<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
For the fiscal year ended December 31, 1996
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 1-7377.
Exact name of registrant as specified in its charter:
BANKAMERICA CORPORATION
Address and telephone
State of incorporation: of principal executive offices: I.R.S. Employer I.D. No:
Delaware. Bank of America Center 94-1681731.
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, 8.16% Cumulative Preferred Stock,
Stock, Series B Series K Series L
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, 1997, was in excess of $39.5
billion.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of January 31, 1997.
Common Stock, $1.5625 par value-------354,589,200 shares
outstanding on January 31, 1997.*
*In addition, 32,707,587 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, 1996 Parts I, II, & IV
Portions of the Proxy Statement for the May 22, 1997 Annual
Meeting of Shareholders Part III
<PAGE>
FORM 10-K
================================================================================
<TABLE>
<S> <C> <C>
Part I Items 1 and 2. Business and Properties
General........................................................... 3
Operations........................................................ 4
Properties........................................................ 5
Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential....................... 6
Available-for-Sale and Held-to-Maturity Securities................ 9
Loan Portiflio.................................................... 11
Summary of Credit Loss Experience................................. 14
Deposits.......................................................... 14
Return on Equity and Assets....................................... 15
Short-Term Borrowings............................................. 15
Competition....................................................... 15
Supervision and Regulation........................................ 16
Employees......................................................... 19
Item 3. Legal Proceedings................................................. 19
Item 4. Submission of Matters to a Vote of Security Holders............... 19
- --------------------------------------------------------------------------------------------
Part II Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters............................................ 20
Item 6. Selected Financial Data........................................... 20
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 20
Forward-Looking Statements........................................ 20
Item 8. Financial Statements and Supplementary Data....................... 21
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure....................................... 21
- --------------------------------------------------------------------------------------------
Part III Item 10. Directors and Executive Officers of the Registrant................ 22
Item 11. Executive Compensation............................................ 24
Item 12. Security Ownership of Certain Beneficial Owners and Management.... 24
Item 13. Certain Relationships and Related Transactions.................... 24
- --------------------------------------------------------------------------------------------
Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.. 25
- --------------------------------------------------------------------------------------------
SIGNATURES ...................................................................... 28
</TABLE>
1
<PAGE>
[This page is left intentionally blank]
2
<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,
1996, BankAmerica Corporation and its subsidiaries (BAC) was
one of the three largest bank holding companies in the United
States, based on total assets of $250.8 billion.
During 1996, BAC completed the divestiture of its
Institutional Trust and Securities Services business.
Additional information related to this divestiture is
incorporated by reference from pages 22 and 25 of the 1996
Annual Report to Shareholders. In addition, during 1996, BAC
began the process of combining its interstate banks into Bank
of America NT&SA (the Bank), a subsidiary of BAC. During
1996, Bank of America Oregon and BankAmerica National Trust
Company were merged into the Bank. Additional information
related to the merger of the interstate banks into the Bank
is incorporated by reference from page 18 of the 1996 Annual
Report to Shareholders. Furthermore, as a result of decisions
to implement a number of changes in its business activities,
BAC recorded a restructuring charge in the fourth quarter of
1996. Additional information related to the restructuring
charge is incorporated by reference from pages 18 and 26 and
from Note 26 on page 81 of the 1996 Annual Report to
Shareholders.
As part of its efforts to strategically redeploy capital in
1996, BAC acquired a portfolio of lease-related financial
assets from subsidiaries of Ford Motor Company. In 1996, BAC
also completed the initial public offering of a portion of
the common stock of BA Merchant Services, Inc., a subsidiary
of BAC. Additional information related to the initial public
offering of the subsidiary's common stock is incorporated by
reference from pages 18 and 25 of the 1996 Annual Report to
Shareholders.
The Parent's largest subsidiaries, based on total assets at
year-end 1996, were the Bank, Bank of America Illinois (BAI),
and Bank of America NW, National Association (formerly
Seattle-First National Bank) (BANW). 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. BAI,
headquartered in Chicago, provides corporate banking, middle
market banking, and wealth management services. BANW was the
largest bank in Washington State based on total assets at
December 31, 1996, and is a major presence in the consumer
and commercial banking sectors of the Pacific Northwest. On
January 1, 1997, BANW was merged into the Bank. Additional
information related to the merger of the interstate banks
into the Bank is incorporated by reference from page 18 of
the 1996 Annual Report to Shareholders.
3
<PAGE>
================================================================================
At December 31, 1996, the Parent's other bank subsidiaries
also included Bank of America Arizona, Bank of America
Nevada, 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; Bank of America Trust Company
of Florida, National Association, which is a limited purpose
national bank; and Bank of America, FSB (FSB), a federal
savings bank. On January 1, 1997, Bank of America Arizona,
Bank of America Nevada, Bank of America Alaska, N.A., and
Bank of America New Mexico, N.A. were merged into the Bank,
in addition to BANW. Additional information related to the
merger of the interstate banks into the Bank is incorporated
by reference from page 18 of the 1996 Annual Report to
Shareholders. In addition, Bank of America National
Association, which holds a national charter, offers credit
card services, primarily to individuals, throughout the
United States.
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, credit card, home mortgage, manufactured
housing and auto loan financing, and various other consumer
finance products. It provides a range of deposit and loan
products to individuals and small businesses through almost
2,000 full-service branches, more than 7,000 ATMs, and
telephone and other delivery channels. BAC's consumer banking
operations also operate over 150 in-store facilities in the
Chicago metropolitan area. In California, BAC's largest
market, the Bank operated approximately 1,020 branches at
December 31, 1996.
As a global financial intermediary, BAC provides capital-
raising services, trade finance, cash management, investment
banking, capital markets and credit products, and financial
advisory services to large public- and private-sector
institutions that are part of the global economy.
The range of financial 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.
BAC also 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.
Furthermore, BAC provides a range of banking, personal trust
and investment services to high-net-worth clients worldwide
who require specialized personal services. The services also
encompass BAC's investment management, brokerage, and mutual
fund activities.
Additional information about BAC and its operations is
incorporated by reference from pages 19 through 22, Note 2 on
page 58, and Note 30 on page 84 of the 1996 Annual Report to
Shareholders.
4
<PAGE>
================================================================================
Properties
=============================================================
BAC's principal offices are located at 555 California Street
in San Francisco, California.
BAI's principal offices are located at 231 South LaSalle
Street in Chicago, Illinois.
At December 31, 1996, BANW's principal offices were located
at 701 Fifth Avenue in Seattle, Washington.
At December 31, 1996, BAC owned approximately 30 percent of
its properties. The remaining facilities were leased.
5
<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, 1996 Year Ended December 31, 1995
------------------------------------- ------------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,717 $ 453 7.93% $ 5,853 $ 466 7.95%
Federal funds sold 533 29 5.41 548 32 5.89
Securities purchased under resale agreements 10,334 653 6.32 8,823 618 7.00
Trading account assets 12,541 1,004 8.01 9,106 745 8.18
Available-for-sale securities/d/ 11,383/c/ 848 7.45 9,768/c/ 764 7.83
Held-to-maturity securities/d/ 4,347 322 7.42 7,192 524 7.29
Domestic loans:
Consumer--residential first mortgages 37,572 2,806 7.47 35,407 2,500 7.06
Consumer--residential junior mortgages 14,264 1,225 8.59 13,832 1,252 9.05
Consumer--credit card 8,837 1,284 14.53 8,230 1,230 14.95
Other consumer 17,465 1,720 9.85 14,149 1,399 9.89
Commercial and industrial 32,944 2,581 7.83 30,927 2,619 8.47
Commercial loans secured by real estate 11,508 1,018 8.84 10,586 957 9.04
Financial institutions 2,815 124 4.40 2,511 143 5.69
Lease financing 2,127 147 6.92 1,835 111 6.06
Construction and development loans secured by real estate 2,816 301 10.69 3,367 373 11.07/e/
Loans for purchasing or carrying securities 1,270 86 6.78 1,303 91 7.02
Agricultural 1,570 137 8.70 1,619 157 9.67
Other 1,176 75 6.39 1,394 91 6.56
-------- ------- -------- --------
Total domestic loans 134,364 11,504 8.56 125,160 10,923 8.73
Foreign loans 24,087 1,863 7.73 21,754 1,792 8.24
-------- ------- -------- --------
Total loans/c/ 158,451 13,367 8.44 146,914 12,715 8.65
-------- ------- -------- --------
Total earning assets 203,306 $16,676 8.20 188,204 $ 15,864 8.43
======= ========
Nonearning assets 42,060 42,641
Less: Allowance for credit losses 3,524 3,672
-------- --------
TOTAL ASSETS/f/ $241,842 $227,173
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 12,205 $ 149 1.22% $ 13,241 $ 159 1.20%
Savings 12,872 263 2.06 13,550 282 2.08
Money market 28,772 905 3.14 29,070 870 2.99
Time 30,132 1,545 6.13 30,002 1,471 4.90
-------- ------- --------- --------
Total domestic interest-bearing deposits 83,981 2,862 3.41 85,863 2,782 3.24
Foreign interest-bearing deposits/g/:
Banks located in foreign countries 12,957 763 5.89 10,245 679 6.63
Governments and official institutions 9,579 502 5.23 6,845 397 5.80
Time, savings, and other 19,058 1,232 6.47 16,131 1,065 6.60
-------- ------- --------- --------
Total foreign interest-bearing deposits 41,594 2,497 6.00 33,221 2,141 6.44
-------- ------- --------- --------
Total interest-bearing deposits 125,575 5,359 4.27 119,084 4,923 4.13
Federal funds purchased 1,492 79 5.29 2,222 131 5.89
Securities sold under repurchase agreements 11,702 695 5.94 9,110 581 6.38
Other short-term borrowings 14,448 883 6.11 9,301 630 6.77
Long-term debt 14,981 1,023 6.83 15,156 1,067 7.04
Subordinated capital notes 415 33 7.95 605 46 7.58
-------- ------- --------- ========
Total interest-bearing liabilities 168,613 $ 8,072 4.79 155,478 $ 7,378 4.75
======= ========
Domestic noninterest-bearing deposits 34,415 33,272
Foreign noninterest-bearing deposits 1,557 1,630
Other noninterest-bearing liabilities 16,898 17,238
-------- ---------
Total liabilities/f/ 221,483 207,618
Trust preferred securities/h/ 90 -
Stockholders' equity 20,269 19,555
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $241,842 $227,173
======== =========
Interest income as a percentage of average earning assets 8.20% 8.43%
Interest expense as a percentage of average earning assets (3.97) (3.92)
----- -----
NET INTEREST MARGIN 4.23% 4.51%
===== =====
</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 40 percent.
/c/ Average balances include nonaccrual assets.
/d/ Refer to the table on page 9 for more detail on average balances, interest,
and average rates 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 year ended
December 31, 1994.
6
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1994 Fourth Quarter 1996
------------------------------------- ---------------------------------
(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 $ 4,912 $ 325 6.62% $ 5,878 $ 145 9.86%
Federal funds sold 1,318 55 4.13 499 7 5.49
Securities purchased under resale agreements 6,378 351 5.51 9,077 144 6.30
Trading account assets 6,713 476 7.09 13,393 271 8.05
Available-for-sale securities/d/ 9,675/c/ 593 6.13 11,763/c/ 210 7.12
Held-to-maturity securities/d/ 10,805/c/ 794 7.35 4,160 76 7.34
Domestic loans:
Consumer--residential first mortgages 32,012 1,913 5.97 37,291 695 7.46
Consumer--residential junior mortgages 13,196 1,009 7.65 14,625 312 8.48
Consumer--credit card 7,280 1,139 15.65 8,338 296 14.24
Other consumer 11,847 1,217 10.27 18,731 457 9.68
Commercial and industrial 23,643 1,665 7.04 33,454 669 7.95
Commercial loans secured by real estate 9,407 757 8.04 12,185 269 8.82
Financial institutions 2,142 108 5.06 2,695 29 4.29
Lease financing 1,675 129 7.70 2,508 51 8.15
Construction and development loans secured by real estate 3,948 307 7.78 2,402 61 10.13
Loans for purchasing or carrying securities 1,814 92 5.06 1,565 28 7.08
Agricultural 1,641 129 7.87 1,486 32 8.51
Other 1,244 76 6.10 1,241 17 5.33
-------- ------- -------- -------
Total domestic loans 109,849 8,541 7.77 136,521 2,916 8.52
Foreign loans 18,572 1,273 6.86 25,024 475 7.55
-------- ------- -------- -------
Total loans/c/ 128,421 9,814 7.64 161,545 3,391 8.37
-------- ------- -------- -------
Total earning assets 168,222 $12,408 7.38 206,315 $ 4,244 8.20
======= =======
Nonearning assets 37,366 42,682
Less: Allowance for credit losses 3,520 3,520
-------- --------
TOTAL ASSETS/f/ $202,068 $245,477
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,761 $ 160 1.16% $ 9,287 $ 30 1.32%
Savings 14,427 294 2.04 12,479 64 2.04
Money market 32,625 818 2.51 31,699 243 3.04
Time 28,259 864 3.06 30,357 415 5.44
-------- ------- -------- -------
Total domestic interest-bearing deposits 89,072 2,136 2.40 83,822 752 3.57
Foreign interest-bearing deposits/g/:
Banks located in foreign countries 6,771 421 6.23 12,318 182 5.87
Governments and official institutions 4,646 217 4.67 9,996 130 5.17
Time, savings, and other 11,371 563 4.95 19,657 342 6.92
-------- ------- -------- -------
Total foreign interest-bearing deposits 22,788 1,201 5.27 41,971 654 6.20
-------- ------- -------- -------
Total interest-bearing deposits 111,860 3,337 2.98 125,793 1,406 4.45
Federal funds purchased 611 27 4.48 1,553 20 5.22
Securities sold under repurchase agreements 6,455 351 5.44 10,457 155 5.90
Other short-term borrowings 4,231 275 6.50 16,453 254 6.14
Long-term debt 13,920 810 5.82 15,435 266 6.86
Subordinated capital notes 606 42 6.84 355 7 7.66
-------- ------- -------- -------
Total interest-bearing liabilities 137,683 $ 4,842 3.52 170,046 $ 2,108 4.93
======= =======
Domestic noninterest-bearing deposits 31,938 35,585
Foreign noninterest-bearing deposits 1,498 1,435
Other noninterest-bearing liabilities 13,258 17,429
-------- --------
Total liabilities/f/ 184,377 224,495
Trust preferred securities/h/ - 366
Stockholders' equity 17,691 20,616
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $202,068 $245,477
======== ========
Interest income as a percentage of average earning assets 7.38% 8.20%
Interest expense as a percentage of average earning assets (2.88) (4.07)
------ ------
Net Interest Margin 4.50% 4.13%
====== ======
</TABLE>
<TABLE>
<CAPTION>
Fourth Quarter 1995
------------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,962 $ 119 7.91%
Federal funds sold 392 5 5.51
Securities purchased under resale agreements 8,204 147 7.09
Trading account assets 9,568 200 8.28
Available-for-sale securities/d/ 9,951 196 7.86
Held-to-maturity securities/d/ 6,614 120 7.22
Domestic loans:
Consumer--residential first mortgages 36,361 674 7.42
Consumer--residential junior mortgages 13,691 306 8.85
Consumer--credit card 8,750 318 14.55
Other consumer 15,633 389 9.87
Commercial and industrial 31,940 666 8.27
Commercial loans secured by real estate 10,768 241 8.95
Financial institutions 2,786 34 4.89
Lease financing 1,876 26 5.53
Construction and development loans secured by real estate 3,237 84 10.23
Loans for purchasing or carrying securities 1,284 22 6.83
Agricultural 1,572 37 9.44
Other 1,410 23 6.59
-------- -------
Total domestic loans 129,308 2,820 8.68
Foreign loans 22,588 468 8.22
-------- -------
Total loans/c/ 151,896 3,288 8.62
-------- -------
Total earning assets 192,587 $ 4,075 8.42
=======
Nonearning assets 43,286
Less: Allowance for credit losses 3,604
--------
TOTAL ASSETS/f/ $232,269
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,165 $ 40 1.21%
Savings 13,216 70 2.08
Money market 28,271 221 3.11
Time 29,776 385 5.12
-------- -------
Total domestic interest-bearing deposits 84,428 716 3.36
Foreign interest-bearing deposits/g/:
Banks located in foreign countries 11,856 196 6.54
Governments and official institutions 7,446 106 5.67
Time, savings, and other 17,680 289 6.49
-------- -------
36,982 591 6.34
Total foreign interest-bearing deposits -------- -------
121,410 1,307 4.27
Total interest-bearing deposits
Federal funds purchased 2,492 35 5.60
Securities sold under repurchase agreements 9,051 147 6.44
Other short-term borrowings 9,653 168 6.88
Long-term debt 15,100 265 6.98
Subordinated capital notes 605 12 7.50
-------- -------
Total interest-bearing liabilities 158,311 $ 1,934 4.84
=======
Domestic noninterest-bearing deposits 34,350
Foreign noninterest-bearing deposits 1,539
Other noninterest-bearing liabilities 18,207
--------
Total liabilities/f/ 212,407
Trust preferred securities/h/ -
Stockholders' equity 19,862
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $232,269
========
Interest income as a percentage of average earning assets 8.42%
Interest expense as a percentage of average earning assets (3.98)
------
NET INTEREST MARGIN 4.44%
======
</TABLE>
================================================================================
/f/ The percentage of average total assets attributable to foreign operations
for the years ended December 31, 1996, 1995, and 1994 was 20 percent, 18
percent, and 18 percent, respectively. The percentage of average total
liabilities attributable to foreign operations for the same periods was 20
percent, 19 percent, and 18 percent, respectively.
/g/ Primarily consists of time deposits in denominations of $100,000 or more.
/h/ Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
7
<PAGE>
==============================================================================
Net Interest Income Analysis
==============================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1996 over 1995 Year Ended December 31, 1995 over 1994
-------------------------------------- ---------------------------------------
Increase (Decrease)/a/ Increase (Decrease)/a/
-------------------------------------- ---------------------------------------
(in millions) Volume Rate Net Volume Rate Net
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Income/b/
Interest-bearing deposits in banks $ (12) $ (1) $ (13) $ 69 $ 72 $ 141
Federal funds sold (1) (2) (3) (40) 17 (23)
Securities purchased under resale agreements 99 (64) 35 157 110 267
Trading account assets 275 (16) 259 188 81 269
Available-for-sale securities:
U.S. Treasury and other government agency securities (15) 4 (11) (84) 28 (56)
Mortgage-backed securities 92 (6) 86 35 46 81
Other domestic securities 7 3 10 11 2 13
Foreign securities 38 (39) (1) 65 68 133
------ ------
Total available-for-sale securities 84 171
Held-to-maturity securities:
U.S. Treasury and other government agency securities (19) (5) (24) (20) - (20)
Mortgage-backed securities (165) 19 (146) (179) (3) (182)
State, county, and municipal securities (2) (2) (4) (3) (1) (4)
Other domestic securities (5) (1) (6) (4) 1 (3)
Foreign securities (14) (8) (22) (56) (5) (61)
------ ------
Total held-to-maturity securities (202) (270)
Domestic loans:
Consumer-residential first mortgages 157 149 306 216 371 587
Consumer-residential junior mortgages 38 (65) (27) 51 192 243
Consumer-credit card 89 (35) 54 144 (53) 91
Other consumer 327 (6) 321 229 (47) 182
Commercial and industrial 166 (204) (38) 575 379 954
Commercial loans secured by real estate 82 (21) 61 100 100 200
Financial institutions 16 (35) (19) 20 15 35
Lease financing 19 17 36 11 (29) (18)
Construction and development loans
secured by real estate (60) (12) (72) (50) 116 66
Loans for purchasing or carrying securities (2) (3) (5) (30) 29 (1)
Agricultural (5) (15) (20) (2) 30 28
Other (14) (2) (16) 9 6 15
------ ------
Total domestic loans 581 2,382
Foreign loans 186 (115) 71 239 280 519
------ ------
Total loans 652 2,901
------ ------
Net Increase $ 812 $3,456
====== ======
Interest Expense
Domestic interest-bearing deposits:
Transaction $ (13) $ 3 $ (10) $ (6) $ 5 $ (1)
Savings (15) (4) (19) (18) 6 (12)
Money market (9) 44 35 (95) 147 52
Time 6 68 74 56 551 607
------ ------
Total domestic interest-bearing deposits 80 646
Foreign interest-bearing deposits:
Banks located in foreign countries 166 (82) 84 229 29 258
Governments and official institutions 147 (42) 105 119 61 180
Time, savings, and other 188 (21) 167 279 223 502
------ ------
Total foreign interest-bearing deposits 356 940
------ ------
Total interest-bearing deposits 436 1,586
Federal funds purchased (40) (12) (52) 93 11 104
Securities sold under repurchase agreements 156 (42) 114 162 68 230
Other short-term borrowings 319 (66) 253 343 12 355
Long-term debt (12) (32) (44) 76 181 257
Subordinated capital notes (15) 2 (13) - 4 4
------ ------
Net Increase $ 694 $2,536
====== ======
=================================================================================================================================
</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
40 percent.
8
<PAGE>
================================================================================
Available-for-Sale and Held-to-Maturity Securities-Average Balances, Interest,
and Average Rates
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
------------------------------------------------- ------------------------------------------------
Rate Rate
Rate based on Rate based on
based on amortized based on amortized
(dollar amounts in millions) Balance/a/ Interest/b/ fair value/b/ cost/b/ Balance/a/ Interest/b/ fair value/b/ cost/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,440 $ 97 6.72% 6.70% $1,659 $108 6.49% 6.45%
Mortgage-backed securities 6,305 431 6.83 6.82 4,962 344 6.94 6.89
Other domestic securities 786 44 5.64 6.61 660 34 5.22 5.84
Foreign securities 2,852/c/ 276 9.69/d/ 9.19/d/ 2,487/c/ 278 11.17/d/ 10.10/d/
- ------------------------------------------------------------------------------------------------------------------------------------
$11,383 $848 7.45% 7.42% $9,768 $764 7.83% 7.64%
- --------------------------------====================================================================================================
<CAPTION>
Year Ended December 31, 1994
----------------------------------
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 $3,029 $164 5.41%
Mortgage-backed securities 4,410 263 5.88
Other domestic securities 427 21 5.00
Foreign securities 1,809/c/ 145 7.09
- ----------------------------------------------------------------------
$9,675 $593 5.95%
- -------------------------------------=================================
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
------------------------------- -------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government
agency securities $ 33 $ 2 4.95% $ 388 $ 26 6.72%
Mortgage-backed securities 2,308 175 7.60 4,490 321 7.15
State, county, and municipal securities 416 31 7.57 445 35 7.89
Other domestic securities 99 7 7.28 178 13 7.62
Foreign securities 1,491 107 7.15 1,691 129 7.62
- ----------------------------------------------------------------------------------------------------------
$4,347 $322 7.42% $7,192 $ 524 7.29%
- --------------------------------------------==============================================================
<CAPTION>
Year Ended December 31, 1994
-------------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government
agency securities $ 689 $ 46 6.72%
Mortgage-backed securities 6,985 503 7.20
State, county, and municipal securities 479 39 8.12
Other domestic securities 224 16 7.11
Foreign securities 2,428/c/ 190 7.83
- -------------------------------------------------------------------------------
$10,805 $794 7.35%
- -------------------------------------------====================================
<CAPTION>
Fourth Quarter 1996 Fourth Quarter 1995
---------------------------------------------- -----------------------------------------------
Rate Rate
Rate based on Rate based on
based on amortized based on amortized
(dollar amounts in millions) Balance/a/ Interest/b/ fair value/b/ cost/b/ Balance/a/ Interest/b/ fair value/b/ cost/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other government
agency securities $ 1,346 $ 23 6.74% 6.72% $1,665 $ 27 6.32% 6.36%
Mortgage-backed securities 6,566 113 6.87 6.90 4,927 85 6.91 6.97
Other domestic securities 926 12 5.44 6.43 720 9 5.31 6.06
Foreign securities 2,925/c/ 62 8.38 8.06 2,639/c/ 75 11.31/d/ 10.46/d/
- -----------------------------------------------------------------------------------------------------------------------------------
$11,763 $210 7.12% 7.15% $9,951 $196 7.86% 7.81%
- ----------------------------------------===========================================================================================
<CAPTION>
Fourth Quarter 1996 Fourth Quarter 1995
------------------------------------ ----------------------------------
(dollar amounts in millions) Balance/a/ Interest/b/ Rate/b/ Balance/a/ Interest/b/ Rate/b/
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government
agency securities $ 19 $ - 5.51% $ 289 $ 5 6.42%
Mortgage-backed securities 2,190 42 7.60 4,169 75 7.18
State, county, and municipal securities 401 7 7.55 452 9 7.99
Other domestic securities 58 1 7.12 165 3 7.39
Foreign securities 1,492 26 6.93 1,539 28 7.24
- ------------------------------------------------------------------------------------------------------------------------------------
$4,160 $76 7.34% $6,614 $120 7.22%
- --------------------------------------------------------------======================================================================
====================================================================================================================================
</TABLE>
/a/Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 40 percent.
/c/Average balances include nonaccrual assets.
/d/Rates reflect interest received on nonaccrual debt-restructuring par bonds.
9
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Available-for-Sale and Held-to-Maturity Securities
Carrying Value and Yield by Contractual Maturity Date
====================================================================================================================================
Available-for-Sale Securities Held-to-Maturity Securities
----------------------------- ---------------------------
December 31, 1996/a/ December 31, 1996
----------------------------- ---------------------------
(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 $ 645 7.05% $ 16 5.25%
Mortgage-backed securities - - - -
State, county, and municipal securities - - 86 4.62
Other securities 905 5.91 224 6.79
------- -------
1,550 6.39 326 6.14
DUE AFTER ONE YEAR THROUGH FIVE YEARS
U.S. Treasury and other government agency securities 56 6.85 1 4.75
Mortgage-backed securities 7 7.76 62 7.95
State, county, and municipal securities - - 116 5.45
Other securities 1,791 8.61 113 7.00
------- -------
1,854 8.56 292 6.58
DUE AFTER FIVE YEARS THROUGH TEN YEARS
U.S. Treasury and other government agency securities 449 6.10 - -
Mortgage-backed securities 91 6.20 635 7.09
State, county, and municipal securities 1 5.00 87 5.31
Other securities 162 7.93 35 6.88
------- -------
703 6.53 757 6.88
DUE AFTER TEN YEARS
U.S. Treasury and other government agency securities 344 6.74 2 4.50
Mortgage-backed securities 6,524 6.91 1,466 7.45
State, county, and municipal securities 1 5.03 134 5.31
Other securities 840 6.64 1,161 7.09
------- -------
7,709 6.87 2,763 7.20
------- -------
$11,816 $ 4,138
======= =======
</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
54 of Note 1 and Note 7 on pages 60 and 61 of the 1996 Annual Report to
Shareholders.
10
<PAGE>
================================================================================
LOAN PORTFOLIO Loan Outstandings by Type
=================================================================
Information on loan outstandings by type is
incorporated by reference from page 29 of the 1996
Annual Report to Shareholders.
Maturity Distribution and Interest Rate
Characteristics of Certain Types of Loans
=================================================================
<TABLE>
<CAPTION>
Remaining Maturities as of December 31, 1996
-------------------------------------------------
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 $ 3,404 $ 3,103 $ 5,981 $12,488
Construction and development
secured by real estate 1,565 508 179 2,252
Commercial and industrial,
financial institutions,
and agricultural 23,945 11,530 2,734 38,209
Foreign loans 17,323 4,409 4,744 26,476
---------------------------------------------------------------------------------------
$46,237 $19,550 $13,638 $79,425
-----------------------------------------==============================================
LOANS DUE AFTER ONE YEAR
Predetermined interest rates $ 4,794 $ 5,406 $10,200
Floating or adjustable interest rates 14,756 8,232 22,988
---------------------------------------------------------------------------------------
$19,550 $13,638 $33,188
-------------------------------------------------------================================
</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.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Cross-Border Outstandings Exceeding One Percent of Total Assets
===================================================================================================================================
Cross-Border
Total Outstandings
Public Private Cross-Border as a Percentage
(dollar amounts in millions)/a/b/c/d/ December 31 Sector/e/ Banks/e/ Sector/e/ Outstandings of Total Assets
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan 1996 $ 23 $1,285 $1,852 $3,160 1.26%
1995 7 2,253 2,546 4,806 2.07
1994 17 1,248 2,292 3,557 1.65
South Korea 1996 - 1,327 1,453 2,780 1.11
1995 106 1,189 1,143 2,438 1.05
1994 - 864 935 1,799 0.83
Italy 1996 486 154 1,877 2,517 1.00
1995 172 101 2,500 2,773 1.19
1994 57 119 1,371 1,547 0.72
- -----------------------------------------------------------------------------------------------------------------------------------
</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, 1996, total unfunded commitments of the countries listed,
whose unfunded commitments exceeded 10 percent of their respective cross-
border outstandings, were as follows: Japan, $696 million and South Korea,
$344 million.
/c/Included in the cross-border outstandings of the countries listed are loans
and other interest-bearing assets on nonaccrual status of $17 million and $18
million for Japan at December 31, 1995 and 1994, 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 except $2,000 million and $1,982 million for Spain at December 31,
1996 and 1994, respectively.
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, 1996, 1995, and 1994. The par bonds had a carrying value of $1,202
million, $1,162 million, and $1,109 million at December 31, 1996, 1995, and
1994, respectively. At December 31, 1996, the par bonds had a total fair
value of approximately $1,015 million. Certain of these par bonds were
recorded in available-for-sale securities and carried at their fair value of
$345 million at December 31, 1996, 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,
1996, this collateral had a fair value of approximately $310 million. Future
interest payments for a rolling eighteen-month period are also collateralized
by additional U.S. dollar-denominated securities permitted by the agreement.
Mexico's cross-border outstandings also excluded additional securities of $30
million at December 31, 1996, 1995, and 1994, 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 page 32, pages 38 through 40, and Note 8 on page 61 of the
1996 Annual Report to Shareholders.
12
<PAGE>
================================================================================
Off-Balance-Sheet Credit-Related Financial Instruments
====================================================================
Information on off-balance-sheet credit-related financial
instruments is incorporated by reference from page 38 and
pages 72 and 73 of Note 24 of the 1996 Annual Report to
Shareholders.
Nonperforming Assets
====================================================================
Information on nonperforming assets is incorporated by
reference from pages 36 through 38 of the 1996 Annual Report
to Shareholders.
Interest Income Foregone on Nonaccrual Assets
====================================================================
<TABLE>
<CAPTION>
Year Ended
(in millions) December 31, 1996
----------------------------------------------------------------------------------------------
<S> <C>
Domestic
Interest income that would have been recognized had the assets performed in
accordance with their original terms $241
Less: Interest income included in the results of operations 70
----------------------------------------------------------------------------------------------
Domestic interest income foregone 171
Foreign
Interest income that would have been recognized had the assets performed in
accordance with their original terms 25
Less: Interest income included in the results of operations 18
----------------------------------------------------------------------------------------------
Foreign interest income foregone 7
----------------------------------------------------------------------------------------------
$178
----------------------------------------------------------------------------------------------
</TABLE>
Information on nonaccrual loan accounting policies and interest
income foregone on restructured loans is incorporated by
reference from pages 54 through 55 of Note 1, and Notes 8 and 9
on pages 61 through 62 of the 1996 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 37 of the
1996 Annual Report to Shareholders.
13
<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 1996 Annual Report to Shareholders.
ALLOWANCE FOR FOREIGN CREDIT LOSSES/a/
================================================================
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------------
(in millions) 1996 1995 1994 1993 1992
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, BEGINNING OF YEAR $428 $391 $322 $ 559 $ 808
Credit losses 39 15 42 36 126
Credit loss recoveries 60 99 124 66 174
--------------------------------------------------------------------------------------------------------
Net credit recoveries 21 84 82 30 48
Provision for credit losses (26) (54) - - 3
Losses on the sale or swap of loans
to restructuring countries - - - (3) (72)
Other net additions (deductions) 2 7 (13) (264)/ab/ (228)/a/
--------------------------------------------------------------------------------------------------------
BALANCE, END OF YEAR $425 $428 $391 $ 322 $ 559
========================================================================================================
</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 and $212 million in
1993 and 1992, 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 1996 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, 1996
----------------------------------------
TIME CERTIFICATES OTHER TIME
OF DEPOSIT DEPOSITS
(in millions) OF $100,000 OR MORE OF $100,000 OR MORE
------------------------------------------------------------------------------------------
TIME REMAINING UNTIL MATURITY
<S> <C> <C>
Three months or less $ 5,431 $310
After three months through six months 2,122 33
After six months through twelve months 1,552 22
After twelve months 1,909 72
------------------------------------------------------------------------------------------
$11,014 $437
------------------------------------------------------------------------------------------
==========================================================================================
14
</TABLE>
<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, 1996, 1995, and 1994
are incorporated by reference from page 17 of the 1996 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>
1996
Federal funds purchased/a/ $ 2,740 $ 2,176 5.21% $ 1,492 5.29%
Securities sold under repurchase
agreements/a/ 15,102 7,644 5.98 11,702 5.94
Other short-term borrowings 17,566 17,566 6.08 14,448 6.11
- -------------------------------------------------------------------------------------------------------
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
=======================================================================================================
</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 has intensified due to recently
enacted federal and state interstate banking laws, which
permit banking organizations to expand geographically. Such
laws 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 services that previously have been
traditional banking products. In addition, customers now
15
<PAGE>
===============================================================================
expect a choice of several delivery systems and channels,
including telephone, mail, home computer, ATMs, self-service
branches, and in-store 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
significantly impacted 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 continuously 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
Illinois, which, as a state bank member of the Federal Reserve
System, is primarily regulated by the FRB and a state banking
regulator. FSB is subject to the regulatory authority of the
Office of Thrift Supervision ("OTS") and the FRB. Further, all
domestic depository institution subsidiaries of BAC
16
<PAGE>
================================================================================
that are insured institutions are subject to the authority of
the FDIC. The activities of the Parent's broker-dealers, which
include BancAmerica 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 29 on pages 81 through 83 of the 1996 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, 1996, 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 45 through 47 and Note 19
on pages 66 and 67 of the 1996 Annual Report to Shareholders.
17
<PAGE>
================================================================================
As deposits of BAC's subsidiary banks are insured by the Bank
Insurance Fund (BIF) administered by the FDIC, such
subsidiaries are subject to FDIC insurance assessments. For
purposes of determining insurance premium assessments, the
FDIC places each insured bank in one of nine risk categories
based on its level of capital and other relevant information
(such as supervisory evaluations). Assessment rates for
deposit insurance premiums currently range from zero percent
to 0.27 percent, depending on the assessment category into
which the insured institution is placed.
Deposits of BAC's subsidiary savings association and portions
of the deposits of BAC subsidiary banks are insured by the
Savings Association Insurance Fund (SAIF) administered by the
FDIC. The portion of the average assessment base that is
attributable to the adjusted amount of deposits acquired from
savings associations is treated as SAIF deposits and is
assessed at the rate applicable to SAIF members in the same
risk category. Those rates effectively range from zero percent
to 0.27 percent.
Under legislation enacted in 1996, beginning January 1, 1997,
BIF member institutions will begin sharing in the cost of
funding Financing Corporation (FICO) interest payments. The
cost of funding these interest payments will be in the form of
an assessment on both BIF and SAIF insured deposits. The
assessment rate will be lower for BIF deposits than for SAIF
deposits. Actual rates will fluctuate over time depending on
the amount of deposits insured by the BIF and SAIF at the time
the assessment is made.
D. KEY LEGISLATIVE AND REGULATORY DEVELOPMENTS
1. Interstate Banking
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 interstate legislation. However, Texas
has "opted out".
2. Pending Legislation And Regulation
During 1996, 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.
18
<PAGE>
================================================================================
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, 1996, the actual number of persons employed by
BAC was 92,100. On a full-time-equivalent basis, BAC's staff
level was 78,000 at December 31, 1996.
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.
19
<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 17, 18, 45 through 47, Note 29 on
pages 81 through 83, and Note 31 on page 85 of the 1996 Annual
Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
Selected financial data is incorporated by reference from
pages 17 and 18 of the 1996 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 17 through 47 of the 1996 Annual Report to Shareholders.
FORWARD-LOOKING From time to time, the Parent makes forward-looking
STATEMENTS statements. Forward-looking statements include financial
projections, statements of plans and objectives for future
operations, statements of future economic performance, and
statements of assumptions relating thereto.
The Parent may include forward-looking statements in its
periodic reports to the Securities and Exchange Commission on
Forms 10-K, 10-Q, and 8-K, in its annual report to
shareholders, in its proxy statement, in other written
materials, and in statements made by senior management to
analysts, institutional investors, representatives of the
media, and others.
By their very nature, forward looking statements are subject
to uncertainties, both general and specific, and risks exist
that predictions, forecasts, projections and other forward-
looking statements will not be achieved. Actual results may
differ materially due to a variety of factors. Among the
uncertainties to which the Parent's forward-looking statements
are subject are credit risk, market risk, liquidity risk,
operational risk, settlement risk, and capital risk. See pages
39 through 47 of the Parent's 1996 Annual Report to
Shareholders for a discussion of these risks. In addition,
various events can create uncertainties to which the Parent's
forward-looking statements are subject. These events include,
but are not limited to, technological changes; the effects of
competition or of legislative or regulatory developments (see
"Competition" and "Supervision and Regulation" on pages 15
through 19); changes in fiscal monetary and tax policies of
the United States and other countries in which the Parent does
business; political or social developments, including war,
civil unrest or terrorist activity; the possibility of foreign
exchange controls, expropriation, nationalization or
20
<PAGE>
================================================================================
confiscation of assets in countries in which the Parent
conducts business; and natural disasters (including
earthquakes). When relying on forward-looking statements to
make decisions with respect to the Parent, investors and
others should carefully consider these and other uncertainties
and events, whether or not the statements are described as
forward-looking.
Forward-looking statements made by the Parent are intended to
apply only at the time they are made, unless explicitly stated
to the contrary. Moreover, whether or not stated in connection
with a forward-looking statement, the Parent undertakes no
obligation to correct or update a forward-looking statement
should the Parent later become aware that it is not likely to
be achieved. If the Parent were to update or correct a
forward-looking statement, investors and others should not
conclude that the Parent will make additional updates or
corrections thereafter.
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 49 through 85 of the
1996 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.
21
<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 the 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 22, 1997
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,
1997 is set forth below.
<TABLE>
<CAPTION>
Name Age Position with Registrant
---- --- ------------------------
<S> <C> <C>
David A. Coulter 49 Chairman of the Board, President,
and Chief Executive Officer
Kathleen J. Burke 45 Vice Chairman and Personnel Relations Officer
Jack L. Meyers 54 Vice Chairman
Michael J. Murray 52 Vice Chairman
Michael E. O'Neill 50 Vice Chairman and Chief Financial Officer
Thomas E. Peterson 61 Vice Chairman
Michael E. Rossi 52 Vice Chairman
Martin A. Stein 56 Vice Chairman
</TABLE>
DAVID A. COULTER was appointed Chairman of the Board on May
23, 1996 and as 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.
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.
22
<PAGE>
================================================================================
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. Murray 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.
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 22, 1997 or on their earlier retirement,
resignation, or removal. There is no family relationship
among any such officers.
23
<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 Director 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 22, 1997 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 22, 1997 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 22, 1997 Annual Meeting of Shareholders.
24
<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 1996 Annual Report to
Shareholders. Page number references are to the 1996
Annual Report to Shareholders.
<TABLE>
<CAPTION>
PAGE
<S> <C>
BankAmerica Corporation:
Report of Independent Auditors......................................................... 49
Consolidated Statement of Operations--
Years Ended December 31, 1996, 1995, and 1994....................................... 50
Consolidated Balance Sheet--December 31, 1996 and 1995................................. 51
Consolidated Statement of Cash Flows--Years Ended December 31, 1996,
1995, and 1994...................................................................... 52
Consolidated Statement of Changes in Stockholders' Equity--
Years Ended December 31, 1996, 1995, and 1994....................................... 53
Notes to Consolidated Financial Statements............................................. 54
</TABLE>
- --------------------------------------------------------------------------------
(a)(2) FINANCIAL Schedules to the consolidated financial statements (Nos.
STATEMENT I 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 percent 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. X
</TABLE>
25
<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 13, 14, and 15 on pages 62
through 64 of the 1996 Annual Report to
Shareholders. None of such debt exceeds 10
percent 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 9/30/94 10
Nonofficer Directors, as amended./a/ 12/31/95 10(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 X
Plan, as amended./a/
10.d. BankAmerica Corporation Senior Management 12/31/93 10(d)
Incentive Plan, as amended (formerly the 12/31/95 10(d)
"Annual Management Incentive Plan")./a/
10.e. Supplemental Retirement Plan (formerly the
"Supplemental CareerAccounts Plan")./a/ X
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/ 9/30/96 10
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 Seattle-First
National Bank./a/
10.l. Supplemental Benefits Agreement dated July 9, 1990 12/31/95 10(l)
and December 6, 1990 between M.A. Stein and
the Parent./a/
10.m. Change-in-Control Severance Pay Program./a/ 12/31/95 10(o)
</TABLE>
----------------------
/a/Management contract or compensatory plan, contract, or arrangement.
26
<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.n. Continental Illinois Corporation 1979 Stock Option X
Plan, as amended./a/
10.o. Continental Bank Corporation 1982 Performance, X
Resticted Stock and Stock Option Plan, as amended./a/
10.p. Continental Bank Corporation 1991 Equity X
Performance Incentive Plan, as amended./a/
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. 1996 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 1996, the Parent filed reports
FORM 8-K on Form 8-K dated October 16, 1996, December 12, 1996, and
December 19, 1996. The October 16, 1996 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 December 12, 1996 report disclosed, pursuant
to Item 5 of the report, a fourth quarter restructuring
charge as a result of the restructuring of the Parent's
business activities. The December 19, 1996 report filed,
pursuant to Items 5 and 7 of the report, a copy of the
Parent's press release titled "BA Merchant Services, Inc.
Announces Public Offering of 14 Million Shares of Class A
Common Stock; BankAmerica Corporation Expects $145 Million
Fourth-Quarter After-Tax Gain." After the fourth quarter of
1996, the Parent filed reports on Form 8-K dated January 15,
1997, February 3, 1997, and March 3, 1997. The January 15,
1997 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 3, 1997 report filed,
pursuant to Items 5 and 7 of the report, a copy of the
Parent's press release titled "BankAmerica Board Extends
Stock Repurchase Program, Increases Common Stock Dividend,
Approves Premium Price Stock Option Plan." The March 3, 1997
report filed, pursuant to Items 5 and 7 of the report, a copy
of the Parent's press release titled, "BankAmerica Announces
Intention to Split Stock."
27
<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 14, 1997 BANKAMERICA CORPORATION
/s/ JOHN J. HIGGINS
---------------------
(John J. Higgins
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
--------- -----
<S> <C>
Principal Executive Officer
and Director:
/s/ DAVID A. COULTER Chairman of the Board, 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/ JOHN J. HIGGINS Executive Vice President
------------------------------- and Chief Accounting Officer
(John J. Higgins)
</TABLE>
<TABLE>
Directors:
<S> <C> <C> <C>
JOSEPH F. ALIBRANDI* Director DONALD E. GUINN* Director
JILL E. BARAD* Director FRANK L. HOPE, JR.* Director
PETER B. BEDFORD* Director IGNACIO E. LOZANO, JR.* Director
ANDREW F. BRIMMER* Director WALTER E. MASSEY* Director
RICHARD A. CLARKE* Director JOHN M. RICHMAN* Director
TIMM F. CRULL* Director RICHARD M. ROSENBERG* Director
KATHLEEN FELDSTEIN* Director A. MICHAEL SPENCE* Director
SOLOMON D. TRUJILLO* Director
</TABLE>
A majority of the members of the Board of Directors.
*By /s/ CHERYL A. SOROKIN
-------------------------------
(Cheryl A. Sorokin, Attorney-in-Fact)
Dated: March 14, 1997
28
<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 - 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 CORPORATION APPEARS HERE]
BankAmerica
NL-9 3-97
(Receycled paper logo appears here) Recycled paper
<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. X
4.a. The Parent and certain of its consolidated
subsidiaries have outstanding certain long-term
debt. See Notes 13, 14, and 15 on pages 62
through 64 of the 1996 Annual Report to
Shareholders. None of such debt exceeds 10
percent 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 9/30/94 10
Nonofficer Directors, as amended./a/ 12/31/95 10(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 X
Plan, as amended./a/
10.d. BankAmerica Corporation Senior Management 12/31/93 10(d)
Incentive Plan, as amended (formerly the 12/31/95 10(d)
"Annual Management Incentive Plan")./a/
10.e. Supplemental Retirement Plan (formerly the
"Supplemental CareerAccounts Plan")./a/ X
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/ 9/30/96 10
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 Seattle-First
National Bank./a/
10.l. Supplemental Benefits Agreement dated July 9, 1990 12/31/95 10(l)
and December 6, 1990 between M.A. Stein and
the Parent./a/
10.m. Change-in-Control Severance Pay Program./a/ 12/31/95 10(o)
10.n. Continental Illinois Corporation 1979 Stock Option X
Plan, as amended./a/
10.o. Continental Bank Corporation 1982 Performance, X
Resticted Stock and Stock Option Plan, as amended./a/
10.p. Continental Bank Corporation 1991 Equity X
Performance Incentive Plan, as amended./a/
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. 1996 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 3.b
-----------
BANKAMERICA CORPORATION BYLAWS
LAST AMENDED: March 3, 1997
<PAGE>
INDEX
BANKAMERICA CORPORATION BY-LAWS
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
<S> <C> <C> <C>
Amendments.............................. XI 3 30
Capital Stock-Certificates of Stock..... VII 24
Certificates......................... VII 1 24
Dividends............................ VII 6 25
Lost, Stolen, Mutilated or
Destroyed Certificates............... VII 2 24
Fixing Record Date................... VII 4 25
Registered Shareholders.............. VII 5 25
Transfers of Stock................... VII 3 25
Committees.............................. V 15
Action By Written Consent............ V 9 21
Auditing and Examining Committee..... V 3 16
Delegation of Authority.............. V 12 21
Executive Committee.................. V 1 15
Executive Personnel and
Compensation Committee............... V 4 18
Meeting Requirements................. V 8 20
Nominating Committee................. V 5 19
Operating Policy Committee........... V 2 16
Other Committees..................... V 7 20
Public Policy Committee.............. V 6 19
Reports to the Board................. V 13 22
Subcommittees........................ V 11 21
Telephone Participation in Meetings.. V 10 21
Directors............................... III 13
Advisory............................. III 6 13
Compensation of Directors............ III 5 13
General Powers....................... III 4 13
Number, Election and Term............ III 1 13
Resignations......................... III 3 13
Vacancies and Newly Created
Directorships....................... III 2 13
Emergency............................... X 28
Application.......................... X 1 28
Authority............................ X 5 29
Conduct of Business.................. X 3 28
Effect on By-laws.................... X 7 29
Meetings of Board or Committee....... X 2 28
No Liability......................... X 6 29
Succession........................... X 4 28
Termination of Emergency............. X 8 29
Fiscal Year............................. XI 1 29
Indemnification......................... VIII 26
Insurance............................ VIII 4 27
Non-Exclusivity of Rights............ VIII 3 27
Right to Indemnification............. VIII 1 26
Right of Claimant to Bring Suit...... VIII 2 26
Meetings of the Board of Directors...... IV 14
Action by Written Consent............ IV 6 14
</TABLE>
-iii-
<PAGE>
INDEX
BANKAMERICA CORPORATION BY-LAWS
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
<S> <C> <C> <C>
Meetings of the Board of Directors (Cont.).. IV
Emergency................................ X 28
Organizational Meeting................... IV 2 14
Place of Meetings........................ IV 1 14
Quorum................................... IV 5 14
Regular Meetings......................... IV 3 14
Special Meetings......................... IV 4 14
Telephone Participation in Meetings...... IV 7 15
Meetings of Shareholders.................... II 9
Annual Meeting........................... II 2 9
Business................................. II 7 10
Judges of Election....................... II 11 11
Notice of Annual Meeting................. II 3 9
Notice of Shareholder Business at
Annual Meeting......................... II 12 11
Notice of Shareholder Nominees........... II 13 12
Notice of Special Meetings............... II 6 10
Organization............................. II 9 10
Place of Meetings........................ II 1 9
Quorum and Adjournment................... II 8 10
Shareholders List........................ II 4 9
Special Meetings......................... II 5 10
Voting of Shareholders................... II 10 11
Miscellaneous............................... XI 29
Amendments............................... XI 3 30
Fiscal Year.............................. XI 1 29
Seal..................................... XI 2 29
Notices..................................... IX 27
Form of Notices.......................... IX 1 27
Waiver of Notice......................... IX 2 27
Officers.................................... VI 22
Appointment, Term of Office.............. VI 2 22
Authority, Duties, Fidelity Bond......... VI 4 23
Chairman of the Board.................... VI 5 23
Chief Executive Officer.................. VI 11 24
Chief Financial Officer.................. VI 13 24
Chief Operating Officer.................. VI 12 24
Compensation............................. VI 3 22
Number and Titles........................ VI 1 22
President................................ VI 7 23
Secretary................................ VI 10 24
Vice Chairmen............................ VI 8 23
Vice Chairmen of the Board............... VI 6 23
Vice Presidents.......................... VI 9 23
Offices..................................... I 9
Other Offices............................ I 2 9
Registered Office........................ I 1 9
Seal........................................ XI 2 29
</TABLE>
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INDEX
BANKAMERICA CORPORATION BY-LAWS
<TABLE>
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ARTICLE SECTION PAGE
<S> <C> <C> <C>
Shareholders........................... II 9
See: Meetings of Shareholders
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BANKAMERICA CORPORATION
BY-LAWS
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office shall be in the
City of Wilmington, County of New Castle, State of Delaware.
Section 2. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. All annual meetings of the
shareholders shall be held in the City and County of San Francisco, State of
California, at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting. Special meetings of shareholders may be held at such
time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. ANNUAL MEETING. Annual meetings of shareholders for the
election of Directors and the transaction of such other business as may be
properly brought before the meeting shall be held in March, April or May of each
year on such business day and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting.
Section 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting stating the place, date and hour of the meeting shall be given to each
shareholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 4. SHAREHOLDERS LIST. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days before
every meeting of shareholders, a complete list of the shareholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each shareholder and the number of shares registered in the name of each
shareholder. Such list shall be open to the examination of any
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shareholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
Section 5. SPECIAL MEETINGS. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or the
President and shall be called by the Chairman of the Board or the President or
Secretary at the request in writing of a majority of the Board of Directors, or
at the request in writing of shareholders owning a majority in amount of the
entire capital stock of the Corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 6. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than fifty days before the date of the meeting, to each shareholder
entitled to vote at such meeting.
Section 7. BUSINESS. Business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
Section 8. QUORUM AND ADJOURNMENT. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote at the meeting.
Section 9. ORGANIZATION. At every meeting of the shareholders the
Chairman of the Board shall preside. In the absence of such officer, any other
officer of the rank of President, Vice Chairman of the Board, Vice Chairman,
Executive Vice President or Senior Vice President present shall call such
meeting to order and preside. The Secretary, or inhis or her absence, the
appointee of the presiding officer of the meeting shall act as Secretary of the
meeting.
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Section 10. VOTING OF SHAREHOLDERS. When a quorum is present or
represented at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which by
express provision of statute or of the Certificate of Incorporation a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Each shareholder shall at every meeting of the shareholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such shareholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. JUDGES OF ELECTION. The Board of Directors may at any
time appoint one or more persons to serve as judges of election at any meeting
of shareholders with respect to the votes of shareholders at such meeting. If
any judge appointed is absent or refuses to act, a majority of the judges, if
present, may act. If a majority of the judges is not present, the presiding
officer of the meeting may appoint one or more persons to serve as judges for
the meeting. The judges appointed to act at any meeting of the shareholders
shall perform their duties faithfully and impartially, and shall notify the
Secretary of the Corporation in writing of the votes cast at such meeting by the
shareholders.
Section 12. NOTICE OF SHAREHOLDER BUSINESS AT ANNUAL MEETING. At an
annual meeting of the shareholders only such business shall be conducted as
shall have been brought before the meeting (a) by or at the direction of the
Board of Directors or (b) by any shareholder of the Corporation entitled to vote
at the meeting who complies with the notice procedures set forth in this
Section. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than thirty days nor more than sixty days prior to the
meeting; provided, however, that if less than forty days' notice of the date of
-------- -------
the meeting is given to shareholders, notice by the shareholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the Corporation's stock which
are owned by the shareholder and (d) any material interest of the shareholder in
such business. Notwithstanding anything in these By-laws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section. The Chairman of an annual meeting shall,
if the facts warrant, determine and declare to the meeting that any business
proposed at the meeting
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was not properly brought before the meeting in accordance with the provisions of
this Section, and if he or she should so determine, he or she shall so declare
to the meeting and any such business shall not be transacted.
Section 13. NOTICE OF SHAREHOLDER NOMINEES. Only persons who are
nominated in accordance with the procedures set forth in this Section shall be
eligible for election as Directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of shareholders
(a) by or at the direction of the Board of Directors or (b) by any shareholder
of the Corporation entitled to vote for the election of Directors at the meeting
who has complied with the notice procedures set forth in this Section. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than thirty days nor more than sixty days prior to the meeting; provided,
--------
however, that if less than forty days' notice of the date of the meeting is
- -------
given to shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the tenth day following the day
on which the notice of the date of the meeting was mailed. A shareholder's
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or re-election as a Director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to being named
in the Corporation's proxy statement as a nominee if nominated by the Board of
Directors and to serving as a Director if elected); and (b) as to the
shareholder giving the notice (i) the name and address, as they appear on the
Corporation's books, of such shareholder and (ii) the class and number of shares
of the Corporation's stock which are owned by such shareholder; provided,
---------
however, that compliance by a shareholder with the notice provisions and other
- -------
requirements in this Section shall not create a duty of the Corporation to
include the shareholder's nominee in the Corporation's proxy statement or proxy
if the shareholder's nominee is not nominated by the Board of Directors, and the
Corporation shall retain any discretion it has to omit the nominee from the
Corporation's proxy statement and proxy. At the request of the Board of
Directors, any person nominated by the Board of Directors for election as a
Director shall furnish to the Secretary of the Corporation that information
required to be set forth in a shareholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination made at the meeting was not made in
accordance with the provisions of this Section or with law or rules applicable
to the meeting, and if he or she should so determine, he or she shall so declare
to the meeting and the nomination shall be disregarded.
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ARTICLE III
DIRECTORS
Section 1. NUMBER, ELECTION AND TERM. The number of Directors which
shall constitute the whole Board shall be not less than three or more than
thirty-five. The first Board shall consist of three Directors. Thereafter,
within the limits above specified, the number of Directors shall be determined
by resolution of the Board of Directors or by the shareholders at the annual
meeting. The Directors shall be elected at the annual meeting of the
shareholders, except as provided in Section 2 of this Article III, and each
Director elected shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Directors need
not be shareholders.
Section 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and
newly created directorships resulting from any increase in the authorized number
of Directors may be filled by a majority of the Directors then in office, though
less than a quorum, or by a sole remaining Director, and the Directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify or until their earlier resignations or removals.
If there are no Directors in office, then an election of Directors may be held
in the manner provided by statute.
Section 3. RESIGNATIONS. Any Director of the Corporation may resign
at any time by giving written notice to the Chairman of the Board or President
or to the Secretary of the Corporation. The resignation of any Director shall
take effect at the date of receipt of such notice or at any later date specified
therein; and unless otherwise specified therein the acceptance of such
resignation by the Board of Directors shall not be necessary to make it
effective.
Section 4. GENERAL POWERS. The business of the Corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-laws
directed or required to be exercised or done by the shareholders.
Section 5. COMPENSATION OF DIRECTORS. Fees and expenses payable to
Directors shall be in such amounts as shall be determined by the Board of
Directors, except that no Director of the Corporation who receives any salary as
an officer or employee thereof shall receive any per diem or other compensation
for attending any meeting of the Board of Directors or of the Executive
Committee or of any other committee.
Section 6. ADVISORY DIRECTORS. The Board of Directors may appoint
such number of Advisory Directors as shall be determined by the Board from time
to time. Such Advisory Directors shall serve at the pleasure of the Board of
Directors and shall have such rights and functions as the Board shall determine.
Advisory Directors shall receive such compensation for their
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services as may be fixed by the Board. No Advisory Director who receives a
salary as an officer or employee of the Corporation or any of its subsidiaries
shall receive compensation for attending any meeting of the Board of Directors
or of any committee of the Board.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. PLACE OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 2. ORGANIZATIONAL MEETING. The Board of Directors shall meet
for the purpose of organization, the election of officers and the transaction of
other business, on the same day as each annual meeting of shareholders at such
place as may be designated by the presiding officer of such meeting, or as may
be otherwise provided by vote of the shareholders at such meeting. Notice of
such meeting shall not be necessary.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
Section 4. SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board or a Vice Chairman of the Board or the
President on two days' notice to each Director, either personally or by mail or
by telegram; special meetings shall be called by the Chairman of the Board or a
Vice Chairman of the Board or the President or the Secretary in like manner and
on like notice on the written request of any three Directors.
Section 5. QUORUM. At all meetings of the Board a majority of the
Directors shall constitute a quorum for the transaction of business and the act
of a majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 6. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the Certificate of Incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing. The written consents
shall be filed with the minutes of proceedings of the Board or committee.
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Section 7. TELEPHONE PARTICIPATION IN MEETINGS. Members of the Board
of Directors or any committees thereof may participate in a meeting of the Board
of Directors or of such committees by means of conference telephone or other
communications equipment by means of which all persons participating can hear
each other, and such participation shall constitute presence in person at such
meeting.
ARTICLE V
COMMITTEES
Section 1. EXECUTIVE COMMITTEE. During the intervals between meetings of
the Board, all powers and authority of the Board regarding the management of the
business and affairs of the Corporation shall be exercised by the Executive
Committee of the Board; except that the committee shall have no power:
(a) To amend the Certificate of Incorporation (except that the committee
may, to the extent authorized in a resolution adopted by the Board
providing for the issuance of shares of stock, fix the designations
and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation or fix
the number of shares of any series of stock or authorize the increase
or decrease of the shares of any series).
(b) To amend the By-laws of the Corporation.
(c) To recommend to the shareholders of the Corporation the sale, lease
or exchange of all or substantially all of the Corporation's property
and assets.
(d) To adopt an agreement of merger or consolidation.
(e) To recommend to the shareholders of the Corporation the dissolution
of the Corporation or a revocation of a dissolution.
(f) To declare a dividend.
(g) To authorize the issuance of stock, except that the committee shall
have the power to authorize the issuance of common stock of the
Corporation in one transaction or a series of related transactions
(including, without limitation, pursuant to a shelf registration),
provided that the number of shares of common stock so authorized
shall not exceed 5% of the number of shares of common stock issued
and outstanding immediately before such
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authorization.
(h) To appoint or remove the Chairman of the Board or the President of
the Corporation.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
The committee shall have the power and authority to adopt a certificate of
ownership and merger in connection with the merger of a parent and one or more
subsidiary corporations.
Section 2. OPERATING POLICY COMMITTEE. During intervals between meetings
of the Executive Committee, the Operating Policy Committee shall exercise the
power and authority of the Executive Committee to the extent permitted by law
and subject to the final sentence of this Section 2. The Operating Policy
Committee shall consist of such Directors or officers as the Board may from time
to time appoint by resolution passed by a majority of the whole Board. The
Operating Policy Committee shall be subject to the limitations on delegation of
authority set forth in Section 12 of this Article V and such limits as the Board
may establish from time to time by resolution.
Section 3. AUDITING AND EXAMINING COMMITTEE. The Auditing and Examining
Committee shall provide assistance to the Board in meeting its responsibilities
regarding the adequacy of internal controls, the quality and integrity of
regulatory and financial accounting and reporting and the effectiveness of the
internal and external auditing and examining functions of the Corporation and
its subsidiaries.
In carrying out its duties the committee shall:
. monitor areas of significant risk, including credit risk, market risk,
liquidity risk, cross border risk, operational risk, and compliance;
. monitor the adequacy of the Corporation's internal controls through
reviewing reports of regulatory examinations of the Corporation,
management letters, and other assessments of the adequacy of internal
controls from the independent accountants and internal auditors, together
with any proposed responses by management of the Corporation;
. review the Corporation's annual report and other principal periodic
financial reports to the public and reports to the regulatory agencies
(including the adequacy of any of the foregoing reports' supporting
processes), in all cases to the extent deemed appropriate by the
committee;
. review significant accounting policy and reporting issues;
. recommend to the Board the firm to be employed by the Corporation as its
independent auditors, and review and make recommendations to the Board
regarding the terms and scope of such firm's engagement, and
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monitor its performance and independence;
. annually review and approve the scope of the auditing and credit
examination functions of the Corporation and monitor their performance;
. review with the Chief Executive Officer any performance reports and
compensation recommendations to be made to the Executive Personnel and
Compensation Committee for the General Auditor and the Director of Credit
Examination Services;
. review and take such other actions as may be appropriate with respect to
reports and other requirements under the Federal Deposit Insurance
Corporation Improvement Act of 1991;
. inquire into such matters and review such reports and other documents
regarding subsidiaries as it deems appropriate;
. take such action as the committee deems appropriate to encourage free and
open communication among the Board, the committee, the independent
auditors and the officers of the Corporation responsible for internal
audit, credit examination, regulatory/financial accounting and reporting,
and internal controls, including the scheduling of periodic executive
sessions with the independent auditors and members of management deemed
appropriate by the committee.
The committee shall also provide assistance to the Board with respect to
the fiduciary activities of subsidiaries. The committee shall:
. review reports of examination of the fiduciary activities of any
subsidiary which has been directed to the committee by the Board or by
regulatory authorities;
. monitor the internal fiduciary audit function and its findings for
subsidiaries;
. review reports from the Corporation's independent auditors with respect
to fiduciary activities of subsidiaries;
. have authority to make recommendations to the Board with respect to
fiduciary activities of subsidiaries as a result of audit and examination
reviews;
The committee shall also provide assistance to the Board in meeting its
fiduciary responsibilities with respect to the employee benefit plans of the
Corporation subject to the Employee Retirement Income Security Act of 1974, as
amended (ERISA). In carrying out its duties the committee shall:
. review the performance of the Employee Benefits Administrative Committee
and the Employee Benefits Investment Committee and any other fiduciary
appointed by the Board for the Corporation's employee
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benefit plans subject to ERISA and review audit reports on such plans;
The committee may employ, at the Corporation's expense, independent
accountants, outside counsel and other experts as it deems necessary, and shall
have all additional powers necessary to carry out the foregoing functions and
such other functions as may be assigned by the Board from time to time.
The committee shall consist of such members as the Board may from time to
time appoint by resolution passed by a majority of the whole Board. At least
two members of the committee shall have significant executive, professional,
educational, or regulatory experience in financial, auditing, accounting, or
banking matters as shall be determined by the Board.
No member of the committee shall be, or shall have been within one year
prior to serving as a member of the committee, an officer or employee of the
Corporation or any of its subsidiaries or affiliates, and no member shall have
any relationship that, in the opinion of the Board, would interfere with the
member's exercise of independent judgment as a member of the committee,
including any significant direct or indirect credit or other relationships with
the Corporation or its subsidiaries, the termination of which likely would
materially and adversely affect the Corporation's financial condition or results
of operations.
Section 4. EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE.
The Executive Personnel and Compensation Committee shall have responsibility
for, and shall review and approve, the compensation, including salary and
perquisites, of the Corporation's executive officers, as designated for Federal
securities law purposes by the Board from time to time, and such other members
of the senior management of the Corporation as determined by the committee from
time to time by resolution. The committee shall also make recommendations to
the Corporation's subsidiaries as to the compensation of such members of senior
management of the subsidiaries as determined by the committee from time to time
by resolution.
The committee shall also have responsibility for the administration of the
Corporation's short-term and long-term incentive plans and deferred compensation
programs established for the Executive Officers and other senior management of
the Corporation and its subsidiaries (incentive plans). The Committee shall
approve or review the designation of participants in incentive plans, the
principles and procedures used in determining grants and awards under the plans,
and with respect to grants or awards of the Company's equity securities, the
specific grants and awards within such categories of recipients as designated by
the committee from time to time by resolution. The committee shall also
recommend to the full Board such amendments or revisions to incentive plans, and
shall take such other actions with respect to incentive plans, as deemed
appropriate by the committee.
The committee shall also advise management regarding executive succession
planning and the selection, development and performance of the
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Executive Officers and other senior management of the Corporation and its
subsidiaries as determined by the committee from time to time.
The committee shall have all additional powers necessary to carry out its
responsibilities and such other duties as may be assigned by the Board from time
to time.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
No member of the committee shall be an active officer of the Corporation
or any of its subsidiaries, and no member shall have any relationship that, in
the opinion of the Board, would interfere with the member's exercise of
independent judgment as a member of the committee.
Section 5. NOMINATING COMMITTEE. The Nominating Committee shall
recommend to the Board criteria for the selection of candidates to serve on the
Board; evaluate all proposed candidates; recommend to the Board nominees to fill
vacancies on the Board; and recommend to the Board prior to the annual meeting
of shareholders a slate of nominees for election to the Board by the
shareholders of the Corporation at the annual meeting.
The committee may also review and make recommendations to the Executive
Committee or the Board with respect to the Corporation's overall compensation
program for Directors, including salary, perquisites, deferred compensation
plans, stock or stock option plans or other incentive plans, and retirement
plans.
In carrying out its duties, the committee shall seek possible candidates
for the Board and otherwise aid in attracting qualified candidates to the Board.
The committee shall be available to the Chairman of the Board and the Chief
executive Officer and other members of the Board for consultation concerning
candidates for the Board. The committee shall periodically review, assess and
make recommendations to the Board with regard to the size and composition of the
Board. The committee shall have all additional powers necessary to carry out
its responsibilities and such other duties as may be assigned by the Board from
time to time.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
No member of the committee shall be an active officer of the Corporation
or any of its subsidiaries and no member shall have any relationship that, in
the opinion of the Board, would interfere with the member's exercise of
independent judgment as a member of the committee.
Section 6. PUBLIC POLICY COMMITTEE. The Public Policy committee shall
advise and make recommendations to the Board and management of the Corporation
and its subsidiaries concerning matters of public and social policy. The
committee shall identify and monitor the social, political and environmental
trends and issues that could affect the corporation's or its
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subsidiaries' performance and the related interests of employees, shareholders,
customers, and the general public; evaluate and advise the Board and management
on long range plans and programs for adjusting operations to those trends and
issues; provide Community Reinvestment Act (CRA) oversight to ensure that the
CRA activities of all banking subsidiaries of the Corporation reflect the
Corporation's commitment to outstanding performance; and recommend to the Board
and management, as appropriate, action on specific public policy issues, and
advise the Board and management as to the committee's evaluation of related
policies, practices and procedures.
The committee shall have all additional powers necessary to carry out its
responsibilities and such other duties as may be assigned by the Board from time
to time.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
Section 7. OTHER COMMITTEES. The Board may designate one or more other
committees, each committee to consist of one or more members as the Board
determines. The Board may designate one or more persons as alternate members of
any such committee who may replace any absent or disqualified member at any
meeting of the committee. Any such committee shall have and may exercise such
powers as may be specified in the resolution creating such committee, including,
to the extent authorized in a resolution adopted by the Board providing for the
issuance of shares of stock, the power to fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series. Each committee shall have
such name as may be determined from time to time by the Board. The Board may
change the members of any committee, fill vacancies and discharge any committee,
with or without cause, at any time.
Section 8. MEETING REQUIREMENTS. The Board shall designate one member of
each committee to serve as chairman of the committee. Except as otherwise
stated in these By-laws or a resolution of the Board, a number equal to a
majority of the members of a committee shall be deemed to constitute a quorum
for actions of the committee. If a quorum is not present at any meeting of a
committee, the committee members present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. Except as otherwise stated in these By-laws or in a
resolution of the Board, the vote of a majority of the members of a committee
present at a meeting at which a quorum is present shall be necessary for action
to be taken by the committee, and each committee shall hold regular and special
meetings at times and places and upon notice as the committee may determine. In
the absence of any other notice requirements, meetings of a committee may be
called by the chairman of the committee or the Secretary, and must be called by
the chairman of the committee or the Secretary upon the request of any two
members of the committee, on at least 24 hours' notice to
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each committee member before the hour appointed for holding such meeting.
Notice shall be given personally, or by leaving the notice at the member's place
of business or residence, or by mailing the notice in San Francisco or Los
Angeles, with the postage thereon fully prepaid, addressed to the member at his
or her last known place of business or residence, or by telegraphing or
telecopying the notice to the member at his or her last known place of business
or residence. The method of notice of a special meeting shall be entered in the
minutes of the special meeting, and the approval of the minutes at any
subsequent meeting of the committee shall be conclusive upon the question of
service. Personal notice includes telephone notice to the individual.
Section 9. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
these By-laws, any action required or permitted to be taken at any meeting of
any committee may be taken without a meeting, if all members of the committee
consent to the action in writing. The written consents shall be filed in the
minute book of the committee.
Section 10. TELEPHONE PARTICIPATION IN MEETINGS. Members of a committee
may participate in a meeting of the committee by means of conference telephone
or other communications equipment by means of which all persons participating
can hear each other, and such participation shall constitute presence in person
at the meeting.
Section 11. SUBCOMMITTEES. The provisions of this Section 11 with
respect to subcommittees shall be effective only to the extent permitted by
Delaware law. Subject to the foregoing, and except as otherwise stated in these
By-laws or a resolution of the Board, each committee may appoint and discharge
subcommittees and may delegate to such subcommittees any of the power and
authority of the committee, subject to such restrictions as the committee may
determine. The committee may authorize such subcommittees to appoint their own
subcommittees and to delegate any of their power and authority. Each
subcommittee shall have such members as the committee shall appoint, provided
that at least one member of the committee shall be a member of the subcommittee.
The name of each subcommittee shall be determined by the committee or
subcommittee which appoints it. Each committee and subcommittee may designate
one or more Directors or officers as alternate members of any subcommittee, who
may replace any specified or unspecified member who is absent or disqualified at
any meeting of the subcommittee. Each subcommittee shall be subject to the same
procedural requirements as the committee or subcommittee which appointed it,
including but not limited to the requirements set forth in this Article V for
notices, quorums, action by written consent, and telephone participation in
meetings. Each subcommittee shall report its actions at the next practicable
meeting of the committee or subcommittee for its review and any action it deems
appropriate.
Section 12. DELEGATION OF AUTHORITY. The Board of Directors and each
committee and subcommittee may delegate authority to officers and employees of
the Corporation, to the fullest extent permitted by law and subject to any
restrictions and limitations the Board of Directors, the committee, or the
subcommittee, as the case may be, deems appropriate. This power shall include
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delegation to committees or subcommittees whose members may include officers of
the Corporation, provided however, that discretion reserved under Delaware law
to the Board of Directors or a committee established by the Board of Directors
may be exercised only by the Board of Directors or a Board committee established
by a majority of the whole Board of Directors.
Section 13. REPORTS TO THE BOARD. Except as otherwise stated in these
By-laws or a resolution of the Board, each committee shall keep minutes of its
proceedings and shall report its actions and, at least on a quarterly basis, the
actions of its subcommittees at the next practicable Board meeting for its
review and any action it deems appropriate. Any action of the Board with
respect to the report shall be recorded in the minutes of the meeting of the
Board, as well as in the minute book of the committee.
ARTICLE VI
OFFICERS
Section 1. NUMBER AND TITLES. The officers of the Corporation may be,
and to the extent required by law shall be: a Chairman of the Board, a
President, one or more Vice Chairmen of the Board, one or more Vice Chairmen,
one or more Executive Vice Presidents, one or more Senior Vice Presidents, one
or more Vice Presidents, one or more Assistant Vice Presidents, a Secretary, one
or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers,
and such other officers as the Board may by resolution create, or as may be
appointed in accordance with Section 2 of this Article.
The Board of Directors shall designate one officer of the Corporation as
the Chief Executive Officer and may in its discretion confer additional
functional titles, including but not limited to Chief Operating Officer and
Chief Financial Officer.
Section 2. APPOINTMENT, TERM OF OFFICE. The officers shall be appointed
by the Board of Directors and shall serve at the pleasure of the Board, which
may demote, suspend, remove or dismiss any officer with or without cause or
notice at any time. However, any such action shall be without prejudice to any
rights of such officer under any written contract addressing employment issues
executed by an officer of the Corporation authorized to execute such a contract.
Each officer shall hold office until a successor is elected and qualified or
until the officer's earlier resignation or removal.
Section 3. COMPENSATION. The compensation of all officers and other
employees of the Corporation shall be fixed by the Board of Directors or by a
committee appointed or officers designated for that purpose or in accordance
with procedures established by the Corporation's human resources or personnel
function.
Section 4. AUTHORITY, DUTIES, FIDELITY BOND. One person may hold
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more than one office, except that the offices of President and Secretary and of
Chairman of the Board and Secretary may not be held by the same person. When
the signature or approval of two officers is required, a person holding two
offices shall act only as one signer or approver. The duties and authority of
the officers of the Corporation, other than as set forth in these By-laws, may
be prescribed and established by the Board of Directors or by the Executive
Committee. Each officer shall perform the duties imposed upon the officer by
law, these By-laws, the Board of Directors or the Executive Committee. Except
as otherwise set forth in these By-laws or by the Board of Directors or the
Executive Committee, each officer shall have such authority and duties as
usually are incident to the title and office held. Authority to act on behalf
of the Corporation may be delegated to officers to the extent permitted by these
By-laws, including, without limitation, Sections 2, 11 and 12 of Article V
hereof, except to the extent such delegation is prohibited or limited by
Delaware law. The Board of Directors may provide for such bond and fidelity
insurance covering the officers of the Corporation and for the faithful and
honest discharge of their duties as they may determine.
Section 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the shareholders and the Board of Directors and shall
have such other duties and authority as are set forth in these By-laws or may be
assigned by the Board of Directors.
Section 6. THE VICE CHAIRMEN OF THE BOARD. The Board of Directors may
appoint one or more Vice Chairmen of the Board. Each Vice Chairman of the Board
shall have such duties and authority as may be assigned by the Board of
Directors or by the officer to whom such Vice Chairman of the Board reports. If
more than one Vice Chairman of the Board is appointed, the Board may designate
one such Vice Chairman of the Board as Senior Vice Chairman of the Board.
Section 7. THE PRESIDENT. The President shall have such duties and
authority as are set forth in these By-laws or may be assigned by the Board of
Directors or by the Chairman of the Board.
Section 8. THE VICE CHAIRMEN. The Board of Directors may appoint one or
more Vice Chairmen. Each Vice Chairman shall have such duties and authority as
may be assigned by the Board of Directors or by the officer to whom such Vice
Chairman reports.
Section 9. THE VICE PRESIDENTS. The Board of Directors may appoint one
or more Vice Presidents. The Board may create categories of Vice Presidents,
including but not limited to Executive Vice Presidents, Senior Vice Presidents
and Assistant Vice Presidents. The Board of Directors, the Chairman of the Board
or the President may designate seniority of ranking among categories of Vice
Presidents. Each Vice President shall have such duties and authority as may be
assigned by the Board of Directors or by the officer to whom such Vice President
reports.
Section 10. THE SECRETARY. The Secretary shall have charge and
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custody of the corporate seal, records and Minute Books of the Corporation,
shall keep correct written minutes of all meetings of shareholders and
Directors, and shall give or cause to be given notice of all meetings of the
shareholders and of the Board of Directors in accordance with these By-laws and
as required by law. The duties of the Secretary may be performed by any
Assistant Secretary.
Section 11. THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall have general executive supervision of the business and affairs of the
Corporation.
Section 12. THE CHIEF OPERATING OFFICER. The Chief Operating Officer
shall have such duties and authority as may be assigned by the Chief Executive
Officer, to whom the Chief Operating Officer shall report.
Section 13. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall be the principal financial officer of the Corporation.
ARTICLE VII
CAPITAL STOCK--CERTIFICATES OF STOCK
Section 1. CERTIFICATES. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation by
the Chairman of the Board of Directors, or the President or a Vice Chairman of
the Board of Directors, or a Vice Chairman, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
representing the number of shares registered in certificate form. Any or all
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
Section 2. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. The Board
of Directors, a committee of the Board or an officer of the Corporation may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen, mutilated or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen,
mutilated or destroyed. When authorizing such issue of a new
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certificate or certificates, the Board of Directors, a committee of the Board or
an officer of the Corporation may, as a matter of discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen,
mutilated or destroyed certificate or certificates, or such owner's legal
representative, to advertise the same in such manner as shall be required and
give the Corporation a bond in such sum as may be directed as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen, mutilated or destroyed.
Section 3. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 4. FIXING RECORD DATE. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of shareholders of record entitled to notice of
or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 5. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
Section 6. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
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ARTICLE VIII
INDEMNIFICATION
Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or another
person of whom such person is the legal representative, is or was a Director,
officer, or employee of the Corporation or is or was serving at the request of
the Corporation as a director, officer, or employee of, or in some other
representative capacity for, another corporation or a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a Director, officer, or employee or in any other capacity
while serving as a Director, officer, or employee, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended, against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a Director,
officer, or employee and shall inure to the benefit of such person's heirs,
executors and administrators; provided, however, that except as provided in
-------- -------
Section 2 hereof with respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Article shall be a contract right and shall include the right to be paid
by the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Delaware
-------- -------
General Corporation Law so requires, the payment of such expenses incurred by a
Director or officer in such person's capacity as a Director or officer (and not
in any other capacity in which service was or is rendered by such person while a
Director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
Director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such Director or officer is not entitled to be indemnified under
this Article or otherwise.
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1
of this Article is not paid in full by the Corporation within ninety days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in
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advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because the claimant has met the applicable standard
of conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
Section 3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested Directors or otherwise.
Section 4. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, officer, or employee of the
Corporation serving in any capacity on behalf of the Corporation or at its
request for any other entity to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended, whether
or not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
ARTICLE IX
NOTICES
Section 1. FORM OF NOTICES. Whenever, under the provisions of the
statutes or of the Certificate of Incorporation or of these By-laws, notice is
required to be given to any Director or shareholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such Director or shareholder, at his or her address as it appears
on the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to Directors may also be given by telegram.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be given
by law or by the Certificate of Incorporation or these By-laws, a waiver thereof
in writing, signed by the person or persons entitled to said notice,
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whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE X
EMERGENCY
Section 1. APPLICATION. This Article shall operate during any emergency
resulting from any disaster or other emergency condition when a quorum of the
Board of Directors or a Board committee cannot readily be convened.
Section 2. MEETINGS OF BOARD OR COMMITTEE. A meeting of the Board of
Directors or Board committee may be called by any officer or Director by giving
notice to the Directors or committee members who can be reached by any means the
person calling the meeting deems feasible.
Section 3. CONDUCT OF BUSINESS. During any emergency, the quorum
requirements for all meetings of the Board of Directors and any Board committee
shall be one-fourth of the members.
(a) If no Board of Directors meeting can be held because a quorum cannot
be assembled, then those Directors who can assemble may, by majority vote,
reduce the Board of Directors to not less than five Directors and may elect
emergency Directors.
(b) If only one Director can be found, then that Director may appoint
emergency Directors.
(c) If no Director can be found, then the Chief Executive Officer or
Acting Chief Executive Officer may appoint emergency Directors.
Section 4. SUCCESSION. During any emergency when the Chief Executive
Officer becomes incapacitated, cannot be located, or otherwise is unable to
perform his or her duties, succession to the powers of the Chief Executive
Officer as Acting Chief Executive Officer shall occur in the following order:
Chairman of the Board,
President,
Vice Chairman of the Board,
Vice Chairman,
any Executive Vice President.
Priority within rank shall be set by seniority in the ranking office. If
seniority in office dates from the same day, then seniority based on total
length of service shall be determinative.
Notwithstanding the foregoing, the Board of Directors during an
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emergency may appoint or replace any Acting Chief Executive Officer, or may
change the priority of succession, as the Board determines.
Section 5. AUTHORITY. During any emergency the Chief Executive Officer
or Acting Chief Executive Officer shall have all authority that officer deems
necessary to protect the interests of the Corporation, may appoint emergency
officers, and may delegate authority to them.
Section 6. NO LIABILITY. No officer, Director or employee acting in
accordance with any emergency By-laws or resolutions shall be liable except for
willful misconduct.
Section 7. EFFECT ON BY-LAWS. To the extent not inconsistent with this
emergency By-law, the By-laws of the Corporation shall remain in effect during
any emergency. Upon termination of the emergency, this By-law shall cease to be
operative and authority to act as an officer or Director shall be determined by
the other By-laws, except that Directors and officers elected or appointed
pursuant to this By-law shall remain Directors or officers to the extent that
vacancies have been caused by death or incapacity of regular Directors or
officers until their successors are appointed or elected.
Section 8. TERMINATION OF EMERGENCY. Any emergency condition which
causes this By-law to become operative shall be deemed terminated whenever one
of the following conditions is met:
(a) The Directors and emergency Directors determine by majority vote at a
meeting that the emergency condition is over; or
(b) A majority of the Directors elected or appointed pursuant to the
regular By-laws holds a meeting and determines the emergency condition is
over.
ARTICLE XI
MISCELLANEOUS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 2. SEAL. In the execution on behalf of the Corporation of any
instrument, writing, notice or paper, it shall not be necessary to affix the
corporate seal of the Corporation thereon, and any such instrument, document,
writing, notice or paper when executed without said seal affixed thereon shall
be of the same force and effect and as binding in the Corporation as if said
corporate seal had been affixed thereon in the first instance.
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Section 3. AMENDMENTS. These By-laws may be altered or repealed at any
regular meeting of the shareholders or of the Board of Directors or at any
special meeting of the shareholders or of the Board of Directors if notice of
such alteration or repeal be contained in the notice of such special meeting.
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EXHIBIT 10.c
BANKAMERICA DEFERRED COMPENSATION PLAN
--------------------------------------
(As amended and restated effective January 1, 1997)
4142350.05
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I
NAME AND PURPOSE............................................... 1
1.1 Name............................................... 1
1.2 Purpose............................................ 1
1.3 Status Under ERISA................................. 1
ARTICLE II
DEFINITIONS.................................................... 2
2.1 Annual Incentive Award............................. 2
2.2 Annual Incentive Plan.............................. 2
2.3 Compensation....................................... 2
2.4 Deferred Compensation Account or Account...........
2.5 Deferred Compensation Plan or Plan................. 2
2.6 Eligible Employee.................................. 2
2.7 Employee........................................... 3
2.8 Employer........................................... 3
2.9 Employment......................................... 3
2.10 Enrollment Period.................................. 3
2.11 Executive Officer.................................. 3
2.12 401(k) Investment Plan............................. 3
2.13 Internal Revenue Code.............................. 3
2.14 Participant........................................ 3
2.15 Participating Employer............................. 3
2.16 Plan Administrator................................. 3
2.17 Plan Year.......................................... 3
2.18 Prior Plan......................................... 4
2.19 Salary............................................. 4
2.20 Service Center..................................... 4
2.21 United States...................................... 4
ARTICLE III
ELECTION TO DEFER COMPENSATION................................. 5
3.1 Submission of Deferral Election.................... 5
3.2 Amount of Compensation Which May be Deferred....... 5
3.3 Deferral of Compensation........................... 6
3.4 Vesting............................................ 6
ARTICLE IV
401(k) "MIRROR" RATE OF RETURN................................. 7
4.1 Deferred Compensation Account...................... 7
4.2 Special Definitions................................ 7
4.3 Allocation of Existing Account Balances on
12/31/96 Among Mirror Investment Options........... 7
4.4 Allocation of New Deferrals Among Mirror
Investment Options and Transfers Among Mirror
Investment Options................................. 8
4.5 Procedures and Deadlines for Transactions.......... 8
4.6 Payments Deducted on a Pro Rata Basis from each
Mirror Investment Option........................... 8
4.7 Other Deferred Compensation Plans.................. 8
</TABLE>
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<TABLE>
<S> <C>
ARTICLE V
PAYMENT OF DEFERRED COMPENSATION ACCOUNT....................... 11
5.1 Form of Payment.................................... 11
5.2 Balance less than $10,000.......................... 11
5.3 Balance of $10,000 or More......................... 11
5.4 Payment Election for Termination of Employment..... 11
5.5 In-Service Payment Election........................ 12
5.6 Payments due to Hardship........................... 13
5.7 Immediate Payment with 10 Percent Forfeiture....... 13
5.8 Reemployed Employees............................... 13
5.9 Payments Upon Death of Participant................. 13
5.10 Withholding Taxes.................................. 14
5.11 Temporary Postponement of Payment to Executive
Officers........................................... 14
5.12 Transition Provisions.............................. 14
ARTICLE VI
PLAN AMENDMENT, TERMINATION AND ADMINISTRATION................. 16
6.1 Amendment and Termination.......................... 16
6.2 Plan Administrator................................. 16
6.3 Powers and Duties of Plan Administrator............ 16
6.4 Reliance Upon Information.......................... 17
ARTICLE VII
CLAIMS FOR BENEFITS............................................ 18
7.1 Claims Procedure................................... 18
7.2 Appeal and Review Procedure........................ 18
7.3 Exhaustion of Remedies............................. 19
ARTICLE VIII
GENERAL PROVISIONS............................................. 20
8.1 Source of Payments................................. 20
8.2 Prohibition on Alienation.......................... 20
8.3 Not a Contract of Employment....................... 20
8.4 Headings Not to Control............................ 20
8.5 Separability of Plan
Provisions......................................... 20
8.6 Applicable Law..................................... 20
8.7 Entire Plan........................................ 20
</TABLE>
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ARTICLE I
---------
NAME AND PURPOSE
----------------
1.1 Name. This document shall be known as the BankAmerica Deferred
----
Compensation Plan (the "Deferred Compensation Plan" or "Plan"). Effective
January 1, 1997, this document constitutes an amendment to and restatement of
the BankAmerica Corporation Deferred Compensation Plan which was adopted on
November 7, 1977 and was amended from time to time thereafter.
1.2 Purpose. The purpose of the Deferred Compensation Plan is to
-------
provide Eligible Employees with an opportunity to defer the receipt of cash
compensation which would have otherwise been received as Salary or as an Annual
Incentive Award, as such terms are defined in Article II, and to credit the
deferred compensation with a rate of return which mirrors the rates of return
available under the BankAmerica 401(k) Investment Plan.
1.3 Status Under ERISA. The Deferred Compensation Plan is unfunded
------------------
and is maintained for the purpose of providing deferred compensation for a
select group of management or highly compensated employees.
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ARTICLE II
----------
DEFINITIONS
-----------
The following terms when used herein shall have the meaning set forth
below, if capitalized. Unless the context clearly indicates otherwise, words in
the masculine, feminine or neuter gender include the other genders and the
singular includes the plural and vice versa.
2.1 "Annual Incentive Award" means a discretionary cash incentive
----------------------
award under an Annual Incentive Plan for a calendar year which is determined and
payable during the succeeding Plan Year.
2.2 "Annual Incentive Plan" means the BankAmerica Corporation Senior
---------------------
Management Incentive Plan, the BankAmerica Corporation Annual Management
Incentive Plan and any other written plan of the Participating Employers which
(a) provides for annual cash incentive awards determined on a discretionary
basis and (b) is designated by the Plan Administrator as being eligible for
deferral into this Deferred Compensation Plan.
2.3 "Compensation" means Salary and an Annual Incentive Award.
------------
2.4 "Deferred Compensation Account" or "Account" means the account
------------------------------------------
described in Section 4.1.
2.5 "Deferred Compensation Plan" or "Plan" means the BankAmerica
------------------------------------
Deferred Compensation Plan, as set forth in this document and as amended from
time to time.
2.6 "Eligible Employee" means an Employee of a Participating Employer
-----------------
who satisfies (a), (b) or (c):
(a) As of the September 30 preceding the applicable Plan Year, the
Employee is based within the United States and satisfies (i), (ii), or (iii):
(i) The Employee is an Executive Officer.
(ii) The Employee is classified within Impact Level 1, 2 or
3 under the personnel policy of the Participating Employer.
(iii) The Employee has an annual Salary of $100,000 or more.
(b) As of the September 30 preceding the applicable Plan Year, the
Employee is based outside the United States and is classified as an
International Assignee whose home country is the United States under the
personnel policy of the Participating Employer and qualifies under (ii) or (iii)
of section (a) above, unless the Plan Administrator determines that the Employee
shall be ineligible because of adverse tax or other
-2-
<PAGE>
consequences under applicable non-U.S. law.
(c) The Employee has been designated as an Eligible Employee for the
Plan Year by the Personnel Relations Officer of BankAmerica Corporation.
2.7 "Employee" means a common law employee of an Employer who is
--------
treated as an employee in the personnel records of the Employer. Individuals
who are leased from a third party or who are independent contractors are not
Employees.
2.8 "Employer" means BankAmerica Corporation or any other corporation
--------
which is a member of the controlled group of corporations (within the meaning of
Section 1563(a) of the Internal Revenue Code without regard to Section
1563(a)(4) and 1563(e)(3)(C)) of which BankAmerica Corporation is a member, but
only after the date such corporation becomes a member of the BankAmerica
Corporation controlled group of corporations. Employer shall also include any
other subsidiary or affiliate of BankAmerica Corporation designated as a
Participating Employer by BankAmerica Corporation.
2.9 "Employment" means employment with an Employer.
----------
2.10 "Enrollment Period" means the period in each calendar year
-----------------
designated by the Plan Administrator during which Eligible Employees make
elections to defer Compensation otherwise payable during the following Plan
Year.
2.11 "Executive Officer" means an officer of BankAmerica Corporation
-----------------
designated by the Board of Directors of BankAmerica Corporation as an Executive
Officer for purposes of the Securities and Exchange Commission reporting and
proxy regulations.
2.12 "401(k) Investment Plan" means the BankAmerica 401(k) Investment
----------------------
Plan, as amended from time to time.
2.13 "Internal Revenue Code" means the Internal Revenue Code of 1986,
---------------------
as amended from time to time.
2.14 "Participant" means an Employee or former Employee who has an
-----------
amount credited to a Deferred Compensation Account under the Plan.
2.15 "Participating Employer" means BankAmerica Corporation and each
----------------------
subsidiary or affiliated corporation of BankAmerica Corporation which
participates in the Plan with the approval of BankAmerica Corporation.
2.16 "Plan Administrator" means the manager of Executive Resources of
------------------
Bank of America NT&SA.
2.17 "Plan Year" means the calendar year. The first Plan Year is
---------
1997.
-3-
<PAGE>
2.18 "Prior Plan" means each of the following:
----------
(a) BankAmerica Corporation Deferred Compensation Plan as in
effect on December 31, 1996.
(b) Continental Deferred Incentive Plan, as amended and restated
effective January 1, 1992, as further amended October 17, 1994 and as in effect
on December 31, 1996.
(c) Seafirst Deferred Compensation Plan, as adopted effective
January 1, 1990 and as in effect on December 31, 1996.
(d) Seafirst Bank Management Incentive Plan, as adopted
effective January 1, 1995 and as in effect on December 31, 1996.
2.19 "Salary" means the base salary of an Employee. Salary includes
------
amounts paid as sickness benefits which are designed to replace 100 percent of
the Employee's salary when the Employee is absent from work due to illness or
injury.
2.20 "Service Center" means the BankAmerica Retirement Plans Service
--------------
Center, which is the department of Bank of America NT&SA or third party
designated by the Plan Administrator to provide day-to-day administrative
services under the Plan.
2.21 "United States" means the 50 states, Guam, Puerto Rico and the
-------------
Virgin Islands.
-4-
<PAGE>
ARTICLE III
ELECTION TO DEFER COMPENSATION
------------------------------
3.1 Submission of Deferral Election. Each Eligible Employee who
-------------------------------
desires to defer the receipt of Compensation otherwise payable during a Plan
Year may do so by filing a deferral election with the Service Center during the
Enrollment Period for that Plan Year. The deferral election shall be made on the
form specified by the Plan Administrator. To be effective, the form must be
received by the Service Center during the annual Enrollment Period. A deferral
election for a Plan Year may not be changed after the end of the Enrollment
Period for that Plan Year.
(a) Notwithstanding the foregoing, the Personnel Relations Officer of
BankAmerica Corporation may, in his or her sole discretion, permit an Eligible
Employee who commences work, or first qualifies as an Eligible Employee, after
the September 30 preceding a Plan Year to submit a deferral election after the
end of the Enrollment Period, provided such deferral election form is received
by the Service Center prior to the beginning of such Plan Year. In addition, the
Personnel Relations Officer of BankAmerica Corporation may, in his or her sole
discretion, permit an Eligible Employee who commences work during a Plan Year to
submit a deferral election for Salary payable during such Plan Year, provided
such deferral election is submitted no later than 30 days after Employment
commences and applies only to Salary earned after the date such form is received
by the Service Center.
(b) Except as provided in the following sentence, an Eligible Employee
must file a separate deferral election for each Plan Year. The Plan
Administrator may adopt procedures permitting an Eligible Employee to specify on
the deferral election form that the election shall remain in effect for future
Plan Years unless and until the election is revoked by the Eligible Employee
during the Election Period for a Plan Year.
(c) Each Eligible Employee who elects to defer Compensation under the
Plan must also consent to the purchase of corporate owned life insurance on his
or her life by Bank of America NT&SA. Bank of America NT&SA shall pay all
premiums and shall be the sole owner and beneficiary of any such policies. Bank
of America NT&SA may use the proceeds from such policies to meet its general
corporate and employee benefit obligations, including, without limitation, to
help defray the cost of offering the Deferred Compensation Plan to its Eligible
Employees.
3.2 Amount of Compensation Which May be Deferred.
--------------------------------------------
(a) Each Eligible Employee may defer a specified percentage (or
specified dollar amount) of Salary payable during the Plan Year. The deferral
percentage must be in whole percentages and must be not less than 5 nor more
than 50 percent of such Salary. A dollar deferral must be in an amount not less
-5-
<PAGE>
than 5 nor more than 50 percent of the Employee's annual Salary rate as of the
September 30 preceding the Plan Year.
(b) Each Eligible Employee may defer a specified percentage of an
Annual Incentive Award payable during the Plan Year. The deferral percentage
must be in whole percentages and must be not less than 5 nor more than 90
percent of the Annual Incentive Award.
3.3 Deferral of Compensation. The Employee's Employer shall withhold
------------------------
payment of the applicable portion of each Salary payment and each Annual
Incentive Award elected by the Participant to be deferred for the Plan Year.
The deferred Compensation shall be credited to the Participant's Deferred
Compensation Account described in Section 4.1.
3.4 Vesting. All amounts deferred under the Plan, and any earnings
-------
thereon, shall be fully vested at all times.
-6-
<PAGE>
ARTICLE IV
----------
401(k) "MIRROR" RATE OF RETURN
------------------------------
4.1 Deferred Compensation Account. An unfunded bookkeeping account
-----------------------------
known as the Deferred Compensation Account shall be established for each
Participant who is in Employment on or after January 1, 1997. The Deferred
Compensation Account shall be credited with all amounts credited under a Prior
Plan as of December 31, 1996 and all Compensation deferred under Article III of
the Plan on and after January 1, 1997. The amounts credited to a Participant's
Deferred Compensation Account shall be adjusted each month to reflect gain or
loss from the Mirror Investment Options as provided in this Article.
4.2 Special Definitions. The following definitions shall apply for
-------------------
purposes of this Article:
(a) "Mirror Investment Option" means an unfunded bookkeeping
------------------------
account under the Plan which is credited monthly with the same monthly rate of
return as its corresponding 401(k) Investment Plan Fund.
(b) "401(k) Investment Plan Fund" means each of the following 8
---------------------------
investment funds in the 401(k) Investment Plan:
(1) BankAmerica Corporation Common Stock Fund
(2) International Stock Index Fund
(3) Mid Cap Stock Index Fund
(4) Large Cap Stock Index Fund
(5) Balanced Fund
(6) Treasury Bond Index Fund
(7) Income Accumulation Fund
(8) Money Market Fund
(c) "Pre-tax Contributions" means an Employee's Pre-tax
---------------------
Contributions in the 401(k) Investment Plan.
4.3 Allocation of Existing Account Balances on 12/31/96 Among Mirror
----------------------------------------------------------------
Investment Options. The amount credited to a Participant under a Prior Plan as
- ------------------
of December 31, 1996 shall be allocated among the Mirror Investment Options as
of January 1, 1997 in the same proportion that the balance in his or her Pre-tax
Contributions account in the 401(k) Investment Plan as of December 31, 1996 is
allocated among the corresponding 401(k) Investment Plan Funds. If (a) a
Participant does not have a balance in a Pre-tax Contributions account in the
401(k) Investment Plan as of December 31, 1996 or (b) the Plan
-7-
<PAGE>
Administrator, in his sole discretion, so permits upon a Participant's request,
the Participant's entire Deferred Compensation Account as of January 1, 1997
shall be allocated to the Balanced Fund Mirror Investment Option. A special rule
applies under Section 4.7(a) for the Continental Deferred Incentive Plan.
4.4 Allocation of New Deferrals Among Mirror Investment Options and
---------------------------------------------------------------
Transfers Among Mirror Investment Options.
- -----------------------------------------
(a) Unless the Participant elects otherwise, new amounts credited to
the Deferred Compensation Account on and after January 1, 1997 shall be (i)
allocated to the Mirror Investment Options in the same proportion as the
Participant's most recent Pre-tax Contributions investment election in effect
for the corresponding 401(k) Investment Plan Funds as of January 1, 1997, or
(ii) if the Participant has no Pre-tax Contributions investment election in
effect for the 401(k) Investment Plan as of January 1, 1997, allocated to the
Balanced Fund Mirror Investment Option.
(b) Each Participant may change the manner in which new deferrals
credited to the Participant's Deferred Compensation Account are allocated among
the Mirror Investment Options beginning February 1, 1997. However, no more than
50 percent of new deferrals may be allocated to the BankAmerica Corporation
Common Stock Fund Mirror Investment Option.
(c) Each Participant may transfer his or her Deferred Compensation
Account among the Mirror Investment Options each month beginning January 31,
1997. However, no transfer may be made to the extent that such transfer would
cause more than 50 percent of the Participant's Deferred Compensation Account to
be invested in the BankAmerica Corporation Common Stock Fund Mirror Investment
Option. In addition, transfers to or from the Income Accumulation Fund Mirror
Investment Option may only be effective during the months of April and October
and such transfers may not be made with the Money Market and Treasury Bond Index
Fund Mirror Investment Options.
4.5 Procedures and Deadlines for Transactions. Participants shall
-----------------------------------------
request the transactions described in Section 4.4(b) and (c) through the
telephonic interactive voice response system maintained by the Service Center
for the Plan. The procedures and deadlines for such transactions shall be the
same as for similar transactions in the 401(k) Investment Plan.
4.6 Payments Deducted on a Pro Rata Basis from each Mirror Investment
-----------------------------------------------------------------
Option. Installment payments, payments under Section 5.5, 5.6 and 5.7 or any
- ------
other partial payments from the Deferred Compensation Account shall be deducted
from the balance in each Mirror Investment Option on a pro rata basis in
proportion to the balance in each Option.
4.7 Other Deferred Compensation Plans.
---------------------------------
-8-
<PAGE>
(a) The Continental Deferred Compensation Plan shall be replaced by
this Plan as of January 1, 1997 with respect to each Participant who is in
Employment on or after January 1, 1997. Amounts credited under the Continental
Deferred Compensation Plan as of December 31, 1996 shall be credited to the
Participant's Deferred Compensation Account as of January 1, 1997.
The dollar value of the Participant's Stock Unit Subaccount under the
Continental Deferred Incentive Plan as of December 31, 1996 shall be allocated
to the BankAmerica Corporation Common Stock Fund Mirror Investment Option as of
January 1, 1997. The amount credited to a Participant's Interest Subaccount
under the Continental Deferred Incentive Plan as of December 31, 1996 shall be
allocated among the Mirror Investment Options as of January 1, 1997 in the same
proportion that his or her Pre-tax Contributions account is allocated among the
corresponding 401(k) Investment Plan Funds as of December 31, 1996. If (i) a
Participant does not have a balance in a Pre-tax Contributions account in the
401(k) Investment Plan as of December 31, 1996 or (ii) the Plan Administrator,
in his sole discretion, so permits upon a Participant's request, the
Participant's entire Interest Subaccount as of December 31, 1996 shall be
allocated to the Balanced Fund Mirror Investment Option.
(b) The Seafirst Deferred Compensation Plan shall be replaced by this
Plan as of January 1, 1997 with respect to each Participant who is in Employment
on or after January 1, 1997. Amounts credited under the Seafirst Deferred
Compensation Plan as of December 31, 1996 shall be credited to the Participant's
Deferred Compensation Account as of January 1, 1997.
(c) Deferred amounts under Seafirst Bank Management Incentive Plan
shall be replaced by this Plan as of January 1, 1997 with respect to each
Participant who is in Employment on or after January 1, 1997. Amounts credited
under the Seafirst Bank Management Incentive Plan as of December 31, 1996 shall
be credited to the Participant's Deferred Compensation Account as of January 1,
1997.
(d) The Security Pacific Deferred Compensation Plan (as adopted
effective January 1, 1986 and as in effect on December 31, 1996) shall not be
replaced by this Plan as of January 1, 1997. Amounts credited under the
Security Pacific Deferred Compensation Plan as of December 31, 1996 shall remain
subject to the terms of such plan as in effect from time to time and no Deferred
Compensation Account shall be established for such amounts. Notwithstanding the
foregoing, interest shall be credited to deferred amounts under such plan at a
rate equal to the rate of return on the Income Accumulation Fund Mirror
Investment Option commencing as of January 1, 1997.
(e) The Security Pacific Deferral Plan (as adopted October 20, 1987
and as in effect on December 31, 1996) shall not be replaced by this Plan as of
January 1, 1997. Amounts credited
-9-
<PAGE>
under the Security Pacific Deferral Plan as of December 31, 1996 shall remain
subject to the terms of such plan as in effect from time to time and no Deferred
Compensation Account shall be established for such amounts. Notwithstanding the
foregoing, interest shall be credited to deferred amounts under such plan at a
rate equal to the rate of return on the Income Accumulation Fund Mirror
Investment Option commencing as of January 1, 1997.
-10-
<PAGE>
ARTICLE V
---------
PAYMENT OF DEFERRED COMPENSATION ACCOUNT
----------------------------------------
5.1 Form of Payment. The amounts credited to a Participant's
---------------
Deferred Compensation Account shall be paid in cash as provided in this Article.
5.2 Balance less than $10,000. If the amount credited to a
-------------------------
Participant's Deferred Compensation Account is less than $10,000 when the
Participant's Employment ends, the Account shall be paid to the Participant in a
single payment within 60 days of the date the Participant's Employment ends.
5.3 Balance of $10,000 or More. If the amount credited to a
--------------------------
Participant's Deferred Compensation Account is $10,000 or more when the
Participant's Employment ends, the Account shall be paid to the Participant as
provided in (a) or (b) below:
(a) If the Participant's Employment ends during 1997:
(1) The amount credited to the Participant's Deferred Compensation
Account as of December 31, 1996, and any investment gain or loss attributable
thereto, shall be paid pursuant to the payment provisions of the applicable
Prior Plan.
(2) Any amounts deferred under the Plan during 1997, and any
investment gain or loss attributable thereto, shall be paid (i) pursuant to the
Participant's payment election form if one was filed under this Plan prior to
January 1, 1997, or (ii) in a single payment within 60 days of the date
Employment ends if no payment election form was filed under this Plan prior to
January 1, 1997.
(b) If the Participant's Employment ends on or after January 1,
1998:
(1) If the Participant has a payment election in effect, as provided
in Section 5.4(b), when Employment ends, the Participant's Account shall be paid
in accordance with such payment election.
(2) If the Participant does not have a payment election in effect, as
provided in Section 5.4(b), when Employment ends, all amounts credited to the
Participant's Account balance shall be paid in a single payment within 60 days
of the date the Participant's Employment ends.
5.4 Payment Election for Termination of Employment. Each Participant
----------------------------------------------
may submit a payment election form specifying how the Participant's Deferred
Compensation Account (as reduced by any amounts previously paid under Sections
5.5, 5.6 or 5.7) shall be paid upon the Participant's termination of Employment
for any reason other than death.
-11-
<PAGE>
(a) The payment election form shall specify which of the
following forms of payment shall apply:
(1) A single payment made within 60 days of the date
Employment ends.
(2) A single payment made within the first 60 days of the
first, second or third calendar year immediately following the calendar year in
which Employment ends.
(3) Fifteen or fewer annual installment payments commencing
in the first, second or third calendar year immediately following the calendar
year in which the Participant's Employment ends. Each payment shall be made
within the first 60 days of the calendar year. Each payment shall be equal to
(i) the Participant's Account balance as of December 31 of the immediately
preceding calendar year, multiplied by (ii) a fraction, the numerator of which
is one and the denominator is the number of installments remaining, including
the current year's payment.
(b) If the Participant does not have an existing Deferred
Compensation Account balance at the time a payment election form is submitted,
the payment election form shall become effective on the date of receipt by the
Service Center with respect to amounts deferred in subsequent Plan Years. Except
as provided in section 5.3(a)(2), if the Participant has a Deferred Compensation
Account balance at the time a payment election form is submitted, the payment
election shall become effective on the one year anniversary of the date the
election form is received by the Service Center, provided the Participant has
remained continuously employed by an Employer until that date. If the
Participant has previously submitted a payment election form, the Participant
may not submit a new payment election form until his or her prior election has
become effective. In addition, no new payment election form may be submitted
which would shorten the period during which payments are made after Employment
ends or accelerate the date upon which payment commences after Employment ends.
5.5 In-Service Payment Election. Each Participant may submit an in-
---------------------------
service payment election form during an Enrollment Period directing that a
specified dollar amount of his or her Deferred Compensation Account shall be
paid in a single payment in a specified calendar year, provided the Participant
remains continuously employed by an Employer until that calendar year.
(a) The in-service payment shall be made in a single payment within
the first 60 days of the calendar year specified by the Participant. Each
Participant may have up to 4 in-service elections in effect at one time, not
including any payment elections under Section 5.12. The payment shall be
deducted on a prorated basis from the Participant's balance in each mirror
investment option.
(b) Each in-service payment election shall become
-12-
<PAGE>
effective upon receipt by the Service Center. An in-service payment election may
only apply to Compensation which will be deferred in Plan Years after the form
is received by the Service Center, but shall not include amounts deferred in the
Plan Year preceding the calendar year specified for payment. A Participant may
not change an in-service payment election.
5.6 Payments due to Hardship. In the event a Participant has an
------------------------
unforeseeable emergency, the Plan Administrator in his or her sole discretion
may, upon the Participant's written request and submission of such information
as the Plan Administrator may request, authorize a payment to the Participant
from his or her Account in an amount no greater than necessary to meet such
emergency. For purposes of this section, an unforeseeable emergency means an
unanticipated emergency that is caused by any event beyond the control of the
Participant and that would result in severe financial hardship to the individual
if the withdrawal were not permitted.
5.7 Immediate Payment with 10 Percent Forfeiture. A Participant may
--------------------------------------------
at any time submit a written request to the Service Center for immediate payment
of $10,000 or more from the Participant's Deferred Compensation Account. In such
event, 10 percent of the amount requested shall be forfeited and the remaining
90 percent payable to the Participant in a single payment within 60 days of the
request. If a Participant elects an immediate payment under this section, all
deferrals for the current Plan Year shall cease and the Participant shall be
ineligible to request another immediate payment under this section, or defer
Compensation, during the 3 Plan Years following the Plan Year in which the
request is submitted.
5.8 Reemployed Employees. If a former Employee is reemployed by an
--------------------
Employer, any payments then being made under the Deferred Compensation Plan
shall continue.
5.9 Payments Upon Death of Participant.
----------------------------------
(a) A Participant may designate any person or persons (not exceeding
10), including a trust, as his or her primary beneficiary or contingent
beneficiary to receive his or her Deferred Compensation Account in the event of
the Participant's death. Any such designation shall be made by filing the Plan
form designated for that purpose with the Service Center. The Participant may
change or cancel his or her beneficiary designation at any time prior to death
without the consent of any designated beneficiary. If no beneficiary has been
designated by the Participant, or if no beneficiary is alive at the date of the
Participant's death, payment shall be made to the Participant's estate.
(b) The Participant may elect on the death benefit payment election
form that his or her Deferred Compensation Account shall be paid, except as
provided in (d) below, upon the Participant's death in accordance with one of
the following options:
-13-
<PAGE>
(1) In a single payment within 90 days of the date of death.
(2) In a single payment within the first 60 days of the
calendar year immediately following the calendar year in which the death occurs.
(3) In three approximately equal payments, each made within
the first 60 days of the three calendar years immediately following the calendar
year in which the death occurs.
If no death benefit payment election is in effect at the date of the
Participant's death and if a single payment or installment payments under
Sections 5.2, 5.3, or 5.4, as applicable, have not been made, payment shall be
made in a single payment within 60 days of the date of death.
(c) If the Participant's death occurs after installment payments have
commenced, payments shall continue in installments to the Participant's then
living beneficiaries. Upon the death of the last surviving beneficiary, payment
shall be made in a single payment to the Participant's estate within 60 days of
such death. If no beneficiary is living at the Participant's death, payment
shall be made in a single payment to the Participant's estate within 60 days of
the date of death.
5.10 Withholding Taxes. The Participating Employers shall have the
-----------------
right to deduct from payments under the Plan any and all taxes required to be
collected under federal, state or local law.
5.11 Temporary Postponement of Payment to Executive Officers.
-------------------------------------------------------
BankAmerica Corporation reserves the right to temporarily postpone payment of
the Deferred Compensation Account of any Participant who is an Executive Officer
at the time such payment would have occurred, or was an Executive Officer in the
period immediately preceding such date, if BankAmerica Corporation determines in
good faith that such delay is necessary to avoid adverse tax consequences to the
Employers under Internal Revenue Code Section 162(m), or other tax provision.
5.12 Transition Provisions.
---------------------
(a) If a Participant had elected to defer amounts under a Prior Plan
until a specified year, the current value of the deferral, including interest,
shall be determined as of December 31, 1996. The amount so determined shall be
converted into an in-service payment election under Section 5.5 by projecting
the amount forward at a 6 percent interest rate, compounded quarterly, to
December 31 of the year immediately preceding the year specified in the original
election.
(b) If an Employee who ceased Employment prior to January 1, 1997 had
amounts deferred under a Prior Plan, the provisions of the Prior Plan as in
effect on December 31, 1996
-14-
<PAGE>
shall continue to apply to such amounts. No Deferred Compensation Account shall
be established for such former Employee. Notwithstanding the foregoing, interest
shall be credited to such former Employees' deferred amounts at a rate equal to
the rate of return on the Income Accumulation Fund Mirror Investment Option.
-15-
<PAGE>
ARTICLE VI
----------
PLAN AMENDMENT, TERMINATION AND ADMINISTRATION
----------------------------------------------
6.1 Amendment and Termination. BankAmerica Corporation is the "plan
-------------------------
sponsor" of the Deferred Compensation Plan as that term is defined in ERISA.
BankAmerica Corporation may amend or modify the Plan in whole or in part at any
time by a written instrument executed by either the Chief Executive Officer or
Personnel Relations Officer of BankAmerica Corporation, except that any action
which would materially alter the manner in which the investment return on
Participants' Accounts is determined shall be approved by the Executive
Personnel and Compensation Committee of the Board of Directors of BankAmerica
Corporation. BankAmerica Corporation may terminate the Plan in whole or part by
action of its Board of Directors. No such amendment, modification or
termination shall reduce the amount credited to a Participants' Accounts as of
the date of such action. Upon Plan termination, all amounts credited to
Participants' Accounts shall be paid to Participants in a single payment within
120 days.
6.2 Plan Administrator. The Plan Administrator is the named
------------------
fiduciary, as that term is defined in ERISA, of the Deferred Compensation Plan
having discretionary authority to control and manage the operation and
administration of the Deferred Compensation Plan.
6.3 Powers and Duties of Plan Administrator.
---------------------------------------
(a) The Plan Administrator shall have discretionary authority to
determine eligibility for benefits and to construe the terms of the Deferred
Compensation Plan. The Plan Administrator shall have such other discretionary
authority as may be necessary to enable it to discharge its responsibilities
under the Deferred Compensation Plan as administrator and named fiduciary,
including, but not limited to, the power:
(1) To review appeals by Participants under Article
VIII.
(2) To appoint or employ one or more persons to assist
in the administration of the Deferred Compensation Plan.
(3) To adopt such rules as it deems appropriate for the
administration of the Deferred Compensation Plan.
(4) To prescribe procedures to be followed by
Participants.
(5) To prepare and distribute information relating to
the Deferred Compensation Plan.
(6) To request from Participating
-16-
<PAGE>
Employers and Participants such information as shall be necessary for proper
administration of the Deferred Compensation Plan.
(b) The decision of the Plan Administrator upon any matter within its
authority shall be final and binding on all parties, including BankAmerica
Corporation, the Participating Employers and Participants and their
beneficiaries.
6.4 Reliance Upon Information. In making decisions under the
-------------------------
Deferred Compensation Plan, the Plan Administrator shall be entitled to rely
upon information furnished by a Participant, beneficiary or Participating
Employer.
-17-
<PAGE>
ARTICLE VII
-----------
CLAIMS FOR BENEFITS
-------------------
7.1 Claims Procedure.
----------------
(a) Claims Must be Filed. An Employee, Participant, beneficiary or
--------------------
estate of a deceased Participant (the "claimant") who has a claim for benefits
or concerning any other matter under the Plan must give written notice of such
claim or other matter to the Service Center.
(b) Review of Claim. After the Service Center has reviewed the claim
---------------
and obtained any other information it deems necessary to render a decision on
the claim, the Service Center shall notify the claimant within 90 days after
receipt of the claim of the acceptance or denial of the claim, unless special
circumstances require an extension of time for processing the claim. Such an
extension of time may not exceed 90 additional days and notice of the extension
shall be provided to the claimant prior to the termination of the initial 90 day
period indicating the special circumstances requiring the extension and the date
by which a final decision on the claim is expected.
(c) Denied Claims. In the event any application for benefits is
-------------
denied, in whole or in part, the Service Center shall notify the claimant of
such denial in writing and shall advise the claimant of the right to appeal the
denial and to request a review thereof. Such notice shall be written in a
manner calculated to be understood by the claimant and shall contain:
(1) Specific reason for such denial.
(2) Specific reference to the Plan provisions on which such
denial is based.
(3) A description of any information or material necessary
for the Employee to perfect the claim.
(4) An explanation of why such material is necessary.
(5) An explanation of the Plan's appeal and review
procedure.
7.2 Appeal and Review Procedure.
---------------------------
(a) Appeal to Plan Administrator. If the claimant's claim for
----------------------------
benefits is denied in whole or in part, the claimant, or the claimant's duly
authorized representative, may appeal the denial by submitting to the Plan
Administrator a written request for review of the application within 60 days
after receiving written notice of such denial. The Plan Administrator shall give
the applicant (upon request) an
-18-
<PAGE>
opportunity to review pertinent Plan documents (other than legally privileged
documents) in preparing such request for review.
(b) Contents of Appeal. The request for review must be in writing and
------------------
shall be addressed to the Deferred Compensation Plan Administrator, c/o
Executive Resources at the address stated in the current BankAmerica Corporation
and subsidiaries corporate directory. The request for review shall set forth all
of the grounds upon which it is based, all facts in support thereof and any
other matters which the claimant deems pertinent. The Plan Administrator may
require the claimant to submit (at the claimant's expense) such additional
facts, documents or other material as the Plan Administrator deems necessary or
advisable in making its review.
(c) Review of Appeal. The Plan Administrator shall act upon each
----------------
request for review within 60 days after its receipt thereof unless special
circumstances require further time for processing. Written notice of an
extension of time beyond 60 days shall be furnished to the claimant prior to the
commencement of the extension. In no event shall the decision on review be
rendered more than 120 days after the Plan Administrator receives the request
for review.
(d) Denied Appeals. In the event the Plan Administrator confirms the
--------------
denial of the claim for benefits in whole or in part, it shall give written
notice of its decision to the claimant. Such notices shall be written in a
manner calculated to be understood by the claimant and shall contain the
specific reasons for the denial.
7.3 Exhaustion of Remedies. No legal action for benefits under the
----------------------
Plan shall be brought unless and until the following steps have occurred:
(a) The claimant has submitted a written application for benefits
in accordance with Section 7.1.
(b) The claimant has been notified that the claim has been
denied.
(c) The claimant has filed a written request appealing the denial
in accordance with Section 7.2.
(d) The claimant has been notified in writing that the Plan
Administrator has denied the claimant appeal or has failed to take any action on
the appeal within the time prescribed by Section 7.2.
-19-
<PAGE>
ARTICLE VIII
------------
GENERAL PROVISIONS
------------------
8.1 Source of Payments. The Deferred Compensation Accounts
------------------
established under the Plan are unfunded bookkeeping accounts and are payable
from the general assets of the Participating Employers as determined by
BankAmerica Corporation. The Participating Employers are not required to
physically segregate any cash or securities or establish any separate funds to
pay any benefits under the Plan.
8.2 Prohibition on Alienation. No amount payable under the Plan
-------------------------
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, hypothecation, charge, attachment, garnishment, execution,
or levy of any kind or any other process of law, voluntary or involuntary. Any
attempt to dispose of any rights to benefits payable under the Plan shall be
void. Notwithstanding the preceding sentence, the Participating Employers shall
have the right to offset from a Participant's unpaid amounts under the Plan any
amounts due and owing from the Participant to the extent permitted by law.
8.3 Not a Contract of Employment. Participation in this Plan by an
----------------------------
Employee shall not give such Employee any right to be retained in the employ of
any Participating Employer and the ability of each Participating Employer to
dismiss or discharge an Employee is specifically reserved.
8.4 Headings Not to Control. Headings and titles within the Plan are
-----------------------
for convenience only and are not to be read as part of the text of the Plan.
8.5 Separability of Plan Provisions. If any provisions of the Plan
-------------------------------
are for any reason declared invalid or not enforceable, such provisions will not
affect the remaining terms and conditions, but the Plan will be construed and
enforced thereafter as if such provisions had not been inserted.
8.6 Applicable Law. The validity and effect of the Plan and the
--------------
rights and obligations of all persons affected thereby, are to be construed and
determined in accordance with applicable federal law, and to the extent that
federal law is inapplicable, under the laws of the State of California.
8.7 Entire Plan. This document is a complete statement of the
-----------
Deferred Compensation Plan and as of January 1, 1997 supersedes all
representations, prior plans, promises and inducements, proposals, written or
oral, relating to its subject matter. The Participating Employers shall not be
bound by or liable to any person for any representation, promise or inducement
made by any person which is not embodied in this document or in any authorized
written amendment to the Plan.
IN WITNESS WHEREOF, BankAmerica Corporation, has caused this
-20-
<PAGE>
instrument to be executed by its duly authorized officer, this 6th day of
December, 1996 to be effective January 1, 1997.
BANKAMERICA CORPORATION
By /s/ Kathleen J. Burke
----------------------------
Kathleen J. Burke
Vice Chairman and
Personnel Relations Officer
4142350.05
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<PAGE>
EXHIBIT 10.e
BANKAMERICA SUPPLEMENTAL RETIREMENT PLAN
----------------------------------------
(As amended and restated effective April 1, 1996)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I - NAME AND PURPOSE.................................... 1
1.1 Name.............................................. 1
1.2 Purpose........................................... 1
1.3 Participating Employers........................... 1
1.4 Status Under ERISA................................ 1
1.5 Status Under P.L. 104-95.......................... 1
ARTICLE II - DEFINITIONS........................................ 3
2.1 401(k) Investment Plan............................ 3
2.2 Administrative Committee.......................... 3
2.3 BAC Deferred Compensation Plan.................... 3
2.4 Contributing Employee............................. 3
2.5 Employee.......................................... 3
2.6 Employer.......................................... 3
2.7 Employment........................................ 4
2.8 Internal Revenue Code............................. 4
2.9 Matching Employer Contribution.................... 4
2.10 Participant....................................... 4
2.11 Participant Contributions......................... 4
2.12 Participating Employee............................ 4
2.13 Participating Employer............................ 4
2.14 Pension Plan...................................... 4
2.15 Plan Year......................................... 4
2.16 Prior Plan........................................ 4
2.17 Qualified Earnings................................ 4
2.18 Service Center.................................... 4
2.19 Supplemental Earnings............................. 5
2.20 Supplemental Plan................................. 5
ARTICLE III - SUPPLEMENTAL 401(k) INVESTMENT PLAN BENEFITS...... 6
3.1 Supplemental 401(k) Investment Plan Account....... 6
3.2 Benefits on Supplemental Earnings................. 6
3.3 Benefits if Participation is Restricted........... 6
3.4 Benefits Based on Deferred Compensation........... 7
3.5 Supplemental Plans which have merged with this
plan.............................................. 8
3.6 Benefits In Excess of 415 Dollar Limit............ 8
3.7 Interest.......................................... 9
3.8 Vesting........................................... 9
ARTICLE IV - SUPPLEMENTAL PENSION PLAN BENEFITS................. 10
4.1 Supplemental Pension Plan Account................. 10
4.2 Benefits Based on Supplemental Earnings........... 10
4.3 Benefits Based on Deferred Compensation........... 10
4.4 Supplemental Benefits Attributable to BankAmerican
Retirement Plan................................... 11
4.5 Supplemental Plans which have merged with this
plan.............................................. 11
4.6 Benefits in Excess of 415 Dollar Limits........... 13
4.7 Interest.......................................... 13
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
4.8 Vesting........................................... 13
ARTICLE V - PAYMENT OF BENEFITS AFTER EMPLOYMENT ENDS........... 15
5.1 Form of Payment................................... 15
5.2 Vested balance less than $10,000.................. 15
5.3 Vested balance $10,000 or more.................... 15
5.4 Benefit Payment Election.......................... 16
5.5 Reemployed Employees.............................. 17
5.6 Beneficiary Designation........................... 17
5.7 Withholding Taxes................................. 19
5.8 Transition Provisions............................. 19
ARTICLE VI - PLAN OPERATION, AMENDMENTS AND ADMINISTRATION..... 21
6.1 Amendment and Termination......................... 21
6.2 Plan Administrator................................ 21
6.3 Powers and Duties of Administrative Committee..... 21
6.4 Reliance Upon Information......................... 22
6.5 Action by Administrative Committee................ 22
ARTICLE VII - CLAIMS FOR BENEFITS............................... 24
7.1 Claims Procedure.................................. 24
7.2 Appeal and Review Procedure....................... 25
7.3 Exhaustion of Remedies............................ 26
ARTICLE VIII - GENERAL PROVISIONS............................... 28
8.1 Cost.............................................. 28
8.2 Unfunded Bookkeeping Accounts..................... 28
8.3 Prohibition on Alienation......................... 28
8.4 Not a Contract of Employment...................... 28
8.5 Headings Not to Control........................... 28
8.6 Separability of Plan Provisions................... 29
8.7 Applicable Law.................................... 29
8.8 Entire Plan....................................... 29
</TABLE>
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<PAGE>
ARTICLE I
---------
NAME AND PURPOSE
----------------
1.1 Name. This document shall be known as the BankAmerica
----
Supplemental Retirement Plan (the "Supplemental Plan"). Effective April 1,
1996, this Supplemental Plan document constitutes an amendment to and
restatement of the Supplemental CareerAccounts Plan ("Prior Plan") which was
established effective January 1, 1985 and was amended from time to time
thereafter.
1.2 Purpose. The purpose of the Supplemental Plan is to provide
-------
retirement benefits which supplement benefits from the BankAmerica Pension Plan
(the "Pension Plan") and the BankAmerica 401(k) Investment Plan (the "401(k)
investment Plan"), tax-qualified employee benefit plans sponsored by BankAmerica
Corporation for its participating subsidiaries and affiliates.
1.3 Participating Employers. The Supplemental Plan is established by
-----------------------
BankAmerica Corporation. Employees of BankAmerica Corporation and any of its
subsidiaries and affiliates which are participating employers in the Pension
Plan and 401(k) Investment Plan are eligible to participate in the Supplemental
Plan.
1.4 Status Under ERISA. The Plan is unfunded. Sections 3.6 and 4.5
------------------
are maintained for the purpose of providing benefits to employees in excess of
the limitations on contributions and benefits under Section 415 of the Internal
Revenue Code. The other benefit provisions are maintained for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.
1.5 Status Under P.L. 104-95. For purposes of Section
------------------------
-1-
<PAGE>
114 (entitled "Limitation on State Income Taxation of Certain Pension Income")
of Pub. Law 104-95 (enacted January 10, 1996), Article III and Section 4.2, 4.3
and 4.6 of Article IV are intended to constitute plans, programs or arrangements
maintained solely for the purpose of providing retirement benefits for Employees
in excess of the limitations imposed by one or more of sections 401(a)(17),
401(k), 401(m), 402(g), 403(b), 408(k), or 415 of the Internal Revenue Code or
any other limitation on contributions or benefits in the Internal Revenue Code
on plans to which any of such sections apply. Benefits provided under Sections
4.4 and 4.5 are also intended to constitute such plans, programs or arrangements
to the extent benefits provided under such sections satisfy the requirements in
the preceding sentence.
-2-
<PAGE>
ARTICLE II
----------
DEFINITIONS
-----------
The following terms when used herein shall have the meaning set forth
below, if capitalized. Unless the context clearly indicates otherwise, words in
the masculine, feminine or neuter gender include the other genders and the
singular includes the plural and vice versa.
2.1 "401(k) Investment Plan" means the BankAmerica 401(k) Investment
----------------------
Plan, as amended from time to time. This plan was named the BankAmerishare Plan
prior to January 1, 1996.
2.2 "Administrative Committee" means the BankAmerica Corporation
------------------------
Employee Benefits Administrative Committee, consisting of senior officers of
Participating Employers who shall be appointed initially by and serve at the
pleasure of the Board of Directors of BankAmerica Corporation.
2.3 "BAC Deferred Compensation Plan" means the BankAmerica Corporation
------------------------------
Deferred Compensation Plan, as amended from time to time.
2.4 "Contributing Employee" is defined under the 401(k) Investment
---------------------
Plan.
2.5 "Employee" means a common-law employee of an Employer.
--------
2.6 "Employer" means BankAmerica Corporation or any other corporation
--------
which is a member of the controlled group of corporations (within the meaning of
Section 1563(a) of the Internal Revenue Code without regard to Section
1563(a)(4) and 1563(e)(3)(C)) of which BankAmerica Corporation is a member, but
only after the date such corporation becomes a member of the
-3-
<PAGE>
BankAmerica Corporation controlled group of corporations.
2.7 "Employment" means employment with an Employer.
----------
2.8 "Internal Revenue Code" means the Internal Revenue Code of 1986,
---------------------
as amended from time to time.
2.9 "Matching Employer Contribution" is defined under the 401(k)
------------------------------
Investment Plan.
2.10 "Participant" means an Employee who has an account balance for
-----------
either the supplemental 401(k) Investment Plan benefits in Article III or
supplemental Pension Plan benefits in Article IV.
2.11 "Participant Contributions" is defined in the 401(k) Investment
-------------------------
Plan.
2.12 "Participating Employee" is defined in the Pension Plan.
----------------------
2.13 "Participating Employer" means BankAmerica Corporation and such
----------------------
subsidiaries and affiliated corporations of BankAmerica Corporation which shall
participate in this Plan with the approval of BankAmerica Corporation.
2.14 "Pension Plan" means the BankAmerica Pension Plan, as amended from
------------
time to time. This plan was named the BankAmeraccount Plan prior to January 1,
1996 and the BankAmerican Retirement Plan prior to July 1, 1985.
2.15 "Plan Year" means the calendar year.
---------
2.16 "Prior Plan" means the Supplemental CareerAccounts Plan as in
----------
effect on March 31, 1996.
2.17 "Qualified Earnings" is defined in the Pension Plan and 401(k)
------------------
Investment Plan.
2.18 "Service Center" means the BankAmerica Retirement
--------------
-4-
<PAGE>
Plans Service Center, which is the department of Bank of America NT&SA or third
party designated by the Administrative Committee to provide day-to-day
administrative services under the Plan.
2.19 "Supplemental Earnings" means compensation which, but for the
---------------------
$150,000 annual compensation limit in Section 401(a)(17) of the Internal Revenue
Code, would constitute Qualified Earnings.
2.20 "Supplemental Plan" means the BankAmerica Supplemental Retirement
-----------------
Plan, as set forth herein, and as amended from time to time.
-5-
<PAGE>
ARTICLE III
-----------
SUPPLEMENTAL 401(k) INVESTMENT PLAN BENEFITS
--------------------------------------------
3.1 Supplemental 401(k) Investment Plan Account. An unfunded
-------------------------------------------
bookkeeping account shall be established for each Participant who has earned
supplemental 401(k) Investment Plan benefits. The account shall be credited
with all supplemental 401(k) Investment Plan benefits credited under the Prior
Plan as of March 31, 1996, any amounts credited under Section 3.5, plus all
amounts credited under this Article after that date.
3.2 Benefits on Supplemental Earnings. If a Contributing Employee to
---------------------------------
the 401(k) Investment Plan has Supplemental Earnings for a Plan Year, an amount
equal to the additional Matching Employer Contributions the Contributing
Employee would have received in the 401(k) Investment Plan with respect to such
Supplemental Earnings, calculated as if there was no annual dollar limit on
Qualified Earnings (or other limit on contributions), shall be credited to the
Participant's account under this Article. For purposes of the preceding
sentence, the Contributing Employee shall be assumed to have made Participant
Contributions with respect to Supplemental Earnings at the actual rate of
Participant Contributions in effect in the 401(k) Investment Plan when the
annual dollar limit on Qualified Earnings was reached.
3.3 Benefits if Participation is Restricted. This section shall apply
---------------------------------------
if a Contributing Employee in the 401(k) Investment Plan does not receive a full
Matching Employer Contribution in the 401(k) Investment Plan for any month
because the participation of the Contributing Employee is restricted in
-6-
<PAGE>
order to enable the 401(k) Investment Plan to meet the rules under Internal
Revenue Code (S)(S)401(k) or (m) or similar rules limiting benefits for highly
compensated Employees. If this section is applicable, an amount equal to the
additional Matching Employer Contributions the Contributing Employee would have
received in the 401(k) Investment Plan if he or she been allowed to fully
contribute for that month shall be credited to the Participant's account under
this Article. For purposes of the preceding sentence, the actual rate of
Participant Contributions in effect prior to any required reduction shall be
used.
3.4 Benefits Based on Deferred Compensation. This Section shall apply
---------------------------------------
if a Contributing Employee in the 401(k) Investment Plan defers the receipt of
compensation under the BAC Deferred Compensation Plan, which compensation would
have been Qualified Earnings or Supplemental Earnings had it not been deferred.
(a) If a Contributing Employee defers compensation under the BAC
Deferred Compensation Plan on or after January 1, 1992, an amount equal to the
additional Matching Employer Contributions the Contributing Employee could have
received in the 401(k) Investment Plan with respect to such deferred
compensation, calculated as if there was no annual dollar limit on Qualified
Earnings (or other limit on benefit accruals), shall be credited to the
Participant's account under this Article. For purposes of the preceding
sentence, the most recent rate of Participant Contributions on record at the
time the deferred compensation would have been paid shall be used.
(b) Amounts deferred under the Annual Management
-7-
<PAGE>
Incentive Plan and BAC Deferred Compensation Plan between October 1, 1985 and
December 31, 1992, including accumulated interest, were treated as Supplemental
Earnings as of December 31, 1991.
3.5 Supplemental Plans which have merged with this plan
---------------------------------------------------
(a) Supplemental amounts credited under the Security Pacific Thrift
Plus Supplemental Plan as of December 31, 1992 shall be credited to the account
of the Participant under this Article.
(b) Supplemental amounts credited under the Seafirst Corporation
Supplemental Employee Matched Savings Plan as of March 31, 1996 shall be
credited to the account of the Participant under this Article.
3.6 Benefits In Excess of 415 Dollar Limit. This section shall apply
--------------------------------------
if a Participant does not receive a full Matching Employer Contribution for any
month of participation in the 401(k) Investment Plan on account of the dollar
limitation on maximum annual contributions under Section 415(c)(1)(A) of the
Internal Revenue Code. If this section is applicable, an amount shall be
credited to the Participant's account equal to (a) the amount of Matching
Employer Contributions the Contributing Employee would have received in the
401(k) Investment Plan for each month of participation if the dollar limitation
on maximum annual contributions did not apply, less (b) the actual amount of
Matching Employer Contributions received by the Participant in the 401(k)
Investment Plan for that month. The Participant's actual rate of Participant
Contributions to the 401(k) Investment Plan for each month of participation
shall be used to calculate Matching Employer Contributions under (a) in the
preceding sentence.
-8-
<PAGE>
3.7 Interest. The amounts credited to a Participant's account under
--------
this Article shall be increased each month by an interest factor. During a
Participant's Employment, the interest factor shall be equal to the monthly
interest rate for the Income Accumulation fund in the 401(k) Investment Plan.
For any month in which the Participant is not credited with a month of Covered
Service, the interest factor shall be equal to the monthly interest factor for
pay-based credits in effect from time to time for the Pension Plan.
3.8 Vesting. The benefits provided under this article shall be fully
-------
vested and nonforfeitable at all times.
-9-
<PAGE>
ARTICLE IV
----------
SUPPLEMENTAL PENSION PLAN BENEFITS
----------------------------------
4.1 Supplemental Pension Plan Account. An unfunded bookkeeping
---------------------------------
account or accounts shall be established for each Participant who has earned
supplemental Pension Plan benefits. The accounts shall be credited with all
supplemental Pension Plan benefits credited under the Prior Plan as of March 31,
1996, any amounts credited under Section 4.5, plus all amounts credited under
this Article.
4.2 Benefits Based on Supplemental Earnings. If a Participating
---------------------------------------
Employee in the pension plan has Supplemental Earnings for a Plan Year, an
amount equal to the additional pay-based credits the Participating Employee
would have received in the Pension Plan with respect to such Supplemental
Earnings, calculated as if there was no annual dollar limit on Qualified
Earnings (or other limit on benefit accruals), shall be credited to the
Participant's account under this Article.
4.3 Benefits Based on Deferred Compensation. This Section shall apply
---------------------------------------
if a Participating Employee in the Pension Plan defers the receipt of
compensation under the BAC Deferred Compensation Plan, which compensation would
have been Qualified Earnings or Supplemental Earnings had it not been deferred.
(a) If a Participating Employee defers compensation under the BAC
Deferred Compensation Plan on or after January 1, 1992, an amount equal to the
pay-based credits the Participating Employee would have received had such
compensation not been deferred shall be credited to the Participant's account
under this Article.
-10-
<PAGE>
(b) Amounts deferred under the BankAmerica Corporation Annual
Management Incentive Plan and BAC Deferred Compensation Plan between October 1,
1985 and December 31, 1992, including accumulated interest, were treated as
Supplemental Earnings as of December 31, 1991.
4.4 Supplemental Benefits Attributable to BankAmerican Retirement
-------------------------------------------------------------
Plan. Supplemental amounts credited under the Supplemental BankAmerican
- ----
Retirement Plan as of June 30, 1985 were converted into a conversion balance,
in the same manner as benefits under the BankAmerican Retirement Plan were
converted into an conversion balance under the Pension Plan, and credited to an
account for the Participant under this Article. If the Participant qualifies
for grandfathered benefits and/or early retirement subsidies under the Pension
Plan which increase the value of the benefits attributable to the BankAmerican
Retirement Plan, similar adjustments shall be made to the value of the
Participant's supplemental benefits under this section.
4.5 Supplemental Plans which have merged with this plan
---------------------------------------------------
(a) Supplemental amounts credited under the Security Pacific
Supplemental Retirement Plan as of December 31, 1992 based on compensation in
excess of the $150,000 compensation limit in Internal Revenue Code Section
401(a)(17) shall be converted into a conversion balance, in the same manner as
benefits under the Security Pacific Trusteed Retirement Income Plan ("SPTRIP")
were converted into an conversion balance under the Pension Plan, and credited
to an account for the Participant under this Article. If the Participant
qualifies for early retirement subsidies under the Pension Plan which increase
the
-11-
<PAGE>
value of the benefits attributable to the SPTRIP, similar adjustments shall be
made to the value of the Participant's "rule of $50,000" benefits under Article
Three of the Security Pacific Supplemental Retirement Plan and the Participant
shall receive the greater of the conversion balance or the value of the adjusted
benefits.
(b) Supplemental amounts credited under the Continental Supplemental
Pension Program as of December 31, 1994 shall be converted into a conversion
balance, in the same manner as benefits under the Continental Employees Pension
Plan ("Continental Pension Plan") were converted into an conversion balance
under the Pension Plan, and credited to an account for the Participant under
this Article. If the Participant qualifies for enhanced benefits and/or early
retirement subsidies under the Pension Plan which increase the value of the
benefits attributable to the Continental Pension Plan, similar adjustments shall
be made to the value of the Participant's supplemental benefits under this
section and the Participant shall receive the greater of the conversion balance
or the value of the adjusted benefits.
(c) Supplemental amounts credited under the Seafirst Corporation
Supplemental Retirement Plan as of March 31, 1996 shall be converted into a
conversion balance, in the same manner as benefits under the Seafirst
Corporation Retirement Plan ("Seafirst Pension Plan") were converted into an
conversion balance under the Pension Plan, and credited to an account for the
Participant's account under this Article. If the Participant qualifies for
enhanced benefits and/or early retirement subsidies
-12-
<PAGE>
under the Pension Plan which increase the value of the benefits attributable to
the Seafirst Pension Plan, similar adjustments shall be made to the value of the
Participant's supplemental benefits under this section and the Participant shall
receive the greater of the conversion balance or the value of the adjusted
benefits.
4.6 Benefits in Excess of 415 Dollar Limits.
---------------------------------------
(a) This Section shall apply if the benefits of a Participating
Employee in the Pension Plan are reduced on account of the dollar limitation on
maximum annual benefits under Section 415(b)(1)(A) of the Internal Revenue Code.
(b) The Plan shall pay the Participant an amount, if any, equal to (1)
the benefit which would be payable to a Participant under the Pension Plan if
the limitations on maximum annual benefits did not apply, less (2) the benefit
actually payable to the Participant under the Pension Plan.
4.7 Interest.
--------
(a) The amounts credited to the Participant's account under this
Article shall be increased each month by an interest factor equal to the monthly
interest factor for pay-based credits in effect from time to time for the
Pension Plan. Any supplemental conversion balance shall be credited with the
same interest rate the Participant receives under the Pension Plan for his or
her conversion balance.
4.8 Vesting.
-------
(a) The Participant shall be vested in the benefits provided under
this Article to the same extent the Participant is vested under the Pension Plan
for similar
-13-
<PAGE>
benefits.
-14-
<PAGE>
ARTICLE V
---------
PAYMENT OF BENEFITS AFTER EMPLOYMENT ENDS
-----------------------------------------
5.1 Form of Payment. The amounts credited to a Participant's accounts
---------------
under the Supplemental Plan shall be payable in cash as provided in this
Article.
5.2 Vested balance less than $10,000. If the total of the vested
--------------------------------
amounts credited to a Participant's accounts under Articles III and IV is less
than $10,000, all benefits shall be paid to the Participant in a single cash
payment within 90 days of the date Employment ends.
5.3 Vested balance $10,000 or more. If the total of the vested
------------------------------
amounts credited to a Participant's accounts under Articles III and IV is
$10,000 or more and Employment ends on or after April 1, 1997, all benefits
shall be paid to the Participant as follows:
(a) If the Participant has a benefit payment election in effect
when Employment ends, as provided in Section 5.4(b), the Participant's benefits
under the Supplemental Plan shall be paid in accordance with such benefit
payment election.
(b) If the Participant does not have a benefit payment election in
effect when Employment ends, the Participant's benefits under the Supplemental
Plan shall be paid in five annual installments commencing in the calendar year
after the Participant attains age 65, with each payment made within the first 60
days of such calendar year. Each payment shall be equal to (a) the sum of the
accounts maintained for the Participant under Article III and IV, multiplied by
(b) a fraction, the numerator of which is one and the denominator is the number
of
-15-
<PAGE>
installments remaining, including the current year's payments.
5.4 Benefit Payment Election. If the total of the amounts credited to
------------------------
a Participant's accounts under Articles III and IV is $10,000 or more (or has a
current value of $10,000 or more based on early retirement adjustments for early
retirement subsidiaries the Participant currently qualifies for), the
Participant may submit a benefit payment election form specifying how all vested
benefits under the Supplemental Plan shall be paid if Employment ends on or
after April 1, 1997, provided the amount of vested benefits exceeds $10,000 at
time of payment.
(a) The Participant may elect one of the following forms of
payment on the benefit payment election form:
(1) A single payment. The payment shall be made within 90
days of the date Employment ends, or within the first 60 days of any subsequent
calendar year specified by the Participant.
(2) Ten or fewer annual installment payments. The installment
payments shall commence in any calendar year specified by the Participant after
the calendar year in which Employment ends, with each payment made within the
first 60 days of such calendar year. Each payment shall be equal to (i) the sum
of the accounts maintained for the Participant under Article III and IV,
multiplied by (ii) a fraction, the numerator of which is one and the denominator
is the number of installments remaining, including the current year's payment.
(3) Monthly level annuity payments. The payments shall
commence within 90 days of the date Employment ends, or January of in any
subsequent calendar year specified by
-16-
<PAGE>
the Participant, with each payment made by the end of the month. The Participant
may elect a single life level annuity, or a joint and 50%, 75% or 100% survivor
annuity with the spouse to whom the Participant is married on the annuity
starting date. If the Participant elects a joint and survivor level annuity but
is not married on the annuity starting date, the Participant shall receive a
single life level annuity. The level annuity shall contain the 5 year certain
feature described in Section 3.3(c) of the Pension Plan. The amount of level
annuity shall be calculated under Section 3.3(b) of the Pension Plan, based on
the Level Annuity Interest rate in effect on the annuity starting date and the
joint annuitant factors in Section 3.3(c) of the Pension Plan.
(b) Each benefit payment election shall become effective on the one
year anniversary of the date the election is received by the Service Center,
provided the Participant has remained continuously employed by an Employer until
that date. If the Participant has previously submitted an election form, the
Participant may not submit a new benefit payment election until his or her prior
election has become effective. In addition, the Administrative Committee
reserves the right to reject a new benefit payment election if it results in a
significant acceleration of payments over the prior election.
5.5 Reemployed Employees. If a former Employee is reemployed by an
--------------------
Employer, any annuity or installment then being paid under the Supplemental Plan
shall continue.
5.6 Beneficiary Designation.
-----------------------
(a) A participant may designate any person or
-17-
<PAGE>
persons, including a trust, as his or her beneficiary or contingent beneficiary
to receive his or her unpaid benefits under the Supplemental Plan in the event
of the Participant's death. Any such designation shall be made by filing the
Supplemental Plan form designated for that purpose with the Service Center. The
Participant may change or cancel his or her beneficiary designation at any time
prior to death without the consent of any designated beneficiary.
(b) The Participant shall designate on his or her benefit payment
election that any benefits under the Supplemental Plan unpaid at the time of the
Participant's death shall be paid in accordance with one of the following
options:
(1) In a single payment within 90 days of the date of death.
(2) In a single payment within the first 60 days of the calendar
year immediately following the calendar year in which the death occurs.
(3) In three approximately equal payments, each made within the
first 60 days of the three calendar years immediately following the calendar
year in which the death occurs.
(c) If no beneficiary has been designated by the Participant, or if
no beneficiary is alive at the date of the Participant's death, payment shall be
made to the Participant's estate. If no death benefit payment election is in
effect at the date of the Participant's death, payment shall be made in a single
payment within 90 days of the date of death. If payment is made to a
beneficiary or the Participant's estate under the 5
-18-
<PAGE>
year certain feature of a level annuity election, payment shall be made within
90 days of death of the Participant or joint annuitant (if applicable),
whichever occurs later.
5.7 Withholding Taxes. The Participating Employers shall have the
-----------------
right to deduct from payments under the Supplemental Plan any and all taxes
required to be collected under federal, state or local law.
5.8 Transition Provisions.
---------------------
(a) If the total of the vested amounts credited to a
Participant's accounts under Articles III and IV is $10,000 or more and
Employment ends on or before March 31, 1997, the amounts credited to a
Participant's account shall be payable to the Participant in a single payment
within 90 days of the date Employment ends, unless prior to termination of
Employment, the Participant elects one of the following payment options, which
election must be approved by the Administrative Committee:
(1) Ten or fewer equal annual installments.
(2) Monthly level annuity payments calculated by using the
applicable Pension Plan level annuity conversion factors.
(b) If a Participant submitted a benefit payment election form prior to
June 15, 1996, the Participant may submit a replacement benefit payment election
form prior to August 1, 1996 which will have the same effective date as the
first election would have had.
(c) If a Participant had amounts credited under the Seafirst
Corporation Supplemental Retirement Plan or Supplemental Employee Matched
Savings Plan as of March 31, 1996 and if
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Employment ends prior to July 1, 1997: (1) the procedure in Section 5.8(a)
shall be applicable even if the sum of the Participant's accounts is less than
$10,000, and (2) if a Participant does not have a benefit payment election in
effect when Employment ends, the Participant may make a written request for an
alternative form of distribution under the procedure in Section 5.8(a) instead
of the default provisions in Section 5.3(b), provided that such written request
is submitted prior to the Participant's termination of Employment.
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ARTICLE VI
----------
PLAN OPERATION, AMENDMENTS AND ADMINISTRATION
----------------------------------------------
6.1 Amendment and Termination. BankAmerica Corporation is the "plan
-------------------------
sponsor" of the Supplemental Plan as that term is defined in ERISA. BankAmerica
Corporation may amend or modify the Supplemental Plan in whole or in part at any
time by a written instrument executed by an officer designated by the Board of
Directors of BankAmerica Corporation. BankAmerica Corporation may terminate the
Plan by action of its Board of Directors. No such amendment, modification or
termination shall reduce the amount credited to a Participant's accounts as of
the date of such action. Upon Plan termination, all amounts credited to
Participant's accounts shall be paid to such Participants in a single payment
within 120 days.
6.2 Plan Administrator. The Administrative Committee is the plan
------------------
administrator as that term is defined in ERISA. The Administrative Committee is
also the named fiduciary, as that term is defined in ERISA, of the Supplemental
Plan having discretionary authority to control and manage the operation and
administration of the Supplemental Plan.
6.3 Powers and Duties of Administrative Committee.
---------------------------------------------
(a) The Administrative Committee shall have discretionary
authority to determine eligibility for benefits and to construe the terms of the
Supplemental Plan. The Administrative Committee shall have such other
discretionary authority as may be necessary to enable it to discharge its
responsibilities under the Supplemental Plan as administrator and named
fiduciary, including, but not limited to, the power:
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(1) To review appeals by Participants under Article
VIII.
(2) To appoint or employ one or more persons to assist
in the administration of the Supplemental Plan.
(3) To adopt such rules as it deems appropriate for the
administration of the Supplemental Plan.
(4) To prescribe procedures to be followed by
Participants.
(5) To prepare and distribute information relating to
the Supplemental Plan.
(6) To request from Participating Employers and
Participants such information as shall be necessary for proper administration of
the Plan.
(b) The decision of the Administrative Committee upon any matter
within its authority shall be final and binding on all parties, including
BankAmerica Corporation, the Participating Employers and Participants and their
beneficiaries.
6.4 Reliance Upon Information. In making decisions under the
-------------------------
Supplemental Plan, the Administrative Committee shall be entitled to rely upon
information furnished by a Participant, beneficiary or Participating Employer.
6.5 Action by Administrative Committee. The Administrative Committee
----------------------------------
may act either at a meeting or, in the absence of a meeting, by an instrument in
writing signed by a majority of the Committee members. The Administrative
Committee shall elect one of its members as chairperson and it shall
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<PAGE>
appoint a secretary who shall keep a record of all meetings and forward all
necessary communication to the Participating Employers. The Administrative
Committee shall adopt such bylaws for the conduct of its business as it deems
desirable. An Administrative Committee member who becomes aware of any action or
failure to act by the Administrative Committee may, within a reasonable time
thereafter, deliver his or her dissent in writing, setting forth specific
reasons for such dissent, to all other Committee members and to the committee of
the BankAmerica Corporation Board of Directors designated to review Committee
activities.
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ARTICLE VII
-----------
CLAIMS FOR BENEFITS
-------------------
7.1 Claims Procedure.
----------------
(a) Claims Must be Filed. An Employee, Participant, alternate
--------------------
payee, or the spouse, beneficiary or estate of a deceased Participant (the
"claimant") who has a claim for benefits or concerning any other matter under
the Plan must give written notice of such claim or other matter to the Service
Center.
(b) Review of Claim. After the Service Center has reviewed the
---------------
claim and obtained any other information it deems necessary to render a decision
on the claim, the Service Center shall notify the claimant within 90 days after
receipt of the claim of the acceptance or denial of the claim, unless special
circumstances require an extension of time for processing the claim. Such an
extension of time may not exceed 90 additional days and notice of the extension
shall be provided to the claimant prior to the termination of the initial 90 day
period indicating the special circumstances requiring the extension and the date
by which a final decision on the claim is expected.
(c) Denied Claims. In the event any application for benefits is
-------------
denied, in whole or in part, the Service Center shall notify the claimant of
such denial in writing and shall advise the claimant of the right to appeal the
denial and to request a review thereof. Such notice shall be written in a
manner calculated to be understood by the claimant and shall contain:
(1) Specific reason for such denial.
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(2) Specific reference to the Plan provisions on which such
denial is based.
(3) A description of any information or material necessary
for the Employee to perfect the claim.
(4) An explanation of why such material is necessary.
(5) An explanation of the Plan's appeal and review procedure.
7.2 Appeal and Review Procedure.
---------------------------
(a) Appeal to Administrative Committee. If the claimant's claim
----------------------------------
for benefits is denied in whole or in part, the claimant, or the claimant's duly
authorized representative, may appeal the denial by submitting to the
Administrative Committee a written request for review of the application within
60 days after receiving written notice of such denial. The Administrative
Committee shall give the applicant (upon request) an opportunity to review
pertinent Plan documents (other than legally privileged documents) in preparing
such request for review.
(b) Contents of Appeal. The request for review must be in
------------------
writing and shall be addressed to the Secretary, BankAmerica Corporation
Employee Benefits Administrative Committee at the address stated in the current
summary plan description. The request for review shall set forth all of the
grounds upon which it is based, all facts in support thereof and any other
matters which the claimant deems pertinent. The Administrative Committee may
require the claimant to submit (at the claimant's expense) such additional
facts, documents or other
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<PAGE>
material as the Administrative Committee deems necessary or advisable in making
its review.
(c) Review of Appeal. The Administrative Committee shall act upon
----------------
each request for review within 60 days after its receipt thereof unless special
circumstances require further time for processing. In no event shall the
decision on review be rendered more than 120 days after the Administrative
Committee receives the request for review. Written notice of an extension of
time beyond 60 days shall be furnished to the claimant prior to the commencement
of the extension.
(d) Denied Appeals. In the event the Administrative Committee
--------------
confirms the denial of the claim for benefits in whole or in part, it shall give
written notice of its decision to the claimant. Such notices shall be written
in a manner calculated to be understood by the claimant and shall contain the
specific reasons for the denial.
7.3 Exhaustion of Remedies. No legal action for benefits under the
----------------------
Plan shall be brought unless and until the following steps have occurred:
(a) The claimant has submitted a written application for benefits
in accordance with Section 7.1.
(b) The claimant has been notified that the claim has been denied.
(c) The claimant has filed a written request appealing the denial
in accordance with Section 7.2.
(d) The claimant has been notified in writing that the
Administrative Committee has denied the claimant appeal or has failed to take
any action on the appeal within the time
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<PAGE>
prescribed by Section 7.2.
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<PAGE>
ARTICLE VIII
------------
GENERAL PROVISIONS
------------------
8.1 Cost. The Participating Employers shall pay the entire cost of
----
the Plan. The cost shall be allocated among the Participating Employers as
determined by BankAmerica Corporation.
8.2 Unfunded Bookkeeping Accounts. The accounts established under the
-----------------------------
Plan are unfunded bookkeeping accounts. The Participating Employers are not
required to physically segregate any cash or securities or establish any
separate funds to pay any benefits under the Plan.
8.3 Prohibition on Alienation. No benefit payable under this Plan
-------------------------
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, hypothecation, charge, attachment, garnishment, execution,
or levy of any kind or any other process of law, voluntary or involuntary. Any
attempt to dispose of any rights to benefits payable under the Plan shall be
void. Notwithstanding the preceding sentence, the Participating Employers shall
have the right to offset from a Participant's unpaid benefits under the
Supplemental Plan any amounts due and owing from the Participant to the extent
permitted by law.
8.4 Not a Contract of Employment. Participation in this Plan by an
----------------------------
Employee shall not give such Employee any right to be retained in the employ of
any Participating Employer and the ability of each Participating Employer to
dismiss or discharge an Employee is specifically reserved.
8.5 Headings Not to Control. Headings and titles within the Plan are
-----------------------
for convenience only and are not to be read
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<PAGE>
as part of the text of the Plan.
8.6 Separability of Plan Provisions. If any provisions of the
-------------------------------
Supplemental Plan are for any reason declared invalid or not enforceable, such
provisions will not affect the remaining terms and conditions, but the
Supplemental Plans will be construed and enforced thereafter as if such
provisions had not been inserted.
8.7 Applicable Law. The validity and effect of the Plan and the
--------------
rights and obligations of all persons affected thereby, are to be construed and
determined in accordance with applicable federal law, and to the extent that
federal law is inapplicable, under the laws of the State of California.
8.8 Entire Plan. This document is a complete statement of the Plan
-----------
and as of April 1, 1996 supersedes all representations, prior plans, promises
and inducements, proposals, written or oral, relating to its subject matter.
The Participating Employers shall not be bound by or liable to any person for
any representation, promise or inducement made by any person which is not
embodied in this document or in any authorized written amendment to the Plan.
IN WITNESS WHEREOF, BankAmerica Corporation, has caused this instrument
to be executed by its duly authorized officer, this 27th day of August, 1996
------ ------
to be effective April 1, 1996.
BANKAMERICA CORPORATION
By /s/ KATHLEEN J. BURKE
-------------------------------
Kathleen J. Burke
Vice Chairman and
Personnel Relations Officer
Document #4115175.02
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<PAGE>
EXHIBIT 10.n
CONTINENTAL ILLINOIS CORPORATION
1979
STOCK OPTION PLAN
As amended
Last Amended August 7, 1995
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<PAGE>
CONTINENTAL ILLINOIS CORPORATION
1979
STOCK OPTION PLAN
1. PURPOSE. The purpose of the 1979 Stock Option Plan (the "Plan")
of Continental Illinois Corporation (the "Company") is to provide the officers
(including officers who are members of the Board of Directors), and other key
employees, of the Company or any of its Subsidiaries (as hereinafter defined)
who are materially responsible for the management of the business of the Company
or a Subsidiary with incentive compensation opportunities which are competitive
with those available elsewhere and to motivate such officers and employees to
exert maximum efforts for the Company's success, thereby better enabling the
Company and its Subsidiaries to attract and retain capable executive personnel
and promoting the long term financial interests of the Company.
2. ADMINISTRATION. The Plan shall be administered, construed and
interpreted by a Committee (the "Committee") of not less than three members, and
such Committee shall be the Compensation and Nominating Committee of the Board
of Directors of the Company until the Board of Directors of the Company
determines otherwise. No member of the Committee shall be eligible, or within
one year prior to such membership shall have been eligible, for selection as a
person to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted under the Plan or any other plan of the
Company (or any of its affiliates) entitling participants therein to acquire
stock, stock options or stock appreciation rights of the Company (or any of its
affiliates). The decision of a majority of the members of the Committee shall
constitute the decision of the Committee and the Committee may act either at a
meeting at which a majority of the members of the Committee is present, or by
writing signed by all members of the Committee. The Committee shall have the
sole, final and conclusive authority to determine, consistent with and subject
to the provisions of the Plan:
(a) The individuals ("optionees") to whom options ("options") and
related stock appreciation rights ("stock appreciation rights") shall be
granted under the Plan;
(b) The number of shares of common stock, par value $5 per share, of
the Company ("Common Stock") to be optioned under each option;
(c) The option price to be paid upon the exercise of each option;
(d) The period or periods within which each option and related stock
appreciation right may be exercised; and
(e) The terms and conditions of each Stock Option Agreement and Stock
Appreciation Rights Agreement between the Company and an optionee;
provided, however, that a Committee consisting of the Chairman of the Board of
Directors and the President of the Company shall exercise all authority
otherwise delegated to the Committee under the Plan with respect to options and
stock appreciation rights which are granted to, or held by, persons who, at the
time such authority is exercised, are not subject to Section 16(a) or Section
16(b) of the Securities Exchange Act of 1934.
3. ELIGIBILITY. The officers and other key employees of the Company or a
Subsidiary, who, in the opinion of the Committee, are from time to time
materially responsible for the management of the business of the Company or a
Subsidiary, shall be eligible to be granted options (both incentive stock
options and non-qualified options) and related stock appreciation rights under
the Plan. The term "Subsidiary", as used herein, means any corporation whose
relationship to the Company, whether established before or after adoption of
this Plan, is such that the Company would be deemed to be the "parent
corporation" of such corporation within the meaning of Section 425(e) of the
Internal Revenue Code of 1954.
1
4116614
<PAGE>
4. STOCK SUBJECT TO PLAN. The aggregate number of shares of Common Stock
which may be delivered under the Plan shall not exceed 1,500,000, subject,
however, to adjustment as provided in Section 8 hereof. Either authorized and
unissued shares or treasury shares may be delivered under the Plan. If any
option granted pursuant to the Plan shall expire or terminate for any reason, as
to any shares, such shares shall again become available under the Plan;
provided, however, that if any option or portion thereof is surrendered in
exchange for cash or shares delivered pursuant to the exercise of a stock
appreciation right, such number of shares covered by the option or portion
thereof as are so surrendered may not again be made available under the Plan.
The aggregate fair market value of the shares for which options intended to
qualify as incentive stock options are granted to any employee in any calendar
year under this Plan and each other stock option plan of the Company and any
parent or subsidiary corporation shall not exceed $100,000, plus any unused
limit carryover to that year (as described in Section 422A(c)(4) of the Internal
Revenue Code of 1954).
5. TERMS OF OPTIONS. Each option granted pursuant to the Plan shall be
evidenced by a Stock Option Agreement between the Company and the optionee, and
shall be subject to the following terms and conditions, and to such other terms
and conditions not inconsistent therewith as the Committee may deem appropriate
in each case:
(a) Option Price. The per share price at which shares of Common Stock
may be purchased under the option shall be determined by the Committee at
the time such option is granted, but such price in no event shall be less
than the greater of (i) the per share fair market value, as determined by
the Committee, of such stock on the date on which such option is granted,
or (ii) the par value of such stock.
(b) Period for Exercise of Option. The option or any part thereof
shall become exercisable at such date or dates as shall be fixed by the
Committee at the time such option is granted, provided that an incentive
stock option, by its terms, shall not be exercisable while there is
outstanding, within the meaning of Section 422A(c)(7) of the Internal
Revenue Code of 1954, any other incentive stock option which was granted to
the optionee before the granting of the option and which other incentive
stock option is for the purchase of shares of stock in the Company or in a
corporation which at the time of the granting of the other incentive stock
option was a parent or subsidiary corporation of the Company, or in a
predecessor corporation of any of such corporations.
(c) Purchase of Shares. The option price of each share of Common
Stock purchased upon exercise of an option shall be paid in full in cash
or, with the consent of the Committee, by delivery of shares of Common
Stock having a fair market value equal to the option price or by a
combination of such shares and cash, at the time of such exercise. Each
option may be exercised in whole or in part, at any time or from time to
time, during the period such option is exercisable, except that no option
may be exercised for less than fifty shares of stock, unless the exercise
for a lesser number of shares will exhaust such option.
(d) Termination of Option. Any option granted pursuant to the Plan
shall terminate ten years after the date on which such option is granted,
except as otherwise provided for below. If an optionee ceases to be an
employee of the Company or any Subsidiary for any reason other than
retirement or death, any option granted to him pursuant to the Plan shall
forthwith terminate. Leave of absence approved by the Committee, or
transfer of employment from the Company to any Subsidiary or from a
Subsidiary to the Company or any other Subsidiary, shall not constitute a
cessation of employment. If any optionee ceases to be an employee of the
Company or a Subsidiary by reason of retirement (the term "retirement", as
used herein, means such termination of employment as shall entitle an
individual to benefits, other than a deferred vested pension, under any
then existing pension plan of the Company or a Subsidiary), any option
granted to him pursuant to the Plan may be exercised by him within three
years after the date of his retirement (but not later than ten years after
the date such option was granted) to the full extent such option was
exercisable on the date of such cessation. In the event of the death of an
optionee while in the employ of the Company or a Subsidiary or within three
years after the date of his retirement, any option which had not previously
terminated may be exercised within three years after the date of his death
by his estate or by the person or persons entitled thereto by will or by
applicable laws of descent and distribution, to the full extent such option
was exercisable on the date of his death; provided, however, that an
incentive stock option may not be exercised after the expiration of ten
years from the date the option was granted.
6. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant a stock appreciation right to any optionee under the Plan. Each stock
appreciation right shall be evidenced by a Stock Appreciation Rights
2
4116614
<PAGE>
Agreement between the Company and the optionee, and shall relate to and be
associated with all or any part of a specific option. Such stock appreciation
right may be granted either at the time of grant of such option or at any time
thereafter. A stock appreciation right shall be exercisable to the extent, and
only to the extent, that the related option is exercisable; provided, however,
that for purposes of this sentence, to the extent provided by the Committee, an
incentive stock option which is otherwise exercisable shall not be considered
nonexercisable merely by reason of the fact that a previously granted incentive
stock option is outstanding within the meaning of Section 422A(c)(7) of the
Internal Revenue Code of 1954. The Committee may at the time of granting any
stock appreciation right add such additional conditions and limitations to such
stock appreciation right as it shall deem advisable, including, but not limited
to, the period or periods within which such stock appreciation right shall be
exercisable and the maximum amount of appreciation to be recognized with regard
to such stock appreciation right. In the case of optionees who are persons
subject to Section 16(a) and Section 16(b) of the Securities Exchange Act of
1934, the Committee may at any time add such additional conditions and
limitations to such stock appreciation right which, in its discretion, the
Committee deems necessary or desirable in order to comply with Section 16(a) or
Section 16(b) and the rules and regulations thereunder, or in order to obtain
any exemption therefrom. A stock appreciation right shall entitle the optionee
to whom it is granted (including his estate or other successor in interest upon
his death as provided in the last sentence of Section 5(d) hereof) the right to
elect, so long as such stock appreciation right is exercisable and subject to
such limitations as the Committee shall have imposed, to surrender any then
exercisable portion of his related option, in whole or in part, and receive from
the Company in exchange, without any payment of cash (except for applicable
employee withholding taxes), that number of shares of Common Stock having an
aggregate fair market value on the date of such surrender equal to the product
of (i) the excess, if any, of the per share fair market value of Common Stock on
the date of such surrender over the per share option price under such option and
(ii) the number of shares of Common Stock called for by such option or portion
thereof which is so surrendered. Any option or portion thereof which is so
surrendered shall no longer be exercisable. The Committee, in its sole
discretion, may allow the Company to settle all or part of the Company's
obligation arising out of the exercise of a stock appreciation right by the
payment of cash equal to the aggregate fair market value of the shares of Common
Stock the Company would otherwise be obligated to deliver.
7. TRANSFERABILITY. Options and stock appreciation rights are not
transferable except by will or the laws of descent and distribution. Options
and stock appreciation rights may be exercised during the lifetime of the
participant only by the participant and after the death of the participant, only
as provided in Section 5(d).
8. ADJUSTMENT OF SHARES. In the event of any change after the effective
date of the Plan in the outstanding Common Stock of the Company by reason of any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger or consolidation, or any other change after the effective date of
the Plan in the nature of shares of Common Stock of the Company, the Committee
shall, if it deems it to be appropriate, direct that a proportionate adjustment
be made in the maximum number and kind of shares which may be delivered under
the Plan, and in the option price under and the number and kind of shares
covered by outstanding options (and related stock appreciation rights) granted
under the Plan. Such determination of the Committee shall be conclusive.
However, in no event shall the Committee adjust the option price of the stock to
a price less than the par value of the stock on the date of the adjustment.
Furthermore, if there is an adjustment in the number of shares, no fraction of a
share shall be delivered upon any exercise of an option, and, if an adjustment
of the option price shall result in a fraction of one cent, a full cent shall be
included in such price in lieu of such fraction.
9. EMPLOYEES' AND OPTIONEES' RIGHTS. No employee or other person shall
have any claim or right to be granted an option or a stock appreciation right
under the Plan except as the Committee shall have conferred in its discretion in
the administration of the Plan. Participation in the Plan shall not confer upon
any optionee any right with respect to continuation of employment by the Company
or a Subsidiary, nor interfere with the right of the Company or such Subsidiary
to terminate at any time employment of any optionee. An option or stock
appreciation right shall not confer any rights as a stockholder upon the holder
thereof, except only as to shares actually delivered pursuant to the Plan.
10. AMENDMENT. The Board of Directors of the Company may amend the Plan
from time to time, except that, without the approval of a majority of the votes
represented and entitled to be voted at a duly held meeting of the stockholders
of the Company;
(a) The maximum number of shares which may be delivered under the Plan
may not be increased except as provided in Section 8 hereof;
3
4116614
<PAGE>
(b) The option price under any option may not be reduced except as
provided in Section 8 hereof;
(c) The period during which an option may be exercised may not be
extended beyond the period provided in Section 5(d) hereof; and
(d) The granting of an option to a member of the Committee shall be
prohibited as provided in Section 2 hereof.
The Committee may, with the consent of the optionee, amend any option
agreement or stock appreciation rights agreement to the extent that the
Committee determines that such amendment is necessary or desirable in order to
permit any option outstanding on or after January 1, 1981 to qualify as an
incentive stock option or to be exercisable, in whole or in part, by delivery of
shares of Common Stock having a fair market value equal to the option price. No
amendment of the Plan or of an agreement, however, may, without the consent of
the optionee, make any changes in any outstanding option (or related stock
appreciation rights) theretofore granted under the Plan which would adversely
affect the rights of such optionee.
11. TERMINATION. The Plan shall terminate on the tenth anniversary of the
date of approval of the Plan by the stockholders of the Company as provided in
Section 12 and may be terminated at any earlier time by the Board of Directors
of the Company. No option or stock appreciation right shall be granted
hereunder after termination of the Plan. Termination of the Plan, however,
shall not affect the validity of any option (or related stock appreciation
right) theretofore granted under the Plan.
12. EFFECTIVE DATE. This Plan shall become effective upon the approval by
the affirmative vote of a majority of the shares present or represented by proxy
at the Annual Meeting of Stockholders to be held on April 23, 1979 or any
adjournment thereof. The effective date of each option and stock appreciation
right shall be the day on which it is granted to any optionee hereunder.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) 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 of 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 (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) 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.
(iii) 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,
4
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<PAGE>
unless, following such Business Combination, (A) 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 80% 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 Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the purposes of
this clause (A), 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), (B) 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
(C) 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.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) [intentionally left blank]
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
5
4116614
<PAGE>
EXHIBIT 10.o
CONTINENTAL BANK CORPORATION
1982 PERFORMANCE, RESTRICTED STOCK
AND STOCK OPTION PLAN
As amended
Last Amended August 7, 1995
4117042
<PAGE>
CONTINENTAL BANK CORPORATION
1982 PERFORMANCE, RESTRICTED STOCK
AND STOCK OPTION PLAN
1. Purpose. The purpose of the 1982 Performance, Restricted Stock and
Stock Option Plan (the "Plan") of Continental Bank Corporation (the "Company")
is to promote the long-term financial interests of the Company by (i) rewarding
key executives of the Company and its Subsidiaries (as defined below) for their
contributions to the success of the Company, (ii) attracting and encouraging
long service by key executives possessing outstanding abilities, (iii) providing
competitive incentive compensation in the form of incentive stock options, non-
qualified stock options, stock appreciation rights and restricted stock; and
(iv) furthering the identity of interests of key executives with those of the
Company's stockholders through opportunities for increased stock ownership and
awards based on corporate performance. The term "Subsidiary" means any
corporation of which the Company owns or controls, directly or indirectly, 50
percent or more of the outstanding shares of stock normally entitled to vote for
the election of directors.
2. Administration. The Plan shall be administered, construed and
interpreted by a Committee of not less than three members, which, subject to the
following provisions of this Section 2, shall be the Compensation Committee of
the Board of Directors of the Company until such Board of Directors determines
otherwise. No member of the Committee shall be eligible, or within one year
prior to such membership shall have been eligible, for selection as a person to
whom stock may be awarded or allocated or to whom stock options or stock
appreciation rights may be granted under the Plan or any other plan of the
Company (or of any of its affiliates) entitling participants therein to acquire
stock, stock options or stock appreciation rights of the Company (or of any of
its affiliates). The decision of a majority of the members of the Committee
shall constitute the decision of the Committee and the Committee may act either
at a meeting at which a majority of the members of the Committee is present, or
by writing signed by all members of the Committee. The Committee shall have the
sole, final and conclusive authority to interpret the Plan. Notwithstanding the
foregoing provisions of this Section 2, the Chairman of the Company shall
exercise all authority otherwise delegated to the Committee under the Plan with
respect to stock options, stock appreciation rights and Restricted Stock (as
described in Section 8) awarded to, or held by, person who, at the time such
authority is exercised, are not subject to Section 16(a) or Section 16(b) of the
Securities Exchange Act of 1934.
3. Participation. The Committee shall, from time to time, determine and
designate the officers (including officers who are members of the Board of
Directors) and other key
4117042 -1-
<PAGE>
employees of the Company and its Subsidiaries who shall be Participants in the
Plan and the number of stock options, stock appreciation rights and shares of
Restricted Stock to be awarded to each such Participant. In making any such
award the Committee shall take into account the past performance of the Company
and its Subsidiaries, the Participant's contributions to such performance, the
capacity of the Participant to contribute in a substantial measure to such
performance in the future, and such other factors as the Committee may consider
relevant.
4. Stock Subject to Plan. Shares of stock subject to the Plan shall be
shares of the Company's common stock, par value $4 per share ("Common Stock").
Subject to adjustment as provided in Section 11, the aggregate number of shares
of Common Stock which may be delivered under the Plan shall not exceed 4,000,000
shares. Any shares subject to any grant which terminates by expiration,
cancellation, forfeiture, surrender or otherwise without the issuance of shares
or without payment therefore or, in the case of Restricted Stock, without
vesting shall again be available for future grants under the Plan. Either
authorized and unissued shares or treasury shares may be delivered under the
Plan; provided, however, that unissued shares shall not be awarded as Restricted
Stock to any Participant who has been employed by the Company and its
Subsidiaries for less than one year, unless the Committee expressly determines,
after consideration of all other remuneration paid or payable to the
Participant, that the services already rendered to the Company and its
Subsidiaries by the Participant for which he is being awarded Restricted Stock
have a value of not less than the par value of the shares awarded to him.
5. Terms of Option. Each option granted pursuant to the Plan shall be
evidenced by a Stock Option Agreement between the Company and the Participant,
and shall be subject to the following terms and conditions, and to such other
terms and conditions not inconsistent therewith as the Committee may deem
appropriate in each case:
(a) Option Price. The price at which a share of Common Stock may be
purchased pursuant to the exercise of an option shall be determined by
the Committee at the time such option is granted, but shall not be
less than the greater of (i) the fair market value, as determined by
the Committee, of a share of Common Stock on the date of grant or (ii)
the par value of such stock.
(b) Period for Exercise of Option. The option or any part thereof shall
become exercisable at such date or dates as shall be fixed by the
Committee at the time such option is granted or at such earlier time
as may subsequently be determined by the Committee; provided that an
incentive stock option granted prior to January 1, 1987, by its terms,
shall not be exercisable while there is outstanding, within the
meaning of
4117042 -2-
<PAGE>
Section 422A(b)(7) of the Internal Revenue Code of 1954, any other
incentive stock option which was granted to the Participant before the
granting of the option and which other incentive stock option is for
the purchase of shares of stock in the Company, in a corporation which
at the time of the granting of the other incentive stock option was a
parent or subsidiary corporation of the Company, or in a predecessor
corporation of any such corporations.
(c) Purchase of Shares. The option price of each share of Common Stock
purchased upon exercise of an option shall be paid in full at the time
of exercise, which payment shall be in cash or, unless otherwise
determined by the Committee, by delivery of shares of Common Stock
having a fair market value equal to the option price, or by a
combination of such shares and cash. Each option may be exercised in
whole or in part, at any time or from time to time, during the period
such option is exercisable, except that no option may be exercised for
less than fifty shares of stock, unless the exercise for a lesser
number of shares will exhaust such option.
(d) Termination of Option. Except as otherwise provided for below, any
option granted pursuant to the Plan shall terminate not more than ten
years after the date on which such option is granted. If a
Participant ceases to be an employee of the Company or any Subsidiary
for any reason other than retirement or death, any option granted to
him pursuant to the Plan shall forthwith terminate. A leave of
absence approved by the Committee, or a transfer of employment from
the Company to any Subsidiary or from a Subsidiary to the Company or
any other Subsidiary, shall not constitute a cessation of employment.
If any Participant ceases to be an employee of the Company or a
Subsidiary by reason of a retirement which entitles him to pension
benefits, other than a deferred vested pension, under any pension plan
then maintained by the Company or a Subsidiary, any option granted to
him pursuant to the Plan may be exercised by him within three years
after the date of his retirement (but not later than ten years after
the date such option was granted) to the full extent such option was
exercisable on the date of such cessation. In the event of the death
of a Participant while in the employ of the Company or a Subsidiary or
within three years after the date of his retirement, any option which
had not previously terminated may be exercised within three years
after the date of his death by his estate or by the person or persons
entitled thereto by will or by applicable laws of descent and
distribution, to the full extent such option was exercisable on the
date of his death;
4117042 -3-
<PAGE>
provided, however, that an incentive stock option may not be exercised
after the expiration of ten years from the date the option was
granted.
(e) Limitation on Amount of Incentive Stock Options. The aggregate fair
market value (determined at the time the option is granted) of the
shares with respect to which incentive stock options granted after
December 31, 1986 are exercisable for the first time by any
Participant in any calendar year under this Plan and each other stock
option plan of the Company and any parent and subsidiary corporations
shall not exceed $100,000.
6. Stock Appreciation Rights. The Committee may, in its discretion,
grant a stock appreciation right to any Participant under the Plan. Each stock
appreciation right shall be evidenced by a Stock Appreciation Rights Agreement
between the Company and the Participant, and shall relate to and be associated
with all or any part of a specific option. A stock appreciation right may be
granted either at the time of the grant of the related option or at any time
thereafter. A stock appreciation right shall be exercisable only if the fair
market value of a share of Common Stock exceeds the option price for the related
option and then shall be exercisable to the extent, and only to the extent, that
the related option is exercisable. The Committee may at the time of granting
any stock appreciation right add such additional conditions and limitations to
the stock appreciation right as it shall deem advisable, including, but not
limited to, limitations on the period or periods within which the stock
appreciation right shall be exercisable and the maximum amount of appreciation
to be recognized with regard to such stock appreciation right. In the case of
Participants who are subject to Section 16(a) and Section 16(b) of the
Securities Exchange Act of 1934, the Committee may at any time add such
additional conditions and limitations to such stock appreciation right which, in
its discretion, the Committee deems necessary or desirable in order to comply
with Section 16(a) or Section 16(b) and the rules and regulations thereunder, or
in order to obtain any exemption therefrom. A stock appreciation right shall
entitle the Participant to whom it is granted (including his estate or other
successor in interest upon his death as provided in the last sentence of
paragraph 5(d)) the right to elect, so long as such stock appreciation right is
exercisable and subject to such limitations as the Committee shall have imposed,
to surrender any then exercisable portion of his related option, in whole or in
part, and receive from the Company in exchange, without any payment of cash
(except for applicable employee withholding taxes), that number of shares of
Common Stock having an aggregate fair market value on the date of surrender
equal to the product of (i) the excess of the fair market value of a share of
Common Stock on the date of surrender over the per share option price under such
option and (ii) the number of shares of Common Stock subject to such option or
portion thereof which is surrendered. Any option or portion thereof which is
4117042 -4-
<PAGE>
surrendered shall no longer be exercisable. The Committee, in its sole
discretion, may allow the Company to settle all or part of the Company's
obligation arising out of the exercise of a stock appreciation right by the
payment of cash equal to the aggregate fair market value of the shares of Common
Stock the Company would otherwise be obligated to deliver.
7. Transferability. Options and stock appreciation rights are not
transferable except by will or the laws of descent and distribution. Options
and stock appreciation rights may be exercised during the lifetime of the
Participant only by the Participant and, after the death of the Participant,
only as provided in paragraph 5(d).
8. Terms and Conditions of Restricted Stock Awards. All shares of Common
Stock awarded to Participants under the Plan ("Restricted Stock") shall be
subject to the following terms and conditions and to such other terms and
conditions, not inconsistent with the Plan, as shall be prescribed by the
Committee in its sole discretion:
(a) Restricted Period. Shares of Restricted Stock awarded to Participants
may not be sold, assigned, transferred, pledged or otherwise
encumbered during a "Restricted Period" commencing on the date of the
award and ending on the September 30th coincident with or next
following the fourth anniversary thereof, or such later date as the
Committee may designate at the time of the award, subject to the
following:
(i) Except as otherwise provided by the Committee at the time of an
award of Restricted Stock, if a Participant's employment with the
Company and its Subsidiaries is terminated by reason of his
death, disability (as determined by the Committee) or a
retirement which entitles him to pension benefits other than a
deferred vested pension under a pension plan then maintained by
the Company or a Subsidiary, then the Restricted Period shall end
as of the date of such termination with respect to such number
of shares (disregarding any fractional shares) of Restricted
Stock granted to him under such prior award as is proportionate
to the ratio of (A) the number of whole calendar months elapsed
between the date of the award and the date of such termination to
(B) the number of whole calendar months in the original
Restricted Period.
(ii) The Committee may, at the time of an award or at any time
thereafter, reduce or terminate the Restricted Period otherwise
applicable to all or any portion of any Restricted Stock award;
provided, however, that no such reduction under this subparagraph
(i) shall be applicable to
4117042 -5-
<PAGE>
Restricted Stock held by a Participant who voluntarily terminates
his employment within one year of the date such Restricted Stock
was awarded. For purposes of this subparagraph (ii), termination
of employment by reason of disability (as determined by the
Committee) or mandatory retirement shall not be deemed a
voluntary termination.
Subject to the provisions of paragraphs (b) and (f) next below, at the
end of the Restricted Period for any shares of Restricted Stock, such
shares will be transferred free of all restrictions to the Participant
or, in the event of his death, to the beneficiary or beneficiaries
designated by the Participant under this Plan or, if none, to his
estate. Delivery of shares in accordance with the preceding sentence
shall be made within the thirty-day period following the end of the
Restricted Period.
(b) Forfeitures. Except as otherwise provided in subparagraph 8(a)(i) and
subject to the rights of the Committee under subparagraph 8(a)(ii), a
Participant shall forfeit all shares of Restricted Stock and all
dividends and interest accumulated in accordance with the provisions
of Section 9 if his employment with the Company and its Subsidiaries
is terminated prior to the last day of the applicable Restricted
Period.
(c) Certificates Deposited With Company. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the
Company. Each such certificate shall bear the following (or a
similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the Continental Bank Corporation 1982
Performance, Restricted Stock and Stock Option Plan and an Agreement
entered into between the registered owner and Continental Bank
Corporation. A copy of such Plan and Agreement is on file at the
principal office of Continental Bank Corporation at 231 South LaSalle
Street, Chicago, Illinois 60697."
(d) Restricted Stock Agreement. The Participant shall enter into an
Agreement with the Company in a form specified by the Committee
agreeing to the terms and conditions of the award and such other
matters as the Committee shall, in its sole discretion, determine.
4117042 -6-
<PAGE>
(e) Stockholder Rights. Subject to the foregoing restrictions and to the
provisions of Section 9, each Participant shall have all the rights of
a stockholder with respect to his shares of Restricted Stock,
including, but not limited to, the right to vote such share.
(f) Substitution of Rights. Prior to the end of the Restricted Period
with respect to any shares of Restricted Stock awarded to a
Participant, the Committee may, with the consent of the Participant,
substitute an unsecured obligation of the Company to pay cash or stock
(on such reasonable terms and conditions as the Committee may, in its
sole discretion, determine) in lieu of its obligations under this
Section 8 and under Section 9 to deliver unrestricted shares of Common
Stock plus accrued dividends and interest.
9. Dividends. Except as otherwise provided by the Committee, dividends,
including stock dividends, shall be accrued on each share of Restricted Stock
from the date as of which it is awarded and, if such share has not been
forfeited, shall be paid to the Participant, or in the event of his death to his
estate, as of the last day of the Restricted Period with respect to such share.
Such dividends shall not be held in a separate fund or separately invested.
Upon delivery of such dividends, interest shall be paid by the Company on the
amount of cash dividends withheld, including cash dividends on stock dividends,
at a rate equal to the rate of interest payable on amounts deferred under the
Continental Bank Corporation Deferred Incentive Plan, as such rate may be
adjusted from time to time.
10. Compliance With Applicable Laws. Notwithstanding any other provision
of the Plan, the Committee may subject shares of Common Stock awarded under the
Plan to such conditions, limitations or restrictions as the Committee determines
to be necessary or desirable to comply with any law or regulation or with the
requirements of any securities exchange.
11. Changes in Capitalization, Similar Changes and Changes in Control. In
the event of any change in the outstanding shares of Common stock by reason of
any stock dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, the maximum
aggregate number and class of shares which may be delivered under the Plan and
the option price under and the number and class of shares covered by outstanding
options and stock appreciation rights shall be equitably adjusted by the
Committee. Such determination of the Committee shall be conclusive; provided
that in no event shall the Committee adjust the option price of the stock to a
price less than the par value of the stock on the date of the adjustment.
Furthermore, if there is an adjustment in the number of shares, no fraction of a
share shall be delivered upon any exercise of an option or with respect to any
4117042 -7-
<PAGE>
Restricted Stock; and, if an adjustment of the option price shall result in a
fraction of one cent, a full cent shall be included in such price in lieu of
such fraction. Any shares of stock or other securities received by a
Participant with respect to Restricted Stock will be subject to the same
restrictions and shall be deposited with the Company. If the company shall be
consolidated or merged with another corporation, any stock, securities or other
property which any Participant is entitled to receive by reason of his ownership
of the shares of Restricted Stock shall be deposited with the Company or its
successor. Subject to the provisions of Section 8, such stock, securities or
other property shall also be subject to the same restrictions as such Restricted
Stock, and shall bear an appropriate legend similar in form to the legend set
forth in paragraph 8(c). Notwithstanding the foregoing provisions of this
Section 11, or any other provision of the Plan, other than Section 14, the
Committee may, in its sole discretion, at the time of any award or grant under
the Plan or at any time thereafter, provide for the acceleration of rights under
any grant or award in the event of a change in control of the Company and may
establish the conditions under which such a change in control will be deemed to
have occurred.
12. Withholding Tax. The Company shall have the right to withhold with
respect to any payments made to Participants under the Plan any taxes required
by law to be withheld because of such payments.
13. Employees' and Participants' Rights. No employee or other person
shall have any claim or right to be awarded stock options, stock appreciation
rights or Restricted Stock under the Plan except as the Committee shall have
conferred in its discretion in the administration of the Plan. Participation in
the Plan shall not confer upon any Participant any right with respect to
continuation of employment by the Company or a Subsidiary, nor interfere with
the right of the Company or such Subsidiary to terminate at any time employment
of any Participant.
14. Amendment and Termination. The Board of Directors may amend, suspend
or terminate the Plan or any portion thereof at any time. The Compensation
Committee of the Board of Directors, or any successor thereto designated by the
Board of Directors in accordance with the provisions of Section 2, may amend the
Plan to the extent necessary for the efficient administration of the Plan, or to
make it practically workable or to conform to the provisions of any federal or
State law or regulation. Notwithstanding the foregoing provisions of this
Section 14, in no event shall any amendment be made without stockholder approval
which shall:
(a) increase the total number of shares which may be awarded under Section
4 of the Plan (subject to adjustment in accordance with Section 11);
4117042 -8-
<PAGE>
(b) reduce the option price under any option below the fair market value
of the stock subject to the option determined as of the date of grant;
(c) extend the period during which an option or stock appreciation right
may be exercised beyond the period provided in paragraph 5(d); or
(d) withdraw the administration of the Plan from the Committee.
The Plan shall terminate automatically on April 26, 1993. In no event may any
amendment, suspension or termination impair the rights of any Participant,
without his consent, in any stock option, stock appreciation right or Restricted
Stock previously awarded under the Plan.
15. Effective Date. This Plan shall be effective as of January 1, 1982
subject to the approval by the affirmative vote of a majority of the shares
present or represented by proxy at the Annual Meeting of Stockholders to be held
on April 26, 1982 or any adjournment thereof. All awards of stock options,
stock appreciation rights and Restricted Stock are subject to such approval and,
notwithstanding any other provision of the Plan, if such stockholder approval is
not obtained, all such awards as well as dividends paid or payable with respect
to Restricted Stock shall be forfeited.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) 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 of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
4117042 -9-
<PAGE>
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) 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.
(iii) 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, (A) 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 80% 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 standing BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the purposes of
this clause (A), 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), (B) 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
4117042 -10-
<PAGE>
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 (C) 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.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) [intentionally left blank]
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, or to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
4117042 -11-
<PAGE>
CONTINENTAL ILLINOIS CORPORATION
231 South LaSalle Street
Chicago, Illinois 60697
SERIAL NUMBER
8290021
Optionee:
Shares: 9,000
Option Price: $16.875
Date of Grant: February 26, 1990
Expiration Date: February 24, 2000
ENDORSEMENTS
<TABLE>
<CAPTION>
===============================================================================
SHARES ISSUED
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ISSUE NUMBER BALANCE AUTHORIZED ENDORSEMENT
DATE OF OF SIGNATURE DATE
SHARES OPTION
SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
4117042 -12-
<PAGE>
EXHIBIT 10.p
CONTINENTAL BANK CORPORATION
1991 EQUITY PERFORMANCE INCENTIVE PLAN
As amended
Last Amended August 7, 1995
4117043
<PAGE>
CONTINENTAL BANK CORPORATION
1991 EQUITY PERFORMANCE INCENTIVE PLAN
1. Purpose. The purpose of this Plan is to promote the long-term
financial interests of the Company by (i) rewarding key employees of the Company
or one or more of its Affiliates for their contributions to the success of the
Company; (ii) attracting and encouraging long service by key employees
possessing outstanding abilities; (iii) providing key employees with additional
incentives in the form of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights and Restricted Stock Units; and (iv) furthering the
identity of interests of key employees with those of the Company's stockholders
through opportunities for interested stock ownership and awards based on
corporate stock performance.
2. Definitions.
"Affiliate" means a corporation, partnership, joint venture or other entity
in which the Company has an ownership interest.
"Award" means an award of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units
under the Plan.
"Award Agreement" means an agreement entered into between the Company and a
Participant, setting forth the terms and conditions applicable to an award
granted to the Participant.
"Board of Directors" or "Board" means the Board or Directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Committee" means the Human Resources Committee or the Board of Directors,
or such other committee as may be designated by the Board of Directors and so
constituted as to permit the Plan to comply with Rule 16b-3 under the Exchange
Act or any successor rule or regulation.
"Common Stock" means the Company's common stock, $4.00 par value per share.
"Company" means Continental Bank Corporation, a Delaware corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Fair Market Value" means, as of any given date, the mean of the highest
and lowest market prices of the Common Stock, or other security for which Fair
Market Value is being determined,
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<PAGE>
as reported on the composite tape of New York Stock Exchange issues (or such
other reporting system as shall be selected by the Committee) on such date or,
if no sale of Common Stock or such other security is reported for such date, the
next preceding day for which there was a reported sale. If such Common Stock or
other security is not traded on the New York Stock Exchange, the Fair Market
Value shall be such amount as shall be reasonably determined by the Committee.
"Incentive Stock Option" means any Stock Option intended to meet the
requirements of an "incentive stock option" within the meaning of Section 422 of
the Code, or any successor Code section.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Participant" means an employee of the Company or its Affiliates who is
designated as a Participant in the Plan by the Committee pursuant to Section 4
below.
"Plan" means the Continental Bank Corporation 1991 Equity Performance
Incentive Plan, as set forth herein and as amended from time to time.
"Restricted Stock" means Common Stock which has been awarded to a
Participant subject to the restrictions referred to in Section 9 below, so long
as such restrictions are in effect.
"Restricted Stock Unit" means a right to receive a payment determined by
the price of Common Stock as described in Section 10 below.
"Stock Appreciation Right" means a right to receive a payment determined by
the appreciation in Common Stock as described in Section 8 below.
"Stock Option" or "Option" means a right to purchase shares of Common Stock
(including Restricted Stock, if the Committee so determines) as described in
Section 7 below.
3. Administration. The Plan and all Awards granted pursuant thereto
shall be administered, construed and interpreted by the Committee. The decision
or a majority of the members of the Committee voting shall constitute the
decision of the Committee and the Committee may act either at a meeting at which
a majority of the members of the Committee is present, or by writing signed by
all members of the Committee. The Committee shall have the sole, final and
conclusive authority to interpret the Plan and all Awards granted pursuant
thereto. Notwithstanding the foregoing provisions of this Section 3, and
subject to the restrictions set forth in Section 14 below, the Committee may
delegate to the Chairman or, except as to the issuance of Common Stock, the
Chief Human Resources Officer of the Company any or all authority otherwise
delegated to the
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Committee under the Plan with respect to granting Awards to or administering
Awards granted to, or held by, persons who, at the time such authority is
exercised, are not subject to Section 16(a) or Section 16(b) of the Exchange
Act.
4. Participation. The Committee shall, from time to time, determine and
designate the key employees of the Company or its Affiliates (any of whom may be
members of the Board of Directors) who shall be Participants in the Plan and the
types, terms and size of Awards to be made to each such Participant. Any such
Award may be granted singly or in combination or in tandem with other Awards and
may be made in tandem with or in lieu of current or deferred compensation and
may be conditioned on a Participant's purchase and/or retention of shares of
Common Stock, all as the Committee may determine.
5. Stock Subject to Plan. Shares of stock subject to the Plan shall be
shares of the Company's Common Stock. Subject to adjustment as provided in
Section 12 below, the aggregate number of shares of Common Stock with respect to
which Awards may be granted under the Plan shall not exceed 3,500,000 shares.
The grant of an Award shall be deemed to be a grant of shares equal to the
greater of the number of shares that may be issued under the Award or the number
of shares on the basis of which the Award is calculated. To the extent that any
Award terminates by expiration, cancellation, forfeiture, surrender or otherwise
(other than by reason of the exercise of an Award granted in tandem therewith)
without the issuance of shares or without payment therefor or, in the case of
Restricted Stock, without vesting, any shares subject to such Award or on the
basis of which such Award would have been calculated shall again be available
for future Awards. Either authorized and unissued shares or treasury shares may
be used for Plan purposes; provided, however, that unissued shares shall not be
awarded to any Participant who has been employed by the Company or its
Affiliates for less than one year, unless the Committee expressly determines,
after consideration of all other remuneration paid or payable to the
Participant, that the services already rendered to the Company and its
Affiliates by the Participant for which the Participant is being granted the
Award have a value of not less than the par value of the shares being awarded.
6. Award Agreement. Each Award under this Plan shall be evidenced by an
Award Agreement which shall include provisions governing the disposition of the
Award in the event of retirement, disability, death or other termination of a
Participant's employment by or relationship to the Company or any of its
Affiliates, and such other terms and conditions, including the criteria for
determining vesting of Awards and the amount or value of Awards, as the
Committee shall deem necessary and appropriate to effect an Award Agreement with
the Participant to whom the Award is granted.
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7. Options. Each Option shall entitle the Participant to whom it is
granted the right to purchase a specified number of shares of Common Stock
(including Restricted Stock, if the Committee so determines) at a fixed price
subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as shall be prescribed by the
Committee in its sole discretion:
(a) Option Price. The price at which a share of Common Stock may be
purchased pursuant to the exercise of an Option shall be determined by the
Committee at the time such Option is granted, but shall not be less than
the greater of (i) the Fair Market Value of a share of Common Stock on the
date of grant or (ii) the par value or the Common Stock.
(b) Exercisability of Option. An Option or any part thereof shall
become exercisable at such date or dates as shall be fixed by the Committee
at the time such Option is granted or at such earlier time as may
subsequently be determined by the Committee but in no event earlier than
six months after the date of grant. Options shall be exercised in whole or
in part by written notice to the Company and payment in full of the option
price. Payment of the option price may be made, at the discretion of the
optionee, and to the extent permitted by the Committee, (A) in cash
(including check, bank draft, or money order), (B) in Common Stock (valued
at the Fair Market Value thereof on the date of exercise), (C) by a
combination of cash and Common Stock or (D) with any other consideration
(including payment in accordance with a cashless exercise program under
which, if so instructed by the Participant, shares of Common Stock may be
issued directly to the Participant's broker or dealer upon receipt of the
option price in cash from the broker or dealer).
(c) Termination of Option. An Option shall terminate as determined by
the Committee at the time such Option is granted; provided, however, no
Option shall be exercisable after the expiration of ten years from the date
such Option is granted.
(d) Limitation on Amount of Incentive Stock Options. The aggregate
Fair Market Value (determined at the time the Option is granted) of the
shares with respect to which Incentive Stock Options are exercisable for
the first time by any Participant in any calendar year under this Plan and
each other stock option plan of the Company and any "parent" and
"subsidiary" corporations (as those terms are defined in Sections 424(c)
and 424(f) of the Code, respectively, or any successor Code section) shall
not exceed $100,000.
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<PAGE>
8. Stock Appreciation Rights. Each Stock Appreciation Right shall entitle
the Participant to whom it is granted to receive, upon exercise of the Stock
Appreciation Right (or of both the Stock Appreciation Right and the related
Option, or of a portion of either, in the case of a Stock Appreciation Right
granted in tandem with all or a portion of a related Stock Option), without any
payment of cash (except for applicable employee withholding taxes), that number
of shares of Common Stock (including Restricted Stock, if the Committee so
determines) having an aggregate Fair Market Value on the date of exercise equal
to the excess of the aggregate Fair Market Value on the exercise date of the
shares of Common Stock for which the Stock Appreciation Right is exercised, over
the exercise price of such right, which price shall be not less than the Fair
Market Value of such shares on the date the right was granted (or, in the case
of a right granted in tandem with an Option, the option price the Participant
would otherwise have been required to pay for such shares). Each Stock
Appreciation Right shall be subject to the terms and conditions set forth in
this Section 8 and to such other terms and conditions not inconsistent with the
Plan as shall be specified in a related Award Agreement, including, but not
limited to, limitations on the period or periods within which the Stock
Appreciation Right shall be exercisable and any restrictions as to the amount of
appreciation that may be recognized upon exercise of such Stock Appreciation
Right. No Stock Appreciation Right shall become exercisable prior to six months
after the date of grant. A Stock Appreciation Right granted in tandem with all
or a portion of a related Stock Option may be granted either at the time of the
grant of the related Option or, unless the related Option is an incentive Stock
Option, at any time thereafter during the term of the Option and shall be
exercisable only to the extent that the related Option is exercisable. The
Company may (if the Committee so determines) settle all or part of the Company's
obligation arising out of the exercise of a Stock Appreciation Right by the
payment of cash equal to the aggregate Fair Market Value of the shares of Common
Stock the Company would otherwise be obligated to deliver.
9. Restricted Stock. Restricted Stock is Common Stock that is subject to
forfeiture, restrictions on transfer and/or such other restrictions on incidents
of ownership, as the Committee may determine. A Restricted Stock Award shall
entitle the Participant to whom it is granted to receive, on the date or dates
designated in the Award Agreement, subject to such terms and conditions as the
Committee may determine, the number of shares of Common Stock specified in the
Award Agreement and shall require no payment or consideration by the
Participant, either on the date of grant or the date the restrictions are
removed, unless specifically required by the terms of the Award Agreement. The
Committee in its sole discretion may specify at the time a Restricted Stock
Award is granted that the recipient thereof is entitled to receive, currently or
on deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the Award, and the
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<PAGE>
Committee may specify that such amounts (if any) shall be deemed to have been
reinvested in additional Common Stock or otherwise reinvested.
10. Restricted Stock Units. Each Restricted Stock Unit shall entitle the
Participant to whom it is awarded to receive from the Company upon its
surrender, on or as soon as practicable after the date designated in the Award
Agreement, a payment, subject to such terms and conditions as the Committee may
determine (including those related to the form of such payment), equal to the
Fair Market Value of a share of Common Stock on the date the restrictions lapse.
The Committee in its sole discretion may specify at the time a Restricted Stock
Unit is awarded that the recipient thereof is entitled to receive, currently or
on a deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the Award, and the Committee may
specify that such amounts (if any) shall be deemed to have been reinvested in
Common Stock or otherwise reinvested.
11. Compliance With Applicable Laws. Notwithstanding any other provisions
of the Plan, the Committee may subject shares of Common Stock (including
Restricted Stock) awarded under the Plan to such conditions, limitations or
restrictions as the Committee determines to be necessary or desirable to comply
with any law or regulation or with the requirements of any securities exchange.
12. Changes in Capitalization, Similar Changes and Changes in Control. In
the event of any change in the outstanding shares of Common Stock by reason of
any stock dividend or split, recapitalization, merger, reorganization
(including, but not limited to, any spinoff, extraordinary dividend or other
distribution), consolidation, combination or exchange of shares or other similar
corporate change, the maximum aggregate number and class of shares with respect
to which Awards may be granted under the Plan and (where applicable) the
exercise or purchase price of and the number and class of shares covered by
outstanding Awards shall be equitably adjusted by the Committee. Such
determination of the Committee shall be conclusive; provided that in no event
shall the Committee adjust the exercise or purchase price for an Award under
which shares may be issued to a price less than the par value of the stock on
the date of the adjustment. Furthermore, if there is an adjustment in the
number of shares, no fraction of a share (or, if applicable, fraction of one
cent) shall be delivered with respect to any Restricted Stock or upon any
exercise of any other Award and, if an adjustment of the exercise or purchase
price shall result in a fraction of one cent, a full cent shall be included in
such price in lieu of such fraction. Any shares of stock or other securities
received by a Participant with respect to Restricted Stock in connection with
such an adjustment shall be subject to the same restrictions as was the
Restricted Stock at the time of the adjustment. If the Company shall be
consolidated or merged with another corporation, any
6
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<PAGE>
stock, securities or other property which any Participant is entitled to receive
by reason of such Participant's ownership of the shares of Restricted Stock
shall be deposited with the Company or its successor. Subject to the provisions
of Section 9 above, such stock, securities or other property shall also be
subject to the same restrictions as such Restricted Stock, and shall bear an
appropriate legend with respect thereto. Notwithstanding the foregoing
provisions of this Section 12 or any other provision of the Plan, other than
Section 14, the Committee may, in its sole discretion, at the time of granting
any Award under the Plan or at any time thereafter, provide for the acceleration
of vesting or the modification of any other terms of such Award in the event of
a change in control of the Company and may establish the conditions under which
such a change in control will be deemed to have occurred.
13. Employees' and Participants' Rights. Notwithstanding any other
provision of the Plan:
(a) No Right to Receive Award. No employee of the Company or any
Affiliate or other person shall have any claim or right to receive an Award
under the Plan except as the Committee (or, if authority is delegated as
provided in Section 3, the Chairman or the Chief Human Resources Officer)
shall have conferred in its discretion in the administration of the Plan.
(b) No Right to Continued Employment. Participation in the Plan shall
not confer upon any Participant any right with respect to continuation of
employment by the Company or any Affiliate, nor interfere with the right of
the Company or such Affiliate to terminate at any time employment of any
Participant.
(c) Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date
the Participant or the Participant's nominee becomes the stockholder of
record of the shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date the Participant or
the Participant's nominee becomes the stockholder of record of the shares,
unless the Award Agreement specifically requires such adjustment.
(d) Withholding. Except as otherwise provided by the Committee, the
deduction of withholding and any other taxes required by law will be made
from all amounts paid in cash. In the case of payments of Awards in shares
of Common Stock, the Participant shall be required to pay the amount of any
taxes required to be withheld prior to receipt of such
7
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<PAGE>
stock; provided, however, that the Committee may permit the withholding
obligation to be met in whole or in part by withholding a number of shares
otherwise deliverable under the Award, the Fair Market Value of which
equals the amount required to be withheld.
(e) Non-Assignability. An Award shall not be assignable or
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employees Retirement Income Security Act, or the rules
thereunder (but only if permitting such transfer will not affect the status
of the Award under the Code).
14. Amendment and Termination. The Board of Directors may amend, suspend
or terminate the Plan or any portion thereof at any time; provided, however,
that no such amendment, suspension or termination shall impair the rights of
Participants with respect to any outstanding Awards. Notwithstanding any other
provision of the Plan to the contrary, the Committee may amend the Plan to the
extent necessary for the efficient administration of the Plan, or to make it
practically workable or to conform to the provisions of any federal or state law
or regulation. Notwithstanding the foregoing provisions of this Section 14, in
no event shall any amendment be made without stockholder approval, as long as
such approval is required by Rule 16b-3 of the Exchange Act or by the rules of
the New York Stock Exchange, which shall:
(a) increase the total number of shares with respect to which Awards
may be granted under Section 5 of the Plan (subject to adjustment in
accordance with Section 12 above);
(b) reduce the option price under any Option below the Fair Market
Value of the stock subject to the Option determined as of the date of
grant;
(c) materially modify the requirements as to eligibility for
participation in the Plan; or
(d) withdraw the administration of the Plan from the Committee.
The Plan shall terminate automatically on February 25, 2001, except as to
outstanding Awards.
15. Effective Date. This Plan shall be effective as of February 25, 1991
subject to the approval by the affirmative vote of a majority of the shares
present or represented by proxy at the Annual Meeting of Stockholders to be held
on April 22, 1991 or any adjournment thereof and any necessary regulatory
approval. All Awards are subject to such approval and, notwithstanding any
other provision of the Plan, if any such
8
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<PAGE>
approval is not obtained, all such Awards as well as dividends paid or payable
with respect to such Awards shall be forfeited.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) 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 of 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 (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) 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.
(iii) 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, (A) all or substantially
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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 80% 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 standing BankAmerica Common Stock and Outstanding
BankAmerica Voting Securities, as the case may be, (provided, however, that, for
the purposes of this clause (A), 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), (B) 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
(C) 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.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) Except as provided in the following sentence and in (c) below, if
applicable to the Plan, in the event an employee terminates employment with the
Company following a Change in Control, his or her stock options and stock
appreciation rights granted under the Plan shall remain exercisable for a period
of three years following termination of employment, not to exceed
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the original term of the stock option or stock appreciation right. The
preceding sentence shall not apply to an incentive stock option unless the
option agreement gives the Plan committee discretion to permit the incentive
stock option to remain exercisable following termination of the optionholder's
employment, in which case the incentive stock option shall be exercisable for
three months following termination of employment without further committee
action.
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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Exhibit 11
----------
<TABLE>
<CAPTION>
BANKAMERICA CORPORATION
Computation of Earnings Per Common Share
(Dollar amounts in millions, except Year Ended December 31
per share data) ------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net income $ 2,873 $ 2,664 $ 2,176
Less: Preferred stock dividends 185 227 248
------------ ------------ ------------
NET INCOME APPLICABLE TO COMMON STOCK $ 2,688 $ 2,437 $ 1,928
============ ============ ============
Average number of common shares
outstanding 361,186,603 370,981,593 357,312,433
Average number of common and common
equivalent shares outstanding 368,027,522 375,555,919 359,793,169
Average number of common shares
outstanding - assuming full dilution 368,557,970 378,103,241 365,273,824
Earnings per common and common
equivalent share $ 7.31 $ 6.49 $ 5.36
Earnings per common share -
assuming full dilution $ 7.30 $ 6.45 $ 5.33
</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 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 average market
price of BankAmerica Corporation's (BAC) 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 BAC's common
stock for the period. Earnings per common share, assuming full dilution, also
includes the dilution which would result if BAC'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 and $16 million during the years ended December 31, 1995 and 1994,
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) 1996 1995 1994 1993 1992
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense (other
than interest on deposits) $ 2,713 $ 2,455 $1,505 $1,215 $1,126
Interest payments on trust preferred
securities/a/ 7 - - - -
Interest factor in rent expense 125 120 109 112 95
Other - - 3 2 1
------- ------- ------ ------ ------
$ 2,845 $ 2,575 $1,617 $1,329 $1,222
======= ======= ====== ====== ======
Earnings:
Income from operations $ 2,873 $ 2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,900 1,903 1,541 1,474 1,190
Fixed charges 2,845 2,575 1,617 1,329 1,222
Other (9) (12) (55) (39) (14)
------- ------- ------ ------ ------
$ 7,609 $ 7,130 $5,279 $4,718 $3,890
======= ======= ====== ====== ======
Ratio of earnings to fixed charges,
excluding interest on deposits 2.67 2.77 3.26 3.55 3.18
INCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense $ 8,072 $ 7,378 $4,842 $4,186 $4,895
Interest payments on trust preferred
securities/a/ 7 - - - -
Interest factor in rent expense 125 120 109 112 95
Other - - 3 2 1
------- ------- ------ ------ ------
$ 8,204 $ 7,498 $4,954 $4,300 $4,991
======= ======= ====== ====== ======
Earnings:
Income from operations $ 2,873 $ 2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,900 1,903 1,541 1,474 1,190
Fixed charges 8,204 7,498 4,954 4,300 4,991
Other (9) (12) (55) (39) (14)
------- ------- ------ ------ ------
$12,968 $12,053 $8,616 $7,689 $7,659
======= ======= ====== ====== ======
Ratio of earnings to fixed charges,
including interest on deposits 1.58 1.61 1.74 1.79 1.53
</TABLE>
SEE NOTES ON PAGE 3 OF THIS EXHIBIT
<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) 1996 1995 1994 1993 1992
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends
Interest expense (other
than interest on deposits) $ 2,713 $ 2,455 $1,505 $1,215 $1,126
Interest payments on trust preferred
securities/a/ 7 - - - -
Interest factor in rent expense 125 120 109 112 95
Preferred dividend requirements/b/ 307 389 424 423 304
Other - - 3 2 1
------- ------- ------ ------ ------
$ 3,152 $ 2,964 $2,041 $1,752 $1,526
======= ======= ====== ====== ======
Earnings:
Income from operations $ 2,873 $ 2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,900 1,903 1,541 1,474 1,190
Fixed charges, excluding preferred
dividend requirements 2,845 2,575 1,617 1,329 1,222
Other (9) (12) (55) (39) (14)
------- ------- ------ ------ ------
$ 7,609 $ 7,130 $5,279 $4,718 $3,890
======= ======= ====== ====== ======
Ratio of earnings to fixed charges,
and preferred dividends, excluding
interest on deposits 2.41 2.41 2.59 2.69 2.55
INCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends
Interest expense $ 8,072 $ 7,378 $4,842 $4,186 $4,895
Interest payments on trust preferred
securities/a/ 7 - - - -
Interest factor in rent expense 125 120 109 112 95
Preferred dividend requirements/b/ 307 389 424 423 304
Other - - 3 2 1
------- ------- ------ ------ ------
$ 8,511 $ 7,887 $5,378 $4,723 $5,295
======= ======= ====== ====== ======
Earnings:
Income from operations $ 2,873 $ 2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,900 1,903 1,541 1,474 1,190
Fixed charges, excluding preferred
dividend requirements 8,204 7,498 4,954 4,300 4,991
Other (9) (12) (55) (39) (14)
------- ------- ------ ------ ------
$12,968 $12,053 $8,616 $7,689 $7,659
======= ======= ====== ====== ======
Ratio of earnings to fixed charges,
and preferred dividends, including
interest on deposits 1.52 1.53 1.60 1.63 1.45
</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/Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
/b/Preferred stock dividend requirements represent pretax earnings necessary to
cover preferred stock dividends declared during the years ended December 31,
1996, 1995, 1994, 1993, and 1992 of $185 million, $227 million, $248 million,
$241 million, and $169 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.
q:\sec\msword\10k\1996\exhib12b.doc
<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.
q:\sec\msword\10k\1996\exhib12b.doc
<PAGE>
BankAmerica Corporation
(Photo appears here)
Sideview of three athletes running (two men and a woman) wearing T-shirts with
BankAmerica Corporation logo.
1996 annual report
<PAGE>
- -------------------------------------------------------------------------------
Letter to Shareholders 2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Financial Review
- -------------------------------------------------------------------------------
Overview 17
Business Sectors 19
Operating Leverage and Capital Management 22
Results of Operations 23
Net Interest Income 23
Noninterest Income 23
Noninterest Expense 26
Income Taxes 27
Comparison of 1995 Versus 1994 27
Balance Sheet Review 28
Overview 28
Pending Accounting Standards 28
Loan Portfolio Management 28
Allowance for Credit Losses 33
Nonperforming Assets 36
Off-Balance-Sheet Financial Instruments 38
Credit-Related Financial Instruments 38
Foreign Exchange and Derivatives Contracts 38
Risk Management 39
Credit Risk Management 39
Off-Balance-Sheet Credit Risk 39
Operational Risk Management 40
Market Risk Management 40
Overview 40
Trading Activities 41
Other Banking Activities 42
Liquidity Risk Management 44
Overview 44
Liquidity Review 44
Capital Management 45
Forward-Looking Statements 47
- -------------------------------------------------------------------------------
Consolidated Financial Statements
- -------------------------------------------------------------------------------
Report of Management 48
Report of Independent Auditors 49
Consolidated Financial Statements 50
Notes to Consolidated Financial Statements 54
- -------------------------------------------------------------------------------
Corporate Information
- -------------------------------------------------------------------------------
Boards of Directors/BankAmerica Corporation
and Bank of America NT&SA 86
Principal Officers/BankAmerica Corporation 87
Senior Management Council/Bank of America NT&SA 88
BankAmerica Corporate Governance Principles 89
BankAmerica Behind the Scenes 90
Glossary of Common Banking Terms 92
On the Cover: From left, Bank of America employees Roger Hancock, Nikolai
Safavi, and Valerie Scott-St. James.
<PAGE>
1996
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 the
third-largest bank holding company in the United States based on total assets at
December 31, 1996.
BankAmerica's principal banking subsidiaries operate full-service branches in
California, Washington, Texas, Arizona, Illinois, Oregon, Nevada, New Mexico,
Hawaii, Idaho, and Alaska, as well as consumer finance offices in 35 states,
corporate banking offices in major U.S. cities, and branches, corporate offices,
and representative offices in 37 other countries and territories. BancAmerica
Securities, Inc. is a primary dealer in U.S. government securities. It
underwrites and trades in federal agency, corporate, state, and municipal
obligations, as well as mortgage-backed securities, asset-backed securities, and
money market instruments. It also provides advisory and corporate
finance/capital structuring services in areas such as asset sales, mergers and
acquisitions, private placements, and loan syndications. BankAmerica Business
Credit is one of the largest commercial finance companies in the United States,
serving businesses throughout the country and Canada. Throughout the United
States, BankAmerica Mortgage originates and services home loans and BankAmerica
Housing Services makes loans for manufactured housing. BA Merchant Services,
Inc. provides payment processing and related information products and services
to merchants throughout the United States who accept credit and debit cards as
payment for goods and services. Bank of America Community Development Bank
provides financing for small businesses and affordable housing in 15 states,
plus Washington D.C.
- --------------------------------------------------------
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), and Continental Bank Corporation (Continental).
<TABLE>
<CAPTION>
Quarterly Earnings Per Share (plot point graph in non-EDGAR version)
1995 1996
<S> <C> <C>
Q1 $1.46 $1.79
Q2 1.56 1.84
Q3 1.72 1.88/*/
Q4 1.74 1.93
</TABLE>
/*/Adjusted to include the effect of a one-time assessment for the Savings
Association Insurance Fund (SAIF).
<TABLE>
<CAPTION>
Quarterly Return on Average Common Equity (plot point graph in non-EDGAR
version)
1995 1996
<S> <C> <C>
Q1 13.86% 15.19%
Q2 14.30 15.42
Q3 15.09 15.23/*/
Q4 14.96 15.24
</TABLE>
/*/ Adjusted to exclude the effect of a one-time assessment for SAIF.
<TABLE>
<CAPTION>
Quarterly Expense-to-Revenue Ratio/*/ (plot point graph in non-EDGAR version)
1995 1996
<S> <C> <C>
Q1 59.8% 55.8%
Q2 59.7 55.1
Q3 56.4 54.5
Q4 56.6 54.0
</TABLE>
/*/Excludes net other real estate owned expense, amortization of intangibles,
payments related to trust preferred securities; and the effect of a one-time
assessment for SAIF in the third quarter of 1996, a fourth-quarter 1996
restructuring charge, and a fourth-quarter 1996 gain on the initial public
offering of BA Merchant Services, Inc. common stock.
1
<PAGE>
To Our Shareholders
BankAmerica Corporation logo appears to the left of the quote by
David A. Coulter
- --------------------------------------------------------------------------------
"The overriding governing objective of maximizing shareholder value has been
firmly established at BankAmerica. We made good progress in 1996, both in our
operations and in our financial results. But that's just the beginning of what I
would like to see BankAmerica accomplish."
-- David A. Coulter, Chairman and CEO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Introduction
- --------------------------------------------------------------------------------
In this first annual report since I have been Chairman and CEO of BankAmerica, I
want to discuss in my own words how our company is performing, and more
important, how we plan on continuing to improve our performance in the future.
I'll present as clear a picture as I can of what BankAmerica is doing to meet
your expectations as shareholders and also the expectations of our retail and
wholesale customers and our employees.
First, 1996 was a good year for BankAmerica. We made progress on two primary
financial objectives: increasing earnings per share by 12.6 percent to $7.31 and
improving return on average common equity by 42 basis points to 15.00 percent.
We achieved this by paying close attention to the fundamentals: managing risk
effectively, managing our operating leverage by keeping core expense growth well
below core revenue growth, and managing capital in a disciplined way. And the
price of our common stock increased by 54 percent in 1996. While the market for
bank stocks was certainly favorable during the year, BankAmerica had the biggest
increase of the 15 largest U.S. banking companies for the year.
The overriding governing objective of maximizing shareholder value has been
firmly established at BankAmerica. This objective serves as the touchstone for
all we do. However, in order to achieve it, we must accelerate our focus on
providing excellent customer service, motivating the best group of employees
possible, and continuing to invest in building franchise value over the long
term.
The basic value we create for shareholders stems from a broad and valuable set
of customers. We continue to analyze and experiment with how best to build on
relationships at both the retail and wholesale levels. We are also working to
infuse a spirit of teamwork throughout the organization, so that we can cut
across departmental boundaries to meet a wide range of customer needs
seamlessly.
Our intent is to be recognized as one of the world's best financial
institutions, aggressively adapting our approach to a changing environment,
while making our actions pay for investors. In the following pages, I'll
describe steps taken in 1996 to move this process forward.
- --------------------------------------------------------------------------------
2
<PAGE>
(Photo appears here)
Chairman and CEO Dave Coulter in video broadcast studio
Chairman and CEO Dave Coulter announces a new stock option plan for employees
via live satellite broadcast
- --------------------------------------------------------------------------------
Selected Financial Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year 1996 1995
- ---------------------------------------------------
<S> <C> <C>
Net Income $ 2,873 $ 2,664
Earnings per
common share 7.31 6.49
At Year End
- ---------------------------------------------------
Loans $165,415 $155,373
Total assets 250,753 232,446
Deposits 168,015 160,494
Stockholders' Equity 20,713 20,222
Selected Ratios 1996 1995
- ---------------------------------------------------
Rate of return
average common equity 15.00% 14.58%
Ratio of common
equity to total assets 7.37% 7.57%
Tier 1 risk-based
capital ratio 7.77% 7.35%
</TABLE>
(Dollar amounts in millions, except per share data)
3
<PAGE>
(Photo appears here)
A hand sliding a Bank of America Versatel check card through a point-of-sale
machine is shown primarily on page 4 and continues on to page 5.
- --------------------------------------------------------------------------------
Retail Banking
- --------------------------------------------------------------------------------
It is generally recognized that the retail banking environment is undergoing
significant change. With size, scale, and scope in a number of very attractive
markets, we are adapting BankAmerica's long-term economic framework to meet the
change.
People today expect an expanded array of choices to access their banking
services. Merely having branches everywhere you look isn't enough anymore.
Today, we conduct two telephone and electronic transactions for every
traditional teller transaction.
BankAmerica has responded by using information in its extensive corporate "data
store" to determine exactly what our customers want and to develop a dynamic,
multi-channel distribution system which includes both traditional and in-store
branches, ATMs, telephones, and personal computers. We recognize that the
diversity of our customers will be reflected in the diversity of their choices,
and we are determined to structure an open and user-friendly system to allow for
those choices.
We have made extensive investments in our interactive banking infrastructure so
customers can plug into their banking services through a variety of
telecommunications channels. Customers who prefer opening accounts, applying for
loans, transferring funds, or conducting other transactions by phone, and
customers who access our HomeBanking service via personal computer, can now do
so 24 hours a day, seven days a week.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
Retail Banking
- --------------------------------------------------------------------------------
In this age of technology, quality service has tremendous importance. We believe
that we're making fundamental and significant improvements in customer service,
not only through the use of technology and expanded options for accessing
banking services, but also through new levels of person-to-person contact. One
innovation we have recently implemented, for example, is the addition of a team
of specialists whom we call financial relationship managers. We expect to have
1,300 of these experienced, highly trained bankers in place throughout our
retail system by the end of 1997. They will be responsible for building
relationships with our most valuable customers and attracting a high proportion
of those customers' assets and liabilities.
The financial relationship management program is an example of our ability to
experiment with new ideas on a small scale, then build a larger program from our
best practices. In this case, the program was designed by staff from throughout
our system, then implemented in phases in the Northwest, California, and the
Southwest.
Some of our retail businesses are truly nationwide in scope. Mortgage banking,
for example, continues to grow, not just in the West, but in states in which we
have no traditional branch franchise. In those states, we can originate loans
through a variety of channels and service them efficiently at centralized
processing facilities.
Our manufactured housing operation, which makes loans for the purchase of
factory-built homes, is also growing rapidly, both inside and outside of our
traditional service areas. Manufactured housing is increasingly a prime
affordable housing option for many Americans, particularly first-time
homebuyers, and BankAmerica is one of the nation's largest lenders for these
homes.
- --------------------------------------------------------------------------------
(Photo appears here)
A continuation of the photo on page 4 shows the right hand corner of the
point-of-sale machine.
connections
<TABLE>
<CAPTION>
Daily Customer Contacts
<S> <C>
ATM and Point-of-Sale Transactions 2,600,000
Teller Transactions 1,650,000
Teleservicing Calls 650,000
Loan-by-Phone Calls 4,350
Credit Card Transactions 600,000
Visits to Web Site 100,000
</TABLE>
5
<PAGE>
(Photo appears here)
A woman is portrayed accessing Bank of America's Homebanking service. She is
sitting at a table at home facing a computer with her checkbook open. Photo is
primarily on page 6 and continues on to page 7.
convenience
6
<PAGE>
http://www.bankamerica.com
(Photo appears here)
A continuation of the photo on page 6 shows the rest of the table and a vase
filled with flowers.
(Photo appears here)
Small photo inset portrays three customer service representatives on the
telephone.
- --------------------------------------------------------------------------------
Retail Banking
- --------------------------------------------------------------------------------
Our international retail activities are focused mainly in the Pacific Rim
through Bank of America (Asia), Ltd., with operations in Hong Kong, Taiwan,
India, Singapore, and the Philippines. We grew this business aggressively in
1996 and this region represents an excellent competitive opportunity for us in
the future.
We also took a number of capital allocation steps in the retail area in 1996, as
part of our overall capital strategy. We established BA Merchant Services, Inc.,
consolidated our domestic credit and debit card merchant processing operations
into this new company, then sold a portion of its common stock in a public
offering, which resulted in a $147 million nontaxable gain for our shareholders.
This action helps to create additional options for funding the future growth of
the business, while retaining control within BankAmerica. In addition, we began
to manage our retail balance sheet more actively, with significant sales and
securitizations from our mortgage and credit card portfolios. We sold nearly $3
billion of variable- and fixed-rate conforming mortgage loans during 1996 and
securitized approximately $1.5 billion of credit card receivables.
The transformation of the retail banking business is by no means complete. We
will continue to manage our channels of distribution to satisfy customer needs,
while retaining the power of the BankAmerica brand. Our various asset and
liability products must be capable of matching those provided by focused,
non-bank competitors. In some cases, it may be more economical to distribute
products provided by other manufacturers. Finally, in everything we do, we must
deliver the quality of service customers expect. That's as important in the long
run as products and distribution channels.
- --------------------------------------------------------------------------------
7
<PAGE>
(Photo appears here)
Background is a map of the world on pages 8 and 9. Page 8 shows Europe, Africa,
and Asia.
(Photo appears here)
Photo inset portrays three businessmen in suits discussing business.
8
<PAGE>
- --------------------------------------------------------------------------------
Wholesale Banking
- --------------------------------------------------------------------------------
In the wholesale banking business, we have determined that the market is far too
competitive and our infrastructure too large to support a single transaction per
client. Instead, our economic model builds on broad, multi-product relationships
with corporate clients and recognizes that these relationships will have peaks
and valleys of usage. We intend to be among the top providers of financial
services in relationships with wholesale clients.
We recognize that the increasing rate of market globalization affects our
clients throughout the world and creates new challenges. To meet these changing
needs and market demands, we are focusing on our clients' most important global
challenges and growth opportunities. Our positioning in the broad Pacific Rim
enables us to serve clients in the world's highest growth markets, while our
European operations provide centralized treasury management services and access
to the world's capital markets.
Product skills and geographic capabilities are only part of the picture. The
most significant competitive factor in this business is the ability of our
client-focused teams to understand a customer's business, anticipate needs, then
tailor customized solutions to meet those needs. Time and time again, our
wholesale institutional clients in both the public and private sectors are
finding that they can use
- --------------------------------------------------------------------------------
capabilities
(Photo appears here)
Background is a continuation of a map of the world, showing North, Central, and
South America.
9
<PAGE>
(Photo appears here)
Photo portrays four employees working in a Bank of America office, primarily on
page 10
client focus
10
<PAGE>
- --------------------------------------------------------------------------------
Wholesale Banking
- --------------------------------------------------------------------------------
BankAmerica in ways not usually associated with a traditional U.S. commercial
bank. Indeed, we now have one of the most significant global corporate
franchises of any U.S. bank -- ranked first for the most primary relationships
with large U.S. corporations.
We are determined to enhance our reputation as a high quality provider in a
number of ways. We have created what we call our Global Network Initiative to
enable us to mobilize a broad array of experts quickly to meet the specialized
needs of our largest global clients. We have also prioritized our key industry
specializations so we can concentrate on the areas we know the best, such as
transportation, energy, technology, health services and entertainment. We pride
ourselves on our level of client responsiveness in capital raising for both
standard transactions and mega-deals.
In addition, we are looking carefully at each of our wholesale businesses,
products, and relationships to ensure that we have appropriate capital allocated
to those that generate the highest returns. We are resolved either to improve
underperforming businesses within a reasonable time frame, or to invest our
capital in more productive ways. This capital allocation process resulted in a
number of decisions in 1996 that we think will help us improve the effectiveness
and profitability of the franchise:
. We increased the size of our high-performing leasing business by acquiring a
$1.8 billion portfolio of lease-related assets from subsidiaries of Ford
Motor Company.
. We announced a new business strategy in Europe that reduces the capital
allocated to traditional lending activities, realigns our capital markets
resources, and pursues growth opportunities in specific products and selected
emerging markets such as Russia and Poland. In fact, we opened a
representative office in Warsaw in 1996.
. We reshaped our operations in Japan to align our business more closely with
client needs. We are focusing more on capital raising and capital markets
activities where we are highly competitive, and less on traditional credit,
which many of our Japanese clients prefer to obtain from local banks.
. We are streamlining our operations around the world by centralizing
management of branch back-office activities and some of our processing
activities for foreign exchange, options, derivatives, and other
transactions. The objective is to keep key line managers fully engaged in
marketing, while centralizing as much of our operations and administrative
work as possible.
- --------------------------------------------------------------------------------
(Photo appears here)
A continuation of the Bank of America office is shown on page 11.
The Market View
Through multiple industry and independent surveys, Bank of America has
demonstrated leadership across a broad spectrum of products and services:
. Number two in agent/co-agent volume in loan syndication both in the
U.S. and globally.
. Named number one global lead arranger by Project Finance International.
. Largest number of "most important" relationships with U.S. clients.
. Named number one arranger of syndicated loans in Latin America by
LatinFinance magazine for the third consecutive year.
. One of the top global providers of cash management and foreign exchange.
. Named Project Finance Advisor of the Year for 1996 by Project Finance
International and Best Swaps House of 1996 by Finance Asia.
11
<PAGE>
(Photo appears here)
Three male athletes wearing T-shirts with the BankAmerica Corporation logo are
shown running. Photo is continued on page 13.
commitment
12
<PAGE>
The "Take Ownership!" logo and trademark symbol appear at the top and center
page above the heads of the athletes in the picture
(Photo appears here)
A continuation of the photo on page 12, page 13 shows four athletes running
(three men and one woman), wearing T shirts with the BankAmerica Corporation
logo.
- --------------------------------------------------------------------------------
Employee Programs
- --------------------------------------------------------------------------------
In an industry like financial services, where competitors can replicate our
products and delivery systems relatively quickly, the quality of our people is
our main competitive advantage. I believe that the key to grooming a team that
stays focused on maximizing shareholder value is very simple and
straightforward: Put employees in the same position as shareholders. That's why
I am so excited about our new Take Ownership! TM program.
Under Take Ownership!, employees at all levels, including part-time and hourly
employees, are granted stock options at six-month intervals. The ultimate value
of the options depends on whether the stock price increases, and by how much.
Our goal is to encourage employees to act like owners by rewarding them
according to how well the corporation performs for its shareholders.
I think stock options can be an effective tool for encouraging employees to stay
with the company and to give you, our shareholders, their very best efforts. I
also think it's important to grant options to employees because of the kind of
work we ask them to do. As a result of the rapid changes taking place at
BankAmerica and throughout our industry, our employees have to be especially
creative and flexible. They have to make important and difficult decisions every
day, some of which can lead to changes in the nature of their own jobs. They are
making these decisions in the interests of shareholders and I believe they
should share in the rewards.
Our overall philosophy with regard to human resources can be summed up in a
single word: inclusion. We strive to maintain a diverse workforce in which all
participants are encouraged and given the resources they need to do their best
work, and then are compensated and rewarded appropriately.
- --------------------------------------------------------------------------------
13
<PAGE>
maximize shareholder
(Photo appears here)
Photo covers page 14 and 15 and portrays traders on the floor of an exchange
with quotes superimposed.
- --------------------------------------------------------------------------------
Working for Shareholders
- --------------------------------------------------------------------------------
The point of all the work we do for customers and employees, of course, is to
produce returns for our shareholders. We made good progress in 1996, both in our
operations and in our financial results. But that's just the beginning of what I
would like to see BankAmerica accomplish.
In 1997, we will continue to execute on the necessary conditions for a
top-performing financial institution that I mentioned at the outset of this
letter: effective risk management, strong operating leverage, and disciplined
capital management.
Risk management includes credit, market, and interest rate risk, all of which
are discussed in detail later in this report. I believe we've done a fine job in
these areas so far, establishing solid risk-management processes as a core
competency. And our results speak for themselves.
Favorable operating leverage is achieved by restricting core expense growth to a
significantly slower pace than core revenue growth. Expense control is a
continuing discipline at BankAmerica. We have made progress recently in a number
of areas, including the restructuring and, in some cases, outsourcing of some of
our businesses and staff support units for improved efficiency. Consolidating
most of our subsidiary banks into a single legal entity will produce additional
ongoing savings. And an initiative we have undertaken to coordinate and
centralize our purchasing activities is producing significant savings.
In my view, the operating leverage numbers for 1996 are good. Noninterest
expense increased only 4 percent over the past four quarters. The adjusted
expense-to-revenue ratio declined in each of those quarters. In times when
competitive pressures sometimes limit revenue growth, maintaining appropriate
operating leverage can still produce acceptable returns.
- --------------------------------------------------------------------------------
14
<PAGE>
value
(Photo appears here)
Continuation of photo on page 14 portraying traders on the floor of an exchange
with quotes superimposed.
<TABLE>
<CAPTION>
Total Shareholder Return* (bar chart in non-EDGAR version)
(in percent)
1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
3.0 39.8 33.4 2.8 (11.5) 69.4 58.1
*Appreciation in price of common stock plus common stock dividends
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
Working for Shareholders
- --------------------------------------------------------------------------------
Disciplined capital management begins with a focus on the economic profit
generated by key businesses - a measure of the absolute return in excess of the
cost of capital for a specific business. Fundamentally, growth should relate to
increases in economic profit. Understanding the amount of economic profit
BankAmerica's businesses are capable of generating over time is a key
determinant in our capital management approach.
In 1996, we returned approximately 60 percent of the Tier 1 capital we generated
to shareholders in the form of dividends, preferred stock redemptions, and
common stock repurchases. We increased the common stock dividend by 13 percent
in February of 1997, following a 17 percent increase in 1996. Also in February
1997, we further increased our stock repurchase program, establishing new
authorization for up to $3 billion of common stock by the end of 1998. We
repurchased 17 million shares of common stock in 1996, reducing common equity by
$1.35 billion.
In addition to these necessary conditions for a top-performing financial
institution, real success will come from continuing to expand our franchise and
build our brand. We recognize that we cannot merely save our way to long-term
prosperity, but we remain intent on pursuing only those strategic moves which
add to shareholder value within a reasonable timeframe.
I believe that only by performing well for our shareholders can we keep the
company in a position to also perform well for its customers and its employees.
High-performing businesses can then contribute to the community, which is
becoming increasingly important in our society. With some of the burden of
providing such necessities as housing, welfare, health care, and job
opportunities shifting from the public to the private sector, BankAmerica will
continue to meet that challenge head-on.
The decisions we make at BankAmerica, and the actions we take, affect people all
over the globe. In order to appreciate how extensive our operations really are,
I'd invite you to take a behind-the-scenes look at some of our activities on
pages 90-91.
I truly believe that if we succeed in the endeavors I have outlined here, we can
make BankAmerica the best place to bank, the best place to work, and the best
place to invest.
In closing, I would like to thank our Board of Directors for their support in my
initial year as Chief Executive and specifically recognize the long-term
contributions of directors Andrew Brimmer and Ignacio Lozano, who will be
retiring as of the 1997 Annual Meeting.
/s/David A. Coulter
David A. Coulter
Chairman and Chief Executive Officer
San Francisco, California
February 6, 1997
character
(Photo appears here)
Photo of foreign currency
16
<PAGE>
BankAmerica Corporation 1996
- ----------------------------- Financial Review ---------------------------------
OVERVIEW
BankAmerica Corporation (the parent) and its subsidiaries (BAC) is the third
largest bank holding company in the United States, with total assets of $250.8
billion and total deposits of $168.0 billion at December 31, 1996. At year-end
1996, BAC's closing stock price was $99.75 per common share, up 54 percent from
year-end 1995.
During 1996, BAC reported record earnings of $2,873 million, reflecting BAC's
ongoing efforts to expand revenues and contain costs. Also during 1996, BAC
repurchased 17.0 million shares of its common stock for $1,351 million, and
redeemed $399 million of its preferred stock. In addition, BAC continued to
maintain capital ratios above the regulatory "well-capitalized" levels.
<TABLE>
<CAPTION>
Price Range of Common Stock (bar chart in non-EDGAR version)
(in dollars)
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
High 49.75 55.50 50.25 68.50 103.875
Low 35.375 40.375 38.375 39.50 58.75
</TABLE>
BAC's annual earnings increased $209 million, or 8 percent, from $2,664 million
in 1995. Earnings per share for 1996 were $7.31, an increase of 13 percent from
$6.49 in 1995. Cash earnings per share, which are reflected in the table on page
18 and exclude amortization of intangibles, were $8.05 for 1996, an increase of
11 percent from $7.23 in 1995. Return on average common equity was 15.00 percent
in 1996, up 42 basis points from 14.58 percent in 1995.
Net interest income was $8,587 million in 1996, up $125 million from 1995. BAC's
net interest margin was 4.23 percent in 1996, compared with 4.51 percent in
1995. Noninterest income increased $866 million, or 19 percent, from 1995 to
$5,412 million in 1996. Noninterest expense was $8,341 million in 1996, up $340
million from $8,001 million in 1995.
Total loans at year-end 1996 were $165.4 billion, up $10.0 billion, or 6
percent, from $155.4 billion at year-end 1995. Average loans in 1996 increased
$11.5 billion, or 8 percent, from 1995.
Total nonaccrual assets were $1,118 million at year-end 1996, down $773 million,
or 41 percent, from year-end 1995. In addition, BAC's nonaccrual coverage ratio
(the allowance for credit losses to total nonaccrual assets) was 315 percent at
year-end 1996, up from 188 percent at December 31, 1995.
- --------------------------------------------------------------------------------
Ratio and Stock Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------
1996/a/ 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED FINANCIAL RATIOS
Expense to revenue/b/ 54.85% 58.08% 60.42%
Rate of return (based on net income) on:
Average common equity 15.00 14.58 13.20
Average total equity 14.18 13.62 12.30
Average total assets 1.19 1.17 1.08
CAPITAL RATIOS
Ratio of common equity to total assets 7.37 7.57 7.34
Ratio of average total equity to average total assets 8.38 8.61 8.76
Common dividend payout ratio 29.03 28.01 29.63
STOCK DATA
Book value per common share at year end $51.99 $47.90 $42.63
Closing common stock price 99 3/4 64 3/4 39 1/2
Number of common shares outstanding at year end/c/ 355,266,895 367,447,202 371,182,004
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Except for the expense-to-revenue ratio, includes the income statement
effect of the following items in 1996, which are more fully described in
this section: a $147 million nontaxable gain from the initial public
offering of BA Merchant Services, Inc. common stock; a $280 million pre-tax
restructuring charge; and an $82 million pre-tax one-time Savings
Association Insurance Fund (SAIF) assessment.
/b/Excludes net other real estate owned expense, amortization of intangibles,
payments related to corporation obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely junior subordinated
deferrable interest debentures of the corporation, a nontaxable gain from
the initial public offering of BA Merchant Services, Inc. common stock, a
restructuring charge, and a one-time SAIF assessment.
/c/There were 139,235 common stockholders of record at January 31, 1997.
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.
17
<PAGE>
BankAmerica Corporation 1996
- ----------------------------- Financial Review ---------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Selected Financial Data
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------------
(dollar amounts in millions, except per share data) 1996/a/ 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Interest income $ 16,659 $ 15,840 $ 12,384 $ 11,627 $ 11,613
Interest expense 8,072 7,378 4,842 4,186 4,895
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income 8,587 8,462 7,542 7,441 6,718
- -----------------------------------------------------------------------------------------------------------------------------
Provision for credit losses 885 440 460 803 1,009
Noninterest income 5,412 4,546 4,135 4,261 3,649
Noninterest expense 8,341 8,001 7,500 7,471 6,676
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 4,773 4,567 3,717 3,428 2,682
- -----------------------------------------------------------------------------------------------------------------------------
Provision for income taxes 1,900 1,903 1,541 1,474 1,190
- -----------------------------------------------------------------------------------------------------------------------------
Net Income $ 2,873 $ 2,664 $ 2,176 $ 1,954 $ 1,492
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Earnings per common and common equivalent share $ 7.31 $ 6.49 $ 5.36 $ 4.79 $ 4.24
Earnings per common share -- assuming full dilution 7.30 6.45 5.33 4.76 4.21
Dividends declared per common share 2.16 1.84 1.60 1.40 1.30
BALANCE SHEET DATA AT YEAR END
Loans $165,415 $155,373 $140,912 $126,556 $126,611
Total assets 250,753 232,446 215,475 186,933 180,646
Deposits 168,015 160,494 154,394 141,618 137,883
Long-term debt and subordinated capital notes 15,785 15,328 15,428 14,115 16,395
Common equity 18,471 17,599 15,823 14,165 12,509
Total equity 20,713 20,222 18,891 17,144 15,488
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Includes the income statement effect of the following items which are more
fully described in this section: a $147 million nontaxable gain from the
initial public offering of BAMSI common stock during the fourth quarter of
1996; a $280 million pre-tax restructuring charge incurred in the fourth
quarter of 1996; and an $82 million pre-tax one-time SAIF assessment in the
third quarter of 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Summary of Results Excluding Amortization of Intangibles/a/
- -------------------------------------------------------------------------------
Year Ended December 31
-------------------------
(dollar amounts in millions, except per share data) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $3,145 $2,946 $2,442
Cash earnings per common and common
equivalent share 8.05 7.23 6.10
Rate of return on average
common equity 16.52% 16.26% 15.03%
- --------------------------------------------------------------------------------
</TABLE>
/a/For purposes of this table, amortization amounts are related to those
intangibles that are deducted from Tier 1 capital under regulatory
guidelines. These amortization amounts were excluded from BAC's results and
totaled $272 million, $282 million, and $266 million for the years ended
December 31, 1996, 1995, and 1994, respectively.
As part of its efforts to improve efficiency by eliminating redundant functions
and reducing costs, BAC began the process of combining its interstate banks into
Bank of America NT&SA (the bank). During 1996, Bank of America Oregon and
BankAmerica National Trust Company were merged into the bank. On January 1,
1997, Bank of America Alaska, N.A., Bank of America Arizona, Bank of America
Nevada, Bank of America New Mexico, N.A., and Bank of America NW, National
Association (formerly Seattle-First National Bank) were merged into the bank.
BAC's expense-to-revenue ratio, or efficiency ratio, was 54.85 percent in 1996.
This ratio was adjusted to exclude: net other real estate owned expense;
amortization of intangibles; payments related to the corporation obligated
mandatorily redeemable preferred securities of subsidiary trusts holding solely
junior subordinated deferrable interest debentures of the corporation (trust
preferred securities) which are more fully discussed in Note 15 of the Notes to
Consolidated Financial Statements on page 64; the gain from the initial public
offering of BA Merchant Services, Inc. (BAMSI) common stock, which is more fully
discussed below and on page 25; the restructuring charges, which are more fully
discussed below, on page 26, and in Note 26 of the Notes to Consolidated
Financial Statements on page 81; and the one-time Savings Association Insurance
Fund (SAIF) assessment, which is more fully discussed below, on page 27, and in
Note 27 of the Notes to Consolidated Financial Statements on page 81.
In the fourth quarter of 1996, BAC completed the initial public offering of
16,100,000 shares of Class A Common Stock of BAMSI, a subsidiary of BAC,
resulting in a $147 million nontaxable gain, which increased earnings per share
by $0.40 and the return on average common equity by 82 basis points.
As a result of decisions to implement a number of changes in its business
activities, BAC recorded a pre-tax restructuring charge of $280 million in the
fourth quarter of 1996, which reduced earnings per share by $0.46 and the return
on average common equity by 94 basis points.
During the third quarter of 1996, Congress passed legislation that would
recapitalize the SAIF to 1.25 percent of insured deposits as prescribed by the
Federal Deposit Insurance Corporation Improvement Act. As a result of this
legislation, which imposed a one-time assessment on SAIF deposits held on March
31, 1995, BAC recognized a charge of $82 million, which reduced earnings per
share by $0.13 and the return on average common equity by 27 basis points.
18
<PAGE>
BankAmerica Corporation 1996
- ----------------------------Financial Review------------------------------------
During 1996, BAC produced tax advantaged Tier 1 capital through four trusts. At
December 31, 1996, trust preferred securities totaled $1,477 million, net of
deferred issuance costs. For more information, refer to Note 15 of the Notes to
Consolidated Financial Statements on page 64.
BUSINESS SECTORS
For management reporting purposes, BAC segregates its operations into five
primary business or operating sectors. BAC's Vice Chairmen oversee the
operations of the businesses that comprise the sectors and are responsible for
each sector's 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 report to the Chief
Executive Officer. In addition, there is a corporate sector referred to as
"Other," which primarily includes the residual revenues and expenses not
allocated to the business sectors.
BAC determines its business sector results based on an internal management
reporting system that allocates certain revenues, expenses, assets, and
liabilities to each business. Furthermore, for internal business sector
monitoring, the unallocated allowance for credit losses and related provision
for credit losses are assigned to the businesses. Equity is assigned to each
business on a risk-adjusted basis taking into account goodwill and tax-effected
identifiable intangibles. While BAC manages its interest-rate risk hedging
activities centrally, the effects of hedging are generally allocated to the
businesses through a transfer pricing process. As a result, the effects of
hedging interest rate risk are reflected in the appropriate business sectors. In
addition, certain unallocated expenses and the effects of some hedging
activities are included in the Other sector.
The information set forth in the tables on pages 19-22 reflects the condensed
income statements and selected average balance sheet line items and financial
ratios by business sector. 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 comparability. In addition, the expense-to-revenue ratios have been
adjusted to exclude net other real estate owned expense and amortization of
intangibles.
CONSUMER BANKING
BAC's Consumer Banking Group served over eleven million households in 1996,
which gave it the largest customer base of any bank in the western United
States. Consumer Banking provides a full array of deposit and loan products to
individuals and small businesses through almost 2,000 full-service branches,
more than 7,000 ATMs, and telephone and other delivery channels. Consumer
Banking also operates over 150 in-store facilities in the Chicago metropolitan
area. It also provides credit card, home mortgage, manufactured housing
financing, auto loan 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>
- -------------------------------------------------------------------------
Consumer Banking
- -------------------------------------------------------------------------
Year Ended December 31
------------------------------
(dollar amounts in millions) 1996 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 5,518 $ 5,338 $ 4,884
Noninterest income 2,561 1,973 1,835
Noninterest expense 4,895 4,656 4,508
- -------------------------------------------------------------------------
Income before the provisions for
credit losses and income taxes 3,184 2,655 2,211
- -------------------------------------------------------------------------
Provision for credit losses 1,017 698 679
Provision for income taxes 862 828 711
- -------------------------------------------------------------------------
Net Income 1,305 1,129 821
- -------------------------------------------------------------------------
Preferred stock dividends 75 89 103
- -------------------------------------------------------------------------
Net income attributable
to common equity $ 1,230 $ 1,040 $ 718
- -------------------------------------------------------------------------
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $82,327 $75,381 $68,309
Earning assets 82,749 75,732 68,675
Total assets 91,244 83,613 76,497
Deposits 95,720 95,522 99,014
Common equity 7,264 6,558 6,160
SELECTED FINANCIAL RATIOS
Return on average
common equity 16.94% 15.85% 11.65%
Expense to revenue 57.31 59.50 62.31
- -------------------------------------------------------------------------
</TABLE>
Consumer Banking's net income for 1996 was up $176 million, or 16 percent, from
1995. This increase largely reflected growth in the average loan portfolios,
primarily the residential, consumer installment, and credit card portfolios.
Included in this sector's net income are a one-time assessment of $82 million
associated with the recapitalization of the SAIF, approximately $100 million of
restructuring charges, and the nontaxable gain of $147 million from the sale of
BAMSI common stock. Net interest income increased primarily due to higher
revenues from growth in average loan balances. Noninterest income for Consumer
Banking increased $588 million due to higher revenues from service fees and
charges associated with deposit accounts, an $82 million gain on the sale of a
Hong Kong subsidiary, increased gains on loan sales, and the aforementioned gain
from the initial public offering of BAMSI common stock. The provision for credit
losses for Consumer Banking increased $319 million primarily as a result of
growth in the consumer loan portfolio. Average loan outstandings grew $6.9
billion, or 9 percent, from 1995, primarily representing growth in the
residential first mortgage, manufactured housing, and credit card portfolios.
Net income in 1995 was up $308 million, or 38 percent from 1994, primarily
reflecting improved results in BAC's California retail deposit business and its
non-California banks. Average loan outstandings increased $7.1 billion, or 10
percent, during 1995. This growth was broad based, both in type of loan and
geographic region. Average deposits declined $3.5 billion, reflecting decreases
in most deposit categories, with the largest decrease in interest-bearing
deposits.
19
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
U.S. CORPORATE AND INTERNATIONAL BANKING
U.S. Corporate and International Banking provides capital-raising services,
trade finance, cash management, investment banking, capital markets and credit
products, and financial advisory services to large public- and private-sector
institutions that are part of the global economy. 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, with
offices in the United States and 37 other countries and territories in North and
South America, Asia, Europe, Africa, and the Middle East.
U.S. Corporate and International Banking's net income for 1996 increased $208
million, or 25 percent, from 1995. The increase reflected higher net interest
and noninterest income levels partially offset by approximately $130 million in
restructuring charges. The $149 million increase in net interest income
primarily resulted from loan growth, especially in the foreign loan portfolio.
Noninterest income was up $318 million from 1995, primarily due to higher
trading-related income, income related to global equity activities including
venture capital, and financial management fees. In addition, the increase in
noninterest income was partly due to a $43 million gain on the liquidation of an
Australian subsidiary, and a $39 million gain that resulted from a reduction of
BAC's equity interest in KorAm Bank, an Asian investment. The 1995 amount
included a $50 million gain on the sale of an asset received in lieu of debt
repayment.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
U.S. Corporate and International Banking
- ----------------------------------------------------------------------
Year Ended December 31
-----------------------------
(dollar amounts in millions) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 1,496 $ 1,347 $ 947
Noninterest income 2,185 1,867 1,526
Noninterest expense 2,058 1,837 1,553
- ----------------------------------------------------------------------
Income before the provisions for
credit losses and income taxes 1,623 1,377 920
- ----------------------------------------------------------------------
Provision for credit losses (13) (17) 10
Provision for income taxes 599 565 382
- ----------------------------------------------------------------------
Net Income 1,037 829 528
- ----------------------------------------------------------------------
Preferred stock dividends 53 66 63
- ----------------------------------------------------------------------
Net income attributable
to common equity $ 984 $ 763 $ 465
- ----------------------------------------------------------------------
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $42,075 $39,937 $32,168
Earning assets 72,221 65,805 52,265
Total assets 92,045 85,968 68,185
Deposits 45,065 37,169 26,071
Common equity 5,124 4,867 3,756
SELECTED FINANCIAL RATIOS
Return on average
common equity 19.21% 15.67% 12.39%
Expense to revenue 54.77 55.87 61.58
- ----------------------------------------------------------------------
</TABLE>
Noninterest expense increased due to higher group variable compensation,
primarily resulting from higher incentive accruals associated with trading
activities. Average loans increased $2.1 billion. Average deposits increased
$7.9 billion, reflecting higher foreign interest-bearing deposits that were
utilized to fund balance sheet growth.
Net income in 1995 for U.S. Corporate and International Banking increased $301
million from 1994. 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).
MIDDLE MARKET BANKING
Middle Market Banking provides a full range of financial products and services,
primarily in the West and the Midwest, targeting companies with annual revenues
between $5 million and $250 million. Included in this sector is a national
commercial finance company that serves mid-sized and large companies with
specialized needs throughout the United States and in Canada.
Middle Market Banking's net income for 1996 increased $28 million, or 9
percent, from 1995. This increase was primarily attributable to a reduction in
the provision for credit losses, reflecting an improvement in credit quality.
Net income in 1995 for Middle Market Banking increased $58 million from 1994,
primarily reflecting the effects of the Continental acquisition and increased
loan volumes.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Middle Market Banking
- ----------------------------------------------------------------------
Year Ended December 31
------------------------------
(dollar amounts in millions) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 864 $ 865 $ 697
Noninterest income 216 202 169
Noninterest expense 536 528 480
- ----------------------------------------------------------------------
Income before the provisions for
credit losses and income taxes 544 539 386
- ----------------------------------------------------------------------
Provision for credit losses (40) (5) (71)
Provision for income taxes 241 229 200
- ----------------------------------------------------------------------
Net Income 343 315 257
- ----------------------------------------------------------------------
Preferred stock dividends 16 20 20
- ----------------------------------------------------------------------
Net income attributable
to common equity $ 327 $ 295 $ 237
- ----------------------------------------------------------------------
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $19,181 $17,482 $14,409
Earning assets 19,228 17,503 14,434
Total assets 21,528 19,630 16,427
Deposits 7,473 7,616 7,928
Common equity 1,526 1,466 1,215
SELECTED FINANCIAL RATIOS
Return on average
common equity 21.47% 20.10% 19.47%
Expense to revenue 47.50 47.21 52.80
- ----------------------------------------------------------------------
</TABLE>
20
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
COMMERCIAL REAL ESTATE SERVICES
Commercial Real Estate Services 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 throughout
California and in ten other states. National clients, such as publicly traded
corporations and private entities, are served through offices in California and
Chicago.
Commercial Real Estate Services' net income for 1996 decreased $103 million, or
29 percent, from 1995, largely due to a change in the provision for credit
losses from ($227) million in 1995 to ($44) million in 1996. The change in the
provision for credit losses was primarily due to lower net credit recoveries
from construction loans.
Commercial Real Estate Services' net income for 1995 increased $23 million, or 7
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
prior to 1995.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Commercial Real Estate
- ----------------------------------------------------------------------
Year Ended December 31
------------------------------
(dollar amounts in millions) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 442 $ 473 $ 418
Noninterest income 37 34 66
Noninterest expense 102 131 131
- ----------------------------------------------------------------------
Income before the provisions for
credit losses and income taxes 377 376 353
- ----------------------------------------------------------------------
Provision for credit losses (44) (227) (218)
Provision for income taxes 172 251 242
- ----------------------------------------------------------------------
Net Income 249 352 329
- ----------------------------------------------------------------------
Preferred stock dividends 7 10 13
- ----------------------------------------------------------------------
Net income attributable
to common equity $ 242 $ 342 $ 316
- ----------------------------------------------------------------------
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $10,414 $10,265 $10,313
Earning assets 10,409 10,265 10,182
Total assets 10,474 10,059 10,016
Deposits 2,087 1,613 1,814
Common equity 705 759 790
SELECTED FINANCIAL RATIOS
Return on average
common equity 34.34% 45.09% 39.95%
Expense to revenue 23.65 26.56 28.70
- ----------------------------------------------------------------------
</TABLE>
WEALTH MANAGEMENT
The Wealth Management Group encompasses a number of strategically significant
businesses serving individuals and institutions with sophisticated planning and
management needs. The range of capabilities represented in Wealth Management
include institutional investment management supporting BAC's corporate and
commercial banking relationships, private banking, investment management, and
trust services for high-net-worth clients both in the U.S. and internationally.
In addition to BAC's domestic network of branches and other points of delivery,
Wealth Management reaches the market through private banking offices, both
domestically and in 36 locations overseas, 400 investment sales specialists in
its brokerage operation and mutual fund group, a specialized sales force working
in conjunction with other business groups, and correspondent banking
relationships with over 2,000 financial institutions worldwide.
Wealth Management's net income increased $26 million, or 45 percent, for 1996
compared with 1995. The increase primarily resulted from higher net interest
income and noninterest income partially offset by increased noninterest expense.
The increase in net interest income primarily reflected loan growth. Noninterest
income increased due to growth in mutual fund and annuity revenues as well as
higher trust fees. Noninterest expense increased primarily due to higher
performance-based pay.
Net income for Wealth Management in 1995 increased $3 million from 1994. Net
interest income and noninterest income rose $34 million and $24 million,
respectively. However, these increases in revenue were offset by an increase in
noninterest expense of $58 million.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Wealth Management
- ----------------------------------------------------------------------
Year Ended December 31
----------------------------
(dollar amounts in millions) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 183 $ 170 $ 136
Noninterest income 387 346 322
Noninterest expense 431 419 361
- ----------------------------------------------------------------------
Income before the provisions for
credit losses and income taxes 139 97 97
- ----------------------------------------------------------------------
Provision for credit losses -- (2) --
Provision for income taxes 55 41 42
- ----------------------------------------------------------------------
Net Income 84 58 55
- ----------------------------------------------------------------------
Preferred stock dividends 5 6 6
- ----------------------------------------------------------------------
Net income attributable
to common equity $ 79 $ 52 $ 49
- ----------------------------------------------------------------------
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $4,455 $3,780 $2,981
Earning assets 4,524 3,851 3,051
Total assets 5,012 4,379 3,506
Deposits 6,975 5,852 5,056
Common equity 457 415 351
SELECTED FINANCIAL RATIOS
Return on average
common equity 17.27% 12.68% 14.09%
Expense to revenue 73.14 78.62 76.42
- ----------------------------------------------------------------------
</TABLE>
21
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
OTHER
Other amounts are primarily associated with the residual of revenues and
expenses not allocated to the business sectors. Other also includes the results
from corporate asset and liability management activities (investment securities,
federal funds bought and sold, institutional and brokered deposits and
intermediate debt), along with any residual differences between actual centrally
managed external hedging results and the transfer of interest rate risk hedging
to the appropriate business sectors. The income and expenses related to the
Institutional Trust and Securities Services (ITSS) business are included in this
sector. However, the corporation had substantially divested ITSS by the end of
the first quarter of 1996. During 1996 and 1995, BAC recognized pre-tax gains
of $50 million and $36 million, respectively, associated with the divestiture of
ITSS.
This sector had a net loss of $145 million in 1996, compared with a net loss of
$19 million in the same period a year ago. This increased net loss was primarily
attributable to lower results from corporate liquidity management activities.
OPERATING LEVERAGE AND CAPITAL MANAGEMENT
BAC demonstrated effective management of operating leverage in both 1996 and
1995. Operating leverage is achieved when the rate of revenue growth exceeds
that of expenses. As shown in the table below, in 1996, revenue increased 8
percent while
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Operating Leverage and Capital Management
- ----------------------------------------------------------------------------------------------------------------------------
(dollar amounts in millions, except per share data) 1996/a/ 1995 Change 1995 1994 Change
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING LEVERAGE COMPONENTS
Net interest income $ 8,587 $ 8,462 1% $ 8,462 $ 7,542 12%
Noninterest income 5,412 4,546 19 4,546 4,135 10
Total revenue 13,999 13,008 8 13,008 11,677 11
Noninterest expense 8,341 8,001 4 8,001 7,500 7
Operating income/b/ 5,658 5,007 13 5,007 4,177 20
Provision for credit losses 885 440 101 440 460 (4)
Provision for income taxes 1,900 1,903 -- 1,903 1,541 23
CAPITAL MANAGEMENT COMPONENTS
Net income 2,873 2,664 8 2,664 2,176 22
Preferred stock dividends 185 227 (19) 227 248 (8)
Net income applicable to common stock 2,688 2,437 10 2,437 1,928 26
Average number of common shares
outstanding-- assuming full dilution
(in thousands) 368,558 378,103 (3) 378,103 365,274 4
Earnings per common share--
assuming full dilution $ 7.30 $ 6.45 13 $ 6.45 $ 5.33 21
Average common equity 17,926 16,716 7 16,716 14,606 14
Rate of return on
average common equity 15.00% 14.58% 42/b/p/ 14.58% 13.20% 138/b/p/
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes the income statement effect of the following items, which have
been previously discussed: a $147 million nontaxable gain from the initial
public offering of BAMSI common stock during the fourth quarter of 1996; a
$280 million pre-tax restructuring charge incurred in the fourth quarter
of 1996; and an $82 million pre-tax one-time SAIF assessment in the third
quarter of 1996.
/b/ Represents income before the provisions for credit losses and income
taxes.
/b/p/ Basis points
noninterest expense increased 4 percent from 1995. In 1995, revenue increased 11
percent while noninterest expense increased 7 percent from 1994.
Capital management objectives are achieved when the rates of growth in common
shares outstanding and preferred stock dividends are below that of net income.
As a result of BAC's stock repurchase program, the average number of common
shares outstanding, assuming full dilution, decreased 3 percent in 1996 over
1995. Additionally, preferred stock dividends decreased 19 percent in 1996 over
1995. However, the decrease in preferred stock dividends will be partially
offset by the after-tax effect of noninterest expense related to distributions
on trust preferred securities in future years.
By effectively managing expenses, BAC reported increases in net income of 8
percent in 1996 over 1995 and 22 percent in 1995 over 1994. In addition, the
rate of return on average common equity increased 42 basis points in 1996 over
1995 and 138 basis points in 1995 over 1994.
22
<PAGE>
BankAmerica Corporation 1996
- ---------------------------- Financial Review --------------------------------
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 primarily reflect the
volume and mix of interest-earning assets and interest-bearing deposits and
other interest-bearing liabilities.
On a taxable-equivalent basis, net interest income was $8,604 million in 1996,
up $117 million from 1995. The increase primarily resulted from growth in
earning assets, partially offset by a decrease in the net interest margin.
During 1996, BAC securitized approximately $1.5 billion in credit card loans.
Excluding the effect of these credit card securitizations in 1996,
taxable-equivalent net interest income would have increased $161 million from
1995. Refer to the table, Impact of Credit Card Securitization, on page 30 for
more information.
<TABLE>
<CAPTION>
Net Interest Income (bar chart in non-EDGAR version)
(in millions of dollars)
1992 1993 1994 1995 1996
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net Interest Income 6,740 7,463 7,566 8,487 8,604
</TABLE>
Average earning assets totaled $203.3 billion in 1996, up 15.1 billion, or 8
percent, from 1995. The increase was largely attributable to growth in most
segments of the loan portfolio as average loans increased $11.5 billion from
1995. In addition, other average earning assets rose $3.6 billion from 1995,
primarily due to an increase in trading account assets.
The net interest margin is the difference between the yield earned on assets and
the rate incurred on liabilities. BAC's net interest margin for 1996 was 4.23
percent, down 28 basis points from 1995. During the year ended December 31,
1996, the yield on average earning assets decreased 23 basis points, primarily
due to lower prevailing market rates, while the cost of funds remained
essentially unchanged. No decrease in the cost of funds occurred primarily since
rates on domestic interest-bearing deposits, the largest component of
interest-bearing liabilities, increased. In addition, BAC has experienced a
shift in the mix of liabilities toward wholesale funding sources, including
foreign interest-bearing deposits and domestic purchased funds, which are more
costly than traditional core deposits. For more information, refer to the
Average Balances and Rates table on the following page.
BAC's net interest income and margin include the results of hedging with certain
on- and off-balance-sheet financial instruments. During 1996, approximately $5
million of net interest income attributable to hedging with derivative financial
instruments was included in BAC's net interest income results, compared with
approximately $65 million in 1995. The effect of the hedging amounts on the net
interest margin for both 1996 and 1995 was less than 5 basis points.
NONINTEREST INCOME
Noninterest income for 1996 increased $866 million, or 19 percent, from $4,546
million in 1995. The increase reflected growth in fees and commissions, trading
income, and other noninterest income.
Fees and commissions, the largest component of noninterest income, increased
$179 million, or 6 percent, from 1995, reflecting BAC's continued focus on
expanding its fee-generating activities. Retail deposit account fees earned in
1996 rose $126 million from 1995, primarily due to increased revenues from
service fees and charges associated with deposit accounts, increased transaction
volumes, and an increase in the number of fee-paying accounts. Other fees and
commissions rose $114 million, primarily due to increased revenues from loan
fees and charges as well as financial services fees. Loan fees and charges, net
of amortization expense and valuation adjustments on mortgage servicing rights,
increased $54 million from 1995 as a result of BAC's expanded mortgage banking
activities. The increase in loan fees and charges was also attributable to the
securitization of credit card receivables as well as revenues from late payment
charges on credit card accounts. The growth in financial services fees was
largely attributable to expanded loan syndication volume. Other credit card fees
increased $60 million from 1995, largely due to increased credit card sales
draft volume and the introduction of a debit card, the VERSATEL/(R)/ Check Card,
in 1996. The above increases were partially offset by a decrease in trust fees
as a result of the divestiture of ITSS and lower fee revenue from personal trust
activities.
VERSATEL is a registered name, and the symbol follows the name in the non-EDGAR
version.
23
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Average Balances and Rates
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
(dollar amounts in millions) Balance/a/ Rate Balance/a/ Rate Balance/a/ Rate
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,717 7.93% $ 5,853 7.95% $ 4,912 6.62%
Federal funds sold 533 5.41 548 5.89 1,318 4.13
Securities purchased under resale agreements 10,334 6.32 8,823 7.00 6,378 5.51
Trading account assets 12,541 8.01 9,106 8.18 6,713 7.09
Available-for-sale securities/b,c/ 11,383 7.45 9,768 7.83 9,675 6.13
Held-to-maturity securities/c/ 4,347 7.42 7,192 7.29 10,805/b/ 7.35
Domestic loans:
Consumer--residential first mortgages 37,572 7.47 35,407 7.06 32,012 5.97
Consumer--residential junior mortgages 14,264 8.59 13,832 9.05 13,196 7.65
Consumer--credit card 8,837 14.53 8,230 14.95 7,280 15.65
Other consumer 17,465 9.85 14,149 9.89 11,847 10.27
Commercial and industrial 32,944 7.83 30,927 8.47 23,643 7.04
Commercial loans secured by real estate 11,508 8.84 10,586 9.04 9,407 8.04
Financial institutions 2,815 4.40 2,511 5.69 2,142 5.06
Lease financing 2,127 6.92 1,835 6.06 1,675 7.70
Construction and development loans secured by real estate 2,816 10.69 3,367 11.07/d/ 3,948 7.78
Loans for purchasing or carrying securities 1,270 6.78 1,303 7.02 1,814 5.06
Agricultural 1,570 8.70 1,619 9.67 1,641 7.87
Other 1,176 6.39 1,394 6.56 1,244 6.10
- ----------------------------------------------------------------------------------------------------------------------------
Total domestic loans 134,364 8.56 125,160 8.73 109,849 7.77
- ----------------------------------------------------------------------------------------------------------------------------
Foreign loans 24,087 7.73 21,754 8.24 18,572 6.86
- ----------------------------------------------------------------------------------------------------------------------------
Total loans/b/ 158,451 8.44 146,914 8.65 128,421 7.64
Total earning assets 203,306 8.20 188,204 8.43 168,222 7.38
- ----------------------------------------------------------------------------------------------------------------------------
Nonearning assets 42,060 42,641 37,366
Less: Allowance for credit losses 3,524 3,672 3,520
- ----------------------------------------------------------------------------------------------------------------------------
Total Assets $241,842 $227,173 $202,068
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 12,205 1.22% $ 13,241 1.20% $ 13,761 1.16%
Savings 12,872 2.05 13,550 2.08 14,427 2.04
Money market 28,772 3.14 29,070 2.99 32,625 2.51
Time 30,132 5.13 30,002 4.90 28,259 3.06
- ----------------------------------------------------------------------------------------------------------------------------
Total domestic interest-bearing deposits 83,981 3.41 85,863 3.24 89,072 2.40
- ----------------------------------------------------------------------------------------------------------------------------
Foreign interest-bearing deposits:
Banks located in foreign countries 12,957 5.89 10,245 6.63 6,771 6.23
Governments and official institutions 9,579 5.23 6,845 5.80 4,646 4.67
Time, savings, and other 19,058 6.47 16,131 6.60 11,371 4.95
- ----------------------------------------------------------------------------------------------------------------------------
Total foreign interest-bearing deposits 41,594 6.00 33,221 6.44 22,788 5.27
Total interest-bearing deposits 125,575 4.27 119,084 4.13 111,860 2.98
- ----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased 1,492 5.29 2,222 5.89 611 4.48
Securities sold under repurchase agreements 11,702 5.94 9,110 6.38 6,455 5.44
Other short-term borrowings 14,448 6.11 9,301 6.77 4,231 6.50
Long-term debt 14,981 6.83 15,156 7.04 13,920 5.82
Subordinated capital notes 415 7.95 605 7.58 606 6.84
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 168,613 4.79 155,478 4.75 137,683 3.52
Domestic noninterest-bearing deposits 34,415 33,272 31,938
Foreign noninterest-bearing deposits 1,557 1,630 1,498
Other noninterest-bearing liabilities 16,898 17,238 13,258
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 221,483 207,618 184,377
- ----------------------------------------------------------------------------------------------------------------------------
Trust preferred securities/e/ 90 -- --
Stockholders' equity 20,269 19,555 17,691
- ----------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $241,842 $227,173 $202,068
- ----------------------------------------------------------------------------------------------------------------------------
Interest income as a percentage of average earning assets 8.20% 8.43% 7.38%
Interest expense as a percentage of average earning assets (3.97) (3.92) (2.88)
- ----------------------------------------------------------------------------------------------------------------------------
Net Interest Margin 4.23% 4.51% 4.50%
- ----------------------------------------------------------------------------------------------------------------------------
</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 28 of the Balance Sheet Review for more detail on
available-for-sale and held-to-maturity securities.
/d/Rate reflects a higher level of interest recoveries on nonaccrual loans
during the year ended December 31, 1995 compared to the year ended December
31, 1994.
/e/Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
24
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review ------------------------------
Trading income increased $103 million, or 20 percent, from 1995, and was
primarily attributable to growth in foreign exchange trading-related income as
well as improved performance in emerging markets, Latin America, European, and
domestic debt securities. For more information on the functional components of
trading income, refer to Note 24 of the Notes to Consolidated Financial
Statements on pages 72-78.
<TABLE>
<CAPTION>
Noninterest Income (stacked block graphs in non-EDGAR version)
(millions of dollars) 1995 1996
-------------------------
<S> <C> <C>
=========================
Fees and Commissions 3,187 3,366
Other Noninterest Income 832 1,416
Trading Income 527 630
----- -----
Total Noninterest Income 4,546 5,412
===== =====
</TABLE>
Other noninterest income for 1996 rose $584 million, or 70 percent, from 1995,
reflecting higher net gains on sales of subsidiaries and operations, a gain on
the issuance of a subsidiary's stock, increased net gains on sales of assets,
and higher income related to venture capital activities. The net gain on sales
of subsidiaries and operations totaled $180 million in 1996, an increase of $155
million from 1995. This increase included gains of $82 million from the sale of
a Hong Kong consumer and commercial finance subsidiary, $50 million from the
divestiture of ITSS, and $39 million from a reduction of BAC's equity interest
in KorAm Bank, an Asian investment. The gain on issuance of a subsidiary's stock
was due to BAMSI's issuance of 16,100,000 shares of Class A Common Stock through
an underwritten public offering which resulted in a nontaxable gain of $147
million. The stock is traded on the New York Stock Exchange under the trading
symbol BPI. BAMSI provides an array of payment processing and related
information products and services to merchants who accept credit and debit cards
as payment for goods and services throughout the U.S. BAC owns 100 percent of
the Class B Common Stock of BAMSI, which represents approximately 65 percent of
the outstanding common stock, but approximately 95 percent of voting rights. In
addition, non-interest income related to the net gain on sales of assets
increased $126 million from 1995, largely due to higher gains on loan sales as
well as on sales of leased property, primarily airplanes. Noninterest income
related to venture capital activities increased $90 million from 1995 due to
higher realized capital gains and partnership distributions.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Noninterest Income
- --------------------------------------------------------------------------
Year Ended December 31
----------------------------
(in millions) 1996 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
FEES AND COMMISSIONS
Deposit account fees:
Retail $1,057 $ 931 $ 841
Commercial 342 372 360
Credit card fees:
Membership 29 49 79
Other 326 266 252
Trust fees:
Corporate and employee benefit 18 53 70
Personal and other 211 247 215
Other fees and commissions:
Loan fees and charges 364 310 296
Off-balance-sheet credit-related
instrument fees 345 344 282
Financial services fees 216 189 101
Mutual fund and annuity commissions 100 81 89
Other 358 345 343
- --------------------------------------------------------------------------
3,366 3,187 2,928
- --------------------------------------------------------------------------
TRADING INCOME 630 527 357
OTHER NONINTEREST INCOME
Venture capital activities 427 337 136
Net gain on sales of assets/a/ 197 71 126
Net gain on sales of subsidiaries
and operations 180 25 85
Gain on issuance of subsidiary's stock 147 - -
Net gain on available-for-sale securities 61 34 24
Other income 404 365 479
- --------------------------------------------------------------------------
1,416 832 850
$5,412 $4,546 $4,135
- --------------------------------------------------------------------------
</TABLE>
/a/Net gain on sales of assets includes gains and losses from the disposition
of loans, premises and equipment, and certain other assets.
25
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
NONINTEREST EXPENSE
Noninterest expense was $8,341 million in 1996, up $340 million, or 4 percent,
from 1995. The increase reflected a $280 million restructuring charge, which is
described below, as well as a climb in personnel expense and occupancy and
equipment expense.
Personnel expense, the largest component of noninterest expense, increased $37
million, or 1 percent, from 1995. The increase in personnel expense was largely
due to expanded employee benefits as the result of retirement enhancements that
became effective January 1, 1996. A decrease in salaries, largely attributable
to reductions in staff levels, partially offset the increase. BAC's staff level
on a full-time-equivalent (FTE) basis was approximately 78,000 at December 31,
1996, down from 79,900 at December 31, 1995. FTE is a measurement equal to one
full-time employee working a standard day. BAC had approximately 92,100
employees, both full-time and part-time, at December 31, 1996, down from 95,300
employees at year-end 1995.
<TABLE>
<CAPTION>
Noninterest Expense (Stacked blocked graphs in non-EDGAR version)
(in millions of dollars)
1995 1996
-------------------------
<S> <C> <C>
Personnel 4,027 4,064
Other Noninterest Expense 2,573 2,818
Occupancy and Equipment 1,401 1,459
- -----------------------------------------------------------
Total Noninterest Expense 8,001 8,341
=========================
</TABLE>
Occupancy and equipment expense increased $58 million, or 4 percent, from 1995.
The increase was primarily due to higher depreciation expense on equipment.
Other noninterest expense increased $245 million, or 10 percent, from 1995,
primarily due to restructuring charges. The increase was partially offset by
decreases in amortization of intangibles as well as regulatory fees and related
expenses. As a result of decisions to implement a number of streamlining
measures in its business activities, BAC recorded a pre-tax restructuring charge
of $280 million in the fourth quarter of 1996. The charge will cover severance
payments, premises, and other costs connected with functions in the wholesale
banking, retail banking, and staff support areas affected by the actions.
Approximately $130 million of the charge relates to changes in wholesale banking
activities, primarily in mature European and Asian markets. Approximately
<TABLE>
<CAPTION>
Staff Levels (Plot point graph in non-EDGAR version)
December 31
------------------------------------------------
(in thousands) 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of employees 99.2 96.4 98.6 95.3 92.1
Full-time equivalent staff 83.2 79.2 82.1 79.9 78.0
================================================================================
</TABLE>
$100 million of the charge relates to changes in domestic retail operations. A
significant portion of the retail charge will be incurred by closing
approximately 120 branches in California during 1997. The remaining $50 million
of the charge relates to staff support units, particularly the finance, mail
processing, and human resources functions. In total, the restructuring decisions
contemplate an overall reduction of approximately 3,700 positions company-wide.
Management expects that the charge will be recovered in cost savings by the end
of 1998 through lower personnel and occupancy costs. The previous sentence is a
forward-looking statement. Actual results may differ materially due to
uncertainties, including unanticipated changes in either the competitive
environment or the costs associated with premises, technology, and other
equipment. See Forward-Looking Statements on page 47. For more information
regarding the restructuring charges, refer to Note 26 of the Notes to
Consolidated Financial Statements on page 81.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Noninterest Expense
- -------------------------------------------------------------------------
Year Ended December 31
----------------------------------
(in millions) 1996 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C> <C>
PERSONNEL
Salaries $3,291 $3,309 $2,936
Employee benefits 773 718 703
- -------------------------------------------------------------------------
4,064 4,027 3,639
- -------------------------------------------------------------------------
OCCUPANCY AND EQUIPMENT
Occupancy 757 738 690
Equipment 702 663 589
- -------------------------------------------------------------------------
1,459 1,401 1,279
- -------------------------------------------------------------------------
OTHER NONINTEREST EXPENSE
Amortization of intangibles 373 428 411
Communications 363 359 323
Professional services 344 313 225
Restructuring charges 280 -- --
Regulatory fees and related expenses 123 176 290
Other expense 1,335 1,297 1,333
- -------------------------------------------------------------------------
2,818 2,573 2,582
$8,341 $8,001 $7,500
- -------------------------------------------------------------------------
</TABLE>
26
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
Amortization of intangibles decreased $55 million, or 13 percent, from 1995,
primarily due to the impact of the fourth-quarter 1995 adoption of Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights" (SFAS No. 122). Subsequent to the adoption of SFAS No. 122, mortgage
servicing rights are amortized as an offset to noninterest income related to
loan fees and charges. For additional information regarding SFAS No. 122, refer
to Note 1 of the Notes to Consolidated Financial Statements on pages 54-58.
Regulatory fees and related expenses declined $53 million primarily due to a
reduction in Federal Deposit Insurance Corporation (FDIC) assessment rates. When
the FDIC achieved its legally mandated ratio of Bank Insurance Fund (BIF)
reserves to insured deposits of 1.25 percent in 1995, it reduced the assessment
rate of $0.23 per $100 of eligible deposits to zero for the highest rated banks,
effective January 1996. Partially offsetting this reduction in deposit insurance
premiums was a one-time assessment of $82 million in 1996 associated with the
recapitalization of the FDIC's SAIF. For more information regarding this special
deposit assessment, refer to Note 27 of the Notes to Consolidated Financial
Statements on page 81.
INCOME TAXES
BAC's effective income tax rates for 1996 and 1995 were 39.8 percent and 41.7
percent, respectively. For further information concerning the provisions for
federal, state, and foreign income taxes, refer to Note 21 of the Notes to
Consolidated Financial Statements on pages 67-68.
COMPARISON OF 1995 VERSUS 1994
BAC's revenue and expense levels for 1995, as well as its average loans and
deposits, reflect a full year's impact of BAC's merger with Continental that
took place on August 31, 1994. Most of the variances between 1995 and 1994 are
caused by this full-year impact of Continental, unless otherwise noted.
Net income in 1995 was $2,664 million, up 22 percent from $2,176 million in
1994, and was primarily attributable to substantial growth in net interest
income. Taxable-equivalent net interest income was $8,487 million in 1995, up
$921 million from 1994, primarily due to an increase in average loans of $18.5
billion, or 14 percent, during 1995. BAC's net interest margin for 1995 was 4.51
percent, essentially unchanged from the margin in 1994.
The provision for credit losses decreased $20 million, or 4 percent, reflecting
improvements in most portfolio segments.
Noninterest income for 1995 increased $411 million, or 10 percent, from 1994.
Fees and commissions rose $259 million from 1994, primarily reflecting higher
revenues from retail deposit account fees, financial services fees, and other
fees and commissions. Trading income increased by $170 million, or 48 percent,
from 1994, as a result of 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 products by
BAC customers.
Noninterest expense for 1995 increased $501 million from 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 Continental
acquisition. In addition, noninterest expense in 1994 included $83 million of
capital additions to two Pacific Horizon money market mutual funds, for which
the bank serves as investment advisor.
Personnel expense totaled $4,027 million in 1995, up $388 million from 1994. The
increase in personnel expense was largely attributable to increases in base
salaries and incentive-based compensation. Base salaries increased $190 million,
primarily due to 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 higher
executive stock-based incentive bonuses and discretionary variable pay plans.
In 1995, regulatory fees and related expenses declined $114 million from 1994,
primarily due to a reduction in FDIC assessment rates. When the FDIC achieved
its mandated ratio of BIF reserves to 1.25 percent of insured deposits in May
1995, it reduced the assessment rates for well-capitalized and highest rated
institutions from $0.23 to $0.04 per $100 of eligible deposits for the balance
of 1995. Other expense decreased $36 million from 1994. Excluding the previously
discussed $83 million of capital additions to the Pacific Horizon funds that
occurred in 1994, other expense for 1995 increased $47 million from 1994. This
increase reflected higher professional services fees and external data
processing costs.
27
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Available-for-Sale and Held-to-Maturity Securities - Average Balances and Rates
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Rate Rate Rate Rate Rate Rate
based on based on based on based on based on based on
fair amortized fair amortized fair amortized
(dollar amounts in millions) Balance/a/ value cost Balance/a/ value cost Balance/a/ value cost
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,440 6.72% 6.70% $1,659 6.49% 6.45% $3,029 5.42% 5.41%
Mortgage-backed securities 6,305 6.83 6.82 4,962 6.94 6.89 4,410 5.96 5.88
Other domestic securities 786 5.64 6.61 660 5.22 5.84 427 4.78 5.00
Foreign securities 2,852/b/ 9.69/c/ 9.19/c/ 2,487/b/ 11.17/c/ 10.10/c/ 1,809/b/ 8.05 7.09
- -----------------------------------------------------------------------------------------------------------------------------------
$11,383 7.45% 7.42% $9,768 7.83% 7.64% $9,675 6.13% 5.95%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
(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 $ 33 4.95% $ 388 6.72% $ 689 6.72%
Mortgage-backed securities 2,308 7.60 4,490 7.15 6,985 7.20
State, county, and municipal securities 416 7.57 445 7.89 479 8.12
Other domestic securities 99 7.28 178 7.62 224 7.11
Foreign securities 1,491 7.15 1,691 7.62 2,428/b/ 7.83
- ------------------------------------------------------------------------------------------------------------------------------------
$4,347 7.42% $7,192 7.29% $10,805 7.35%
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
BALANCE SHEET REVIEW
OVERVIEW
At December 31, 1996, BAC's assets totaled $250.8 billion, up $18.3 billion from
year-end 1995. This increase was primarily due to growth in the loan portfolio.
For a discussion of the loan portfolio, refer to the Loan Portfolio Management
section on pages 28-32. In addition, trading account assets and securities
purchased under resale agreements increased $2.7 billion and $2.3 billion,
respectively, from their 1995 levels. This growth in interest-earning assets was
largely funded by increases in liabilities, such as other short-term borrowings
and foreign interest-bearing deposits.
At December 31, 1996, BAC's other short-term borrowings were $17.6 billion, up
$9.9 billion from 1995. The increased funding from short-term borrowings
largely resulted from the issuance of bank notes was used to support domestic
loan growth.
BAC is one of the largest depository institutions in the U.S., with $168.0
billion of deposits at December 31, 1996. Total deposits increased $7.5 billion,
or 5 percent, from year-end 1995. Deposits increased $2.9 billion in domestic
offices and $4.6 billion in foreign offices from year-end 1995. The growth in
foreign deposits primarily resulted from BAC's continued participation in
selected global markets.
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 on pages 39-40 and the Liquidity Risk Management and Capital
Management sections on pages 44-47.
PENDING ACCOUNTING STANDARDS
In June 1996, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No.
125). The FASB subsequently amended SFAS No. 125 in December 1996. As amended,
SFAS No. 125 applies to securities lending, repurchase agreements, dollar rolls,
and other similar secured financing transactions occurring after December 31,
1997 and to all other transfers and servicing of financial assets occurring
after December 31, 1996. BAC does not expect that, at adoption, SFAS No. 125
will have a material effect on its financial position or results of operations.
LOAN PORTFOLIO MANAGEMENT
The Loan Portfolio Management section should be read in conjunction with the
credit quality and credit risk management sections. For information regarding
credit quality, refer to pages 33-37. For information regarding credit risk
management, refer to page 39.
At December 31, 1996, BAC's loan and lease portfolio totaled $165.4 billion, an
increase of $10.0 billion from year-end 1995. This increase was in both the
domestic and foreign portfolios and primarily reflects BAC's efforts to expand
its customer base nationally as well as globally. However, the relative
composition of the loan portfolios has remained fairly constant, with domestic
loans comprising approximately 85 percent of the portfolio at both year-end 1996
and 1995.
28
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Loan Outstandings
- --------------------------------------------------------------------------------------------------------------
December 31
-------------------------------------------------------------------
(in millions) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 37,459 $ 36,572 $ 33,818 $ 30,483 $ 29,306
Residential junior mortgages 14,743 13,777 13,589 12,847 13,870
Other installment 16,979 13,834 10,598 9,129 9,509
Credit card 8,707/a/ 9,139 8,020 7,474 8,306
Other individual lines of credit 1,948 1,847 1,736 1,901 1,725
Other 401 319 403 215 260
- --------------------------------------------------------------------------------------------------------------
80,237 75,488 68,164 62,049 62,976
- --------------------------------------------------------------------------------------------------------------
Commercial:
Commercial and industrial 33,404 32,745 28,814 20,486 21,632
Loans secured by real estate 12,488 10,975 10,277 9,251 10,123
Financial institutions 3,109 2,834 2,872 2,170 2,017
Lease financing 2,542 1,927 1,814 1,715 1,889
Construction and development loans
secured by real estate 2,252 3,153 3,616 4,418 6,781
Loans for purchasing or carrying securities 1,941 1,458 1,529 3,090 987
Agricultural 1,696 1,737 1,840 1,679 1,704
Other 1,270 1,574 1,623 1,478 1,360
- --------------------------------------------------------------------------------------------------------------
58,702 56,403 52,385 44,287 46,493
138,939 131,891 120,549 106,336 109,469
- --------------------------------------------------------------------------------------------------------------
FOREIGN
Commercial and industrial 16,394 15,003 13,496 11,448 10,338
Banks and other financial institutions 3,958 3,386 2,516 2,279 1,855
Governments and official institutions 970 1,020 896 3,429 3,513
Other 5,154 4,073 3,455 3,064 1,436
- --------------------------------------------------------------------------------------------------------------
26,476 23,482 20,363 20,220 17,142
Total loans 165,415 155,373 140,912 126,556 126,611
- --------------------------------------------------------------------------------------------------------------
Less: Allowance for credit losses 3,523 3,554 3,690 3,508 3,921
- --------------------------------------------------------------------------------------------------------------
$161,892 $151,819 $137,222 $123,048 $122,690
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Excludes $1,471 million of securitized credit card receivables.
<TABLE>
<CAPTION>
Total Loan Outstandings by Type (Pie charts in non-EDGAR version)
December 31,
1995 1996
----------------------
<S> <C> <C>
Domestic Consumer 48.6% 48.5%
Domestic Commercial 36.3% 35.5%
Foreign 15.1% 16.0%
----------------------
Total 100.0% 100.0%
======================
</TABLE>
Domestic Consumer Loans
Domestic consumer loan outstandings at year-end 1996 rose $4.7 billion, or 6
percent, from year-end 1995, primarily due to increases in residential first
mortgages, residential junior mortgages, and other installment loans. At
December 31, 1996, residential first mortgages and residential junior mortgages
increased $0.9 billion and $1.0 billion, respectively, from year-end 1995,
reflecting BAC's continued efforts to geographically diversify and expand its
mortgage lending activities on a national scale. At December 31, 1996,
approximately 70 percent of these residential real estate loans were secured by
properties in California, compared with approximately 74 percent in 1995. For
more information, refer to the table on page 30.
The growth in other installment loans was largely due to increases in indirect
manufactured housing and auto loans and leases. BAC has become a major lender in
the indirect manufactured housing market, with 40 offices nationwide at December
31, 1996. The largest area of expansion in this market was in the 13 states in
the southeastern region of the U.S. Growth in indirect auto loans and leases was
primarily attributable to originations in the western states, augmented by an
expansion of these loan and lease products in the Northwest, Southwest, and
Midwest regions.
29
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Domestic Consumer Loans by Geographic Area and Loan Type as of December 31, 1996
- --------------------------------------------------------------------------------------------------------------------------------
Residential Residential
First Junior Credit Manufactured Other Total
(in millions) Mortgages Mortgages Card Housing Auto Consumer Consumer
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $26,532 $ 9,836 $3,771 $1,033 $2,545 $2,281 $45,998
Washington 1,697 1,886 1,323 343 1,417 482 7,148
Arizona 1,316 908 316 219 599 142 3,500
Texas 928 132 403 613 712 326 3,114
Oregon 1,072 513 256 150 283 253 2,527
Other/a/ 5,914 1,468 2,638 5,738 814 1,378 17,950
- --------------------------------------------------------------------------------------------------------------------------------
$37,459 $14,743 $8,707 $8,096 $6,370 $4,862 $80,237
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/No other state individually exceeded 2 percent of total domestic consumer
loans.
At year-end 1996, the credit card loan portfolio decreased $0.4 billion from its
1995 level. During 1996, this portfolio grew by approximately $1.1 billion,
primarily outside of California. However, this growth was offset by
the securitization and sale of approximately $1.5 billion of credit card
receivables during 1996. In addition to reducing the amount of loan
outstandings, the securitization affects the manner and time period in which
revenue is reported in the statement of operations. The amounts that would
otherwise be included in net interest revenue are instead included in
noninterest income as fees and commissions,
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Impact of Credit Card Securitization
- --------------------------------------------------------------------------
Year Ended December 31, 1996
------------------------------------------
Before
Credit Card Credit Card
(dollar amounts in millions) Securitization Securitization Reported
- --------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 8,631 $ (44) $ 8,587
Credit card fees 373 (8) 365
Other noninterest income 5,019 28 5,047
- --------------------------------------------------------------------------
Total revenue 14,023 (24) 13,999
- --------------------------------------------------------------------------
Noninterest expense 8,341 -- 8,341
Income before provision for
credit losses and income taxes 5,682 (24) 5,658
Provision for credit losses 909 (24)/a/ 885
- --------------------------------------------------------------------------
Income before income taxes $ 4,773 $ -- $ 4,773
Net interest margin 4.24% (0.01)% 4.23%
BALANCE SHEET DATA AT YEAR END
Credit card loans outstanding $ 10,178 $(1,471) $ 8,707
Total assets 252,224 (1,471) 250,753
AVERAGE BALANCE SHEET DATA
Credit card loans 9,279 (442) 8,837
Earning assets 203,748 (442) 203,306
Total assets 242,284 (442) 241,842
Net credit losses--credit
card portfolio 450 (24) 426
SELECTED FINANCIAL RATIOS
Annualized ratio of net credit losses
on credit card loans to average
credit card loans outstanding 4.85% (0.03)% 4.82%
Delinquent credit card loan ratio/b/ 2.40 (0.04) 2.36
- --------------------------------------------------------------------------
</TABLE>
/a/Represents the investors' share of charge-offs.
/b/60 days or more past due.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Domestic Consumer Loan Delinquency Information/a/
- ----------------------------------------------------------------------
December 31
--------------------------
(dollar amounts in millions) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
DELINQUENT CONSUMER LOANS
Residential first mortgages $477 $ 642 $566
Residential junior mortgages 62 90 92
Credit card 206 190 153
Other 129 100 69
- ----------------------------------------------------------------------
$874 $1,022 $880
- ----------------------------------------------------------------------
DELINQUENT CONSUMER LOAN RATIOS/b/
Residential first mortgages 1.27% 1.76% 1.68%
Residential junior mortgages 0.42 0.67 0.68
Credit card 2.36 2.08 1.91
Other 0.67 0.62 0.54
- ----------------------------------------------------------------------
1.09% 1.36% 1.29%
- ----------------------------------------------------------------------
</TABLE>
/a/60 days or more past due.
/b/Ratios represent delinquency balances expressed as a percentage of total
loans for that loan category.
net of any credit losses on the securitized portion of the credit card
portfolio. Refer to the table at the left for the impact of credit card
securitization on BAC during 1996.
Delinquent domestic consumer loans that are 60 days or more past due decreased
$148 million from year-end 1995, despite a 6 percent increase in consumer loans.
The decrease is primarily reflected in a lower level of delinquencies in two
large portfolios: residential first mortgages and residential junior mortgages
in Southern California. Partially offsetting this decrease was an increase in
delinquent credit card loans reflecting current economic conditions. For further
information regarding BAC's domestic consumer loan delinquencies, refer to the
table above.
Domestic Commercial Loans
Domestic commercial loan outstandings increased $2.3 billion, or 4 percent,
during 1996, primarily reflecting increases in commercial and industrial loans,
loans secured by real estate, and lease financing.
30
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Domestic Commercial Loans Secured by Real Estate by Geographic Area and Project Type
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 1996
---------------------------------------------------------------------------------------------------------------
Light Apartment &
(in millions) Office Retail Industry Condominium Hotel Other Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $1,525 $1,430 $1,358 $1,027 $158 $ 923 $ 6,421
Washington 505 338 518 425 150 596 2,532
Nevada 146 184 69 197 109 212 917
Oregon 134 131 80 160 25 52 582
Arizona 59 99 59 99 42 92 450
Illinois 77 29 92 69 -- 34 301
Other/a/ 416 243 100 165 193 168 1,285
- ------------------------------------------------------------------------------------------------------------------------------
$2,862 $2,454 $2,276 $2,142 $677 $2,077 $12,488
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1995
---------------------------------------------------------------------------------------------------------------
Light Apartment &
(in millions) Office Retail Industry Condominium Hotel Other Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $1,201 $1,739 $1,149 $ 785 $152 $ 612 $ 5,638
Washington 391 369 461 433 163 490 2,307
Nevada 58 401 44 99 53 125 780
Arizona 25 236 25 52 2 77 417
Oregon 40 93 63 130 32 50 408
Other/a/ 527 237 69 170 300 122 1,425
- ------------------------------------------------------------------------------------------------------------------------------
$2,242 $3,075 $1,811 $1,669 $702 $1,476 $10,975
- ------------------------------------------------------------------------------------------------------------------------------
/a/For each period presented, no other state individually exceeded 2 percent of
total domestic commercial loans secured by real estate.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Domestic Construction and Development Loans by Geographic Area and Project Type
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 1996
---------------------------------------------------------------------------------------------------------------
Apartment & Light
(in millions) Subdivision Retail Condominium Office Industry Hotel Other Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $220 $207 $ 76 $ 87 $ 64 $27 $ 59 $ 740
Washington 214 64 56 68 19 16 55 492
Nevada 72 26 95 39 39 36 76 383
Arizona 44 14 55 1 5 -- 18 137
Texas 23 19 55 1 14 -- 10 122
Oregon 6 23 33 5 -- 3 19 89
New York -- 9 4 -- -- -- 44 57
Florida 1 52 -- -- -- -- -- 53
Other/a/ 28 80 42 13 13 -- 3 179
- ------------------------------------------------------------------------------------------------------------------------------
$608 $494 $416 $214 $154 $82 $284 $2,252
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 1995
---------------------------------------------------------------------------------------------------------------
Apartment & Light
(in millions) Subdivision Retail Condominium Office Industry Hotel Other Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $342 $256 $136 $366 $ 81 $114 $ 85 $1,380
Washington 197 105 60 138 16 7 65 588
Nevada 51 67 32 33 8 16 30 237
Pennsylvania -- -- -- 202 -- -- -- 202
Arizona 45 33 53 9 5 2 10 157
Texas 18 19 72 1 -- -- 2 112
Florida 5 96 8 -- -- -- -- 109
Georgia 5 56 6 -- 14 1 -- 82
Illinois 15 12 10 37 -- -- -- 74
Other/a/ 29 72 53 20 8 4 26 212
- ------------------------------------------------------------------------------------------------------------------------------
$707 $716 $430 $806 $132 $144 $218 $3,153
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/For each period presented, no other state individually exceeded 2 percent of
total domestic construction and development loans.
31
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
Commercial and industrial loans, the largest component of BAC's domestic
commercial loan portfolio, consist of loans made to large corporate and middle
market customers. At December 31, 1996, domestic commercial and industrial loans
totaled $33.4 billion, up $0.7 billion from year-end 1995. The increase in
commercial and industrial loans was primarily attributable to a combination of
BAC's efforts to diversify its market share as well as increased loan demand
from large corporate and middle market borrowers in various industries
throughout the United States.
Included in BAC's commercial loan portfolio are mortgages on commercial
properties, primarily in California, the Northwest, the Southwest, and the
Midwest. At December 31, 1996, commercial loans secured by real estate increased
$1.5 billion from year-end 1995. Growth in this portfolio resulted from the
improved California economy, increased expansion into the Northwest, Southwest,
and Midwest, and the general stabilization of the commercial real estate market.
The lease financing portfolio grew $0.6 billion from year-end 1995. During the
third quarter of 1996, BAC purchased a transportation and industrial lease
financing portfolio totaling $1.8 billion. Approximately $0.4 billion was
recorded in the domestic lease financing portfolio, $0.2 billion was recorded in
the domestic commercial and industrial loan portfolio, $0.5 billion and $0.1
billion were recorded in the foreign other loan portfolio and foreign commercial
and industrial loan portfolio, respectively, and $0.6 billion was recorded in
other assets.
Foreign Commercial and Consumer Loans
BAC has expanded its lending activities in the Pacific Rim as well as selected
countries in Latin America. As a result, total foreign loan outstandings
increased $3.0 billion, or 13 percent, from year-end 1995. This growth was
primarily due to increases in commercial and industrial loans of $1.4 billion
and banks and other financial institutions of $0.6 billion.
Emerging Market Exposure
In connection with its effort to maintain a diversified portfolio, BAC limits
its exposure to any one country. In particular, BAC monitors its exposure to
economies that are considered to be emerging markets. As indicated in the table
below, at December 31, 1996, BAC's emerging market exposure totaled $12,079
million, or 5 percent of total assets, compared to $8,843 million, or 4 percent,
at year-end 1995. This exposure represents loans, restructured debt which is
included in the securities portfolios, and other monetary assets.
BAC's investments in emerging markets are predominantly concentrated in Latin
America and Asia. As developing countries in these areas improve their economic
performance, business environment, infrastructure, and regional trade
capabilities, BAC may selectively expand its investment in these regions. 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Market Exposure
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1996
--------------------------------------------------------------------------------------------------------------------
Loans Available-for-Sale Securities/a/ Held-to-Maturity Securities/a/
-------------------- ----------------------------------------- -----------------------------------------
Medium- and
(in millions) Total/c/ Short-Term Long-Term Collateralized Uncollateralized Collateralized Uncollateralized
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mexico $ 2,519 $ 306 $ 624/d/ $345 $18 $ 856 $175
Brazil 1,849 640 45 6 9 -- 30
India 1,332 85 168 -- -- -- --
Colombia 1,082 549 412 -- 10 -- 2
Chile 1,049 159 313 -- -- -- --
Argentina 931 287 53 -- 1 -- 32
China 738 369 30 -- -- -- --
Philippines 563 75 9 22 32 -- --
Indonesia 494 186 48 -- -- -- --
Venezuela 357 13 6 -- -- 288 22
Pakistan 291 -- 6 -- -- -- --
Other/e/ 874 128 152 147 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
$12,079 $2,797/f/ $1,866/f/ $520/g/ $70/g/ $1,144/h/ $261/h/
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
- -----------------------------------------------------
Other/b/
- -----------------------------------------------------
Medium- and
Short-Term Long-Term
- -----------------------------------------------------
<S> <C> <C>
Mexico $ 106 $ 89
Brazil 1,102 17
India 1,076 3
Colombia 104 5
Chile 491 86
Argentina 532 26
China 325 14
Philippines 409 16
Indonesia 259 1
Venezuela 9 19
Pakistan 285 --
Other/e/ 441 6
- -----------------------------------------------------
$5,139 $282
- -----------------------------------------------------
</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: $108 million for Mexico, $56 million for Brazil, $323
million for India, $70 million for Chile, $28 million for Argentina, $44
million for the Philippines, $45 million for Indonesia, $16 million for
Venezuela, and $72 million for Pakistan.
/d/Includes $30 million loan that is collateralized by zero-coupon U.S.
Treasury securities.
/e/No other country individually exceeded 2 percent of total emerging market
exposure.
/f/Total loans include nonaccrual loans of $39 million.
/g/Total available-for-sale securities include $6 million of nonaccrual debt-
restructuring bonds.
/h/Total fair value of total held-to-maturity securities was approximately $1.2
billion.
32
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Allowance for Credit Losses
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------------
(in millions) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of year $3,554 $3,690 $3,508 $3,921 $2,420
CREDIT LOSSES
Domestic consumer:
Residential first mortgages 42 49 49 23 15
Residential junior mortgages 70 74 88 104 38
Credit card 463 386 382 488 538
Other consumer 448 252 231 300 321
Domestic commercial:
Commercial and industrial 132 139 47 230 197
Loans secured by real estate 22 50 52 91 60
Financial institutions 45 1 2 18 41
Lease financing 1 1 1 9 12
Construction and development loans secured by real estate 61 36 86 291 376
Loans for purchasing or carrying securities -- 5 -- 2 9
Agricultural 2 3 8 7 10
Other commercial -- -- -- -- 2
Foreign 39 15 42 36 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total credit losses 1,325 1,011 988 1,599 1,745
- ------------------------------------------------------------------------------------------------------------------------------------
CREDIT LOSS RECOVERIES
Domestic consumer:
Residential first mortgages 1 1 4 1 1
Residential junior mortgages 17 16 18 14 6
Credit card 37 41 54 53 48
Other consumer 176 84 87 100 86
Domestic commercial:
Commercial and industrial 82 83 94 111 77
Loans secured by real estate 15 16 25 34 10
Financial institutions -- 5 16 2 1
Lease financing 3 4 6 6 9
Construction and development loans secured by real estate 11 66 82 87 19
Loans for purchasing or carrying securities 1 -- -- -- --
Agricultural 4 7 8 10 6
Other commercial -- -- -- -- 4
Foreign 60 99 124 66 174
- ------------------------------------------------------------------------------------------------------------------------------------
Total credit loss recoveries 407 422 518 484 441
Total net credit losses 918 589 470 1,115 1,304
- ------------------------------------------------------------------------------------------------------------------------------------
Provision for credit losses 885 440 460 803 1,009
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)
Other net additions (deductions) 2 10 (49) (110)/b/ (914)/b/
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, End of Year/c/ $3,523 $3,554 $3,690 $3,508 $3,921
- ------------------------------------------------------------------------------------------------------------------------------------
</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. 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, 1996 was $3,523 million, or 2.13
percent of total loan outstandings, compared with $3,554 million, or 2.29
percent, at December 31, 1995. Excluding outstandings in the residential first
mortgage loan portfolio and the portion of the allowance associated with these
outstandings, the ratios were 2.67 percent and 2.89 percent of loans at year-end
1996 and 1995, respectively. The ratio of the allowance for credit losses to
total nonaccrual assets was 315 percent at December 31, 1996, up from 188
percent at December 31, 1995.
33
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Allocation of Allowance for Credit Losses by Loan Type
- ------------------------------------------------------------------------------------------------------------------------------------
December 31
---------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---------------------------------------------------------------------------------------------------
Percent Percent Percent Percent Percent
of Loan of Loan of Loan of Loan of Loan
(dollar amounts in millions) Allowance Category Allowance Category Allowance Category Allowance Category Allowance Category
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic consumer:
Residential first mortgages $ 110 0.29% $ 115 0.31% $ 91 0.27% $ 55 0.18% $ 62 0.21%
Residential junior mortgages 165 1.12 177 1.28 186 1.37 152 1.18 134 0.95
Credit card 385 4.42 394 4.31 344 4.29 425 5.69 479 5.77
Other consumer 755 3.91 561 3.51 438 3.44 440 3.91 425 3.86
Domestic commercial:
Commercial and industrial/a/ 528 1.44 458 1.28 396 1.24 368 1.47 636 2.65
Loans secured by real estate 208 1.67 140 1.28 166 1.62 165 1.78 232 2.29
Financial institutions 4 0.12 10 0.37 6 0.21 8 0.38 14 0.70
Lease financing 45 1.79 48 2.51 51 2.81 48 2.81 55 2.90
Construction and development
loans secured by real estate 73 3.26 293 9.28 389 10.76 611 13.83 884 13.04
Agricultural 43 2.53 35 1.99 38 2.07 39 2.30 37 2.19
Foreign 425 1.61 428 1.82 391 1.92 322 1.59 559 3.26
Unallocated 782 -- 895 -- 1,194 -- 875 -- 404 --
- ------------------------------------------------------------------------------------------------------------------------------------
$3,523 2.13% $3,554 2.29% $3,690 2.62% $3,508 2.77% $3,921 3.10%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Includes the allowance for credit losses for commercial and industrial
loans, loans for purchasing or carrying securities, and other commercial
loans.
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 consider 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, evaluation 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 to the right 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.
After an allowance has been established for the loan portfolio segments, credit
management determines 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Composition of Allowance for Credit Losses
- --------------------------------------------------------------------------------
December 31
---------------------------------------------
(in millions) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Special mention
and classified:
Historical loss
experience component $ 349 $ 506 $ 516 $ 475 $1,273
Credit management
allocated component 426 377 428 770 601
- --------------------------------------------------------------------------------
Total special mention
and classified 775 883 944 1,245 1,874
- --------------------------------------------------------------------------------
Other:
Domestic consumer 1,414 1,247 1,059 1,072 1,100
Domestic commercial 252 229 223 151 215
Foreign 300 300 270 165 328
- --------------------------------------------------------------------------------
Total allocated 2,741 2,659 2,496 2,633 3,517
- --------------------------------------------------------------------------------
Unallocated 782 895 1,194 875 404
- --------------------------------------------------------------------------------
$3,523 $3,554 $3,690 $3,508 $3,921
- --------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Net Credit Losses (Recoveries) as a Percentage of Average Loan Outstandings
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic consumer:
Residential first mortgages 0.11% 0.14% 0.14% 0.07% 0.05%
Residential junior mortgages 0.37 0.42 0.53 0.67 0.28
Credit card 4.82 4.19 4.50 5.81 6.16
Other consumer 1.55 1.19 1.21 1.77 2.03
Domestic commercial:
Commercial and industrial 0.15 0.18 (0.20) 0.58 0.61
Loans secured by real estate 0.08 0.32 0.29 0.59 0.57
Financial institutions 1.58 (0.17) (0.64) 0.80 2.18
Lease financing (0.11) (0.16) (0.30) 0.20 0.14
Construction and development loans
secured by real estate 1.77 (0.89) 0.10 3.57 5.32
Loans for purchasing or carrying
securities (0.11) 0.36 -- 0.11 0.86
Agricultural (0.14) (0.23) -- (0.23) 0.29
Other commercial -- -- -- -- (0.15)
Total domestic 0.70 0.54 0.50 1.09 1.37
Foreign (0.09) (0.39) (0.44) (0.16) (0.28)
Total loans 0.58 0.40 0.37 0.89 1.12
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The special mention and classified categories referred to 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
<TABLE>
<CAPTION>
Allowance for Credit Losses as a % of Nonaccrual Assets (Bar Chart in non-Edgar version)
1992 1993 1994 1995 1996
---------------------------------------------------------
<S> <C> <C> <C> <C>
75% 122% 177% 188% 315%
</TABLE>
and timing of the possible loss cannot be determined. BAC's actual historical
loss experience since 1992 indicates ultimate loss rates for "special mention,"
"substandard," and "doubtful" loans of approximately 2 percent, 6 percent, and
34 percent, respectively.
Net credit losses totaled $918 million in 1996, an increase of $329 million from
1995. The increase was largely in the domestic consumer and commercial
portfolios.
Domestic consumer net credit losses were $792 million in 1996, an increase of
$173 million from 1995. This increase was primarily in the consumer installment
and credit card categories. Growth in the consumer portfolio, primarily
manufactured housing loans, resulted in higher charge-offs in the consumer
installment loan category. Loan growth coupled with higher levels of personal
bankruptcy filings contributed to increased charge-offs in the credit card
portfolio.
Domestic commercial net credit losses were $147 million in 1996, up $93 million
from 1995. The increase was primarily in the construction and development and
financial institutions portfolios. The increase in net charge-offs of
construction and development loans was primarily due to lower credit recoveries
in 1996. The increase in charge-offs of loans to financial institutions resulted
primarily from a decline in the collateral value supporting a loan to a
particular borrower.
Net credit recoveries in the foreign loan portfolio were $21 million in 1996,
compared with $84 million in 1995. The net credit recoveries in 1996 primarily
related to previously charged off loans to borrowers in Australia, Venezuela,
United Kingdom, and Canada.
35
<PAGE>
BankAmerica Corporation 1996
- ------------------------------ Financial Review --------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Nonaccrual Assets
- ----------------------------------------------------------------------------------
December 31
--------------------------------------------------------
(in millions) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC LOANS
Consumer:
Residential
first mortgages $ 354/a/ $ 311 $ 319 $ 406 $ 267
Residential
junior mortgages 59/a/ 72 56 49 55
Other consumer 2 2 7 4 30
Commercial:
Commercial
and industrial 241 511 420 457 898
Loans secured
by real estate 206 280 347 570 721
Financial institutions -- 46 3 64 49
Lease financing 1 -- 1 18 3
Construction and
development loans
secured by real estate 95 495 680 1,037 2,430
Agricultural 28 29 31 49 94
- ----------------------------------------------------------------------------------
986 1,746 1,864 2,654 4,547
- ----------------------------------------------------------------------------------
FOREIGN LOANS,
PRIMARILY COMMERCIAL 109 142 215 232 683
Other interest-bearing
assets 23 3 1 -- 5
- ----------------------------------------------------------------------------------
$1,118/b/ $1,891/b/ $2,080/b/ $2,886/b,c/ $5,235/c/
- ----------------------------------------------------------------------------------
</TABLE>
/a/Reflects the effect of a change in the past due period on nonaccrual loans,
which is discussed in the Nonperforming Assets section.
/b/Excludes certain nonaccrual debt-restructuring par bonds and other
instruments that were included in available-for-sale and held-to-maturity
securities of $67 million, $62 million, and $441 million at December 31,
1996, 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.
/c/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
nonaccrual 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.
NONPERFORMING ASSETS
Total nonaccrual assets decreased $773 million, or 41 percent, from year-end
1995. This decrease reflected improvements in most segments of the loan
portfolio, particularly in commercial and industrial loans, construction and
development loans secured by real estate, and commercial loans secured by real
estate. These improvements resulted primarily from full or partial payments on
nonaccrual loans. Other significant factors that contributed to the decrease
were charge-offs and the restoration of nonaccrual loans to accrual status in
most loan categories, including a large construction and development real estate
loan. The decrease in nonaccruals also reflects low levels of loans being placed
on nonaccrual status.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Analysis of Change in Nonaccrual Assets
- ------------------------------------------------------------------------------
December 31
--------------------------------------
(in millions) 1996 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $1,891 $2,080 $2,886
Additions:
Loans placed on
nonaccrual status 505 1,432 1,058
Acquired in the
Continental merger -- -- 245
Leases acquired 34 -- --
Other/a/ 144 -- --
Deductions:
Sales (130) (35) (210)
Restored to accrual status (360) (399) (616)
Foreclosures (25) (113) (155)
Charge-offs (237) (188) (143)
Other, primarily payments (704) (886) (985)
- ------------------------------------------------------------------------------
Balance, end of year $1,118 $1,891 $2,080
- ------------------------------------------------------------------------------
</TABLE>
/a/Reflects the effect of a change in the past due period on nonaccrual
loans, which is discussed in the Nonperforming Assets section.
During the fourth quarter of 1996, BAC changed the past due period by which
residential real estate loans and consumer loans that are collateralized by
junior mortgages on residential real estate are considered nonaccrual. The
maximum period that loans can be past due before being placed on nonaccrual
status was reduced from 180 days to 90 days. As a result of this change,
nonaccrual loans increased by $144 million, while loans past due 90 days or more
and still accruing interest decreased by the same amount.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Nonaccrual Assets at Year End (Bar chart in non-EDGAR version)
- --------------------------------------------------------------------------------
(in millions of dollars)
1992 1993 1994 1995 1996
-------------------------------------------
<S> <C> <C> <C> <C> <C>
5,235 2,886 2,080 1,891 1,118
</TABLE>
36
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Cash Interest Payments on Nonaccrual Assets by Loan Type/a/
- -----------------------------------------------------------------------------------------------------------------------
December 31, 1996
---------------------------------------------------------------------------------------
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 $ 357 $ 2 $ 1 $ 354/b/ 99%
Residential junior mortgages 60 1 -- 59/b/ 98
Other consumer 7 4 1 2 29
Commercial:
Commercial and industrial 623 289 93 241 39
Loans secured by real estate 323 94 23 206 64
Financial institutions 52 51 1 -- --
Lease financing 1 -- -- 1 100
Construction and development
loans secured by real estate 161 53 13 95 59
Agricultural 46 11 7 28 61
- -----------------------------------------------------------------------------------------------------------------------
1,630 505 139 986 60
- -----------------------------------------------------------------------------------------------------------------------
FOREIGN, PRIMARILY COMMERCIAL 224 96 19 109 49
Other interest-bearing assets 23 -- -- 23 100
- -----------------------------------------------------------------------------------------------------------------------
$1,877 $601 $158 $1,118 60%
- -----------------------------------------------------------------------------------------------------------------------
Cash yield on average total
nonaccrual book balance
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended December 31, 1996
--------------------------------------------------------------------------------
Cash Interest
Average Payments Applied
Nonaccrual ----------------------------------------------------------------
Book As Interest
(dollar amounts in millions) Balance/b/ Income Other/c/ Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 276 $11 $ 1 $ 12
Residential junior mortgages 64 4 -- 4
Other consumer 2 -- 1 1
Commercial:
Commercial and industrial 381 25 21 46
Loans secured by real estate 241 14 7 21
Financial institutions 14 -- -- --
Lease financing 1 -- -- --
Construction and development
loans secured by real estate 270 12 11 23
Agricultural 31 4 1 5
- ----------------------------------------------------------------------------------------------------------------------
1,280 70 42 112
- ----------------------------------------------------------------------------------------------------------------------
FOREIGN, PRIMARILY COMMERCIAL 121 18 14 32
Other interest-bearing assets 8 -- -- --
- ----------------------------------------------------------------------------------------------------------------------
$1,409 $88 $56 $144
- ----------------------------------------------------------------------------------------------------------------------
Cash yield on average total
nonaccrual book balance 10.22%
- ----------------------------------------------------------------------------------------------------------------------
</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/Reflects the effect of a change in the past due period on nonaccrual loans,
which is discussed on page 36.
/c/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.
Loans past due 90 days or more and still accruing interest, which are generally
well secured and in the process of collection, decreased $176 million in 1996.
The decrease was primarily due to the previously mentioned change in the past
due period on certain consumer nonaccrual loans and the overall improvements in
customer delinquencies within the residential real estate categories. Partially
offsetting the decrease was an increase in the other consumer category, which
was primarily attributable to growth in this portfolio.
The improvement in BAC's credit quality during 1996 was also reflected in BAC's
nonperforming asset ratios. At December 31, 1996, the ratio of nonaccrual loans
to total loans was 0.66 percent, down from 1.22 percent at December 31, 1995. In
addition, the ratio of nonperforming assets to total assets (comprised of
nonaccrual assets and other real estate owned) declined 44 basis points from
year-end 1995 to 0.59 percent at December 31, 1996.
OREO, which is recorded in other assets, primarily includes properties acquired
through foreclosure or in full or partial satisfaction of loans. OREO was $353
million at December 31, 1996, a decrease of $139 million from year-end 1995.
Both at year-end 1996 and 1995, the aggregate fair value of properties included
in OREO represented approximately 123 percent of their net carrying value.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Loans Past Due 90 Days or More and Still Accruing Interest
- -----------------------------------------------------------------------
December 31
-------------------------------------
(in millions) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages/a/ $ -- $180 $133 $153 $181
Residential junior mortgages/a/ -- 12 23 23 70
Other consumer 186 162 136 152 219
Commercial:
Commercial and industrial 29 20 25 20 19
Loans secured by real estate 5 1 54 138 22
Financial institutions -- 16 16 -- --
Lease financing -- 1 1 -- 1
Construction and
development loans
secured by real estate 12 -- 38 86 117
Agricultural 1 -- 8 -- 4
- -----------------------------------------------------------------------
233 392 434 572 633
- -----------------------------------------------------------------------
FOREIGN 2 19 2 6 --
- -----------------------------------------------------------------------
$235 $411 $436 $578 $633
- -----------------------------------------------------------------------
</TABLE>
/a/Reflects the change in the past due period on nonaccrual loans, which is
discussed on page 36.
37
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Restructured Loans
- -----------------------------------------------------------------------
December 31
----------------------------------------
(in millions) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Commercial and industrial $ 25 $ 78 $71 $ 66 $ 69
Commercial loans secured
by real estate 255 18 15 21 12
Financial institutions -- -- -- -- 1
Lease financing -- -- -- 1 --
Construction and
development loans
secured by real estate 16 15 2 10 34
Agricultural 1 1 7 -- 20
- -----------------------------------------------------------------------
297 112 95 98 136
- -----------------------------------------------------------------------
FOREIGN/a/ 5 1 2 36 40
- -----------------------------------------------------------------------
$302 $113 $97 $134 $176
- -----------------------------------------------------------------------
</TABLE>
/a/Excludes debt restructurings with countries that have experienced liquidity
problems of $1.6 billion, $1.6 billion, $1.8 billion, $2.4 billion, and $2.3
billion at December 31, 1996, 1995, 1994, 1993, and 1992, 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 8 of the Notes to
Consolidated Financial Statements on page 61.
The increase in restructured commercial real estate loans was primarily due to a
loan to a particular borrower that was previously on nonaccrual status.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
In the ordinary course of business, BAC enters into various types of
transactions that involve off-balance-sheet financial instruments. These include
credit-related financial instruments and derivative and foreign exchange
products.
CREDIT-RELATED FINANCIAL INSTRUMENTS
Credit-related financial instruments include commitments to extend credit,
standby letters of credit, and commercial letters of credit. BAC makes
commitments to extend credit to a wide range of customers as part of its ongoing
lending operations. Additionally, BAC issues standby letters of credit to ensure
performance or financial obligations of customers. 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 24 of the Notes to Consolidated Financial Statements
on pages 72-78.
In meeting the needs of its global customers, BAC uses its expertise to execute
transactions to aid these customers in managing their risk exposures to interest
rates, exchange rates, prices of securities, and financial or commodity indices.
For example, a multinational consumer products company may choose to manage the
currency risks associated with the foreign countries in which it operates. BAC
will transact cross currency swaps or foreign exchange contracts with the
customer to meet this need. 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. 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, 1996. The remaining 5 percent involved
nontraditional products or transactions and were executed primarily to meet
unique client needs.
As an end-user, BAC employs foreign exchange contracts to hedge foreign exchange
risk and derivatives contracts to hedge interest rate risk and foreign exchange
risk in connection with its own asset and liability management activities. More
specifically, BAC primarily uses interest rate derivatives instruments to manage
the interest rate risk associated with its assets and liabilities, including
residential loans, long-term debt, and deposits. For a detailed discussion of
BAC's hedging objectives and the strategies and financial instruments used to
achieve such objectives, refer to Note 24 of the Notes to Consolidated Financial
Statements on pages 72-78.
Similar to on-balance-sheet financial instruments, such as loans and investment
securities, off-balance-sheet financial instruments expose BAC to various types
of risk. For a discussion of these risks and how they are managed, please refer
to the Risk Management section that follows.
38
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
RISK MANAGEMENT
Risk management is integral to BAC's operations and a key determinant of its
overall financial performance, since risk is inherent in most of BAC's business
activities. BAC applies various strategies to mitigate risks to which it is
exposed, namely credit, market, liquidity, and operational risk. These
strategies are discussed in the following sections.
CREDIT RISK MANAGEMENT
Credit risk is the possibility of loss from the failure of a borrower or
counterparty to fully perform under the terms of a credit-related contract.
Credit risk arises primarily from BAC's lending activities, as well as from
transactions involving other on- and off-balance-sheet instruments. Credit risk
also includes transfer risk, which is the repayment risk that occurs in
transactions subject to potential restrictions on the movement of funds across
borders. For example, although foreign customers possess adequate funds, their
local central banks may preclude them from exchanging their local currency for
the foreign currency (usually U.S. dollars) in which they agreed to repay their
obligations.
BAC's Credit Policy Committee (CPC) oversees all credit-related activities. The
CPC is responsible for managing BAC's overall credit exposure, and for
establishing credit policies, standards, and guidelines that define, quantify,
and monitor credit risk. 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. Furthermore, the CPC continually monitors
significant economic developments and internal shifts in strategic emphasis and
updates the credit risk management process accordingly. Managing credit risk
within the guidelines established by the CPC is the responsibility of all BAC
line officers involved in extending credit to customers. The primary focus of
managing credit risk is to evaluate the likelihood that a borrower or
counterparty will repay a loan from expected financial sources and to follow up
with appropriate action. When collateral-secured transactions are involved, this
includes ensuring that sufficient collateral is obtained at the outset and that
sufficient collateral margins are maintained.
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 credit
risk management process is monitored on an ongoing basis by officers from BAC's
Corporate Credit Examination Services. The results of these monitoring
activities are reported to senior credit management and the Auditing and
Examining Committee of the Board of Directors. BAC makes substantial investments
in credit risk training to ensure competence among all credit officers and to
better serve customers' changing needs.
<TABLE>
<CAPTION>
Total Loan Outstandings by Geographic Area (Pie charts in non-EDGAR version)
December 31, December 31,
1995 1996
------------------------
<S> <C> <C>
Northern California 11.1% 10.7%
Central California 8.8% 8.0%
Southern California 21.4% 18.8%
Other Western States 20.2% 21.2%
Other U.S. 23.4% 25.3%
Foreign 15.1% 16.0%
------------------------
Total 100.0% 100.0%
========================
</TABLE>
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 by geographic area and type of asset is
evident in the chart above, and in the tables on pages 30-31. The
diversification in BAC's off-balance-sheet portfolio is discussed in Note 24 of
the Notes to Consolidated Financial Statements on pages 72-78.
OFF-BALANCE-SHEET CREDIT RISK
OTC foreign exchange and derivatives contracts introduce two additional elements
of credit risk: pre-settlement (or close-out) risk and settlement risk.
Pre-settlement risk arises from the possibility that a counterparty to a
transaction is unable to live up to the terms of its contract and BAC must write
off the current market value of the contract (that has already been recognized
as an asset and taken into income). Settlement risk occurs whenever BAC pays out
funds or delivers assets before it receives payment from the counterparty in the
transaction.
BAC mitigates both pre-settlement and settlement risk primarily by evaluating
the creditworthiness of its counterparties. BAC utilizes the same policies,
procedures, and internal credit risk rating system established for all
on-balance-sheet credit exposures. At December 31, 1996, approximately 95
percent of the counterparties with whom BAC had credit exposure from foreign
exchange and derivatives contracts had investment grade or equivalent ratings.
39
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
To mitigate pre-settlement risk further, BAC obtains collateral where
appropriate. In addition, BAC uses agreements that allow netting of multiple
transactions in the case of default, such as the internationally recognized
International Swap and Derivatives Association (ISDA) agreement and the
International Foreign Exchange Master Agreement (IFEMA). BAC's policy is to
execute legally enforceable netting agreements with its foreign exchange and
derivative customers whenever possible.
BAC reduces settlement risk through either novation netting
(a mutual agreement to substitute a new contract for two or more existing
contracts that are then discharged) or settlement netting (a contract to settle
mutual obligations at the net value of the individual contracts) arrangements,
which may be included as part of a master netting agreement. There were no
losses due to settlement risk in either 1996 or 1995.
BAC measures both current and potential future exposure when evaluating its
pre-settlement credit risk on foreign exchange and derivative contracts. Current
credit exposure is the amount of unrealized gain on the contract, or the amount
BAC would have the right to receive if a foreign exchange or derivative contract
were terminated on the date of evaluation. Potential credit exposure (at the
97.5 percent confidence level) is calculated based on the range of probable
changes in the contract's fair value over its remaining life, given the
historical pattern of market behavior.
Current credit risk, based on current positive fair values of open OTC contracts
at December 31, 1996 and taking into account the effect of master netting
agreements and arrangements, was $6.8 billion, down $1.3 million from year-end
1995. The decrease in credit risk between year-end 1996 and 1995 was primarily
due to higher use of enforceable netting agreements by BAC's counterparties.
Risk mitigating netting agreements and arrangements helped to limit BAC's actual
credit losses from counterparty nonperformance to $1.4 million in 1996 and $3
million in 1995.
Potential credit exposure is an estimate based on statistical analysis which
involves numerous assumptions and variables. The process involves simulation of
many scenarios for interest rates and exchange rates. Credit exposure for each
counterparty individually and for the total of all counterparties is determined
for each scenario on a series of future dates. At the 97.5 percent level of
confidence, it is estimated that total current exposure of $6.8 billion in the
portfolio as of December 31, 1996 could potentially increase to a peak of $8.7
billion in the first quarter of 1997.
OPERATIONAL 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.
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 a broad array of financial products, BAC is exposed to
interest rate risk and, to a much less significant extent, foreign exchange
risk. Financial products that expose BAC to market risk include securities,
loans, deposits, long-term debt, and subordinated capital notes. Derivative
financial instruments that expose BAC to market risk include futures, forwards,
swaps, options, and other financial instruments with similar characteristics.
The Bank's 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
on page 41.
40
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
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 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
(EAR), 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. EAR limits measure potential loss at a
certain statistical confidence level. Finally, BAC uses profit and loss
simulation limits to 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 occurrence.
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 1996 and 1995, BAC's combined EAR calculated on a perfectly correlated
basis averaged $42 million and $32 million, respectively, and peaked at $52
million and $41 million. BAC's EAR calculated on an uncorrelated basis averaged
$18 million and $13 million, respectively, and peaked at $23 million and $18
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 illustrated in the histogram of 1996 daily
trading-related revenues, which is presented below. This graph depicts the
number of days in 1996 in which BAC's trading revenues fell within each million
dollar increment. During 1996, daily trading-related revenues averaged $3.5
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 1996 in controlling the volatility of its
daily trading activities, reflecting its diversified approach to market risk
management.
<TABLE>
<CAPTION>
Histogram of Daily Trading-Related Revenue for 1996 (Bar chart in non-EDGAR
version)
Daily Revenue in millions of dollars Number of Days
--------------------------------------------------------
<S> <C>
> -6 0
-6 to -5 0
-5 to -4 0
-4 to -3 1
-3 to -2 2
-2 to -1 3
-1 to 0 1
0 to 1 17
1 to 2 40
2 to 3 51
3 to 4 51
4 to 5 35
5 to 6 26
6 to 7 13
7 to 8 9
8 to 9 3
9 to 10 2
> 10 2
------
256
</TABLE>
41
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
- --------------------------------------------------------------------------------
Interest Rate Sensitivity by Repricing or Maturity Dates
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------
Greater than Greater than Over
(in billions) 0-6 months 6-12 months 1-5 years 5 years Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC ASSETS
Federal funds sold and securities
purchased under resale agreements $ 1.4 $ -- $ -- $ -- $ 1.4
Trading account securities 1.4 -- -- -- 1.4
Loans:
Prime indexed 16.0 -- -- -- 16.0
Adjustable rate residential first mortgages 8.5 5.1 6.6 4.1 24.3
Other loans, net 49.0 8.0 19.4 12.0 88.4
Other assets 14.4 0.8 14.1 10.5 39.8
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic Assets 90.7 13.9 40.1 26.6 171.3
- ------------------------------------------------------------------------------------------------------------------------------------
DOMESTIC LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic deposits (68.0) (8.9) (22.2) (19.6) (118.7)
Other short-term borrowings (11.6) (1.9) (0.4) (0.1) (14.0)
Long-term debt and subordinated capital notes (11.0) (0.5) (3.4) (6.3) (21.2)
Other liabilities and stockholders' equity (3.6) (0.5) (10.0) (16.6) (30.7)
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic Liabilities and Stockholders' Equity (94.2) (11.8) (36.0) (42.6) (184.6)
- ------------------------------------------------------------------------------------------------------------------------------------
Offshore Funding Books, net (2.0) 0.5 0.4 1.1 --
- ------------------------------------------------------------------------------------------------------------------------------------
Core Gap before Risk Management Positions (5.5) 2.6 4.5 (14.9) (13.3)
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE RISK MANAGEMENT POSITIONS
Investment securities/a/ 2.3 1.3 4.2 5.5 13.3
Off-balance-sheet financial instruments/b/ (1.9) (0.8) (5.8) 8.5 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Rate Risk Management Positions 0.4 0.5 (1.6) 14.0 13.3
Net Gap (5.1) 3.1 2.9 (0.9) --
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Gap $ (5.1) $ (2.0) $ 0.9 $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Available-for-sale and held-to-maturity securities.
/b/Represents the repricing effect on off-balance-sheet positions, which
include interest rate swaps, futures contracts, and similar agreements.
<TABLE>
<CAPTION>
Net Interest Rate Risk (Plot point graph in non-EDGAR version)
(in billions of dollars) 1992 1993 1994 1995 1996
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Interest Rate Risk (6.9) 1.0 (2.8) 0.0 0.0
</TABLE>
OTHER BANKING ACTIVITIES
BAC's banking activities other than trading include lending, accepting deposits,
investing in securities, and issuing debt as needed to fund assets. BAC's
governing objective in interest rate risk management for these activities is to
minimize the potential for significant loss as a result of changes in market
conditions. 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 reported earnings variability by estimating the potential effect of
changes in interest rates on projected net interest 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 yield curve shifts. 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
context. 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 to the left, BAC's net one-year position has been essentially
balanced throughout the last five years.
42
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
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 "receive fixed, pay floating" 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 on page 42, Interest Rate Sensitivity by Repricing or Maturity Dates,
shows BAC's mismatch positions. At year-end 1996, 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.
BAC must make a number of estimates and assumptions to calculate its exposure to
gap risk and develop the table on page 42. 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 gap maturities reflect the existence of periodic interest rate caps,
floors, and lifetime ceilings, as well as an estimated amount of loan
prepayments. For purposes of estimating gap risk, BAC assumes that its common
equity is an intermediate- to long-term source of funds.
Overall, management measures gap risk by modeling potential quarterly 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, 1996.
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, 1996,
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 two 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 repricing
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-rate products 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 remain 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 market
characteristics. This process includes a representative number of scenarios that
diverge widely from average 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 1996, 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 4 percent and 9 percent, respectively, of common equity. Management
believes that these adverse outcomes would be distributed over several years and
mitigated by intervening risk management actions.
43
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
Residual option and index risk is unavoidable since it reflects the decisions of
many individual customers, and since market available hedging products may not
wholly protect against the specific risks 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, 1996, BAC's purchased
option contracts, which reduce option risk, had a gross notional value of $11.0
billion.
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.
The coordination of the relative maturities of assets and liabilities is
fundamental to the management of liquidity. BAC's ability to raise funds in
money and capital markets provides flexibility in managing liquidity and
mitigates the potential for liquidity risk. 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, senior debt, including commercial paper, 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 and commercial paper.
Subsidiary funding is also available through lines of credit between banking
subsidiaries and the bank and between nonbanking subsidiaries and the parent
company.
The liquid assets of BAC and of its subsidiaries consist of cash and 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 the funding sources are core deposits, foreign deposits,
capital markets 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 markets
funds include long-term debt, subordinated capital notes, and common and
preferred equity. Purchased money-market liabilities primarily include foreign
time deposits, federal funds purchased, securities sold under repurchase
agreements, and other short-term borrowings. As discussed on page 28, BAC
experienced a shift in its funding structure during 1995 and 1996. The credit
ratings of BAC and its subsidiaries, as well as market conditions, generally
influence the cost and availability of funding sources.
LIQUIDITY REVIEW
The ongoing operations of BAC resulted in cash inflows of $17.5 billion and $8.4
billion in 1996 and 1995 from deposits and short-term borrowings. During the
same periods, BAC's liquidity was enhanced by proceeds from sales of loans,
totaling $5.8 billion and $2.0 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.
During 1996, loan sales included the securitization of credit card receivables
of $1.5 billion. In addition, total sales, maturities, prepayments, and calls of
securities exceeded total purchases, resulting in cash inflows of $0.6 billion
and $2.4 billion in 1996 and 1995, respectively.
Total loan originations and purchases exceeded total principal collections,
resulting in cash outflows of $17.8 billion and $16.1 billion in 1996 and 1995,
respectively. In addition, in both 1996 and 1995, the parent paid dividends of
$965 million and $911 million, respectively, to its preferred and common
stockholders. During the same periods, the parent repurchased common and
preferred stock for $1,724 million and $1,132 million, respectively. For
information concerning dividend and loan restrictions, refer to Note 29 of the
Notes to Consolidated Financial Statements on pages 81-83.
44
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
CAPITAL MANAGEMENT
Capital represents the stockholders' investment on which BAC strives to generate
appropriate returns. BAC's capital position continued to strengthen during 1996.
At December 31, 1996, stockholders' equity totaled $20.7 billion, an increase of
$0.5 billion from year-end 1995. Common equity increased $0.9 billion during
1996, but was partially offset by a decline in preferred stock of $0.4 billion.
<TABLE>
<CAPTION>
Common and Total Stockholders' Equity (stacked plot point graph in non-EDGAR
version
(in billions of dollars)
Total Common
-------------------------
<S> <C> <C>
March 31, 1995 19.2 16.2
June 30, 1995 19.6 16.9
September 30, 1995 19.9 17.2
December 31, 1995 20.2 17.6
March 31, 1996 20.2 17.7
June 30, 1996 20.1 17.9
September 30, 1996 20.5 18.3
December 31, 1996 20.7 18.5
</TABLE>
Common equity rose $0.9 billion during 1996 primarily due to an increase in
retained earnings of $1.9 billion, partially offset by an increase in treasury
stock of $1.2 billion. During 1996, BAC repurchased 17.0 million shares of its
common stock at an average per-share price of $79.39, which reduced common
equity by $1,351 million. For additional information regarding the common stock
component of the stock repurchase program, refer to Note 16 of the Notes to
Consolidated Financial Statements on page 65.
The decline in BAC's preferred stock of $381 million during 1996 resulted from
the redemption of all 400,000 outstanding shares of its 11% Preferred Stock,
Series J, on March 31, 1996, and all 7,250,000 outstanding shares of its 9 5/8%
Cumulative Preferred Stock, Series F, on April 16, 1996.
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 3,
1997, BAC's Board of Directors declared an increase in the quarterly dividend on
common stock from $0.54 per share to $0.61 per share. The dividend is payable on
March 12, 1997 to shareholders of record on February 20, 1997.
Also on February 3, 1997, BAC announced that the Board amended the stock
repurchase program to enable BAC to buy back up to an additional $3.0 billion of
its common stock through year-end 1998. The revised program also enables BAC to
retire up to an additional $1.0 billion of preferred stock over the same time
period.
On December 3, 1996, BAC announced the redemption of all outstanding shares of
its 9% Cumulative Preferred Stock, Series H, which will occur on January 15,
1997. In addition, on January 6, 1997, BAC announced the redemption of all
outstanding shares of its 8 3/8% Cumulative Preferred Stock, Series K, which
will occur on February 15, 1997. For additional information regarding the
preferred stock component of the stock repurchase program, refer to Note 18 of
the Notes to Consolidated Financial Statements on pages 65-66.
In addition, BAC introduced an employee stock option program, which allows
employees to buy shares of BAC common stock over several years at a grant
price set on the date of the grant. Under the program, beginning November 18,
1996, employees will be granted options every six months for the next three
years. BAC is authorized to grant options to its employees for up to 35,100,000
shares of common stock. All options granted have been included in the
calculation of earnings per share.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Dividends Declared per Common Share (plot point graph in non-EDGAR Version)
1992 1993 1994 1995 1996
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividends Declared per Common Share $1.30 $1.40 $1.60 $1.84 $2.16
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
BankAmerica Corporation 1996
- --------------------------------------------------- Financial Review ---------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Risk-Based Capital, Risk-Weighted Assets, and Risk-Based Capital Ratios
- ------------------------------------------------------------------------------------------------------------------------------
December 31
---------------------------------------------
(dollar amounts in millions) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RISK-BASED CAPITAL
Common stockholders' equity $ 18,439 $ 17,598 $ 16,149
Qualified perpetual preferred stock 1,961 2,623 3,068
Minority interest/a/ 1,566 -- --
Less: Goodwill, nongrandfathered core deposit and other identifiable
intangibles, and other deductions/b/ (4,922) (5,230) (5,559)
- ------------------------------------------------------------------------------------------------------------------------------
Tier 1 risk-based capital 17,044 14,991 13,658
- ------------------------------------------------------------------------------------------------------------------------------
Eligible portion of the allowance for credit losses 2,758 2,566 2,366
Hybrid capital instruments 142 214 336
Subordinated notes and debentures 6,169 5,798 5,707
Less: Other deductions (184) (153) (114)
- ------------------------------------------------------------------------------------------------------------------------------
Tier 2 risk-based capital 8,885 8,425 8,295
Total 25,929 23,416 21,953
- ------------------------------------------------------------------------------------------------------------------------------
Less: Investments in unconsolidated banking and
finance subsidiaries/c/ (49) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Risk-Based Capital $ 25,880 $ 23,416 $ 21,953
- ------------------------------------------------------------------------------------------------------------------------------
RISK-WEIGHTED ASSETS
Balance sheet assets:
Trading account assets $ 6,022 $ 3,506 $ 2,773
Available-for-sale and held-to-maturity securities 5,121 5,007 4,950
Loans 139,412 132,504 120,808
Other assets 18,711 16,725 15,924
- ------------------------------------------------------------------------------------------------------------------------------
Total balance sheet assets 169,266 157,742 144,455
- ------------------------------------------------------------------------------------------------------------------------------
Off-balance-sheet items:
Unused commitments 28,368 26,268 23,211
Standby letters of credit 15,021 12,888 12,516
Foreign exchange and derivatives contracts 4,662 4,530 5,638
Other 2,166 2,567 1,990
- ------------------------------------------------------------------------------------------------------------------------------
Total off-balance-sheet items 50,217 46,253 43,355
Total Risk-Weighted Assets $219,483 $203,995 $187,810
- ------------------------------------------------------------------------------------------------------------------------------
RISK-BASED CAPITAL RATIOS
Tier 1 Capital Ratio 7.77% 7.35% 7.27%
Total Capital Ratio 11.79 11.48 11.69
Tier 1 Leverage Ratio 7.44 6.92 6.74
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes $1,477 million of trust preferred securities and $89 million
related to BAMSI.
/b/ Includes nongrandfathered core deposit and other identifiable intangibles
acquired after February 19, 1992 of $772 million and $67 million,
respectively, at December 31, 1996, $856 million and $78 million,
respectively, at December 31, 1995, and $937 million and $100 million,
respectively, at December 31, 1994. Also includes $8 million, $1 million,
and $111 million, at December 31, 1996, 1995, and 1994, respectively, of the
excess of the net book value over 90 percent of the fair value of mortgage
servicing rights and credit card intangibles.
/c/ Reflects the Federal Reserve Board's adoption of the Office of the
Comptroller of the Currency's treatment of investments in unconsolidated
banking and finance subsidiaries. Prior to 1996, half of the amount for each
respective year was included in other deductions from Tier 1 Capital and
half was included in other deductions from Tier 2 Capital.
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. The minimum
Tier 1 leverage ratio is 4 percent.
In accordance with BAC policy, BAC maintained capital ratios for both the parent
and its domestic banking subsidiaries above the regulatory well-capitalized
levels during 1996, 1995, and 1994. The minimum levels for well-capitalized
status 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.
46
<PAGE>
BankAmerica Corporation 1996
- ------------------------------- Financial Review -------------------------------
The Federal Reserve has announced that certain cumulative preferred securities
having the characteristics of trust preferred securities qualify as minority
interest, which is included in Tier 1 capital for bank holding companies. During
the fourth quarter of 1996, BAC issued $1,477 million of trust preferred
securities.
At December 31, 1996, BAC's Tier 1 and total risk-based capital ratios increased
42 basis points and 31 basis points from year-end 1995, primarily due to the
issuance of $1,477 million of trust preferred securities. This issuance was
partially offset by an increase in total risk-weighted assets, primarily loans
and off-balance-sheet credit-related financial instruments. The increases in
Tier 1 and total risk-based capital ratios may be temporary. These ratios may
return to their targeted levels to the extent that preferred stock is redeemed
in future years. BAC's targeted Tier 1 risk-based capital ratio is approximately
7.30 percent. BAC's Tier 1 leverage ratio was 7.44 percent at December 31, 1996,
up from 6.92 percent at year-end 1995.
<TABLE>
<CAPTION>
Risk-Based Capital Ratios (Bar chart in non-EDGAR version)
1994 1995 1996
----------------------------------
<S> <C> <C> <C>
Tier 1 7.3% 7.4% 7.8%
Total 11.7% 11.5% 11.8%
</TABLE>
The table to the right, Tier 1 Capital Generation, shows that BAC generated
Tier 1 capital of $5,013 million, $3,577 million, and $3,985 million during the
years ended December 31, 1996, 1995, and 1994, respectively. These amounts were
used to pay dividends on common and preferred stock as well as to repurchase
common stock and redeem or buy back preferred stock. The remaining capital
generated was used to fund balance sheet growth and support off-balance-sheet
activities, resulting in net capital generated of $886 million, $104 million,
and $155 million in 1996, 1995, and 1994, respectively.
For further information related to the bank's regulatory capital requirements,
refer to Note 19 of the Notes to Consolidated Financial Statements on pages
66-67.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Tier 1 Capital Generation
- -----------------------------------------------------------------------
Year Ended December 31
------------------------------
(in millions) 1996 1995 1994
- -----------------------------------------------------------------------
<S> <C> <C> <C>
GENERATION
Net income $ 2,873 $ 2,664 $ 2,176
Amortization of intangibles 272 282 266
Common stock issuances and other 302 631 1,128
Minority interest/a/ 1,566 -- --
Preferred stock issued -- -- 415
- -----------------------------------------------------------------------
Total generation 5,013 3,577 3,985
- -----------------------------------------------------------------------
APPLICATIONS
Common stock dividends (780) (684) (571)
Preferred stock dividends (185) (227) (248)
Common stock repurchased (1,351) (926) (503)
Preferred stock repurchased (680) (206) (324)
Preferred stock converted to
common stock -- (248) --
- -----------------------------------------------------------------------
Total applications (2,996) (2,291) (1,646)
- -----------------------------------------------------------------------
Capital attributed to growth
in risk-weighted assets (1,131) (1,182) (2,184)
- -----------------------------------------------------------------------
Net capital generated $ 886 $ 104 $ 155
- -----------------------------------------------------------------------
</TABLE>
/a/Includes $1.477 million of trust preferred securities and $89 million related
to BAMSI.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, usually containing the words
"estimate," "project," "expect" or similar expressions. Those statements are
subject to uncertainties, including those discussed in this report, particularly
in Risk Management, Operational Risk Management, Market Risk Management,
Liquidity Risk Management, and Capital Management on pages 39-47. These
uncertainties could cause actual results to differ materially. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Readers should also consider information on
risks and uncertainties contained in the discussions of competition, supervision
and regulation, and forward-looking statements in BAC's most recent report on
Form 10-K.
47
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
Consolidated Financial Statements
REPORT OF MANAGEMENT
The management of BankAmerica Corporation and its subsidiaries (BAC) 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 audit 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 audit committee, oversees the
adequacy of BAC's control environment. The audit 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, 1996, 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/ David A. Coulter
David A. Coulter
Chairman and Chief Executive Officer
/s/ Michael E. O'Neill
Michael E. O'Neill
Vice Chairman and Chief Financial Officer
/s/ John J. Higgins
John J. Higgins
Executive Vice President and Chief Accounting Officer
January 14, 1997
48
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
San Francisco, California
January 14, 1997
49
<PAGE>
BankAmerica Corporation 1996
- -------------------------------- Consolidated Financial Statements -------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Consolidated Statement of Operations
- ------------------------------------------------------------------------------------------------------
BankAmerica Corporation and Subsidiaries Year Ended December 31
-------------------------------------------
(dollar amounts in millions, except per share data) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $13,363 $12,707 $ 9,806
Interest-bearing deposits in banks 453 466 325
Federal funds sold 29 32 55
Securities purchased under resale agreements 653 618 351
Trading account assets 1,001 741 473
Available-for-sale and held-to-maturity securities 1,160 1,276 1,374
- ------------------------------------------------------------------------------------------------------
Total interest income 16,659 15,840 12,384
- ------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 5,359 4,923 3,337
Federal funds purchased 79 131 27
Securities sold under repurchase agreements 695 581 351
Other short-term borrowings 883 630 275
Long-term debt 1,023 1,067 810
Subordinated capital notes 33 46 42
- ------------------------------------------------------------------------------------------------------
Total interest expense 8,072 7,378 4,842
Net interest income 8,587 8,462 7,542
- ------------------------------------------------------------------------------------------------------
Provision for credit losses 885 440 460
- ------------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses 7,702 8,022 7,082
- ------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Deposit account fees 1,399 1,303 1,201
Credit card fees 355 315 331
Trust fees 229 300 285
Other fees and commissions 1,383 1,269 1,111
Trading income 630 527 357
Venture capital activities 427 337 136
Net gain on sales of assets 197 71 126
Net gain on sales of subsidiaries and operations 180 25 85
Gain on issuance of subsidiary's stock 147 - -
Net gain on available-for-sale securities 61 34 24
Other income 404 365 479
- ------------------------------------------------------------------------------------------------------
Total noninterest income 5,412 4,546 4,135
- ------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries 3,291 3,309 2,936
Employee benefits 773 718 703
Occupancy 757 738 690
Equipment 702 663 589
Amortization of intangibles 373 428 411
Communications 363 359 323
Professional services 344 313 225
Restructuring charges 280 - -
Regulatory fees and related expenses 123 176 290
Other expense 1,335 1,297 1,333
- ------------------------------------------------------------------------------------------------------
Total noninterest expense 8,341 8,001 7,500
Income before income taxes 4,773 4,567 3,717
- ------------------------------------------------------------------------------------------------------
Provision for income taxes 1,900 1,903 1,541
- ------------------------------------------------------------------------------------------------------
Net Income $ 2,873 $ 2,664 $ 2,176
- ------------------------------------------------------------------------------------------------------
Net income applicable to common stock $ 2,688 $ 2,437 $ 1,928
Earnings per common and common equivalent share 7.31 6.49 5.36
Earnings per common share -- assuming full dilution 7.30 6.45 5.33
Dividends declared per common share 2.16 1.84 1.60
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
50
<PAGE>
BankAmerica Corporation 1996
- ------------------------------------- Consolidated Financial Statements --------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet
- ------------------------------------------------------------------------------------------------------------------
BankAmerica Corporation and Subsidiaries December 31
----------------------------
(dollar amounts in millions) 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 16,223 $ 14,312
Interest-bearing deposits in banks 5,708 5,761
Federal funds sold 134 721
Securities purchased under resale agreements 7,275 4,962
Trading account assets 12,205 9,516
Available-for-sale securities 12,113 12,043
Held-to-maturity securities (market value: 1996-- $3,920; 1995-- $4,332) 4,138 4,656
Loans 165,415 155,373
Less: Allowance for credit losses 3,523 3,554
- ------------------------------------------------------------------------------------------------------------------
Net loans 161,892 151,819
- ------------------------------------------------------------------------------------------------------------------
Customers' acceptance liability 2,861 2,295
Accrued interest receivable 1,441 1,458
Goodwill, net 3,938 4,192
Identifiable intangibles, net 1,616 1,806
Unrealized gains on off-balance-sheet instruments 7,682 7,801
Premises and equipment, net 3,987 3,985
Other assets 9,540 7,119
- ------------------------------------------------------------------------------------------------------------------
Total Assets $250,753 $232,446
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits in domestic offices:
Interest-bearing $ 84,133 $ 84,097
Noninterest-bearing 39,694 36,820
Deposits in foreign offices:
Interest-bearing 42,732 37,886
Noninterest-bearing 1,456 1,691
- ------------------------------------------------------------------------------------------------------------------
Total deposits 168,015 160,494
- ------------------------------------------------------------------------------------------------------------------
Federal funds purchased 2,176 5,160
Securities sold under repurchase agreements 7,644 6,383
Other short-term borrowings 17,566 7,627
Acceptances outstanding 2,861 2,295
Accrued interest payable 879 848
Unrealized losses on off-balance-sheet instruments 7,633 8,227
Other liabilities 6,004 5,862
Long-term debt 15,430 14,723
Subordinated capital notes 355 605
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 228,563 212,224
- ------------------------------------------------------------------------------------------------------------------
Corporation obligated mandatorily redeemable preferred securities of subsidiary
trusts holding solely junior subordinated deferrable interest debentures of the
corporation (trust preferred securities) 1,477 --
STOCKHOLDERS' EQUITY
Preferred stock 2,242 2,623
Common stock, par value $1.5625 (authorized: 1996 and 1995-- 700,000,000 shares;
issued: 1996-- 387,296,287 shares; 1995-- 385,006,003 shares) 605 602
Additional paid-in capital 8,467 8,328
Retained earnings 11,500 9,606
Net unrealized gain on available-for-sale securities 32 1
Common stock in treasury, at cost (1996-- 32,029,392 shares; 1995-- 17,558,801 shares) (2,133) (938)
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 20,713 20,222
Total Liabilities and Stockholders' Equity $250,753 $232,446
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
51
<PAGE>
BankAmerica Corporation 1996
- --------------------Consolidated Financial Statements---------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consolidated Statement of Cash Flows
- --------------------------------------------------------------------------------
BankAmerica Corporation and Subsidiaries Year Ended December 31
-------------------------------------
(in millions) 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,873 $ 2,664 $ 2,176
Adjustments to net income to arrive at net cash provided by operating activities:
Provision for credit losses 885 440 460
Net gain on sales of assets and subsidiaries and operations (377) (96) (211)
Net amortization of loan fees and discounts (70) (101) (102)
Depreciation and amortization of premises and equipment 593 552 489
Amortization of intangibles 373 428 411
Provision for deferred income taxes 605 268 713
Change in assets and liabilities net of effects from acquisitions and
pending dispositions:
(Increase) decrease in accrued interest receivable 17 (9) (325)
Increase in accrued interest payable 31 17 421
Increase in trading account assets (2,689) (2,685) (35)
Increase (decrease) in current income taxes payable (29) 265 64
Deferred fees received from lending activities 240 142 121
Net cash provided (used) by loans held for sale (622) (880) 436
Other, net (2,873) 1,730 (598)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (1,043) 2,735 4,020
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Sales proceeds 1,985 2,509 3,019
Maturities, prepayments, and calls 5,805 5,722 6,481
Purchases (7,661) (7,416) (5,815)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 1,111 2,514 2,763
Purchases (632) (976) (1,319)
Proceeds from loan sales and securitizations 5,776 1,982 1,516
Purchases of loans (2,555) (1,711) (758)
Purchases of premises and equipment (665) (649) (617)
Proceeds from sales of other real estate owned 432 525 587
Net cash provided (used) by:
Loan originations and principal collections (15,269) (14,429) (7,602)
Interest-bearing deposits in banks 53 472 (2,576)
Federal funds sold 587 (81) 1,941
Securities purchased under resale agreements (2,313) 297 (1,108)
Net cash provided by acquisitions -- -- 700
Proceeds from liquidations of assets identified for disposition -- 55 300
Other, net 542 83 (151)
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (12,804) (11,103) (2,639)
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 3,719 2,588 3,400
Principal payments and retirements of long-term debt and subordinated capital notes (2,965) (2,652) (3,263)
Net proceeds from issuance of trust preferred securities/a/ 1,477 -- --
Proceeds from issuance of common stock 83 151 52
Proceeds from issuance of treasury stock 99 -- --
Preferred stock repurchased (391) (206) (324)
Treasury stock purchased (1,333) (926) (503)
Common stock dividends (780) (684) (571)
Preferred stock dividends (185) (227) (248)
Net cash provided (used) by:
Deposits 7,580 6,100 598
Federal funds purchased (2,984) 1,877 2,677
Securities sold under repurchase agreements 1,261 878 756
Other short-term borrowings 9,939 2,282 (708)
Other, net 216 (87) (162)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 15,736 9,094 1,704
- --------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and due from banks 22 8 11
- --------------------------------------------------------------------------------------------------------------------------
Net increase in cash and due from banks 1,911 734 3,096
- --------------------------------------------------------------------------------------------------------------------------
Cash and due from banks at beginning of year 14,312 13,578 10,482
- --------------------------------------------------------------------------------------------------------------------------
Cash and Due from Banks at End of Year $16,223 $14,312 $13,578
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
See notes to consolidated financial statements.
52
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BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consolidated Statement of Changes in Stockholders' Equity
- --------------------------------------------------------------------------------
BankAmerica Corporation and Subsidiaries Year Ended December 31
--------------------------------------
(in millions) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCK
Balance, beginning of year $ 2,623 $ 3,068 $ 2,979
Preferred stock issued -- -- 389
Preferred stock repurchased (381) (197) (300)
Convertible preferred stock converted to common stock -- (248) --
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year 2,242 2,623 3,068
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCK
Balance, beginning of year 602 581 560
Common stock issued 3 21 21
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year 605 602 581
- -----------------------------------------------------------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year 8,328 7,743 7,118
Common stock issued 142 594 623
Preferred stock issued -- -- 26
Preferred stock repurchased (18) (9) (24)
Treasury stock issued 15 -- --
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year 8,467 8,328 7,743
- -----------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of year 9,606 7,854 6,502
Net income 2,873 2,664 2,176
Common stock dividends (780) (684) (571)
Preferred stock dividends (185) (227) (248)
Foreign currency translation adjustments,
net of related income taxes (14) (1) (5)
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year 11,500 9,606 7,854
- -----------------------------------------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) ON AVAILABLE-FOR-SALE SECURITIES
Balance, beginning of year 1 (326) --
Effect of adoption of SFAS No. 115, net of related income taxes -- -- (15)
Valuation adjustments, net of related income taxes 31 327 (311)
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year 32 1 (326)
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCK IN TREASURY, AT COST
Balance, beginning of year (938) (29) (15)
Treasury stock purchased (1,351) (926) (503)
Treasury stock issued 173 29 489
Other (17) (12) --
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year (2,133) (938) (29)
Total Stockholders' Equity $20,713 $20,222 $18,891
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
53
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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 (BAI), and Bank of America
NW, National Association (formerly Seattle-First National Bank) (BANW), 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 resale, are carried at their fair values.
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.
Debt securities for which BAC has the positive intent and ability to hold to
maturity are 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.
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 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 assets and
liabilities, liquidity demands, regulatory capital considerations, and other
similar factors. All loans that are held for sale are recorded at the lower of
cost or fair value. The fair value of loans held for sale represents the cash
price anticipated to be received for the loans in a current sale.
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. During the fourth quarter of 1996, BAC changed the past
due period for nonaccrual residential real estate loans and consumer loans that
were collateralized by junior mortgages on residential real estate. The maximum
period loans can be past due before being placed on nonaccrual status was
reduced from 180 days to 90 days. 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
54
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BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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). 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.
Generally, BAC evaluates a loan for impairment when it is placed on nonaccrual
status and all or a portion is internally risk rated as substandard or doubtful.
BAC measures impairment of loans 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. Substantially
all of BAC's impaired loans are on nonaccrual status.
The primary method used by BAC to measure loan impairment is 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.
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. When
foreclosure or liquidation is probable or when the primary source of repayment
is provided by real estate collateral, impairment is measured based upon the
fair value of the collateral less estimated selling and disposal costs. In
addition, when quoted market prices are available, impairment is based on the
loan's observable market value less estimated selling and disposal costs.
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.
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 Statement of Financial Accounting Standards
No. 122, "Accounting for Mortgage Servicing Rights" (SFAS No. 122), purchased
mortgage servicing rights (PMSR). CCI represents the intangible value of credit
card customer relationships resulting from customer balances acquired. Other
identifiable intangibles are amortized using accelerated methods over their
estimated periods of benefit.
55
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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 SFAS No. 122, which 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. Prior to the adoption of SFAS
No. 122, BAC capitalized only PMSR, which represents the value of purchased
rights to service mortgage loans.
SFAS No. 122 also 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 specifies that MSRs be stratified 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 to reflect the predominant risk
characteristics.
BAC then uses a fair valuation model which incorporates assumptions used by
market participants in estimating future net servicing income based on estimates
of the cost of servicing per loan, the discount rate, float value, an inflation
rate, ancillary income per loan, prepayment speeds and default rates. Beginning
in the fourth quarter of 1995, 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. 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 equity affiliates that change BAC's percentage of ownership are recognized at
the issue date and are recorded in noninterest 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) that are
not represented by marketable securities 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 are netted to the extent allowed when
contracts are executed under legally enforceable master netting agreements.
FOREIGN EXCHANGE AND DERIVATIVES CONTRACTS
BAC uses foreign exchange and derivatives contracts in both its trading and
asset and liability management activities.
Trading Activities
Interest rate derivative contracts are primarily swaps and options, and foreign
exchange contracts, which include spot, futures, forward, swap, and option
positions used in BAC's trading activities. These interest rate derivative
contracts 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. 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.
56
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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 recorded in
income 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.
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.
57
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
STOCK-BASED COMPENSATION
Effective January 1, 1996, BAC adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123).
SFAS No. 123 establishes financial accounting and reporting standards for stock-
based compensation plans. BAC elected to continue accounting for stock-based
employee compensation plans in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
Interpretations (APB Opinion No. 25), as SFAS No. 123 permits, and to follow the
pro forma net income, pro forma earnings per share, and stock-based compensation
plan disclosure requirements set forth in SFAS No. 123.
2. NATURE OF OPERATIONS
BAC, through its subsidiaries, provides banking and various 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, Middle Market
Banking, Commercial Real Estate Services, and Wealth Management, ranked, for the
purpose of the following discussion, in order of their contribution to net
income in 1996.
Consumer Banking provides a full array of deposit and loan products to
individuals and small businesses through traditional and in-store branches,
ATMs, telephones, personal computers, and other delivery channels throughout ten
western states. In addition, Consumer Banking operates service centers and
in-store branches in the Chicago metropolitan area. It also provides credit
card, home mortgage, manufactured housing financing, and consumer financing
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 credit and 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. It has offices in
the United States and 37 other countries and territories in North and South
America, Asia, Europe, Africa, and the Middle East.
Middle Market Banking provides a full range of financial products and services
to businesses throughout the West and the Midwest with annual revenues between
$5 million and $250 million.
Commercial Real Estate Services 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 ten western states plus
Illinois. National clients are served through offices in California and Chicago.
The Wealth Management Group encompasses a number of strategically significant
businesses serving individuals and institutions with sophisticated planning and
management needs. The range of capabilities represented in Wealth Management
include institutional investment management supporting BAC's corporate and
commercial banking relationships, private banking, investment management, and
trust services for high-net-worth clients both in the U.S. and internationally.
3. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the years ended December 31, 1996, 1995, and 1994, BAC made interest
payments on deposits and other interest-bearing liabilities of $8,039 million,
$7,361 million, and $4,422 million, respectively, and made net income tax
payments of $1,324 million, $1,342 million, and $785 million, respectively.
During the years ended December 31, 1996, 1995, and 1994, there were
foreclosures of loans with carrying values of $360 million, $520 million, and
$493 million, respectively. Loans made to facilitate the sale of OREO totaled
$12 million, $8 million, and $29 million during the years ended December 31,
1996, 1995, and 1994, respectively.
At December 31, 1996, BAC accrued an $18 million liability related to common
stock repurchased. For further information regarding stock repurchases, refer to
Note 16 of the Notes to Consolidated Financial Statements on page 65.
4. 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 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.
58
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
Refer to Note 18 of the Notes to Consolidated Financial Statements on pages 65
and 66 for further information on the Series 1 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. 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 table to the right presents an unaudited pro forma combined summary of
operations of BAC and Continental for the year ended December 31, 1994. The
Unaudited Pro Forma Combined Summary of Operations is presented as if the
Continental merger had been effective January 1, 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 combined 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 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 year
presented.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Unaudited Pro Forma Combined Summary of Operations
- -------------------------------------------------------------------------------
Year Ended December 31
------------------------------
(dollar amount in millions, except per share data) 1994
- -----------------------------------------------------------------------------
<S> <C>
SUMMARY OF OPERATIONS
Interest income $13,152
Interest expense 5,298
- -----------------------------------------------------------------------------
Net interest income 7,854
- -----------------------------------------------------------------------------
Provision for credit losses 520
- -----------------------------------------------------------------------------
Net interest income after provision
for credit losses 7,334
- -----------------------------------------------------------------------------
Noninterest income 4,485
Noninterest expense 7,951/a/
- -----------------------------------------------------------------------------
Income before income taxes 3,868
- -----------------------------------------------------------------------------
Provision for income taxes 1,606
- -----------------------------------------------------------------------------
Net Income $ 2,262
- -----------------------------------------------------------------------------
Earnings per common and common
equivalent share $ 5.32
Earnings per common and common
equivalent share-assuming full dilution 5.29
- -----------------------------------------------------------------------------
</TABLE>
/a/Merger-related expenses of $50 million have been eliminated from the combined
historical results of operations, as these expenses do not represent ongoing
expenses of BAC.
Primary and fully diluted pro forma combined earnings per common share for the
year ended December 31, 1994 were calculated based on pro forma combined net
income, less the sum of actual preferred dividends paid by BAC and Continental
during the year. 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.
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 1996 and 1995 were $3,740 million
and $3,851 million, respectively.
6. SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND SECURITIES SOLD UNDER
REPURCHASE AGREEMENTS
BAC enters into purchases and sales of securities, primarily U.S. government and
federal agency, under agreements to resell and repurchase substantially
identical securities. In 1996, the yearly averages of securities purchased under
resale agreements and securities sold under repurchase agreements, based on
daily balances, were $10.3 billion and $11.7 billion, respectively, and the
maximum amounts outstanding at any month end during the year were $13.4 billion
and $15.1 billion, respectively.
During 1996, the underlying securities purchased under resale agreements were
delivered into BAC's account at the Federal Reserve Bank of San Francisco or
into a third-party custodian's account that recognizes BAC's rights and interest
in these securities.
59
<PAGE>
BankAmerica Corporation 1996
- --------------------- Consolidated Financial Statements ----------------------
7. 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, 1996
U.S. Treasury and other
government agency
securities $ 1,505 $ 6 $ 17 $ 1,494
Mortgage-backed securities 6,591 70 39 6,622
Foreign governments/a/ 2,365 36 132 2,269
Equity securities 177 121 1 297
Corporate and other
debt securities/a/ 1,421 13 3 1,431
- -------------------------------------------------------------------------------
$12,059 $246 $192 $12,113
- -------------------------------------------------------------------------------
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/ 2,293 17 265 2,045
Equity securities 183 114 -- 297
Corporate and other
debt securities/a/ 1,120 22 -- 1,142
- -------------------------------------------------------------------------------
$12,042 $287 $286 $12,043
- -------------------------------------------------------------------------------
<CAPTION>
Held-to-Maturity Securities
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(in millions) Cost Gains Losses Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
U.S. Treasury and other
government agency
securities $ 19 $ -- $ -- $ 19
Mortgage-backed securities 2,163 31 15 2,179
State, county, and
municipal securities 423 14 6 431
Foreign governments/a/ 1,160 9 261 908
Corporate and other
debt securities/a/ 373 21 11 383
- -------------------------------------------------------------------------------
$4,138 $ 75 $293 $3,920
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
</TABLE>
/a/Securities for which no market values were available are stated at cost or
appraised value as deemed appropriate by management.
During the fourth quarter of 1995, the Financial Accounting Standards Board
allowed financial statement preparers a one-time opportunity to reassess the
classifications of securities accounted for under Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," (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 the years ended December 31, 1996, 1995 and 1994, BAC sold
available-for-sale securities for aggregate proceeds of $1,985 million, $2,509
million, and $3,019 million, respectively. These sales resulted in gross
realized gains of $91 million, $268 million, and $94 million, and gross realized
losses of $30 million, $234 million, and $70 million in 1996, 1995, and 1994,
respectively.
The following is a summary of the contractual maturities of available-for-sale
debt securities at December 31, 1996. 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 $ 1,545 $ 1,550
Due after one year through five years 1,836 1,854
Due after five years through ten years 763 703
Due after ten years 7,738 7,709
- ------------------------------------------------------------------------
$11,882 $11,816
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
<CAPTION>
The following is a summary of the contractual maturities of held-to-maturity
securities at December 31, 1996:
- ------------------------------------------------------------------------
Amortized Fair
(in millions) Cost Value
- ------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 326 $ 327
Due after one year through five years 292 297
Due after five years through ten years 757 765
Due after ten years 2,763 2,531
- ------------------------------------------------------------------------
$4,138 $3,920
- ------------------------------------------------------------------------
</TABLE>
Certain securities, such as mortgage-backed securities, may not become due at a
single maturity date. Those mortgage-backed securities with no specified
maturities are included as having contractual maturities of greater than ten
years for purposes of the tables above. 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 presented in
the summaries above.
60
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
Certain assets were pledged to collateralize U.S. government and public
deposits, trust and other deposits, and repurchase agreements. These assets,
primarily trading, available-for-sale, and held-to-maturity securities, had
carrying values of $11,477 million and $10,461 million at December 31, 1996 and
1995, respectively.
During the year ended December 31, 1996, trading income included a net
unrealized holding gain on trading securities of $1 million. During the year
ended December 31, 1995, trading income included a net unrealized holding gain
on trading securities of $37 million. These amounts exclude the net unrealized
trading results of the parent's securities broker and dealer subsidiaries.
8. OTHER DEBT RESTRUCTURINGS
Not included in restructured loans as described in Note 9 of the Notes to
Consolidated Financial Statements on this page and on page 62 were other debt
restructurings totaling $1,685 million and $1,657 million at December 31, 1996
and 1995, respectively, with countries that were experiencing liquidity problems
at the time of restructuring. These amounts include securities and loans
received in connection with formal debt restructurings. The majority of these
instruments are classified as either available-for-sale or held-to-maturity
securities.
Included in other debt restructurings at December 31, 1996 and 1995, were $1,456
million and $1,416 million, respectively, of par bonds issued by the governments
of Mexico and Venezuela in 1990, and the government of Uruguay in 1991. The face
values of these par bonds at December 31, 1996 and 1995 were $1,607 million and
$1,632 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
both have fixed annual interest rates of 6.75 percent. The principal of all 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 $1,230 million at December 31,
1996. The fair value of the U.S. Treasury securities collateralizing the
principal of the par bonds totaled $361 million at December 31, 1996.
Also included in the aggregate other debt restructurings discussed above were
$229 million and $241 million at December 31, 1996 and 1995, respectively,
related to other restructuring transactions with borrowers in Venezuela, Poland,
the Philippines, Mexico, Brazil, Ecuador and Panama. Interest income foregone on
total other debt restructurings was not significant in 1996 or 1995.
9. LOANS
Loans are presented net of unearned income of $1,636 million and $1,068 million
at December 31, 1996 and 1995, respectively.
The following is a summary of loans:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
December 31
---------------------------
(in millions) 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 37,459 $ 36,572
Residential junior mortgages 14,743 13,777
Other installment 16,979 13,834
Credit card 8,707 9,139
Other individual lines of credit 1,948 1,847
Other 401 319
- -----------------------------------------------------------------------
80,237 75,488
- -----------------------------------------------------------------------
Commercial:
Commercial and industrial 33,404 32,745
Loans secured by real estate 12,488 10,975
Financial institutions 3,109 2,834
Lease financing 2,542 1,927
Construction and development loans
secured by real estate 2,252 3,153
Loans for purchasing or
carrying securities 1,941 1,458
Agricultural 1,696 1,737
Other 1,270 1,574
- -----------------------------------------------------------------------
58,702 56,403
138,939 131,891
- -----------------------------------------------------------------------
FOREIGN
Commercial and industrial 16,394 15,003
Banks and other financial institutions 3,958 3,386
Governments and official institutions 970 1,020
Other 5,154 4,073
- -----------------------------------------------------------------------
26,476 23,482
$165,415 $155,373
- -----------------------------------------------------------------------
</TABLE>
61
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements ----------------------
The following is a summary of loans considered to be impaired and the related
interest income:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31
---------------------
(in millions) 1996 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Recorded investment in impaired loans
not requiring an allowance for credit
losses/a/ $ 412 $ 610
Recorded investment in impaired
loans requiring an allowance for
credit losses 439 763
- ---------------------------------------------------------------------
Total recorded investment in
impaired loans/b/ $ 851 $1,373
- ---------------------------------------------------------------------
December 31
---------------------
1996 1995
- ---------------------------------------------------------------------
Average recorded investment in
impaired loans $1,120 $1,361
Interest income recognized/c/ 50 80
- ---------------------------------------------------------------------
</TABLE>
/a/These loans do not require an allowance for credit losses since the values of
the impaired loans equal or exceed the recorded investments in the loans.
/b/These amounts were evaluated using the following measurement methods: For
1996, $403 million was evaluated using the present value of the loan's
expected future cash flows, $422 million using the fair value of the
collateral, and $26 million using the loan's observable market value. For
1995, $741 million was evaluated using the present value of the loan's
expected future cash flows and $632 million 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 8
of the Notes to Consolidated Financial Statements on page 61, were $302 million
and $113 million at December 31, 1996 and 1995, respectively. Interest income
foregone on these loans was not significant in 1996 or 1995.
Previously restructured loans of $29 million and $37 million were on nonaccrual
status at December 31, 1996 and 1995, respectively.
10. 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 $115
million at December 31, 1996.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Year Ended December 31
----------------------------------
(in millions) 1996 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $3,554 $3,690 $3,508
Credit losses 1,325 1,011 988
Credit loss recoveries 407 422 518
- --------------------------------------------------------------------------
Net credit losses 918 589 470
- --------------------------------------------------------------------------
Provision for credit losses 885 440 460
Allowance related to mergers
and acquisitions/a/ - 3 241
Other net additions (deductions) 2 10 (49)
- --------------------------------------------------------------------------
Balance, End of Year $3,523 $3,554 $3,690
- --------------------------------------------------------------------------
</TABLE>
/a/Represents the addition of consummation date allowances for credit losses of
Arbor National Holdings, Inc. in 1995, and Continental and Liberty Bank of
$238 million and $3 million, respectively, in 1994.
11. PREMISES AND EQUIPMENT
The following is a summary of premises and equipment:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
December 31
---------------------
(in millions) 1996 1995
- -------------------------------------------------------------------
<S> <C> <C>
Premises, including capitalized leases $3,060 $2,919
Equipment and furniture,
including capitalized leases 3,072 2,939
Leasehold improvements 888 863
Land 489 452
- -------------------------------------------------------------------
7,509 7,173
- -------------------------------------------------------------------
Less: Accumulated depreciation
and amortization 3,522 3,188
- -------------------------------------------------------------------
$3,987 $3,985
- -------------------------------------------------------------------
</TABLE>
Depreciation and amortization expense for the years ended December 31, 1996,
1995, and 1994 was $593 million, $552 million, and $489 million, respectively.
12. DEPOSITS
The aggregate amount of time deposit accounts exceeding $100,000, was
approximately $50,182 million and $45,390 million at December 31, 1996 and 1995,
respectively.
At December 31, 1996, the scheduled maturities for time deposits are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
(in millions)
- ----------------------------------------------------------------------
<S> <C>
Due in 1997 $63,824
Due in 1998 2,985
Due in 1999 1,106
Due in 2000 561
Due in 2001 483
Thereafter 410
- ----------------------------------------------------------------------
$69,369
- ----------------------------------------------------------------------
</TABLE>
13. LONG-TERM DEBT
BAC's fixed-rate long-term debt of $9,418 million at December 31, 1996 matures
through 2015. At December 31, 1996 and 1995, the interest rates on fixed-rate
long-term debt ranged from 5.55% to 11.50% and from 4.55% to 11.50%,
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 $7 billion at December 31,
1996, to change its interest rate exposure from fixed to floating rate. At
December 31, 1996 and 1995, the weighted average interest rates on fixed-rate
long-term debt, including the effects of interest rate swaps, were 7.33% and
7.69%, respectively.
62
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
The following is a summary of long-term debt having original maturities of more
than one year. The maturity distribution is based upon contractual maturities or
earlier dates due to call notices issued.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31
--------------------------------------------------------
1996 1995
--------------------------------------------------------
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 1996 $ -- $ -- $ -- $ 1,012
Due in 1997 995 697 1,692 1,964
Due in 1998 219 133 352 1,458
Due in 1999 215 1,745 1,960 1,705
Due in 2000 16 1,580 1,596 1,431
Due in 2001 718 932 1,650 90
Thereafter 311 507 818 543
- --------------------------------------------------------------------------
2,474 5,594 8,068 8,203
- --------------------------------------------------------------------------
Subordinated Debt:
Due in 1998 53 -- 53 122
Due in 2000 419 -- 419 409
Due in 2001 782 30 812 789
Thereafter 4,527 348 4,875 4,174
- --------------------------------------------------------------------------
5,781 378 6,159 5,494
- --------------------------------------------------------------------------
Total parent 8,255 5,972 14,227 13,697
- --------------------------------------------------------------------------
SUBSIDIARIES
Senior Debt:
Due in 1996 -- -- -- 370
Due in 1997 -- 15 15 89
Due in 1998 188 25 213 7
Due in 1999 -- -- -- 39
Due in 2000 84 -- 84 39
Due in 2001 420 -- 420 --
Thereafter 9 -- 9 20
- --------------------------------------------------------------------------
701 40 741 564
- --------------------------------------------------------------------------
Subordinated Debt:
Due in 1996 -- -- -- 10
Due in 1997 19 -- 19 10
Due in 1998 10 -- 10 11
Due in 1999 11 -- 11 12
Due in 2000 12 -- 12 13
Due in 2001 309 -- 309 306
Thereafter 101 -- 101 100
- --------------------------------------------------------------------------
462 -- 462 462
- --------------------------------------------------------------------------
Total subsidiaries 1,163 40 1,203 1,026
- --------------------------------------------------------------------------
$9,418 $6,012 $15,430 $14,723
- --------------------------------------------------------------------------
</TABLE>
At December 31, 1996, BAC's floating-rate long-term debt of $6,012 million
matures through 2004. The majority of the floating rates are based on three-and
six-month London InterBank Offer Rate (LIBOR). At December 31, 1996 and 1995,
the interest rates on floating-rate long-term debt ranged from 5.26% to 7.54%
and from 5.37% to 7.80%, 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 $6 billion at December 31, 1996, to
reduce the interest rate risk by shortening the repricing profile on
floating-rate debt that reprices within one year. At December 31, 1996 and 1995,
the weighted average interest rates on floating-rate long-term debt were
5.74% and 6.10%, respectively. The effect of futures on floating rate long-term
debt interest rates was not material.
At December 31, 1995, $37 million of subsidiary long-term debt was guaranteed by
the parent.
At December 31, 1996 and 1995, $3,702 million and $4,304 million, respectively,
of long-term debt was redeemable at par at the option of the parent on dates
ranging from March 15, 1997 through February 21, 2001.
At December 31, 1996, BAC had $1.65 billion available under a long-term line of
credit that expires in 2001.
14. SUBORDINATED CAPITAL NOTES
The following is a summary of subordinated capital notes recorded by the parent.
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 had interest rates that approximated LIBOR and were
subject to a minimum interest rate of 5.25%.
Effective May 17, 1996, the Auction Rate Notes bear interest as follows: $1
million bears interest at a fixed rate of 6.647% per annum, while the remaining
$98 million bears interest at a floating rate of 0.50% over LIBOR per annum
through the maturity date.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
December 31
------------------
(in millions) 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Floating Rate Notes due 1996 $ -- $248
9.75% Notes Due 1999 256 258
Auction Rate Notes due 1999 99 99
- ----------------------------------------------------------------------
$355 $605
- ----------------------------------------------------------------------
</TABLE>
At the option of the parent, 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, 1996, proceeds from issuances of common and preferred
stock of $350 million have been dedicated to fully retire or redeem subordinated
capital notes.
63
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
15. CORPORATION OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES OF THE CORPORATION (TRUST PREFERRED SECURITIES)
The trust preferred securities are issued by trusts all of whose outstanding
common securities are owned by the parent. Such common securities represent an
aggregate liquidation amount equal to 3 percent of the total capital of each
trust. The sole assets of the trusts are Junior Subordinated Deferrable Interest
Debentures of the parent (the Debentures). In addition, the parent has entered
into an expense agreement with each trust obligating the parent to pay any
costs, expenses or liabilities of the trust, other than obligations of the trust
to pay amounts due pursuant to the terms of the trust preferred securities. Each
issue of the Debentures has an interest rate equal to the corresponding trust
preferred securities distribution rate. The parent has the right to defer
payment of interest on the Debentures at any time or from time to time for a
period not exceeding the extension period described in the table below with
respect to each deferral period, provided that no extension period may extend
beyond the stated maturity of the relevant Debentures. During any such extension
period, distributions on the trust preferred securities will also be deferred
and the parent's ability to pay dividends on its common and preferred stock will
be restricted. The Debentures are redeemable prior to stated maturity at the
parent's option during the redemption periods at the redemption prices described
below plus accrued interest to the redemption dates. The trust preferred
securities are subject to mandatory redemption upon repayment of the related
Debentures at their stated maturity dates or their earlier redemption at a
redemption price equal to their liquidation amount plus accrued distributions to
the date fixed for redemption and the premium, if any, paid by the parent upon
concurrent repayment of the related Debentures.
The parent has issued guarantees for the payment of distributions and payments
on liquidation or redemption of the trust preferred securities, but only to the
extent of funds held by the relevant trust. The guarantees are junior
subordinated obligations of the parent. In 1996, distributions totaling $7
million on the trust preferred securities were included in noninterest expense
in the consolidated statement of operations.
The parent's obligations under each series of Debentures, the related junior
subordinated indenture, the related trust agreement, the related expense
agreement, and the related guarantee taken together constitute a full and
unconditional guarantee by the parent of each trust's obligations under the
relevant trust preferred securities.
The parent is required by the Federal Reserve to maintain certain levels of
capital for bank regulatory purposes. The Federal Reserve has announced that
certain cumulative preferred securities having the characteristics of trust
preferred securities qualify as minority interest, which is included in Tier 1
capital for bank holding companies. Such Tier 1 capital treatment, together with
the parent's ability to deduct, for federal income tax purposes, interest
payable on the corresponding Debentures, provide the parent with a more
cost-effective means of obtaining capital for bank regulatory purposes than if
the parent were to issue preferred stock.
The following is a summary of the outstanding trust preferred securities and
Debentures:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Liquidation Liquidation Aggregate
Amount of Amount of Principal Stated
Trust Preferred Common Amount of Maturity of
(dollar amounts in thousands) Securities Securities Debentures Debentures
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NAME OF TRUST
BankAmerica Institutional Capital A $ 450,000 $13,918 $ 463,918 12/31/26
BankAmerica Institutional Capital B 300,000 9,279 309,279 12/31/26
BankAmerica Capital I 300,000 9,279 309,279 12/31/26/d/
BankAmerica Capital II 450,000 13,918 463,918 12/15/26
- -------------------------------------------------------------------------------------------------------------
Total $1,500,000/g/ $46,394 $1,546,394
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Per Annum Interest
Interest Rate Payment Extension Redemption
(dollar amounts in thousands) of Debentures Dates Period Period
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NAME OF TRUST
BankAmerica Institutional Capital A 8.07% 6/30, 12/31 10 semi- On or after
annual periods 12/31/06/ab/
BankAmerica Institutional Capital B 7.70 6/30, 12/31 10 semi- On or after
annual periods 12/31/06/bc/
BankAmerica Capital I 7.75 3/31, 6/30, 20 qtrs. On or after
9/30, 12/31 12/20/01/e/
BankAmerica Capital II 8.00 6/15, 12/15 10 semi- On or after
annual periods 12/15/06/bf/
- -------------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ The Debentures may be redeemed on or after December 31, 2006 and prior to
December 31, 2007 at 104.0350% of the principal amount, and thereafter at
prices declining to 100% on December 31, 2016 and thereafter.
/b/ The parent may redeem the Debentures prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Debentures or relating to capital treatment of the
trust preferred securities at a redemption price calculated by a formula,
which redemption price shall be at least equal to the principal amount of
the Debentures.
/c/ The Debentures may be redeemed on or after December 31, 2006 and prior to
December 31, 2007 at 103.7785% of the principal amount, and thereafter at
prices declining to 100% on December 31, 2016 and thereafter.
/d/ At the option of the parent, the stated maturity may be shortened to a date
not earlier than December 20, 2001 or extended to a date not later than
December 31, 2045, in each case if certain conditions are met.
/e/ The parent may redeem the Debentures (i) during the indicated redemption
period or (ii) upon the occurrence of certain events relating to tax
treatment of the trust or the Debentures or relating to capital treatment
of the trust preferred securities, prior to the indicated redemption
period, in each case, at a redemption price of 100% of the principal
amount.
/f/ The Debentures may be redeemed on or after December 15, 2006 and prior to
December 15, 2007 at 103.9690% of the principal amount, and thereafter at
prices declining to 100% on December 15, 2016 and thereafter.
/g/ Excludes $23 million of deferred issuance costs.
64
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
16. STOCK REPURCHASE PROGRAM
During the first quarter of 1996, BAC's Board of Directors authorized a stock
repurchase program to replace the one previously approved in February 1995. This
new program enables the parent to buy back up to $2.0 billion of its common
stock by the end of 1997 and to buy back or redeem up to $1.0 billion of its
preferred stock by the end of 1997.
During the year ended December 31, 1996, the parent repurchased 17.0 million
shares of its common stock under the current and prior stock repurchase programs
at an average per-share price of $79.39. These transactions reduced
stockholders' equity by $1,351 million.
During the year ended December 31, 1995, the parent repurchased 16.6 million
shares of its common stock in connection with the prior program at an average
per-share price of $53.83, which reduced stockholders' equity by $894 million.
During the year ended December 31, 1996, the parent repurchased and redeemed
preferred stock under the current stock repurchase program of $181 million and
under the prior program of $218 million, reducing stockholders' equity by $399
million. During the year ended December 31, 1995, the parent repurchased and
redeemed preferred stock in connection with the prior program, reducing
stockholders' equity by $206 million.
In addition, in December 1996, the parent called $281 million of preferred
stock, which will be redeemed in 1997. The remaining buyback and redemption
authorities for common and preferred stock totaled $0.8 billion and $0.5
billion, respectively, at December 31, 1996.
17. 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, 1996 and 1995, common stock warrants outstanding totaled 52,773
and 99,053, 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.
18. 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. 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 April 16, 1996, the parent redeemed all 7,250,000 outstanding shares of its
9 5/8% Cumulative Preferred Stock, Series F, reducing stockholders' equity by
$181 million. The redemption price was equal to the stated value of $25.00 per
share, plus dividends of $0.30747 per share accrued and unpaid to the redemption
date. On March 31, 1996, the parent redeemed all 400,000 outstanding shares of
its 11% Preferred Stock, Series J (Preferred Stock, Series J). This transaction
reduced stockholders' equity by $218 million. The shares were represented by 8
million depositary shares, each corresponding to a one-twentieth interest in a
share of Preferred Stock, Series J. The redemption price was $26.375 per
depositary share. The quarterly dividend of $0.6875 per depositary share was
paid on March 31, 1996 to holders of record on March 15, 1996.
On September 30, 1995, the parent redeemed all 200,000 outstanding shares of its
11% Preferred Stock, Series I. In addition, on May 31, 1995, the parent redeemed
all 1,788,000 shares of its Adjustable Rate Preferred Stock, Series 1. Also,
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 made under the current or prior stock repurchase
plans are summarized in the table on the next page.
65
<PAGE>
BankAmerica Corporation 1996
- ----------------------- Consolidated Financial Statements ----------------------
The following is a summary of preferred stock:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Original Shares Dividend
Shares Outstanding at Stated Value Per Share Redemption Price
Preferred Stock Series Issued December 31, 1996 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
Cumulative Fixed:
9 5/8% Series F 7,250,000 -- 25.00 2.41 Redeemed 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/d/ -- 500.00 55.00 Redeemed 9/30/95 527.50
11% Series J 400,000/d/ -- 500.00 55.00 Redeemed 3/31/96 527.50
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/d/ 798,020/d/ 500.00 40.80 On or after 7/13/97 500.00
7 7/8% Series M 700,000/d/ 696,847/d/ 500.00 39.38 On or after 9/30/97 500.00
8 1/2% Series N 475,000/d/ 469,273/d/ 500.00 42.50 On or after 12/15/97 500.00
Cumulative Convertible Fixed:
6 1/2% Series G/e/ 5,000,000 -- 50.00 3.25 Redeemed or converted/f/ 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/ Represented by depositary shares, each corresponding to a one-twentieth
interest in a share of Preferred Stock.
/e/ 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.
/f/ 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.
19. CAPITAL REQUIREMENTS
The parent and its domestic banking subsidiaries are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can result in certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on BAC's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
BAC's banking subsidiaries must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The
quantitative measures established by regulation to ensure capital adequacy
require financial institutions to maintain minimum amounts and ratios as set
forth in the table on page 67 of total and Tier I capital to risk-weighted
assets, and of Tier I capital divided by average total assets. The table
presented on page 67 includes BankAmerica Corporation, and its largest banking
subsidiaries, Bank of America NT&SA, Bank of America Illinois, and Bank of
America NW, National Association at December 31, 1996 and 1995. The calculation
of BAC's risk-based capital amounts and ratios excludes the effect of its
Section 20 subsidiary. At December 31, 1996, this exclusion reduced Tier I
capital by $137 million, and total risk-based capital by $339 million. This
resulted in reducing the Tier I capital ratio and total risk-based capital ratio
by 1 basis point and 6 basis points, respectively.
During 1996, Bank of America Oregon and BankAmerica National Trust Company were
merged into the bank, and Bank of America Idaho, N.A. was merged into BANW.
Consequently, the 1995 risk-based capital amounts and ratios do not include
these respective subsidiaries. However, their impact is not significant. Capital
amounts and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
As of December 31, 1996 and 1995, all of BAC's depository institution
subsidiaries met the well-capitalized requirements under the regulatory
framework for prompt corrective action. To be categorized as well capitalized, a
financial institution must maintain minimum total risk-based capital, Tier I
risk-based capital, and Tier I leverage ratios as set forth in the table. There
are no conditions or events since December 31, 1996 that management believes
would change these categorizations.
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.
66
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Risk-Based Capital - Actual and Minimum Amounts and Ratios
- --------------------------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------------------------
Total Tier 1 Tier 1
Risk-Based Risk-Based Leverage
(dollar amounts in millions) Capital Capital Ratio
- --------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BANKAMERICA CORPORATION
Actual $25,880 11.79% $17,044 7.77% $17,229 7.44%
Minimum adequately capitalized 17,559 8.00 8,779 4.00 9,257 4.00
Minimum well capitalized 21,948 10.00 13,169 6.00 11,571 5.00
BANK OF AMERICA NT&SA
Actual 16,521 10.96 10,701 7.10 10,701 6.18
Minimum adequately capitalized 12,064 8.00 6,032 4.00 6,922 4.00
Minimum well capitalized 15,080 10.00 9,048 6.00 8,652 5.00
BANK OF AMERICA ILLINOIS
Actual 2,676 11.30 1,798 7.59 1,798 11.84
Minimum adequately capitalized 1,895 8.00 948 4.00 607 4.00
Minimum well capitalized 2,369 10.00 1,421 6.00 759 5.00
BANK OF AMERICA NW,
NATIONAL ASSOCIATION
Actual 1,878 11.89 1,442 9.13 1,442 9.15
Minimum adequately capitalized 1,263 8.00 632 4.00 631 4.00
Minimum well capitalized 1,579 10.00 948 6.00 788 5.00
- --------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1995
- --------------------------------------------------------------------------------------------------
Total Tier 1 Tier 1
Risk-Based Risk-Based Leverage
(dollar amounts in millions) Capital Capital Ratio
- --------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BANKAMERICA CORPORATION
Actual $23,416 11.48% $14,991 7.35% $15,144 6.92%
Minimum adequately capitalized 16,320 8.00 8,160 4.00 8,760 4.00
Minimum well capitalized 20,400 10.00 12,240 6.00 10,950 5.00
BANK OF AMERICA NT&SA
Actual 15,420 11.25 9,834 7.18 9,834 6.23
Minimum adequately capitalized 10,962 8.00 5,481 4.00 6,310 4.00
Minimum well capitalized 13,702 10.00 8,221 6.00 7,888 5.00
BANK OF AMERICA ILLINOIS
Actual 2,539 11.59 1,603 7.32 1,603 10.53
Minimum adequately capitalized 1,752 8.00 876 4.00 609 4.00
Minimum well capitalized 2,190 10.00 1,314 6.00 761 5.00
BANK OF AMERICA NW,
NATIONAL ASSOCIATION
Actual 1,830 11.17 1,364 8.32 1,364 8.33
Minimum adequately capitalized 1,311 8.00 656 4.00 655 4.00
Minimum well capitalized 1,639 10.00 983 6.00 819 5.00
- --------------------------------------------------------------------------------------------------
</TABLE>
20. LEASE COMMITMENTS
BAC leases certain premises and equipment under noncancelable agreements
expiring between the years 1997 and 2069.
The following is a summary of future minimum rental commitments for
noncancelable leases at December 31, 1996, which do not include minimum sublease
rental income of $3 million for capital leases and $86 million for operating
leases:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Capital Operating
(in millions) Leases Leases
- ----------------------------------------------------------------------
<S> <C> <C>
1997 $8 $ 268
1998 8 253
1999 7 234
2000 7 218
2001 7 194
Thereafter 43 1,375
- ----------------------------------------------------------------------
Total minimum lease payments 80 $2,542
- ----------------------------------------------------------------------
Amount representing interest (37)
- ---------------------------------------------------------
Present Value of Net Minimum Lease Payments $43
- ----------------------------------------------------------------------
</TABLE>
Total rental expense was $375 million in 1996, $359 million in 1995, and $327
million in 1994.
21. INCOME TAXES
The significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Year Ended December 31
- ----------------------------------------------------------------------
(in millions) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
PROVISION FOR (BENEFIT FROM)
INCOME TAXES
Current:
Federal $ 869 $1,091 $ 559
State and local 161 305 140
Foreign 265 239 129
- -------------------------------------------------------------------------
1,295 1,635 828
- -------------------------------------------------------------------------
Deferred:
Federal 419 268 567
State and local 175 29 137
Foreign 11 (29) 9
- -------------------------------------------------------------------------
605 268 713
$1,900 $1,903 $1,541
- -------------------------------------------------------------------------
</TABLE>
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
The significant components of deferred income tax assets and liabilities at
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
December 31
----------------------
(in millions) 1996 1995
- -------------------------------------------------------------------------
DEFERRED INCOME TAX ASSETS
<S> <C> <C>
Allowance for credit losses $1,534 $1,554
Accrued expenses 237 155
Tax carryovers/a/ 84 180
Other 528 562
Valuation allowance for deferred
income tax assets/a/ (75) (124)
- -------------------------------------------------------------------------
Total deferred income tax assets 2,308 2,327
- -------------------------------------------------------------------------
DEFERRED INCOME TAX LIABILITIES
Lease financing (1,698) (1,365)
Identifiable intangible assets (545) (575)
Securities valuation (483) (425)
Employee benefit plans (205) (59)
Accumulated tax depreciation in excess of
book depreciation (227) (237)
Deferred gains and installment sales (122) (155)
Other (246) (134)
- -------------------------------------------------------------------------
Total deferred income tax liabilities (3,526) (2,950)
Net Deferred Income Tax Liabilities $(1,218) $ (623)
- -------------------------------------------------------------------------
</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 since 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, 1996 based upon BAC's recoverable taxes from prior
carryback years, its total deferred income tax liabilities, and its current
level of operating income.
The valuation allowance for deferred income tax assets was $75 million and $124
million at December 31, 1996 and 1995, respectively. During 1996, the
recognition of deferred tax assets subject to the valuation allowance resulted
in a reduction to goodwill of $20 million. In the future, the recognition of
deferred tax assets subject to the valuation allowance may result in a reduction
to goodwill of up to $60 million.
The reconciliation of the provision for income taxes computed at the U.S.
statutory income tax rate to pretax income is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Year Ended December 31
---------------------------
1996 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income tax rate 35% 35% 35%
State and local income taxes,
net of federal tax effect 5 5 5
Other, net -- 2 1
- ------------------------------------------------------------------------
Effective Tax Rate 40% 42% 41%
- ------------------------------------------------------------------------
</TABLE>
In 1996 and 1995, deferred tax liabilities of $21 million and $219 million,
respectively, relating to net unrealized gains on available-for-sale securities
was charged directly to stockholders' equity.
At December 31, 1996, federal income taxes had not been provided on $420 million
of undistributed earnings of foreign subsidiaries earned prior to 1987 that have
been reinvested for an indefinite period of time. 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 $80 million of the $180 million 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 $24 million, $13 million, and $9 million on net
securities gains in 1996, 1995, and 1994, respectively.
22. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLANS
During 1996, the majority of salaried U.S. employees within BAC were covered
under the BankAmerica Pension Plan (the Pension Plan), a defined benefit cash
balance plan. Effective December 31, 1995, the Seafirst Corporation Retirement
Plan (the Seafirst Plan) was merged into the Pension Plan. However, the Seafirst
Plan benefit formula remained in effect for Seafirst employees through March 31,
1996.
Benefits are based on length of service, level of compensation, and a specified
interest rate. Effective January 1, 1996, the benefit formula of the Pension
Plan was amended so that eligible participants receive nonmatching employer
contributions, called pay-based credits, of 7 percent of annual qualified
earnings over one-half of the Social Security wage base. 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, the Continental Employees
Pension Plan was merged into the Pension Plan effective January 1, 1995.
BAC maintains certain nonqualified, nonfunded 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
68
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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) 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
PREPAID PENSION COST
Plan assets at fair value, primarily listed
stocks and bonds $3,385 $3,137
Less: Actuarial present value of projected
benefit obligation 2,971 2,938
- -------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation/a/ 414 199
- -------------------------------------------------------------------------
Unrecognized net loss 151 341
Unrecognized prior service cost 41 46
Unrecognized net transition obligation 15 19
Additional minimum liability (3) (5)
- -------------------------------------------------------------------------
Prepaid Pension Cost $ 618 $ 600
- -------------------------------------------------------------------------
ACTUARIAL PRESENT VALUE
OF BENEFIT OBLIGATION
Vested benefit obligation $2,697 $2,613
Accumulated benefit obligation 2,902 2,808
- -------------------------------------------------------------------------
</TABLE>
/a/Certain defined benefit plans not covered by the Pension Benefit Guaranty
Corporation (PBGC) had an accumulated benefit obligation of $203 million and
$193 million and plan assets of $78 million and $79 million at December 31,
1996 and 1995, respectively. The estimated vested benefit obligation for PBGC
covered plans using a 5.25% interest rate and the Group Annuity Mortality 83
table as of December 31, 1996 is $3,001 million as compared with assets of
$3,307 million.
The following is a summary of the components of net pension expense:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Year Ended December 31
---------------------------
(in millions) 1996 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned
during the year $ 85 $ 98 $ 78
Interest cost on projected benefit obligation 188 200 175
Net amortization and deferral 195 399 (202)
Effect of actual return on plan assets (408) (631) 16
- ---------------------------------------------------------------------------
Net Pension Expense $ 60 $ 66 $ 67
- ---------------------------------------------------------------------------
</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. 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate in determining expense 6.50% 8.50% 7.25%
Discount rate in determining benefit
obligations at year end 7.25 6.50 8.50
Rate of increase in future compensation
levels for determining expense/a/ 5.00 5.50 4.00
Rate of increase in future compensation
levels for determining benefit obligations
at year end/a/ na 5.00 5.50
Expected long-term rate of return on assets 8.00 9.75 8.50
Account growth interest rate in
determining expense 6.00 6.75 5.00
Account growth interest rate in
determining benefit obligations at year end 6.75 6.00 6.75
- -----------------------------------------------------------------------------
</TABLE>
/a/Rates are attributable to the Seafirst Plan since this is the only U.S.
defined benefit final average pay plan as of January 1, 1995. Effective
December 31, 1995, the Seafirst Plan was merged into the Pension Plan.
/na/Not applicable
DEFINED CONTRIBUTION PLANS
During 1996, the majority of salaried U.S. employees within BAC were eligible to
participate in either the BankAmerica 401(k) Investment Plan (the 401(k) Plan)
or the Seafirst Corporation Employee Matched Savings Plan, which was merged into
and replaced by the 401(k) Plan effective April 1, 1996. 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. Effective January 1, 1996, the 401(k) Plan was
amended to provide employees with pay-based credits. The pay-based credits are
equal to 3 percent or 7 percent of an eligible employee's annual qualified
earnings up to one-half of the Social Security wage base, depending upon the
employee's age or length of service.
In connection with the Continental acquisition, the Continental Employee Savings
Incentive Plan and the Continental Employee Stock Ownership Plan were merged
into the 401(k) Plan effective January 1, 1995.
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 participating employers for all defined
contribution plans were $175 million, $93 million, and $86 million in 1996,
1995, and 1994, respectively. The increase of $82 million from 1995 was
primarily attributable to the aforementioned amendment regarding pay-based
credits. Certain employer and employee contributions to the plans are used to
purchase BAC's common stock at prices that approximate
69
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
market values. Contributions, including dividends, to the plans were used to
purchase 380,547 shares for $30 million in 1996, 295,945 shares for $16 million
in 1995, and 539,910 shares for $23 million in 1994. Sales by the plans of BAC's
common stock were 290,573 shares for $26 million in 1996, 843,588 shares for $45
million in 1995, and 220,468 shares for $10 million in 1994. The plans held
15,668,209 shares, 15,994,153 shares, and 16,611,787 shares of BAC's common
stock at December 31, 1996, 1995, and 1994, respectively.
EMPLOYEE STOCK PLANS
Effective January 1, 1996, BAC adopted SFAS No. 123, "Accounting for Stock-Based
Compensation." For information regarding the adoption of SFAS No. 123, refer to
Note 1 of the Notes to Consolidated Financial Statements on pages 54-58.
At December 31, 1996, BAC had three stock-based compensation plans: 1987
Management Stock Plan, 1992 Management Stock Plan (the management stock plans),
and Take Ownership!/TM/ The BankAmerica Global Stock Option Program (the
Program).
BAC offers shares of its common stock to certain key employees under the
management stock plans. Shares are offered by the management stock plans under
three types of options: nonqualified stock options, performance stock options,
and incentive stock options. Under the management stock plans, BAC was
authorized to grant up to 5,511,708 and 5,567,730 shares of common stock in 1996
and 1995, respectively. The shares under option generally vest ratably over
three years. In addition, the shares under option generally become exercisable
not earlier than six months and not later than ten years after the date the
options are granted.
Options awarded before August 5, 1991 to principal officers of BAC are subject
to certain restrictions and 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 in shares. Stock appreciation rights, which are included in options for
purposes of this disclosure, are exercisable under the same terms as the related
stock options.
Under the management stock plans, BAC also awards restricted stock to certain
key employees. Generally, the restricted stock awarded under the management
stock plans is not released until the employee has completed a continuous
service requirement specified in the award agreement. During 1996, BAC awarded
568,626 restricted shares under the management stock plans with a weighted-
average fair value at the date of grant of $82.91 per share. BAC awarded 639,424
restricted shares during 1995 which had a weighted-average fair value at the
date of grant of $53.89 per share. In addition, during 1995, 12,000 shares of
restricted stock were awarded under a performance share program with a weighted
average fair value at the date of grant of $60.00 per share. In 1994 417,000
shares of restricted stock were awarded under the performance share program,
which had a weighted average fair value at the date of grant of $42.38 per
share. There were no restricted shares awarded during 1996 under the
performance share program. Generally, the shares vested in three equal
installments as the price of BAC common stock attained the specified targets. In
1996 and 1995, 151,000 and 278,000, respectively, of these shares vested. Shares
of restricted stock outstanding under the management stock plans were 2,082,752
and 2,278,552 at December 31, 1996 and 1995, respectively.
Effective October 1, 1996, BAC adopted the Program which covers substantially
all its employees. Under the Program, BAC is authorized to grant options to its
employees for up to 35,100,000 shares of common stock. The shares under option
vest ratably over three years and have a maximum term of five years after the
date the options are granted.
Both stock options and restricted stock are granted by the Executive Personnel
and Compensation Committee. Shares available for grant under the employee stock
plans, as either stock options or restricted stock, were 2,131,889 and 884,312
at December 31, 1996 and 1995, 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.
The following is a summary of options outstanding and exercisable at December
31, 1996:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Options Outstanding Options Exercisable
---------------------------------------------------------- -----------------------------------
Shares Weighted-Average Shares
Range of Outstanding Remaining Weighted-Average Exercisable Weighted-Average
Exercise Prices at End of Year Contractual Life Exercise Price at End of Year Exercise Price
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$8.63 to $36.93 2,792,334 3.8 $25.87 2,791,402 $25.87
$38.13 to $66.44 10,669,085 7.1 49.49 6,309,106 47.76
$67.00 to $95.19 9,128,774 7.0 89.80 5,000 71.50
- -----------------------------------------------------------------------------------------------------------------
Total 22,590,193 6.7 $62.87 9,105,508 $41.06
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Take Ownership! is followed by the Trademark Symbol in the non-EDGAR version
70
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
The following is a summary of changes in the options for the three employee
stock plans:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Year Ended December 31
-----------------------------------------------------------
1996 1995
---------------------------- ----------------------------
Weighted-Avg. Weighted-Avg.
Shares Exercise Price Shares Exercise Price
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance,
beginning
of year 18,125,674 $42.87 17,356,127 $36.87
Granted 9,370,375 89.77 5,144,845 54.00
Exercised (4,367,199) 37.08 (4,081,083) 30.99
Forfeited (538,657) 67.45 (260,354) 46.64
Expired - - (33,861) 55.33
- ------------------------------------------------------------------------
Balance,
End of
Year 22,590,193 $62.87 18,125,674 $42.87
- ------------------------------------------------------------------------
Exercisable
at end of
year 9,105,508 $41.06 9,565,742 $35.94
- ------------------------------------------------------------------------
</TABLE>
The table below reflects BAC's net income, earnings per common and common
equivalent share, and earnings per common share, assuming full dilution, if
compensation cost for BAC's stock plans had been determined based on the fair
value at the grant dates for awards under those plans. Since pro forma
compensation cost relates to all periods over which the awards vest, the initial
impact on pro forma net income may not be representative of compensation cost in
subsequent years, when the effect of the amortization of multiple awards would
be reflected.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Year Ended December 31
------------------------
(in millions, except per share data) 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Net income $2,844 $2,655
Earnings per common and common
equivalent share 7.24 6.47
Earnings per common share--assuming
full dilution 7.24 6.43
- ------------------------------------------------------------------------
</TABLE>
Compensation expense related to employee stock plans calculated in accordance
wih APB Opinion No. 25 was $50 million and $94 million in 1996 and 1995,
repectively.
Fair values of the options were estimated at the date of grant using a variation
of the Black-Scholes option pricing model, which includes the following
assumptions used for the stock options awarded during 1996 and 1995,
respectively: risk-free weighted average interest rates of 5.95 percent and 6.17
percent; weighted average dividend yield of 3.23 percent and 3.33 percent;
expected volatility of 20.80 percent and 30.30 percent; expected option life for
the management stock plans of 4.5 and 4.8 years; and expected life for the
Program in 1996 of 2.6 years.
The weighted-average grant date fair values of the options granted during 1996
and 1995 were $15.05 and $14.12 per share, respectively. The exercise price of
each option equals the market price of BAC's common stock on the date of grant.
Expiration dates ranged from January 5, 1997 to October 7, 2006 for options
outstanding at December 31, 1996.
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. The contributions of BAC are expressed as a fixed dollar amount.
The cost of monthly coverage each year for retirees is equal to the difference
between the projected total cost of coverage for the year and the fixed dollar
amount. 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 7.25 percent and 6.50 percent at December 31, 1996 and
1995, respectively. The expected long-term rates of return on plan assets used
in computing the net periodic postretirement cost were 8.00 percent, 9.75
percent, and 8.50 percent for the years ended December 31, 1996, 1995, and 1994,
respectively.
The following is a reconciliation between the funded status of all post-
retirement benefit plans other than pensions and the amounts included in BAC's
consolidated balance sheet:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
December 31
------------------
(in millions) 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $467 $513
Fully eligible active plan participants 19 21
Other active plan participants 89 97
- ------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 575 631
- ------------------------------------------------------------------------
Less: Plan assets at fair value, primarily
listed stocks and bonds 116 104
- ------------------------------------------------------------------------
Accumulated postretirement benefit
obligation in excess of plan assets 459 527
- ------------------------------------------------------------------------
Less: Unrecognized net transition obligation 424 451
Unrecognized net gain (61) (5)
Unrecognized prior service benefit (23) (23)
- ------------------------------------------------------------------------
Accrued Postretirement Benefit Cost $119 $104
- ------------------------------------------------------------------------
</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) 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Service cost--benefits earned during the year $ 6 $ 6
Interest cost on accumulated postretirement
benefit obligation 40 49
Net amortization and deferral 28 37
Effect of actual return on plan assets (12) (17)
- ------------------------------------------------------------------------
Net Periodic Postretirement Cost $62 $75
- ------------------------------------------------------------------------
</TABLE>
71
<PAGE>
UI BankAmerica Corporation 1996
- -----------------------Consolidated Financial Statements------------------------
23. 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 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 average market
price of BAC'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 BAC'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) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Net income applicable
to common stock $2,688 $2,437 $1,928
Average number
of common
shares outstanding 361,186,603 370,981,593 357,312,433
Average number
of common
and common
equivalent shares
outstanding 368,027,522 375,555,919 359,793,169
Average number
of common
shares outstanding--
assuming full dilution 368,557,970 378,103,241 365,273,824
- ----------------------------------------------------------------------
</TABLE>
24. 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, 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, 1996 and 1995 totaled $158,287
million and $149,453 million, respectively, of which $10,255 million and $8,294
million related to foreign-based customers and $148,032 million and $141,159
million related to domestic-based customers. The unfunded credit commitments to
domestic-based customers at December 31, 1996 and 1995 included $36,897 million
and $34,465 million, respectively, of unutilized credit card lines. At both
December 31, 1996 and 1995, no domestic or foreign industry nor any individual
foreign country comprised more than 10 percent of total unfunded noncredit-card-
related commitments. For a summary of funded loan outstandings by type at
December 31, 1996 and 1995, refer to Note 9 of the Notes to Consolidated
Financial Statements on pages 61 and 62.
72
<PAGE>
BankAmerica Corporation 1996
- -----------------------Consolidated Financial Statements------------------------
A summary of the contractual amounts of each significant class of credit-related
financial instruments outstanding appears below. 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
December 31
------------------------
(in millions) 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit:
Unutilized credit card lines $ 36,897 $34,465
Other commitments to extend credit 100,234 94,524
Standby letters of credit (net of
participations sold: 1996--$2,999;
1995--$2,383) 17,092 16,336
Commercial letters of credit 4,064 4,128
- ------------------------------------------------------------------------
</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, 1996, $40,352 million will expire in less than one year, $55,175
million from one to five years, and $4,707 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
A standby letter of credit (SBLC) represents an irrevocable obligation to pay a
third-party beneficiary in the event a customer fails to meet a financial or
performance obligation. BAC's determination of whether an SBLC is financial or
performance is based upon the contractual obligation which triggers payment.
When the contractual obligation is financial, such as securing bonds or debt,
the SBLC is classified as financial. When the contractual obligation is
performance-related, such as shipping a product or providing a service, then the
SBLC is classified as performance. Credit risk arises in these transactions from
the possibility that, if the SBLC has been drawn upon due to default of payment
or nonperformace, a customer may not be able to repay BAC. Historically, losses
associated with counterparty nonperformance on these instruments have been
immaterial.
At December 31, 1996 and 1995, financial SBLCs totaled $12,720 million and
$9,108 million, respectively. Of the year-end 1996 balance, $7,508 million will
expire in less than one year, $4,631 million will expire in one to five years,
and $581 million will expire after five years.
At December 31, 1996 and 1995, performance SBLCs totaled $4,372 million and
$7,228 million, respectively. Of the year-end 1996 balance, $2,609 million will
expire in less than one year, $1,628 million will expire in one to five years,
and $135 million will expire after five years.
Fees received for SBLCs are recognized over the lives of the contracts and are
included in other fees and commissions in noninterest income. Generally, SBLCs
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. BAC's credit risk in these
transactions is limited by the face amount of the letter of credit, along with
the related collateral and the general duration of the contract.
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.
73
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
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 the criteria for right of set-off 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 Consolidated Financial Statements on pages 54-58.
The table below summarizes the notional and credit risk amounts for each
significant class of foreign exchange and derivatives contracts outstanding in
BAC's trading and asset and liability management portfolios.
Credit risk represents unrealized gains on foreign exchange and derivatives
contracts. It is the amount of loss that BAC would suffer 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 period after the effects of master netting
agreements. In the aggregate for all contracts, credit risk totaled $7.7 billion
at December 31, 1996.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Notional and Credit Risk Amounts for Derivative Financial Instruments Held or Issued for Trading Purposes
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
----------------------------------------------------------------
Notional Credit Notional Credit
(in millions) Amount Risk/a/ Amount Risk/a/
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $ 442,160 $2,968/b/ $ 418,240 $2,787/b/
Futures and forward rate contracts:
Commitments to purchase 138,381 34 160,126 9
Commitments to sell 182,065 280 190,538 381
Written options 32,679 --/c/ 35,217 --/c/
Purchased options 40,805 373 45,351 390
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest rate contracts 836,090 3,655 849,472 3,567
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 612,767 2,670 592,441 2,553
Written options 24,840 --/c/ 21,095 --/c/
Purchased options 23,272 319 20,244 268
Currency swaps 27,589 951 23,085 1,403
- -----------------------------------------------------------------------------------------------------------------------------------
Total foreign exchange contracts 688,468 3,940 656,865 4,224
- -----------------------------------------------------------------------------------------------------------------------------------
Stock index options and commodity contracts 1,561 87 878 10
- -----------------------------------------------------------------------------------------------------------------------------------
Total $1,526,119/d/ $7,682 $1,507,215/e/ $7,801
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Notional and Credit Risk Amounts for Derivative Financial Instruments Held or Issued for Asset and Liability Management Purposes
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
Notional Credit Notional Credit
(in millions) Amount Risk/a/ Amount Risk/a/
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $ 46,445 $128 $33,543 $155
Futures and forward rate contracts 58,467 -- 28,702 --
Purchased options 10,957 81 9,200 60
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest rate contracts 115,869 209 71,445 215
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 1,746 -- 1,900 --
Currency swaps 673 -- 430 61
- -----------------------------------------------------------------------------------------------------------------------------------
Total foreign exchange contracts 2,419 -- 2,330 61
Total $118,288/d/ $209 $73,775/e/ $276
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Credit risk represents current replacement cost after the effects of master
netting agreements.
/b/Including the effects of cross product netting of certain interest rate
derivatives and currency swaps.
/c/Interest rate and foreign exchange options written have no credit risk.
/d/Interest rate swaps and interest rate options in both the trading and asset
and liability management portfolios include $13.9 billion and $0.7 billion,
respectively, of intercompany hedging-related contracts. Foreign exchange
contracts in both the trading and asset and liability management portfolios
include $2.4 billion of intercompany hedging-related contracts.
/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.
74
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
The table below summarizes the average and year-end fair values of each
significant class of foreign exchange and derivatives contracts outstanding in
BAC's trading portfolio and the year-end fair values for each significant class
of foreign exchange and derivatives contracts 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fair Values of Derivative Financial Instruments Held or Issued for Trading Purposes
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
------------------------------------------------------------------------------
Average Fair Value Year-End Average Fair Value Year-End
(in millions) For the Year Ended/ab/ Fair Value/b/ For the Year Ended/ab/ Fair Value/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps:
Assets $2,956 $2,968 $2,522 $2,787
Liabilities (2,661) (2,820) (2,258) (2,605)
Futures and forward rate contracts:
Assets 335 314 319 390
Liabilities (331) (329) (291) (373)
Written options (221) (300) (222) (237)
Purchased options 307 373 263 390
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest rate contracts 385 206 333 352
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts:
Assets 2,358 2,670 3,979 2,553
Liabilities (2,709) (2,842) (4,429) (3,048)
Written options (333) (369) (431) (355)
Purchased options 283 319 403 268
Currency swaps:
Assets 1,137 951 1,762 1,403
Liabilities (1,308) (937) (2,062) (1,600)
- ------------------------------------------------------------------------------------------------------------------------------------
Total foreign exchange contracts (572) (208) (778) (779)
- ------------------------------------------------------------------------------------------------------------------------------------
STOCK INDEX OPTIONS AND COMMODITY CONTRACTS
Assets 58 87 13 10
Liabilities (25) (36) (8) (9)
- ------------------------------------------------------------------------------------------------------------------------------------
Total stock index options and commodity contracts 33 51 5 1
Total $ (154) $ 49 $ (440) $ (426)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fair Values of Derivative Financial Instruments Held or Issued for Asset and Liability Management Purposes
- ------------------------------------------------------------------------------------------------------------------------------------
December 31
---------------------------------------
(in millions) 1996/b/ 1995/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $(369) $ 33
Futures and forward rate contracts (26) 56
Purchased options (4) 3
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest rate contracts (399) 92
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts -- --
Currency swaps (63) 47
- ------------------------------------------------------------------------------------------------------------------------------------
Total foreign exchange contracts (63) 47
Total $(462) $139
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Average fair value amounts are calculated based on monthly balances.
/b/ For a description of fair value methodologies, refer to Note 25 of the Notes
to Consolidated Financial Statements on pages 78-80.
75
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
Interest Rate and Currency Swaps
Interest rate swaps are contractual agreements between two parties to exchange
periodic payments in the same currency, each of which is computed on a different
interest rate basis, on a specified notional amount. Most interest rate swaps
involve the net exchange of payments calculated as the difference between fixed
and floating interest rate payments. Currency swaps, in their simplest form, are
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 obligation of the seller
to pay the buyer 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.
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.
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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Trading-Related Income
- --------------------------------------------------------------------------------
Year Ended December 31
-------------------------
(in millions) 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
TRADING INCOME
Interest rate $ 56 $ 67
Foreign exchange 316 303
Debt instruments 258 157
- --------------------------------------------------------------------------------
$630 $527
- --------------------------------------------------------------------------------
OTHER TRADING-RELATED INCOME/a/
Interest rate $ 31 $ 30
Foreign exchange 20 28
Debt instruments 208 152
- --------------------------------------------------------------------------------
$259 $210
- --------------------------------------------------------------------------------
</TABLE>
/a/ Primarily includes the net interest revenue and expense associated with
these contracts.
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
76
<PAGE>
BankAmerica Corporation 1996
- ----------------------- Consolidated Financial Statements ----------------------
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, 1996 and 1995, and the amortization of such
amounts for the years ended 1996 and 1995 were not significant.
The table below 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, 1996 and 1995. These swaps have been designated as accounting
hedges and are used to modify the interest rate characteristics of certain
specified assets and liabilities.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Asset and Liability Management Interest Rate Swaps/a/
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1996
---------------------------------------------------------------------------------------------------
Greater Greater Greater Greater Greater Greater
than than than than than than
(dollar amounts in billions) 0-1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-10 years 10 years Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RECEIVE FIXED/b/
Notional amount $ 4.4 $ 1.1 $ 1.3 $ 1.8 $ 1.7 $ 11.6 $ 3.6 $25.5/c/
Weighted average receive rate 6.02% 6.69% 6.91% 6.35% 7.29% 6.62% 6.75% 6.58%
PAY FIXED/b/
Notional amount $ 2.4 $ 3.5 $ 1.8 $ 3.6 $ 2.4 $ 4.4 $ 0.1 $18.2
Weighted average pay rate 5.95% 6.19% 6.65% 6.97% 7.11% 7.16% 7.30% 6.72%
FORWARD RECEIVE FIXED/d/
Notional amount -- -- $ 0.8 $ 0.1 -- $ 0.4 -- 1.3
Weighted average receive rate -- -- 6.46% 5.62% -- 7.40% -- 6.68%
FORWARD PAY FIXED/d/
Notional amount -- -- $ 0.1 $ 0.7 -- $ 0.3 -- 1.1
Weighted average pay rate -- -- 6.55% 7.82% -- 8.14% -- 7.79%
BASIS SWAPS/e/
Notional amount -- -- -- -- -- 0.3 -- 0.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total Notional Amount $46.4
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1995
--------------------------------------------------------------------------------------------------
Greater Greater Greater Greater Greater Greater
than than than than than than
(dollar amounts in billions) 0-1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-10 years 10 years Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RECEIVE FIXED/b/
Notional amount $ 2.5 $ 1.6 $ 1.2 $ 1.2 $ 0.5 $ 9.4 $ 1.6 $18.0/c/
Weighted average receive rate 6.83% 6.54% 7.06% 6.95% 6.79% 6.31% 6.77% 6.55%
PAY FIXED/b/
Notional amount $ 3.4 $ 2.4 $ 2.2 $ 1.4 $ 1.1 $ 2.0 -- $12.5
Weighted average pay rate 4.89% 6.23% 6.26% 7.26% 7.86% 6.61% -- 6.18%
FORWARD RECEIVE FIXED/d/
Notional amount -- $ 0.3 -- $ 0.9 -- $ 0.2 -- $ 1.4
Weighted average receive rate -- 5.93% -- 6.42% -- 7.87% -- 6.60%
FORWARD PAY FIXED/d/
Notional amount -- $ 0.3 -- $ 0.1 $ 0.6 $ 0.3 -- $ 1.3
Weighted average pay rate -- 6.28% -- 6.55% 8.06% 8.23% -- 7.57%
BASIS SWAPS/e/
Notional amount -- -- -- -- -- $ 0.3 -- $ 0.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total Notional Amount $33.5
- ------------------------------------------------------------------------------------------------------------------------------------
</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, 1996, and 1995, the one-, three-, and six-month LIBOR rates
were 5.5000 percent and 5.5625 percent, 5.6016 percent and 5.9375 percent,
and 6.1250 percent and 5.6563 percent, respectively.
/c/Includes $1.0 billion and $0.4 billion of swaps with amortizing notional
amounts at December 31, 1996 and 1995, 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.
77
<PAGE>
BankAmerica Corporation 1996
- -------------------------- Consolidated Financial Statements -------------------
Approximately 75 percent of BAC's hedging-related interest rate futures and
forward rate agreements outstanding at December 31, 1996 mature within one year,
while approximately 80 percent of its hedging-related option contracts mature
between five and ten years. 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.
All of BAC's hedging-related foreign exchange forward contracts outstanding at
December 31, 1996 and 1995 mature within sixty days. At both December 31, 1996
and 1995, BAC's hedging-related foreign exchange forward contracts were
denominated in various currencies, most notably Hong Kong dollars and Spanish
pesetas.
Securities Lending
BAC completed the divestiture of its securities lending portfolio during the
third quarter of 1996 following its decision in 1995 to exit the institutional
trust and securities services business. Securities lending transactions were
conducted primarily for institutional trust customers and, at times, these
customers were indemnified against various losses. All securities lending
transactions were 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.
The following summarizes indemnified securities lending transactions and the
associated collateral:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
December 31
---------------------
(in millions) 1996 1995
- --------------------------------------------------------------------
<S> <C> <C>
Indemnified securities lent $ -- $207
Associated collateral -- 209
- --------------------------------------------------------------------
</TABLE>
25. 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, 1996 or
1995. The estimated fair value amounts for 1996 and 1995 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 MSR, any intangibles, including core deposit intangibles and
credit card intangibles, or trust preferred securities.
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, 1996 and 1995.
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.
78
<PAGE>
BankAmerica Corporation 1996
- -------------------------- Consolidated Financial Statements -------------------
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, if available. If 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, while held-to-maturity securities are carried at amortized
cost. There were no off-balance-sheet financial instruments that qualified as
accounting hedges for available-for-sale or held-to-maturity securities at
December 31, 1996 or 1995. For more information on the fair values of these
securities, refer to Note 7 of the Notes to Consolidated Financial Statements on
pages 60-61.
LOANS
The fair values of residential first mortgages were estimated 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 loans with similar characteristics and risk factors.
For residential junior mortgages, consumer installment loans, and other consumer
loans that do not reprice frequently, the fair values were estimated using
discounted cash flow models. The discount rates were based on current market
pricing for loans with similar characteristics and risk factors. Since
substantially all credit card loans, individual lines of credit, and other
variable rate consumer loans reprice frequently, with interest rates reflecting
current market pricing, the carrying values of these loans 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 estimated using discounted cash flow
models. The discount rates were based on current market interest rates for
similar types of loans, remaining maturities and credit ratings. For domestic
commercial loans that reprice within relatively short time frames, the carrying
values were used to approximate their fair values.
Substantially all of the foreign loans reprice within relatively short time
frames. Accordingly, for the majority of foreign loans, the carrying values were
assumed to approximate their fair values.
For purposes of these fair value estimates, the fair values of nonaccrual loans
were computed by deducting an estimated market discount from their carrying
values to reflect the uncertainty of future cash flows.
The fair values of commitments to extend credit were not significant at either
December 31, 1996 or 1995.
The aggregate fair value of loans excludes the effect of off-balance-sheet
financial instruments that qualify as accounting hedges. The fair value of these
hedges was $(8) million and $(42) million at December 31, 1996 and 1995,
respectively. The contract amount of these instruments was $12,545 million and
$12,107 million at December 31, 1996 and 1995, respectively.
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
------------------------------------------------
1996 1995
------------------------------------------------
Carrying Fair Carrying Fair
(in millions) Value Value Value Value
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Held-to-maturity
securities $ 4,138 $ 3,920 $ 4,656 $ 4,332
Loans:
Domestic consumer:
Residential first
mortgages 37,459 37,998 36,572 37,088
Other consumer loans 40,094 40,048 37,281 37,722
Domestic commercial 56,160 56,082 54,081 53,759
Foreign 25,053 25,019 22,920 22,937
- ---------------------------------------------------------------------------
Total loans 158,766 159,147 150,854 151,506
- ---------------------------------------------------------------------------
Other financial
instruments 2,596 2,611 3,022 3,022
- ---------------------------------------------------------------------------
</TABLE>
79
<PAGE>
BankAmerica Corporation 1996
- --------------------- Consolidated Financial Statements ------------------------
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 domestic deposits with defined maturities, the fair values were estimated
using discounted cash flow models that apply market interest rates corresponding
to similar deposits and timing of maturities. 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 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.
The fair value of deposits excludes the fair value of off-balance-sheet
financial instruments that qualify as accounting hedges for the bank's deposits.
The fair value of these accounting hedges was $(478) million and $(16) million
at December 31, 1996 and 1995, respectively. The contract amount of these
financial instruments was $93,083 million and $53,296 million at December 31,
1996 and 1995, 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 value of off-balance-sheet
financial instruments that qualify as accounting hedges for the parent's long-
term debt. The fair value of these hedges was $24 million and $192 million at
December 31, 1996 and 1995, respectively. The contract amount of these financial
instruments was $12,660 million and $6,752 million at December 31, 1996 and
1995, 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
values for either of the periods presented:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
December 31
-----------------------------------------------
1996 1995
-----------------------------------------------
Carrying Fair Carrying Fair
(in millions) Value Value Value Value
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
Deposits $168,015 $167,971 $160,494 $160,713
Long-term debt 15,430 15,754 14,723 15,422
Subordinated capital
notes 355 368 605 628
- ------------------------------------------------------------------------
</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 and derivatives contracts prevalent in the market.
Refer to Note 24 of the Notes to Consolidated Financial Statements on pages
72-78 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Fair Values of Foreign Exchange Contracts and Derivatives
- ------------------------------------------------------------------------
December 31
------------------------------
(in millions) 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Trading $ 49 $(426)
Asset and Liability Management (462) 139
- ------------------------------------------------------------------------
</TABLE>
80
<PAGE>
BankAmerica Corporation 1996
- --------------------- Consolidated Financial Statements ------------------------
26. RESTRUCTURING CHARGES
BAC recorded a pre-tax restructuring charge of $280 million in the fourth
quarter of 1996 as a result of decisions to implement a number of restructurings
of its business activities. The charge will cover severance payments, premises
and other costs connected with the wholesale banking, retail banking, and staff
support areas affected by the actions.
Approximately $196 million of the pre-tax charge is for severance payments,
reflecting an estimated reduction of approximately 3,700 positions. At December
31, 1996, $4 million in severance payments had been paid.
Approximately $72 million is for premises expense, primarily reflecting the
planned closure of 120 branches. Equipment write-offs and other miscellaneous
costs total $12 million.
Management expects that the majority of these restructurings will be
accomplished in 1997.
27. SPECIAL DEPOSIT ASSESSMENT
On September 30, 1996, Congress passed legislation to recapitalize the Savings
Association Insurance Fund (SAIF) to 1.25 percent of insured deposits as
prescribed by the Federal Deposit Insurance Corporation Improvement Act. This
legislation imposed a one-time assessment on SAIF deposits held on March 31,
1995. BAC recognized a charge of $82 million for the year ended December 31,
1996 as a result of this assessment.
In conjunction with the SAIF recapitalization, the Federal Deposit Insurance
Corporation lowered the rates on assessments paid to the SAIF, and widened the
spread of the rates between institutions. The effective SAIF rates are zero for
well-capitalized and well-managed institutions.
In addition, beginning January 1, 1997, Bank Insurance Fund (BIF) member
institutions will begin sharing in the cost of funding Financing Corporation
(FICO) interest payments. The cost of funding these interest payments will be in
the form of an assessment on both BIF and SAIF insured deposits. The assessment
rate will be lower for BIF deposits than for SAIF deposits. Actual rates will
fluctuate over time depending on the amount of deposits insured by the BIF and
SAIF at the time the assessment is made.
28. 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.
29. 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------
Year Ended December 31
------------------------------
(in millions) 1996 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Dividends from subsidiaries:
Banking $1,964 $2,110 $2,107
Nonbanking 460 153 5
Interest on subordinated notes
purchased from banking subsidiaries 310 316 184
Interest on advances to subsidiaries:
Banking -- 3 6
Nonbanking 239 239 200
Interest on deposits in banks:
Banking subsidiaries 192 231 86
Third parties -- -- 6
Interest on available-for-sale
and held-to-maturity securities 73 87 123
Interest from securities purchased
under resale agreements from
third parties -- -- 4
Net gain on available-for-sale securities 33 10 21
Other income 54 26 14
- --------------------------------------------------------------------------
Total income 3,325 3,175 2,756
- --------------------------------------------------------------------------
Interest on other short-term
borrowings 89 76 28
Interest on long-term debt 966 1,007 778
Interest on subordinated capital notes 33 46 42
Interest on junior subordinated deferrable
interest debentures issued to
grantor trusts 7 -- --
Amortization of goodwill 31 30 30
Other expense 75 95 156
- --------------------------------------------------------------------------
Total expense 1,201 1,254 1,034
Income before income taxes
and equity in undistributed
income of subsidiaries 2,124 1,921 1,722
- --------------------------------------------------------------------------
Benefit from income taxes 105 158 172
Equity in undistributed income
of subsidiaries 644 585 282
- --------------------------------------------------------------------------
Net Income $2,873 $2,664 $2,176
- --------------------------------------------------------------------------
</TABLE>
See notes following the Statement of Cash Flows on page 83.
81
<PAGE>
BankAmerica Corporation 1996
- --------------------- Consolidated Financial Statements ----------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Balance Sheet
- ------------------------------------------------------------------------
December 31
-------------------------
(in millions) 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and short-term investments $ 4,961 $ 3,211
Available-for-sale securities 982 1,101
Investments in subsidiaries:
Banking 21,674 21,124
Nonbanking 1,563 1,530
Subordinated notes purchased from
banking subsidiaries 4,715 4,587
Advances to subsidiaries:
Banking -- 25
Nonbanking 4,110 3,586
Accrued interest receivable 64 99
Goodwill 605 643
Other assets 720 733
- --------------------------------------------------------------------------
Total Assets $39,394 $36,639
- --------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings from subsidiaries $ 130 $ 141
Other short-term borrowings 1,552 706
Accrued interest payable 206 192
Other liabilities 665 1,076
Long-term debt 14,227 13,697
Subordinated capital notes 355 605
Junior subordinated deferrable
interest debentures issued to grantor trusts 1,546 --
- --------------------------------------------------------------------------
Total liabilities 18,681 16,417
- --------------------------------------------------------------------------
Stockholders' equity 20,713 20,222
- --------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $39,394 $36,639
- --------------------------------------------------------------------------
</TABLE>
See notes following the Statement of Cash Flows on page 83.
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 retained 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 1996 of $1,907 million, BANW could have declared
dividends of $397 million, and the parent's other national banking subsidiaries
could have declared dividends of $49 million. At December 31, 1996, the
unutilized dividends allowed under these laws for the bank, BANW, and other
national banking subsidiaries were $357 million, $48 million, and $62 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 $35
million without approval of the Federal Reserve Bank for 1996. State-chartered
nonmember banking subsidiaries could have declared dividends without state
approval of $353 million for 1996. At December 31, 1996, the unutilized
dividends allowed under these laws for the state-chartered member and nonmember
banking subsidiaries were $50 million and $53 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 $211 million for 1996. At December 31, 1996, the
unutilized dividends allowed under these laws were $211 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 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, BANW, BAI, Bank
of America National Association, and other depository subsidiaries could have
loaned to the parent a maximum of $1,296 million, $167 million, $219 million,
$133 million, and $285 million respectively, at December 31, 1996.
The net assets of depository subsidiaries restricted from flowing to the parent
by legal limitations were $18,274 million at December 31, 1996.
82
<PAGE>
BankAmerica Corporation 1996
- -----------------------Consolidated Financial Statements------------------------
- --------------------------------------------------------------------------------
Statement of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31
-----------------------
(in millions) 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,873 $2,664 $2,176
Adjustments to net income to arrive at net cash provided by operating activities:
Provision for (benefit from) deferred income taxes (41) (43) 215
Equity in undistributed income of subsidiaries (697) (613) (282)
Amortization of goodwill 31 30 30
(Increase) decrease in accrued interest receivable 35 (36) 1
Increase (decrease) in accrued interest payable 14 (1) 2
Increase (decrease) in current income taxes payable (79) 53 (165)
Other, net (198) 378 13
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,938 2,432 1,990
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital contributions to subsidiaries (347) (182) (700)
Capital returns from subsidiaries 673 108 522
Purchase of subordinated notes from banking subsidiaries (135) (500) (310)
Redemption of subordinated capital notes from banking subsidiaries 7 400 --
Activity in available-for-sale securities:
Sales proceeds 40 513 932
Purchases -- (54) (1,325)
Maturities, prepayments, and calls 60 59 --
Maturities, prepayments, and calls of held-to-maturity securities -- 125 529
Cash used for acquisitions -- -- (55)
Collections from subsidiaries 5,412 6,807 7,185
Advances to subsidiaries (5,937) (6,597) (6,301)
Other, net 32 (55) (35)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (195) 624 442
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings from subsidiaries 329 428 386
Payments on borrowings from subsidiaries (341) (360) (326)
Increase (decrease) in other short-term borrowings 766 (267) 128
Proceeds from issuance of long-term debt 2,994 2,265 3,336
Principal payments and retirements of long-term debt and subordinated capital notes (2,714) (2,591) (3,208)
Net proceeds from issuance of junior subordinated deferrable interest debentures issued
to grantor trusts 1,477 -- --
Proceeds from issuance of common stock 83 151 52
Proceeds from issuance of treasury stock 99 -- --
Preferred stock repurchased (391) (206) (324)
Treasury stock purchased (1,333) (926) (503)
Common stock dividends (780) (684) (571)
Preferred stock dividends (185) (227) (248)
Other, net 3 1 (107)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 7 (2,416) (1,385)
Net increase in cash and short-term investments 1,750 640 1,047
- ---------------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at beginning of year 3,211 2,571 1,524
- ---------------------------------------------------------------------------------------------------------------------------
Cash and Short-Term Investments at End of Year $4,961 $3,211 $2,571
- ---------------------------------------------------------------------------------------------------------------------------
</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, 1996 and 1995, cash and short-term investments
included $4,938 million and $3,191 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 1996, the parent made net
income tax payments of $15 million. During 1995 and 1994, the parent received
net income tax payments representing reimbursements from subsidiaries of $168
million and $211 million, respectively. The parent made interest payments on
interest-bearing liabilities of $1,109 million, $1,155 million, and $916 million
in 1996, 1995, and 1994, respectively.
83
<PAGE>
BankAmerica Corporation 1996
- --------------------------Consolidated Financial Statements---------------------
30. 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 1996 $204,716 $17,316 $12,202 $4,058 $2,410
1995 191,883 16,202 11,622 4,070 2,358
1994 183,406 13,178 10,315 3,198 1,855
- -----------------------------------------------------------------------------------------------------------------------------
Asia 1996 21,296 2,029 937 382 237
1995 17,601 1,678 652 172 105
1994 14,708 1,380 696 281 174
Europe, Middle East, and Africa 1996 21,060 2,046 543 137 105
1995 20,422 1,854 512 180 118
1994 15,113 1,393 436 87 49
Latin America and the Caribbean 1996 2,215 540 269 158 96
1995 1,505 553 192 114 63
1994 1,716 469 166 63 41
Canada 1996 1,466 140 48 38 25
1995 1,035 99 30 31 20
1994 532 99 64 88 57
- -----------------------------------------------------------------------------------------------------------------------------
Total Foreign 1996 46,037 4,755 1,797 715 463
1995 40,563 4,184 1,386 497 306
1994 32,069 3,341 1,362 519 321
- -----------------------------------------------------------------------------------------------------------------------------
BankAmerica Corporation 1996 250,753 22,071 13,999 4,773 2,873
1995 232,446 20,386 13,008 4,567 2,664
1994 215,475 16,519 11,677 3,717 2,176
- -----------------------------------------------------------------------------------------------------------------------------
</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 taking into account goodwill and
tax-effected identifiable intangibles. Overhead is allocated based on each
geographic area's equally weighted direct 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 $23 million, $14 million, and $2
million in 1996, 1995, and 1994, respectively. These amounts, which are reported
in other noninterest income, are included in the table above.
84
<PAGE>
BankAmerica Corporation 1996
- -------------------------Consolidated Financial Statements----------------------
31. QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1996 Quarter Ended 1995 Quarter Ended
----------------------------------------- ----------------------------------------
(in millions, except per share data) Dec 31/a/ 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 $4,238 $4,206 $4,126 $4,089 $4,071 $4,044 $3,989 $3,736
Interest expense 2,108 2,054 1,967 1,943 1,934 1,888 1,866 1,690
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income 2,130 2,152 2,159 2,146 2,137 2,156 2,123 2,046
- ---------------------------------------------------------------------------------------------------------------------------
Provision for credit losses 220 235 250 180 130 110 100 100
Noninterest income 1,499 1,319 1,320 1,274 1,158 1,157 1,138 1,093
Noninterest expense 2,250 2,081 1,997 2,013 1,966 1,993 2,053 1,989
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,159 1,155 1,232 1,227 1,199 1,210 1,108 1,050
- ---------------------------------------------------------------------------------------------------------------------------
Provision for income taxes 412 472 509 507 495 506 463 439
- ---------------------------------------------------------------------------------------------------------------------------
Net Income $ 747 $ 683 $ 723 $ 720 $ 704 $ 704 $ 645 $ 611
- ---------------------------------------------------------------------------------------------------------------------------
Earnings per common and common
equivalent share $ 1.93 $ 1.75 $ 1.84 $ 1.79 $ 1.74 $ 1.72 $ 1.56 $ 1.46
Earnings per common share--assuming
full dilution 1.92 1.75 1.84 1.79 1.74 1.72 1.55 1.45
STOCK DATA
Dividends per common share 0.54 0.54 0.54 0.54 0.46 0.46 0.46 0.46
Common stock price range:/b/
High 103 7/8 85 1/4 80 3/8 79 1/8 68 1/2 61 1/8 55 1/4 49 5/8
Low 82 1/8 72 69 3/4 58 3/4 57 52 1/2 48 3/8 39 1/2
Closing common stock price/b/ 99 3/4 82 1/8 75 3/4 77 1/2 64 3/4 59 7/8 52 5/8 48 1/4
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Includes the income statement effect of the following items which have been
previously discussed: a $147 million nontaxable gain from the initial public
offering of BAMSI common stock during the fourth quarter of 1996; a $280
million pre-tax restructuring charge incurred in the fourth quarter of 1996;
and an $82 million pre-tax one-time SAIF assessment in the third quarter of
1996.
/b/The principal market of BAC's common stock is the New York Stock Exchange;
the stock is also listed on the Chicago, Pacific, and London Stock
Exchanges. BAC delisted from the Tokyo Stock Exchange during the first
quarter of 1996. Price information represents quotations as reported in the
New York Stock Exchange consolidated transaction reporting system.
85
<PAGE>
BankAmerica Corporation 1996
- ---------------------------- Corporate Information -----------------------------
Corporate Information
BOARDS OF DIRECTORS/BANKAMERICA CORPORATION AND
BANK OF AMERICA NT&SA
Members of the Boards of Directors spend a great many hours every year, both
attending Board and committee meetings and tending to BankAmerica business
between meetings. They make their diverse experience and expertise readily
available to senior management for the benefit of the corporation and its
shareholders.
<TABLE>
<CAPTION>
As of February 3, 1997 Committees:
- -----------------------------------------------------------------------------
<S> <C>
Joseph F. Alibrandi
Chairman of the Board Executive
and Chief Executive Officer Executive Personnel and
Whittaker Corporation Compensation
Simi Valley, California Nominating (Chair)
(aerospace/manufacturing
and communications)
- -----------------------------------------------------------------------------
Jill E. Barad
Chief Executive Officer Public Policy
Mattel, Inc. Executive Personnel and
El Segundo, California Compensation
(toy manufacturing)
- -----------------------------------------------------------------------------
Peter B. Bedford
Chairman of the Board Executive
and Chief Executive Officer Nominating
Bedford Property Investors, Inc. Public Policy (Chair)
Lafayette, California
(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 Auditing and Examining
and Chief Executive Officer
Pacific Gas and Electric Company
San Francisco, California
(gas and electric utility)
- -----------------------------------------------------------------------------
David A. Coulter
Chairman of the Board, President, Executive
and Chief Executive Officer
BankAmerica Corporation/
Bank of America NT&SA
- -----------------------------------------------------------------------------
Timm F. Crull
Retired, Chairman Executive
Nestle USA, Inc. Executive Personnel and
Glendale, California Compensation (Chair)
(food and related products processing)
- -----------------------------------------------------------------------------
Kathleen Feldstein
President Executive
Economics Studies, Inc. Executive Personnel and
Belmont, Massachusetts Compensation
(economics consulting)
- -----------------------------------------------------------------------------
Donald E. Guinn
Chairman Emeritus Auditing and
Pacific Telesis Group Examining (Chair)
San Francisco, California
(telecommunications)
- -----------------------------------------------------------------------------
Frank L. Hope, Jr.
Consulting Architect Executive Personnel and
San Diego, California Compensation
(architecture) Nominating
Public Policy
- -----------------------------------------------------------------------------
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 Nominating
Chicago, Illinois
(law firm)
- -----------------------------------------------------------------------------
Richard M. Rosenberg
Retired Chairman of the Board and Executive (Chair)
Chief Executive Officer
BankAmerica Corporation/
Bank of America NT&SA
- -----------------------------------------------------------------------------
A. Michael Spence
Dean of the Graduate School of Business Executive
Stanford University Executive Personnel and
Stanford, California Compensation
(education)
- -----------------------------------------------------------------------------
Solomon D. Trujillo
President and Chief Executive Officer Auditing and
U.S. West Communication Examining
(telecommunications)
- -----------------------------------------------------------------------------
</TABLE>
HONORARY DIRECTORS/BANKAMERICA CORPORATION AND
BANK OF AMERICA NT&SA (NONVOTING)
As of February 3, 1997
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
ADVISOR-BANKAMERICA CORPORATION
As of February 3, 1997
- -----------------------------------------------------------------------------
George S. Ishiyama
Senior Advisor
- -----------------------------------------------------------------------------
86
<PAGE>
BankAmerica Corporation 1996
- ---------------------------- Corporate Information -----------------------------
PRINCIPAL OFFICERS/BANKAMERICA CORPORATION
Pictured are members of the Operating Policy Committee
As of February 3, 1997
David A. Coulter*
Chairman and Chief Executive Officer
- --------------------------------------------
(Photo appears here)
David A. Coulter
Jack L. Meyers*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Jack L. Meyers
Michael E. O'Neill*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Michael E. O'Neill
Michael E. Rossi*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Michael E. Rossi
Kathleen J. Burke*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Kathleen J. Burke
Michael J. Murray*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Michael J. Murray
Thomas E. Peterson*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Thomas E. Peterson
Martin A. Stein*
Vice Chairman
- --------------------------------------------
(Photo appears here)
Martin A. Stein
Other Principal Officers
- --------------------------------------------------------------------------
John J. Higgins
Executive Vice President and Chief Accounting Officer
- --------------------------------------------------------------------------
Bruce W. Mitchell
Executive Vice President and General Auditor
- --------------------------------------------------------------------------
Raymond R. Peters
Executive Vice President and Treasurer
- --------------------------------------------------------------------------
James N. Roethe
Executive Vice President and General Counsel
- --------------------------------------------------------------------------
Cheryl A. Sorokin
Executive Vice President and Secretary
- --------------------------------------------------------------------------
Joseph E. Vaez
Executive Vice President and Director of Credit Examination Services
- --------------------------------------------------------------------------
*Executive Officer of BankAmerica Corporation for Securities and Exchange
Commission reporting purposes.
87
<PAGE>
BankAmerica Corporation 1996
- ---------------------------- Corporate Information -----------------------------
SENIOR MANAGEMENT COUNCIL/BANK OF AMERICA NT&SA
As of February 3, 1997
- -----------------------------------------------------------------------------
Alexander M. Anderson
Investment Management
- -----------------------------------------------------------------------------
Doyle L. Arnold
Corporate Development
- -----------------------------------------------------------------------------
Charles Bell
Corporate Human Resources
- -----------------------------------------------------------------------------
Jeanine R. Brown
Interactive Banking
- -----------------------------------------------------------------------------
Kathleen J. Burke
Managing Committee
- -----------------------------------------------------------------------------
Christopher A. Callero
National Consumer Assets
- -----------------------------------------------------------------------------
David A. Coulter
Managing Committee
- -----------------------------------------------------------------------------
Barbara J. Desoer
California Retail
- -----------------------------------------------------------------------------
P. Gerald Doherty
Global Capital Markets
- -----------------------------------------------------------------------------
Paul M. Dorfman
Credit Policy
- -----------------------------------------------------------------------------
Jeremy G. Fair
U.S. Corporate
- -----------------------------------------------------------------------------
Stephen B. Galasso
Credit Card
- -----------------------------------------------------------------------------
Christine N. Garvey
Corporate Real Estate/OREO
- -----------------------------------------------------------------------------
William M. Goodyear
Bank of America Illinois
- -----------------------------------------------------------------------------
David S. Hanna
Southwest Region
- -----------------------------------------------------------------------------
Richard V. Harris
Leasing
- -----------------------------------------------------------------------------
John J. Higgins
Business Finance
- -----------------------------------------------------------------------------
James E. Hulihan, Jr.
Asia Retail
- -----------------------------------------------------------------------------
James G. Jones
Consumer Credit
- -----------------------------------------------------------------------------
Cheryl L. Kane
Technology Support
- -----------------------------------------------------------------------------
Richard W. Madresh
Business Credit
- -----------------------------------------------------------------------------
Liam E. McGee
Customer Support
- -----------------------------------------------------------------------------
Jack L. Meyers
Managing Committee
- -----------------------------------------------------------------------------
Bruce W. Mitchell
Audit
- -----------------------------------------------------------------------------
Robert P. Morrow
Asia Wholesale
- -----------------------------------------------------------------------------
Donald A. Mullane
Corporate Community Development
- -----------------------------------------------------------------------------
Michael J. Murray
Managing Committee
- -----------------------------------------------------------------------------
Michael E. O'Neill
Managing Committee
- -----------------------------------------------------------------------------
Barbara Z. Otto
Latin America
- -----------------------------------------------------------------------------
Terry E. Perucca
Global Equity
- -----------------------------------------------------------------------------
Raymond R. Peters
Corporate Treasury
- -----------------------------------------------------------------------------
Thomas R. Peterson
Managing Committee
- -----------------------------------------------------------------------------
Barbara L. Rambo
Commercial Banking
- -----------------------------------------------------------------------------
Daniel P. Riley
Global Payments
- -----------------------------------------------------------------------------
John V. Rindlaub
Northwest Region
- -----------------------------------------------------------------------------
Arthur P. Ringwald
BankAmerica Mortgage
- -----------------------------------------------------------------------------
Michael E. Rossi
Managing Committee
- -----------------------------------------------------------------------------
James N. Roethe
Legal
- -----------------------------------------------------------------------------
Federico Sacasa
International Trade Banking
- -----------------------------------------------------------------------------
Frank A. Somers
Special Assets
- -----------------------------------------------------------------------------
Cheryl A. Sorokin
Corporate Secretary's, Corporate Relations, and Investment Administration
- -----------------------------------------------------------------------------
Martin A. Stein
Managing Committee
- -----------------------------------------------------------------------------
Lewis W. Teel
Trading Exposure Control and Compliance
- -----------------------------------------------------------------------------
Joseph E. Vaez
Corporate Credit Examination Services
- -----------------------------------------------------------------------------
John W. Wheeler
Housing Services
- -----------------------------------------------------------------------------
Mary Wikstrom
Retail Systems
- -----------------------------------------------------------------------------
M. Faye Wilson
Consumer Finance
- -----------------------------------------------------------------------------
88
<PAGE>
BankAmerica Corporation 1996
- ---------------------------- Corporate Information -----------------------------
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 at the
address listed on the inside back cover of this Annual Report.
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 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.
89
<PAGE>
http://www.bankamerica/
BankAmerica Corporation is at work 24 hours a day serving customers around the
world. The cumulative effect of the jobs we do is greater than the sum of their
individual parts, but the parts are very impressive by themselves. In fact, the
corporation's activities comprise a truly astonishing inventory. Here is a sort
of "back channel" view, if you will -- a behind-the-scenes glimpse of some of
what we do and the effect it has on customers, employees, shareholders,
communities, suppliers, and others.
MEGA-DEALS
- -- We financed the Golden Gate Bridge during the Depression, when nobody else
would.
- -- We helped build Hollywood into the film capital it is today, employing
thousands of people and exporting its product around the world. Through the
years, we have been involved in more than 1,000 Hollywood films, including
It's a Wonderful Life, Gone With the Wind, Snow White and the Seven Dwarfs,
--------------------- ------------------ -------------------------------
Lawrence of Arabia, Dances With Wolves, and Independence Day.
------------------ ------------------ ----------------
- -- We crafted a $6 million debt-for-nature swap to preserve rainforests in
Latin America.
- -- We continue to be instrumental in growing California's world famous wine and
high technology industries.
- -- We helped to fund the nation's airlines and aerospace industry when it was
in its infancy, providing financing to a number of pioneering firms,
including Ryan Aircraft, which built The Spirit of St. Louis, and we
-----------------------
continue to be a leading provider of financial services to this industry.
- -- We are a lead financial advisor and arranger of financing on a project basis
around the world in areas such as infrastructure development, power,
petrochemical plants, telecommunications, and oil and gas production.
EXTENSIVE OPERATIONS
- -- 92,000 employees earn $4 billion a year in salaries and benefits.
- -- We occupy approximately 30 million square feet of office space in 38
countries and territories.
- -- We handle more than 450,000 pieces of mail per day.
- -- And more than one million telephone calls per day.
90
<PAGE>
SERVING BUSINESS
- -- We work with more than 85 percent of the Fortune 500.
- -- To facilitate international trade, we provided $36 billion in trade finance
worldwide in 1996.
- -- We turn an average of more than $50 billion per day through our trading
rooms: more than the daily transaction volume for the New York Stock
Exchange.
- -- Our leasing and capital finance operation owns, manages, or finances nearly
$20 billion worth of equipment.
- -- We also serve government institutions, including a majority of California's
cities and counties, and we have a significant number of public-sector
relationships in Arizona, Hawaii, Nevada, and Washington states.
SERVING PEOPLE
- -- Our customers have more than 11 million checking and savings accounts, and 9
million credit card accounts.
- -- VERSATELLER(R) cardholders can access the largest proprietary ATM network in
the U.S. -- more than 7,000 machines. They can also get local currency at
more than 286,000 ATMs in 107 countries.
- -- For customers who need branch services, BofA operates more than 2,000
branches, plus more than 1,000 in-store locations with extended hours in 11
states.
- -- We process more than 20 million checks every 24 hours.
HELPING COMMUNITIES GROW
- -- In the last five years, we have loaned more than $15 billion for community
reinvestment, economic development, and low-income home purchases.
- -- We've committed to lend an additional $10.6 billion for small business.
- -- We also make grants for worthwhile nonprofit projects -- nearly $30 million
per year -- in the areas of economic development, education, and the
environment.
- -- Our employees contribute more than 250,000 hours of their personal volunteer
time annually, on 1,000 different projects.
- -- Our employee volunteer network Team America was nationally recognized by the
Points of Light Foundation.
- -- Business Ethics magazine awarded us its 1996 Corporate Social Responsibility
---------------
and Ethics Award.
- -- Federal regulators gave us three consecutive Community Reinvestment Act
ratings of "Outstanding."
RESPONSIBILITY FOR THE ENVIRONMENT
- -- We were the first major bank to develop formal environmental principles
factoring environmental concerns into daily operations.
- -- Last year we became the first major U.S. financial services company to
endorse the CERES Principles for environmental protection.
- -- We helped create the Recycled Paper Coalition, which now has more than 200
corporate and nonprofit members nationwide.
- -- In our offices, we recycle more than 12,000 tons of waste paper per year.
91
<PAGE>
BankAmerica Corporation 1996
- ---------------------- Consolidated Financial Statements -----------------------
GLOSSARY OF COMMON BANKING TERMS
ADJUSTABLE RATE MORTGAGE (ARM) A loan secured by real estate with periodic
adjustments in the interest rate. 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 and over the life
of the loan.
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.
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.
DERIVATIVE INSTRUMENT A financial instrument whose value is based on another
security. For example, an option is a derivative instrument because its value is
derived from an underlying stock, stock index, or future.
DOLLAR ROLL The sale of a mortgage-backed security to a dealer, with an
agreement to repurchase a substantially identical security at a future date and
at a specified price. Typically, this is done as a short-term financing
technique (one to three months) or to generate income from arbitrage by
borrowing at below market rate in the mortgage-backed securities market and
reinvesting in another market, such as the U.S. Treasury bond market, at a
higher rate.
DURATION Expected life of a fixed-income security, taking into account its
coupon yield, interest payments, maturity, and call features. Duration attempts
to measure actual maturity, as opposed to final maturity, by measuring the
average time required to collect all payments of principal and interest.
ECONOMIC CAPITAL The level of equity capital that is assigned to cover the
inherent risk of each business. Economic Capital is the amount of capital
protection that is required to protect the business against unexpected losses.
ECONOMIC PROFIT The dollar amount of earnings generated by a business after
subtracting the cost of economic capital. Economic profit is a function of a
group's risk adjusted net income, assigned economic capital, and the Bank's cost
of equity capital.
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.
HURDLE RATE The minimum return required to cover BAC's cost of equity capital.
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.
MANUFACTURED HOUSING A single family residence built in a factory and
transported to a homesite where the wheels and axles are removed and the home is
set. Manufactured homes come in single- and multi-sectional configurations and
are the only homes built to conform to a national building code which is
administered by the Department of Housing and Urban Development.
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.
MORTGAGE-BACKED SECURITIES Investment grade securities backed by a pool of
mortgages or trust deeds. Principal and interest payments on the underlying
mortgages are used to pay semi-annual interest and principal on the securities.
Income from the principal and interest payments on the underlying mortgages are
used to pay off the bonds.
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.
92
<PAGE>
CONNECTING WITH BANKAMERICA
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 1996 . Information regarding
Form 10-K, which includes additional community reinvestment and
information and financial data on the related activities
corporation
. Environmental Program Progress Report . Recording for the blind of
the 1995 Annual Report
Requests for copies of the full text of the BankAmerica
Corporation Board of Directors' Corporate Governance
Principles can be obtained by writing to:
BankAmerica Corporation
Corporate Secretary's Office #13018
Bank of America Center
555 California Street
San Francisco, CA 94104
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:
<TABLE>
<CAPTION>
<S> <C>
ChaseMellon Shareholder Services, L.L.C. or ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road 50 California Street - 10th Floor
Ridgefield Park, NJ 07660 San Francisco, CA 94111
</TABLE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Online
--------------------------------------------------------------------------
Visit BankAmerica's home page on the World Wide Web to view the latest
information about the corporation and its products and services, open an
account, bank online, 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].
Shareholders can reach the corporation's Transfer Agent and Registrar through
http://www.cmssonline.com
- --------------------------------------------------------------------------------
In Person
-----------------------------------------------------------------------
With more than 3,000 branches and in-store facilities and more than 7,000
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 Los Angeles at the Sheraton
Grande Hotel, 333 South Figueroa Street, on Thursday, May 22, 1997 at 2 p.m.
- --------------------------------------------------------------------------------
Printed on recycled paper.
Recycle symbol appears to the left of "Printed on recycled paper" on
non-EDGAR version.
<PAGE>
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
BankAmerica -----------------------
BULK RATE
Department 13018 U.S. POSTAGE
Box 37000 PAID
San Francisco, CA 94137 BANKAMERICA CORPORATION
-----------------------
SEC-13 2-97
<PAGE>
EXHIBIT 21 TO 10K (1996)
BANKAMERICA CORPORATION (BAC) SUBSIDIARIES LIST
AS OF DECEMBER 31, 1996
LIST OF ENTITIES IN WHICH BAC DIRECTLY OR INDIRECTLY (THROUGH ONE OR MORE
SUBSIDIARIES), HAD 50% OR MORE OWNERSHIP INTEREST AS OF DECEMBER 31, 1996.
EXCEPT AS OTHERWISE INDICATED, EACH SUBSIDIARY IS WHOLLY OWNED AND DOES BUSINESS
UNDER ITS OWN NAME.
* Denotes Ownership within the BAC Family by More Than One Entity - See Listing
at end of report for details
~ Denotes Partial Outside Ownership - See Listing at end of report for details
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
54 Appold Holdings Limited Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
80 Appold Japan Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
86 Appold Leasing Limited U.K.
- ----------------------------------------------------------------------------------------------------------------------
199 Security Pacific EuroFinance, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
235 Sec Pac Spain S.A. Spain
- ----------------------------------------------------------------------------------------------------------------------
1400 Societe Nouvelle Les Dolomites Francaises, SARL* France
- ----------------------------------------------------------------------------------------------------------------------
1400 Societe Nouvelle Les Dolomites Francaises, SARL* France
- ----------------------------------------------------------------------------------------------------------------------
52 Appold Leasing, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
240 BA Clearing Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
368 BA Futures, Incorporated Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2268 BA Futures, S.A. France
- ----------------------------------------------------------------------------------------------------------------------
15 BA Northwest Community Service Corporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
120 BA Securities, Inc. Delaware, USA
DBA: Texas BA Securities, Inc.
- ----------------------------------------------------------------------------------------------------------------------
376 BancAmerica Commercial Corporation Pennsylvania, USA
- ----------------------------------------------------------------------------------------------------------------------
16 Bank of America Alaska, N.A. USA (National Bank)
- ----------------------------------------------------------------------------------------------------------------------
382 Bank of America Arizona Arizona, USA
DBA: Bank of America
- ----------------------------------------------------------------------------------------------------------------------
657 Bamerilease, Inc. Arizona, USA
- ----------------------------------------------------------------------------------------------------------------------
121 Bank of America Community Development Bank California, USA
DBA: Security Pacific Insurance Agency, Inc.
- ----------------------------------------------------------------------------------------------------------------------
2011 Bank of America Illinois Illinois, USA
- ----------------------------------------------------------------------------------------------------------------------
2082 BA Service Corp. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2019 Bank of America Illinois Community Development Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2022 BankAmerica International Investment Corporation USA (Edge Act Corporation)
- ----------------------------------------------------------------------------------------------------------------------
2784 Asia Port Investors LLC~ Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2785 Port Investors Limited British West Indies
- ----------------------------------------------------------------------------------------------------------------------
2028 C.N. Investments, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2026 CIC Trading, S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
2079 Continental Bank Participacoes, Ltda. Brazil
- ----------------------------------------------------------------------------------------------------------------------
2029 Continental Capital Markets Limited U.K.
- ----------------------------------------------------------------------------------------------------------------------
2030 Lease Continental PLC U.K.
- ----------------------------------------------------------------------------------------------------------------------
2032 Continental Finanziaria S.P.A. Italy
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
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 Islands
- ----------------------------------------------------------------------------------------------------------------------
2043 Continental Investment Company S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
2044 Continental Servicios Corporativos S.A. De C.V. Mexico
- ----------------------------------------------------------------------------------------------------------------------
2098 Fundo 2001 de Conversao-Capital Estrangeiro Brazil
- ----------------------------------------------------------------------------------------------------------------------
2047 Invenco, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2054 Ismael I, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2057 Juliana, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2059 Justin, Inc. Chile Ltda.* Chile
- ----------------------------------------------------------------------------------------------------------------------
2058 Justin, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2059 Justin, Inc. Chile Ltda.* Chile
- ----------------------------------------------------------------------------------------------------------------------
2064 Labco I, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2065 Labco I, Inc. Chile Limitada* Chile
- ----------------------------------------------------------------------------------------------------------------------
2038 Continental International Finance Corporation II Limitada* Chile
- ----------------------------------------------------------------------------------------------------------------------
2067 Labco II, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2065 Labco I, Inc. Chile Limitada* Chile
- ----------------------------------------------------------------------------------------------------------------------
2038 Continental International Finance Corporation II Limitada* Chile
- ----------------------------------------------------------------------------------------------------------------------
2106 Lawrence Holdings Ltd. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2068 M.A.S. Investments, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2107 Moraine Ltd. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2026 CIC Trading, S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
2037 Continental Information & Technology Services Co., S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
2043 Continental Investment Company S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
2108 North Bay Holdings, Ltd. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2075 Tanco I, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2077 Valores Mercantiles Banconti, C.A. Venezuela
- ----------------------------------------------------------------------------------------------------------------------
2014 C.I.N.B. Nominees (London) Limited U.K.
- ----------------------------------------------------------------------------------------------------------------------
2018 Continental Brokerage Services Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2020 Continental Illinois Property Corporation No. 3 Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2021 Continental Illinois Venture Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
2081 Continental Partners Group, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2090 Moorpark Holding, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2091 PDE, Inc. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2115 Penguin Holding, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2093 Rose Holding, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
44 Bank of America National Association USA (National Bank)
- ----------------------------------------------------------------------------------------------------------------------
385 Bank of America National Trust and Savings Association USA (National Bank)
DBA: Seafirst Bank
DBA: Security Pacific National Bank
- ----------------------------------------------------------------------------------------------------------------------
517 693327 Ontario Limited*~ Canada
- ----------------------------------------------------------------------------------------------------------------------
361 BA Credit Corporation Delaware, USA
DBA: BankAmerica Credit Corporation
DBA: SPFSSI-SPCC, Inc
- ----------------------------------------------------------------------------------------------------------------------
2275 BA Interactive Services Holding Company, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
282 BA Investment Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
3000 BA Merchant Services, Inc.* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2792 BA Mortgage Securities, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
264 BA Properties, Inc. Delaware, USA
DBA: Holding Pattern Company
- ----------------------------------------------------------------------------------------------------------------------
266 BancAmerica Auto Finance Corp. Delaware, USA
DBA: Security Pacific Auto Finance
- ----------------------------------------------------------------------------------------------------------------------
526 Bank of America (Jersey) Limited Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
514 Bank of America Canada Canada
- ----------------------------------------------------------------------------------------------------------------------
517 693327 Ontario Limited*~ Canada
- ----------------------------------------------------------------------------------------------------------------------
515 Bank of America Canada Leasing Corporation Canada
- ----------------------------------------------------------------------------------------------------------------------
516 Bank of America Canada Securities Corporation Canada
- ----------------------------------------------------------------------------------------------------------------------
437 Bank of America Colombia* Colombia
- ----------------------------------------------------------------------------------------------------------------------
470 Bank of America International Limited* U.K.
- ----------------------------------------------------------------------------------------------------------------------
473 BA Netting Limited U.K.
- ----------------------------------------------------------------------------------------------------------------------
476 Fenchurch Steamship Corporation Liberia
- ----------------------------------------------------------------------------------------------------------------------
440 Bank of America, S.A.* Spain
- ----------------------------------------------------------------------------------------------------------------------
441 BankAmerica Gestion SGIIC, S.A. Spain
- ----------------------------------------------------------------------------------------------------------------------
360 BankAmerica Business Credit, Inc. Delaware, USA
DBA: BA Business Credit, Inc.
- ----------------------------------------------------------------------------------------------------------------------
438 BankAmerica International USA (Edge Act Corporation)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
2270 Arrendadora BankAmerica, S.A.* Mexico
- ----------------------------------------------------------------------------------------------------------------------
2269 Bank of America Mexico, S.A.* Mexico
- ----------------------------------------------------------------------------------------------------------------------
440 Bank of America, S.A.* Spain
- ----------------------------------------------------------------------------------------------------------------------
441 BankAmerica Gestion SGIIC, S.A. Spain
- ----------------------------------------------------------------------------------------------------------------------
498 Inversiones of America Corredores de Bolsa Limitada* Chile
- ----------------------------------------------------------------------------------------------------------------------
443 Societe Anonyme Immobiliere du 28 Place Vendome France
- ----------------------------------------------------------------------------------------------------------------------
444 BankAmerica International Financial Corporation USA (Edge Act Corporation)
- ----------------------------------------------------------------------------------------------------------------------
2270 Arrendadora BankAmerica, S.A.* Mexico
- ----------------------------------------------------------------------------------------------------------------------
445 BA Asia Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
2801 BA Assets Company ~ Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
506 BA Australia Limited Australia
- ----------------------------------------------------------------------------------------------------------------------
509 BA Staff Limited Australia
- ----------------------------------------------------------------------------------------------------------------------
707 BA Staff Superannuation Limited Australia
- ----------------------------------------------------------------------------------------------------------------------
2941 BA Card Services, Inc. Philippines
- ----------------------------------------------------------------------------------------------------------------------
446 BA Finance (Hong Kong) Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
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 Trustees (B.V.I.) Limited British Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
459 BankAmerica Financial Services Ltd. British Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
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 Islands
- ----------------------------------------------------------------------------------------------------------------------
1360 BankAmerica Fund Management Limited Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
456 Harbour Nominees Ltd. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
457 BankAmerica Trust Company (Hong Kong) Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
458 BATCO Nominees Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
457 BankAmerica Trust Company (Hong Kong) Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
461 Fiduciary Services Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
460 ITG Secretaries Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
462 Renfrew Services Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
461 Fiduciary Services Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
460 ITG Secretaries Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
462 Renfrew Services Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
458 BATCO Nominees Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
467 BankAmerica Trust Company (Jersey) Limited Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
468 BankAmerica Properties (Jersey) Limited Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
2939 Fenborough Services Limited British Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2940 NS Secretaries Limited Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
2938 Ridgemount Services Limited British Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
469 Unihouse Nominees Limited Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
449 BA Swallow Business Systems Limited Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
479 BamerInvest C.A. Venezuela
- ----------------------------------------------------------------------------------------------------------------------
437 Bank of America Colombia* Colombia
- ----------------------------------------------------------------------------------------------------------------------
470 Bank of America International Limited* U.K.
- ----------------------------------------------------------------------------------------------------------------------
473 BA Netting Limited U.K.
- ----------------------------------------------------------------------------------------------------------------------
476 Fenchurch Steamship Corporation Liberia
- ----------------------------------------------------------------------------------------------------------------------
2140 Bank of America Malaysia Berhad Malaysia
- ----------------------------------------------------------------------------------------------------------------------
316 BA Nominees (Asing) Sdn. Bhd. 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, USA
- ----------------------------------------------------------------------------------------------------------------------
491 Companhia Internacional de Participacoes E Emprendimentos S.A. Brazil
- ----------------------------------------------------------------------------------------------------------------------
492 Multi Banco S.A.~ Brazil
- ----------------------------------------------------------------------------------------------------------------------
494 Multi-Distribuidora Internacional de Titulos e Valores Ltda. 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~ Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
604 Debt Recovery (Hong Kong) Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
3021 InverAmerica, S.A* Colombia
- ----------------------------------------------------------------------------------------------------------------------
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, USA
- ----------------------------------------------------------------------------------------------------------------------
671 Delta FSC Eight, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
669 Orion Nine, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
672 Delta FSC Nine, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
670 Orion Ten, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
673 Delta FSC Ten, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
302 Security Pacific Do Brazil S/C Ltda. Brazil
- ----------------------------------------------------------------------------------------------------------------------
306 Security Pacific Overseas Investment Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
339 Appold Limited U.K.
- ----------------------------------------------------------------------------------------------------------------------
308 Bank of America (Asia) Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
312 Bank of America (Macau) Limited Macau
- ----------------------------------------------------------------------------------------------------------------------
3019 Villages of LaCosta LLC* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
314 Canton Pacific Finance Ltd. Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
309 The Bank of Canton (Nominees) Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
3021 InverAmerica, S.A. Colombia
- ----------------------------------------------------------------------------------------------------------------------
301 InvestAmerica S.A.* Chile
- ----------------------------------------------------------------------------------------------------------------------
323 Security Pacific Australian Assets Limited Australia
- ----------------------------------------------------------------------------------------------------------------------
336 Security Pacific Financing Services Ltd. U.K.
- ----------------------------------------------------------------------------------------------------------------------
337 Security Pacific Hong Kong Holdings Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
308 Bank of America (Asia) Limited* Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
312 Bank of America (Macau) Limited Macau
- ----------------------------------------------------------------------------------------------------------------------
3019 Villages of LaCosta LLC* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
Canton Pacific Finance Ltd. Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
309 The Bank of Canton (Nominees) Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
501 Titulos Rioplatenses S.A.* Uruguay
- ----------------------------------------------------------------------------------------------------------------------
2078 Venco, B.V. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2144 Montana Fundo de Renda Fixa Brazil
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
313 BankAmerica Nominees (1993) Pte. Ltd. Singapore
- ----------------------------------------------------------------------------------------------------------------------
502 BankAmerica Nominees (Hong Kong) Ltd. Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
504 BankAmerica Nominees (Singapore) Pte. Ltd. Singapore
- ----------------------------------------------------------------------------------------------------------------------
503 BankAmerica Nominees Limited (London) Channel Islands
- ----------------------------------------------------------------------------------------------------------------------
2999 BankAmerica Preferred Capital Corporation Maryland, USA
- ----------------------------------------------------------------------------------------------------------------------
481 BankAmerica Representacao e Servicos Limitada* Brazil
- ----------------------------------------------------------------------------------------------------------------------
250 BankAmerica Ventures California, USA
- ----------------------------------------------------------------------------------------------------------------------
2886 Bay Street Limited Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
278 BofA Capital Management, Inc. Delaware, USA
DBA: Inter Cash Capital Advisors
DBA: Pacific Century Advisors
- ----------------------------------------------------------------------------------------------------------------------
2945 California Street Limited Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
3016 Davis Street Limited Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
249 Equitable Deed Company California, USA
DBA: Continental Auxiliary Company
- ----------------------------------------------------------------------------------------------------------------------
534 Golden Gate Participacoes Ltd. Brazil
- ----------------------------------------------------------------------------------------------------------------------
252 Grant County Power Company Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
536 Lease Holding VI, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
541 NAGSA II, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
258 Pacific Southwest Realty Company Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
259 PNB Securities Corporation California, USA
- ----------------------------------------------------------------------------------------------------------------------
265 Security Pacific Asia Limited Singapore
- ----------------------------------------------------------------------------------------------------------------------
347 Security Pacific Equipment Leasing, Inc. Delaware, USA
DBA: SPELI
- ----------------------------------------------------------------------------------------------------------------------
428 BA Leasing & Capital Corporation California, USA
- ----------------------------------------------------------------------------------------------------------------------
3003 Airlease Management Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
1324 BA FSC Holdings, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
348 Aerocrane Leasing Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
1323 BA Swiss FSC Holdings, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
551 Samedan Leasing Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2367 Canea, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2364 Canea FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2790 Eloundra FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2212 Epidaurus FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
349 First Executive Sands Leasing Corp. California, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
350 First Executive Leasing FSC Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2998 FM FSC UK, Ltd. Bermuda
- ----------------------------------------------------------------------------------------------------------------------
2791 Irapetra FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
1409 Knossus FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2970 Lease Holding Company Pte. Ltd. Singapore
- ----------------------------------------------------------------------------------------------------------------------
549 Marco Polo Leasing Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2213 Mycenae, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2214 Mycenae FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
1436 Nauplia, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
1438 Nauplia FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2368 Patras, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2365 Patras FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
1408 Phaestos FSC, Inc. ~ U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
550 Raffles Leasing Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
1439 Sounion FSC, Inc. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
552 Tanah Merah Leasing Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
1419 Tiryns, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
1420 Tiryns FSC, Inc. ~ U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
2969 Pydna Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2973 Taurus Trust Company, Inc. Illinois, USA
- ----------------------------------------------------------------------------------------------------------------------
433 Transit Holding, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
434 Asset Holding Co. Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
3002 United States Airlease Holding, Inc. California, USA
- ----------------------------------------------------------------------------------------------------------------------
546 Balmoral Leasing Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
354 SPAA Leasing Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
358 Security Pacific Financial Services of California Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
3015 Silver REMIC Management Co. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
542 Special Asset Holding Co. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
543 Film Asset Holding Co. ~ Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
533 The Electronic Payments Exchange, Inc.* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
3042 Vision Achievement Limited Hong Kong
- ----------------------------------------------------------------------------------------------------------------------
537 Wilco One, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
363 Zedd Investments, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
364 Zentac Productions, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
554 Bank of America Nevada Nevada, USA
- ----------------------------------------------------------------------------------------------------------------------
386 Bank of America New Mexico, National Association USA (National Bank)
- ----------------------------------------------------------------------------------------------------------------------
408 Bank of America NW, National Association USA (National Bank)
- ----------------------------------------------------------------------------------------------------------------------
3000 BA Merchant Services, Inc.* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
20 Centrum Properties Corporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
625 DAS Holdings Inc. Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
11 Rainier Credit Company Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
416 Seafirst America Corporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
2185 Seafirst Asset Holding Co. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
411 Seafirst Auto Leasing, Inc. Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
404 Seafirst Insurance Corporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
27 Seafirst Investment Services, Inc. Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
413 Seafirst Leasing Company Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
45 Seafirst Merchant Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
420 Seafirst Properties Corporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
421 Seafirst Services Corporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
533 The Electronic Payments Exchange, Inc.* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
389 Bank of America Texas, N.A. USA (National Bank)
- ----------------------------------------------------------------------------------------------------------------------
2008 Bank of America Trust Company of Florida, National Association USA (National Bank)
- ----------------------------------------------------------------------------------------------------------------------
32 Bank of America, FSB Washington, USA
DBA: Bank of America Hawaii
DBA: Bank of America, FSB, Community Development Division
DBA: BankAmerica Housing Services, a division of Bank of America, FSB
DBA: BankAmerica Mortgage, a division of Bank of America, FSB
- ----------------------------------------------------------------------------------------------------------------------
2202 Arbor National Holdings, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
2208 Arbor National Mortgage, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
2203 Arbor Real Estate Management, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
2206 Designated Appraisers, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
2207 Home Closing Services, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
2204 Lauren Advertising, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
2205 Roots Insurance Agency, Inc. New York, USA
- ----------------------------------------------------------------------------------------------------------------------
641 Bank of America (Hawaii) Insurance Agency, Inc. Hawaii, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
631 Honfed Financial Services Corp. Hawaii, USA
- ----------------------------------------------------------------------------------------------------------------------
1411 United Mortgage Corporation Minnesota, USA
- ----------------------------------------------------------------------------------------------------------------------
1413 IDL Mortgage Corporation Wisconsin, USA
- ----------------------------------------------------------------------------------------------------------------------
1412 Valley Mortgage Corporation Minnesota, USA
- ----------------------------------------------------------------------------------------------------------------------
1410 United Mortgage Holding Company Minnesota, USA
- ----------------------------------------------------------------------------------------------------------------------
29 BankAmerica Community Development Corporation Oregon, USA
- ----------------------------------------------------------------------------------------------------------------------
139 BankAmerica Financial, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
104 Argentina Investment Holding Limited Bahamas
- ----------------------------------------------------------------------------------------------------------------------
370 B.A. Insurance (Cayman) Ltd. Cayman Islands
- ----------------------------------------------------------------------------------------------------------------------
2001 BankAmerica Capital Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
98 Security Pacific Investors, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
182 BankAmerica Insurance Group, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
190 BA Insurance Agency, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
184 General Fidelity Insurance Company California, USA
- ----------------------------------------------------------------------------------------------------------------------
185 General Fidelity Life Insurance Company California, USA
- ----------------------------------------------------------------------------------------------------------------------
43 Security Pacific Southwest Insurance Agency, Inc. Arizona, USA
- ----------------------------------------------------------------------------------------------------------------------
109 Brazilian Financial Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
110 BFS Participacoes, Ltda Brazil
- ----------------------------------------------------------------------------------------------------------------------
112 Brazilian Tourism Holdings, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
397 Overseas Lending Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
497 Hedges, S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
499 Inversiones y Negocios Fiduciarios S.A.* Argentina
- ----------------------------------------------------------------------------------------------------------------------
143 Security Pacific Business Credit Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
145 Security Pacific Finance System Incorporated Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
151 BA Financial Management Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
146 Dealers Credit, Inc. Delaware, USA
DBA: Dealers Credit Insurance Agency (Inc.)
- ----------------------------------------------------------------------------------------------------------------------
148 Security Pacific Consumer Discount Company Pennsylvania, USA
DBA: Security Pacific Financial Services of Pennsylvania Inc.
- ----------------------------------------------------------------------------------------------------------------------
149 Security Pacific Finance Credit Corp. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
152 Security Pacific Financial Services Inc. Delaware, USA
DBA: Security Pacific Manufacturer Funding
- ----------------------------------------------------------------------------------------------------------------------
163 Security Pacific Executive/Professional Services, Inc. Colorado, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
165 Security Pacific Financial Services of Minnesota Inc. Minnesota, USA
- ----------------------------------------------------------------------------------------------------------------------
154 Security Pacific Financial Services of Nevada Inc. Nevada, USA
- ----------------------------------------------------------------------------------------------------------------------
156 Security Pacific Financial Services of West Virginia Inc. West Virginia, USA
- ----------------------------------------------------------------------------------------------------------------------
160 SPF Advertising Agency, Inc. Kansas, USA
- ----------------------------------------------------------------------------------------------------------------------
166 The Midwestern Agency Corporation, Inc. Iowa, USA
- ----------------------------------------------------------------------------------------------------------------------
161 Security Pacific Financial Services of Des Moines Inc. Iowa, USA
- ----------------------------------------------------------------------------------------------------------------------
147 Security Pacific Mortgage Corp. Virginia, USA
- ----------------------------------------------------------------------------------------------------------------------
168 Security Pacific Housing Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
169 Security Pacific Acceptance Corp. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
170 Security Pacific Acceptance Corp. II Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
172 Security Pacific Leasing Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
173 MCOG Leasing Corp. California, USA
- ----------------------------------------------------------------------------------------------------------------------
2356 Sardonyx Shipping Pte Ltd~ Singapore
- ----------------------------------------------------------------------------------------------------------------------
200 Securilease BV Netherlands Antilles
- ----------------------------------------------------------------------------------------------------------------------
174 Security Pacific Capital Leasing Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
194 Security Pacific EuroFinance Holdings, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
195 Security Pacific Equipment Finance (Europe) Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
224 Security Pacific Lease Finance (Europe) Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
218 Security Pacific International Leasfinance, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
3001 Ulysses Beta, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2972 Ulysses Queensland Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
177 White Sands Leasing Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
178 Pasir Mas Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
179 Windmill Sands Leasing Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
180 Windmill Leasing, Ltd. U.S. Virgin Islands
- ----------------------------------------------------------------------------------------------------------------------
501 Titulos Rioplatenses S.A.* Uruguay
- ----------------------------------------------------------------------------------------------------------------------
400 Western America Financial, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2003 BankAmerica Investment Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2010 BankAmerica Realty Finance, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
380 BankAmerica Realty Services, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
3019 Villages of LaCosta LLC* Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
242 BankAmerica State Trust Company California, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Org # LE Name Jurisdiction of Incorporation
- ----- ------- -----------------------------
1st 2nd 3rd 4th 5th 6th 7th 8th
--- --- --- --- --- --- --- ---
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------
2793 Concorde Solutions, Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2005 Continental Illinois Energy Development Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2007 Continental Illinois Service Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
2110 LaSalle Street Natural Resources Corporation Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
9 Rainier Bancorporation Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
12 Rainier Mortgage Company Washington, USA
- ----------------------------------------------------------------------------------------------------------------------
372 Real Estate Collateral Management Company Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------
42 Security Pacific Southwest Financial Services, Inc. Arizona, USA
- ----------------------------------------------------------------------------------------------------------------------
132 Security-First Company California, USA
- ----------------------------------------------------------------------------------------------------------------------
133 Security-First CMO-I Corporation California, USA
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
* LEGAL ENTITIES OWNED WITHIN THE BAC FAMILY BY MORE THAN ONE ENTITY
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Legal Entity: 517 693327 Ontario Limited
Shareholders: Voting Common Shares
385 Bank of America National Trust and Savings Association 51.69
514 Bank of America Canada 10.22
--------
61.91
========
Legal Entity 2270 Arrendadora BankAmerica, S.A.
Voting Common Shares
438 BankAmerica International 0.01
444 BankAmerica International Financial Corporation 99.99
--------
100
========
3000 BA Merchant Services, Inc.
Legal Entity
Voting Common Shares
385 Bank of America National Trust and Savings Association 85
408 Bank of America NW, National Association 15
--------
100
========
Legal Entity: 308 Bank of America (Asia) Limited
Shareholders: Voting Common Shares
337 Security Pacific Hong Kong Holdings Limited 30.93
306 Security Pacific Overseas Investment Corporation 69.07
--------
100
========
Shareholders: Voting Preferred Shares
306 Security Pacific Overseas Investment Corporation 100
--------
100
========
Legal Entity: 437 Bank of America Colombia
Shareholders: Voting Common Shares
444 BankAmerica International Financial Corporation 5
385 Bank of America National Trust and Savings Association 95
--------
100
========
Legal Entity: 470 Bank of America International Limited
Shareholders:
Voting Common Shares
385 Bank of America National Trust and Savings Association 37.9
444 BankAmerica International Financial Corporation 1.8
450 BA Holding Company S.A. 60.3
--------
100
========
Legal Entity: 2269 Bank of America Mexico, S.A.
Shareholders: Voting Common Shares
444 BankAmerica International Financial Corporation 99.67
438 BankAmerica International 0.33
--------
100
========
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Legal Entity: 440 Bank of America, S.A.
Shareholders: Voting Common Shares
385 Bank of America National Trust and Savings Association 50
438 BankAmerica International 50
----------
100
==========
Legal Entity: 481 BankAmerica Representacao e Servicos Limitada
Shareholders: Voting Common Shares
444 BankAmerica International Financial Corporation 99.95
385 Bank of America National Trust and Savings Association 0.05
----------
100
==========
Legal Entity: 457 BankAmerica Trust Company (Hong Kong) Limited
Shareholders: Voting Common Shares
450 BA Holding Company S.A. 99.6
458 BATCO Nominees Limited 0.4
----------
100
==========
Legal Entity: 458 BATCO Nominees Limited
Shareholders: Voting Common Shares
462 Renfrew Services Limited 50
457 BankAmerica Trust Company (Hong Kong) Limited 50
----------
100
==========
Legal Entity: 2026 CIC Trading, S.A.
Shareholders: Voting Common Shares
2107 Moraine Ltd. 1
2022 BankAmerica International Investment Corporation 99
----------
100
==========
Legal Entity: 2037 Continental Information & Technology Services Co., S.A.
Shareholders: Voting Common Shares
2022 BankAmerica International Investment Corporation 99
2107 Moraine Ltd. 1
----------
100
==========
Legal Entity: 2038 Continental International Finance Corporation II Limitada
Shareholders: Voting Participation or Partnership Interest
2022 BankAmerica International Investment Corporation 99.9628
2065 Labco I, Inc. Chile Limitada 0.03720
----------
100
==========
Legal Entity: 2043 Continental Investment Company S.A.
Shareholders: Voting Common Shares
2022 BankAmerica International Investment Corporation 99
2107 Moraine Ltd. 1
----------
100
==========
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Legal Entity: 604 Debt Recovery (Hong Kong) Limited
Shareholders: Voting Common Shares
232 Inchroy Credit Corporation Limited 50
444 BankAmerica International Financial Corporation 50
----------
100
==========
Legal Entity: 461 Fiduciary Services Limited
Shareholders: Voting Common Shares
457 BankAmerica Trust Company (Hong Kong) Limited 50
458 BATCO Nominees Limited 50
----------
100
==========
Legal Entity: 497 Hedges, S.A.
Shareholders: Voting Common Shares
444 BankAmerica International Financial Corporation 99.9
397 Overseas Lending Corporation 0.1
----------
100
==========
Legal Entity: 3021 InverAmerica, S.A.
Shareholders: Voting Common Shares
306 Security Pacific Overseas Investment Corporation 10
444 BankAmerica International Financial Corporation 90
----------
100
==========
Legal Entity: 498 Inversiones of America Corredores de Bolsa Limitada
Shareholders: Voting Common Shares
438 BankAmerica International 0.0004
444 BankAmerica International Financial Corporation 99.9996
----------
100
==========
Legal Entity: 499 Inversiones y Negocios Fiduciarios S.A.
Shareholders: Voting Common Shares
444 BankAmerica International Financial Corporation 99
397 Overseas Lending Corporation 1
----------
100
==========
Legal Entity: 301 InvestAmerica S.A.
Shareholders: Voting Participation or Partnership Interest
444 BankAmerica International Financial Corporation 99.19
306 Security Pacific Overseas Investment Corporation 0.81
----------
100
==========
Legal Entity: 460 ITG Secretaries Limited
Shareholders: Voting Common Shares
457 BankAmerica Trust Company (Hong Kong) Limited 50
458 BATCO Nominees Limited 50
----------
100
==========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Legal Entity: 2059 Justin, Inc. Chile Ltda.
Shareholders: Voting Common Shares
2058 Justin, Inc. 99
2057 Juliana, Inc. 1
-------
100
=======
Legal Entity: 2065 Labco I, Inc. Chile Limitada
Shareholders: Voting Common Shares
2067 Labco II, Inc. 1
2064 Labco I, Inc. 99
-------
100
=======
Legal Entity: 462 Renfrew Services Limited
Shareholders: Voting Common Shares
458 BATCO Nominees Limited 50
457 BankAmerica Trust Company (Hong Kong) Limited 50
-------
100
=======
Legal Entity: 1400 Societe Nouvelle Les Dolomites Francaises
Shareholders: Voting Common Shares
199 Security Pacific EuroFinance, Inc. 99.8
54 Appold Holdings Limited 0.2
-------
100
=======
Legal Entity: 533 The Electronic Payments Exchange, Inc.
Shareholders: Voting Common Shares
408 Bank of America NW, National Association 2
385 Bank of America National Trust and Savings Association 98
-------
100
=======
Legal Entity: 501 Titulos Rioplatenses S.A.
Shareholders: Voting Common Shares
139 BankAmerica Financial, Inc. 2
444 BankAmerica International Financial Corporation 98
-------
100
=======
Legal Entity: 3019 Villages of Lacosta LLC
Shareholders: Voting Common Shares
312 Bank of America (Macau) Limited 99
380 BankAmerica Realty Services, Inc. 1
-------
100
=======
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
~ LISTING OF ENTITIES WHERE OWNERSHIP WITHIN THE BAC FAMILY IS 50% OR MORE BUT LESS
THAN 100%
<S> <C> <C> <C>
Legal Entity: 517 693327 Ontario Limited 61.91
Legal Entity: 2784 Asia Port Investors LLC 90
Legal Entity: 2801 BA Assets Company 75
Legal Entity: 543 Film Asset Holding Co. 50
Legal Entity: 232 Inchroy Credit Corporation Limited 50
Legal Entity: 492 Multi Banco S.A. 99.998
Legal Entity: 1408 Phaestos FSC, Inc. 50
Legal Entity: 2356 Sardonyx Shipping Pte Ltd 50
Legal Entity: 1420 Tiryns FSC, Inc. 50
</TABLE>
17
<PAGE>
Exhibit 23
----------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
numbers 333-16477 on Form S-8 filed November 20, 1996; 333-16131 on Form S-8
filed November 13, 1996; 333-15559 on Form S-3 filed November 5, 1996, as
amended by Pre-Effective Amendment No. 1 filed December 4, 1996; 333-09575 on
Form S-8 filed on August 5, 1996; 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;
33-51064 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 on 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 in their related prospectuses of our
report dated January 14, 1997, 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, 1996.
/s/ ERNST & YOUNG LLP
--------------------------
ERNST & YOUNG LLP
San Francisco, California
March 14, 1997
4017499
<PAGE>
Exhibit 24
Powers of Attorney
Follow
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 9 , 1997
---------------
/s/ JOSEPH F. ALIBRANDI
-----------------------------
Joseph F. Alibrandi
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 9 , 1997
---------------
/s/ JILL E. BARAD
------------------------------
Jill E. Barad
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 9 , 1997
---------------
/s/ PETER B. BEDFORD
------------------------------
Peter B. Bedford
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 6 , 1997
---------------
/s/ ANDREW F. BRIMMER
------------------------------
Andrew F. Brimmer
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 5 , 1997
---------------
/s/ RICHARD A. CLARKE
------------------------------
Richard A. Clarke
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 9 , 1997
---------------
/s/ TIMM F. CRULL
------------------------------
Timm F. Crull
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: Jan. 5 , 1997
---------------
/s/ KATHLEEN FELDSTEIN
------------------------------
Kathleen Feldstein
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: 1-6 , 1997
------------------
/s/ DONALD E. GUINN
------------------------------
Donald E. Guinn
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: 1/3 , 1997
---------------
/s/ FRANK L. HOPE, JR.
------------------------------
Frank L. Hope, Jr.
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: 1/6 , 1997
---------------
/s/ IGNACIO E. LOZANO, JR.
------------------------------
Ignacio E. Lozano, Jr.
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 9 , 1997
---------------
/s/ WALTER E. MASSEY
------------------------------
Walter E. Massey
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: Jan. 3 , 1997
---------------
/s/ JOHN M. RICHMAN
------------------------------
John M. Richman
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: 1/6 , 1997
---------------
/s/ RICHARD M. ROSENBERG
------------------------------
Richard M. Rosenberg
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 7 , 1997
---------------
/s/ A. MICHAEL SPENCE
------------------------------
A. Michael Spence
[BAC-Form 10-K: Director]
4011513
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
I hereby appoint JAMES N. ROETHE, 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
1996, and any amendments.
Dated: January 9 , 1997
---------------
/s/ SOLOMON D. TRUJILLO
------------------------------
Solomon D. Trujillo
[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, 1996
CONTAINS SUMMARY FINANCIAL INFORMATION WHICH IS INCORPORATED BY REFERENCE FROM
THE 1996 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 not be subject to liability under the federal securities laws,
except to the extent that the financial statements and other information from
which the data were extracted violate the federal securities laws. Also,
pursuant to item 601(c)(1)(iv) of Regulation S-K promulgated by the Securities
and Exchange Commission (SEC), the schedule shall not be deemed filed for
purposes of Section 11 of the Securities Act of 1933, Section 18 of the Exchange
Act of 1934 and Section 323 of the Trust Indenture Act, or otherwise be subject
to the liabilities of such sections, nor shall it be deemed a part of any
registration statement to which it relates.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 16,223
<INT-BEARING-DEPOSITS> 5,708
<FED-FUNDS-SOLD> 7,409
<TRADING-ASSETS> 12,205
<INVESTMENTS-HELD-FOR-SALE> 12,113
<INVESTMENTS-CARRYING> 4,138
<INVESTMENTS-MARKET> 3,920
<LOANS> 165,415
<ALLOWANCE> 3,523
<TOTAL-ASSETS> 250,753
<DEPOSITS> 168,015
<SHORT-TERM> 27,386
<LIABILITIES-OTHER> 18,854<F1>
<LONG-TERM> 15,785<F2>
<COMMON> 605
0
2,242
<OTHER-SE> 17,866
<TOTAL-LIABILITIES-AND-EQUITY> 250,753
<INTEREST-LOAN> 13,363
<INTEREST-INVEST> 1,160
<INTEREST-OTHER> 2,136<F3>
<INTEREST-TOTAL> 16,659
<INTEREST-DEPOSIT> 5,359
<INTEREST-EXPENSE> 8,072
<INTEREST-INCOME-NET> 8,587
<LOAN-LOSSES> 885
<SECURITIES-GAINS> 61
<EXPENSE-OTHER> 8,341
<INCOME-PRETAX> 4,773
<INCOME-PRE-EXTRAORDINARY> 4,773
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,873
<EPS-PRIMARY> 7.31
<EPS-DILUTED> 7.30
<YIELD-ACTUAL> 4.23
<LOANS-NON> 1,095
<LOANS-PAST> 235
<LOANS-TROUBLED> 302
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,554
<CHARGE-OFFS> 1,325
<RECOVERIES> 407
<ALLOWANCE-CLOSE> 3,523
<ALLOWANCE-DOMESTIC> 2,316
<ALLOWANCE-FOREIGN> 425
<ALLOWANCE-UNALLOCATED> 782
<FN>
<F1>INCLUDES CORPORATION OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES
OF SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES OF THE CORPORATION OF $1,477 MILLION.
<F2>INCLUDES SUBORDINATED CAPITAL NOTES OF $355 MILLION.
<F3>INCLUDES INTEREST INCOME ON TRADING ACCOUNT ASSETS OF $1,001 MILLION.
</FN>
</TABLE>
