) of net rents under
long-term leases.
The following table sets forth (i) the historical ratios of earnings to fixed
charges and the ratios of earnings to combined fixed charges and preferred stock
dividends for the year ended December 31, 1992 for BankAmerica Corporation and
its consolidated subsidiaries (BAC) and for Security Pacific Corporation and its
consolidated subsidiaries (SPC) and (ii) the pro forma combined ratios of
earnings to fixed charges and ratios of earnings to combined fixed charges and
preferred stock dividends for the year ended December 31, 1992, giving effect to
the April 22, 1992 merger between BAC and SPC (the Merger) as if it had been
consummated on January 1, 1991. The pro forma combined ratio has been
calculated using the pro forma combined financial information for the year ended
December 31, 1992, and should be read in conjunction with and is qualified in
its entirety by such pro forma combined information included in the 1994 Annual
Report to Shareholders. Pro forma adjustments made to arrive at the pro forma
combined ratio are based on the purchase method of accounting and are based upon
actual amounts recorded by BAC subsequent to the effective time of the Merger.
<PAGE>
Exhibit 12(b)
Page 2 of 2
<TABLE>
<CAPTION>
Year Ended
December 31, 1992
------------------------------
Historical Pro Forma
------------- ---------
BAC/a/ SPC Combined
----- --- --------
<S> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Excluding interest on deposits 3.18 /b/ 2.05
Including interest on deposits 1.53 /b/ 1.27
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
Excluding interest on deposits 2.55 /b/ 1.87
Including interest on deposits 1.45 /b/ 1.26
</TABLE>
- ----------
/a/ This financial information reflects the effects of the Merger subsequent to
the Merger's consummation on April 22, 1992.
/b/ Because the Merger was consummated on April 22, 1992, there is no year-to-
date data for SPC.
These pro forma combined ratios are intended for informational purposes and
are not necessarily indicative of the future ratios of earnings to fixed charges
and ratios of earnings to combined fixed charges and preferred stock dividends
of the combined company or the ratios of earnings to fixed charges and ratios of
earnings to combined fixed charges and preferred stock dividends of the combined
company that would have actually occurred had the Merger been effective on
January 1, 1991.
<PAGE>
BankAmerica Corporation
Computer icons depicting the Corporation's
Major Business Sectors
[LOGO OF BANKAMERICA APPEARS HERE]
1995 Annual Report
<PAGE>
- --------------------------------------------------------------------------------
Letter to Shareholders....................................................... 1
- --------------------------------------------------------------------------------
Review of Major Business Sectors............................................. 5
- --------------------------------------------------------------------------------
Financial Review
- --------------------------------------------------------------------------------
Overview..................................................................... 16
Ratio and Stock Data....................................................... 16
Selected Financial Data.................................................... 17
Business Sectors............................................................. 17
Results of Operations........................................................ 21
Net Interest Income........................................................ 21
Noninterest Income......................................................... 23
Noninterest Expense........................................................ 24
Income Taxes............................................................... 25
Comparison of 1994 Versus 1993............................................. 25
Balance Sheet Review......................................................... 25
Investment Securities...................................................... 25
Deposits................................................................... 26
Pending Accounting Standards............................................... 26
Off-Balance-Sheet Financial Instruments...................................... 27
Credit-Related Financial Instruments....................................... 27
Foreign Exchange and Derivatives Contracts................................. 27
Risk Management.............................................................. 27
Credit Risk Management....................................................... 27
Overview................................................................... 27
Off-Balance-Sheet Credit Risk.............................................. 28
Loan Portfolio Management.................................................. 29
Allowance for Credit Losses................................................ 33
Nonperforming Assets....................................................... 35
Market Risk Management....................................................... 38
Overview................................................................... 38
Trading Activities......................................................... 38
Other Banking Activities................................................... 39
Objectives and Results of Interest Rate Risk Management.................... 39
Liquidity Risk Management.................................................... 42
Overview................................................................... 42
Liquidity Review........................................................... 42
Operational and Settlement Risk Management................................... 42
Capital Management........................................................... 43
- --------------------------------------------------------------------------------
Consolidated Financial Statements
- --------------------------------------------------------------------------------
Report of Management......................................................... 46
Report of Independent Auditors............................................... 47
Consolidated Financial Statements............................................ 48
Notes to Consolidated Financial Statements................................... 52
- --------------------------------------------------------------------------------
Corporate Information
- --------------------------------------------------------------------------------
Boards of Directors/BankAmerica Corporation
and Bank of America NT&SA.................................................. 84
Honorary Directors/BankAmerica Corporation
and Bank of America NT&SA (nonvoting)...................................... 84
Principal Officers/BankAmerica Corporation................................... 85
Senior Management Council/Bank of America NT&SA.............................. 86
Chairmen/Presidents/Other Subsidiary Banks................................... 87
Advisor/BankAmerica Corporation.............................................. 87
BankAmerica Corporate Governance Principles.................................. 88
- ----------------------------------------
BankAmerica Today
- ----------------------------------------
BankAmerica Corporation and its consolidated subsidiaries provide diverse
financial products and services to individuals, businesses, government agencies,
and financial institutions throughout the world. BankAmerica Corporation is one
of the three largest bank holding companies in the United States, based on total
assets at December 31, 1995.
BankAmerica's principal banking subsidiaries operate full-service branches in
California, Washington, Texas, Arizona, Oregon, Nevada, New Mexico, Hawaii,
Idaho, and Alaska, as well as corporate banking and business credit offices in
major U.S. cities, and branches, corporate offices, and representative offices
in 36 other countries and territories. Bank of America Illinois provides a full
range of financial services to business and private banking clients in the
Midwest. BankAmerica Business Credit is a national commercial finance company
engaged in asset-based lending. Also on a national scale, BankAmerica Mortgage
originates and services home loans, and BankAmerica Housing Services makes loans
for manufactured housing. Bank of America Community Development Bank provides
financing for small businesses and affordable housing in 11 western states,
Chicago, Washington, D.C., and Atlanta.
- --------------------------------------------------------------------------------
Note: The following abbreviations, among others, appear in the text of this
report: BankAmerica Corporation and its consolidated subsidiaries (BankAmerica,
BAC), BankAmerica Corporation (the parent), Bank of America NT&SA (Bank of
America, BofA, the bank), Continental Bank Corporation (Continental), and
Seattle-First National Bank (SFNB).
<PAGE>
BankAmerica Corporation 1995 / 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To Our Shareholders
- --------------------------------------------------------------------------------
----------------------------------------------------
[PHOTO APPEARS HERE]
----------------------------------------------------
Richard M. Rosenberg David A. Coulter
Chairman of the Board Chief Executive Officer
We are pleased to report that the financial position of BankAmerica Corporation
is strong and solid. 1995 was a very successful year for the corporation,
capping a six-year period of growth. We are proud of having achieved our two
primary financial goals during the year: increasing earnings per share and
increasing return on common equity. Per-share earnings increased 21 percent to a
record $6.49 from the previous year on net income of $2.664 billion - also a
record. Return on average common equity increased 138 basis points,
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Selected Financial Data
- --------------------------------------------------------------------------------
(dollar amounts in millions,
except per share data) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
For the Year
Net Income $ 2,664 $ 2,176
Earnings per
common share 6.49 5.36
At Year End
Loans $155,373 $140,912
Total assets 232,446 215,475
Deposits 160,494 154,394
Stockholders' equity 20,222 18,891
Selected Ratios
Rate of return on
average common
equity 14.58% 13.20%
Ratio of common
equity to
total assets 7.57 7.34
Tier 1 risk-based
capital ratio 7.35 7.27
</TABLE>
to 14.58 percent. From a perspective of increasing shareholder value, further
increasing both of these measures of performance is a primary financial goal for
1996.
We attribute our 1995 results to three factors: excellent, dedicated performance
by BankAmerica employees, continuing support from our customers, and the
strategic decisions we have made and put in place in recent years. We believe
that our strategic plans, effectively implemented, will result in increasing the
value of our shareholders' investment by allowing us to address three key areas:
revenue generation, expense control, and capital allocation.
Revenue Generation
A large part of our success in 1995 was due to the steps we have taken
throughout the 1990s to build a diversified franchise that has given us earnings
momentum and still provides considerable potential for growth.
In the retail markets, we grew from our California and Washington operations at
the end of the last decade, to our present position of full-service banks in ten
western states. The merger with Security Pacific Corporation in 1992 contributed
to that growth and also added important new businesses such as personal trust,
proprietary mutual funds, consumer financial operations, a nationwide commercial
finance company, and a consumer banking presence in some of the fastest growing
economies in Asia.
We have invested in changing our retail delivery structure to reflect the
changes in our customers' expectations and the practical realities of today's
marketplace. We know, for example, that today's consumers increasingly demand
broader choices of when, where, and how they access their banking services.
Therefore, we have enhanced our delivery systems, particularly the lower cost
alternative systems such as ATMs, in-store branches, and interactive banking
technologies, including telephone banking. Together with other financial
institutions, we purchased an interest in the company that offers the popular
<PAGE>
2 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Managing Your Money(R) software. We have established an interactive presence on
the Internet's World Wide Web and opened an electronic branch on America Online.
The rapid development of consumer banking technology has given our customers an
unprecedented range of choices for accessing banking services. We, frankly,
don't yet know what the ideal long-term model will be for maximizing customer
service and profitability at BankAmerica. But the scale of our business allows
us to experiment broadly and refine our system as customer usage patterns begin
to emerge. In the consumer banking market of the future, we are committing to a
world-class delivery structure.
We have also expanded the geographical reach of our consumer banking operations,
enhancing our national mortgage origination and servicing capabilities with the
acquisition of Arbor National Holdings, Inc. and establishing a credit card
operation in Taiwan.
The 1994 acquisition of Continental Bank Corporation increased the scale and
scope of our wholesale banking activities, adding significantly to our middle-
market presence in the Midwest and expanding our relationships with large
corporations throughout the United States. In fact, a recent survey of Fortune
1,000 companies conducted by Goldman Sachs ranked BankAmerica the nation's
leading relationship bank, with a 40 percent market share of primary
relationships.
To enhance relationships with our corporate and commercial customers, we
intensified our investment in relationship-building businesses such as capital
raising and capital markets. We have also strengthened our presence in selected
foreign markets such as Vietnam, Mexico, and China, where we opened our fourth
office.
This growth in both retail and wholesale banking has enabled us to diversify our
revenue streams, both geographically and by product lines, thereby reducing our
exposure to regional and particular industry sector economic downturns. We
believe that it is especially noteworthy that the corporation recorded gains in
net income throughout the 1990s, despite the fact that, during that time,
California endured one of the worst recessions in its history.
- --------------------------------------------------------------------------------
Quarterly Earnings Per Share (plot point graph in
non-EDGAR version appears here)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarterly Earnings per Share
(in dollars)
1994 1995
------ ------
<S> <C> <C>
<Q1> 1.27 1.46
<Q2> 1.33 1.56
<Q3> 1.36 1.72
<Q4> 1.41 1.74
</TABLE>
- --------------------------------------------------------------------------------
Quarterly Return on Average Common Equity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarterly return on Average Common Equity (plot point graph in
non-EDGAR version appears here)
(in percent)
1994 1995
------ ------
<S> <C> <C>
<Q1> 13.00 13.86
<Q2> 13.32 14.30
<Q3> 13.12 15.09
<Q4> 13.24 14.96
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 3
- --------------------------------------------------------------------------------
"BankAmerica Corporation has experienced tremendous growth during the 1990s, in
size, geographic scope, and the diversity of its products and business lines.
I truly believe that we have built one of the best franchises in banking
today."
-- Richard M. Rosenberg
We have also achieved our goal of establishing and maintaining leadership in our
industry for corporate responsibility and community reinvestment, with a broad
range of programs that have increased both our revenue and our stature in the
communities where we do business. Since initiating the Neighborhood Advantage(R)
program in 1990, we have made more than $10 billion in low-income home loans.
And our Community Development Bank loaned approximately $550 million for low-
cost housing and small business development in 1995.
We believe that the franchise we have established during the course of this
decade provides a solid base from which to continue building an organization
that can succeed in a changing environment.
Expense Control
While we have significant potential to improve profitability by selectively
growing our existing operations, we also place equal emphasis on controlling
noninterest expense. We have succeeded in increasing our operating efficiency,
as measured by the expense to revenue ratio, which has improved steadily over
the last six quarters.
To a large extent, this has been due to the efforts of thousands of employees
and their managers working in our processing centers both in the United States
and overseas. BankAmerica is a high volume processor of loans, checks and other
payments. As we have expanded geographically, we have also taken steps to
consolidate some of these processing operations and made substantial investments
in advanced technology, thereby enhancing the efficiency of the businesses they
support. For example, we now process indirect auto loans through dedicated
dealer centers in Nevada and Washington. Consumer and residential loans in our
Southwestern and Northwestern banking subsidiaries are serviced out of regional
centers in Arizona and Oregon, and some phases of credit card processing are
being outsourced to reduce expenses and improve flexibility.
Capital Allocation
We believe that capital must be invested in ways that generate appropriate
returns for the risks involved. That means increasing investments in those
businesses that earn more than their cost of capital, decreasing the investment
in businesses that do not meet that test, and returning excess capital to
shareholders by repurchasing common stock, redeeming preferred stock, and paying
dividends.
During 1995, we sold the Institutional Trust and Securities Services business at
an attractive price, which freed up additional risk capital. We also divested
some traditional bank branches in areas where the present and potential customer
base was too small to justify our investment.
Under a program authorized by our Board of Directors early in the year, we
repurchased 16.6 million shares of our common stock for $894 million, redeemed
approximately $200 million of preferred stock, and converted $248 million of
preferred stock into 5.4 million shares of common stock. In February 1996, The
Board approved the redemption of approximately $200 million more of preferred
stock.
At the same time, the Board declared a quarterly common stock dividend of $0.54
per share - a 17 percent increase and the highest level ever.
<PAGE>
4 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
"We remain focused on managing our businesses in ways that create value for our
shareholders. That means continuing to find ways to broaden the relationships
we have with our customers, to allocate our resources prudently, to reduce
costs, and to return excess capital to our shareholders."
-- David A. Coulter
The Importance of Employees
None of the programs and strategies outlined in this letter could succeed
without the efforts of BankAmerica's 95,000 employees around the world. These
are the people who have brought the company to its present position in the
industry and who operate the franchise day in and day out. They have shown
themselves willing and able to undertake a variety of challenges, from building
market share, to reducing expenses, to expanding or consolidating their
operations. Their experience, integrity, and pride in the company and in the
jobs they do produce results for our shareholders every day.
In a relationship business such as ours, teamwork across disciplines and
business lines is an important ingredient for success. We actively encourage and
facilitate teamwork at every level of the corporation by seeking ways to
eliminate artificial barriers and rewarding people who achieve excellence
through teamwork.
Change and Opportunity
We face a future that promises continuing change and challenge for the financial
services industry. Competition continues to increase, particularly from
nonbanks, which sometimes play by different rules than those that we must
follow. Congress continues to debate these very rules, and the outcome of their
deliberations is difficult to predict. Technology alters the nature of both our
competition and our customers' expectations. Consolidations keep the competitive
landscape in flux.
Change also brings opportunity, particularly for institutions that have the
flexibility to adapt and the will to stay ahead of the curve. We believe that we
have the franchise, the customer base, the capital, the earnings momentum, and
the talent - in short, the scale and scope we need - to succeed in this
challenging environment.
We also have an extremely capable and hard-working Board of Directors whose
guidance and leadership during this recent period of growth and change has been
invaluable. One of our longest serving Directors, Philip M. Hawley, is retiring
from the Board this year. We would like to acknowledge and thank him for his
many years of dedicated service.
/s/ Richard M. Rosenberg
Richard M. Rosenberg
Chairman of the Board
/s/ David A. Coulter
David A. Coulter
Chief Executive Officer
San Francisco, California
February 8, 1996
<PAGE>
BankAmerica Corporation 1995 / 5
- --------------------------------------------------------------------------------
- ----------------------------------------
Major Business Sectors
- ----------------------------------------
Pie chart of the Corporation's Major Consumer Banking
Business Sectors, including the following
listed in order of magnitude: Consumer U.S. Corporate and
Banking, U.S. Corporate and International International Banking
Banking, Commercial Real Estate, Middle-
Market Banking, and Private Banking and Commercial Real Estate
Investment Services with all sectors
highlighted (Pie chart in non-EDGAR Middle-Market Banking
version appears here)
Private Banking and
Investment Services
BankAmerica Corporation derives its income from five primary business sectors,
ranked, for the purpose of the discussion in the following 10 pages, in order of
their contribution to net income in 1995. Although each sector provides discrete
lines of products and services and pursues strategic goals aligned to the needs
and potentials of its own customer base, there is synergy among the sectors. The
ability to offer customers access to a comprehensive range of financial services
by managing relationships across sector boundaries is a competitive advantage
for BankAmerica. At the same time, maintaining operating results and balance
sheets for discrete business sectors enables management to focus its allocation
of capital to those businesses that it believes can best increase returns for
shareholders.
<PAGE>
6 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Consumer Banking
- --------------------------------------------------------------------------------
Computer icons depicting the Corporation's
Major Business Sectors including Consumer
Banking, U.S. Corporate and International
Banking, Commercial Real Estate, Middle-
Market Banking, and Private Banking and
Investment Services, with the Consumer
Banking icon highlighted appears here
Consumer Banking Strategy
Combine superior quality and locally managed sales and service capabilities with
large-scale, cost-efficient processing and distribution channels. Offer
customers a wide variety of transaction choices, enabling them to access the
bank when, where, and how they wish.
Pie chart of the Corporation's Major
Business Sectors, including the
following listed in order of magnitude:
Consumer Banking, U.S. Corporate and
International Banking, Commercial Real
Estate, Middle-Market Banking, and
Private Banking and Investment Services
with the Consumer banking sector
highlighted (Pie chart in non-EDGAR
version appears here)
Consumer Banking provides a full array of deposit and loan products to
individuals and small businesses through branches, ATMs, phones, and other
delivery channels throughout ten western states and through in-store ATMs in the
Chicago metropolitan area. It also provides credit card, home mortgage,
manufactured housing financing, and consumer finance products throughout the
United States, and a range of consumer banking products and services in Hong
Kong, India, Taiwan, Singapore, and the Philippines.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Net Income 1995 $1,154 million
- --------------------------------------------------------------------------------
($ millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail Deposit Services $779 Other $41
Consumer Lending $334
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 7
- --------------------------------------------------------------------------------
BankAmerica's consumer banking operations serve the largest customer base of any
bank in the western United States - nearly 11 million households in 1995. In the
ten western states in which we operate, we offer the largest full-service branch
network - nearly 2,000 branches, approximately 200 of them in supermarkets and
other stores. Our proprietary network of more than 6,600 ATMs handles nearly 2
million transactions per day.
The trend away from traditional branches toward alternative delivery systems
continues to increase. We now conduct two telephone and ATM transactions for
every traditional teller transaction. To keep pace with our customers' changing
expectations, we have implemented a variety of options, including in-store
banking facilities and interactive banking services.
In-store banking remains a high growth area and a high priority because of its
popularity with customers and its cost-effectiveness. We now have 183 full-
service in-store branches operating with extended hours in nine states, in
addition to 323 in-store ATM or sales kiosks and more than 400 ATM-only
installations. The addition of in-store ATMs in Washington state has expanded
the reach of our Seattle-First National Bank operation still further. And we are
now able to offer consumers access to the bank through more than 170 ATMs in the
Chicago area.
Cost-effectiveness and customer service are also the reasons behind our
continuing investment in interactive banking: the delivery of products and
services remotely through customer-owned devices. Our Interactive Banking Group
develops and manages systems such as a new telephone bill-paying service,
personal computer banking, "smart card" technology, and the delivery of services
through BankAmerica's Internet site on the World Wide Web:
[http://www.bankamerica.com]. Bank of America has become the first bank to open
a site on America Online through which customers will be able to access their
accounts and initiate loan applications.
Interactive banking enables us to sell more products to existing customers and
also to expand our geographic base. For example, we are now able to offer home
mortgage products in nearly every state through an efficient combination of
offices, regionalized processing centers, and telephone- and computer-based
delivery.
Electronic tools also help to give us a competitive edge in selling consumer
loans. In some of our markets, computerized credit scoring now enables us to
give customers approval for consumer loans at the time they make their
applications. We are also using technology to improve our understanding of
customer profitability and to anticipate purchasing behaviors through our
"corporate data store," one of the largest information warehouses in the
financial services industry.
We have increased both the number and use of credit card accounts, both within
our traditional western markets and in other parts of the United States, as the
result of marketing initiatives such as co-branding, photocard, balance
consolidation premiums, and competitive pricing.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consumer Highlights
- --------------------------------------------------------------------------------
($ millions) 1995
- --------------------------------------------------------------------------------
<S> <C>
Net Interest Income $ 5,358
Provision for Credit Losses 646
Noninterest Income 2,011
Noninterest Expense 4,700
Net Income 1,154
Average Loans 75,907
Average Deposits 95,495
Average Common Equity 5,800
Return on Average Common Equity 18.54%
- --------------------------------------------------------------------------------
</TABLE>
BankAmerica is California's leading small business lender in terms of loan
outstandings, and the fifth-largest in the nation. To encourage small business
clients to broaden their relationships with us, we recently began to offer
relationship pricing on term loans and lines of credit, as well as discounts on
checking service charges.
Our retail operations in Asia give us access to consumers in some of the world's
fastest growing economies. These operations also provide opportunities to
enhance service to millions of Asian-Americans and recent emigres who live in
the western United States and maintain close ties to Asia. We are in the process
now of upgrading and standardizing our processing systems in Asia, introducing
credit cards, and bringing additional new products to market.
The challenge for the future in all our consumer markets is to determine the mix
of delivery systems that both meets our customers' needs and offers us the best
opportunities for profitability.
<PAGE>
8 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. Corporate and International Banking
- --------------------------------------------------------------------------------
Computer icons depicting the Corporation's
Major Business Sectors including Consumer
Banking, U.S. Corporate and International
Banking, Commercial Real Estate, Middle-
Market Banking, and Private Banking and
Investment Services, with the U.S.
Corporate and International Banking icon
highlighted appears here
U.S. Corporate and International Banking Strategy
Be the most important provider of financial services to customers in our markets
by developing deep relationships based on our breadth of high-quality financial
products and services and our global capabilities.
Pie chart of the Corporaton's Major
Business Sectors, including the following
listed in order of magnitude:
Consumer Banking, U.S. Corporate and
International Banking, Commercial Real
Estate, Middle-Market Banking, and Private
Banking and Investment Services with the
U.S. Corporate and International Banking
sector highlighted (Pie chart in non-EDGAR
version appears here)
U.S. Corporate and International Banking provides capital-raising services,
trade finance, cash management, investment banking, capital markets products,
and financial advisory services to large public- and private-sector institutions
that are part of the global economy and affected by global financial flows. With
offices in the United States and 36 countries in North and South America, Asia,
Europe, Africa, and the Middle East, and the ability to serve the needs of
institutional clients anywhere in the world, BankAmerica is one of the leading
U.S.-based providers of financial services to institutions conducting business
within the United States and across international boundaries.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Net Income 1995 $872 million
- --------------------------------------------------------------------------------
($ millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Corporate Group $337 Asia Wholesale $ 68
Latin America/Canada $131 Other $217
Europe, Middle East & Africa $119
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 9
- --------------------------------------------------------------------------------
As business becomes increasingly globalized, the ability to analyze a client's
needs and provide a wide range of products and services to meet those needs
becomes increasingly important. BankAmerica leverages its global network for its
clients through coordinated teams of relationship, product, industry, and
regional bankers who utilize their knowledge and experience to study a client's
business issues and opportunities and deliver tailored solutions.
We are a client-focused organization, managing relationships through teams that
cross geographic, product, and organizational lines, driven by our clients'
needs. We have recently launched a new international network initiative to
further strengthen client relationships where we believe that both we and our
clients can benefit.
Capital raising is growing in importance to our clients, as the credit and
securities markets continue to converge across both markets and products. In
1995, our large client base, including both issuers and investors, enabled us to
achieve leadership in capital raising in a number of areas, including the
following:
. We were the number one provider of commercial and industrial loans in the
United States,
. We were one of the top two providers of agented/co-agented syndicated loans,
. We had the largest number of commercial paper programs among bank-affiliated
dealers, and
. We were number one in private placements of corporate debt by banks.
In recognition of our leadership, we were named "Loan House of the Year" by the
International Financial Review in Asia, "Best Syndicated Loan House" in Asia by
Asia Risk Manager, top arranger of U.S. commercial paper for Latin America by
LatinFinance Magazine, and top agent and agent/co-agent in syndicated lending
in Latin America by Gold Sheets.
We have continued to invest in BA Securities, Inc., through which we
are able to underwrite and manage corporate debt issues for our clients.
We are also a major player in capital markets, trading in more than 125
currencies with approximately 4,000 counterparties worldwide, maintaining an
average daily foreign exchange volume of about $60 billion. In 1995 we were the
number one foreign exchange bank in terms of top-tier relationships and the
number one derivatives house in terms of both market penetration and lead
relationships.
We have a world-class leasing operation in BA Leasing & Capital
Corporation. We have also substantially expanded our presence in the private
global equity business with increased focus on Latin America, Asia, and Eastern
Europe. We continue to have a strong commitment and market presence in the
global payments business.
In the United States, BankAmerica ranked first in the nation in terms of key
corporate banking relationships in 1995. With a customer franchise that includes
most of the 500 largest U.S. corporations, we have the opportunity to
participate in most major financial transactions and the ability to establish
and build lasting and mutually beneficial relationships with clients.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
U.S. Corporate and International Highlights
- --------------------------------------------------------------------------------
($ millions) 1995
- --------------------------------------------------------------------------------
<S> <C>
Net Interest Income $ 1,408
Provision for Credit Losses (30)
Noninterest Income 1,861
Noninterest Expense 1,840
Net Income 872
Average Loans 39,379
Average Deposits 36,962
Average Common Equity 6,062
Return on Average Common Equity 13.02%
- --------------------------------------------------------------------------------
</TABLE>
Our positioning in major markets in Europe, Asia, Latin America, and the Middle
East, makes us one of a very few U.S. banking companies with the capability of
serving our clients' needs virtually anywhere in the world. Our most rapidly
growing offshore market is the Asia-Pacific region, including the Far East and
Latin America. This region is a natural market for BankAmerica with its west
coast headquarters and Pacific Basin focus.
Asia, in particular, continues to be an attractive market for us, one in which
we have been investing heavily, particularly in the countries whose financial
markets are undergoing rapid expansion.
We have also expanded in Latin America, where we have a physical presence in the
six countries whose economies comprise 90 percent of the region's GDP. In
response to opportunities arising out of NAFTA, we opened commercial banking and
leasing subsidiaries in Mexico during 1995.
Our operations in Europe and the Middle East remain profitable and vital to the
global network we offer to our clients.
<PAGE>
10 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Commercial Real Estate
- --------------------------------------------------------------------------------
Computer icons depicting the Corporation's
Major Business Sectors including Consumer
Banking, U.S. Corporate and International
Banking, Commercial Real Estate, Middle-
Market Banking, and Private Banking and
Investment Services, with the Commercial
Real Estate icon highlighted appears here
Commercial Real Estate Strategy
Build comprehensive relationships with leading firms in selected segments of the
real estate industry by leveraging off of our in-depth real estate knowledge,
credit capacity, and broad product offerings.
Pie chart of the Corporation's Major
Business Sectors, including the following
listed in order of magnitude:
Consumer Banking, U.S. Corporate and
International Banking, Commercial Real
Estate, Middle-Market Banking, and
Private Banking and Investment Services
with the Commercial Real Estate sector
highlighted (Pie chart in non-EDGAR version appears here)
The Commercial Real Estate Group provides credit and other financial services to
a variety of real estate market segments, including developers, investors,
pension fund advisors, real estate investment trusts, and property managers.
Local clients are served through offices across California and in ten other
states. National clients, such as publicly traded corporations and private
entities, are served through offices in California and Chicago.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Net Income 1995 $326 million
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 11
- --------------------------------------------------------------------------------
Our focus in the commercial real estate business is to create and expand close
relationships with a select list of clients. We know from more than 90 years'
experience with real estate companies that dependable credit underwriting is key
in their choice of relationship banks and in their purchase of other non-credit
services. That dependability is the foundation of our client approach in this
business.
At the same time, we are actively moving beyond our traditional dependency on
credit in this sector, to provide clients with a broader range of BankAmerica's
products and services and diversify the revenue stream. As developers seek
alternatives to traditional credit, we are finding opportunities to provide them
with capital raising services including private placements and syndications, and
capital markets activities such as risk management.
We are also an important provider of non-credit services such as deposits, cash
management and related services, and loan administration services to our clients
in this sector.
In all of these activities, we have found that we can succeed in this business
by striving toward seamless service delivery.
Real estate project finance teams structure individualized packages of products
and services for clients whose needs may include various types of credit; risk
management; deposit, cash management and related services; syndications; private
placements; or loan administration services. BankAmerica's commercial mortgage
specialists can usually close approved loans within 60 days of the receipt of
completed applications.
In the last year, we have expanded our client base significantly in our
traditional markets in the West, as well as in other parts of the country.
In California, the construction lending business continued to be affected by low
demand for new construction. But we have been able to emphasize term lending on
existing properties as well as working capital financing for our national
clients.
Another demonstration of our recent progress in client relationships was the
increase in accounts in which we acted as an agent bank. We hope to increase
real estate loan syndication volumes by advancing more of our client
relationships into primary or agent bank status, which tend to be more
profitable for us.
Our challenge now is to continue to keep pace with the changing markets in which
our clients operate. Significantly more funding options are now available to our
clients than have been available in the past, and we expect this trend to
continue. The capital markets will continue to be an important source of funds
for many sectors of the business, and we will continue
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Commercial Real Estate Highlights
- --------------------------------------------------------------------------------
($ millions) 1995
- --------------------------------------------------------------------------------
<S> <C>
Net Interest Income $ 467
Provision for Credit Losses (189)
Noninterest Income 35
Noninterest Expense 133
Net Income 326
Average Loans 10,102
Average Deposits 1,519
Average Common Equity 1,189
Return on Average Common Equity 26.04%
- --------------------------------------------------------------------------------
</TABLE>
to expand our services to encompass a broader range of these activities.
The growth in capital markets has also provided us opportunities to service
loans and collateral for commercial mortgage-backed securities originated and
owned by others. Our focus on service quality and our economies of scale make us
competitive with the best servicers in the industry.
Over the long term, we believe we will be successful in our markets if we focus
on our clients' needs, execute service with high standards, and deliver value in
the process.
<PAGE>
12 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Middle-Market Banking
- --------------------------------------------------------------------------------
Computer icons depicting the Corporation's
Major Business Sectors including Consumer
Banking, U.S. Corporate and International
Banking, Commercial Real Estate, Middle-
Market Banking, and Private Banking and
Investment Services, with the Middle-Market
Banking icon highlighted appears here
Middle-Market Banking Strategy
Become the most important provider of diversified financial services to our
customers based on strong relationships with companies, their ownership, and
management.
Pie chart of the Corporation's Major
Business Sectors, including the following
listed in order of magnitude:
Consumer Banking, U.S. Corporate and
International Banking, Commercial Real
Estate, Middle-Market Banking, and Private
Baking and Investment Services, with the
Middle-Market Banking sector highlighted
(Pie chart in non-EDGAR version appears here)
Middle-Market Banking provides a full range of financial products and services
to companies with annual revenues between $5 million and $250 million throughout
the West and in the Midwest. We include in this sector financial results from a
national commercial finance company that serves mid-sized and large companies
with specialized needs throughout the United States and in Canada.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Net Income 1995 $325 million
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 13
- --------------------------------------------------------------------------------
Middle-market banking is an excellent stable business for BankAmerica. We are
able to operate at relatively low cost, provide credit, deposit, and other
services to a broad range of businesses with a widely differing range of needs,
and change the nature of our relationships with clients as their businesses grow
and their needs change.
Although middle-market banking is primarily a credit business for BankAmerica,
the fact that we can deliver the full range of the corporation's products and
services, including cash management, capital raising, capital markets, and
access to our global network, is a distinct competitive advantage for us. No
other financial institution in our markets can provide such a comprehensive
level of service to such a complete range of businesses within the sector.
In addition, many middle-market companies are privately owned, creating a strong
connection between the businesses and the individuals who own them. This offers
significant opportunities for us to cross-sell the services of The Private Bank
to both the owners and senior executives of middle-market companies. In some
cases, we are also able to offer consumer financial services to the employees of
our client companies.
For the growing number of businesses involved in globalization and foreign
trade, our international trade bank is now among the top two providers of trade
finance for both middle-market and large corporate clients.
We are expanding the geographic base of our middle-market business. In addition
to the western states, we also have significant market presence in the Chicago
area. In 1995, we expanded into Michigan, Wisconsin, Indiana, and Missouri. Our
plans for 1996 include further expansion in the Midwest. We have also opened a
commercial banking office in Atlanta to serve clients in eight states in the
rapidly growing markets within the southeastern United States.
We have been able to expand in these markets without additional high-cost
infrastucture, and we are able to offer a broader range of products and services
than most of our local competitors.
We serve the middle-market sector in a number of different ways, collectively
striving to reach businesses at all levels of development. Through BankAmerica
Business Credit, the largest commercial finance company in the United States, we
are able to provide asset-based lending services to companies in all 50 states.
Middle-market banking is first and foremost a relationship business at
BankAmerica. We seek to become the financial services provider of choice for our
clients, developing a complete
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Middle-Market Highlights
($ millions) 1995
- --------------------------------------------------------------------------------
<S> <C>
Net Interest Income $ 858
Provision for Credit Losses (20)
Noninterest Income 203
Noninterest Expense 524
Net Income 325
Average Loans 17,371
Average Deposits 7,691
Average Common Equity 1,285
Return on Average Common Equity 23.91%
- --------------------------------------------------------------------------------
</TABLE>
financial relationship with each company, its owners, and management, by
offering them the full range of BankAmerica's products and services, matching
our resources with their needs and priorities, and seeking opportunities to
enhance our mutual interests. We continually seek more effective - and more
profitable - ways of nurturing customer relationships and increasing the amount
of business we conduct with each client company.
Going forward, we will endeavor to improve profitability further by increasing
the number of products and services we provide to our customers. At the same
time, we are striving to attract new customers to further leverage the
company's investment in various product areas.
<PAGE>
14 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Private Banking and Investment Services
- --------------------------------------------------------------------------------
Computer icons depicting the Corporation's
Major Business Sectors including Consumer
Banking, U.S. Corporate and International
Banking, Commercial Real Estate, Middle-
Market Banking, and Private Banking and
Investment Services, with the Private
Banking and Investment Services icon
highlighted appears here
Private Banking and Investment Services Strategy
Use our extensive domestic and international distribution systems to offer high
quality investment, fiduciary, and wealth management services designed to meet
the needs of consumers, high-net-worth individuals, and institutions in the
process of building or preserving wealth.
Pie chart of the Corporation's Major
Business Sectors, including the following
listed in order of magnitude:
Consumer Banking, U.S. Corporate and
International Banking, Commercial Real
Estate, Middle-Market Banking, and Private
Banking and Investment Services, with the
Private Banking and Investment Services
sector highlighted (Pie chart in non-EDGAR
version appears here)
Through BankAmerica's domestic affiliates and select international offices, The
Private Bank provides a broad range of banking, personal trust, and investment
services to high-net-worth clients worldwide who require specialized personal
services. Investment Services encompasses BankAmerica's investment management,
brokerage, and mutual fund activities. The two businesses use BankAmerica's
domestic network of branches and other delivery points, more than 400 securities
brokers, offices in 36 foreign countries, and correspondent relationships with
more than 2,000 banks throughout the world to address the wealth management
needs of customers ranging from the very wealthy to the middle class saving for
retirement.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Net Income 1995 $45 million
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 15
- --------------------------------------------------------------------------------
The accumulation of wealth by an aging population, the transfer of wealth
between generations, and the growing globalization of investment opportunities
are creating new customers and increasing the need for sophisticated expertise
in serving the needs of individuals with high net worth or investible assets.
In both The Private Bank and the investment services business, the acquisition
of new clients and the deepening of relationships with existing clients require
a broad range of products and an efficient and effective delivery capability, as
well as highly qualified professionals dedicated to assisting their clients in
finding the right solutions for their needs.
Consequently, we are building a staff of investment brokers, Private Banking
representatives, and personal trust officers who have the knowledge, experience,
and resources to identify their clients' needs and help them find the right
products and services to meet those needs.
Our Private Bankers, for example, are equipped to function as "financial general
practitioners" who know their clients well enough to recommend specialized
service providers when the need arises, whether it be in tax or estate planning,
property titles, sophisticated investment advice, or any of the complex needs
that may arise with high-net-worth clients.
In the brokerage business, we have nearly completed a multi-year project to give
our representatives the electronic support they need to provide their clients
with the best tools available for retirement and estate planning, asset
allocation, education planning, and other available products and services.
To enhance the fiduciary services that are a key part of these businesses, our
personal trust department has been actively strengthening the quality of its
team by internal recruiting and outside hires.
In both The Private Bank and the brokerage business, our focus is on the full
client relationship rather than just the current transaction. In the fiduciary
part of the business we position ourselves as "trusted financial advisors",
helping clients to design and implement solutions to their long-term investment
needs.
We continue to work on improving strategic alliances with the consumer bank and
especially with the commercial bank, to make investment and fiduciary services
part of the total complement of services they can provide to their clients. At
the same time, the consumer and commercial operations - particularly middle-
market banking - are significant sources of new clients for The Private Bank.
In product development, too, our emphasis is on improving our accessibility to
clients and making it easy for them to do business with us. We have recently
introduced a number of highly competitive asset-gathering products. Time
Horizon(TM) Mutual Funds, for example, are designed to enable investors to
achieve financial goals over specified periods of time by seeking to maximize
total return over a stated investment period, while also increasing the emphasis
on capital preservation as the
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Private Banking and
Investment Services Highlights
- --------------------------------------------------------------------------------
($ millions) 1995
- --------------------------------------------------------------------------------
<S> <C>
Net Interest Income $ 170
Provision for Credit Losses (2)
Noninterest Income 327
Noninterest Expense 423
Net Income 45
Average Loans 3,741
Average Deposits 6,124
Average Common Equity 351
Return on Average Common Equity 11.48%
- --------------------------------------------------------------------------------
</TABLE>
funds approach their targeted time horizons. TrustAmerica(TM) is a fiduciary
product offering comprehensive trust services to clients of modest means who
might not be able to afford a corporate trustee.
While maintaining this focus on growing both our client base and individual
client relationships, we have also maintained a competitive performance record
in our mutual fund activities. During 1995, we consolidated the money-market
products of Continental Bank into our core investment products: the Pacific
Horizon(R) Funds. At the same time, effective marketing, relationship service,
and competitive yields enabled us to bring nearly $2 billion in new money into
the funds in the last year.
In both The Private Bank and the investment business, we believe that our
combination of centralized asset management expertise and decentralized
distribution should allow us to operate efficiently, while serving the needs of
our clients.
<PAGE>
16 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Financial Review
- --------------------------------------------------------------------------------
[Computer icons depicting the Financial Review, Consolidated Financial
Statements, and Corporate Information sections of the Annual Report with
Financial Review icon highlighted appears here]
Overview
BankAmerica Corporation and subsidiaries' (BAC) earnings per share for 1995 were
$6.49, an increase of 21 percent from $5.36 in 1994. Net income in 1995 was
$2,664 million, up 22 percent from $2,176 million in 1994.
Return on average common equity was 14.58 percent in 1995, up 138 basis
points from 13.20 percent in 1994. In addition, the return on average total
assets increased to 1.17 percent in 1995 from 1.08 percent in 1994.
- --------------------------------------------------------------------------------
Price Range of Common Stock (Bar chart in non-EDGAR version)
(in dollars)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
High 44.75 49.75 55.50 50.25 68.50
Low 23.125 35.375 40.375 38.375 39.50
- --------------------------------------------------------------------------------
</TABLE>
Net interest income was $8,462 million in 1995, up $920 million from $7,542
million in 1994. BAC's net interest margin was 4.51 percent for 1995,
essentially unchanged from the amount reported in 1994. Noninterest income
increased $411 million, or 10 percent, from $4,135 million in 1994 to $4,546
million in 1995. Noninterest expense was $8,001 million in 1995, up $501 million
from $7,500 million in 1994. BAC's expense to revenue ratio, or efficiency
ratio, improved from 60.4 percent in 1994 to 58.1 percent in 1995.
Total loans at December 31, 1995 were $155.4 billion, up $14.5 billion, or
10 percent, from $140.9 billion at year-end 1994. Average loans in 1995
increased $18.5 billion, or 14 percent, over 1994. Total nonaccrual assets
declined by $189 million, or 9 percent, from $2,080 million at year-end 1994 to
$1,891 million at year-end 1995. In addition, BAC's nonaccrual coverage ratio
(computed as allowance for credit losses to total nonaccrual assets) was 188
percent at year-end 1995, up from 177 percent at December 31, 1994.
During 1995, BAC repurchased 16.6 million shares of its common stock for
$894 million and redeemed approximately $200 million of its preferred stock. In
addition, $248 million of convertible preferred stock was converted into 5.4
million shares of common stock. During 1995, BAC also continued to maintain
capital ratios above the regulatory "well-capitalized" levels.
- --------------------------------------------------------------------------------
Ratio and Stock Data
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Year Ended December 31
-----------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Selected Financial Ratios
Rate of return (based on net income) on:
Average common equity 14.58% 13.20% 12.88%
Average total equity 13.62 12.30 12.00
Average total assets 1.17 1.08 1.05
Capital Ratios
Ratio of common equity to total assets 7.57 7.34 7.58
Ratio of total equity to total assets 8.70 8.77 9.17
Ratio of average total equity to average total assets 8.61 8.76 8.79
Common dividend payout ratio 28.01 29.63 28.99
Stock Data
Book value per common share at year end $47.90 $42.63 $39.58
Closing common stock price 64 3/4 39 1/2 46 3/8
Number of common shares outstanding at year end/a/ 367,447,202 371,182,004 357,912,170
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ There were 152,763 common stockholders of record at January 31, 1996.
- --------------------------------------------------------------------------------
Note: Information included in the text and tables of the Financial Review
reflects the effects of the Continental Bank Corporation merger subsequent to
its consummation on August 31, 1994 and the effects of the Security Pacific
Corporation merger subsequent to its consummation on April 22, 1992.
<PAGE>
BankAmerica Corporation 1995 / 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Selected Financial Data
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
------------------------------------------------------------
(dollar amounts in millions, except per share data) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Results
Interest income $ 15,840 $ 12,384 $ 11,627 $ 11,613 $ 9,860
Interest expense 7,378 4,842 4,186 4,895 5,388
------------------------------------------------------------
Net interest income 8,462 7,542 7,441 6,718 4,472
Provision for credit losses 440 460 803 1,009 805
Noninterest income 4,546 4,135 4,261 3,649 2,408
Noninterest expense 8,001 7,500 7,471 6,676 4,202
------------------------------------------------------------
Income before income taxes 4,567 3,717 3,428 2,682 1,873
Provision for income taxes 1,903 1,541 1,474 1,190 749
------------------------------------------------------------
Net Income $ 2,664 $ 2,176 $ 1,954 $ 1,492 $ 1,124
Per Share Data
Earnings per common and common equivalent share $ 6.49 $ 5.36 $ 4.79 $ 4.24 $ 4.81
Earnings per common share -- assuming full dilution 6.45 5.33 4.76 4.21 4.78
Dividends declared per common share 1.84 1.60 1.40 1.30 1.20
Balance Sheet Data at Year End
Loans $155,373 $140,912 $126,556 $126,611 $ 86,634
Total assets 232,446 215,475 186,933 180,646 115,509
Deposits 160,494 154,394 141,618 137,883 94,067
Long-term debt and subordinated capital notes 15,328 15,428 14,115 16,395 4,378
Common equity 17,599 15,823 14,165 12,509 6,737
Total equity 20,222 18,891 17,144 15,488 8,063
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Business Sectors
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, as discussed on page 45. 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 18-20 reflects the
condensed income statements and selected average balance sheet line items and
financial ratios by business sectors. The expense to revenue ratio in the tables
excludes net other real estate owned (OREO) expense and amortization of
intangibles. The information presented does not necessarily represent the
business sectors' financial condition and results of operations as if they were
independent entities. Results from prior periods are restated for changes in
sector composition and in allocation and assignment methodologies to allow for
comparability. For a detailed discussion of the composition of each business
sector, refer to pages 6-15.
<PAGE>
18 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Computer icon depicting the Consumer
Banking sector appears here
Consumer Banking
Net income for Consumer Banking was up $322 million, or 39 percent, from 1994,
primarily reflecting improved results in BAC's California retail deposit
business and its non-California banks. Improved results in these
businesses were partially offset by declines in net income in BAC's credit card
and Asia retail operations. Net interest income increased from the amount
reported in 1994 as a result of higher spreads. Noninterest income increased $80
million primarily due to higher service charge revenues on deposit accounts and
transactions. Noninterest expense increased $65 million primarily due to growth
in residential lending activities, reflecting BAC's expanded mortgage banking
operations. In addition, BAC incurred higher direct mail advertising expenses
and branch promotional costs to market new co-branding and photocard products.
These increases were partially offset by a decrease in Federal Deposit Insurance
Corporation (FDIC) deposit premiums, as discussed on page 24. During 1995,
average loan outstandings grew $7.7 billion, or 11 percent. This increase was
broadly based, both in terms of loan type and geographic region. Average
deposits declined $3.6 billion, reflecting decreases in most deposit categories.
The expense to revenue ratio for this sector improved from 63.2 percent in 1994
to 59.5 percent in 1995.
Net income in 1994 for Consumer Banking was up $153 million, or 23 percent,
from the amount reported for 1993, largely reflecting improved results in BAC's
retail deposit and credit card businesses, as well as its non-California retail
franchises. Noninterest expense decreased primarily due to lower personnel
expense resulting from the centralization of support functions and various other
operational efficiencies. The provision for credit losses declined primarily due
to improved credit quality in the credit card business. The $2.9 billion
increase in average loan outstandings primarily reflected an increase in
residential first mortgages. Average deposits decreased $2.5 billion, largely
reflecting a decline in time deposits.
- --------------------------------------------------------------------------------
Consumer Banking
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Results
Net interest income $ 5,358 $ 4,884 $ 4,983
Provision for credit losses 646 693 896
Noninterest income 2,011 1,931 2,029
Noninterest expense 4,700 4,635 4,874
---------------------------------------
Income before income taxes 2,023 1,487 1,242
Provision for income taxes 869 655 563
---------------------------------------
Net Income 1,154 832 679
Preferred stock dividends 79 89 95
---------------------------------------
Net income attributable
to common equity $ 1,075 $ 743 $ 584
Selected Average
Balance Sheet Components
Loans $75,907 $68,257 $ 65,340
Earning assets 76,556 68,918 66,058
Total assets 84,365 76,752 73,215
Deposits 95,495 99,083 101,604
Common equity 5,800 5,247 5,282
Selected Financial Ratios
Return on average
common equity 18.54% 14.16% 11.05%
Expense to revenue 59.49 63.20 64.55
- --------------------------------------------------------------------------------
</TABLE>
Computer icon depicting the U.S. Corporate
and International Banking sector appears here
U.S. Corporate and International Banking
U.S. Corporate and International Banking's net income in 1995 increased $268
million, or 44 percent, from that of the previous year. The increase in this
sector's revenue and expense levels and average loans and deposits was largely a
result of a full year's impact of BAC's acquisition of Continental Bank
Corporation (Continental). In addition, net interest income grew due to loan
growth in the commercial and industrial and foreign sectors. Noninterest income
rose in connection with improved results from BAC's venture capital, trading,
and loan syndication activities, partially offset by lower income from assets
pending disposition. Noninterest expense grew primarily due to continued
expansion of BAC's global capital markets operations. Average deposits
increased, reflecting higher foreign interest-bearing deposits that were
utilized primarily to fund loan growth.
<PAGE>
BankAmerica Corporation 1995 / 19
- --------------------------------------------------------------------------------
U.S. Corporate and International Banking's net income in 1994 decreased
$166 million, or 22 percent, from 1993. This decrease was primarily due to an
increase in the provision for credit losses from ($158) million in 1993 to $10
million in 1994. Noninterest income increased in 1994 largely due to gains on
sales of assets pending disposition and certain equity investments, partially
offset by lower trading income. Noninterest expense grew primarily due to the
Continental acquisition and to investments made to support and expand BAC's
global capital markets operations. Average loans increased due to the
Continental acquisition and strong demand from commercial and industrial
customers.
- --------------------------------------------------------------------------------
U.S. Corporate and International Banking
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Results
Net interest income $ 1,408 $ 1,025 $ 967
Provision for credit losses (30) 10 (158)
Noninterest income 1,861 1,528 1,477
Noninterest expense 1,840 1,522 1,371
----------------------------------
Income before income taxes 1,459 1,021 1,231
Provision for income taxes 587 417 461
----------------------------------
Net Income 872 604 770
Preferred stock dividends 83 81 73
----------------------------------
Net income attributable
to common equity $ 789 $ 523 $ 697
Selected Average
Balance Sheet Components
Loans $39,379 $32,187 $30,571
Earning assets 65,245 52,287 41,149
Total assets 85,483 68,600 49,374
Deposits 36,962 26,076 19,515
Common equity 6,062 4,724 4,027
Selected Financial Ratios
Return on average
common equity 13.02% 11.08% 17.30%
Expense to revenue 54.89 58.37 54.75
- --------------------------------------------------------------------------------
</TABLE>
Computer icon depicting the Commercial
Real Estate sector appears here
Commercial Real Estate
Commercial Real Estate's net income for 1995 decreased $21 million, or 6
percent, from 1994. Net interest income was up in 1995 due to Continental's
contribution. Noninterest income declined $32 million during 1995 due to fewer
asset sales, as a majority of the sector's sales of problem assets occurred
during 1993 and 1994.
Commercial Real Estate's net income for 1994 increased $222 million, or 178
percent, from 1993. This increase was attributable to a decrease in the
provision for credit losses from $78 million in 1993 to $(218) million in 1994,
lower OREO expense, and increased net interest income, partially offset by lower
noninterest income. OREO expense decreased due to stabilized values, resulting
in declines in writedowns of foreclosed properties, and to increased gains on
the disposition of problem real estate assets. Net interest income was up in
1994 due to increased interest collections that resulted from a lower level of
nonperforming assets. Noninterest income declined during 1994 due to fewer asset
sales, resulting in lower gains on assets sold.
- --------------------------------------------------------------------------------
Commercial Real Estate
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Results
Net interest income $ 467 $ 444 $ 396
Provision for credit losses (189) (218) 78
Noninterest income 35 67 124
Noninterest expense 133 134 232
----------------------------------------
Income before income taxes 558 595 210
Provision for income taxes 232 248 85
----------------------------------------
Net Income 326 347 125
Preferred stock dividends 16 22 19
----------------------------------------
Net income attributable
to common equity $ 310 $ 325 $ 106
Selected Average
Balance Sheet Components
Loans $10,102 $10,182 $12,192
Earning assets 10,104 10,182 12,209
Total assets 10,023 10,017 12,414
Deposits 1,519 1,814 2,505
Common equity 1,189 1,261 1,040
Selected Financial Ratios
Return on average
common equity 26.04% 25.79% 10.24%
Expense to revenue 25.81 25.88 39.01
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
20 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Computer icon depicting the Middle-
Market Banking sector appears here
Middle-Market Banking
Middle-Market Banking's net income for 1995 grew $60 million, or 23 percent,
from 1994. This growth primarily reflected improved net interest income results
in BAC's commercial businesses, as loan volumes increased and spreads widened.
In addition, the improved results included the effects of the Continental
acquisition. Increases in noninterest income, noninterest expense, and average
loans were largely due to BAC's expanded midwestern banking operations.
Middle-Market Banking's net income in 1994 grew $45 million, or 20 percent,
from 1993. This increase was primarily due to a decrease in the provision for
credit losses in 1993 from $(19) million to $(66) million in 1994. The increase
in net interest income was primarily attributable to the acquisition of
Continental. Noninterest expense in 1994 was essentially unchanged from 1993,
even after the inclusion of post-Continental acquisition operations in this
sector.
- --------------------------------------------------------------------------------
Middle-Market Banking
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Results
Net interest income $ 858 $ 695 $ 659
Provision for credit losses (20) (66) (19)
Noninterest income 203 167 164
Noninterest expense 524 470 468
-----------------------------------
Income before income taxes 557 458 374
Provision for income taxes 232 193 154
-----------------------------------
Net Income 325 265 220
Preferred stock dividends 18 19 16
-----------------------------------
Net income attributable
to common equity $ 307 $ 246 $ 204
Selected Average
Balance Sheet Components
Loans $17,371 $14,183 $13,459
Earning assets 17,404 14,221 13,499
Total assets 19,853 16,216 15,374
Deposits 7,691 7,769 7,556
Common equity 1,285 1,110 886
Selected Financial Ratios
Return on average
common equity 23.91% 22.18% 23.03%
Expense to revenue 47.26 51.97 54.41
- --------------------------------------------------------------------------------
</TABLE>
Computer icon depicting the Private
Banking and Investment Services sector appears here
Private Banking and Investment Services
Net income for Private Banking and Investment Services in 1995 increased $45
million from the amount reported in 1994. Noninterest expense in 1994 includes
$83 million of capital additions to the Pacific Horizon money market mutual
funds. Net interest income increased $32 million primarily due to increased loan
volumes generated by the Continental acquisition. Noninterest income increased
$26 million largely as a result of expanded private banking activities in the
Midwest, which was partially offset by investment financial management fees and
mutual fund and annuity fees.
Net income for Private Banking and Investment Services in 1994 decreased
$61 million from 1993 primarily due to the capital additions discussed above.
This decrease was partially offset by reduced operating costs, improved results
from the personal trust business, and Continental's contribution.
- --------------------------------------------------------------------------------
Private Banking and Investment Services
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Results
Net interest income $ 170 $ 138 $ 123
Provision for credit losses (2) -- (7)
Noninterest income 327 301 308
Noninterest expense 423 441 335
-----------------------------------
Income (loss) before
income taxes 76 (2) 103
Provision for (benefit from)
income taxes 31 (2) 42
-----------------------------------
Net Income 45 -- 61
Preferred stock dividends 5 6 4
-----------------------------------
Net income (loss) attributable
to common equity $ 40 $ (6) $ 57
Selected Average
Balance Sheet Components
Loans $3,741 $2,991 $2,384
Earning assets 3,788 3,046 2,472
Total assets 4,358 3,501 2,839
Deposits 6,124 5,053 5,039
Common equity 351 321 250
Selected Financial Ratios
Return on average
common equity 11.48% (1.73)% 22.63%
Expense to revenue 82.01 97.21 74.60
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 21
- --------------------------------------------------------------------------------
Other
Other amounts are primarily associated with BAC's institutional trust and
securities services (ITSS), certain corporate expenses, and various other
support services. The other sector also includes the results from corporate
liquidity management activities as discussed on page 42, along with any residual
differences between actual centrally managed external hedging results and the
allocation of interest rate risk hedging to the business sectors.
This sector had a net loss of $58 million in 1995, compared with net income
of $128 million in 1994. This decrease was primarily attributable to an increase
in unallocated corporate occupancy expenses, a higher net loss in the ITSS
business, and lower results from corporate liquidity management activities.
During 1995, BAC began to divest its ITSS business, as management
determined that the investment required to remain competitive was not justified
by the anticipated returns. In connection with this divestiture, BAC recognized
a net gain of $36 million associated with the completed components of the sale.
During 1996, BAC anticipates receiving additional revenues in conjunction with
the finalization of the remaining components of the divestiture.
Results Of Operations
Net Interest Income
Net interest income is the difference between interest earned on assets and
interest paid on liabilities. Interest income and expense are affected by
changes in the volume and mix of interest-earning assets and interest-bearing
deposits and other interest-bearing liabilities, as well as fluctuations in
interest rates.
On a taxable-equivalent basis, net interest income amounted to $8,487
million in 1995, up $921 million, or 12 percent, from the amount reported in
1994. The main factor contributing to this increase was loan growth, as average
loans increased $18.5 billion, or 14 percent, during 1995. In addition, net
interest income in 1995 included $215 million of interest recoveries, up from
$120 million in 1994.
- --------------------------------------------------------------------------------
Net Interest Margin (Plot point graph in non-EDGAR version)
(in percent)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Interest Margin 4.36 4.71 4.69 4.50 4.51
- ---------------------------------------------------------------------------------------------------------
</TABLE>
BAC's net interest margin for 1995 was 4.51 percent, essentially unchanged
from the margin in 1994. Net interest margin is the net yield on interest-
earning assets and includes the effects of interest recoveries, as previously
discussed.
Heightened price competition for loan volume negatively influenced the
margin in 1995. In addition, BAC's growth in average earning assets was largely
funded by increases in foreign interest-bearing deposits and domestic purchased
funds, which are more costly than traditional core deposits. If these trends
continue, the net interest margin in 1996 may continue to decline as it has over
the last three quarters of 1995.
BAC's net interest income and margin include the results of hedging with
certain on- and off-balance-sheet financial instruments. During 1995,
approximately $65 million of net interest income attributable to hedging with
derivative instruments was included in BAC's net interest income results,
compared with approximately $390 million in 1994. The derivative hedging amounts
for 1995 and 1994 accounted for approximately 5 basis points and 25 basis
points, respectively, of the net interest margins for those periods.
<PAGE>
22 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average Balances and Rates
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------------
1995 1994 1993
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
(dollar amounts in millions) Balance/a/ Rate Balance/a/ Rate Balance/a/ Rate
Assets
Interest-bearing deposits in banks $ 5,853 7.95% $ 4,912 6.62% $ 2,642/b/ 7.36%
Federal funds sold 548 5.89 1,318 4.13 1,131 3.12
Securities purchased under resale agreements 8,823 7.00 6,378 5.51 3,903 4.46
Trading account assets 9,106 8.18 6,713 7.09 6,341 5.91
Available-for-sale securities/c/ 9,768/b/ 7.83 9,675/b/ 6.13 4,118 6.79
Held-to-maturity securities/c/ 7,192 7.29 10,805/b/ 7.35 15,759 7.13
Domestic loans:
Consumer--residential first mortgages 35,407 7.06 32,012 5.97 29,548 6.29
Consumer--residential junior mortgages 13,832 9.05 13,196 7.65 13,388 7.89
Consumer--credit card 8,230 14.95 7,280 15.65 7,499 16.26
Other consumer 14,149 9.89 11,847 10.27 11,271 10.41
Commercial and industrial 30,927 8.47 23,643 7.04 20,580 6.32
Commercial loans secured by real estate 10,586 9.04 9,407 8.04 9,707 7.51
Construction and development loans secured by real estate 3,367 11.07/d/ 3,948 7.78 5,718 5.17
Financial institutions 2,511 5.69 2,142 5.06 1,948 3.48
Lease financing 1,835 6.06 1,675 7.70 1,773 12.36
Agricultural 1,619 9.67 1,641 7.87 1,605 7.62
Loans for purchasing or carrying securities 1,303 7.02 1,814 5.06 1,447 4.05
Other 1,394 6.56 1,244 6.10 1,099 5.03
---------------------------------------------------------------------
Total domestic loans 125,160 8.73 109,849 7.77 105,583 7.73
Foreign loans 21,754 8.24 18,572 6.86 19,531 6.72
---------------------------------------------------------------------
Total loans/b/ 146,914 8.65 128,421 7.64 125,114 7.57
---------------------------------------------------------------------
Total earning assets 188,204 8.43 168,222 7.38 159,008 7.32
Nonearning assets 42,641 37,366 30,144
Less: Allowance for credit losses 3,672 3,520 3,826
---------------------------------------------------------------------
Total Assets $227,173 $202,068 $185,326
Liabilities and Stockholders' Equity
Domestic interest-bearing deposits:
Transaction $ 13,241 1.20% $ 13,761 1.16% $ 13,469 1.34%
Savings 13,550 2.08 14,427 2.04 13,977 2.23
Money market 29,070 2.99 32,625 2.51 34,182 2.49
Time 30,002 4.90 28,259 3.06 30,939 2.50
---------------------------------------------------------------------
Total domestic interest-bearing deposits 85,863 3.24 89,072 2.40 92,567 2.29
Foreign interest-bearing deposits:
Banks located in foreign countries 10,245 6.63 6,771 6.23 3,346 6.88
Governments and official institutions 6,845 5.80 4,646 4.67 1,927 4.08
Time, savings, and other 16,131 6.60 11,371 4.95 10,276 5.32
---------------------------------------------------------------------
Total foreign interest-bearing deposits 33,221 6.44 22,788 5.27 15,549 5.50
---------------------------------------------------------------------
Total interest-bearing deposits 119,084 4.13 111,860 2.98 108,116 2.75
Federal funds purchased 2,222 5.89 611 4.48 570 2.78
Securities sold under repurchase agreements 9,110 6.38 6,455 5.44 2,837 5.58
Other short-term borrowings 9,301 6.77 4,231 6.50 3,088 6.52
Long-term debt 15,156 7.04 13,920 5.82 14,090 5.16
Subordinated capital notes 605 7.58 606 6.84 1,499 7.52
---------------------------------------------------------------------
Total interest-bearing liabilities 155,478 4.75 137,683 3.52 130,200 3.22
Domestic noninterest-bearing deposits 33,272 31,938 30,688
Foreign noninterest-bearing deposits 1,630 1,498 1,425
Other noninterest-bearing liabilities 17,238 13,258 6,728
---------------------------------------------------------------------
Total liabilities 207,618 184,377 169,041
Stockholders' equity 19,555 17,691 16,285
---------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $227,173 $202,068 $185,326
Interest income as a percentage of average earning assets 8.43% 7.38% 7.32%
Interest expense as a percentage of average earning assets (3.92) (2.88) (2.63)
---------------------------------------------------------------------
Net Interest Margin 4.51% 4.50% 4.69%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Average balances include nonaccrual assets.
/c/ Refer to the table on page 26 of the Balance Sheet Review for more detail
on available-for-sale and held-to-maturity securities.
/d/ Rates reflect a higher level of interest recoveries on nonaccrual loans
during the year ended December 31, 1995 as compared to the years ended
December 31, 1994 and 1993.
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 23
- --------------------------------------------------------------------------------
Noninterest Income
Noninterest income for 1995 increased $411 million, or 10 percent, from the
amount reported in 1994. Fees and commissions, the largest component of
noninterest income, increased $259 million from the amount reported in 1994.
Retail deposit account fees increased due to an increase in the number of fee-
paying accounts, growth in teleservicing fee revenues, and higher service
charge revenues on other transactions. Financial services fees increased $88
million from 1994. This increase was largely attributable to expanded loan
syndication volume. Off-balance-sheet credit-related instrument fees and
personal and other trust fees increased primarily due to the Continental
acquisition. Loan fees and charges increased over 1994 amounts due primarily to
higher revenues from late payment charges on credit card accounts. This increase
in loan fees and charges was partially offset by 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." For more information
on the adoption of SFAS No. 122, refer to Note 1 of the Notes to Consolidated
Financial Statements on pages 52-56. The above increases in fees and commissions
were partially offset by a decline in credit card membership fees, as fee
waivers were granted under certain circumstances to retain and increase card
membership.
Trading income increased $170 million, or 48 percent, from the amount
reported in 1994, reflecting improved market conditions and strengthening
customer demand in 1995. Improved performance in BAC's debt securities trading
operations was largely attributable to 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 these
- --------------------------------------------------------------------------------
Noninterest Income (Stacked block graph in non-EDGAR version)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(in millions of dollars) 1994 1995
--------------------------------
<S> <C> <C>
Total Noninterest Income 4,135 4,546
================================
Fees and Commissions 2,928 3,187
Trading Income 357 527
Other Noninterest Income 850 832
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Noninterest Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31
-----------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Fees and commissions
Deposit account fees:
Retail $ 931 $ 841 $ 815
Commercial 372 360 383
Credit card fees:
Membership 49 79 83
Other 266 252 259
Trust fees:
Corporate and employee benefit 53 70 79
Personal and other 247 215 215
Other fees and commissions:
Loan fees and charges 310 296 313
Off-balance-sheet credit-related
instrument fees 344 282 250
Financial services fees 189 101 63
Mutual fund and annuity commissions 81 89 99
Other 345 343 358
-----------------------------
3,187 2,928 2,917
Trading income 527 357 569
Other noninterest income
Income from assets pending disposition 13 166 171
Net gain on sales of assets/a/ 71 126 106
Venture capital activities 337 136 129
Net gain on available-for-sale securities 34 24 61
Other income 377 398 308
-----------------------------
832 850 775
-----------------------------
$4,546 $4,135 $4,261
- --------------------------------------------------------------------------------
</TABLE>
/a/ Net gain on sales of assets includes gains and losses from the disposition
of loans, premises and equipment, and certain other assets.
- --------------------------------------------------------------------------------
products by BAC customers. For more information on the components of trading
income, refer to Note 20 of the Notes to Consolidated Financial Statements on
pages 70-76.
Other noninterest income for 1995 was $832 million, compared with $850
million reported in 1994. Income from assets pending disposition decreased $153
million from the amount reported in 1994, as sales of such assets were
substantially completed in 1994. Net gain on sales of assets decreased $55
million due to fewer asset sales in 1995. These decreases were partially offset
by higher revenues from venture capital activities, which increased $201 million
from 1994 due to higher realized capital gains and partnership distributions in
connection with a strong equity market in 1995. Other income in 1995 included a
$50 million gain from the sale of an asset received in lieu of debt repayment
and a $36 million gain associated with the completed components of the
previously announced divestiture of BAC's ITSS business. Other income in 1994
included a gain of $85 million on the sales of a minority interest in Burns-Fry
Holdings Corporation and two Asian branches.
<PAGE>
24 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Noninterest Expense
Noninterest expense for 1995 increased $501 million from the amount reported in
1994 primarily due to an increase in personnel expense. In 1994, noninterest
expense included $50 million of merger-related charges incurred in connection
with the acquisition of Continental. In addition, noninterest expense in 1994
included $83 million of capital additions to two Pacific Horizon money market
mutual funds, for which Bank of America NT&SA serves as investment advisor.
- --------------------------------------------------------------------------------
Noninterest Expense (Stacked block graph in non-EDGAR version)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(in millions of dollars) 1994 1995
------------------------
<S> <C> <C>
Total Noninterest Expense 7,500 8,001
========================
Personnel Expense 3,639 4,027
Occupancy and Equipment Expense 1,279 1,401
Amortization of Intangibles 411 428
Other Noninterest Expense 2,171 2,145
- --------------------------------------------------------------------------------
</TABLE>
Personnel expense (salaries and employee benefits), the largest component
of noninterest expense, totaled $4,027 million in 1995, up $388 million from the
amount reported for 1994. The increase in personnel expense was largely
attributable to increases in base salaries and incentive-based compensation.
Base salaries increased $190 million primarily as a result of a full year's
effect of the Continental merger and mortgage banking acquisitions in 1994, as
well as a change in the mix of employees. Incentive-based compensation
increased $183 million largely due to increases in executive stock-based
incentive bonuses and discretionary variable pay plans, which were largely
correlated with BAC's 1995 financial performance and common stock appreciation.
BAC's staff level on a full-time-equivalent (FTE) basis was approximately 79,900
at December 31, 1995, down from 82,100 at December 31, 1994. FTE is a
measurement equal to one full-time employee working a standard day. BAC had
approximately 95,300 employees at December 31, 1995, down from 98,600 employees
at the same time a year earlier. These amounts include both full-time and part-
time employees.
- --------------------------------------------------------------------------------
Staff Levels (Plot-point graph in non-EDGAR version)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
December 31
--------------------------------------
(in thousands) 1991 1992 1993 1994 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of Employees 62.6 99.2 96.4 98.6 95.3
Full-time-equivalent staff 54.4 83.2 79.2 82.1 79.9
=====================================================================================
</TABLE>
Regulatory fees and related expenses declined $114 million primarily due to
a reduction in FDIC assessment rates. When the FDIC achieved its mandated ratio
of Bank Insurance Fund (BIF) reserves to insured deposits of 1.25 percent in May
1995, it reduced the assessment rates for well-capitalized and highest-rated
institutions from 23 cents to 4 cents per $100 of eligible deposits for the
balance of 1995. In November 1995, the FDIC reduced the 1996 insurance premium
rate for well-capitalized and highest-rated BIF-insured banks to zero. Under the
new rate structure, the well-capitalized and highest-rated banks will only pay a
membership fee for BIF insurance, effective January 1996.
Congress is also considering proposed legislation that would recapitalize
the FDIC's Savings Association Insurance Fund (SAIF) to 1.25% of insured
deposits through a special one-time assessment. However, at this time it is not
possible to predict the ultimate provisions of any final legislation or their
effect on BAC. For more information regarding this special deposit assessment,
refer to Note 22 of the Notes to Consolidated Financial Statements on page 79.
Excluding the previously discussed $83 million of capital additions to the
Pacific Horizon funds that occurred in 1994,
- --------------------------------------------------------------------------------
Noninterest Expense
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31
----------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Salaries $3,309 $2,936 $2,886
Employee benefits 718 703 573
Occupancy 738 690 684
Equipment 663 589 610
Amortization of intangibles 428 411 421
Communications 359 323 330
Regulatory fees and related expenses 176 290 309
Merger-related expenses -- 50 9
Net other real estate owned expense 18 34 127
Other expense 1,592 1,474 1,522
----------------------------
$8,001 $7,500 $7,471
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 25
- --------------------------------------------------------------------------------
other expense for 1995 increased $201 million from the amount reported in 1994.
This increase reflected higher professional services fees and external data
processing costs.
Income Taxes
BAC's effective income tax rates for 1995 and 1994 were 41.7 percent and 41.5
percent, respectively. For further information concerning the provisions for
federal, state, and foreign income taxes, refer to Note 17 of the Notes to
Consolidated Financial Statements on page 66.
Comparison of 1994 versus 1993
The increase in 1994 earnings over 1993 was primarily attributable to
substantial improvement in credit quality and increased net interest income.
Taxable-equivalent net interest income for 1994 was $103 million higher than the
amount reported in 1993. The main factor contributing to this increase was a 3
percent increase in average total loans, which included the effects of the
Continental acquisition. The net interest margin for 1994 was 4.50 percent, down
19 basis points from 4.69 percent in 1993.
The provision for credit losses in 1994 decreased $343 million, or 43
percent, from the amount reported in 1993, reflecting improvements in most
portfolio segments.
Noninterest income for 1994 decreased $126 million over the amount reported
for 1993. This decrease primarily reflected lower trading results, offset by
higher other noninterest income. Total fees and commissions for 1994 remained
relatively unchanged from the amount reported for 1993. Excluding Continental's
contribution, various categories of fees and commissions in 1994 declined from
1993.
Trading income for 1994 decreased $212 million from the amount reported in
1993, as a result of less favorable market conditions throughout 1994. In
particular, BAC experienced declines related to foreign debt instruments and
currencies associated with certain foreign markets. Other noninterest income
increased $75 million in 1994 from the amount reported in 1993. This increase
was largely due to the sales of a minority interest in Burns-Fry Holdings
Corporation and two Asian branches, which resulted in a total gain of $85
million. This increase was partially offset by a decline in the net gain on
available-for-sale securities.
Noninterest expense for 1994 was essentially unchanged from the amount
reported in 1993. Noninterest expense in 1994 included amounts related to post-
Continental-acquisition operations, as well as an additional $50 million of
merger-related charges incurred in connection with the Continental acquisition.
Personnel expense for 1994 increased $180 million from the amount reported
in 1993, reflecting higher severance-related benefits and staff levels.
Severance-related expenses increased $61 million over the amount reported in
1993, while staff levels increased due to Continental and other 1994
acquisitions. Partially offsetting increased personnel costs were decreased
professional services and regulatory-related expenses.
In addition, net OREO expense in 1994 decreased $93 million from 1993. This
decrease was due to a decline in writedowns of foreclosed properties and
increased gains on sales of OREO, partially offset by a reduction in OREO-
related income.
Other expense for 1994 was essentially unchanged from the amount reported
in 1993. Other expense in 1994 included $83 million of capital additions to two
money market mutual funds, as discussed on page 24. Other expense for 1993
included a nonrecurring charge of $90 million related to the accrual of various
restructuring expenses.
BAC's effective income tax rate for 1994 decreased to 41.5 percent from
43.0 percent in 1993. This decrease was primarily due to reductions in the state
effective tax rate and effective tax rates applied to leveraged lease income.
Balance Sheet Review
Total assets increased $17.0 billion, or 8 percent, during 1995. Earning assets
were up $14.9 billion, primarily reflecting a $14.5 billion increase in total
loans. Increases in foreign deposits and other short-term borrowings, primarily
bank notes and commercial paper, largely funded the growth in earning assets.
Investment Securities
Total investment securities averaged $17.0 billion in 1995, a 17 percent
decrease from $20.5 billion in 1994. This decline occurred as loan growth
exceeded deposit growth and some proceeds of maturing securities were used to
fund loans, instead of being reinvested in securities.
Available-for-sale securities and held-to-maturity securities comprised 72
percent and 28 percent, respectively, of total investment securities at year-
end 1995, compared with 55 percent and 45 percent, respectively, at year-end
1994. This shift was primarily due to a $2.1 billion reclassification of certain
debt securities from the held-to-maturity to the available-for-sale portfolio
during the fourth quarter of 1995. For more information on this
reclassification, refer to Note 6 of the Notes to Consolidated Financial
Statements on pages 58 and 59.
During 1995, BAC experienced unrealized valuation gains of $327 million on
its available-for-sale portfolio. These unrealized gains, which resulted
primarily from mortgage-backed securities, were recorded on a net-of-tax basis
in stockholders' equity.
<PAGE>
26 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Available-for-Sale and Held-to-Maturity Securities - Average Balances and Rates
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
1995 1994 1993
----------------------------------- ----------------------------------- -----------------------
Rate based Rate based Rate based Rate based Rate based
on fair on amortized on fair on amortized on amortized
(dollar amounts in millions) Balance/a/ value cost Balance/a/ value cost Balance/a/ cost
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale securities
U.S. Treasury and other
government agency securities $1,659 6.49% 6.45% $3,029 5.42% 5.41% $1,646 5.20%
Mortgage-backed securities 4,962 6.94 6.89 4,410 5.96 5.88 1,606 7.35
Other domestic securities 660 5.22 5.84 427 4.78 5.00 39 7.19
Foreign securities 2,487/b/ 11.17/c / 10.10/c/ 1,809/b/ 8.05 7.09 827 8.83
-------------------------------------------------------------------------------------------------
$9,768 7.83% 7.64% $9,675 6.13% 5.95% $4,118 6.79%
<CAPTION>
Year Ended December 31
-----------------------------------------------------------------
1995 1994 1993
-----------------------------------------------------------------
(dollar amounts in millions) Balance/a/ Rate Balance/a/ Rate Balance/a/ Rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Held-to-maturity securities
U.S. Treasury and other government agency securities $ 388 6.72% $ 689 6.72% $ 3,554 5.28%
Mortgage-backed securities 4,490 7.15 6,985 7.20 10,784 7.28
State, county, and municipal securities 445 7.89 479 8.12 553 7.93
Other domestic securities 178 7.62 224 7.11 740 13.01/d/
Foreign securities 1,691 7.62 2,428/b/ 7.83 12 7.61
--------------------------------------------------------------
$7,192 7.29% $10,805 7.35% $15,759 7.13%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Average balances include nonaccrual assets.
/c/ Rates reflect interest received on nonaccrual debt-restructuring par bonds.
/d/ Rates reflect income recognized on call premiums received and unamortized
discounts related to debentures called prior to maturity.
- --------------------------------------------------------------------------------
Deposits
Total deposits were $160.5 billion at December 31, 1995, an increase of $6.1
billion, or 4 percent, from year-end 1994. During 1995, BAC continued to
experience a shift in its funding structure. Average domestic interest-bearing
deposits decreased $3.2 billion, while foreign interest-bearing deposits
increased $10.4 billion. The decline in domestic interest-bearing deposits was
largely reflected in money market accounts and other retail deposit categories.
Funds raised through wholesale sources in the domestic and offshore markets,
including foreign interest-bearing deposits replaced the decline in retail
deposits and helped support balance sheet growth in 1995. Management expects
this trend to continue in 1996.
For further information related to BAC's management of assets and
liabilities, as well as information on BAC's liquidity and capital, refer to the
Risk Management section and Liquidity and Capital Management sections that
follow on pages 27-45.
Pending Accounting Standards
In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No. 121),
which is effective for fiscal years beginning after December 15, 1995 and will
be adopted by BAC effective January 1, 1996. BAC expects that, at adoption, SFAS
No. 121 will not have a material effect on its financial position or results of
operations.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123).
This Statement establishes financial accounting and reporting standards for
stock-based compensation plans. SFAS No. 123 is effective for fiscal years
beginning after December 15, 1995, and BAC will adopt it effective January 1,
1996. BAC expects to continue to account for stock-based employee compensation
plans in accordance with Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," as SFAS No. 123 permits, and to follow the pro
forma net income and earnings per share disclosure requirements set forth in
SFAS No. 123. BAC expects that, at adoption, SFAS No. 123 will not have an
effect on its financial position or results of operations.
<PAGE>
BankAmerica Corporation 1995 / 27
- --------------------------------------------------------------------------------
Off-Balance-Sheet Financial Instruments
Credit-Related Financial Instruments
BAC continually makes commitments to extend credit to a wide range of customers.
Additionally, BAC issues financial guarantees and letters of credit to ensure
performance of customer financial obligations. BAC generally enters into these
contracts to offer short-term financing and facilitate domestic and foreign
trade transactions for customers.
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. For a detailed discussion of these instruments and
transactions, refer to Note 20 of the Notes to Consolidated Financial Statements
on pages 70-76.
BAC executes transactions to aid its customers in managing exposures to
interest rates, foreign exchange rates, prices of securities, and financial or
commodity indices. For example, a multinational manufacturing company may want
to control the cost of purchasing raw materials in foreign currencies at a
future date. BAC will transact cross currency swaps or foreign exchange
contracts with the customer to meet this management objective. 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. In its trading activities, BAC primarily employs traditional or
"plain-vanilla" products such as spot and forward foreign exchange contracts,
exchange-traded futures contracts, and conventional interest rate swaps, caps
and floors. These instruments are designed to be used by a wide variety of
market participants. Such products accounted for approximately 95 percent of all
foreign exchange and derivatives contracts outstanding at December 31, 1995. The
remaining 5 percent involved nontraditional products or transactions and were
executed primarily to meet unique client needs. In the future, BAC plans to
prudently increase its usage of nontraditional derivative financial instruments
to take greater advantage of its market and industry expertise in meeting
customer demand and anticipating market conditions.
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. For a detailed discussion of BAC's hedging objectives and
the strategies and financial instruments used to achieve such objectives, refer
to Note 20 of the Notes to Consolidated Financial Statements on pages 70-76.
Similar to on-balance-sheet financial instruments such as loans and
investment securities, off-balance-sheet financial instruments subject BAC to
various types of risk. For a discussion of these risks and how they are managed,
refer to the Risk Management section below and on pages 28-42.
Risk Management
Since risk is inherent in most of BAC's business activities, risk management is
integral to BAC's operations and a key determinant of its overall financial
performance. BAC applies various strategies to mitigate the risks to which it is
exposed; namely credit, market, liquidity, and operational and settlement risks.
These strategies are discussed in the following sections.
Credit Risk Management
Overview
Credit risk is the possibility of loss in the event that a borrower or other
counterparty fails to perform under the terms of a contract. The existence of
credit risk indicates that not all borrowers or others who enter into credit-
related contractual relationships with BAC will completely meet the terms of
their agreements. Credit risk arises primarily from BAC's lending activities, as
well as from transactions involving certain foreign exchange and derivatives
contacts. Credit risk also includes transfer risk, which is the risk that
although foreign customers possess adequate funds, their local central banks
preclude them from exchanging their local currency for the foreign currency
(usually U.S. dollars) with which they agreed to repay their obligations.
<PAGE>
28 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Loan Outstandings by Geographic Area (Pie chart in non-EDGAR version
appears here)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31
------------------
1994 1995
------------------
<S> <C> <C>
Southern California 23.3% 21.4%
Northern California 12.0% 11.1%
Other U.S. 23.0% 23.4%
Central California 9.2% 8.8%
Other Western States 18.0% 20.2%
Foreign 14.5% 15.1%
------------------
Total 100.0% 100.0%
==================
- --------------------------------------------------------------------------------
</TABLE>
BAC's Credit Policy Committee (CPC) oversees all credit-related activities.
The CPC is responsible for establishing credit standards and guidelines that
define and quantify credit risk, and for managing BAC's overall credit exposure.
The CPC also oversees compliance with established credit limits and conducts
reviews of industry, geographic region or country, product, and individual
borrower or counterparty exposure, together with reviews of problem credits and
credit losses. Managing credit risk within the guidelines established by the CPC
is the responsibility of all BAC line officers involved in granting credit to
customers. For these employees, the primary focus of managing credit risk is to
evaluate a borrower's or counterparty's ability to repay an obligation from
identified financial sources. When collateral-secured transactions are involved,
the focus is to ensure that sufficient collateral is obtained at the outset of
the contract and that sufficient collateral margins are maintained throughout
the contract's life.
In making credit recommendations and decisions, line officers are supported
by credit specialists within BAC who have expertise in specific areas, including
specialized industries, geographic regions, or types of products. The adherence
of line officers to the CPC's established limits and exposure levels is
monitored on an ongoing basis by BAC's credit examination officers and is
ultimately overseen by senior credit management. BAC makes substantial
investments in credit risk training to ensure competence among all credit
officers and to better serve its customers' changing needs.
Like the banking industry as a whole, BAC's operations are affected by
certain business and economic cycles. To mitigate the potential financial impact
of these cycles, the CPC monitors various external statistics and internal
measures that serve as benchmarks to highlight emerging issues. Among them are a
portfolio's sensitivity to interest rate changes, governmental actions such as
spending cutbacks, global economic trends, and fluctuations in energy prices.
Along with other economic, social, and political factors, these benchmarks are
incorporated in periodic CPC reviews of industries and countries.
BAC also manages credit risk by diversifying both on- and off-balance-sheet
portfolios by industry, product, and geographic concentration. The extent of
diversification of the loan portfolio is evident in the accompanying charts and
tables on pages 29-32. No individual loan type exceeded 24 percent of total
loans outstanding at December 31, 1995. The product diversification in BAC's
off-balance-sheet portfolio is exemplified in the tables in Note 20 of the Notes
to Consolidated Financial Statements on pages 70-76.
Off-Balance-Sheet Credit Risk
Foreign exchange and derivatives contracts introduce two additional elements of
credit risk: closeout risk and settlement risk. Closeout risk is the possibility
that a counterparty to a transaction will be unable to comply with the terms of
its contract and BAC will need to replace that contract at current market value.
Settlement risk occurs when BAC pays out funds or delivers assets before it
receives payment from the counterparty in the transaction.
BAC manages closeout and settlement risk by dealing with creditworthy
counterparties. In evaluating creditworthiness, BAC utilizes the same policies,
procedures, and internal credit risk rating system established for all on-
balance-sheet credit exposures. At December 31, 1995, approximately 95 percent
of the counterparties with whom BAC had credit exposure from foreign exchange
and derivatives contracts had investment grade ratings.
BAC measures both current and potential future exposure when evaluating its
closeout credit risk on foreign exchange and derivative contracts. Current
exposure is the amount BAC would have the right to receive if a foreign exchange
or derivative contract were terminated on the date of evaluation. Potential
exposure is calculated based on the estimated change in the contract's fair
value over its remaining life.
To further mitigate closeout risk, BAC obtains collateral where appropriate
and makes use of master netting agreements wherever possible. Master netting
agreements, such as the internationally recognized International Swap and
Derivatives
<PAGE>
BankAmerica Corporation 1995 / 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Loan Outstandings
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 31
-------------------------------------------------------------------
(in millions) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic
Consumer:
Residential first mortgages $ 36,572 $ 33,818 $ 30,483 $ 29,306 $18,897
Residential junior mortgages 13,777 13,589 12,847 13,870 9,281
Other installment 13,834 10,598 9,129 9,509 5,702
Credit card 9,139 8,020 7,474 8,306 7,712
Other individual lines of credit 1,847 1,736 1,901 1,725 1,567
Other 319 403 215 260 138
-------------------------------------------------------------------
75,488 68,164 62,049 62,976 43,297
Commercial:
Commercial and industrial 32,745 28,814 20,486 21,632 13,831
Loans secured by real estate 10,975 10,277 9,251 10,123 5,366
Construction and development loans
secured by real estate 3,153 3,616 4,418 6,781 4,002
Financial institutions 2,834 2,872 2,170 2,017 1,427
Lease financing 1,927 1,814 1,715 1,889 779
Agricultural 1,737 1,840 1,679 1,704 1,124
Loans for purchasing or carrying securities 1,458 1,529 3,090 987 216
Other 1,574 1,623 1,478 1,360 497
-------------------------------------------------------------------
56,403 52,385 44,287 46,493 27,242
-------------------------------------------------------------------
131,891 120,549 106,336 109,469 70,539
Foreign
Commercial and industrial 15,003 13,496 11,448 10,338 9,538
Banks and other financial institutions 3,386 2,516 2,279 1,855 2,080
Governments and official institutions 1,020 896 3,429 3,513 3,557
Other 4,073 3,455 3,064 1,436 920
-------------------------------------------------------------------
23,482 20,363 20,220 17,142 16,095
-------------------------------------------------------------------
Total loans 155,373 140,912 126,556 126,611 86,634
Less: Allowance for credit losses 3,554 3,690 3,508 3,921 2,420
-------------------------------------------------------------------
$151,819 $137,222 $123,048 $122,690 $84,214
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Association (ISDA) agreement and the International Foreign Exchange Master
Agreement (IFEMA), allow for the netting of a counterparty's current positive
and negative closeout exposures associated with all individual transactions of
that counterparty. BAC's policy is to execute legally enforceable master netting
agreements with its foreign exchange and derivative customers whenever possible.
BAC reduces settlement risk through novation netting (a mutual agreement to
substitute a new contract for two or more existing contracts that are then
discharged) or settlement netting arrangements (a contract to settle mutual
obligations at the net value of the individual contracts), which may be included
as part of a master netting agreement.
Current credit exposure, based on current positive fair values of open
contracts at December 31, 1995 and 1994, and taking into account the effect of
master netting agreements and arrangements, was $8.1 billion and $6.6 billion,
respectively. Had the above described netting agreements and arrangements for
foreign exchange and derivative contracts not been in effect at year-end 1995
and 1994, current credit risk would have been $20.5 billion and $14.4 billion.
The increase in credit risk and credit exposure between year-end 1994 and 1995
was primarily reflected in derivative financial instruments held or issued for
trading purposes and was attributable to volume-related growth in interest rate
derivative contracts in response to customer demand and to fluctuations in
foreign exchange spot rates. Risk-mitigating netting agreements and arrangements
helped to limit BAC's actual credit losses from counterparty nonperformance to
$3 million in both 1995 and 1994.
Loan Portfolio Management
Total loans at December 31, 1995 increased $14.5 billion, or 10 percent, from
year-end 1994. Average total loans for 1995 increased $18.5 billion over 1994,
reflecting increases in both the domestic and foreign sectors.
<PAGE>
30 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Domestic Consumer Loans by Geographic Area and Loan Type as of December 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
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 $27,815 $ 9,518 $4,595 $1,074 $1,940 $2,597 $47,539
Washington 1,646 1,574 1,325 322 1,299 402 6,568
Arizona 1,155 782 298 164 567 161 3,127
Oregon 1,243 474 258 123 304 144 2,546
Texas 580 157 382 408 561 277 2,365
Other/a/ 4,133 1,272 2,281 3,985 399 1,273 13,343
------------------------------------------------------------------------------------------------
$36,572 $13,777 $9,139 $6,076 $5,070 $4,854 $75,488
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ No other state individually exceeded 2 percent of total domestic consumer
loans.
- --------------------------------------------------------------------------------
Domestic Consumer Loans
Domestic consumer loan outstandings at year-end 1995 increased $7.3 billion, or
11 percent, from year-end 1994, reflecting increases in most consumer loan
categories. As evidenced in the table on page 29, the most significant changes
were in residential first mortgages, other installment loans, and credit card
loans, which grew $2.8 billion, $3.2 billion, and $1.1 billion, respectively.
The increase in residential first mortgages reflected BAC's continued efforts to
geographically diversify its mortgage lending activities and expand its national
mortgage banking operations. In 1995, mortgage origination and servicing levels
grew in most regions of the country.
The increase in other installment loans was largely due to increases in
manufactured housing and auto loans. Manufactured housing loans grew in the
southern and midwestern regions primarily as a result of strong customer demand
and BAC's continued expansion and marketing efforts in these regions. The growth
in auto loans was primarily attributable to increases in auto leases in Southern
California and loans in other western states.
During 1995, the number of credit card accounts increased, which resulted
from new co-branding relationships with selected nonfinancial institutions, and
increased direct mail and branch advertising. In addition, attrition levels
decreased from 1994 in response to fee waivers and BAC's launching of a new
variable-rate credit card product.
Some consumer loan categories, including residential first mortgages,
credit card, and other consumer, experienced higher delinquency ratios during
1995. For further information regarding BAC's domestic consumer loan
delinquencies, refer to the table at right.
Domestic Commercial Loans
Domestic commercial loan outstandings increased $4.0 billion, or 8 percent,
during 1995, primarily reflecting increases of $3.9 billion and $0.7 billion in
commercial and industrial loans and loans secured by real estate, respectively.
These increases
- --------------------------------------------------------------------------------
Domestic Consumer Loan Delinquency Information/a/
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31
---------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Delinquent consumer loans
Residential first mortgages $ 642 $566 $ 685
Residential junior mortgages 90 92 102
Credit card 190 153 179
Other 100 69 73
----------------------------------
$1,022 $880 $1,039
Delinquent consumer loan ratios/b/
Residential first mortgages 1.76% 1.68% 2.25%
Residential junior mortgages 0.67 0.68 0.80
Credit card 2.08 1.91 2.39
Other 0.62 0.54 0.65
----------------------------------
1.36% 1.29% 1.67%
- --------------------------------------------------------------------------------
</TABLE>
/a/ 60 days or more past due.
/b/ Ratios represent delinquency balances expressed as a percentage of total
loans for that loan category.
- --------------------------------------------------------------------------------
were partially offset by a decrease of $0.5 billion in construction and
development loans secured by real estate.
The increase in commercial and industrial loans was primarily attributable
to strong loan demand from large corporate and middle market borrowers in
various industries, including transportation, energy, communications, utilities,
wholesale manufacturing, and consumer products. In particular, BAC's loan
syndication activities benefited from this demand. During 1995, BAC acted in
lead agent and co-agent roles to structure loan transactions totaling
approximately $300 billion, a 25 percent increase from 1994 levels. Commercial
loans secured by real estate increased as a result of stronger loan demand and
BAC's ability to meet this demand with its broadening commercial lending
operations, particularly in the southwestern United States. The decline in
construction and development loans was primarily attributable to a slowdown in
such lending activities in California and the resolution of problem loans.
<PAGE>
BankAmerica Corporation 1995 / 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Domestic Commercial Loans Secured by Real Estate by Geographic Area and
Project Type
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
December 31, 1995
-------------------------------------------------------------------------------------
Light Apartment &
(in millions) Retail Office Industry Condominium Hotel Other Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $1,739 $1,201 $1,149 $ 785 $152 $ 612 $ 5,638/a/
Washington 369 391 461 433 163 490 2,307
Nevada 401 58 44 99 53 125 780
Arizona 236 25 25 52 2 77 417
Oregon 93 40 63 130 32 50 408
Other/b/ 237 527 69 170 300 122 1,425
---------------------------------------------------------------------------------------
$3,075 $2,242 $1,811 $1,669 $702 $1,476 $10,975
<CAPTION>
December 31, 1994
---------------------------------------------------------------------------------------
Light Apartment &
(in millions) Retail Office Industry Condominium Hotel Other Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $1,993 $ 815 $ 942 $ 617 $165 $ 911 $ 5,443/a/
Washington 360 445 457 429 152 449 2,292
Nevada 171 108 69 54 124 92 618
Oregon 85 37 59 96 31 45 353
Arizona 194 27 25 24 2 80 352
Other/b/ 161 451 72 131 257 147 1,219
---------------------------------------------------------------------------------------
$2,964 $1,883 $1,624 $1,351 $731 $1,724 $10,277
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Approximately 55 percent and 50 percent of domestic commercial loans secured
by real estate in California at December 31, 1995 and 1994, respectively,
were secured by properties in the following Southern California counties:
Los Angeles, Orange, San Bernardino, San Diego, Riverside, and Ventura.
/b/ For each period presented, no other state individually exceeded 2 percent of
total domestic loans secured by real estate.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Domestic Construction and Development Loans by Geographic Area and Project Type
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
December 31, 1995
----------------------------------------------------------------------------------------------------
Apartment & Light
(in millions) Office Subdivision Retail Condominium Hotel Industry Other Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $366 $342 $256 $136 $114 $ 81 $ 85 $1,380/a/
Washington 138 197 105 60 7 16 65 588
Nevada 33 51 67 32 16 8 30 237
Pennsylvania 202 -- -- -- -- -- -- 202
Arizona 9 45 33 53 2 5 10 157
Texas 1 18 19 72 -- -- 2 112
Florida -- 5 96 8 -- -- -- 109
Georgia -- 5 56 6 1 14 -- 82
Illinois 37 15 12 10 -- -- -- 74
Other/b/ 20 29 72 53 4 8 26 212
----------------------------------------------------------------------------------------------------
$806 $707 $716 $430 $144 $132 $218 $3,153
<CAPTION>
December 31, 1994
----------------------------------------------------------------------------------------------------
Apartment & Light
(in millions) Office Subdivision Retail Condominium Hotel Industry Other Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $ 512 $467 $252 $208 $127 $ 95 $142 $1,803/a/
Washington 211 189 84 74 27 20 48 653
Pennsylvania 202 -- -- -- -- -- -- 202
Texas 2 23 63 37 -- 1 6 132
Illinois 39 32 47 -- -- 10 -- 128
Arizona 3 37 34 18 1 2 9 104
Georgia 15 8 48 14 -- 14 3 102
Nevada 24 14 19 19 -- 3 4 83
Florida -- 13 59 7 -- -- 3 82
Other/b/ 94 21 66 52 7 14 73 327
----------------------------------------------------------------------------------------------------
$1,102 $804 $672 $429 $162 $159 $288 $3,616
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Approximately 70 percent and 65 percent of domestic construction and
development loans in California at December 31, 1995 and 1994, respectively,
were secured by properties in the following Southern California counties:
Los Angeles, Orange, San Bernardino, San Diego, Riverside, and Ventura.
/b/ For each period presented, no other state individually exceeded 2 percent of
total domestic construction and development loans.
- --------------------------------------------------------------------------------
<PAGE>
32 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Emerging Market Exposure
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
Loans Available-for-Sale Securities/a/
------------------------ -----------------------------------
Medium- and
(in millions) Total/c/ Short-Term Long-Term Collateralized Uncollateralized
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mexico $2,562 $ 318 $ 604/d/ $306 $14
Brazil 1,318 606 13 5 18
India 920 134 66 -- --
Chile 839 280 224 -- --
Argentina 510 165 19 -- 2
Indonesia 460 259 15 -- --
Venezuela 448 8 35/d/ 55 --
China 439 125 19 -- --
Colombia 354 134 159 -- --
Pakistan 310 44 68 -- --
Philippines 245 78 23 19 30
Other/e/ 438 46 130 49 --
---------------------------------------------------------------------------
$8,843 $2,197/f/ $1,375/f/ $434/g/ $64/g/
- -----------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
December 31, 1995
- -----------------------------------------------------------------------------------
Held-to-Maturity Securities/a/ Other/b/
--------------------------------- ---------------------------
Medium- and
(in millions) Collateralized Uncollateralized Short-Term Long-Term
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mexico $ 856 $111 $ 301 $ 52
Brazil -- 49 627 --
India -- -- 720 --
Chile -- -- 246 89
Argentina -- 48 276 --
Indonesia -- -- 186 --
Venezuela 302 7 23 18
China -- -- 295 --
Colombia -- 8 53 --
Pakistan -- -- 198 --
Philippines -- -- 83 12
Other/e/ -- -- 213 --
---------------------------------------------------------------
$1,158/h/ $223/h/ $3,221 $171
- -----------------------------------------------------------------------------------
</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: $56 million for Mexico, $49 million for Brazil, $266
million for India, $172 million for Chile, $6 million for Argentina, $58
million for Indonesia, $20 million for Venezuela, $81 million for Pakistan,
and $41 million for the Philippines.
/d/ Mexico and Venezuela include $30 million and $4 million, respectively, of
loans that are collateralized by zero-coupon U.S. Treasury securities.
/e/ No other country individually exceeded 2 percent of total emerging market
exposure.
/f/ Total loans include nonaccrual loans of $28 million.
/g/ Total available-for-sale securities includes $62 million of nonaccrual debt-
restructuring bonds.
/h/ Total fair value of total held-to-maturity securities was approximately $930
million.
- --------------------------------------------------------------------------------
Foreign Loans
Foreign loan outstandings were $23.5 billion at December 31, 1995, up $3.1
billion from year-end 1994. This growth was mainly attributable to increases of
$1.5 billion and $0.9 billion in foreign commercial and industrial loans and
loans to banks and other financial institutions, respectively. Growth in these
loan categories was largely due to increased loan demand in BAC's Asia
operations.
Emerging Market Exposure
In connection with its efforts to maintain a diversified 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 above, at December 31, 1995, BAC's emerging market exposure totaled $8,843
million, or 4 percent of total assets, compared to $6,677 million at year-end
1994. This exposure represents loans, restructured debt, which is included in
the securities portfolios, and other monetary assets.
Investment in emerging markets is predominantly concentrated in Latin
America and in Asia. During 1996, BAC plans to continue to expand its investment
in these regions. BAC's growth in these regions is expected to be primarily
concentrated in the transportation and utility sectors, as developing countries
in these regions focus on improving their infrastructure bases and regional
trade capabilities. Since high growth in these countries is expected to be
driven by foreign direct investment and the availability of funding from
offshore capital markets, BAC is strategically positioned to participate in this
expansion with its global presence and diverse product offerings.
- ------------------------------------------------------
Total Loans Outstandings by Type
(Pie chart in non-EDGAR version appears here)
<TABLE>
<CAPTION>
- ------------------------------------------------------
1994 1995
--------------------
<S> <C> <C>
Domestic Consumer 48.4% 48.6%
Domestic Commercial 37.2% 36.3%
Foreign 14.4% 15.1%
--------------------
Total 100.0% 100.0%
====================
- ------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Allowance for Credit Losses
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------
(in millions) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of year $3,690 $3,508 $3,921 $2,420 $2,912
Credit Losses
Domestic consumer:
Residential first mortgages 49 49 23 15 3
Residential junior mortgages 74 88 104 38 6
Credit card 386 382 488 538 429
Other consumer 252 231 300 321 185
Domestic commercial:
Commercial and industrial 139 47 230 197 179
Loans secured by real estate 50 52 91 60 32
Construction and development loans secured by real estate 36 86 291 376 86
Financial institutions 1 2 18 41 6
Lease financing 1 1 9 12 3
Agricultural 3 8 7 10 2
Loans for purchasing or carrying securities 5 -- 2 9 --
Other commercial -- -- -- 2 1
Foreign 15 42 36 126 375
---------------------------------------------------------------
Total credit losses 1,011 988 1,599 1,745 1,307
Credit Loss Recoveries
Domestic consumer:
Residential first mortgages 1 4 1 1 --
Residential junior mortgages 16 18 14 6 3
Credit card 41 54 53 48 36
Other consumer 84 87 100 86 48
Domestic commercial:
Commercial and industrial 83 94 111 77 56
Loans secured by real estate 16 25 34 10 5
Construction and development loans secured by real estate 66 82 87 19 3
Financial institutions 5 16 2 1 1
Lease financing 4 6 6 9 4
Agricultural 7 8 10 6 7
Loans for purchasing or carrying securities -- -- -- -- --
Other commercial -- -- -- 4 1
Foreign 99 124 66 174 54
---------------------------------------------------------------
Total credit loss recoveries 422 518 484 441 218
---------------------------------------------------------------
Total net credit losses 589 470 1,115 1,304 1,089
Provision for credit losses 440 460 803 1,009 805
Allowance related to mergers and acquisitions/a/ 3 241 12 2,782 --
Losses on the sale or swap of loans to restructuring countries -- -- (3) (72) (207)
Other net additions (deductions) 10 (49) (110)/b/ (914)/b/ (1)
---------------------------------------------------------------
Balance, End of Year/c/ $3,554 $3,690 $3,508 $3,921 $2,420
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents the addition of consummation date allowances for credit losses of
Arbor National Holdings, Inc. in 1995, Continental and Liberty Bank of $238
million and $3 million, respectively, in 1994, First Gibraltar in 1993, and
SPC, Valley Capital Corporation, and H.F. Holdings, Inc. of $2,701 million,
$63 million, and $18 million, respectively, in 1992.
/b/ Due to the transfer of certain assets net of their related allowance to
other assets, the allowance for credit losses was reduced by $128 million
and $685 million during 1993 and 1992, respectively. The 1993 amount
included $88 million of regulatory-related allocated transfer risk reserve
(ATRR). In addition, the allowance for credit losses related to loans of
subsidiaries and operations pending disposition totaling $220 million was
reclassified to other assets during 1992.
/c/ Includes ATRR of $67 million at December 31, 1992 and $145 million at
December 31, 1991. Due to the transfer of certain assets net of their
related allowance to other assets during 1993, the allowance for credit
losses did not include any ATRR subsequent to the transfer.
- --------------------------------------------------------------------------------
Allowance for Credit Losses
The allowance for credit losses at December 31, 1995 was $3,554 million, or 2.29
percent of total loan outstandings, compared with $3,690 million, or 2.62
percent, at December 31, 1994. Excluding outstandings in the residential first
mortgage loan portfolio and the portion of the allowance associated with these
outstandings, the ratios were 2.89 percent and 3.36 percent of loans at year-end
1995 and 1994, respectively.
<PAGE>
34 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Allocation of Allowance for Credit Losses by Loan Type
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
December 31
- -----------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992
------------------- ------------------- ------------------- --------------------
Percent Percent Percent Percent
of Loan of Loan of Loan of Loan
(dollar amounts in millions) Allowance Category Allowance Category Allowance Category Allowance Category
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic consumer:
Residential first mortgages $ 115 0.31% $ 91 0.27% $ 55 0.18% $ 62 0.21%
Residential junior mortgages 177 1.28 186 1.37 152 1.18 134 0.95
Other consumer 955 3.80 782 3.77 865 4.62 904 4.68
Domestic commercial:
Commercial and industrial/a/ 458 1.28 396 1.24 368 1.47 636 2.65
Loans secured by real estate 140 1.28 166 1.62 165 1.78 232 2.29
Construction and development
loans secured by real estate 293 9.28 389 10.76 611 13.83 884 13.04
Financial institutions 10 0.37 6 0.21 8 0.38 14 0.70
Lease financing 48 2.51 51 2.81 48 2.81 55 2.90
Agricultural 35 1.99 38 2.07 39 2.30 37 2.19
Foreign 428 1.82 391 1.92 322 1.59 559 3.26
Unallocated 895 -- 1,194 -- 875 -- 404 --
------------------------------------------------------------------------------------
$3,554 2.29% $3,690 2.62% $3,508 2.77% $3,921 3.10%
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------
1991
----------------------
Percent
of Loan
(dollar amounts in millions) Allowance Category
- ---------------------------------------------------------
<S> <C> <C>
Domestic consumer:
Residential first mortgages $ 31 0.16%
Residential junior mortgages 34 0.37
Other consumer 452 3.03
Domestic commercial:
Commercial and industrial/a/ 321 2.21
Loans secured by real estate 48 0.90
Construction and development
loans secured by real estate 367 9.17
Financial institutions 23 1.62
Lease financing 8 1.09
Agricultural 28 2.46
Foreign 808 5.02
Unallocated 300 --
- ---------------------------------------------------------
$2,420 2.79%
- ---------------------------------------------------------
</TABLE>
/a/ Includes the allowance for credit losses for commercial and industrial
loans, loans for purchasing or carrying securities, and other commercial
loans.
- --------------------------------------------------------------------------------
Composition of Allowance for Credit Losses
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31
---------------------------------------------
(in millions) 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Special mention
and classified:
Historical loss
experience component $ 506 $ 516 $ 475 $1,273 $ 718
Credit management
allocated component 377 428 770 601 172
---------------------------------------------
Total special mention
and classified 883 944 1,245 1,874 890
Other:
Domestic consumer 1,247 1,059 1,072 1,100 517
Domestic commercial 229 223 151 215 74
Foreign 300 270 165 328 639
---------------------------------------------
Total allocated 2,659 2,496 2,633 3,517 2,120
Unallocated 895 1,194 875 404 300
---------------------------------------------
$3,554 $3,690 $3,508 $3,921 $2,420
- --------------------------------------------------------------------------------
</TABLE>
The table above shows the allocation of the allowance for credit losses by
loan type. This allocation is based on management's judgment of potential losses
in the respective loan portfolios. 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.
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. In establishing the allowance for the portfolio
segments, credit officers include results obtained from statistical models using
historical loan performance data.
The allowance amounts are calculated, in part, based on historical loss
experience. In addition, the credit officer responsible for each portfolio
segment makes adjustments based on qualitative evaluations of individual
classified assets, knowledge of portfolio segment conditions, and on the
officer's judgment of factors that are expected to influence the future
performance of the portfolio. These factors include geographic and portfolio
concentrations, new products or markets, evaluations of the changes in the
historical loss experience component, and projections of this component into the
current and future periods based on current knowledge and conditions.
The Composition of Allowance for Credit Losses table at left displays how
the allowance for credit losses associated with special mention and classified
assets is determined by combining the historical loss experience component with
the credit management allocated component. The statistical model that BAC uses
in calculating the historical loss experience component reflects the portfolio
experience over a full economic cycle.
<PAGE>
BankAmerica Corporation 1995 / 35
- --------------------------------------------------------------------------------
After an allowance has been established for the loan portfolio segments,
credit management establishes an unallocated portion of the allowance for credit
losses, which is attributable to factors that cannot be associated with a
specific loan or portfolio segment. These factors include general economic
conditions, recognition of specific regional and international geographic
concerns, and trends in portfolio growth.
The special mention and classified amounts in the table on page 34 include
all loans that have been internally risk rated as "special mention,"
"substandard," or "doubtful." Special mention assets are potentially weak, as
the borrower has begun to exhibit deteriorating trends which, if not corrected,
could jeopardize repayment of the loan and result in a "substandard"
classification.
Classified assets include those that are deemed "substandard" or
"doubtful." Substandard assets have a well-defined weakness which if not
corrected, jeopardizes the full satisfaction of the debt. An asset classified as
"doubtful" has critical weaknesses that make full collection improbable.
However, because of pending events that may work to strengthen the asset, the
amount and timing of the possible loss cannot be determined. BAC's actual
historical loss experience since 1991 indicates ultimate loss rates for "special
mention," "substandard," and "doubtful" loans of approximately 2 percent, 6
percent, and 33 percent, respectively.
In 1995, net credit losses were $589 million, an increase of $119 million
from the amount reported in 1994. Net credit losses in the domestic consumer
loan portfolio, the largest component of BAC's net credit losses, increased $32
million from the amount reported in 1994. This increase was primarily due to
growth in the manufactured housing and consumer credit card portfolios and
increased personal bankruptcy filings in these categories.
Net credit losses in the domestic commercial loan portfolio amounted to $54
million in 1995, compared with net credit recoveries of $35 million in 1994.
This increase in credit losses was largely associated with significant charge-
offs on certain large corporate borrowers within the commercial and industrial
sector and lower recoveries in the domestic commercial loan
- -------------------------------------------------------------------------------
Net Credit Losses (Recoveries) as a Percentage
of Average Loan Outstandings
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended December 31
------------------------------------------------
1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic consumer:
Residential first mortgages 0.14 0.14 0.07 0.05 0.02
Residential junior mortgages 0.42 0.53 0.67 0.28 0.03
Credit card 4.19 4.50 5.81 6.16 5.41
Other consumer 1.19 1.21 1.77 2.03 2.02
Domestic commercial:
Commercial and industrial 0.18 (0.20) 0.58 0.61 0.89
Loans secured
by real estate 0.32 0.29 0.59 0.57 0.49
Construction and
development loans
secured by real estate (0.89) 0.10 3.57 5.32 2.08
Financial institutions (0.17) (0.64) 0.80 2.18 0.30
Lease financing (0.16) (0.30) 0.20 0.14 (0.15)
Agricultural (0.23) -- (0.23) 0.29 (0.46)
Loans for purchasing or
carrying securities 0.36 -- 0.11 0.86 --
Other commercial -- -- -- (0.15) --
Total domestic 0.54 0.50 1.09 1.37 1.13
Foreign (0.39) (0.44) (0.16) (0.28) 1.97
Total loans 0.40 0.37 0.89 1.12 1.29
- --------------------------------------------------------------------------------
</TABLE>
portfolio. Partially offsetting increased credit losses in the commercial and
industrial sector were recoveries on construction and development loans that
resulted from the workout of problem loans.
Net credit recoveries in the foreign loan portfolio amounted to $84 million
in 1995, compared to net credit recoveries of $82 million in 1994. In 1995, BAC
recognized recoveries on loans to borrowers in Brazil and Ecuador. In 1994, BAC
recognized recoveries on loans to borrowers in Poland and Ecuador.
Nonperforming Assets
Total nonaccrual assets decreased $189 million, or 9 percent, between year-end
1994 and December 31, 1995. This decrease reflected improvements in most
segments of the loan portfolio, particularly in construction and development
loans, foreign loans, and commercial loans secured by real estate. These
improvements can be primarily attributed to full or partial payments on
nonaccrual loans, and to a lesser degree, the restoration of nonaccrual loans to
accrual status. These decreases were partially offset by an increase in domestic
nonaccrual commercial and industrial loans, which reflected the placement of
various large corporate borrowers on nonaccrual status during the second half of
1995.
<PAGE>
36 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nonaccrual Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
December 31
--------------------------------------------------------
(in millions) 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic Loans
Consumer:
Residential
first mortgages $ 311 $ 319 $ 406 $ 267 $ 93
Residential
junior mortgages 72 56 49 55 3
Other consumer 2 7 4 30 1
Commercial:
Commercial
and industrial 544 453 457 898 675
Loans secured
by real estate 280 347 570 721 286
Construction and
development loans
secured by real
estate 462 647 1,037 2,430 960
Financial institutions 46 3 64 49 97
Lease financing -- 1 18 3 2
Agricultural 29 31 49 94 43
--------------------------------------------------------
1,746 1,864 2,654 4,547 2,160
Foreign Loans
Commercial and
industrial 117 157 139 314 536
Banks and other
financial institutions -- 22 11 78 145
Governments and
official institutions 17 24 42 175 387
Other 8 12 40 116 75
--------------------------------------------------------
142 215 232 683 1,143
Other interest-bearing
assets 3 1 -- 5 46
--------------------------------------------------------
$1,891/a/ $2,080/a/ $2,886/a/b/ $5,235/b/ $3,349
- -------------------------------------------------------------------------------------
</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 $62 million and $441 million at December 31, 1995 and 1994,
respectively. Also excludes certain other nonaccrual loans and other
instruments issued by various governments of $1 million, $8 million, and
$196 million at December 31, 1995, 1994, and 1993, respectively, that were
included in other assets at the lower of cost or fair value.
/b/ Excludes nonaccrual assets that were identified for accelerated disposition
with carrying values prior to reclassification to other assets of $0.6
billion and $2.6 billion at December 31, 1993 and 1992, respectively. These
non-accrual assets were included in other assets at the lower of cost or
fair value. The balance at December 31, 1992 primarily represents nonaccrual
assets that were acquired in the SPC merger and identified for accelerated
disposition at the merger date.
- ---------------------------------------------------------------------------
Analysis of Change in Nonaccrual Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
December 31
---------------------------------
(in millions) 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $2,080 $2,886 $5,235
Additions:
Loans placed on
nonaccrual status 1,432 1,058 1,440
Acquired in the
Continental merger -- 245 --
Deductions:
Sales (35) (210) (150)
Restored to accrual status (399) (616) (988)
Foreclosures (113) (155) (689)
Charge-offs (188) (143) (433)
Restructuring-country-
related assets transferred
to other assets -- -- (310)
Other, primarily payments (886) (985) (1,219)
---------------------------------
Balance, End of Year $1,891 $2,080 $2,886
- ---------------------------------------------------------------------------
</TABLE>
Loans past due 90 days or more and still accruing interest, which are
generally well-secured and in the process of collection, decreased $25 million
in 1995. Decreases in the commercial loan sector were primarily due to paydowns
and year-end 1994 loans being restored to current status. Partially offsetting
these decreases were increases in residential first mortgages and other consumer
loans, which were primarily attributable to growth in these portfolios.
- --------------------------------------------------------------------------
Loans Past Due 90 Days or More and Still Accruing Interest
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31
-----------------------------------------
(in millions) 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic
Consumer:
Residential first mortgages $180 $133 $153 $181 $ 96
Residential junior mortgages 12 23 23 70 6
Other consumer 162 136 152 219 180
Commercial:
Commercial and industrial 20 25 20 19 26
Loans secured by real estate 1 54 138 22 23
Construction and
development loans
secured by real estate -- 38 86 117 28
Financial institutions 16 16 -- -- --
Lease financing 1 1 -- 1 1
Agricultural -- 8 -- 4 --
-----------------------------------------
392 434 572 633 360
Foreign 19 2 6 -- 8
-----------------------------------------
$411 $436 $578 $633 $368
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Restructured Loans
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31
-------------------------------------------------
(in millions) 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic
Commercial and industrial $ 78 $71 $ 66 $ 69 $41
Commercial loans secured
by real estate 18 15 21 12 6
Construction and
development loans
secured by real estate 15 2 10 34 20
Financial institutions -- -- -- 1 2
Lease financing -- -- 1 -- --
Agricultural 1 7 -- 20 --
-------------------------------------------------
112 95 98 136 69
Foreign/a/ 1 2 36 40 10
-------------------------------------------------
$113 $97 $134 $176 $79
- --------------------------------------------------------------------------------
</TABLE>
/a/ Excludes debt restructurings with countries that have experienced liquidity
problems of $1.6 billion, $1.8 billion, $2.4 billion, $2.3 billion, and $2.2
billion at December 31, 1995, 1994, 1993, 1992, and 1991, respectively.
Beginning in the first quarter of 1994, the majority of these instruments
were classified as either available-for-sale or held-to-maturity securities.
Prior to January 1, 1994, these instruments were classified as loans. For
further information on these restructurings, refer to Note 7 of the Notes to
Consolidated Financial Statements on pages 59-60.
- --------------------------------------------------------------------------------
BAC's nonperforming assets ratios also improved during 1995. The ratio of
nonperforming assets (comprised of nonaccrual assets and OREO) to total assets
declined 19 basis points from year-end 1994 to 1.03 percent at December 31,
1995. In addition, at December 31, 1995, the ratio of nonaccrual loans to total
loans was 1.22 percent, down from 1.48 percent at December 31, 1994. Management
expects that these measures of credit quality may not continue to improve in the
future.
- --------------------------------------------------------------------------------
Allowance for Credit Losses as a Percentage of Nonaccrual Assets
(Bar chart in non-EDGAR version appears here)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1993 1994 1995
--------------------------------
<S> <C> <C> <C>
Allowance for Credit Losses as Percentage 122% 177% 188%
of Nonaccrual Assets
- --------------------------------------------------------------------------------
</TABLE>
OREO, which is recorded in other assets, primarily includes properties
acquired through foreclosure or in full or partial satisfaction of loans.
OREO was $492 million at December 31, 1995, down $63 million from year-end
1994. At year-end 1995 and 1994, the aggregate fair value of properties
included in OREO represented approximately 123 percent and 118 percent,
respectively, of their net carrying value.
- --------------------------------------------------------------------------------
Nonaccrual Assets at Year End (in millions of dollars)
(Bar chart in non-EDGAR version appears here)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(in millions of dollars) 1993 1994 1995
--------------------------------
<S> <C> <C> <C>
Nonaccrual Assets at Year End 2,886 2,080 1,891
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
38 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Cash Interest Payments on Nonaccrual Assets by Loan Type/a/
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
December 31, 1995
-------------------------------------------------------------------------
Contractual Cumulative Nonaccrual Book as a
Principal Cumulative Interest Applied Book Percentage of
(dollar amounts in millions) Balance Charge-offs to Principal Balance Contractual
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic
Consumer:
Residential first mortgages $ 313 $ 1 $ 1 $ 311 99%
Residential junior mortgages 74 2 -- 72 97
Other consumer 18 13 3 2 13
Commercial:
Commercial and industrial 998 354 100 544 55
Loans secured by real estate 449 136 33 280 62
Construction and development
loans secured by real estate 603 121 20 462 77
Financial institutions 60 10 4 46 78
Agricultural 47 12 6 29 63
-------------------------------------------------------------------------
2,562 649 167 1,746 68
Foreign
Commercial and industrial 265 127 21 117 44
Banks and other financial
institutions 5 1 1 3 62
Governments and official
institutions 17 -- -- 17 98
Other 33 23 2 8 22
-------------------------------------------------------------------------
320 151 24 145 45
-------------------------------------------------------------------------
$2,882 $800 $191 $1,891 66%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Year Ended December 31, 1995
------------------------------------------------------------
Cash Interest
Average Payments Applied
Nonaccrual ------------------------------------
Book As Interest
(dollar amounts in millions) Balance Income Other/b/ Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic
Consumer:
Residential first mortgages $ 311 $ 9 $ -- $ 9
Residential junior mortgages 66 5 -- 5
Other consumer 4 -- 1 1
Commercial:
Commercial and industrial 539 27 31 58
Loans secured by real estate 329 20 15 35
Construction and development
loans secured by real estate 444 19 16 35
Financial institutions 14 -- -- --
Agricultural 35 5 2 7
- -----------------------------------------------------------------------------------------------------
1,742 85 65 150
Foreign
Commercial and industrial 142 13 6 19
Banks and other financial
institutions 10 1 1 2
Governments and official
institutions 25 3 -- 3
Other 10 -- 1 1
- -----------------------------------------------------------------------------------------------------
187 17 8 25
- -----------------------------------------------------------------------------------------------------
$1,929 $102 $73 $175
Cash yield on average total
nonaccrual book balance 9.06%
- -----------------------------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
Market Risk Management
Overview
Market risk is the risk of loss arising from adverse changes in market rates and
prices, such as interest rates (interest rate risk) and foreign currency
exchange rates (foreign exchange risk). As a financial institution that engages
in transactions involving derivative and other financial instruments, BAC is
exposed to interest rate risk and, to a much less significant extent, foreign
exchange risk. Derivative financial instruments include futures, forwards,
swaps, options, and other financial instruments with similar characteristics.
Other financial instruments that expose BAC to market risk include securities,
loans, deposits, long-term debt, and subordinated capital notes.
Bank of America NT&SA's (the bank) Asset, Liability, and Financial
Management Committee (ALFI) has the overall responsibility for BAC's market risk
management policies. The Market Risk Committee (MRC), a subcommittee of ALFI, is
responsible for approving all global trading activities in all financial
instruments, as well as all foreign treasury activities. It also approves market
risk limits for these activities. The Auditing and Examining Committee regularly
reviews the policies for establishing these limits. The members of the MRC are
senior line managers who are responsible for trading and market risk management,
and senior corporate officers who are responsible for accounting policy,
treasury, and credit policy.
BAC has separate and distinct mechanisms for managing the market risk
associated with its trading activities and its other banking activities, as
discussed below.
Trading Activities
BAC's trading activities include derivatives, foreign currency, and securities
trading. These activities expose BAC to two primary types of market risk--
interest rate risk and, at a much lower level, foreign exchange risk.
BAC manages its exposure to market risk in a variety of ways. First and
foremost, the MRC establishes and monitors various limits on trading activities.
These limits include product volume, gross and net position, earnings-at-risk,
and profit and loss simulation limits. Product volume limits establish maximum
aggregate amounts of specific categories of derivatives, foreign exchange
contracts, and securities. Position limits restrict the amount of contracts by
specific maturity groupings. Earnings-
<PAGE>
BankAmerica Corporation 1995 / 39
- --------------------------------------------------------------------------------
at-risk (EAR) limits measure potential loss at a certain statistical confidence
level. Finally, profit and loss simulation limits measure the potential loss in
various segments of the trading portfolio as a result of specific and extremely
adverse scenarios, without regard to the statistical probability of their
occurring.
On a day-to-day basis, BAC reduces the market risk to which it is exposed
by executing offsetting transactions with other counterparties. However, BAC may
also temporarily retain an open position in an effort to generate revenue by
correctly anticipating future market conditions and customer demand and by
taking advantage of price differentials in the various markets in which it
operates. The day-to-day management of market risk takes place at a
decentralized level within various BAC trading centers. Documented trading
policies and procedures define acceptable boundaries within which traders can
execute transactions in their assigned markets.
BAC uses an EAR methodology to measure the overall market risk inherent in
its trading activities. Under this methodology, management models historical
data to statistically calculate with 97.5 percent confidence the potential loss
in earnings that BAC might experience if an adverse one-day shift in market
prices were to occur.
BAC performs this EAR calculation for each major portfolio segment on a
daily basis. It then calculates the combined EAR across these portfolio segments
using two different sets of assumptions. The first calculation assumes that each
portfolio segment experiences adverse price movements at the same time (i.e.,
the price movements are perfectly correlated). The second calculation assumes
that these adverse price movements within the major portfolio segments do not
occur at the same time (i.e., they are uncorrelated).
During 1995 and 1994, BAC's combined EAR calculated on a perfectly
correlated basis averaged $32 million and $18 million, respectively, and peaked
at $41 million and $28 million. BAC's EAR calculated on an uncorrelated basis
averaged $13 million and $8 million, respectively, and peaked at $18 million and
$13 million. These EAR calculations include the effects of both interest rate
and foreign exchange risks and are measured on a pre-tax basis. For each amount
presented, management estimates that interest rate risk generally comprises at
least 80 percent of the total.
BAC's trading risk profile is exemplified in the histogram of 1995 daily
trading-related revenues, which is presented at the right. During 1995, daily
trading-related revenues averaged $2.9 million. The shaded band in the histogram
represents a 95 percent confidence interval around the average daily revenue
amount. This confidence band demonstrates BAC's success during 1995 in
controlling the volatility of its daily trading activities, which was a result
of its diversified approach to market risk management.
- --------------------------------------------------------------------------------
Histogram of Daily Trading-Related Revenue for 1995
(Bar chart in non-EDGAR version appears here)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Daily Revenue Number of Days
- --------------------------------------------------------------------------------
(in millions of dollars)
<S> <C>
(is less than) -6 0
-6 to -5 0
-5 to -4 0
-4 to -3 0
-3 to -2 4
-2 to -1 6
-1 to 0 10
0 to 1 22
1 to 2 46
2 to 3 41
3 to 4 60
4 to 5 26
5 to 6 16
6 to 7 12
7 to 8 7
8 to 9 2
9 to 10 2
(is greater than) 10 0
---------
254
- --------------------------------------------------------------------------------
</TABLE>
Other Banking Activities
BAC's other banking activities other than trading include lending, accepting
deposits, investing in securities, and issuing debt as needed to fund assets.
Substantially all of the market risk that arises from these activities is
interest rate risk, which BAC manages as discussed below.
Objectives and Results of 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. BAC
measures interest rate risk in terms of potential impact on both its economic
value and reported earnings. Economic value calculations measure the changes in
the present value of net future cash flows. BAC measures its exposure to
earnings variability by estimating the potential effect of changes in interest
rates on projected net income over a three-year period.
As discussed in the following sections, there are three sources of interest
rate risk. These are gap mismatches, options mismatches, and index mismatches.
To minimize exposure to declines in economic value due to gap mismatches, BAC's
policy is that assets and liabilities must have approximately equal total
duration. This asset and liability management 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. 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 graph on page 40, BAC's net one-year position has been essentially
balanced throughout the last five years.
<PAGE>
40 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. Dollar Denominated Interest Rate Sensitivity By Repricing or Maturity Dates
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1995
--------------------------------------------------------------------------------
(in millions) (is greater than) (is greater than) Over
0-6 months 6-12 months 1-5 years 5 years Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic Assets
Interest-bearing deposits in banks $ 5 $ -- $ -- $ -- $ 5
Federal funds sold and securities
purchased under resale agreements 1,692 -- -- -- 1,692
Trading account securities 1,092 -- -- -- 1,092
Loans:
Prime indexed 18,393 -- -- -- 18,393
Adjustable rate residential first mortgages 10,716 5,026 8,510 4,909 29,161
Other loans, net 40,594 5,908 16,421 9,014 71,937
Other assets 23,460 341 11,276 9,948 45,025
--------------------------------------------------------------------------------
Domestic Assets 95,952 11,275 36,207 23,871 167,305
--------------------------------------------------------------------------------
Domestic Liabilities and Stockholders' Equity
Domestic deposits (64,620) (9,792) (23,071) (18,552) (116,035)
Other short-term borrowings (10,024) (775) -- -- (10,799)
Long-term debt and subordinated capital notes (7,442) (175) (2,242) (5,316) (15,175)
Other liabilities and stockholders' equity (12,671) 102 (9,543) (16,015) (38,127)
--------------------------------------------------------------------------------
Domestic Liabilities and Stockholders' Equity (94,757) (10,640) (34,856) (39,883) (180,136)
Offshore Funding Books, net (1,782) 287 314 1,181 --
--------------------------------------------------------------------------------
Core Gap before Risk Management Positions (587) 922 1,665 (14,831) (12,831)
--------------------------------------------------------------------------------
Interest Rate Risk Management Positions
Investment securities/a/ 2,017 1,528 4,768 4,518 12,831
Off-balance-sheet financial instruments/b/ (6,672) 399 (2,600) 8,873 --
--------------------------------------------------------------------------------
Total Interest Rate Risk Management Positions (4,655) 1,927 2,168 13,391 12,831
--------------------------------------------------------------------------------
Net Gap (5,242) 2,849 3,833 (1,440) --
--------------------------------------------------------------------------------
Cumulative Gap $ (5,242) $ (2,393) $ 1,440 $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Interest Rate Risk (Plot-point graph in non-EDGAR version)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(in billions of dollars) 1991 1992 1993 1994 1995
------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Interest Rate Risk (8.1) (6.9) 1.0 (2.8) 0
- -------------------------------------------------------------------------------
</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.
Sources and Management of Interest Rate Risk
Gap Risk Management--Gap mismatches result from timing differences in the
repricing of assets, liabilities, and off-balance-sheet instruments (e.g., loan
commitments). For example, if BAC makes long-term fixed-rate loans and funds
them with floating-rate deposits that reprice every six months, a gap mismatch
is created. In this example, in a rising interest rate environment, BAC would be
exposed to the risk of having to pay more interest on its floating-rate deposits
than it would receive on its fixed-rate loans. BAC has imposed limits on the
level of gap mismatches that it will retain, and uses both securities and
derivatives to keep its exposure within these limits.
The table above labeled "U.S. Dollar-Denominated Interest Rate Sensitivity
By Repricing or Maturity Date" shows BAC's mismatch positions. At year-end 1995,
liabilities and equity exceeded assets by nearly $15 billion in the over five-
year repricing period. Risk management positions, including interest rate swaps
in which BAC received fixed-rate interest payments, significantly reduced this
imbalance. The negative net position in the under six-months repricing period
reflects the pay-floating side of these swaps.
<PAGE>
BankAmerica Corporation 1995 / 41
- --------------------------------------------------------------------------------
BAC must make a number of estimates and assumptions to calculate its
exposure to gap risk and develop the table described on page 40. For example,
BAC estimates deposit maturities based on its expectations about future market
interest rate movements and its customers' reactions to those movements.
Similarly, adjustable-rate mortgage repricings reflect the existence of periodic
interest rate caps, floors, and lifetime ceilings, as well as an estimated
amount of loan prepayments. Finally, for purposes of estimating gap risk, BAC
assumes that its common stock outstanding is an intermediate- to long-term
source of funds.
Overall, management measures gap risk by modeling potential changes in
economic value across a range of upward and downward interest rate scenarios
that encompass over 99 percent of statistically probable occurrences. This model
recognizes that longer-maturity gap mismatches pose greater risk to economic
value. Based on this analysis, management believes that BAC's maximum economic
value exposure attributable to gap positions represented less than 1 percent of
common equity at December 31, 1995.
The near term earnings exposure to gap positions is evaluated in the
context of upward and downward interest rate changes assumed to occur ratably
over a twelve-month period. This calculation indicated that, as of December 31,
1995, an adverse change in interest rates of 200 basis points would have reduced
forecasted annual after-tax earnings by less than 1 percent per year for each of
the next three years.
Options and Index Risk Management--In addition to gap risk, two other
significant sources of interest rate risk for BAC are options mismatches and
index mismatches. Both of these exposures primarily arise from BAC's lending and
deposit-taking activities.
Options commonly exist in BAC's retail banking products (e.g., mortgage
loans, retail deposits) and generally work to the customer's advantage. These
options are often referred to as "embedded options" and examples include limits
on floating-rate loan and deposit repricings (i.e., interest rate caps and
floors), loan prepayment rights, and depositors' ability to withdraw certain
deposits on demand.
Index mismatches relate to floating-rate assets and floating-rate
liabilities that may reprice simultaneously, but that are not tied to the same
index. This risk arises from fluctuating spreads between various indices to
which floating rates are tied (e.g., prime rate, commercial paper rate, London
interbank offered rate (LIBOR), U.S. Treasury rate).
BAC measures options and index risk by developing models based on actual
historical patterns of changes in interest rate levels, yield curve shapes, and
index spreads. Similar to the gap risk analysis, BAC must make a number of
estimates and assumptions in the process. For example, risk is measured assuming
existing embedded options and index mismatch positions will be open throughout
the lives of the related assets and liabilities, a period that can be as long as
30 years. This is consistent with the expectation that loans and deposits will
be held to maturity.
BAC then simulates numerous scenarios using a Monte Carlo statistical
process. Scenarios generated by this process cover an array of possible future
rate levels, yield curve slopes, index spreads, and rates of change in these
scenarios. This process includes a representative number of scenarios that
diverge widely from market expectations. This process ensures that the range and
probability of the potential financial effects presented by options and index
positions are measured in the context of a comprehensive mix of possible future
interest rate scenarios. For each simulated scenario, BAC separately models and
values cash flows attributable to options and index mismatches. Risk is measured
based on the deviation of individual scenario values from the average value of
all scenarios.
Based on this analysis, at year-end 1995, there was a 75 percent
probability that BAC's loss of economic value would not exceed 2 percent of
common equity. At 90 percent and 99 percent probability levels, the analysis
indicated maximum losses of 5 percent and 9 percent, respectively, of common
equity. Management believes that these losses, if realized, would be distributed
over several years.
Residual option and index risk is unavoidable because it reflects the
individual decisions of many individual customers, and because the hedging
products available to BAC may not wholly protect against the kinds of risk
embedded in retail products. In addition, the risk measurement methodology
depends on predictions of customer responses, which may not match actual
customer behavior. Finally, BAC accepts a certain level of risk in situations
where the hedging costs exceed the likely realized benefits.
BAC's risk management policy only permits transactions that reduce options
risk. Accordingly, BAC does not use written options (which expose an institution
to unlimited loss potential), either free-standing or embedded in off-balance-
sheet products, for risk management purposes. At December 31, 1995, BAC's
purchased option contracts, which reduce option risk, had a gross notional value
of $9.2 billion.
<PAGE>
42 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Liquidity Risk Management
Overview
Liquidity risk is the possibility that BAC's cash flows may not be adequate to
fund operations and meet commitments on a timely and cost-effective basis. Since
liquidity risk is closely linked to both credit and market risk, many of the
previously discussed market risk limits, risk control mechanisms, and market and
product participation limitations also apply to the monitoring and managing of
liquidity risk.
Fundamental to the management of liquidity is the coordination of relative
maturities of assets and liabilities. Through BAC's ability to raise funds in
money and capital markets, it can tap a broad variety of funding mechanisms,
providing flexibility in managing liquidity and mitigating the potential for
liquidity risk.
ALFI determines the nature and extent of BAC's on- and off-balance-sheet
activities and products. ALFI seeks to balance BAC's sources and uses of funds
while minimizing market exposure. In this capacity, ALFI places limits on the
level of investments in various assets and off-balance-sheet instruments, as
well as on funding levels for wholesale and other deposits.
BAC manages its liquidity at both the parent and subsidiaries levels. The
parent is funded primarily by debt and equity issues, as well as by dividend and
interest income from its subsidiaries. BAC may issue common stock, preferred
stock, commercial paper, and senior and subordinated debt from time to time when
market conditions are judged appropriate in light of funding and capital needs.
For direct banking subsidiaries, the primary source of funding is domestic
retail deposits. Additional funding support is available to selected banking
subsidiaries through the issuance of bank notes. Subsidiary funding is also
available through lines of credit between banking subsidiaries and the bank and
between nonbanking subsidiaries and the parent company.
BAC's liquid assets consist of cash and short-term borrowings due from
banks, interest-bearing deposits in banks, federal funds sold, securities
purchased under resale agreements, trading account assets and available-for-sale
securities. Among funding sources are core deposits, capital market funds and
purchased money-market liabilities. Core deposits include domestic interest- and
noninterest-bearing retail deposits, which historically have been a relatively
stable source of funds. Capital market funds include long-term debt,
subordinated capital notes and common and preferred equity. Purchased money-
market liabilities primarily include overseas time deposits, federal funds
purchased, securities sold under repurchase agreements and other short-term
borrowings. As discussed on page 26, BAC experienced a shift in its funding
structure during 1994 and 1995. The credit ratings of BAC and its subsidiaries
influence the cost and availability of funding sources.
Liquidity Review
Various factors affected BAC's liquidity during 1995 and 1994. During 1995,
total loan originations and purchases exceeded principal collections, resulting
in a cash outflow of $16.1 billion. Conversely, total sales, maturities,
prepayments, and calls of securities exceeded total purchases, resulting in a
cash inflow of $2.4 billion. In total, the above transactions resulted in a net
cash outflow of $13.7 billion.
In 1994, a net cash outflow of $3.3 billion resulted from these same
activities, as total loan originations and purchases exceeded principal
collections by $8.4 billion and total sales, maturities, prepayments, and calls
of investment securities exceeded purchases by $5.1 billion.
During both 1995 and 1994, BAC's liquidity was also enhanced by proceeds
from sales of loans, totaling $2.0 billion and $1.5 billion, respectively. These
loan sales consisted primarily of loans that were not originated or acquired
with the intent to sell but were sold due to various economic factors, including
significant movements in interest rates, changes in the maturity mix of BAC's
assets and liabilities, liquidity demands, regulatory capital considerations,
and other similar factors.
In addition, in both 1995 and 1994, the parent paid dividends of $911
million and $819 million, respectively, to its preferred and common
stockholders. For information concerning dividend and loan restrictions, refer
to Note 24 of the Notes to Consolidated Financial Statements on pages 79-81.
Operational and Settlement Risk Management
Operational risk is the risk of unexpected losses attributable to human error,
systems failures, fraud, or inadequate internal controls and procedures.
Mitigating this risk are systems and procedures to monitor transactions and
positions, documentation of transactions, regulatory compliance review, and
periodic review by internal auditors. Reconciliation procedures are also in
place to ensure that systems capture critical data. In addition, BAC maintains
contingency systems for operations support in the event of natural disasters.
Settlement risk is the exposure to loss arising when an institution either
pays out funds or delivers assets before receiving assets or payment from its
counterparty. BAC mitigates settlement risk through credit limits for each
counterparty, and, wherever possible, the use of legally enforceable novation or
settlement netting agreements.
<PAGE>
BankAmerica Corporation 1995 / 43
- --------------------------------------------------------------------------------
Capital Management
Capital represents the stockholders' investment on which BAC strives to generate
attractive returns. BAC's capital position continued to strengthen during 1995.
At December 31, 1995, stockholders' equity totaled $20.2 billion, up $1.3
billion, or 7 percent, from year-end 1994. Common equity increased $1.8 billion
during 1995, while preferred stock declined by approximately $0.5 billion.
- --------------------------------------------------------------------------------
Common and Total Stockholders' Equity (Plot-point graph in non-EDGAR version
appears here)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(in billions of dollars)
Total Common
-----------------------
<S> <C> <C>
3/31/94 16.9 13.9
6/30/94 17.1 14.1
9/30/94 18.9 15.6
12/31/94 18.9 15.8
3/31/95 19.2 16.2
6/30/95 19.6 16.9
9/30/95 19.9 17.2
12/31/95 20.2 17.6
- --------------------------------------------------------------------------------
</TABLE>
Common equity increased $1.8 billion due to 1995 earnings net of preferred
and common stock dividends. In addition, common equity increased $0.5 billion
due to the following stock issuances. During the first quarter of 1995, 2.9
million shares of stock were issued in connection with the acquisition of Arbor
National Holdings, Inc., and during the second quarter of 1995, 5.4 million
shares of stock were issued in connection with the conversion of 99 percent of
BAC's 6 1/2% Cumulative Convertible Preferred Stock, Series G to common stock.
Also, valuation adjustments to net unrealized gain (loss) on available-for-sale
securities resulted in a $327 million increase in common equity. These increases
in common equity were offset by the common stock repurchases discussed as
follows.
In connection with its previously announced stock repurchase program, the
parent repurchased 16.6 million shares of its common stock during 1995 at an
average per-share price of $53.83, which reduced common equity by $894 million.
These shares were repurchased on the open market over 113 trading days and
represented approximately 10 percent of the total volume of BAC common stock
traded on those days. For additional information regarding the stock repurchase
plan, refer to Note 13 of the Notes to Consolidated Financial Statements on
page 63.
The decline in the parent's preferred stock resulted from the redemption of
all outstanding shares of the 11% Cumulative Fixed Preferred Stock, Series I, on
September 30, 1995, and the conversion of the 6 1/2% Cumulative Convertible
Preferred Stock, Series G and redemption of the Adjustable Rate Preferred Stock,
Series 1 during the second quarter of 1995. For additional information regarding
these preferred stock transactions, refer to Note 15 of the Notes to
Consolidated Financial Statements on pages 64-65.
- --------------------------------------------------------------------------------
Dividends Declared per Common Share (Plot-point graph in non-EDGAR version)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995
----------------------------------------
<S> <C> <C> <C> <C> <C>
Dividends Declared per Common Share $1.20 $1.30 $1.40 $1.60 $1.84
- --------------------------------------------------------------------------------
</TABLE>
The common stock repurchases and preferred stock redemptions described
above reflect BAC's strong capital position and commitment to return excess
capital to its shareholders. Supported by the growth of the capital base, on
February 5, 1996, BAC's Board of Directors declared an increase in the quarterly
dividend on common stock from $0.46 per share to $0.54 per share. The dividend
is payable on March 12, 1996 to shareholders of record on February 20, 1996. In
addition, the Board authorized the redemption of all outstanding shares of the
parent's 11% Cumulative Fixed Preferred Stock, Series J. This redemption will
occur on March 31, 1996.
<PAGE>
44 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Risk-Based Capital, Risk-Weighted Assets, and Risk-Based Capital Ratios
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
December 31
---------------------------------------------
(dollar amounts in millions) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Risk-Based Capital
Common stockholders' equity $ 17,598 $ 16,149 $ 14,165
Perpetual preferred stock 2,623 3,068 2,979
Less: Goodwill, nongrandfathered core deposit and other identifiable
intangibles, and other deductions/a/ (5,230) (5,559) (5,248)
---------------------------------------------
Tier 1 capital 14,991 13,658 11,896
Eligible portion of the allowance for credit losses 2,566 2,366 1,993
Hybrid capital instruments 214 336 568
Subordinated notes and debentures 5,798 5,707 4,422
Less: Other deductions (153) (114) (37)
---------------------------------------------
Tier 2 capital 8,425 8,295 6,946
---------------------------------------------
Total Risk-Based Capital $ 23,416 $ 21,953 $ 18,842
Risk-Weighted Assets
Balance-sheet assets:
Trading account assets $ 3,506 $ 2,773 $ 1,782
Available-for-sale and held-to-maturity securities 5,007 4,950 3,524
Loans 132,504 120,808 107,764
Other assets 16,725 15,924 12,866
---------------------------------------------
Total balance-sheet assets 157,742 144,455 125,936
Off-balance-sheet items:
Unused commitments 26,268 23,211 15,740
Standby letters of credit 12,888 12,516 8,747
Foreign exchange and derivatives contracts 4,530 5,638 5,259
Other 2,567 1,990 2,208
---------------------------------------------
Total off-balance-sheet items 46,253 43,355 31,954
---------------------------------------------
Total Risk-Weighted Assets $203,995 $187,810 $157,890
Risk-Based Capital Ratios
Tier 1 capital 7.35% 7.27% 7.53%
Tier 2 capital 4.13 4.42 4.40
---------------------------------------------
Total Risk-Based Capital Ratio 11.48% 11.69% 11.93%
Tier 1 Leverage Ratio 6.92% 6.74% 6.58%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes nongrandfathered CDI and other identifiable intangibles acquired
after February 19, 1992 of $856 million and $78 million, respectively, at
December 31, 1995, $937 million and $100 million, respectively, at December
31, 1994, and $1,008 million and $71 million, respectively, at December 31,
1993. Also includes $1 million, $111 million, and $158 million at December
31, 1995, 1994, and 1993, respectively, of the excess of the net book value
over 90 percent of the fair value of mortgage servicing rights and credit
card intangibles.
- -------------------------------------------------------------------------------
The parent and its domestic banking subsidiaries are subject to risk-based
capital regulations. Bank regulatory authorities use these guidelines to
evaluate capital adequacy based on an institution's asset risk profile and off-
balance-sheet exposures, such as unused loan commitments, standby letters of
credit, and foreign exchange and derivatives contracts.
The Federal Reserve has established guidelines that certain banking
organizations are required to maintain a minimum 8 percent total risk-based
capital ratio (the ratio of total capital divided by risk-weighted assets),
including a Tier 1 capital ratio of at least 4 percent. The risk-based capital
rules have been further supplemented by the leverage ratio, defined as Tier 1
capital divided by average total assets, after certain adjustments.
<PAGE>
BankAmerica Corporation 1995 / 45
- --------------------------------------------------------------------------------
The minimum leverage ratio is 3 percent for banking organizations that do not
anticipate significant growth and have well-diversified-risk (including no undue
interest rate risk exposure), excellent asset quality, high liquidity, and good
earnings. Other banking organizations not in this category are expected to have
ratios well above the minimums, depending on their particular condition and
growth plans. Higher capital ratios could also be required if warranted by the
particular circumstances or risk profile of a given banking organization. In the
current regulatory environment, banking companies must stay well capitalized to
receive favorable regulatory treatment of acquisition and other expansion
activities and favorable risk-based deposit insurance assessments. It is BAC's
policy to maintain capital ratios for both the parent and its domestic banking
subsidiaries above the regulatory well-capitalized levels, which are 10 percent
for the total risk-based capital ratio, 6 percent for the Tier 1 capital ratio,
and 5 percent for the Tier 1 leverage ratio.
- --------------------------------------------------------------------------------
Risk-Based Capital Ratios (Bar chart in non-EDGAR version appears here)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1993 1994 1995
------------------------------
<S> <C> <C> <C>
Tier 1 7.5% 7.3% 7.4%
Total 11.9% 11.7% 11.5%
- --------------------------------------------------------------------------------
</TABLE>
The Federal Deposit Insurance Corporation Improvement Act of 1991 requires
all federal banking agencies to incorporate interest rate risk into their risk-
based capital framework. Until all final interest rate risk regulations have
been issued, BAC will be unable to determine the effect of such regulations on
its regulatory capital ratios or those of its subsidiary banks.
At December 31, 1995, BAC's total risk-based capital ratio decreased 21
basis points from the amount reported at year-end 1994. This decline was
primarily due to an increase in total risk-weighted assets, in particular, loans
and off-balance-sheet credit-related financial instruments. BAC's Tier 1
leverage ratio was 6.92 percent at December 31, 1995, up from 6.74 percent at
year-end 1994.
On an ongoing basis, BAC evaluates and modifies its mix of capital sources,
including debt, equity, and off-balance-sheet financing arrangements, taking
into consideration various factors. Such factors include regulatory capital
targets, as well as the cost of capital, which are influenced by prevailing
interest rates and credit risk. BAC's capital mix may vary from time to time in
response to changes in these factors.
To determine the level of capital appropriate to BAC's various lines of
business, an economic capital framework has been developed to promote the
efficient deployment of capital. This framework encompasses credit, liquidity,
market, country, and operating business risks, and is a key tool utilized to
ensure that capital resources are allocated to businesses in proportion to the
economic risks they incur and the returns they generate.
<PAGE>
46 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Consolidated Financial Statements
- --------------------------------------------------------------------------------
[Computer icons depicting the Financial Review, Consolidated Financial
Statements, and Corporate Information sections of the Annual Report with the
Consolidated Financial Statements icon highlighted appears here]
Report of Management
The management of BankAmerica Corporation and its subsidiaries has
responsibility for the preparation, integrity, and reliability of the financial
statements and related financial information contained in this annual report.
The financial statements were prepared in accordance with generally accepted
accounting principles and prevailing practices of the banking industry and
include necessary judgments and estimates by management.
Management has established and is responsible for maintaining an internal
control environment designed to provide reasonable assurance as to the integrity
and reliability of the financial statements, the protection of assets, and the
prevention and detection of fraudulent financial reporting. The internal control
environment includes: an effective financial accounting structure; a
comprehensive internal audit function; an independent auditing and examining
committee (the committee) of the Board of Directors; and extensive financial and
operating policies and procedures. BAC's management also fosters an ethical
climate supported by a code of conduct, appropriate levels of management
authority and responsibility, an effective corporate organizational structure,
and appropriate selection and training of personnel.
The Board of Directors, primarily through the committee, oversees the
adequacy of BAC's control environment. The committee, whose members are neither
officers nor employees of BAC, meets periodically with management, internal
auditors, credit examination officers, and the independent auditors to review
the functioning of each and to ensure that each is properly discharging its
responsibilities.
BAC's financial statements are audited by Ernst & Young LLP, BAC's
independent auditors, whose audit is made in accordance with generally accepted
auditing standards and includes such audit procedures as they consider necessary
to express the opinion in their report that follows. In addition, Ernst & Young
LLP reviews BAC's quarterly financial information. A review is substantially
less in scope than an audit in accordance with generally accepted auditing
standards and, accordingly, Ernst & Young LLP does not express an opinion on the
quarterly financial information. Ernst & Young LLP meets regularly with
management as well as the committee to discuss its audit and its findings as to
the integrity of the financial statements and the adequacy of the internal
controls.
Management recognizes that there are inherent limitations in the
effectiveness of any internal control environment. However, management believes
that, as of December 31, 1995, BAC's internal control environment, as described
above, provided reasonable assurance as to the integrity and reliability of the
financial statements and related financial information.
/s/ Richard M. Rosenberg
Richard M. Rosenberg
Chairman of the Board
/s/ David A. Coulter
David A. Coulter
President and Chief Executive Officer
/s/ Michael E. O'Neill
Michael E. O'Neill
Vice Chairman and Chief Financial Officer
/s/ James H. Williams
James H. Williams
Executive Vice President and Chief Accounting Officer
January 16, 1996
<PAGE>
BankAmerica Corporation 1995 / 47
- --------------------------------------------------------------------------------
Report of Independent Auditors
Shareholders and Board of Directors
BankAmerica Corporation
We have audited the accompanying consolidated balance sheet of BankAmerica
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of BankAmerica Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of BankAmerica
Corporation and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
San Francisco, California
January 16, 1996
<PAGE>
48 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Statement of Operations BankAmerica Corporation and Subsidiaries
Year Ended December 31
--------------------------------------
(dollar amounts in millions, except per share data) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income
Loans, including fees $12,707 $ 9,806 $ 9,463
Interest-bearing deposits in banks 466 325 194
Federal funds sold 32 55 35
Securities purchased under resale agreements 618 351 174
Trading account assets 741 473 372
Available-for-sale and held-to-maturity securities 1,276 1,374 1,389
--------------------------------------
Total interest income 15,840 12,384 11,627
Interest Expense
Deposits 4,923 3,337 2,971
Federal funds purchased 131 27 16
Securities sold under repurchase agreements 581 351 158
Other short-term borrowings 630 275 201
Long-term debt 1,067 810 727
Subordinated capital notes 46 42 113
--------------------------------------
Total interest expense 7,378 4,842 4,186
--------------------------------------
Net interest income 8,462 7,542 7,441
Provision for credit losses 440 460 803
--------------------------------------
Net interest income after provision for credit losses 8,022 7,082 6,638
Noninterest Income
Deposit account fees 1,303 1,201 1,198
Credit card fees 315 331 342
Trust fees 300 285 294
Other fees and commissions 1,269 1,111 1,083
Trading income 527 357 569
Net gain on available-for-sale securities 34 24 61
Net gain on sales of assets 71 126 106
Venture capital activities 337 136 129
Other income 390 564 479
--------------------------------------
Total noninterest income 4,546 4,135 4,261
Noninterest Expense
Salaries 3,309 2,936 2,886
Employee benefits 718 703 573
Occupancy 738 690 684
Equipment 663 589 610
Amortization of intangibles 428 411 421
Communications 359 323 330
Regulatory fees and related expenses 176 290 309
Other expense 1,610 1,558 1,658
--------------------------------------
Total noninterest expense 8,001 7,500 7,471
--------------------------------------
Income before income taxes 4,567 3,717 3,428
Provision for income taxes 1,903 1,541 1,474
--------------------------------------
Net Income $ 2,664 $ 2,176 $ 1,954
Net income applicable to common stock $ 2,437 $ 1,928 $ 1,713
Earnings per common and common equivalent share 6.49 5.36 4.79
Earnings per common share -- assuming full dilution 6.45 5.33 4.76
Dividends declared per common share 1.84 1.60 1.40
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 49
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet BankAmerica Corporation and Subsidiaries
December 31
---------------------
(dollar amounts in millions) 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 14,312 $ 13,578
Interest-bearing deposits in banks 5,761 6,371
Federal funds sold 721 640
Securities purchased under resale agreements 4,962 5,259
Trading account assets 9,516 6,941
Available-for-sale securities 12,043 9,849
Held-to-maturity securities (market value: 1995 -- $4,332; 1994 -- $7,292) 4,656 8,167
Loans 155,373 140,912
Less: Allowance for credit losses 3,554 3,690
---------------------
Net loans 151,819 137,222
Customers' acceptance liability 2,295 1,069
Accrued interest receivable 1,458 1,449
Goodwill, net 4,192 4,296
Identifiable intangibles, net 1,806 2,149
Unrealized gains on off-balance-sheet instruments 7,801 6,267
Premises and equipment, net 3,985 3,955
Other assets 7,119 8,263
---------------------
Total Assets $232,446 $215,475
Liabilities and Stockholders' Equity
Deposits in domestic offices:
Interest-bearing $ 84,097 $ 90,374
Noninterest-bearing 36,820 34,956
Deposits in foreign offices:
Interest-bearing 37,886 27,454
Noninterest-bearing 1,691 1,610
---------------------
Total deposits 160,494 154,394
Federal funds purchased 5,160 3,283
Securities sold under repurchase agreements 6,383 5,505
Other short-term borrowings 7,627 5,053
Acceptances outstanding 2,295 1,069
Accrued interest payable 848 831
Unrealized losses on off-balance-sheet instruments 8,227 6,571
Other liabilities 5,862 4,450
Long-term debt 14,723 14,823
Subordinated capital notes 605 605
---------------------
Total liabilities 212,224 196,584
Stockholders' Equity
Preferred stock 2,623 3,068
Common stock, par value $1.5625 (authorized: 1995 and 1994 -- 700,000,000 shares;
issued: 1995 -- 385,006,003 shares; 1994 -- 371,887,723 shares) 602 581
Additional paid-in capital 8,328 7,743
Retained earnings 9,606 7,854
Net unrealized gain (loss) on available-for-sale securities 1 (326)
Common stock in treasury, at cost (1995 -- 17,558,801 shares; 1994 -- 705,719 shares) (938) (29)
---------------------
Total stockholders' equity 20,222 18,891
---------------------
Total Liabilities and Stockholders' Equity $232,446 $215,475
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
<PAGE>
50 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Cash Flows BankAmerica Corporation and Subsidiaries
Year Ended December 31
----------------------------------------
(in millions) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 2,664 $ 2,176 $ 1,954
Adjustments to net income to arrive at net cash provided by operating
activities:
Provision for credit losses 440 460 803
Net gain on sales of assets and subsidiaries and operations (96) (211) (106)
Net amortization of loan fees and discounts (101) (102) (132)
Depreciation and amortization of premises and equipment 552 489 461
Amortization of intangibles 428 411 421
Provision for deferred income taxes 268 713 964
Change in assets and liabilities net of effects from acquisitions and
pending dispositions:
(Increase) decrease in accrued interest receivable (9) (325) 45
Increase (decrease) in accrued interest payable 17 421 (18)
Increase in trading account assets (2,685) (35) (3,888)
Increase in current income taxes payable 265 64 436
Deferred fees received from lending activities 142 121 176
Net cash provided (used) by loans held for sale (880) 436 (250)
Other, net 1,730 (598) (444)
----------------------------------------
Net cash provided by operating activities 2,735 4,020 422
Cash Flows from Investing Activities
Activity in available-for-sale securities:
Sales proceeds 2,509 3,019 2,018
Maturities, prepayments, and calls 5,722 6,481 6,526
Purchases (7,416) (5,815) (4,694)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 2,514 2,763 5,296
Purchases (976) (1,319) (7,052)
Proceeds from sales of loans 1,982 1,516 2,327
Purchases of loans (1,711) (758) (705)
Purchases of premises and equipment (649) (617) (791)
Proceeds from sales of other real estate owned 525 587 552
Net cash provided (used) by:
Loan originations and principal collections (14,429) (7,602) (1,839)
Interest-bearing deposits in banks 472 (2,576) (806)
Federal funds sold (81) 1,941 (562)
Securities purchased under resale agreements 297 (1,108) (723)
Net cash provided by acquisitions -- 700 106
Proceeds from liquidations of assets identified for disposition 55 300 1,750
Other, net 83 (151) 283
----------------------------------------
Net cash provided (used) by investing activities (11,103) (2,639) 1,686
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt 2,588 3,400 3,150
Principal payments and retirements of long-term debt and subordinated capital notes (2,652) (3,263) (5,387)
Proceeds from issuance of common stock 151 52 268
Preferred stock repurchased (206) (324) --
Treasury stock purchased (926) (503) --
Common stock dividends (684) (571) (497)
Preferred stock dividends (227) (248) (241)
Net cash provided (used) by:
Deposits 6,100 598 (4,588)
Federal funds purchased 1,877 2,677 (197)
Securities sold under repurchase agreements 878 756 3,303
Other short-term borrowings 2,282 (708) 1,435
Other, net (87) (162) (706)
----------------------------------------
Net cash provided (used) by financing activities 9,094 1,704 (3,460)
Effect of exchange rate changes on cash and due from banks 8 11 (14)
----------------------------------------
Net increase (decrease) in cash and due from banks 734 3,096 (1,366)
Cash and due from banks at beginning of year 13,578 10,482 11,848
----------------------------------------
Cash and Due from Banks at End of Year $14,312 $13,578 $10,482
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 51
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Changes in Stockholders' Equity BankAmerica Corporation and Subsidiaries
Year Ended December 31
----------------------------------------
(in millions) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred Stock
Balance, beginning of year $ 3,068 $ 2,979 $ 2,979
Preferred stock issued -- 389 --
Preferred stock repurchased (197) (300) --
Convertible preferred stock converted to common stock (248) -- --
----------------------------------------
Balance, end of year 2,623 3,068 2,979
Common Stock
Balance, beginning of year 581 560 545
Common stock issued 21 21 15
----------------------------------------
Balance, end of year 602 581 560
Additional Paid-In Capital
Balance, beginning of year 7,743 7,118 6,690
Common stock issued 594 623 428
Preferred stock issued -- 26 --
Preferred stock repurchased (9) (24) --
----------------------------------------
Balance, end of year 8,328 7,743 7,118
Retained Earnings
Balance, beginning of year 7,854 6,502 5,283
Net income 2,664 2,176 1,954
Common stock dividends (684) (571) (497)
Preferred stock dividends (227) (248) (241)
Foreign currency translation adjustments,
net of related income taxes (1) (5) 3
----------------------------------------
Balance, end of year 9,606 7,854 6,502
Net Unrealized Gain (Loss) on Available-for-Sale Securities
Balance, beginning of year (326) -- --
Effect of adoption of SFAS No. 115, net of related income taxes -- (15) --
Valuation adjustments, net of related income taxes 327 (311) --
----------------------------------------
Balance, end of year 1 (326) --
Common Stock in Treasury, at Cost
Balance, beginning of year (29) (15) (9)
Treasury stock purchased (926) (503) --
Treasury stock issued 29 489 --
Other (12) -- (6)
----------------------------------------
Balance, end of year (938) (29) (15)
----------------------------------------
Total Stockholders' Equity $20,222 $18,891 $17,144
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
52 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
1. Significant Accounting Policies
The consolidated financial statements of BankAmerica Corporation and
subsidiaries (BAC) are prepared in conformity with generally accepted accounting
principles and prevailing practices of the banking industry. The statements also
reflect specialized industry accounting practices of certain nonbanking
subsidiaries that may differ from those used by banking subsidiaries. The
following is a summary of the significant accounting and reporting policies used
in preparing the consolidated financial statements.
Financial Statement Presentation
The consolidated financial statements of BAC include the accounts of BankAmerica
Corporation (the parent) and companies in which more than 50 percent of the
voting stock is owned directly or indirectly by the parent, including Bank of
America NT&SA (the bank), Bank of America Illinois, Seattle-First National Bank
(SFNB), and other banking and nonbanking subsidiaries. The revenues, expenses,
assets, and liabilities of the subsidiaries are included in the respective line
items in the consolidated financial statements after elimination of intercompany
accounts and transactions.
BAC's results of operations reflect the effects of the merger with
Continental Bank Corporation (Continental) subsequent to its consummation on
August 31, 1994.
The consolidated statement of cash flows explains the change in cash and
due from banks as disclosed in the consolidated balance sheet. The cash flows
from hedging transactions are classified in the same category as the cash flows
from the items being hedged.
Certain amounts in prior periods have been reclassified to conform to the
current presentation.
Use of Estimates in the Preparation of Financial Statements
The preparation of the consolidated financial statements of BAC requires
management to make estimates and assumptions that affect reported amounts. These
estimates are based on information available as of the date of the financial
statements. Therefore, actual results could differ from those estimates.
Trading Account Assets
Trading account assets, which are generally held for the short term in
anticipation of market gains and for resale, are carried at their fair value.
Realized and unrealized gains and losses on trading account assets are included
in trading income.
Available-for-Sale and Held-to-Maturity Securities
BAC's securities portfolios include U.S. Treasury and other government agency
securities, mortgage-backed securities, state, county, municipal, and foreign
government securities, equity securities and corporate debt securities.
Effective January 1, 1994, BAC adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," (SFAS No. 115). SFAS No. 115 permits debt securities for which BAC
has the positive intent and ability to hold to maturity to be classified as
held-to-maturity and reported at amortized cost. Debt securities that BAC may
not hold to maturity and marketable equity securities are classified as
available-for-sale securities if they are not considered to be part of trading-
related activities. Available-for-sale securities are reported at their fair
values, with unrealized gains and losses reported on a net-of-tax basis as a
separate component of stockholders' equity. Prior to the adoption of SFAS No.
115, available-for-sale securities were carried at the lower of amortized cost
or market value. Prior period amounts have not been restated since SFAS No. 115
does not allow retroactive application.
Dividend and interest income, including amortization of premiums and
accretion of discounts, for both securities portfolios are included in interest
income.
Realized gains and losses generated from sales of available-for-sale
securities are recorded in net gain on available-for-sale securities and are
computed using the specific identification method. Any decision to sell
available-for-sale securities would be based on various factors, including
movements in interest rates, changes in the maturity mix of BAC's assets and
liabilities, liquidity demands, regulatory capital considerations, and other
similar factors.
Loans
Loans are generally carried at the principal amount outstanding net of unearned
discounts. Interest income on discounted loans is generally recognized using
methods that approximate the interest method, which provides a level rate of
return over a loan's term.
Loans, in addition to those originated or acquired with the intent to sell,
may be sold prior to maturity due to various economic factors, including
significant movements in interest rates, changes in the maturity mix of BAC's
assets and liabilities, liquidity demands, regulatory capital considerations,
and other similar factors. These loans are recorded at the lower of cost or fair
value when they are identified as being held for sale. The fair value of loans
being held for sale represents the cash price anticipated to be received in a
current sale.
<PAGE>
BankAmerica Corporation 1995 / 53
- --------------------------------------------------------------------------------
Loans are generally placed on nonaccrual status when full payment of
principal or interest is in doubt, or when they are past due 90 days as to
either principal or interest. The past due period for nonaccrual status is 180
days for residential real estate loans and certain consumer loans that are
collateralized by junior mortgages on residential real estate. Senior management
may grant a waiver from nonaccrual status if a past due loan is well secured and
in the process of collection. A nonaccrual loan may be restored to accrual
status when all principal and interest amounts contractually due, including
arrearages, are reasonably assured of repayment within a reasonable period, and
there is a sustained period of payment performance by the borrower in accordance
with the contractual terms of the loan.
When a loan is placed on nonaccrual status, interest accrued but not
received is reversed against interest income. If management determines that
ultimate collectibility of principal is in doubt, cash receipts on nonaccrual
loans are applied to reduce the principal balance.
BAC provides equipment financing to its customers through a variety of
lease arrangements. Direct financing leases are carried at the aggregate of
lease payments receivable plus estimated residual value less unearned income.
Unearned income on direct financing leases is amortized over the lease terms by
methods that approximate the interest method. Leveraged leases, which are a form
of financing lease, are carried net of nonrecourse debt. Unearned income on
leveraged leases is amortized over the lease terms by methods that approximate
the interest method.
Allowance for Credit Losses
The allowance for credit losses is a reserve for estimated credit losses and
other credit-related charges. Actual credit losses and other charges, net of
recoveries, are deducted from the allowance for credit losses. Other charges to
the allowance include amounts related to loans and loans of subsidiaries and
operations that were transferred to other assets. In addition, the difference
between the carrying value of restructuring country assets sold or swapped and
the fair value of assets received is charged to the allowance. A provision for
credit losses, which is a charge against earnings, is added to the allowance
based on a quarterly assessment of the portfolio. While management has
attributed reserves to various portfolio segments, the allowance is general in
nature and is available for the credit portfolio in its entirety.
Effective January 1, 1995, BAC adopted Statement of Financial Accounting
Standards No. 114 , "Accounting by Creditors for Impairment of a Loan," as
amended (SFAS No. 114), which requires loans to be measured for impairment using
one of three methods when it is probable that all amounts, including principal
and interest, will not be collected in accordance with the contractual terms of
the loan agreement. The amount of impairment and any subsequent changes are
recorded through the provision for credit losses as an adjustment to the
allowance for credit losses. SFAS No. 114 applies to all loans, whether
collateralized or uncollateralized, except for large groups of smaller-balance,
homogeneous loans that are collectively evaluated for impairment (domestic
consumer nonaccrual loans), loans that are measured at fair value or at the
lower of cost or fair value, leases, and debt securities. In addition, BAC
excludes loans to foreign governments and official institutions from the scope
of SFAS No. 114, as these loans are collectively evaluated and reserves are
established based upon allocated transfer risk reserve factors. Finally, loans
restructured prior to the effective date of SFAS No. 114 that are performing in
accordance with their restructured terms are not evaluated for impairment under
SFAS No. 114.
As required by SFAS No. 114, BAC generally measures impairment based upon
the present value of a loan's expected future cash flows, except where
foreclosure or liquidation is probable or when the primary source of repayment
is provided by real estate collateral. In these circumstances, impairment is
measured based upon the fair value of the collateral less estimated selling and
disposal costs. The present value of a loan's expected future cash flows is
calculated using the loan's effective interest rate based on the original
contractual terms. In addition, when quoted market prices are available,
impairment is based on the loan's observable market value less estimated selling
and disposal costs. Generally, BAC evaluates a loan for impairment in accordance
with SFAS No. 114 when it is placed on nonaccrual status and a portion is
internally risk rated as substandard or doubtful. Substantially all of BAC's
impaired loans are on nonaccrual status.
The adoption of SFAS No. 114 had no impact on the overall allowance for
credit losses and did not affect BAC's charge-off or income recognition
policies.
Premises and Equipment
Premises, equipment, and leasehold improvements are carried at cost, less
accumulated depreciation and amortization computed on a straight-line basis over
the estimated useful lives of the assets or the terms of the leases. Net gains
and losses on disposal or retirement of premises and equipment are included in
net gain on sales of assets.
<PAGE>
54 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Other Real Estate Owned
Other real estate owned (OREO), which is recorded in other assets, includes
properties acquired through foreclosure or in full or partial satisfaction of
the related loan, as well as properties that are nonperforming acquisition,
development, and construction arrangements. OREO also includes loans where BAC
has obtained physical possession of the related collateral.
OREO is carried at the lower of fair value, net of estimated selling and
disposal costs, or cost. Fair value adjustments are made at the time that real
estate is acquired through foreclosure or when full or partial satisfaction of
the related loan is received. These fair value adjustments are treated as credit
losses. Changes in estimated selling and disposal costs, routine holding costs,
subsequent declines in fair values, and net gains or losses on disposal of
properties classified as OREO are included in other expense as incurred.
Goodwill and Identifiable Intangibles
Goodwill represents the excess of the purchase price over the estimated fair
value of identifiable net assets associated with BAC's merger and acquisition
transactions. Goodwill is amortized on a straight-line basis over 25 years.
Core deposit intangibles (CDI) represent the intangible value of depositor
relationships resulting from deposit liabilities assumed in acquisitions and are
amortized using an accelerated method based on the expected runoff of the
related deposits. Other identifiable intangibles consist primarily of credit
card intangibles (CCI), and, prior to the adoption of SFAS No. 122 as discussed
below, purchased mortgage servicing rights (PMSR). CCI represents the intangible
value of credit card customer relationships resulting from customer balances
acquired. PMSR represented the intangible value of purchased rights to service
mortgage loans. Other identifiable intangibles are amortized using accelerated
methods over their estimated periods of benefit.
Goodwill and identifiable intangibles are assessed quarterly for other-
than-temporary impairment. Should such an assessment indicate that the value of
goodwill may be impaired, an evaluation of the recoverability would be performed
prior to any writedown of the assets. If the net book value of identifiable
intangibles were to exceed their respective undiscounted future net cash flows,
identifiable intangibles would be written down to their respective undiscounted
future net cash flows.
Mortgage Servicing Rights
Effective October 1, 1995, BAC adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights" (SFAS No. 122),
which amended Statement of Financial Accounting Standards No. 65, "Accounting
for Certain Mortgage Banking Activities." SFAS No. 122 requires that mortgage
servicing rights (MSR) be capitalized when acquired either through the purchase
or origination of mortgage loans that are subsequently sold or securitized with
the servicing rights retained and when the relative fair values of the loans and
the related MSR can be estimated. Prior to the adoption of SFAS No. 122, BAC
capitalized only PMSR.
SFAS No. 122 requires an enterprise, on a periodic basis, to assess the
capitalized MSR for impairment based on the fair value of those rights. For this
analysis, SFAS No. 122 requires an entity to stratify its MSR based on one or
more predominant risk characteristics and any resulting impairment is to be
recognized through a valuation allowance for each impaired stratum.
For purposes of measuring impairment, BAC stratifies its MSR by loan type,
investor type, and interest rate for those rights acquired after the adoption of
SFAS No. 122 and by acquisition date for those rights acquired prior to its
adoption. The MSR are included in other assets and are amortized as an offset to
other fees and commissions in proportion to and over the period of estimated net
servicing income not to exceed 15 years. The adoption of SFAS No. 122 did not
have a material effect on BAC's financial position or results of operations.
Investments in Affiliates, Joint Ventures, and Other Entities
Investments in affiliates, joint ventures, and other entities are recorded in
other assets. Investments in affiliates, which are generally 20-to-50-percent-
owned companies, and joint ventures are generally accounted for by the equity
method. BAC's share of net income or loss from these investments is recorded in
other income. Gains or losses resulting from issuances of stock by an equity
affiliate that change BAC's percentage of ownership are recognized at the issue
date and are recorded in other income. Dividends are recorded as a reduction of
the carrying value of the investment when received.
Investments in other entities (less-than-20-percent-owned companies) are
generally carried at cost less writedowns for declines in value judged to be
other than temporary. These valuation losses are recorded in other income when
incurred. Dividends are recorded in other income when received.
Offsetting of Amounts Related to Certain Contracts
Unrealized gains on forward, swap, option, and other conditional or exchange
contracts are recorded as assets and unrealized losses on these contracts are
recorded as liabilities for trading instruments. However, unrealized gains and
losses with the same counterparty may be netted when contracts are executed
under legally enforceable master netting agreements. BAC nets unrealized gains
and losses on these contracts to the extent allowed.
Foreign Exchange and Derivatives Contracts
BAC uses foreign exchange and derivatives contracts in both its trading and
asset and liability management activities.
<PAGE>
BankAmerica Corporation 1995 / 55
- --------------------------------------------------------------------------------
Trading Activities
Interest rate derivative contracts, primarily swaps, and foreign exchange
contracts, which include spot, futures, forward, swap, and option positions used
in BAC's trading activities are carried at market value. The resulting realized
and unrealized gains and losses are recognized in trading income.
Asset and Liability Management Activities
BAC uses various types of derivative contracts to manage interest rate and
foreign currency exposures. When these instruments meet certain criteria, they
qualify for hedge accounting treatment and are accounted for either on a
deferral, accrual, or mark-to-market basis, depending on the nature of BAC's
hedge strategy and the method used to account for the hedged item. Examples of
hedge criteria include demonstrating how the hedge will reduce risk, identifying
the specific asset, liability, or firm commitment being hedged, and citing the
time horizon being hedged. On an ongoing basis, hedge effectiveness tests (e.g.,
correlation tests) must be performed to determine if an instrument meets the
objectives of the hedge strategy and for hedge accounting to continue.
Under deferral and accrual accounting, if at any time the derivative
contract no longer qualifies for hedge accounting treatment, it must be marked
to market on a prospective basis. Any deferred gain or loss (or unrealized gain
or loss) is amortized over the original hedge period. Similarly, gains and
losses on terminated hedging instruments are accounted for in this manner. If
the item being hedged is sold, hedge accounting is terminated. Any deferred or
unrealized amounts are treated as part of the carrying value of the item being
hedged and, therefore, considered in calculating the gain or loss on the sold
item. If the related derivative contract is not terminated, it must be marked to
market on a prospective basis.
Deferral Accounting - BAC accounts for derivative financial instruments on a
deferral basis when the market value of the hedging instrument fulfills the
objectives of the hedge strategy, and the carrying value of the hedged item is
other than fair value.
Interest Rate Contracts - Under deferral accounting, for hedges of existing
assets or liabilities, realized and unrealized gains and losses on the
hedging instrument are recorded as an adjustment to the carrying value of
the hedged item and amortized to the interest income or expense account
related to the hedged item.
BAC accounts for futures and forward rate agreements on a deferral
basis. Deferred gains and losses are reported as adjustments to the
carrying values of loans, deposits, and long-term debt. The amortization of
these deferred gains and losses is reported in the corresponding interest
income and interest expense accounts.
Initial margin deposits for exchange-traded instruments are reported
in other assets. Fees and commissions received or paid are deferred and
recognized as an adjustment to the carrying value of the hedged item,
consistent with the recognition of gains and losses on the hedging
instrument.
Foreign Exchange Contracts - Realized and unrealized gains and losses on
instruments that hedge firm commitments are deferred and included in the
measurement of the subsequent transaction; however, losses are deferred
only to the extent of expected gains on the future commitment. Fees and
commissions received or paid related to firm commitments are included in
the measurement of the transaction when it occurs.
Accrual Accounting - BAC accounts for derivative financial instruments on an
accrual basis when the cash flows generated from the hedging instrument fulfill
the objectives of the hedge strategy.
Under accrual accounting, interest income or expense on the hedging
instrument is accrued and recorded as an adjustment to the interest income or
expense related to the hedged item. BAC accounts for certain interest rate swaps
and purchased interest rate option contracts (caps and floors) on an accrual
basis. Interest income or expense on derivative financial instruments accounted
for using accrual accounting are reported in interest income-loans, interest
expense-deposits, and interest expense-long-term debt.
Initial margin deposits for exchange-traded instruments are reported in
other assets. Fees and commissions received or paid on interest rate swaps are
deferred and amortized as an adjustment to the interest income or expense
related to the hedged item over the term of the swap. Premiums paid for interest
rate options are deferred as a prepaid expense and are amortized to interest
income or expense over the term of the cap or floor.
Mark-to-Market Accounting - BAC accounts for derivative financial instruments on
a mark-to-market basis when the market value of the hedging instrument fulfills
the objectives of the hedge strategy, and the carrying value of the hedged item
is fair value.
Under mark-to-market accounting, realized and unrealized gains and losses
on the hedging instrument are reflected in the line items being hedged and
recognized when they occur in conjunction with the gains and losses on the
hedged item.
BAC accounts for certain interest rate swaps designated as hedges of
available-for-sale securities on a mark-to-market basis. The accrual of interest
payable and interest receivable on these interest rate swaps are reported in
interest income-available-for-sale securities. Changes in the market values of
these interest rate swaps, exclusive of net interest accruals, are reported in
stockholders' equity on a net-of-tax basis.
<PAGE>
56 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Foreign Currency Translation
Assets, liabilities, and operations of foreign branches and subsidiaries are
recorded based on the functional currency of each entity. For the majority of
the foreign operations, the functional currency is the local currency, in which
case the assets, liabilities, and operations are translated, for consolidation
purposes, at current exchange rates from the local currency to the reporting
currency, the U.S. dollar. The resulting gains or losses are reported as a
component of retained earnings within stockholders' equity on a net-of-tax
basis. In certain other instances, including hyperinflationary economies, the
functional currency used to measure the financial statements of a foreign entity
is the U.S. dollar. In these instances, the resulting gains and losses are
included in trading income, except for those of units in hyperinflationary
economies, which are included in other income.
Provision for Income Taxes
The parent files a consolidated U.S. federal income tax return and consolidated
or combined returns for certain states, including California. State, local, and
foreign income tax returns are filed according to the taxable activity of each
unit.
The liability method of accounting is used for income taxes. Under the
liability method, deferred tax assets and liabilities are recognized for the
expected future tax consequences of existing differences between financial
reporting and tax reporting bases of assets and liabilities, as well as for
operating losses and tax credit carryforwards, using enacted tax laws and rates.
Deferred tax expense represents the net change in the deferred tax asset or
liability balance during the year. This amount, together with income taxes
currently payable or refundable for the current year, represents the total
income tax expense for the year.
2. Nature of Operations
BAC, through its banking and other subsidiaries, provides banking and other
financial services throughout the United States and in selected international
markets to consumers and business customers, including corporations,
governments, and other institutions. BAC manages its operations through five
major business sectors -- Consumer Banking, U.S. Corporate and International
Banking, Commercial Real Estate, Middle Market Banking, and Private Banking and
Investment Services, ranked, for the purpose of the following discussion, in
order of their contribution to net income.
Consumer Banking provides a full array of deposit and loan products to
individuals and small businesses through branches, ATMs, phones, and other
delivery channels throughout ten western states and through in-store ATMs in the
Chicago metropolitan area. It also provides credit card, home mortgage,
manufactured housing financing, and consumer finance products throughout the
United States, and a range of consumer banking products and services in Hong
Kong, India, Taiwan, Singapore, and the Philippines.
U.S. Corporate and International Banking provides capital-raising services,
trade finance, cash management, investment banking, capital markets products,
and financial advisory services to large public-and private-sector institutions
that are part of the global economy, through offices in 37 countries in North
and South America, Asia, Europe, Africa, and the Middle East.
The Commercial Real Estate group provides credit and other financial
services to a variety of real estate market segments, including developers,
investors, pension fund advisors, real estate investment trusts, and property
managers. Local clients are served through offices across California and in ten
other states. National clients, such as publicly traded corporations and private
entities, are served through offices in California and Chicago.
Middle-Market Banking provides a full range of financial products and
services to companies with annual revenues between $5 million and $250 million.
BAC serves middle-market customers throughout the West and in the Midwest.
The Private Bank provides a broad range of banking, personal trust, and
investment services to high-net-worth clients worldwide who require specialized
personal services. Investment Services encompasses BAC's investment management,
brokerage, and mutual fund activities. The two businesses use BAC's domestic
network of branches and other delivery points, securities brokers, international
offices, and correspondent banking relationships throughout the world to address
the wealth management needs of their customers.
3. Merger with Continental Bank Corporation
On August 31, 1994, Continental was merged with and into the parent, and
Continental's principal subsidiary, Continental Bank, was renamed Bank of
America Illinois. Each outstanding share of Continental's common stock was
converted into either 0.7993 of a share of the parent's common stock or $38.297
in cash. In connection with the Continental merger, the parent issued 21.5
million shares of common stock valued at $985 million on January 27, 1994, the
day preceding the announcement of the merger. The 21.5 million shares issued
included 11.8 million shares of treasury stock purchased in anticipation of the
merger at an average per-share price of $42.43. The aggregate amount of cash
paid to Continental common stockholders was approximately $950 million.
In addition, each outstanding share of Continental's Adjustable Rate
Preferred Stock, Series 1 and Adjustable Rate
<PAGE>
BankAmerica Corporation 1995 / 57
- --------------------------------------------------------------------------------
Cumulative Preferred Stock, Series 2 was converted upon consummation of the
Continental merger, into one share of the parent's Adjustable Rate Preferred
Stock, Series 1 (Preferred Stock, Series 1) and Adjustable Rate Cumulative
Preferred Stock, Series 2 (Preferred Stock, Series 2), respectively, having
substantially the same terms. The parent's preferred stock issued in connection
with the Continental merger was valued at $415 million, based on market factors
as of January 27, 1994. On December 5, 1994, the Preferred Stock, Series 2 was
redeemed by the parent. On May 31, 1995, the parent redeemed its Preferred
Stock, Series 1. Refer to Note 15 of the Notes to Consolidated Financial
Statements on pages 64 and 65 for further information on these redemptions.
Continental was a Delaware corporation organized in 1968 and was registered
as a bank holding company under the Bank Holding Company Act of 1956, as
amended, and the Illinois Bank Holding Company Act of 1957. Continental provided
an extensive range of commercial banking and financial services, primarily in
the Midwest, but also throughout the United States and in various overseas
markets.
The Continental merger was recorded by the parent during the third quarter
of 1994 using the purchase method of accounting in accordance with Accounting
Principles Board Opinion (APB) No. 16, "Business Combinations." Under this
method of accounting, the purchase price was allocated to assets acquired and
liabilities assumed based on their estimated fair values at consummation.
Merger-related expenses of $50 million were accrued during 1994 to reflect
management's best estimate of separation and benefits costs related to pre-
merger BAC employees, employment assistance costs for separated employees of
pre-merger BAC, and other expenses of pre-merger BAC associated with the
Continental merger.
Unaudited Pro Forma Combined Summary of Operations
The following table presents an unaudited pro forma combined summary of
operations of BAC and Continental for the years ended December 31, 1994 and
1993. The Unaudited Pro Forma Combined Summary of Operations is presented as if
the Continental merger had been effective January 1, 1993.
This information combines the historical results of operations of BAC and
Continental after giving effect to amortization of purchase accounting
adjustments. This summary excludes an $80 million cumulative effect of
accounting change for income taxes recognized by Continental for the year ended
December 31, 1993.
The Unaudited Pro Forma Combined Summary of Operations is based on BAC's
historical results of operations for the year ended December 31, 1994, which
included com-
- --------------------------------------------------------------------------------
Unaudited Pro Forma Combined Summary of Operations
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Year Ended December 31
------------------------
(dollar amount in millions, except per share data) 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Summary of Operations
Interest income $13,152 $12,755
Interest expense 5,298 4,803
------------------------
Net interest income 7,854 7,952
Provision for credit losses 520 984
------------------------
Net interest income after provision
for credit losses 7,334 6,968
Noninterest income 4,485 4,913
Noninterest expense 7,951/a/ 8,178
------------------------
Income before income taxes 3,868 3,703
Provision for income taxes 1,606 1,587
------------------------
Net Income $ 2,262 $ 2,116
Earnings per common and common
equivalent share $ 5.32 $ 4.84
Earnings per common and common
equivalent share-assuming full dilution 5.29 4.81
- -----------------------------------------------------------------------------------------
</TABLE>
/a/ Merger-related expenses, as described above, of $50 million have been
eliminated from the combined historical results of operations, as these
expenses do not represent ongoing expenses of BAC.
- --------------------------------------------------------------------------------
bined operations from the Continental merger date forward. Accordingly, BAC's
earnings for the period September 1, 1994 through December 31, 1994 included
revenues and expenses related to former Continental operations, as well as the
amortization of purchase accounting adjustments, such as fair value adjustments,
goodwill, and identifiable intangibles.
The combined historical results of operations of BAC and Continental were
adjusted to reflect the amortization of the fair value adjustments and other
purchase accounting adjustments recorded in connection with the Continental
merger, including those related to available-for-sale securities, loans,
goodwill, identifiable intangibles, deposits, and long-term debt. Amortization
was calculated based on the methods and periods of benefit determined
appropriate by management. The historical income statement information for the
year ended December 31, 1993 was adjusted to include amortization for the full
period.
The Unaudited Pro Forma Combined Summary of Operations is intended for
informational purposes only and is not necessarily indicative of the future
results of operations of BAC, or of the results of operations of BAC that would
have occurred had the Continental merger been in effect for the full years
presented.
Primary and fully diluted pro forma combined earnings per common share for
the years ended December 31, 1994 and 1993 were calculated based on pro forma
combined net income,
<PAGE>
58 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
less the sum of actual preferred dividends paid by BAC and Continental during
each of the years. Actual average common and common equivalent shares
outstanding and average common shares outstanding assuming full dilution for the
quarter ended December 31, 1994 were used to approximate the same information
for the full year ended December 31, 1994 as if the Continental merger had taken
place on January 1, 1993. The share amounts used to calculate primary and fully
diluted pro forma combined earnings per common share for the year ended December
31, 1993 were determined as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(in millions) Primary Fully Diluted
- --------------------------------------------------------------------------------
<S> <C> <C>
Actual average number of common
and common equivalent shares
outstanding for BAC for
the year ended December 31, 1993 358 363
Common shares issued in connection
with the Continental merger 22 22
Continental's common stock
equivalents for the year ended
December 31, 1993 1 1
-------------------------
381 386
- --------------------------------------------------------------------------------
</TABLE>
4. Supplemental Disclosure of Cash Flow Information
During the years ended December 31, 1995, 1994, and 1993, BAC made interest
payments on deposits and other interest-bearing liabilities of $7,361 million,
$4,422 million, and $4,185 million, respectively, and made net income tax
payments of $1,342 million, $785 million, and $156 million, respectively.
During the years ended December 31, 1995, 1994, and 1993, there were
foreclosures of loans with carrying values of $520 million, $493 million, and
$752 million, respectively. Loans made to facilitate the sale of OREO totaled
$8 million, $29 million, and $27 million during the years ended December 31,
1995, 1994, and 1993, respectively.
During the year ended December 31, 1993, BAC securitized residential first
mortgages of $132 million, and transferred them to available-for-sale
securities. No residential first mortgages were securitized and transferred to
available-for-sale securities during 1994 or 1995.
5. Restrictions on Cash and Due from Banks
BAC's banking subsidiaries are required to maintain reserves with the Federal
Reserve Bank. Reserve requirements are based on a percentage of deposit
liabilities. The average reserves required for 1995 and 1994 were $3,851
million and $4,204 million, respectively.
6. Available-For-Sale and Held-to-Maturity Securities
The following is a summary of available-for-sale and held-to-maturity
securities:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Available-for-Sale Securities
-----------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(in millions) Cost Gains Losses Value
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1995
U.S. Treasury and other
government agency
securities $ 1,775 $ 36 $ 1 $ 1,810
Mortgage-backed securities 6,671 98 20 6,749
Foreign governments/a/ 2,970 18 265 2,045
Equity securities 183 114 -- 297
Corporate and other debt
securities/a/ 443 21 -- 1,142
----------------------------------------------------
$12,042 $287 $286 $12,043
December 31, 1994
U.S. Treasury and other
government agency
securities $ 2,275 $ 35 $ 88 $ 2,222
Mortgage-backed securities 5,537 15 279 5,273
Foreign governments/a/ 1,747 234 503 1,478
Equity securities 186 62 20 228
Corporate and other debt
securities/a/ 648 9 9 648
----------------------------------------------------
$10,393 $355 $899 $ 9,849
<CAPTION>
Held-to-Maturity Securities
----------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(in millions) Cost Gains Losses Value
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1995
U.S. Treasury and other
government agency
securities $ 66 $-- $ -- $ 66
Mortgage-backed securities 2,481 48 2 2,527
State, county, and
municipal securities 467 16 4 479
Foreign governments/a/ 1,182 -- 377 805
Corporate and other debt
securities/a/ 460 15 20 455
----------------------------------------------------
$4,656 $79 $403 $4,332
December 31, 1994
U.S. Treasury and other
government agency
securities $ 431 $ 1 $ 3 $ 429
Mortgage-backed securities 4,753 19 333 4,439
State, county, and
municipal securities 478 4 17 465
Foreign governments/a/ 2,181 2 541 1,642
Corporate and other debt
securities/a/ 324 2 9 317
----------------------------------------------------
$8,167 $28 $903 $7,292
- ----------------------------------------------------------------------------------------
</TABLE>
/a/ Securities for which no market values were available are stated at cost or
appraised value as deemed appropriate by management.
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 59
- --------------------------------------------------------------------------------
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 SFAS No. 115. 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).
During 1994, as a result of the Continental acquisition, $2.5 billion of
BAC's held-to-maturity securities were transferred to available-for-sale
securities to enable BAC to maintain its pre-merger interest rate risk position.
As a result of this transfer, gross unrealized losses of $145 million and gross
unrealized gains of $22 million were recorded in available-for-sale securities
and in stockholders' equity (on a net-of-tax basis).
During the year ended December 31, 1995, BAC sold available-for-sale
securities for aggregate proceeds of $2,509 million, resulting in gross realized
gains of $268 million and gross realized losses of $234 million. During the year
ended December 31, 1994, BAC sold available-for-sale securities for aggregate
proceeds of $3,019 million, resulting in gross realized gains of $94 million and
gross realized losses of $70 million. During the year ended December 31, 1993,
BAC sold available-for-sale securities for aggregate proceeds of $2,018 million,
resulting in gross realized gains of $61 million and no gross realized losses.
The following is a summary of the contractual maturities of available-for-
sale debt securities at December 31, 1995. These amounts exclude equity
securities, which have no contractual maturities:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amortized Fair
(in millions) Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 1,734 $ 1,737
Due after one year through five years 2,001 2,031
Due after five years through ten years 584 532
Due after ten years 7,540 7,446
---------------------------------
$11,859 $11,746
- --------------------------------------------------------------------------------
</TABLE>
The following is a summary of the contractual maturities of held-to-
maturity securities at December 31, 1995:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amortized Fair
(in millions) Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 319 $ 317
Due after one year through five years 394 403
Due after five years through ten years 336 349
Due after ten years 3,607 3,263
---------------------------------
$4,656 $4,332
- --------------------------------------------------------------------------------
</TABLE>
Issuers may have the right to call or prepay obligations with or without
call or prepayment penalties. This right may cause actual maturities to differ
from the contractual maturities summarized in the previous tables.
Assets, primarily trading, available-for-sale, and held-to-maturity
securities, with carrying values of $10,461 million and $11,116 million at
December 31, 1995 and 1994, respectively, were pledged to collateralize U.S.
government and public deposits, trust and other deposits, and repurchase
agreements.
During the year ended December 31, 1995, trading income included a net
unrealized holding gain on trading securities of $37 million. During the year
ended December 31, 1994, trading income included a net unrealized holding loss
on trading securities of $25 million. These amounts exclude the net unrealized
trading results of the parent's securities broker and dealer subsidiaries.
In connection with the January 1, 1994 adoption of SFAS No. 115, $5.6
billion of held-to-maturity securities with a fair value of $5.7 billion were
transferred to available-for-sale securities. In addition, debt restructuring
par bonds and other instruments were transferred during the first quarter of
1994 from loans to available-for-sale and held-to-maturity securities with
carrying values of $1.3 billion and $1.2 billion, respectively, and fair values
of $1.0 billion each immediately prior to the transfer.
7. Other Debt Restructurings
Not included in restructured loans as described in Note 8 of the Notes to
Consolidated Financial Statements on pages 60 and 61 were other debt
restructurings totaling $1,657 million and $2,230 million at December 31, 1995
and 1994, respectively, with countries experiencing liquidity problems. These
amounts include securities and loans received in connection with formal debt
restructurings. Beginning in the first quarter
<PAGE>
60 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
of 1994, the majority of these instruments were classified as either available-
for-sale or held-to-maturity securities. Prior to January 1, 1994, these
instruments were classified as loans.
Included in other debt restructurings at December 31, 1995 and 1994, were
$1,416 million and $1,624 million, respectively, of par bonds issued by the
governments of Mexico and Venezuela in 1990, and Uruguay in 1991. The face
values of these par bonds at December 31, 1995 and 1994 were $1,632 million and
$2,129 million, respectively. The majority of the Mexican par bonds have a fixed
annual interest rate of 6.25 percent, and the Venezuelan and Uruguayan par bonds
each have fixed annual interest rates of 6.75 percent. The principal of these
par bonds is collateralized by zero-coupon U.S. Treasury securities, which at
maturity, will have redemption values equal to the face values of the par bonds.
The market value of the par bonds totaled $1,074 million at December 31, 1995.
The fair value of the U.S. Treasury securities collateralizing the principal of
the par bonds totaled $395 million at December 31, 1995.
Also included in other debt restructurings at December 31, 1994, were bonds
issued by the government of Brazil with a face value of $611 million. These
bonds had a carrying value and fair value of $358 million. The majority of these
bonds were obtained on April 15, 1994 when BAC exchanged then-existing Brazilian
medium- and long-term loans with an aggregate carrying value of $139 million and
an aggregate face value of $692 million plus past due accrued interest for
various bonds with a face value of $727 million. At December 31, 1994, Brazilian
bonds with face values totaling $247 million were collateralized by zero-coupon
U.S. Treasury securities, which at maturity, will have equivalent redemption
values. At December 31, 1994, the collateral had a fair value of approximately
$27 million. During 1995, these bonds were sold.
Included in the aggregate other debt restructurings discussed above were
$241 million and $248 million at December 31, 1995 and 1994, respectively,
related to other restructuring transactions with borrowers in Venezuela, Poland,
the Philippines, and Mexico. Interest income foregone on total other debt
restructurings was not significant in 1995 or 1994.
8. Loans
Loans are presented net of unearned income of $1,068 million and $777 million at
December 31, 1995 and 1994, respectively.
The following is a summary of loans:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
---------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Domestic
Consumer:
Residential first mortgages $ 36,572 $ 33,818
Residential junior mortgages 13,777 13,589
Other installment 13,834 10,598
Credit card 9,139 8,020
Other individual lines of credit 1,847 1,736
Other 319 403
---------------------
75,488 68,164
Commercial:
Commercial and industrial 32,745 28,814
Loans secured by real estate 10,975 10,277
Construction and development loans
secured by real estate 3,153 3,616
Financial institutions 2,834 2,872
Lease financing 1,927 1,814
Agricultural 1,737 1,840
Loans for purchasing or
carrying securities 1,458 1,529
Other 1,574 1,623
---------------------
56,403 52,385
---------------------
131,891 120,549
Foreign
Commercial and industrial 15,003 13,496
Banks and other financial institutions 3,386 2,516
Governments and official institutions 1,020 896
Other 4,073 3,455
---------------------
23,482 20,363
---------------------
$155,373 $140,912
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1995 / 61
- --------------------------------------------------------------------------------
The following is a summary of loans considered to be impaired in accordance
with SFAS No. 114 and the related interest income:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(in millions) December 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
Recorded investment in impaired loans not
requiring an allowance for credit losses as
determined in accordance with SFAS No. 114/a/ $ 610
Recorded investment in impaired loans
requiring an allowance for credit losses as
determined in accordance with SFAS No. 114 763
------------
Total recorded investment in impaired loans/b/ $1,373
<CAPTION>
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
Average recorded investment in impaired loans $1,361
Interest income recognized/c/ 80
- --------------------------------------------------------------------------------
</TABLE>
/a/ These loans do not require an allowance for credit losses as measured in
accordance with SFAS No. 114 since the values of the impaired loans equal or
exceed the recorded investments in the loans.
/b/ These amounts were evaluated for impairment using the following measurement
methods: $741 million was evaluated using the present value of the loan's
expected future cash flows method and $632 million was evaluated using the
fair value of the collateral.
/c/ All interest income recognized was recorded using the cash method of
accounting.
- --------------------------------------------------------------------------------
Restructured loans, excluding the other debt restructurings described in
Note 7 of the Notes to Consolidated Financial Statements on pages 59 and 60,
were $113 million and $97 million at December 31, 1995 and 1994, respectively.
Interest income foregone on these loans was not significant in 1995 or 1994.
Previously restructured loans of $37 million and $104 million were on
nonaccrual status at December 31, 1995 and 1994, respectively.
9. Allowance for Credit Losses
The following is a summary of changes in the allowance for credit losses. This
reconciliation reflects activity related to all loans. The allowance for credit
losses on impaired loans as measured in accordance with SFAS No. 114 was $274
million at December 31, 1995.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $3,690 $3,508 $3,921
Credit losses 1,011 988 1,599
Credit loss recoveries 422 518 484
---------------------------------------------
Net credit losses 589 470 1,115
Provision for credit losses 440 460 803
Allowance related to mergers
and acquisitions/a/ 3 241 12
Other net additions (deductions) 10 (49) (113)/b/
---------------------------------------------
Balance, End of Year $3,554 $3,690 $3,508
- --------------------------------------------------------------------------------
</TABLE>
/a/ Represents the addition of consummation date allowances for credit losses of
Arbor National Holdings, Inc. in 1995, Continental and Liberty Bank of $238
million and $3 million, respectively, in 1994, and First Gibraltar in 1993.
/b/ Due to the transfer of certain assets net of their related allowance to
other assets, the allowance for credit losses was reduced by $128 million.
The amount includes $88 million of regulatory-related allocated transfer
risk reserve.
- --------------------------------------------------------------------------------
10. Premises and Equipment
The following is a summary of premises and equipment:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
----------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Premises, including capitalized leases $2,919 $2,800
Equipment and furniture,
including capitalized leases 2,939 2,732
Leasehold improvements 863 795
Land 452 465
----------------------------
7,173 6,792
Less: Accumulated depreciation
and amortization 3,188 2,837
----------------------------
$3,985 $3,955
- --------------------------------------------------------------------------------
</TABLE>
Depreciation and amortization expense for the years ended December 31,
1995, 1994, and 1993 was $552 million, $489 million, and $461 million,
respectively.
<PAGE>
62 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
11. Long-Term Debt
BAC's fixed-rate long-term debt of $8,182 million at December 31, 1995 matures
through 2015. At December 31, 1995 and 1994, the interest rates on fixed-rate
long-term debt ranged from 4.55% to 11.50% and from 4.55% to 14.25%,
respectively. These obligations were denominated primarily in U.S. dollars. BAC
has entered into off-balance-sheet financial instruments, primarily interest
rate swaps, with notional amounts of approximately $3 billion at December 31,
1995, to change its interest rate exposure from fixed to floating rate. At
December 31, 1995 and 1994, the weighted average interest rates on fixed-rate
long-term debt, including the effects of interest rate swaps, were 7.69% and
8.00%, respectively.
BAC's floating-rate long-term debt of $6,541 million at December 31, 1995
matures through 2004. The majority of the floating rates are based on three- and
six-month London Interbank Offer Rate (LIBOR). At December 31, 1995 and 1994,
the interest rates on floating-rate long-term debt ranged from 5.37% to 7.80%
and from 4.79% to 7.17%, respectively. These obligations were denominated
primarily in U.S. dollars. BAC has entered into off-balance-sheet financial
instruments, primarily futures, with notional amounts of approximately $4
billion at December 31, 1995, to reduce the interest rate risk by shortening the
repricing profile on floating-rate debt that reprices within one year. At
December 31, 1995 and 1994, the weighted average interest rates on floating-rate
long-term debt were 6.10% and 6.27%, respectively. The effect of futures on
floating rate long-term debt interest rates was not material.
At December 31, 1995 and 1994, $37 million and $93 million, respectively,
of subsidiary long-term debt was guaranteed by the parent.
At December 31, 1995 and 1994, $4,304 million and $3,801 million,
respectively, of long-term debt was redeemable at par at the option of the
parent on dates ranging from March 15, 1996 through June 21, 2000.
At December 31, 1995, BAC had $2.0 billion available under a long-term line
of credit that expires in 1999.
The following is a summary of long-term debt (original maturities of more
than one year)/a/:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
----------------------------------------------------
1995 1994
----------------------------------------------------
Various Various
Fixed-Rate Floating-Rate
Debt Debt
(in millions) Obligations Obligations Total Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The parent
Senior Debt:
Due in 1995 $ -- $ -- $ -- $ 1,769
Due in 1996 801 211 1,012 1,489
Due in 1997 1,019 945 1,964 2,100
Due in 1998 268 1,190 1,458 1,369
Due in 1999 215 1,490 1,705 1,704
Due in 2000 16 1,415 1,431 166
Thereafter 308 325 633 158
----------------------------------------------------
2,627 5,576 8,203 8,755
Subordinated Debt:
Due in 1998 52 70 122 122
Due in 2000 409 -- 409 411
Thereafter 4,585 378 4,963 4,741
----------------------------------------------------
5,046 448 5,494 5,274
----------------------------------------------------
Total parent 7,673 6,024 13,697 14,029
Subsidiaries
Senior Debt:
Due in 1995 -- -- -- 92
Due in 1996 3 367 370 75
Due in 1997 23 66 89 89
Due in 1998 1 6 7 1
Due in 1999 -- 39 39 39
Due in 2000 -- 39 39 --
Thereafter 20 -- 20 27
----------------------------------------------------
47 517 564 323
Subordinated Debt:
Due in 1995 -- -- -- 9
Due in 1996 10 -- 10 9
Due in 1997 10 -- 10 10
Due in 1998 11 -- 11 11
Due in 1999 12 -- 12 12
Due in 2000 13 -- 13 13
Thereafter 406 -- 406 407
----------------------------------------------------
462 -- 462 471
----------------------------------------------------
Total subsidiaries 509 517 1,026 794
----------------------------------------------------
$8,182 $6,541 $14,723 $14,823
- --------------------------------------------------------------------------------
</TABLE>
/a/ Maturity distribution is based upon contractual maturities or earlier dates
due to call notices issued.
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 63
- --------------------------------------------------------------------------------
12. Subordinated Capital Notes
The following is a summary of subordinated capital notes recorded by the
parent/a/:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Floating Rate Notes due 1996 $248 $246
9.75% Notes Due 1999 258 261
Auction Rate Notes due 1999 99 98
------------------------
$605 $605
- --------------------------------------------------------------------------------
</TABLE>
/a/ These notes are subordinate to senior indebtedness of the parent and qualify
as Tier 2 risk-based capital under Federal Reserve Board guidelines for
assessing capital adequacy.
- --------------------------------------------------------------------------------
The Floating Rate Notes have interest rates that approximate LIBOR and are
subject to a minimum interest rate of 5.25%.
Effective May 18, 1993, the Auction Rate Notes bear interest as follows:
$68 million bears interest at a fixed rate of 4.99% per annum, while the
remaining $31 million bears interest at a floating rate of 0.50% over LIBOR per
annum through May 17, 1996. Thereafter, the Auction Rate Notes bear interest, at
the election of the holders, as to the final three-year period at either a fixed
rate determined by auction or a floating rate of 0.50% over LIBOR per annum.
At the option of the parent, the Floating Rate Notes and the Auction Rate
Notes may be exchanged for common stock, perpetual preferred stock, or other
capital securities acceptable to the Federal Reserve Board having a market price
equal to the principal amount of the notes or, under certain circumstances, may
be redeemed in whole or in part for cash. As of December 31, 1995, proceeds from
issuances of common and preferred stock of $600 million have been dedicated to
fully retire or redeem subordinated capital notes.
13. Stock Repurchase Program
During the first quarter of 1995, BAC's Board of Directors authorized a stock
repurchase program. This program enables the parent to buy back approximately
$1.9 billion of its common stock, $800 million of which may be repurchased in
one or more transactions by the end of 1996. During each quarter of 1995, 1996,
and 1997, the parent may also purchase additional amounts of common stock up to
the level of amortization of goodwill and core deposit intangibles for that
quarter (currently approximately $85 million per quarter) plus any unused
amounts from the previous four quarters. During the year ended December 31,
1995, the parent repurchased 16.6 million shares of its common stock in
connection with this program at an average per-share price of $53.83, which
reduced stockholders' equity by $894 million.
In addition, this program authorized the parent to buy back or redeem
approximately $500 million of its preferred stock by the end of 1996. During the
fourth quarter of 1995, BAC's Board of Directors modified the stock repurchase
program by authorizing a $250 million increase in the total amount of BAC's
outstanding preferred stock that may be repurchased or redeemed through the end
of 1996. During the year ended December 31, 1995, the parent repurchased and
redeemed preferred stock in connection with this program, reducing stockholders'
equity by $206 million.
<PAGE>
64 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
14. Preferred Share Purchase Rights and Common Stock Warrants
On April 11, 1988, the Board of Directors of the parent declared a dividend of
one preferred share purchase right (a Right) for each outstanding share of the
parent's common stock as of April 22, 1988 (the Rights Agreement). While the
Rights Agreement is in effect, every share of common stock issued before the
rights become effective also represents a right. Each Right entitles the holder
to buy from the parent, until the earlier of April 22, 1998 or the redemption of
the Rights, one one-hundredth of a share of Cumulative Participating Preferred
Stock, Series E, at an exercise price of $50.00 per Right (subject to
adjustment). The Rights will not be exercisable or transferable apart from the
parent's common stock until certain events occur pertaining to a person or group
acquiring or announcing the intention to acquire 20 percent or more of the
parent's outstanding common stock. Under specified circumstances, all of which
relate to a potential acquisition of the parent, a Right may: (i) become a right
to purchase shares of an acquiring company at half of the then-market price,
(ii) become a right to purchase the parent's common stock at half of the then-
market price or (iii) be exchanged by the parent for one share of common stock
or one one-hundredth of a share of Preferred Stock, Series E, or an equivalent
preferred share. The Board of Directors may redeem the Rights at a price of
$0.001 per Right (rounded as to each holder to the nearest $0.01) at any time
prior to the acquisition by a person or group of 20 percent or more of the
outstanding common stock of the parent. Under other specified conditions, the
Rights may be automatically redeemed. The Rights are excluded from the
computation of earnings per common share.
At December 31, 1995 and 1994, common stock warrants outstanding totaled
99,053 and 449,506, respectively. These warrants give the holder the right to
purchase shares of common stock of the parent at a price of $17.50 per share,
subject to adjustment in certain events, until expiration on October 22, 1997.
15. Preferred Stock
The parent is authorized to issue, in one or more series, 70,000,000 shares of
preferred stock. The parent's outstanding preferred shares are nonvoting except
in certain limited circumstances. Dividends are cumulative and are payable
quarterly on February 28, May 31, August 31, and November 30, except for the 11%
Preferred Stock, Series J, whose dividends are payable quarterly on March 31,
June 30, September 30, and December 31. The shares are redeemable at the option
of the parent during the redemption period and at the redemption price per share
noted in the following table plus accrued and unpaid dividends to the redemption
date. Holders of the preferred shares have dividend and liquidation preferences
senior to those of holders of the parent's common stock.
On September 30, 1995, the parent redeemed all 200,000 outstanding shares
of its 11% Preferred Stock, Series I. On May 31, 1995, the parent redeemed all
1,788,000 shares of its Adjustable Rate Preferred Stock, Series 1. During May
1995, the parent redeemed or converted all of the outstanding shares of its
6 1/2% Cumulative Convertible Preferred Stock, Series G. The terms of these
redemptions are summarized in the table on the next page.
<PAGE>
BankAmerica Corporation 1995 / 65
- --------------------------------------------------------------------------------
The following is a summary of preferred stock:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Dividend
Shares Outstanding at Stated Value Per Share Redemption Price
Preferred Stock Series Issued December 31, 1995 Per Share Per Annum Redemption Period Per Share
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cumulative Adjustable:
Series A 5,178,000 5,178,000 $50.00 $3.25/a/ On or after 11/30/87 $50.00
Series B 3,546,100 3,546,100 100.00 6.00/b/ On or after 2/28/88 100.00
Series 1 1,788,000 -- 50.00 3.75/c/ Redeemed 5/31/95 50.00
Series 2 3,000,000/d/ -- 100.00 9.00/e/ Redeemed 12/05/94 108.00
Cumulative Fixed:
9 5/8% Series F 7,250,000 7,250,000 25.00 2.41 On or after 4/16/96 25.00
9% Series H 11,250,000 11,250,000 25.00 2.25 On or after 1/15/97 25.00
11% Series I 200,000/f/ -- 500.00 55.00 Redeemed 9/30/95 527.50
11% Series J 400,000/f/ 400,000/f/ 500.00 55.00 On or after 3/31/96/g/ /g/
8 3/8% Series K 14,600,000 14,600,000 25.00 2.09 On or after 2/15/97 25.00
8.16% Series L 800,000/f/ 798,020/f/ 500.00 40.80 On or after 7/13/97 500.00
7 7/8% Series M 700,000/f/ 696,847/f/ 500.00 39.38 On or after 9/30/97 500.00
8 1/2% Series N 475,000/f/ 469,273/f/ 500.00 42.50 On or after 12/15/97 500.00
Cumulative Convertible Fixed:
6 1/2% Series G/h/ 5,000,000 -- 50.00 3.25 Redeemed or converted/i/ 51.95
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ For the Cumulative Adjustable Preferred Stock, Series A, the dividend is
adjusted quarterly, and is 2.0% lower than the highest of three U.S.
Treasury rates, but is no lower than 6.5% and no greater than 14.5% per
annum.
/b/ For the Cumulative Adjustable Preferred Stock, Series B, the dividend is
adjusted quarterly, and is 4.0% lower than the highest of three U.S.
Treasury rates, but is no lower than 6.0% and no greater than 12.0% per
annum.
/c/ For the Adjustable Rate Preferred Stock, Series 1, the dividend was
adjustable quarterly, and was 1.0% lower than the highest of three U.S.
Treasury rates, but was no lower than 7.5% and no greater than 13.5% per
annum.
/d/ 3,000,000 shares, represented by 12,000,000 depositary shares, each
corresponding to a one-fourth interest in a share of Preferred Stock, were
issued and redeemed in 1994.
/e/ For the Adjustable Rate Cumulative Preferred Stock, Series 2, the dividend
was adjustable quarterly, and was 1.1% higher than the highest of three U.S.
Treasury rates, but was no lower than 9% and no greater than 15.75% per
annum.
/f/ Represented by depositary shares, each corresponding to a one-twentieth
interest in a share of Preferred Stock.
/g/ The preferred shares may be redeemed on or after March 31, 1996 and prior to
March 31, 1997 at $527.50 per share (equivalent to $26.375 per depositary
share), and thereafter at prices declining to $500.00 per share (equivalent
to $25.00 per depositary share) on March 31, 2001 and thereafter.
/h/ The shares were convertible into common stock at any time, unless they had
been previously redeemed, at a conversion price of $45.60 per common share,
subject to adjustment under certain conditions.
/i/ On May 31, 1995, the parent redeemed all of the then-unconverted outstanding
shares of its 6 1/2% Cumulative Convertible Preferred Stock, Series G. On or
prior to the redemption date, 4,966,246 shares of the 4,998,357 outstanding
shares were converted to 5,445,439 shares of common stock. The remaining
32,111 shares were redeemed by the parent on May 31, 1995.
- --------------------------------------------------------------------------------
16. Lease Commitments
BAC leases certain premises and equipment under noncancelable agreements
expiring between the years 1996 and 2069.
The following is a summary of future minimum rental commitments for
noncancelable leases at December 31, 1995, which have not been reduced by
minimum sublease rental income of $13 million for capital leases and $64 million
for operating leases:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capital Operating
(in millions) Leases Leases
- --------------------------------------------------------------------------------
<S> <C> <C>
1996 $ 23 $ 293
1997 23 253
1998 23 237
1999 23 215
2000 20 212
Thereafter 51 1,417
-------------------------
Total minimum lease payments $163 $2,627
Amount representing interest (42)
--------
Present Value of Net Minimum Lease Payments $121
- --------------------------------------------------------------------------------
</TABLE>
Total rental expense was $359 million in 1995, $327 million in 1994, and
$336 million in 1993.
<PAGE>
66 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
17. Income Taxes
The significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
--------------------------------
(in millions) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for (Benefit from)
Income Taxes
Current:
Federal $1,091 $ 559 $ 269
State and local 305 140 93
Foreign 239 129 148
----------------------------
1,635 828 510
Deferred:
Federal 268 567 754
State and local 29 137 212
Foreign (29) 9 (2)
----------------------------
268 713 964
----------------------------
$1,903 $1,541 $1,474
- --------------------------------------------------------------------------------
</TABLE>
The significant components of deferred income tax assets and liabilities
at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
---------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred Income Tax Assets
Allowance for credit losses $ 1,554 $ 1,570
Accrued expenses 155 255
Other real estate owned 52 88
Tax carryovers/a/ 180 359
Other 510 379
Valuation allowance for deferred
income tax assets/a/ (124) (124)
-------------------
Total deferred income tax assets 2,327 2,527
Deferred Income Tax Liabilities
Lease financing (1,365) (1,229)
Identifiable intangible assets (575) (607)
Securities valuation (425) (352)
Employee benefit plans (59) (90)
Accumulated tax depreciation in excess of
book depreciation (237) (209)
Deferred gains and installment sales (155) (128)
Other (134) (46)
-------------------
Total deferred income tax liabilities (2,950) (2,661)
-------------------
Net Deferred Income Tax Liabilities $ (623) $ (134)
- --------------------------------------------------------------------------------
</TABLE>
/a/ The valuation allowance for deferred income tax assets relates primarily to
net operating loss carryovers of foreign subsidiaries and pre-acquisition
tax carryovers associated with the Security Pacific Corporation and
Continental mergers. Utilization of these carryovers is subject to various
limitations. The valuation allowance was established because BAC may not
realize all of the tax benefit of these carryovers as a result of the
limitations. If BAC determines that it will realize the pre-acquisition
carryover tax benefits in the future, the corresponding reduction in the
valuation allowance will decrease goodwill instead of tax expense.
- --------------------------------------------------------------------------------
Management believes that BAC will fully realize its total deferred income
tax assets as of December 31, 1995 based upon BAC's recoverable taxes from prior
carryback years, its total deferred income tax liabilities, and its current
level of operating income.
The reconciliation of the provision for income taxes computed at the U.S.
statutory income tax rate to pre-tax income is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
---------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income tax rate 35% 35% 35%
State and local income taxes,
net of federal tax effect 5 5 6
Effect of purchase accounting for
the Security Pacific Corporation merger 1 2 3
Other, net 1 (1) (1)
---------------------------
Effective Tax Rate 42% 41% 43%
- --------------------------------------------------------------------------------
</TABLE>
BAC's effective tax rate in 1995 was essentially unchanged from 1994. BAC's
effective tax rate in 1994 decreased from 1993 primarily due to a reduction in
the state effective tax rate and the effective tax rate applied to leveraged
lease income.
The valuation allowance for deferred income tax assets was $124 million at
December 31, 1995 and 1994. The recognition of deferred tax assets subject to
the valuation allowance would result in a reduction to goodwill of $92 million.
In 1995, deferred tax liabilities of $219 million relating to net
unrealized gains on available-for-sale securities was charged directly to
stockholders' equity. In 1994, deferred tax benefits of $218 million relating to
net unrealized losses on available-for-sale securities was recorded in
stockholders' equity.
At December 31, 1995, federal income taxes had not been provided on $440
million of undistributed earnings of foreign subsidiaries earned prior to 1987
that have been reinvested for an indefinite period. If the undistributed
earnings were distributed, credits for foreign taxes paid on such earnings and
for the related foreign withholding taxes payable upon remittance, would be
available to offset $90 million of the $190 million of the resulting tax
expense. Subsequent to 1986, federal taxes are provided on earnings of foreign
subsidiaries as a result of a tax law change.
BAC provided tax expense of $13 million, $9 million, and $25 million on net
securities gains in 1995, 1994, and 1993, respectively.
<PAGE>
BankAmerica Corporation 1995 / 67
- --------------------------------------------------------------------------------
18. Employee Benefit Plans
Defined Benefit Plans
During 1995, the majority of salaried U.S. employees within BAC were covered
under either the BankAmeraccount Plan or the Seafirst Corporation Retirement
Plan. The BankAmeraccount Plan is a defined benefit cash balance plan while the
Seafirst Plan was a defined benefit final average pay plan. Effective December
31, 1995, the Seafirst Plan was merged into the BankAmeraccount Plan. However,
until April 1, 1996, the Seafirst Plan benefits will continue to apply to the
employees formerly covered by the plan.
Benefits are based on length of service and level of compensation and, in
the case of the BankAmeraccount Plan, a specified interest rate. Contributions
are made by the employers and are based on actuarial computations of the amount
sufficient to fund the current service cost plus amortization of the unfunded
actuarial accrued liability. Contributions are determined in accordance with
Internal Revenue Service funding requirements and are invested in diversified
portfolios.
In connection with the Continental acquisition, BAC acquired the
Continental Employees Pension Plan, which was merged into the BankAmeraccount
Plan effective January 1, 1995.
BAC maintains certain nonqualified, nonfunded employee defined benefit
retirement plans. The related retirement benefits are paid from BAC's assets.
Certain non-U.S. employees of BAC are covered by noncontributory defined benefit
pension plans that the employers fund based primarily on local laws. The
assumptions used in computing the present value of the accumulated benefit
obligation, the projected benefit obligation, and net pension expense for the
non-U.S. plans are substantially consistent with those assumptions used for the
U.S. plans, given local conditions.
The following is a reconciliation between the funded status of all defined
benefit plans and amounts included in BAC's consolidated balance sheet:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
--------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Prepaid Pension Cost
Plan assets at fair value, primarily listed
stocks and bonds $3,137 $2,492
Less: Actuarial present value of projected
benefit obligation 2,938 2,403
-----------------
Plan assets in excess of projected
benefit obligation/a/ 199 89
Unrecognized net loss 341 280
Unrecognized prior service cost 46 53
Unrecognized net transition obligation 19 27
Additional minimum liability (5) (6)
-----------------
Prepaid Pension Cost $ 600 $ 443
Actuarial Present Value of Benefit Obligation
Vested benefit obligation $2,613 $2,165
Accumulated benefit obligation 2,808 2,284
- --------------------------------------------------------------------------------
</TABLE>
/a/ Certain defined benefit plans not covered by the Pension Benefit Guaranty
Corporation (PBGC) had an accumulated benefit obligation of $193 million and
$172 million and plan assets of $79 million and $68 million at December 31,
1995 and 1994, respectively. The estimated vested benefit obligation for
PBGC covered plans using a 4.75% interest rate and the Group Annuity
Mortality 83 table as of December 31, 1995 is $2,883 million as compared
with assets of $3,058 million.
- --------------------------------------------------------------------------------
The following is a summary of the components of net pension expense:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
-----------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned
during the year $ 98 $ 78 $ 83
Interest cost on projected benefit obligation 200 175 170
Net amortization and deferral 399 (202) 60
Effect of actual return on plan assets (631) 16 (264)
----------------------------
Net Pension Expense $ 66 $ 67 $ 49
- --------------------------------------------------------------------------------
</TABLE>
A summary of the assumptions used in computing the present value of the
accumulated benefit obligation, the present value of projected benefit
obligation, and the net pension expense for the U.S. plans follows on the next
page. The discount rate used in determining benefit obligations at year end
reflects the approximate yield on high quality fixed-income securities taking
into account the duration of the projected benefit obligation. The discount rate
used in determining net pension expense is based on assumptions used for the
previous year-end measurement of the benefit obligation.
<PAGE>
68 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate in determining expense 8.50% 7.25% 8.75%
Discount rate in determining benefit
obligations at year end 6.50 8.50 7.25
Rate of increase in future compensation
levels for determining expense/a/ 5.50 4.00 4.00
Rate of increase in future compensation
levels for determining benefit obligations
at year end/a/ 5.00 5.50 4.00
Expected long-term rate of return on assets 9.75 8.50 9.75
Account growth interest rate in
determining expense 6.75 5.00 5.75
Account growth interest rate in
determining benefit obligations at year end 6.00 6.75 5.00
-------------------------------------------------------------------------------
</TABLE>
/a/ Rates are attributable to the Seafirst Corporation Retirement Plan since
this is the only U.S. defined benefit final average pay plan as of
January 1, 1995.
- --------------------------------------------------------------------------------
Defined Contribution Plans
During 1995, the majority of salaried U.S. employees within BAC were eligible to
participate in either the BankAmerishare Plan or the Seafirst Corporation
Employee Matched Savings Plan. These plans provided tax-deferred investment
opportunities to salaried employees who have completed a required length of
service. Employees may contribute to the plans up to certain limits prescribed
by the Internal Revenue Service. A portion of these contributions is matched by
the employers. Contributions are invested at the direction of the participant.
In connection with the Continental acquisition, BAC acquired the
Continental Employee Savings Incentive Plan and the Continental Employee Stock
Ownership Plan, which were merged into the BankAmerishare Plan effective
January 1, 1995.
Effective April 1, 1996, the Seafirst Corporation Employee Matched Savings
Plan will be merged into and replaced by the BankAmerishare Plan.
BAC maintains certain nonqualified defined contribution retirement plans.
The related retirement benefits are paid from BAC's assets. In addition, certain
non-U.S. employees of BAC are covered under defined contribution pension plans
that are separately administered in accordance with local laws.
Aggregate contributions by the employers for all defined contribution plans
were $93 million, $86 million, and $75 million in 1995, 1994, and 1993,
respectively. Certain employer and employee contributions to the plans are used
to purchase the parent's common stock at prices that approximate market values.
Contributions, including dividends, to the plans were used to purchase 295,945
shares for $16 million in 1995, 539,910 shares for $23 million in 1994, and
784,344 shares for $37 million in 1993.
Sales by the plans of the parent's common stock were 843,588 shares for $45
million in 1995, 220,468 shares for $10 million in 1994, and 637,000 shares for
$29 million in 1993. The plans held 15,994,153 shares, 16,611,787 shares, and
15,375,896 shares of the parent's common stock at December 31, 1995, 1994, and
1993, respectively.
Amendments to the BankAmeraccount Plan and the BankAmerishare Plan
Effective January 1, 1996, the BankAmeraccount Plan and the BankAmerishare
Plan were amended to provide an enhanced level of benefits to employees. The
name of the BankAmeraccount Plan was changed to BankAmerica Pension Plan
while the name of the BankAmerishare Plan was changed to BankAmerica 401(k)
Investment Plan. Management estimates that these amendments could increase
BAC's benefit expense in future periods by approximately $45 million to $55
million per year.
Management Stock Plans
The parent offers shares of its common stock to certain key employees under
management stock plans. Under the plans, three kinds of options are outstanding:
Nonqualified Stock Options, Performance Stock Options, and Incentive Stock
Options. The shares under option generally become exercisable not earlier than
six months and not later than ten years after the date the option was granted.
Options awarded before August 5, 1991 held by principal officers of the
parent, subject to certain restrictions, also constitute stock appreciation
rights equal to the number of shares covered by the options. These stock
appreciation rights are exercisable for the difference between the option price
and the current market price of the stock at the time of exercise. The
difference can be received in cash or shares. Stock appreciation rights are
exercisable under the same terms as the related stock options.
The following is a summary of changes in shares under option:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
---------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of year 17,356,127 10,449,395
Issued in connection with
the Continental merger -- 4,766,781
Granted 5,144,845 3,904,968
Exercised (4,081,083) (1,342,334)
Canceled (294,215) (422,683)
--------------------------------
Balance, End of Year 18,125,674 17,356,127
- --------------------------------------------------------------------------------
</TABLE>
Options to purchase 9,565,742 and 10,511,439 shares were exercisable at
December 31, 1995 and 1994, respectively. Expiration dates ranged from
January 3, 1996 to December 4, 2005 for options outstanding at December 31,
1995.
<PAGE>
BankAmerica Corporation 1995 / 69
- --------------------------------------------------------------------------------
The following is a summary of option prices per share:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Range of prices of shares under
option at December 31 $8.63 to $66.43 $8.63 to $61.00
Weighted average price of shares
under option at December 31 $42.87 $36.87
Range of prices of shares
exercised during year $8.63 to $61.00 $8.69 to $47.73
- --------------------------------------------------------------------------------
</TABLE>
Also under the plans, the parent awards restricted stock to certain key
employees. Generally, the restricted stock awarded under the plans is not
released until the employee has completed a continuous service requirement
specified in the award agreement. During 1995 and 1994, the parent awarded
639,424 shares and 942,138 shares, respectively, under the plans. In addition,
during 1994, 417,000 shares of restricted stock were awarded under a performance
share program. These shares would vest in three equal installments, provided the
price of BAC common stock attained certain targets. During 1995, 278,000 of
these shares vested as two of the price targets were met. If the remaining
target stock price is not reached, but BAC attains a certain ranking among a
comparison group of bank holding companies with respect to total shareholder
return at the end of a three-year performance period, the remaining units will
nevertheless vest unless the Executive Personnel and Compensation Committee
(EPCC) of the Board of Directors determines that all or part of the units shall
not vest. In 1995, an additional 12,000 shares of restricted stock were awarded
under the performance share program, all of which are subject to the same
vesting requirements as the third installment of the 1994 awards.
Both stock options and restricted stock are granted by the EPCC. Shares
available for grant, as either stock options or restricted stock, were 884,312
and 856,531 at December 31, 1995 and 1994, respectively. Shares subject to
options that are canceled, except for those converted in connection with the
Security Pacific Corporation and Continental mergers, become available for
future grants.
Postretirement Health Care and Life Insurance Benefits
BAC provides certain defined health care and life insurance benefits under plans
for retired U.S. employees. Retiree health care benefits are offered under self-
insured arrangements, as well as through various health maintenance
organizations. BAC contributes a fixed dollar amount to the plans, which is
periodically reviewed and evaluated. The retirees' share is the remainder of the
cost for the given coverage. BAC's policy is to fund the cost of medical
benefits in amounts determined at the discretion of management. Employer
contributions are invested in diversified portfolios, including fixed income and
equity investments.
The assumed discount rates used to measure the accumulated postretirement
benefit obligation were 6.50 percent and 8.50 percent at December 31, 1995 and
1994, respectively. The expected long-term rates of return on plan assets used
in computing the net periodic postretirement cost were 9.75 percent, 8.50
percent, and 9.75 percent for the years ended December 31, 1995, 1994, and 1993,
respectively. The expected long-term rate of return on plan assets used in
computing the net periodic postretirement cost for 1996 will be approximately
8.00 percent. This change is not expected to have a material effect on BAC's
results of operations.
The following is a reconciliation between the funded status of all
postretirement benefit plans other than pensions and the amounts included in
BAC's consolidated balance sheet:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
-------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $513 $470
Fully eligible active plan participants 21 26
Other active plan participants 97 91
-----------------
Total accumulated postretirement
benefit obligation 631 587
Less: Plan assets at fair value, primarily
listed stocks and bonds 104 62
-----------------
Accumulated postretirement benefit
obligation in excess of plan assets 527 525
Less: Unrecognized net transition obligation 451 478
Unrecognized net gain (5) (56)
Unrecognized prior service cost (benefit) (23) 5
-----------------
Accrued Postretirement Benefit Cost $104 $ 98
- --------------------------------------------------------------------------------
</TABLE>
The unrecognized net transition obligation is being amortized on a
straight-line basis over twenty years.
The following is a summary of the components of net periodic postretirement
cost:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
-----------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Service cost--benefits earned during the year $ 6 $ 8
Interest cost on accumulated postretirement
benefit obligation 49 48
Net amortization and deferral 37 24
Effect of actual return on plan assets (17) --
-----------------
Net Periodic Postretirement Cost $ 75 $ 80
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
70 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
19. Earnings per Common Share
Earnings per common and common equivalent share are computed by dividing net
income applicable to common stock by the total of the average number of common
shares outstanding and the additional dilutive effect of stock options and
warrants outstanding during the respective period. The dilutive effect of stock
options and warrants is computed using the average market price of the parent's
common stock for the period.
Earnings per common share, assuming full dilution, are computed based on
the average number of common shares outstanding during the period, and the
additional dilutive effect of stock options and warrants outstanding during the
period. The dilutive effect of outstanding stock options and warrants is
computed using the greater of the closing market price or the average market
price of the parent's common stock for the period. Earnings per common share,
assuming full dilution, also includes the dilution which would result if the
parent's Convertible Preferred Stock outstanding during the period had been
converted at the beginning of the period. Net income applicable to common stock
is adjusted for dividends declared during the period on the Convertible
Preferred Stock.
Earnings per common share have been computed based on the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------
(dollar amounts in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income applicable
to common stock $2,437 $1,928 $1,713
Average number
of common
shares outstanding 370,981,593 357,312,433 355,106,722
Average number
of common
and common
equivalent shares
outstanding 375,555,919 359,793,169 357,679,670
Average number
of common
shares outstanding--
assuming full dilution 378,103,241 365,273,824 363,243,993
- --------------------------------------------------------------------------------
</TABLE>
20. Off-Balance-Sheet Transactions
In the ordinary course of business, BAC enters into various types of
transactions that involve credit-related 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.
In its effort to manage credit risk associated with foreign exchange and
derivatives contracts, BAC ensures that its off-balance-sheet portfolio is well
diversified, both in terms of instrument type and industry and customer
concentration. In addition, credit risk is managed through BAC's credit approval
process. It is also BAC's policy to execute legally enforceable master netting
agreements with its foreign exchange and derivative customers, which provide for
the netting of BAC's current positive and negative closeout exposures associated
with all individual transactions of those counterparties in the event of
default. To further mitigate off-balance-sheet credit exposures, BAC obtains
collateral where determined appropriate.
Credit-Related Financial Instruments
Credit-related financial instruments include commitments to extend credit,
standby letters of credit, financial guarantees, and commercial letters of
credit. Fees received from credit-related financial instruments are recognized
over the terms of the contracts and are included in other fees and commissions
in noninterest income.
Unfunded credit commitments at December 31, 1995 and 1994 totaled $149,453
million and $131,070 million, respectively, of which $8,294 million and $7,108
million related to foreign-based customers and $141,159 million and $123,962
million related to domestic-based customers. The unfunded credit commitments to
domestic-based customers at December 31, 1995 and 1994 included $34,465 million
and $28,058 million, respectively, of unutilized credit card lines. At both
December 31, 1995 and 1994, no domestic or foreign industry nor any individual
foreign country comprised more than ten percent of total unfunded noncredit-
card-related commitments. For a summary of funded loan outstandings by type at
December 31, 1995 and 1994, refer to Note 8 of the Notes to Consolidated
Financial Statements on pages 60 and 61.
A summary of the contractual amounts of each significant class of credit-
related financial instruments outstanding appears on the next page. The
contractual amounts of these instruments are not recorded as assets or
liabilities on the balance sheet. 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.
<PAGE>
BankAmerica Corporation 1995 / 71
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
-------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit:
Unutilized credit card lines $34,465 $28,058
Other commitments to extend credit 94,524 82,929
Standby letters of credit and financial
guarantees (net of participations
sold: 1995--$2,383; 1994--$2,402) 16,336 15,870
Commercial letters of credit 4,128 4,213
- --------------------------------------------------------------------------------
</TABLE>
Commitments to Extend Credit
Unutilized credit card lines are commitments to extend credit. These lines
generally are not secured and may be canceled by BAC after thirty-days written
notice to the customer. Many credit card customers are not expected to fully
draw down their total lines of credit and, therefore, the total contractual
amount of these lines does not necessarily represent future cash requirements.
Other commitments to extend credit represent agreements to extend credit to
a customer 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. Although
they are currently subject to drawdown, many of these commitments are expected
to expire or terminate without being funded. Of total other commitments to
extend credit at December 31, 1995, $38,098 million will expire in less than one
year, $51,920 million from one to five years, and $4,506 million after five
years. Generally, other commitments are not secured, but, when required,
collateral may include cash, securities, and real estate.
Standby Letters of Credit and Financial Guarantees
Standby letters of credit are performance assurances made on behalf of customers
who have a contractual obligation to produce or deliver goods or services or
otherwise perform. Credit risk arises in these transactions from the possibility
that a customer may not be able to repay BAC upon default of performance if the
standby letter of credit has been drawn upon. At December 31, 1995 and 1994,
standby letters of credit totaled $7,228 million and $6,312 million,
respectively. Of the December 31, 1995 balance, $4,719 million will expire in
less than one year, $2,080 million from one to five years, and $429 million
after five years.
BAC issues financial guarantees assuring performance of customer financial
obligations under money market instruments, such as commercial paper and state,
county, and municipal securities. At December 31, 1995 and 1994, financial
guarantees totaled $9,108 million and $9,558 million, respectively. Of the
December 31, 1995 balance, $5,532 million will expire in less than one year,
$2,707 million from one to five years, and $869 million after five years.
Fees received for standby letters of credit and financial guarantees are
recognized over the lives of the contracts and are included in other fees and
commissions in noninterest income. Generally, standby letters of credit and
financial guarantees are not secured, but, when required, collateral may include
cash and securities.
Commercial Letters of Credit
Commercial letters of credit ensure payment by a bank to a third party for a
customer's foreign or domestic trade transactions, generally to finance a
commercial contract for the shipment of goods. BAC's credit risk in these
transactions is limited since the contracts are collateralized by the
merchandise being shipped and are generally of short duration.
Foreign Exchange and Derivatives Contracts
Foreign exchange and derivatives contracts include futures, forwards, swaps, and
option contracts, and are principally linked to interest rates, foreign exchange
rates, security prices, or commodity or equity indices. 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.
Foreign exchange and derivatives contracts that do not qualify as hedges
for BAC's own assets and liabilities are marked to market, and the unrealized
gains and unrealized losses are recorded on the consolidated balance sheet on a
gross basis unless right of set-off criteria are met. Unrealized gains and
losses on contracts executed with the same counterparty may be netted when
contracts have been executed under legally enforceable master netting
agreements.
The accounting for gains and losses on foreign exchange and derivatives
contracts that qualify as accounting hedges differs based on the type of
contract and the nature of the hedge strategy. For further information regarding
BAC's accounting treatment for foreign exchange and derivatives contracts, refer
to Note 1 of the Notes to the Consolidated Financial Statements on pages 52-56.
<PAGE>
72 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notional, Credit Risk, and Credit Exposure Amounts for Derivative Financial
Instruments Held or Issued for Trading Purposes
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1995 December 31, 1994
---------------------------------------------------------------------------------------------
Notional Credit Credit Notional Credit Credit
(in millions) Amount Risk/a/ Exposure/b/ Amount Risk/a/ Exposure/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate contracts
Interest rate swaps $ 418,240 $ 8,647 $2,787/c/ $ 348,515 $ 4,971 $1,960/c/
Futures and forward rate contracts:
Commitments to purchase 160,126 9 9 95,010 192 192
Commitments to sell 190,538 381 381 116,408 35 35
Written options 35,217 --/d/ --/d/ 35,909 --/d/ --/d/
Purchased options 45,351 494 390 44,779 441 279
--------------------------------------------------------------------------------------------
Total interest rate contracts 849,472 9,531 3,567 640,621 5,639 2,466
Foreign exchange contracts
Spot, forward, and futures contracts 592,441 8,781 2,553 630,867 6,623 2,234
Written options 21,095 --/d/ --/d/ 19,617 --/d/ --/d/
Purchased options 20,244 395 268 18,861 267 208
Currency swaps 23,085 1,517 1,403 21,943 1,595 1,353
--------------------------------------------------------------------------------------------
Total foreign exchange contracts 656,865 10,693 4,224 691,288 8,485 3,795
Stock index options and
commodity contracts 878 12 10 825 9 6
--------------------------------------------------------------------------------------------
Total $1,507,215/e/ $20,236 $7,801 $1,332,734/f/ $14,133 $6,267
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notional and Credit Risk Amounts for Derivative Financial Instruments Held or
Issued for Asset and Liability Management Purposes
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1995 December 31, 1994
--------------------------------------------------------------------------------
Notional Credit Notional Credit
(in millions) Amount Risk/a/ Amount Risk/a/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate contracts
Interest rate swaps $33,543 $155 $32,864 $120
Futures and forward rate contracts 28,702 -- 28,773 --
Purchased options 9,200 60 4,510 43
----------------------------------------------------------------------------
Total interest rate contracts 71,445 215 66,147 163
Foreign exchange contracts
Spot, forward, and futures contracts 1,900 -- 1,383 --
Currency swaps 430 61 443 129
----------------------------------------------------------------------------
Total foreign exchange contracts 2,330 61 1,826 129
----------------------------------------------------------------------------
Total $73,775/e/ $276 $67,973/f/ $292
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Excluding the effects of legally enforceable master netting agreements.
/b/ Including the effects of legally enforceable master netting agreements.
/c/ Including the 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 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.
/f/ Interest rate swaps and interest rate options in both the trading and asset
and liability management portfolios include $9.8 billion and $0.1 billion,
respectively, of intercompany hedging-related contracts. Foreign exchange
contracts in both the trading and asset and liability management portfolios
include $1.5 billion of intercompany hedging-related contracts.
- --------------------------------------------------------------------------------
The table above summarizes 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.
Credit risk represents BAC's potential loss on these transactions if all
counterparties failed to perform according to the terms of the contract and the
value of any existing collateral became worthless, based on then-current
currency 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.
<PAGE>
BankAmerica Corporation 1995 / 73
- --------------------------------------------------------------------------------
The following table summarizes the average and year-end fair values of
each significant class of foreign exchange and derivative contract
outstanding in BAC's trading portfolio and the year-end fair values for each
significant class of foreign exchange and derivative contract outstanding in
BAC's asset and liability management portfolio. Fair value amounts consist of
unrealized gains and losses, accrued interest receivable and payable, and
premiums paid or received, and take into account master netting agreements.
The fair value amounts for the trading portfolio are disaggregated by gross
unrealized gains (assets) and gross unrealized losses (liabilities), while
the fair value amounts for the asset and liability management portfolio are
shown on a net basis. 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.
- --------------------------------------------------------------------------------
Fair Values of Derivative Financial Instruments Held or Issued for Trading
Purposes
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1995 December 31, 1994
-------------------------------------------------------------------------------------------------
Average Fair Value Period End Period End
(in millions) For The Year Ended/ab/ Fair Value/b/ Fair Value/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest rate contracts
Interest rate swaps:
Assets $2,522 $2,787 $1,960
Liabilities (2,258) (2,605) (1,588)
Futures and forward rate contracts:
Assets 319 390 227
Liabilities (291) (373) (189)
Written options (222) (237) (299)
Purchased options 263 390 279
-----------------------------------------------------------------------
Total interest rate contracts 333 352 390
Foreign exchange contracts
Spot, forward, and futures contracts:
Assets 3,979 2,553 2,234
Liabilities (4,429) (3,048) (2,766)
Written options (431) (355) (228)
Purchased options 403 268 208
Currency swaps:
Assets 1,762 1,403 1,353
Liabilities (2,062) (1,600) (1,494)
-----------------------------------------------------------------------
Total foreign exchange contracts (778) (779) (693)
Stock index options and commodity contracts
Assets 13 10 6
Liabilities (8) (9) (7)
-----------------------------------------------------------------------
Total stock index options and commodity contracts 5 1 (1)
-----------------------------------------------------------------------
Total $ (440) $ (426) $ (304)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Fair Values of Derivative Financial Instruments Held or Issued for Asset and
Liability Management Purposes
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31
------------------------------------
(in millions) 1995/b/ 1994/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest rate contracts
Interest rate swaps $ 33 $(693)
Futures and forward rate contracts 56 (42)
Purchased options 3 39
-------------------------------
Total interest rate contracts 92 (696)
Foreign exchange contracts
Spot, forward, and futures contracts -- --
Currency swaps 47 129
-------------------------------
Total foreign exchange contracts 47 129
------------------------------
Total $139 $(567)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Average fair value amounts are calculated based on monthly balances.
/b/ For a description of fair value methodologies, refer to Note 21 in the
Notes to the Consolidated Financial Statements on pages 77-79.
- --------------------------------------------------------------------------------
<PAGE>
74 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Foreign Exchange Contracts
Foreign exchange contracts, which include spot, forward and futures
contracts, represent agreements to exchange the currency of one country for
the currency of another country at an agreed-upon price, on an agreed-upon
settlement date. Foreign exchange option contracts are similar to interest
rate option contracts, except that they are based on currencies, rather than
interest rates. Exposure to loss on these contracts will increase or decrease
over their respective lives as currency exchange rates fluctuate. For
exchange-traded foreign exchange contracts, BAC's exposure to
off-balance-sheet credit risk is limited, as these transactions are executed
on organized exchanges that assume the obligations of counterparties and
generally require security deposits and daily settlement of margins.
Interest Rate and Currency Swaps
Interest rate swaps represent contractual agreements between two parties to
exchange interest payments in the same currency, each of which is computed on
a different basis, on a specified notional amount. Most interest rate swaps
involve the net exchange of payments calculated as the difference between
fixed and floating rate interest payments. Currency swaps, in their simplest
form, represent contractual agreements that involve the exchange of both
periodic and final amounts in two different currencies. Exposure to loss on
both types of swap contracts will increase or decrease over their respective
lives as a function of maturity dates, interest and foreign exchange rates,
and timing of payments.
Interest Rate Futures, Forward, and Option Contracts
Interest rate futures are exchange-traded instruments and represent
commitments to purchase or sell a designated security or money market
instrument at a specified future date and price. Interest rate forward
agreements are over-the-counter products and represent contracts where two
parties agree on an interest rate for one party to pay the other for a
specific period in the future. Interest rate options, which primarily consist
of caps and floors, are interest rate protection instruments that involve the
payment from the seller to the buyer of an interest rate differential in
exchange for a premium paid by the buyer. This differential represents the
difference between current interest rates and an agreed-upon rate applied to
a notional amount. Exposure to loss on all interest rate contracts will
increase or decrease over their respective lives as interest rates fluctuate.
For interest rate futures and exchange-traded option contracts, BAC's
exposure to off-balance-sheet credit risk is limited, as these transactions
are executed on organized exchanges that assume the obligations of
counterparties and generally require security deposits and daily settlement
of margins.
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.
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 the 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.
- --------------------------------------------------------------------------------
Trading-Related Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31
--------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Trading income
Interest rate $ 67 $ 63
Foreign exchange 303 237
Debt instruments 157 57
----------------------
$ 527 $ 357
Other trading-related income/a/
Interest rate $ 30 $ (3)
Foreign exchange 28 7
Debt instruments 152 85
----------------------
$ 210 $ 89
- --------------------------------------------------------------------------------
</TABLE>
/a/ Primarily includes the net interest revenue and expense associated with
these contracts.
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 75
- --------------------------------------------------------------------------------
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.
One strategy that BAC employs in managing interest rate risk is the use
of interest rate swaps to modify the interest rate characteristics of
designated assets and liabilities. For example, BAC may enter into an
interest rate swap to alter cash flows on its long-term debt from fixed to
floating rate in an effort to reduce gap mismatches.
Another hedging strategy used by BAC is the purchase of options to
protect against significant loss due to extreme interest rate movements. For
example, BAC may purchase interest rate floors on its adjustable rate
mortgage portfolio to reduce the risk of loss from a rapid or prolonged
decline in interest rates. In addition, BAC uses interest rate swaps to hedge
against market value fluctuations of available-for-sale securities.
The above hedging strategies would be rendered ineffective if BAC
disposes of the underlying product being hedged or if certain unexpected
events occur. In addition, BAC may terminate its hedging-related contracts in
reaction to certain events or circumstances. However, such terminations are
infrequent, and the deferred gains or losses on terminated contracts recorded
in BAC's consolidated balance sheet at December 31, 1995 and 1994, and the
amortization of such amounts for the years ended 1995 and 1994 were not
significant.
The table on page 76 summarizes the expected or contractual maturities
and weighted average interest rates associated with amounts to be received or
paid on BAC's interest rate swaps used to manage asset and liability interest
rate exposure at December 31, 1995 and 1994. These swaps have been designated
as accounting hedges and are used to modify the interest rate characteristics
of certain specified assets and liabilities.
Approximately 80 percent of BAC's hedging-related interest rate futures
and forward rate agreements outstanding at December 31, 1995 mature within
one year, while approximately 90 percent of its hedging-related option
contracts mature between five and ten years. Approximately 65 percent of
BAC's hedging-related interest rate futures and forward rate agreements
outstanding at December 31, 1994 mature within one year, while approximately
85 percent of its hedging-related option contracts mature within three years.
All of BAC's hedging-related foreign exchange forward contracts
outstanding at December 31, 1995 and 1994 mature within 60 days. At both
December 31, 1995 and 1994, BAC's hedging-related foreign exchange forward
contracts were denominated in various currencies, most notably Hong Kong
dollars and Spanish pesetas.
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 is in the process of
divesting, its institutional trust and securities services business.
The following summarizes indemnified securities lending transactions and
the associated collateral:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
-----------------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Indemnified securities lent $207 $5,910
Associated collateral 209 6,039
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
76 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Asset and Liability Management Interest Rate Swaps/a/
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
December 31, 1995
------------------------------------------------------------------------------------
(dollar amounts in billions) 0-1 year (greater than)1-2 years (greater than)2-3 years
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Receive fixed/b/
Notional amount $ 2.5 $ 1.6 $ 1.2
Weighted average receive rate 6.83% 6.54% 7.06%
Pay fixed/b/
Notional amount $ 3.4 $ 2.4 $ 2.2
Weighted average pay rate 4.89% 6.23% 6.26%
Forward receive fixed/d/
Notional amount -- $ 0.3 --
Weighted average receive rate -- 6.28% --
Forward pay fixed/d/
Notional amount -- $ 0.3 --
Weighted average pay rate -- 5.93% --
Basis swaps/e/
Notional amount -- -- --
-----------------------------------------------------------------------------------
Total Notional Amount
<CAPTION>
------------------------------------------------------------------------------------------
(dollar amounts in billions) (greater than)3-4 years (greater than)4-5 years (greater than) 5-10 years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Receive fixed/b/
Notional amount $ 1.2 $ 0.5 $ 9.4
Weighted average receive rate 6.95% 6.79% 6.31%
Pay fixed/b/
Notional amount $ 1.4 $ 1.1 $ 2.0
Weighted average pay rate 7.26% 7.86% 6.61%
Forward receive fixed/d/
Notional amount $ 0.1 $ 0.6 $ 0.3
Weighted average receive rate 6.55% 8.06% 8.23%
Forward pay fixed/d/
Notional amount $ 0.9 -- $ 0.2
Weighted average pay rate 6.42% -- 7.87%
Basis swaps/e/
Notional amount -- -- $ 0.3
-------------------------------------------------------------------------
Total Notional Amount
<CAPTION>
--------------------------------------------
(dollar amounts in billions) (greater than)10 years Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Receive fixed/b/
Notional amount $ 1.6 $18.0/c/
Weighted average receive rate 6.77% 6.55%
Pay fixed/b/
Notional amount -- $12.5
Weighted average pay rate -- 6.18%
Forward receive fixed/d/
Notional amount -- $ 1.3
Weighted average receive rate -- 7.57%
Forward pay fixed/d/
Notional amount -- $ 1.4
Weighted average pay rate -- 6.60%
Basis swaps/e/
Notional amount -- $ 0.3
--------------------------
Total Notional Amount $33.5
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
-------------------------------------------------------------------------
(dollar amounts in billions) 0-1 year (greater than)1-2 years (greater than)2-3 years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Receive fixed/b/
Notional amount $ 2.7 $ 1.8 $ 1.5
Weighted average receive rate 5.83% 7.31% 6.99%
Pay fixed/b/
Notional amount $ 3.0 $ 3.6 $ 1.8
Weighted average pay rate 4.91% 5.06% 6.40%
Forward receive fixed/d/
Notional amount -- -- $ 0.2
Weighted average receive rate -- -- 5.93%
Forward pay fixed/d/
Notional amount -- -- $ 0.3
Weighted average pay rate -- -- 6.28%
Basis swaps/e/
Notional amount $ 0.4 -- --
Total Notional Amount
<CAPTION>
December 31, 1994
------------------------------------------------------------------------------------------
(dollar amounts in billions) (greater than)3-4 years (greater than)4-5 years (greater than) 5-10 years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Receive fixed/b/
Notional amount $ 1.0 $ 0.8 $ 7.5
Weighted average receive rate 7.55% 5.73% 6.30%
Pay fixed/b/
Notional amount $ 0.1 $ 0.6 $ 2.8
Weighted average pay rate 7.00% 7.50% 6.84%
Forward receive fixed/d/
Notional amount -- -- $ 0.7
Weighted average receive rate -- -- 6.90%
Forward pay fixed/d/
Notional amount -- $ 0.2 $ 1.0
Weighted average pay rate -- 6.16% 7.60%
Basis swaps/e/
Notional amount -- -- $ 0.3
Total Notional Amount
<CAPTION>
-------------------------------------------
(dollar amounts in billions) (greater than)10 years Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Receive fixed/b/
Notional amount $ 2.0 $17.3/c/
Weighted average receive rate 6.79% 6.50%
Pay fixed/b/
Notional amount $ 0.4 $12.3
Weighted average pay rate 7.35% 5.82%
Forward receive fixed/d/
Notional amount $ 0.2 $ 1.1
Weighted average receive rate 6.66% 6.67%
Forward pay fixed/d/
Notional amount -- $ 1.5
Weighted average pay rate -- 7.15%
Basis swaps/e/
Notional amount -- $ 0.7
--------------------------------------------------------------
Total Notional Amount $32.9
- ----------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes intercompany swaps.
/b/ The variable rate side of substantially all receive fixed rate and pay fixed
rate swaps is based on the one-, three-, or six-month LIBOR. At December 31,
1995, and 1994, the one-, three-, and six-month LIBOR rates were 5.9375
percent and 6.1250 percent, 5.6563 percent and 6.3125 percent, and 5.6563
percent and 6.8125 percent, respectively.
/c/ Includes $0.4 billion and $0.6 billion of swaps with amortizing notional
amounts at December 31, 1995 and 1994, respectively.
/d/ Accrual of interest on forward swaps starts at a predetermined future date.
The majority of the forward swaps start accruing interest one to three years
after each reported year end.
/e/ Basis swaps are interest rate swaps in which both amounts paid and received
are based on floating rates. BAC's pay rates are primarily based on a LIBOR
or Prime index and its receive rates are primarily based on LIBOR.
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 77
- --------------------------------------------------------------------------------
21. Fair Value of Financial Instruments
Management uses its best judgment in estimating the fair value of BAC's
financial instruments; however, there are inherent weaknesses in any estimation
technique. Therefore, for substantially all financial instruments, the fair
value estimates presented herein are not necessarily indicative of the amounts
BAC could have realized in a sales transaction at either December 31, 1995 or
1994. The estimated fair value amounts for 1995 and 1994 have been measured as
of their respective year ends, and have not been reevaluated or updated for
purposes of these consolidated financial statements subsequent to those
respective dates. As such, the estimated fair values of these financial
instruments subsequent to the respective reporting dates may be different than
the amounts reported at each year end. This disclosure of fair value amounts
does not include the fair values of any intangibles, including core deposit
intangibles, MSRs, and credit card intangibles.
The following information should not be interpreted as an estimate of
the fair value of the entire corporation since a fair value calculation is
only required for a limited portion of BAC's assets. Due to the wide range of
valuation techniques and the degree of subjectivity used in making the
estimates, comparisons between BAC's disclosures and those of other companies
may not be meaningful. The following methods and assumptions were used to
estimate the fair values of BAC's financial instruments at December 31, 1995
and 1994.
Financial Instruments Valued at Carrying Value
The respective carrying values of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash and due from banks, interest-bearing deposits in banks, federal
funds sold and purchased, securities purchased and sold under resale and
repurchase agreements, trading account assets, customers' acceptance
liability, accrued interest receivable, other short-term borrowings,
acceptances outstanding, accrued interest payable, and certain other assets
and liabilities that are considered financial instruments. Carrying values
were assumed to approximate fair values for these financial instruments as
they are short term in nature and their recorded amounts approximate fair
values or are receivable or payable on demand.
Available-for-Sale and Held-to-Maturity Securities
Fair value amounts of available-for-sale and held-to-maturity securities were
based on quoted market prices, wherever available. Where quoted market prices
did not exist, fair values were estimated using book, cost, or appraised
value as deemed appropriate by management. Available-for-sale securities are
carried at their aggregate fair value. The aggregate fair value and aggregate
carrying value of available-for-sale securities exclude the fair value of
off-balance-sheet financial instruments that qualify as accounting hedges of
$43 million at December 31, 1994. The notional amount of these instruments
was $515 million at December 31, 1994. There were no off-balance-sheet
financial instruments that qualified as accounting hedges for
available-for-sale securities at December 31, 1995.
Loans
For purposes of these fair value calculations, the aggregate fair value of
each loan portfolio, excluding nonaccrual domestic commercial and foreign
loans, was adjusted by the related portion of the allowance for credit
losses. The allowance for credit losses primarily represents the credit risk
associated with loans that reprice within relatively short time frames. The
fair values of nonaccrual domestic commercial and foreign loans were computed
by deducting an estimated market discount from their carrying values to
reflect the uncertainty of future cash flow amounts and timing.
The aggregate fair value of loans excludes the effect of off-balance-sheet
financial instruments that qualify as accounting hedges. The notional amounts of
these instruments were $12,107 million and $8,484 million at December 31, 1995
and 1994, respectively, and their associated net fair values were $(42) million
at December 31, 1995 and zero at December 31, 1994.
At December 31, 1995 and 1994, the allowance for credit losses included
$895 million and $1,194 million, respectively, that was not allocated to a
specific segment of the loan portfolio. As such, these portions of the
allowance for credit losses were not included in any of the carrying values
or fair values of loans presented in the table on page 78 at each respective
year end.
The following methods and assumptions were used to calculate the fair
values of loans.
<PAGE>
78 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Residential first mortgages
The fair values of residential first mortgages were calculated using pricing
procedures that are similar to those used when these loans are sold in the
secondary market in the normal course of business. These pricing procedures
use current market rates for similar types of loans.
Residential junior mortgages, consumer installment loans, credit card loans,
individual lines of credit, and other consumer loans (other consumer loans)
The fair values of other consumer loans were calculated using discounted cash
flow models. The discount rates were based on current market interest rates
for similar types of loans.
Domestic commercial loans
The carrying values of domestic commercial loans that reprice within
relatively short time frames were assumed to approximate their fair values.
The fair values of domestic commercial loans that do not reprice or
mature within relatively short time frames were calculated using discounted
cash flow models based on the maturity of the loans. The discount rates,
which were based on market interest rates for similar types of loans,
incorporated adjustments for credit risk.
The fair values of commitments to extend credit were not significant at
either December 31, 1995 or 1994.
Foreign loans
Substantially all of the foreign loans reprice within relatively short time
frames. As a result, the carrying values of these foreign loans were assumed
to approximate their fair values.
Other Financial Instruments
For non-exchange-traded equity securities, which are included in other
assets, fair values were estimated using equity, cost, or appraised value as
deemed appropriate by management. The carrying values of all other components
of other assets that are considered financial instruments approximated their
respective fair values, as they are short term in nature or are receivable or
payable on demand.
The following is a summary of previously described on-balance-sheet
asset financial instruments whose fair values differ from their carrying
values for either of the periods presented:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
-------------------------------------------------
1995 1994
------------------- ---------------------
Carrying Fair Carrying Fair
(in millions) Value Value Value Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Held-to-maturity
securities $ 4,656 $ 4,332 $ 8,167 $ 7,292
Loans:
Domestic consumer:
Residential first
mortgages 36,457 37,056 33,727 32,541
Other consumer loans 36,149 36,610 32,252 32,063
Domestic commercial 53,144 53,187 49,576 49,454
Foreign 22,493 22,547 19,552 19,544
-------------------------------------------------
Total loans 148,243 149,400 135,107 133,602
Other financial
instruments 3,022 3,022 2,204 2,217
- --------------------------------------------------------------------------------
</TABLE>
Deposits
The fair values of domestic and foreign demand deposits,
savings deposits, and money market deposits without defined maturities were
the amounts payable on demand. For substantially all domestic deposits with
defined maturities, the fair values were calculated using discounted cash
flow models based on market interest rates for the relevant product types and
maturity dates for the state in which the deposit was held. For variable-rate
deposits with fixed repricing dates, the first repricing date was considered
the maturity date for purposes of the fair value calculation. For variable
rate deposits where BAC has the contractual right to change rates, carrying
value was assumed to approximate fair value. The discount rates used were
based on rates for comparable deposits.
The fair values of domestic business negotiable certificates of deposit
and domestic business time deposits were calculated using a discounted cash
flow model. This model was based on the maturities of the related deposits
and market interest rates for similar types of deposits. The carrying values
of total foreign time deposits were assumed to approximate their fair values
since these deposits primarily had variable rates and repriced within
relatively short time frames.
<PAGE>
BankAmerica Corporation 1995 / 79
- --------------------------------------------------------------------------------
The aggregate fair values of deposits exclude the aggregate fair values
of off-balance-sheet financial instruments that qualify as accounting hedges
for the bank's certificates of deposit, which were $(16) million and $(653)
million, respectively, at December 31, 1995 and 1994. The notional amount of
these contracts were $53,296 million and $50,959 million at December 31, 1995
and 1994, respectively.
Long-term debt
The fair values of BAC's long-term debt instruments were calculated based on
quoted market prices. For those long-term debt issues where quoted market prices
were not available, a discounted cash flow model was used. The discount rates
were based on yield curves appropriate for the remaining maturities of the
instruments. The fair value of long-term debt excludes the fair values of off-
balance-sheet financial instruments that qualify as accounting hedges for the
parent's long-term debt, which were $192 million and $43 million, respectively,
at December 31, 1995 and 1994. The notional amounts of these contracts were
$6,752 million and $5,225 million at December 31, 1995 and 1994, respectively.
Subordinated capital notes
The fair values of BAC's subordinated capital notes were calculated based on
quoted market prices.
The following is a summary of previously described on-balance-sheet liability
financial instruments whose aggregate fair values differ from their carrying
value for either of the periods presented:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31
--------------------------------------------------
1995 1994
---------------------- -----------------------
Carrying Fair Carrying Fair
(in millions) Value Value Value Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Liabilities
Deposits $160,494 $160,713 $154,394 $154,329
Long-term debt 14,723 15,422 14,823 14,762
Subordinated capital
notes 605 628 605 610
- --------------------------------------------------------------------------------
</TABLE>
Foreign exchange contracts and derivatives
The following is a summary of the fair values of foreign exchange and
derivatives contracts outstanding. The fair values of exchange-traded foreign
exchange and derivative contracts are based on quoted market prices or dealer
quotes. Fair values of non-exchange traded, or over-the-counter (OTC) foreign
exchange and derivatives contracts consist of net unrealized gains and
losses, accrued interest receivable or payable, and premiums paid or
received. These amounts were generally calculated using discounted cash flow
models based on current market yields for similar types of instruments and
the maturity of each instrument. The discount rates were based on market
interest rates and indices for similar foreign exchange contracts and
derivatives prevalent in the market. Refer to Note 20 of the Notes to
Consolidated Financial Statements on pages 70-76 for more information
regarding off-balance-sheet transactions, including a summary of the fair
values for each significant class of foreign exchange and derivative contract
outstanding in BAC's trading and asset and liability management portfolios.
- --------------------------------------------------------------------------------
Fair Values of Foreign Exchange Contracts and Derivatives
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31
------------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Trading $(426) $(304)
Asset and Liability Management 139 (567)
- --------------------------------------------------------------------------------
</TABLE>
22. Special Deposit Assessment
Congress is currently considering several proposals that would impose a
one-time assessment on deposits insured by the 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.
23. Legal Contingencies
Due to the nature of its business, BAC is subject to various threatened or
filed legal actions. Although the amount of the ultimate exposure, if any,
cannot be determined at this time, BAC, based upon the advice of counsel,
does not expect the final outcome of threatened or filed suits to have a
material adverse effect on its financial position.
24. BankAmerica Corporation (Parent Company Only)
The amount of funds available to the parent from its subsidiaries is limited
by restrictions placed on them by law and various debt covenants.
<PAGE>
80 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31
--------------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividends from subsidiaries:
Banking $2,110 $2,107 $1,088
Nonbanking 125 5 143
Interest on subordinated notes
purchased from banking subsidiaries 316 184 141
Interest on advances to subsidiaries:
Banking 5 8 13
Nonbanking 237 198 223
Interest on deposits in banks:
Banking subsidiaries 231 86 31
Third parties -- 6 1
Interest on available-for-sale
and held-to-maturity securities 87 123 179
Interest from securities purchased
under resale agreements from
third parties -- 4 9
Net gain on available-for-sale securities 10 21 7
Other income 27 15 3
--------------------------------
Total income 3,148 2,757 1,838
Interest on other short-term
borrowings 76 28 20
Interest on long-term debt 1,007 778 703
Interest on subordinated capital notes 46 42 113
Amortization of goodwill 30 30 27
Other expense 96 157 103
--------------------------------
Total expense 1,255 1,035 966
Income before income taxes
and equity in undistributed
income of subsidiaries 1,893 1,722 872
Benefit from income taxes 158 172 108
Equity in undistributed income
of subsidiaries 613 282 974
--------------------------------
Net Income $2,664 $2,176 $1,954
- --------------------------------------------------------------------------------
</TABLE>
See notes following the Statement of Cash Flows on page 81.
- --------------------------------------------------------------------------------
Under the U.S. National Bank Act and other federal laws, the parent's
national banking subsidiaries are subject to prohibitions on the payment of
dividends in certain circumstances and to restrictions on the amount that
each can pay without the prior approval of the Office of the Comptroller of
the Currency. Without the Comptroller's approval, dividends for a given year
cannot exceed each bank's net income (as defined by national banking laws)
for that year and retained net income from the preceding two years. In
addition, dividends may not be paid in excess of each bank's undivided
profits, subject to other applicable provisions of law. Based upon these
laws, the bank could have declared dividends for 1995 of $2,466 million, SFNB
could have declared dividends of $338 million, and the parent's other
national banking subsidiaries could have declared dividends of $6 million. At
December 31, 1995, the unutilized
- --------------------------------------------------------------------------------
Balance Sheet
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31
--------------------------
(in millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and short-term investments $ 3,211 $ 2,571
Available-for-sale securities 1,101 1,482
Held-to-maturity securities -- 125
Investments in subsidiaries:
Banking 21,124 20,228
Nonbanking 1,530 1,276
Subordinated notes purchased from
banking subsidiaries 4,580 4,525
Advances to subsidiaries:
Banking 79 98
Nonbanking 3,539 3,730
Accrued interest receivable 99 63
Goodwill 643 680
Other assets 733 640
--------------------------
Total Assets $36,639 $35,418
Liabilities and Stockholders' Equity
Borrowings from subsidiaries $ 141 $ 84
Other short-term borrowings 706 835
Accrued interest payable 192 193
Other liabilities 1,076 781
Long-term debt 13,697 14,029
Subordinated capital notes 605 605
--------------------------
Total liabilities 16,417 16,527
Stockholders' equity 20,222 18,891
--------------------------
Total Liabilities and Stockholders' Equity $36,639 $35,418
- --------------------------------------------------------------------------------
</TABLE>
See notes following the Statement of Cash Flows on page 81.
- --------------------------------------------------------------------------------
dividends allowed under these laws for the bank, SFNB, and other national
banking subsidiaries were $866 million, $45 million, and $6 million,
respectively.
In addition, state-chartered member and nonmember banking subsidiaries are
subject to dividend limitations imposed by applicable federal or state law.
State-chartered member banking subsidiaries could have declared dividends of $61
million without approval of the Federal Reserve Board for 1995. State-chartered
nonmember banking subsidiaries could have declared dividends without state
approval of $158 million for 1995. At December 31, 1995, the unutilized
dividends allowed under these laws for the state-chartered banking subsidiaries
were $4 million and $58 million, respectively.
The parent's subsidiary, Bank of America, FSB, is subject to regulatory
restrictions by the Office of Thrift Supervision on its payment of dividends.
Under these restrictions, Bank of America, FSB could have declared dividends
without regulatory approval of $101 million for 1995. At December 31, 1995, the
unutilized dividends allowed under these laws were $73 million.
The depository subsidiaries are also subject to certain restrictions of
the Federal Reserve Act on loans each subsidiary may extend to their parent
companies. Among other things, the aggregate of such loans may not exceed 10
percent of the sum of such subsidiary's capital stock and surplus. Such loans
must be secured by collateral with a value between 100 percent
<PAGE>
BankAmerica Corporation 1995 / 81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Cash Flows
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31
----------------------------------
(in millions) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $2,664 $2,176 $1,954
Adjustments to net income to arrive at net cash provided by operating
activities:
Provision for (benefit from) deferred income taxes (43) 215 (216)
Equity in undistributed income of subsidiaries (613) (282) (974)
Amortization of goodwill 30 30 27
(Increase) decrease in accrued interest receivable (36) 1 33
Increase (decrease) in accrued interest payable (1) 2 (32)
Increase (decrease) in current income taxes payable 53 (165) 216
Other, net 378 13 (73)
----------------------------------
Net cash provided by operating activities 2,432 1,990 935
Cash Flows from Investing Activities
Capital contributions to subsidiaries (182) (700) (935)
Capital returns from subsidiaries 108 522 395
Purchase of subordinated notes from banking subsidiaries (500) (310) --
Redemption of subordinated capital notes from banking subsidiaries 400 -- --
Activity in available-for-sale securities:
Sales proceeds 572 932 98
Purchases (54) (1,325) (25)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 125 529 281
Purchases -- -- (92)
Cash used for acquisitions -- (55) --
Collections from subsidiaries 6,807 7,185 4,224
Advances to subsidiaries (6,597) (6,301) (2,472)
Other, net (55) (35) 14
----------------------------------
Net cash provided by investing activities 624 442 1,488
Cash Flows from Financing Activities
Proceeds from borrowings from subsidiaries 428 386 84
Payments on borrowings from subsidiaries (360) (326) (188)
Increase (decrease) in other short-term borrowings (267) 128 235
Proceeds from issuance of long-term debt 2,265 3,336 3,026
Principal payments and retirements of long-term debt and subordinated capital notes (2,591) (3,208) (5,214)
Proceeds from issuance of common stock 151 52 268
Preferred stock repurchased (206) (324) --
Treasury stock purchased (926) (503) --
Common stock dividends (684) (571) (497)
Preferred stock dividends (227) (248) (241)
Other, net 1 (107) (57)
----------------------------------
Net cash used by financing activities (2,416) (1,385) (2,584)
----------------------------------
Net increase (decrease) in cash and short-term investments 640 1,047 (161)
Cash and short-term investments at beginning of year 2,571 1,524 1,685
----------------------------------
Cash and Short-Term Investments at End of Year $3,211 $2,571 $1,524
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
General: For income and asset classification purposes, banking amounts
include the amounts for all of the parent's bank, bank holding company, and
savings bank subsidiaries. Certain prior-period amounts have been
reclassified to conform to the current presentation.
Balance Sheet: At December 31, 1995 and 1994, cash and short-term investments
included $3,191 million and $2,456 million, respectively, of interest-bearing
deposits with the bank.
Statement of Cash Flows: The statement of cash flows illustrates the change
in cash and short-term investments as disclosed in the Parent Company Only
balance sheet. Short-term investments have original maturities of three
months or less and are considered to be cash equivalents. During 1995, 1994,
and 1993, the parent received net income tax payments representing
reimbursements from subsidiaries of $168 million, $211 million, and $119
million, respectively. The parent made interest payments on interest-bearing
liabilities of $1,155 million, $916 million, and $868 million in 1995, 1994,
and 1993, respectively.
- --------------------------------------------------------------------------------
and 130 percent of the loan, depending on the type of collateral. Under these
restrictions, and assuming the parent provided the collateral required, the
bank, SFNB, Bank of America Illinois, Bank of America National Association, and
other depository subsidiaries could have loaned to the parent a maximum of
$1,198 million, $163 million, $207 million, $95 million, and $308 million
respectively, at December 31, 1995.
The net assets of depository subsidiaries restricted from flowing to the
parent by legal limitations were $17,576 million at December 31, 1995.
<PAGE>
82 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
25. Performance by Geographic Area
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
----------------------------------------------------------------
Total Assets Net Interest and Income Before
(in millions) Year at December 31 Gross Income Noninterest Income Income Taxes Net Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Domestic 1995 $182,402 $16,105 $11,568 $4,009 $2,320
1994 171,002 13,137 10,305 3,214 1,859
1993 150,195 13,061 10,417 2,778 1,540
- ------------------------------------------------------------------------------------------------------------------------------------
Asia 1995 23,147 1,655 642 157 94
1994 18,883 1,358 682 266 165
1993 15,040 1,064 618 247 161
Europe, Middle East, and Africa 1995 20,523 1,836 515 184 119
1994 19,124 1,375 441 102 58
1993 14,702 1,233 441 217 140
Latin America and the Caribbean 1995 4,887 691 252 185 111
1994 5,470 550 185 48 37
1993 5,930 466 192 170 103
Canada 1995 1,487 99 31 32 20
1994 996 99 64 87 57
1993 1,066 64 34 16 10
- ------------------------------------------------------------------------------------------------------------------------------------
Total Foreign 1995 50,044 4,281 1,440 558 344
1994 44,473 3,382 1,372 503 317
1993 36,738 2,827 1,285 650 414
- ------------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corporation 1995 232,446 20,386 13,008 4,567 2,664
1994 215,475 16,519 11,677 3,717 2,176
1993 186,933 15,888 11,702 3,428 1,954
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Since BAC's operations are highly integrated, certain asset, liability,
income, and expense amounts must be allocated to arrive at total assets,
gross income, net interest and noninterest income, income before income
taxes, and net income. The principal allocations and underlying assumptions
used in the presentation above are as follows:
BAC's funds transfer pricing system allocates domestic sources of funds
at U.S. market rates based on the maturities of the funds. To the extent that
overseas units interact with U.S. operations, they are also included in the
funds transfer pricing system.
The allowance for credit losses is established by credit officers for
each portfolio segment. After the allowance has been established for
portfolio segments, credit management establishes an unallocated portion of
the allowance for credit losses, which is attributable to factors that cannot
be associated with a particular portfolio segment. The unallocated portions
of the allowance and the related provisions for credit losses are assigned to
the appropriate geographic areas. While management allocates reserves to
various portfolio segments, the allowance is general in nature and is
available for the entire portfolio.
Equity is assigned on a risk-adjusted basis. Overhead is allocated based
on each geographic area's equally weighted operating expenses.
Each geographic area includes its respective tax liability. BAC allocates
federal and state taxes at its effective tax rates.
Translation losses, net of hedging, totaled $14 million, $2 million, and
$4 million in 1995, 1994, and 1993, respectively. These amounts, which are
reported in other noninterest income, are included in the table above.
<PAGE>
BankAmerica Corporation 1995 / 83
- --------------------------------------------------------------------------------
26. Quarterly Results (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1995 Quarter Ended 1994 Quarter Ended
------------------------------------------ -----------------------------------------------
(in millions, except per share data) Dec 31 Sept 30 June 30 Mar 31 Dec 31 Sept 30 June 30 Mar 31
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Results of Operations
Interest income $4,071 $4,044 $3,989 $3,736 $3,479 $3,153 $2,939 $2,813
Interest expense 1,934 1,888 1,866 1,690 1,467 1,249 1,107 1,019
--------------------------------------------------------------------------------------------
Net interest income 2,137 2,156 2,123 2,046 2,012 1,904 1,832 1,794
Provision for credit losses 130 110 100 100 100 110 125 125
Noninterest income 1,158 1,157 1,138 1,093 1,048 1,072 1,015 1,000
Noninterest expense 1,966 1,993 2,053 1,989 1,966 1,935 1,818 1,781
--------------------------------------------------------------------------------------------
Income before income taxes 1,199 1,210 1,108 1,050 994 931 904 888
Provision for income taxes 495 506 463 439 403 384 379 375
--------------------------------------------------------------------------------------------
Net Income $ 704 $ 704 $ 645 $ 611 $ 591 $ 547 $ 525 $ 513
Earnings per common and common
equivalent share $ 1.74 $ 1.72 $ 1.56 $ 1.46 $ 1.41 $ 1.36 $ 1.33 $ 1.27
Earnings per common share--assuming
full dilution 1.74 1.72 1.55 1.45 1.40 1.35 1.32 1.26
Stock Data
Dividends per common share 0.46 0.46 0.46 0.46 0.40 0.40 0.40 0.40
Common stock price range:/a/
High 68 1/2 61 1/8 55 1/4 49 5/8 46 1/4 49 5/8 50 1/4 48 7/8
Low 57 52 1/2 48 3/8 39 1/2 38 5/8 44 38 3/8 38 3/4
Closing common stock price/a/ 64 3/4 59 7/8 52 5/8 48 1/4 39 1/2 44 1/8 45 3/4 39 3/8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ The principal market of BAC's common stock is the New York Stock
Exchange; the stock is also listed on the Chicago, Pacific, London, and
Tokyo Stock Exchanges. During the first quarter of 1996, BAC plans to
complete its delisting process from the Tokyo Stock Exchange. Price
information represents quotations as reported in the New York Stock Exchange
consolidated transaction reporting system.
- --------------------------------------------------------------------------------
<PAGE>
84 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Corporate Information
- --------------------------------------------------------------------------------
[Computer icons depicting the Financial Review, Consolidated Financial
Statements, and Corporate Information sections of the Annual Report with the
Corporate Information icon highlighted appears here]
Boards of Directors/BankAmerica Corporation and
Bank of America NT&SA
As of February 5, 1996
Committees:
Joseph F. Alibrandi
Chairman of the Board Executive
Whittaker Corporation Executive Personnel and
Simi Valley, California Compensation
(aerospace/manufacturing Nominating (Chair)
and communications)
- --------------------------------------------------------------------------------
Jill E. Barad
President and Chief Operating Officer Public Policy
Mattel, Inc.
El Segundo, California
(toy manufacturing)
- --------------------------------------------------------------------------------
Peter B. Bedford
Chairman of the Board Executive
and Chief Executive Officer Executive Personnel and
Bedford Property Investors, Inc. Compensation
Lafayette, California Nominating
(real estate investment trust)
- --------------------------------------------------------------------------------
Andrew F. Brimmer
President Auditing and Examining
Brimmer & Company, Inc.
Washington, D.C.
(economic and financial consulting)
- --------------------------------------------------------------------------------
Richard A. Clarke
Retired Chairman of the Board Nominating
and Chief Executive Officer Public Policy (Chair)
Pacific Gas and Electric Company
San Francisco, California
(gas and electric utility)
- --------------------------------------------------------------------------------
David A. Coulter
President and Chief Executive Officer Executive
BankAmerica Corporation/
Bank of America NT&SA
- --------------------------------------------------------------------------------
Timm F. Crull
Retired Chairman Executive Personnel and
Nestle USA, Inc. Compensation
Glendale, California Auditing and Examining
(food and related products processing) Public Policy
- --------------------------------------------------------------------------------
Kathleen Feldstein
President Auditing and Examining
Economics Studies, Inc. (Chair)
Belmont, Massachusetts
(economics consulting)
- --------------------------------------------------------------------------------
Committees:
- --------------------------------------------------------------------------------
Donald E. Guinn
Chairman Emeritus Executive
Pacific Telesis Group Executive Personnel and
San Francisco, California Compensation
(telecommunication)
- --------------------------------------------------------------------------------
Philip M. Hawley
Retired Chairman Executive
and Chief Executive Officer Executive Personnel and
Broadway Stores, Inc. Compensation (Chair)
Los Angeles, California
(retailing)
- --------------------------------------------------------------------------------
Frank L. Hope, Jr.
Consulting Architect Nominating
San Diego, California Public Policy
(architecture)
- --------------------------------------------------------------------------------
Ignacio E. Lozano, Jr.
Chairman Auditing and Examining
La Opinion
Los Angeles, California
(newspaper publishing)
- --------------------------------------------------------------------------------
Walter E. Massey
President Auditing and Examining
Morehouse College
Atlanta, Georgia
(education)
- --------------------------------------------------------------------------------
John M. Richman
Of Counsel Public Policy
Wachtell, Lipton, Rosen and Katz
Chicago, Illinois
(law firm)
- --------------------------------------------------------------------------------
Richard M. Rosenberg
Chairman of the Board Executive (Chair)
BankAmerica Corporation/
Bank of America NT&SA
- --------------------------------------------------------------------------------
A. Michael Spence
Dean of the Graduate School of Business Executive Personnel and
Stanford University Compensation
Stanford, California Public Policy
(education)
- --------------------------------------------------------------------------------
Honorary Directors/BankAmerica Corporation and
Bank of America NT&SA (nonvoting)
As of February 5, 1996
- --------------------------------------------------------------------------------
A.W. Clausen
Retired Chairman and Chief Executive Officer
BankAmerica Corporation/Bank of America NT&SA
- --------------------------------------------------------------------------------
Rudolph A. Peterson
Retired President and Chief Executive Officer
BankAmerica Corporation/Bank of America NT&SA
- --------------------------------------------------------------------------------
<PAGE>
BankAmerica Corporation 1995 / 85
- --------------------------------------------------------------------------------
Principal Officers/BankAmerica Corporation
Pictured, in addition to Mr. Rosenberg, are members
of the Operating Policy Committee
As of February 5, 1996
[PHOTO APPEARS HERE] Richard M. Rosenberg
Chairman of the Board
David A. Coulter [PHOTO APPEARS HERE]
President and
Chief Executive Officer
[PHOTO APPEARS HERE] Kathleen J. Burke
Vice Chairman
Luke S. Helms [PHOTO APPEARS HERE]
Vice Chairman
Jack L. Meyers [PHOTO APPEARS HERE]
Vice Chairman
Michael J. Murray [PHOTO APPEARS HERE]
Vice Chairman
[PHOTO APPEARS HERE] Michael E. O'Neill
Vice Chairman
Thomas E. Peterson [PHOTO APPEARS HERE]
Vice Chairman
[PHOTO APPEARS HERE] Michael E. Rossi
Vice Chairman
[PHOTO APPEARS HERE] Martin A. Stein
Vice Chairman
Other Principal Officers
- --------------------------------------------------------------------------------
Michael J. Halloran
Executive Vice President and General Counsel
- --------------------------------------------------------------------------------
Bruce W. Mitchell
Executive Vice President and General Auditor
- --------------------------------------------------------------------------------
Raymond R. Peters
Executive Vice President and Treasurer
- --------------------------------------------------------------------------------
Cheryl A. Sorokin
Executive Vice President and Secretary
- --------------------------------------------------------------------------------
Joseph E. Vaez
Executive Vice President and Director of Credit Examination Services
- --------------------------------------------------------------------------------
James H. Williams
Executive Vice President and Chief Accounting Officer
- --------------------------------------------------------------------------------
<PAGE>
86 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
Senior Management Council/Bank of America NT&SA
As of February 5, 1996
- --------------------------------------------------------------------------------
David A. Coulter*
President and Chief Executive Officer
- --------------------------------------------------------------------------------
Kathleen J. Burke*
Vice Chairman
- --------------------------------------------------------------------------------
Luke S. Helms*
Vice Chairman
- --------------------------------------------------------------------------------
Jack L. Meyers*
Vice Chairman
- --------------------------------------------------------------------------------
Michael J. Murray*
Vice Chairman
- --------------------------------------------------------------------------------
Michael E. O'Neill*
Vice Chairman and Chief Financial Officer
- --------------------------------------------------------------------------------
Thomas E. Peterson*
Vice Chairman
- --------------------------------------------------------------------------------
Michael E. Rossi*
Vice Chairman
- --------------------------------------------------------------------------------
Martin A. Stein*
Vice Chairman
- --------------------------------------------------------------------------------
Alexander M. Anderson
Group Executive Vice President -- Investment Management Services
- --------------------------------------------------------------------------------
Charles Bell
Group Executive Vice President -- Commercial Business
- --------------------------------------------------------------------------------
Julia Chang Bloch
Group Executive Vice President -- Corporate Relations
- --------------------------------------------------------------------------------
Christopher Callero
Group Executive Vice President -- National Consumer Assets
- --------------------------------------------------------------------------------
P. Gerald Doherty
Group Executive Vice President -- Global Capital Markets
- --------------------------------------------------------------------------------
Kenneth G. Edwards
Group Executive Vice President -- Commercial Real Estate
- --------------------------------------------------------------------------------
Jeremy G. Fair
Group Executive Vice President -- U.S. Corporate
- --------------------------------------------------------------------------------
Christine N. Garvey
Group Executive Vice President -- Corporate Real Estate/OREO
- --------------------------------------------------------------------------------
Michael J. Halloran
Group Executive Vice President and General Counsel
- --------------------------------------------------------------------------------
James E. Hulihan, Jr.
Group Executive Vice President -- Asia Retail Banking
- --------------------------------------------------------------------------------
James G. Jones
Group Executive Vice President -- Consumer Credit
- --------------------------------------------------------------------------------
Liam E. McGee
Group Executive Vice President -- California Retail
- --------------------------------------------------------------------------------
Larry D. McNabb
Group Executive Vice President -- Global Payment Services
- --------------------------------------------------------------------------------
Bruce W. Mitchell
Group Executive Vice President and General Auditor
- --------------------------------------------------------------------------------
Robert P. Morrow, III
Group Executive Vice President -- Asia Wholesale Banking
- --------------------------------------------------------------------------------
Barbara Z. Otto
Group Executive Vice President -- Latin America/Canada
- --------------------------------------------------------------------------------
Raymond R. Peters
Group Executive Vice President and Treasurer
- --------------------------------------------------------------------------------
Barbara L. Rambo
Group Executive Vice President -- Commercial Banking
- --------------------------------------------------------------------------------
Daniel P. Riley
Group Executive Vice President -- Support Services
- --------------------------------------------------------------------------------
Arthur D. Ringwald
Group Executive Vice President -- BankAmerica Mortgage
- --------------------------------------------------------------------------------
Federico Sacasa
Group Executive Vice President -- International Trade Banking
- --------------------------------------------------------------------------------
Ralph Schauss
Group Executive Vice President -- Europe, Middle East, and Africa
- --------------------------------------------------------------------------------
Frank A. Somers
Group Executive Vice President -- Special Assets
- --------------------------------------------------------------------------------
Joseph E. Vaez
Group Executive Vice President and Director Corporate Credit
Examination Services
- --------------------------------------------------------------------------------
James H. Williams
Group Executive Vice President and Chief Accounting Officer
- --------------------------------------------------------------------------------
Doyle L. Arnold
Executive Vice President -- Corporate Development
- --------------------------------------------------------------------------------
Jeanine Brown
Executive Vice President -- Interactive Banking
- --------------------------------------------------------------------------------
Paul M. Dorfman
Executive Vice President -- Credit Policy
- --------------------------------------------------------------------------------
Richard V. Harris
Executive Vice President -- Leasing
- --------------------------------------------------------------------------------
John R. Lloyd, Jr.
Executive Vice President -- Institutional Trust
- --------------------------------------------------------------------------------
Richard W. Madresh
Executive Vice President -- Business Credit
- --------------------------------------------------------------------------------
Donald A. Mullane
Executive Vice President -- Corporate Community Development
- --------------------------------------------------------------------------------
Cheryl A. Sorokin
Executive Vice President and Secretary
- --------------------------------------------------------------------------------
Lewis W. Teel
Executive Vice President -- Trading Exposure Control and Compliance
- --------------------------------------------------------------------------------
John W. Wheeler
Executive Vice President -- Housing Services
- --------------------------------------------------------------------------------
M. Faye Wilson
Executive Vice President -- Consumer Finance
- --------------------------------------------------------------------------------
*Member of the Managing Committee
<PAGE>
BankAmerica Corporation 1995 / 87
- --------------------------------------------------------------------------------
Chairmen/Presidents/Other Subsidiary Banks
As of February 5, 1996
- --------------------------------------------------------------------------------
Bank of America Alaska, N.A.
Richard W. Larson*
Chairman and President
- --------------------------------------------------------------------------------
Bank of America Arizona
David S. Hanna Kathryn L. Munro
Chairman President
- --------------------------------------------------------------------------------
Bank of America Community Development Bank
Donald A. Mullane R. Michael Mantle
Chairman President
- --------------------------------------------------------------------------------
Bank of America Idaho, N.A.
Ronald A. Slocum
Chairman and President
- --------------------------------------------------------------------------------
Bank of America Illinois
William M. Goodyear
Chairman and President
- --------------------------------------------------------------------------------
Bank of America National Association
James G. Jones Stephen B. Galasso
Chairman President
- --------------------------------------------------------------------------------
Bank of America Nevada
Richard A. Etter
Chairman and President
- --------------------------------------------------------------------------------
Bank of America New Mexico, N.A.
Laura W. Fitch
Chairman and President
- --------------------------------------------------------------------------------
Bank of America Oregon
W. Charles Armstrong
Chairman and President
- --------------------------------------------------------------------------------
Bank of America Texas, N.A.
Ronald G. Biagi David J. Berry
Chairman President
- --------------------------------------------------------------------------------
Seattle-First National Bank
John V. Rindlaub Joseph E. Gray
Chairman President
- --------------------------------------------------------------------------------
*Effective February 7, 1996
Advisor-BankAmerica Corporation
As of February 5, 1996
- --------------------------------------------------------------------------------
George S. Ishiyama
Senior Advisor
- --------------------------------------------------------------------------------
<PAGE>
88 / BankAmerica Corporation 1995
- --------------------------------------------------------------------------------
BankAmerica Corporate Governance Principles
The Board of Directors has adopted Corporate Governance Principles covering the
Role of the Board, Board Structure, Committees, Meetings, and other issues.
Below is a summary of some of the major points. Copies of the full text of the
Principles can be obtained by writing to the Corporate Secretary's Office
(address on inside back cover).
Responsibility to Shareholders The board believes the role of the board of
directors is to oversee the affairs of the corporation for the benefit of
shareholders.
Strategic Issues The board believes it is important to discuss long-range
strategic issues as a matter of course at regular board meetings as well as at
periodic, multi-day off-site meetings devoted solely to strategic issues.
Operating Plan The board reviews BankAmerica's yearly operating plan and
specific financial goals at the start of each year and monitors performance in
comparison to plan. The board also believes it is important to establish and
evaluate longer-term objectives and not to over-emphasize short-term
performance.
Business Ethics The board believes the long-term success of BankAmerica is
dependent upon maintenance of an ethical business environment that focuses on
adherence to both the letter and the spirit of regulatory and legal mandates and
expects management to conduct operations in a manner supportive of the board's
view.
Performance of CEO The board believes that CEO performance should be evaluated
annually and as a regular part of any decision with respect to CEO compensation.
The board ratifies any compensation decisions for the CEO made by the Executive
Personnel and Compensation Committee.
Chairman of the Board The Chairman of the Board may be an officer/director or
an outside director and may or may not be the same individual as the CEO, at the
option of the board. The board believes it should be free to make these
determinations depending on what it believes is best for the corporation in
light of all the circumstances.
Executive Sessions The board believes that outside directors should meet in
executive session from time to time during the year and that some of the
executive sessions should be with the CEO, who is an inside director, and some
should be outside the presence of the CEO and any other inside directors or
management officials.
Outside Directors The board believes that a significant majority of the board
should be outside directors: individuals who are not members of management and
have not been such within the last 10 years; have no close family relationship
with a member of key management; are not significant advisors or consultants to
BankAmerica; do not have significant personal service contracts with
BankAmerica; and do not have any other relationship with BankAmerica which, in
the opinion of the board, would adversely affect their ability to exercise
independent judgment as directors.
Selection of Directors The board believes that directors should be nominated by
a Nominating Committee of the board consisting entirely of outside directors and
that an offer to join the board should be extended by the committee. The
committee may consider the views of the CEO in making nominations. The board
believes that directors should not represent particular constituents, but should
be diverse enough to be clearly able to represent differing points of view. The
board does not set specific criteria for directors, but believes that they
should show evidence of leadership in their particular field, and have broad
experience and the ability to exercise sound business judgment. In selecting
directors, the board generally seeks a combination of active or former CEOs of
major complex businesses, leading academics and entrepreneurs, including women
and ethnic minority individuals.
Board Effectiveness The board believes it is appropriate to periodically review
its own effectiveness, including its corporate governance policies and
practices, and would generally expect a review annually. The board believes that
the Nominating Committee should review incumbent directors as part of the annual
nomination process and in the context of the committee's overall review of the
strengths and weaknesses of the board as a whole.
Director Compensation The board believes that director compensation should be
competitive with that paid to directors of other major financial institutions
and major corporations. The board believes directors should have a financial
stake in BankAmerica and in 1995 established a stock ownership guideline of
three times the annual director retainer fee in stock or deferred restricted
stock equivalent units, to be achieved within five years of joining the board.
The board also mandates deferral of at least one-half of the retainer into
deferred restricted stock equivalent units which fluctuate with the value of
BankAmerica stock.
Committee Assignments The board believes that the Auditing and Examining
Committee, the Executive Personnel and Compensation Committee, and the
Nominating Committee should be comprised solely of outside directors.
Committee Agendas The board believes committee chairmen, in consultation with
appropriate members of management and committee members, should determine
committee agendas.
<PAGE>
- --------------------------------------------------------------------------------
Glossary of Common Banking Terms
Adjustable rate mortgage (ARM) A loan secured by real estate with periodic
adjustments in the interest rate, usually every six months. These mortgages
often have consumer protections against rapid escalation in borrowing costs,
such as a maximum amount that the interest rate can increase in any single year,
or over the life of the loan.
Allocated transfer risk reserve (ATRR) The portion of a bank's allowance for
credit losses allocated for losses to borrowers in "value impaired" countries,
as prescribed by the banking regulators.
Asset-liability management The practice of balance sheet management with the
objective of promoting income generation while containing market risk exposures.
Bank Insurance Fund (BIF) The government guarantee program administered by the
Federal Deposit Insurance Corporation, backing deposits in commercial banks up
to $100,000 per account.
Brady bond A dollar-denominated long-term bond collateralized by U.S.
government securities received in exchange for restructuring country loans.
Charge-off Loan principal that is written off as an uncollectible bad debt.
Co-branded credit card A credit card jointly sponsored by a bank and a retail
merchant or other entity.
Core deposits Customer deposits which are considered a stable and reasonably
priced source of funds for investing.
Fixed rate mortgage (FRM) A loan secured by real estate with an interest rate
that does not vary over the term of the loan.
Hedging The financial technique utilized to offset the risk of loss from price
or rate fluctuations in the market.
Interest rate gap The amount by which the carrying value of interest-rate-
sensitive assets for a designated maturity period differs from the carrying
value of interest-rate-sensitive liabilities and equity for the same period.
Liquidity The ability of an organization to meet its maturing financial
obligations as they come due.
Master netting agreement A written contract to settle mutual obligations with
a single counterparty at the net value of all outstanding contracts, as opposed
to the gross value.
Risk-based capital A measure of a bank's financial strength developed by
banking regulators, taking into account the risks inherent in the bank's assets
as well as its off-balance-sheet exposures.
Risk management The procedures necessary to manage a bank's exposure to
various types of risk associated with transacting business.
Savings Association Insurance Fund (SAIF) The government guarantee program
administered by the Federal Deposit Insurance Corporation, backing deposits in
federal savings and loan associations, federal savings banks, and certain state
savings and loan associations up to $100,000 per account.
Simulation A technique to test earnings performance under different interest
rate and pricing scenarios.
Spread The difference between the interest rate charged by a bank on an
investment (i.e. a loan) and the bank's cost of funds.
Transfer pricing A method by which costs are allocated to the various profit
centers within an organization.
Venture capital Generally, the investment in high-risk or small companies
specializing in new products or technologies, often in return for an equity
position.
- --------------------------------------------------------------------------------
Design: Vinje Design, Inc.
Illustration: Michael Kohnke
Cover Photography: Geoffrey Nelson
Inside Photography: Terry Huseby
[RECYCLED PAPER LOGO APPEARS HERE] Printed on recycled paper.
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF BANKAMERICA APPEARS HERE]
BankAmerica ------------
BULK RATE
U.S. POSTAGE
PAID
BankAmerica
Corporation
------------
Department 13018
Box 37000
San Francisco, California 94137
- --------------------------------------------------------------------------------
Connecting With BankAmerica
[COMPUTER ICON OF MAILING ENVELOPE APPEARS HERE]
- ----------------------------------------
By Mail
- ----------------------------------------
The Annual Report of BankAmerica Corporation is designed to provide financial
facts and analysis to shareholders and professional investors while satisfying
various regulatory requirements. The following additional publications are
available without charge by writing to:
Bank of America, Corporate Public Relations #13124, P.O. Box 37000,
San Francisco, CA 94137
. The BankAmerica Corporation 1995 Form 10-K, which includes additional
information and financial data on the corporation
. Information regarding community reinvestment and related activities
. Environmental Program Progress Report
. Recording for the blind of the 1995 Annual Report
Requests for assistance with specific matters related to BankAmerica`s stock and
registered securities can be addressed to the corporation`s Transfer Agent and
Registrar:
Chemical Mellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
or
Chemical Mellon Shareholder Services, L.L.C.
50 California Street - 10th Floor
San Francisco, CA 94111
- --------------------------------------------------------------------------------
[COMPUTER ICON OF TELEPHONE AND FAX MACHINE APPEARS HERE]
- ----------------------------------------
By Phone
- ----------------------------------------
Shareholder Assistance Line (800) 642-9880
Shareholders can call toll-free to receive assistance with specific matters
related to BAC stock and registered securities, such as change of address, stock
transfers and change of ownership, non-receipt of or lost stock certificates or
dividend checks, Dividend Reinvestment Plan information, direct deposit of
dividends, consolidation of accounts, and dividend income reporting for tax
purposes. Shareholders can also call (415) 622-3530 during normal Pacific Coast
business hours to receive information on corporate activities.
Loan-by-Phone 1-800-The BofA.
Customers can apply for loans toll-free, 24 hours a day.
- --------------------------------------------------------------------------------
[COMPUTER ICON OF COMPUTER TERMINAL APPEARS HERE]
- ----------------------------------------
Online
- ----------------------------------------
Visit BankAmerica`s home page on the World Wide Web to view the latest
information about the corporation and its products and services, or apply for a
loan or credit card. [http://www.bankamerica.com]
Corporate disclosure documents filed with the Securities and Exchange Commission
by BankAmerica and other companies can be obtained from the SEC home page on the
World Wide Web [http://www.sec.gov].
Customers can also visit BankAmerica`s site in the Personal Finance section of
America Online.
- --------------------------------------------------------------------------------
[COMPUTER ICON FOR PERSONAL SERVICE APPEARS HERE]
- ----------------------------------------
In Person
- ----------------------------------------
With more than 2,500 customer service locations in ten western states and more
than 6,600 ATMs, BankAmerica provides a level of on-site customer convenience
that is second to none. Consult the telephone directory for a location near you.
The Annual Meeting of Shareholders will be held in San Francisco at the
California Masonic Memorial Temple Auditorium, 1111 California Street, on
Thursday, May 23, 1996 at 2 p.m.
SEC-13 2-96
- --------------------------------------------------------------------------------
<PAGE>
Appendix Index
<TABLE>
<CAPTION>
BankAmerica Corporation 1995
Annual Report to Shareholders
page reference Description of omitted graphics
- ----------------------------- -------------------------------
<S> <C>
1 Photograph of Richard M. Rosenberg,
Chairman of the Board and David A.
Coulter, Chief Executive Officer
2 Quarterly Earnings Per Share
(Plot point graph in non-EDGAR version)
2 Quarterly Return On Average Common
Equity (Plot point graph in non-EDGAR
version)
5 Pie Chart of Major Business Sectors with
all sectors highlighted (Pie chart in
non-EDGAR version)
6 Computer icons depicting the Corporation's
Major Business Sectors with the Consumer
banking icon highlighted
6 Pie Chart of Major Business Sectors with
the Consumer Banking sector highlighted
(Pie chart in non-EDGAR version)
8 Computer icons depicting the Corporation's
Major Business Sectors with the U.S.
Corporate and International Banking icon
highlighted
8 Pie Chart of Major Business Sectors with
the U.S. Corporate and International
Banking sector highlighted (Pie chart in
non-EDGAR version)
10 Computer icons depicting the Corporation's
Major Business Sectors with the Commercial
Real Estate icon highlighted
10 Pie Chart of Major Business Sectors with
the Commercial Real Estate sector
highlighted (Pie chart in non-EDGAR
version)
12 Computer icons depicting the Corporation's
Major Business Sectors with the Middle-
Market Banking icon highlighted
12 Pie Chart of Major Business Sectors with
the Middle-Market Banking sector
highlighted (Pie chart in non-EDGAR
version)
14 Computer icons depicting the Corporation's
Major Business Sectors with the Private
Banking and Investment Services icon
highlighted
14 Pie Chart of Major Business Sectors with
the Private Banking and Investment
Services sector highlighted (Pie chart in
non-EDGAR version)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
16 Computer icons depicting the Financial
Review, Consolidated Financial Statements,
and Corporate Information sections of the
Annual Report with Financial Review icon
highlighted
16 Price Range of Common Stock (Bar chart in
non-EDGAR version)
18 Computer icon depicting the Consumer
Banking sector
18 Computer icon depicting the U.S.
Corporate and International Banking sector
19 Computer icon depicting the Commercial
Real Estate sector
20 Computer icon depicting the Middle-Market
Banking sector
20 Computer icon depicting the Private
Banking and Investment Services sector
21 Net Interest Margin (Plot point graph in
non-EDGAR version)
23 Noninterest Income (Stacked block graph
in non-EDGAR version)
24 Noninterest Expense (Stacked block graph
in non-EDGAR version)
24 Staff Levels (Plot point graph in
non-EDGAR version)
28 Total Loan Outstandings by Geographic Area
(Pie chart in non-EDGAR version)
32 Total Loan Outstandings by Type (Pie chart
in non-EDGAR version)
37 Allowance for Credit Losses as a
Percentage of Nonaccrual Assets (Bar
chart in non-EDGAR version)
37 Nonaccrual Assets at Year End (in millions
of dollars) (Bar chart in non-EDGAR
version)
39 Histogram of Daily Trading-Related
Revenue for 1995) (Bar chart in
non-EDGAR version)
40 Net Interest Rate Risk (in billions of
dollars) (Plot point graph in non-EDGAR
version)
43 Common and Total Stockholders' Equity
(Plot point graph in non-EDGAR version)
43 Dividends Declared per Common Shares (Plot
point graph in non-EDGAR version)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
45 Risk-Based Capital Ratios (Bar chart in
non-EDGAR version)
46 Computer icons depicting the Financial
Review, Consolidated Financial
Statements, and Corporate Information
sections of the Annual Report with the
Consolidated Financial Statements icon
highlighted
84 Computer icons depicting the Financial
Review, Consolidated Financial
Statements, and Corporate Information
sections of the Annual Report with the
Corporate Information icon highlighted
85 Photograph of Richard M. Rosenberg,
Chairman of the Board
Photograph of David A. Carter,
President and Chief Executive Officer
Photograph of Kathleen J. Burke,
Vice Chairman
Photograph of Luke S. Helms,
Vice Chairman
Photograph Jack L. Meyers,
Vice Chairman
Photograph of Michael J. Murray,
Vice Chairman
Photograph of Michael E. O'Neil,
Vice Chairman
Photograph of Thomas E. Peterson,
Vice Chairman
Photograph of Michael E. Rossi,
Vice Chairman
Photograph of Martin A. Stein,
Vice Chairman
Back Cover Computer Icon for Obtaining Information by
Mail
Back Cover Computer Icon for Obtaining Information by
Telephone
Back Cover Computer Icon for Obtaining Information by
Online
Back Cover Computer Icon for Obtaining Information by
in Person
</TABLE>
<PAGE>
EXHIBIT 21
As of December 31, 1995
-----------------------
BANKAMERICA CORPORATION SUBSIDIARIES
The following list sets forth information concerning the direct
subsidiaries of BankAmerica Corporation (the Parent) and indirect subsidiaries
of the Parent. Except as otherwise indicated, each subsidiary is wholly owned
and does business under its own name.
<TABLE>
<CAPTION>
Org. Jurisdiction of
NO. Subsidiary Name Incorporation
- ---- --------------- -------------------
<C> <S> <C>
054. Appold Holdings Limited............................ Delaware
080. Appold Japan Limited............................ Hong Kong
086. Appold Leasing Limited.......................... U.K.
052. Appold Leasing, Inc. .............................. Delaware
367. BA Commercial Credit Corp. ........................ Florida
368. BA Futures, Incorporated........................... Delaware
2268. BA Futures, S.A. ............................... France
369. BA Insurance Holding Company....................... Delaware
370. BA Insurance (Cayman) Ltd. ..................... Cayman Islands
371. BancAmerica Insurance Company................... Cayman Islands
120. BA Securities, Inc. ............................... Delaware
238. BA Security Services, Inc. ........................ Delaware
240. BA Clearing Corporation......................... Delaware
242. BankAmerica State Trust Company................. California
376. BancAmerica Commercial Corporation................. Pennsylvania
016. Bank of America Alaska, N.A. ...................... U.S.
382. Bank of America Arizona............................ Arizona
(dba: Bank of America)
657. Bamerilease, Inc. .............................. Arizona
121. Bank of America Community Development Bank......... California
032. Bank of America, FSB............................... U.S.
(dba: Bank of America Hawaii; BankAmerica Mortgage,
a division of Bank of America, FSB; BankAmerica
Housing Services, a division of Bank of America,
FSB; and Bank of America FSB, Community
Development Division)
2202. Arbor National Holdings, Inc. .................. New York
2208. Arbor National Mortgage, Inc. ............... New York
2203. Arbor Real Estate Management, Inc. .......... New York
2206. Designated Appraisers, Inc. ................. New York
2207. Home Closing Services, Inc. ................. New York
2204. Lauren Advertising, Inc. .................... New York
2205. Roots Insurance Agency, Inc. ................ New York
641. Bank of America (Hawaii) Insurance
Agency, Inc. ................................... Hawaii
631. Honfed Financial Services Corp. ................ Hawaii
636. First Collateral Services, Inc. ............. Hawaii
1410. United Mortgage Holding Company................. Minnesota
1411. United Mortgage Corporation.................. Minnesota
1413. IDL Mortgage Corporation.................. Wisconsin
1414. U.M.C. Asset Management Corporation....... Minnesota
1412. Valley Mortgage Corporation............... Minnesota
</TABLE>
- 1 -
<PAGE>
<TABLE>
<C> <S> <C>
017. Bank of America Idaho, N.A. ....................... U.S.
2011. Bank of America Illinois........................... Illinois
2082. BA Service Corp. ............................... Delaware
2019. Bank of America Illinois Community
Development Corporation......................... Delaware
2022. BankAmerica International Investment Corporation U.S.
2024. Chicago Continental Capital Market
Compania de Assesoria Financiera Limitada *.. Chile
2026. CIC Trading, S.A. *.......................... Argentina
2028. C.N. Investments, Inc. ...................... Cayman Islds
2029. Continental Capital Markets Limited.......... U.K.
2030. Lease Continental PLC..................... U.K.
2032. Continental Finanziaria S.P.A. .............. Italy
2033. Continental Illinois de Mexico, S.A.
de C.V. ..................................... Mexico
2037. Continental Information & Technology
Services Co., S.A.*.......................... Argentina
2038. Continental International Finance
Corporation II Limitada...................... Chile
2041. Continental International Securities,
Limited...................................... Cayman Islds
2043. Continental Investment Company S.A. *........ Argentina
2044. Continental Servicios Corporativos S.A.
de C.V. ..................................... Mexico
2045. Destco, Ltd. ................................ Cayman Islds
2098. Fundo De Conversao Capital Estrangeiro-
Continental Illinois Sellas............... Brazil
2047. Invenco, Inc. ............................... Cayman Islds
2054. Ismael I, Inc. .............................. Cayman Islds
2057. Juliana, Inc. ............................... Cayman Islds
2058. Justin, Inc. ................................ Cayman Islds
2059. Justin, Inc. Chile Ltda.*................. Chile
2064. Labco I, Inc. ............................... Cayman Islds
2065. Labco I Inc. Chile Limitada *............. Chile
2067. Labco II, Inc. .............................. Cayman Islds
2106. Lawrence Holdings Ltd. ...................... Cayman Islds
2137. Lisco, Ltd. ................................. Cayman Islds
2068. M.A.S. Investments, Inc. .................... Cayman Islds
2107. Moraine Ltd. ................................ Cayman Islds
2108. North Bay Holdings Ltd. ..................... Cayman Islds
2077. Valores Mercantiles Banconti, C.A. .......... Venezuela
2109. Summit Inc. ................................. Cayman Islds
2034. Continental Illinois Servicos Ltda. ...... Brazil
2035. Continental Banco S.A. (50%; other
50% owned by non-BankAmerica entity)... Brazil
2036. Continental Distribudora de Titulos
E Valores Mobiliaros, S.A. ......... Brazil
2075. Tanco I, Inc. ............................... Cayman Islds
2078. Venco, B.V. ................................. Cayman Islds
2079. Continental Bank Participacoes Ltda. ..... Brazil
2144. Continental Fundo de Renda Fixa........... Brazil
2014. C.I.N.B. Nominees (London) Limited.............. U.K.
2015. Continental Bank International.................. U.S.
2017. Continental Bank New York Trust Company......... New York
2018. Continental Brokerage Services Inc. ............ Delaware
2020. Continental Illinois Property Corporation
No. 3........................................... Delaware
2021. Continental Illinois Venture Corporation........ Delaware
2081. Continental Partners Group, Inc. ............... Delaware
2090. Moorpark Holding, Inc. ......................... Delaware
2091. PDE, Inc. ...................................... Cayman Islds
2115. Penguin Holding, Inc. .......................... Delaware
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
2093. Rose Holding, Inc. ............................. Delaware
2119. VT, Inc. ....................................... Alabama
044. Bank of America National Association............... U.S.
386. Bank of America New Mexico, N.A. .................. U.S.
385. Bank of America NT&SA.............................. U.S.
(dba: Security Pacific National Bank)
517. 693327 Ontario Limited (51.69%) (BofA Canada
holds 10.22%; remainder owned by
non-BankAmerica entity)......................... Canada
361. BA Credit Corporation........................... Delaware
2275. BA Interactive Services Holding Company, Inc. .. Delaware
2276. MECA Software, L.L.C. ....................... Delaware
(50%; other 50% owned by non-BankAmerica
entity)
282. BA Investment Services, Inc. ................... Delaware
264. BA Properties, Inc. ............................ Delaware
436. BA Properties III, Inc. ........................ Delaware
535. BANAM Broadcasting, Inc. ....................... Delaware
2265. BA Series 1995-1, Inc. ......................... Delaware
266. BancAmerica Auto Finance Corp. ................. Delaware
(dba: Security Pacific Auto Finance)
437. Bank of America Colombia*....................... Colombia
526. Bank of America (Jersey) Limited................ Channel Islds
514. Bank of America Canada.......................... Canada
515. Bank of America Canada Leasing Corporation... Canada
516. Bank of America Canada Securities Corporation Canada
440. Bank of America S.A.*........................... Spain
441. BankAmerica Gestion SGIIC, S.A. ............. Spain
(99.6%; other 0.04% owned by non-BankAmerica
entity)
360. BankAmerica Business Credit, Inc. .............. Delaware
438. BankAmerica International....................... U.S.
443. Societe Anonyme Immobiliere du 28 Place
Vendome...................................... France
444. BankAmerica International Financial
Corporation..................................... U.S.
2270. Arrendadora BankAmerica, S.A.*............... Mexico
445. BA Asia Limited.............................. Hong Kong
506. BA Australia Limited......................... Australia
509. BA Staff Limited.......................... Australia
707. BA Staff Superannuation Limited........... Australia
446. BA Finance (Hong Kong) Limited............... Hong Kong
448. BA Finance (Switzerland) Ltd. ............... Switzerland
2271. BA Forex (Philippines) Inc. ................. Philippines
450. BA Holding Company S.A. ..................... Luxembourg
470. Bank of America International Limited*.... U.K.
473. BA Netting Limited..................... U.K.
476. Fenchurch Steamship Corporation........ Liberia
451. BankAmerica International Trustee (B.V.I.)
Limited................................... U.S. Virgin Islds
459. BankAmerica Financial Services Ltd. ... U.S. Virgin Islds
452. BankAmerica Trust and Banking Corporation
(Bahamas) Limited......................... Bahamas
453. Trunoms, Limited....................... Bahamas
454. Wolnoms, Limited....................... Bahamas
455. BankAmerica Trust and Banking Corporation
(Cayman) Limited.......................... Cayman Islds
1360. BankAmerica Fund Management Limited.... Cayman Islds
456. Harbour Nominees Ltd. ................. Cayman Islds
457. BankAmerica Trust Company (Hong Kong)
Limited................................... Hong Kong
458. BATCO Nominees Limited*................ Hong Kong
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
461. Fiduciary Services Limited.......... Hong Kong
460. ITG Secretaries Limited*............ Hong Kong
462. Renfrew Services Limited*........... Hong Kong
467. BankAmerica Trust Company (Jersey)
Limited................................... Channel Islds
468. BankAmerica Properties (Jersey)
Limited................................ Channel Islds
469. Unihouse Nominees Limited.............. Channel Islds
449. BA Swallow Business Systems Limited.......... U.K.
479. BamerInvest C.A. ............................ Venezuela
2140. Bank of America Malaysia Berhad.............. Malaysia
316. BA Nominees (Asing) Sdn. Bdh. ............ Malaysia
2269. Bank of America Mexico S.A.*................. Mexico
481. BankAmerica Representacao e Servicos
Limitada..................................... Brazil
1003. BankAmerica Singapore Limited................ Singapore
628. Bunga Orkid, Ltd. ........................... Bermuda
490. Chile Cellulose Investment Company........... Delaware
491. Companhia Internacional de Participacoes E
Empreedimentos............................... Brazil
492. Multi Banco S.A. ......................... Brazil
494. Multi-Distribuidora Internacional de
Titulos e Valores Ltda. ............... Brazil
495. Multi-Leasing International
Arrendamento Mercantil S.A. ........... Brazil
604. Debt Recovery (Hong Kong) Limited*........... Hong Kong
293. Fundo 2000 de Conversao - Capital
Estrangeiro.................................. Brazil
497. Hedges, S.A. ................................ Argentina
232. Inchroy Credit Corporation Limited (50%;
other 50% owned by non-BankAmerica entity) .. Hong Kong
498. Inversiones of America Corredores de Bolsa
Limitada*.................................... Chile
499. Inversiones y Negocios Fiduciarios S.A. ..... Argentina
301. InvestAmerica S.A.*.......................... Chile
668. Orion Eight, Inc. ........................... Delaware
671. Delta FSC Eight, Inc. .................... U.S. Virgin Islds
669. Orion Nine, Inc. ............................ Delaware
672. Delta FSC Nine, Inc. ..................... U.S. Virgin Islds
670. Orion Ten, Inc. ............................. Delaware
673. Delta FSC Ten, Inc. ...................... U.S. Virgin Islds
300. SP Chile Energia S.A *....................... Chile
233. SPC Credit Limited........................... Hong Kong
302. Security Pacific Do Brazil S/C Ltda. ........ Brazil
304. SP Inversiones y Servicios S.A*.............. Chile
306. Security Pacific Overseas Investment
Corporation.................................. Delaware
339. Appold Limited............................ U.K.
308. Bank of America (Asia) Limited*........... Hong Kong
312. Bank of America (Macau) Limited........ Macau
314. Canton Pacific Finance Ltd. ........... Hong Kong
309. The Bank of Canton (Nominees) Limited.. Hong Kong
323. Security Pacific Australian Assets
Limited................................... Australia
336. Security Pacific Financing Services
Ltd. ..................................... U.K.
337. Security Pacific Hong Kong Holdings
Limited................................... Hong Kong
501. Titulos Rioplatenses S.A.*................... Uruguay
313. BankAmerica Nominees (1993) Pte. Ltd. .......... Singapore
502. BankAmerica Nominees (Hong Kong) Ltd. .......... Hong Kong
503. BankAmerica Nominees Limited (London)........... U.K.
504. BankAmerica Nominees (Singapore) Pte. Ltd. ..... Singapore
250. BankAmerica Ventures............................ California
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
278. BofA Capital Management, Inc. .................. Delaware
(dba: Intercash Capital Advisors and
Pacific Century Advisors)
533. Electronic Payments Exchange, Inc.*............. Delaware
249. Equitable Deed Company.......................... California
(dba: Continental Auxiliary Company)
534. Golden Gate Participacoes Ltd. ................. Brazil
252. Grant County Power Company...................... Delaware
536. Lease Holding VI, Inc. ......................... Delaware
540. NADRE II, Inc. ................................. Delaware
541. NAGSA II, Inc. ................................. Delaware
259. PNB Securities Corporation...................... California
258. Pacific Southwest Realty Company................ Delaware
265. Security Pacific Asia Limited................... Singapore
347. Security Pacific Equipment Leasing, Inc. ....... Delaware
428. BA Leasing & Capital Corporation............. Delaware
1324. BA FSC Holdings, Inc. .................... Delaware
348. Aerocrane Leasing Ltd. ................ U.S. Virgin Islds
1323. BA Swiss FSC Holdings, Inc. ........... Delaware
551. Samedan Leasing Ltd. ............... U.S. Virgin Islds
Canae, Inc. ........................... Delaware
Canae FSC, Inc. .................... U.S. Virgin Islds
2211. Epidaurus, Inc. ....................... Delaware
2212. Epidaurus FSC, Inc. ................ U.S. Virgin Islds
349. First Executive Sands Leasing Corp. ... California
350. First Executive Leasing Ltd. ....... U.S Virgin Islds
1406. Knossus, Inc. ......................... Delaware
1409. Knossus FSC, Inc. .................. U.S. Virgin Islds
549. Marco Polo Leasing Ltd. ............... U.S. Virgin Islds
2213. Mycenae, Inc. ......................... Delaware
2214. Mycenae FSC, Inc. .................. Delaware
1436. Nauplia, Inc. ......................... Delaware
1438. Nauplia FSC, Inc. .................. U.S. Virgin Islds
Patras, Inc. .......................... Delaware
Patras FSC, Inc. ................... U.S. Virgin Islds
1407. Phaestos, Inc. ........................ Delaware
1408. Phaestos FSC, Inc. ................. U.S. Virgin Islds
(50%; other 50% owned by
non-BankAmerica entity)
550. Raffles Leasing Ltd. .................. U.S. Virgin Islds
1437. Sounion, Inc. ......................... Delaware
1439. Sounion FSC, Inc. .................. U.S. Virgin Islds
552. Tanah Merah Leasing Ltd. .............. U.S. Virgin Islds
1419. Tiryns, Inc. .......................... Delaware
1420. Tiryns FSC, Inc. ................... U.S. Virgin Islds
(50%; other 50% owned by
non-BankAmerica entity)
433. Transit Holding, Inc. .................... Delaware
434. Asset Holding Co. Inc. ................ Delaware
546. Balmoral Leasing Ltd. ....................... U.S. Virgin Islds
354. SPAA Leasing Corporation..................... Delaware
358. Security Pacific Financial Services of
California, Inc. ............................... Delaware
542. Special Asset Holding Co. ...................... Delaware
543. Film Asset Holding Co. ...................... Delaware
(50%; other 50% owned by non-BankAmerica
entity)
537. Wilco One, Inc. ................................ Delaware
363. Zedd Investments, Inc. ......................... Delaware
364. Zentac Productions, Inc. ....................... Delaware
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
387. Bank of America Oregon............................. Oregon
(dba: Security Pacific Bank Oregon and Oregon Bank)
031. OBTASCO, Inc. .................................. Oregon
389. Bank of America Texas, N.A. ....................... U.S.
2008. Bank of America Trust Company of Florida, National
Association........................................ U.S.
139. BankAmerica Financial, Inc. ....................... Delaware
104. Argentina Investment Holding Limited............ Argentina
2001. BankAmerica Capital Corporation................. Delaware
098. Security Pacific Investors, Inc. ............ Delaware
182. BankAmerica Insurance Group, Inc. .............. Delaware
190. BA Insurance Agency, Inc. ................... Delaware
184. General Fidelity Insurance Company........... California
185. General Fidelity Life Insurance Company...... California
043. Security Pacific Southwest Insurance
Agency, Inc. ................................ Arizona
109. Brazilian Financial Services, Inc. ............. Delaware
110. BFS Participacoes, Ltda. .................... Brazil
112. Brazilian Tourism Holdings, Inc. ............... Delaware
397. Overseas Lending Corporation.................... Delaware
193. Security Pacific Automotive Financial Services
Corp. .......................................... Delaware
(dba: Security Pacific Auto Finance)
143. Security Pacific Business Credit Inc. .......... Delaware
145. Security Pacific Finance System Incorporated.... Delaware
151. BA Financial Management Services, Inc. ...... Delaware
146. Dealers Credit, Inc. ........................ Delaware
147. First Fenwick Mortgage Corporation........... Virginia
148. Security Pacific Consumer Discount Company... Pennsylvania
(dba: Security Pacific Financial Services of
Pennsylvania Inc.)
149. Security Pacific Finance Credit Corp. ....... Delaware
152. Security Pacific Financial Services Inc. .... Delaware
163. Security Pacific Executive/Professional
Services Inc. ............................ Colorado
165. Security Pacific Financial Services of
Minnesota Inc. ........................... Minnesota
166. The Midwestern Agency Corporation, Inc. .. Iowa
154. Security Pacific Financial Services of
Nevada Inc. .............................. Nevada
156. Security Pacific Financial Services of
West Virginia Inc. ....................... West Virginia
160. SPF Advertising Agency, Inc. ............. Kansas
161. Security Pacific Financial Services of
Des Moines Inc. ............................. Iowa
168. Security Pacific Housing Services, Inc. ........ Delaware
169. Security Pacific Acceptance Corp. ........... Delaware
170. Security Pacific Acceptance Corp. II......... Delaware
172. Security Pacific Leasing Corporation............ Delaware
173. MCOG Leasing Corp. .......................... California
Sardonyx Shipping Pte Ltd ................... Singapore
(50%; other 50% owned by non-BankAmerica
entity)
200. Securilease BV............................... Netherlands
174. Security Pacific Capital Leasing
Corporation.................................. Delaware
194. Security Pacific EuroFinance Holdings,
Inc. ........................................ Delaware
195. Security Pacific Equipment Finance
(Europe) Inc. ............................ Delaware
224. Security Pacific Lease Finance (Europe)
Inc. ..................................... Delaware
218. Security Pacific International Leasfinance,
Inc. ........................................ Delaware
177. White Sands Leasing Corporation.............. Delaware
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
178. Pasir Mas Ltd. ........................... U.S. Virgin Islds
179. Windmill Sands Leasing Corporation........... Delaware
180. Windmill Leasing, Ltd. ................... U.S. Virgin Islds
400. Western America Financial, Inc. ................ Delaware
2003. BankAmerica Investment Corporation................. Delaware
118. BankAmerica National Trust Company................. U.S.
2010. BankAmerica Realty Finance, Inc. .................. Delaware
380. BankAmerica Realty Services, Inc. ................. Delaware
2005. Continental Illinois Energy Development Corporation Delaware
2007. Continental Illinois Service Corporation........... Delaware
2110. LaSalle Street Natural Resources Corporation....... Delaware
390. Nevada First Development Corporation............... Nevada
554. Bank of America Nevada.......................... Nevada
029. Orbanco Real Estate Services, Co. ................. Oregon
009. Rainier Bancorporation............................. Washington
372. Real Estate Collateral Management Company.......... Delaware
401. Seafirst Corporation............................... Washington
012. Rainier Mortgage Company........................ Washington
015. Seafirst Community Service Corporation.......... Washington
408. Seattle-First National Bank..................... U.S.
020. Centrum Properties Corporation............... Washington
658. DAS Holdings, Inc. .......................... Arizona
011. Rainier Credit Company....................... Washington
416. Seafirst America Corporation................. Washington
Seafirst Asset Holding Co. .................. Delaware
411. Seafirst Auto Leasing, Inc. ................. Washington
404. Seafirst Insurance Corporation............... Washington
027. Seafirst Investment Services, Inc. .......... Washington
413. Seafirst Leasing Company..................... Washington
045. Seafirst Merchant Services, Inc. ............ Delaware
420. Seafirst Properties Corporation.............. Washington
421. Seafirst Services Corporation................ Washington
023. Security Pacific Premises Bellevue, Inc. .... Washington
425. Yakima Properties, Incorporated.............. Washington
132. Security-First Company............................. California
133. Security-First CMO-I Corporation................ California
042. Security Pacific Southwest Financial Services, Inc. Arizona
192. SP International Holdings, Inc. ................... Delaware
199. Security Pacific EuroFinance, Inc. ............. Delaware
235. Sec Pac Spain S.A. .......................... Spain
1400. Society Nouvelle Dolomites Francaises*....... France
</TABLE>
* Aggregate 100% ownership is held by more than one BankAmerica legal entity;
for purposes of this listing, the entity is shown in relationship to the
majority holder.
<PAGE>
Exhibit 23
----------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
numbers 33-55225 on Form S-8 filed August 25, 1994; 33-54385 on Form S-3 filed
June 30, 1994, as amended by Pre-Effective Amendment No. 1 filed August 17,
1994; 33-61483 on Form S-8 filed August 1, 1995; 33-53919 on Form S-8 filed June
1, 1994; 33-60648 on Form S-8 filed April 2, 1993; 33-59892 on Form S-3 filed
March 23, 1993, as amended by Pre-Effective Amendment No. 1 filed May 14, 1993
(to which the prospectus in 33-54385 also applies); 33-51064 on Form S-3 filed
August 20, 1992, as amended by Pre-Effective Amendment No. 1 filed October 23,
1992 (to which the prospectus in 33-54385 also applies); 33-50124 on Form S-8
filed July 29, 1992; 33-65326 on Form S-8 filed July 1, 1993; 33-43862 on
Form S-3 filed November 12, 1991, as amended by Pre-Effective Amendment No. 1
filed January 17, 1992 (to which the prospectus in 33-54385 also applies);
33-36718 on Form S-3 filed September 7, 1990, as amended by Pre-Effective
Amendment No. 1 filed November 28, 1990 (to which the prospectus in 33-54385
also applies); 33-26755 on Form S-3 filed January 27, 1989, as amended by Pre-
Effective Amendment No. 1 filed February 16, 1989 and Post-Effective Amendment
No. 1 filed November 3, 1992; 33-23192 on Form S-3 filed July 21, 1988, as
amended by Pre-Effective Amendment No. 1 filed September 13, 1988 (to which the
prospectus in 33-54385 also applies); 33-11516 on Form S-3 filed January 26,
1987, as amended by Amendment No. 1 filed March 12, 1987 and Amendment No. 2
filed April 3, 1987 (to which the prospectus in 33-36718 also applies); 2-93664
on Form S-3 filed on October 9, 1984, as amended by Amendment No. 1 filed
November 23, 1984; 33-28252 on Form S-8 filed April 19, 1989, as amended by
Post-Effective Amendment No. 1 filed August 15, 1989 and Post-Effective
Amendment No.2 filed February 22, 1990; 33-13368 on Form S-8 (to which the
prospectus in 33-28252 also applies); 33-29646 on Form S-8 filed June 30, 1989,
as amended by Post-Effective Amendment No. 1 filed August 3, 1990; and 2-82873,
2-71577, 2-64201, 2-58595, 2-57423, 2-53068, 2-47747, 2-32651 and 33-14135 on
Form S-8 (to all of which the prospectus in 33-29646 also applies), of
BankAmerica Corporation and related prospectuses of our report dated January 16,
1996, with respect to the consolidated financial statements of BankAmerica
Corporation incorporated by reference in this Annual Report on Form 10-K for the
year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
--------------------------------
Ernst & Young LLP
San Francisco, California
March 15, 1996
4017499
<PAGE>
Exhibit 24
Powers of Attorney
Follow
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 6, 1996
/s/ Joseph F. Alibrandi
------------------------------
Joseph F. Alibrandi
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 6, 1996
/s/ Jill E. Barad
------------------------------
Jill E. Barad
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 6, 1996
/s/ Peter B. Bedford
------------------------------
Peter B. Bedford
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 5, 1996
/s/ Andrew F. Brimmer
------------------------------
Andrew F. Brimmer
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 2, 1996
/s/ Richard A. Clarke
-----------------------------
Richard A. Clarke
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 5, 1996
/s/ Timm F. Crull
-------------------------------
Timm F. Crull
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 3, 1996
/s/ Kathleen Feldstein
------------------------------
Kathleen Feldstein
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 2, 1996
/s/ Donald E. Guinn
------------------------------
Donald E. Guinn
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 5, 1996
/s/ Philip M. Hawley
------------------------------
Philip M. Hawley
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 5, 1996
/s/ Frank L. Hope, Jr.
------------------------------
Frank L. Hope, Jr.
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 4, 1996
/s/ Ignacio E. Lozano, Jr.
------------------------------
Ignacio E. Lozano, Jr.
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 6, 1996
/s/ Walter E. Massey
-------------------------------
Walter E. Massey
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 3, 1996
/s/ John M. Richman
------------------------------
John M. Richman
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
I hereby appoint MICHAEL J. HALLORAN, JEFFREY R. LAPIC, and CHERYL SOROKIN,
and each of them, my attorneys-in-fact, each with full power of substitution, to
sign for me as a Director of BankAmerica Corporation and file with the
Securities and Exchange Commission the Corporation's Form 10-K annual report for
1995, and any amendments.
Dated: February 4, 1996
/s/ A. Michael Spence
------------------------------
A. Michael Spence
[BAC-Form 10-K: Director]
4011513
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS FINANCIAL DATA SCHEDULE ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995
CONTAINS SUMMARY FINANCIAL INFORMATION WHICH IS INCORPORATED BY REFERENCE FROM
THE 1995 ANNUAL REPORT TO SHAREHOLDERS AND EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS, AVERAGE BALANCES, INTEREST,
AND AVERAGE RATES, NONPERFORMING ASSETS, ANNUAL CREDIT LOSS EXPERIENCE, AND
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE ANNUAL REPORT AND FORM 10-K FILING.
Any item provided in the schedule, in accordance with the rules governing the
schedule, will 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 14,312
<INT-BEARING-DEPOSITS> 5,761
<FED-FUNDS-SOLD> 5,683
<TRADING-ASSETS> 9,516
<INVESTMENTS-HELD-FOR-SALE> 12,043
<INVESTMENTS-CARRYING> 4,656
<INVESTMENTS-MARKET> 4,337
<LOANS> 155,373
<ALLOWANCE> 3,554
<TOTAL-ASSETS> 232,446
<DEPOSITS> 160,494
<SHORT-TERM> 19,170
<LIABILITIES-OTHER> 17,232
<LONG-TERM> 15,328<F1>
602
0
<COMMON> 2,623
<OTHER-SE> 16,997
<TOTAL-LIABILITIES-AND-EQUITY> 232,446
<INTEREST-LOAN> 12,707
<INTEREST-INVEST> 1,276
<INTEREST-OTHER> 1,857<F2>
<INTEREST-TOTAL> 15,840
<INTEREST-DEPOSIT> 4,923
<INTEREST-EXPENSE> 7,378
<INTEREST-INCOME-NET> 8,462
<LOAN-LOSSES> 440
<SECURITIES-GAINS> 34
<EXPENSE-OTHER> 8,001
<INCOME-PRETAX> 4,567
<INCOME-PRE-EXTRAORDINARY> 4,567
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,664
<EPS-PRIMARY> 6.49
<EPS-DILUTED> 6.45
<YIELD-ACTUAL> 4.51
<LOANS-NON> 1,888
<LOANS-PAST> 411
<LOANS-TROUBLED> 113
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,690
<CHARGE-OFFS> 1,011
<RECOVERIES> 422
<ALLOWANCE-CLOSE> 3,554
<ALLOWANCE-DOMESTIC> 2,231
<ALLOWANCE-FOREIGN> 428
<ALLOWANCE-UNALLOCATED> 895
<FN>
<F1> INCLUDES SUBORDINATED CAPITAL NOTES OF $605 MILLION.
<F2> INCLUDES INTEREST INCOME OR TRADING ACCOUNTS ASSETS OF $741 MILLION.
</FN>
</TABLE>
