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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K A/1
(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, 1997
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-7377.
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER:
BANKAMERICA CORPORATION
STATE OF INCORPORATION OR ORGANIZATION:
Delaware.
ADDRESS AND TELEPHONE OF PRINCIPAL EXECUTIVE OFFICES:
Bank of America Center
San Francisco, California 94104
415-622-3530.
I.R.S. EMPLOYER I.D. NO.:
94-1681731.
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:
Cumulative Adjustable Preferred Stock, Series A
Cumulative Adjustable Preferred Stock, Series B
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. [_]
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, 1998, was in excess of $48.6
billion.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of January 31, 1998.
Common Stock, $1.5625 par value ------ 685,258,124 shares
outstanding on January 31, 1998.*
*In addition, 89,439,396 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, 1997 Parts I, II, & IV
Portions of the Proxy Statement for the May 21, 1998
Annual Meeting of Shareholders Part III
<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. BankAmerica
Corporation and its subsidiaries (BAC) is the second largest
bank holding company in the United States based upon total
market capitalization of $50.2 billion at December 31, 1997.
During 1997, BAC combined several interstate affiliate banks
into Bank of America NT&SA (the Bank), a subsidiary of BAC.
In 1997, Bank of America (BofA) Alaska, N.A., BofA Arizona,
BofA Nevada, BofA New Mexico, N.A., BofA NW, National
Association (formerly Seattle-First National Bank), BofA
Illinois, and BofA Trust Company of Florida, N.A. were
merged into the Bank. Additional information related to the
merger of the interstate banks into the Bank is incorporated
by reference from page 23 of the 1997 Annual Report to
Shareholders.
During 1997, BAC completed the acquisition of Robertson,
Stephens & Company Group, L.L.C., an investment banking and
investment management firm, and established a relationship
with D.E. Shaw & Co., Inc., a private investment banking
company. Also during 1997, BAC completed the sale of its
consumer finance subsidiary, Security Pacific Financial
Services Inc., and the sales of certain rural Texas branches
and its branch system in Hawaii. Furthermore, BAC announced
decisions to exit Midwest retail facilities and to sell its
manufactured housing business.
The Parent's largest subsidiary, based on total assets at
year-end 1997, was the Bank. 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.
At December 31, 1997, the Parent's other bank subsidiaries
included BofA Community Development Bank, which has a state
charter, BofA Texas, N.A., a national bank, and BofA FSB
(FSB), a federal savings bank. In addition, BofA National
Association, which holds a national charter, offers credit
card services, primarily to individuals, throughout the
United States.
1
<PAGE>
================================================================================
OPERATIONS
------------------------------------------------------------
The Parent, through its network of subsidiaries, provides
banking and other financial services throughout the United
States and in selected international markets to consumers
and business customers, including corporations, governments,
and other institutions.
In providing financial products to consumers, BAC offers
retail deposit, 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 about
1,800 full-service branches, close to 7,700 ATMs, and
telephone and other delivery channels. In California, BAC's
largest market, the Bank operated approximately 970 branches
at December 31, 1997.
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 $500 million) primarily in the West and 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 services to individuals
and institutions with sophisticated financial planning and
management needs. The range of capabilities include
institutional investment management supporting BAC's
corporate and commercial banking relationships, private
banking, investment management, brokerage, and trust
services for high-net-worth clients world-wide.
Additional information about BAC and its operations is
incorporated by reference from pages 29 through 31, Note 2
on page 65, and Note 31 on page 91 of the 1997 Annual Report
to Shareholders.
PROPERTIES
------------------------------------------------------------
BAC's principal offices are located at 555 California Street
in San Francisco, California.
At December 31, 1997, BAC owned approximately one half of
its properties. The remaining facilities were leased.
2
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997
---------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 6,197 $ 415 6.70%
Federal funds sold 746 41 5.54
Securities purchased under resale agreements 10,032 776 7.73
Trading account assets 15,538 1,236 7.96
Available-for-sale securities/c/,/d/ 11,934 839 7.03
Held-to-maturity securities/d/ 3,850 294 7.63
Domestic loans:
Consumer--residential first mortgages 35,260 2,601 7.38
Consumer--residential junior mortgages 14,898 1,261 8.46
Consumer--credit card 7,787 1,133 14.56
Other consumer 20,416 1,958 9.59
Commercial and industrial 34,280 2,725 7.95
Commercial loans secured by real estate 12,653 1,130 8.93
Financial institutions 3,175 168 5.30
Lease financing 2,747 157 5.70
Loans for purchasing or carrying securities 1,945 147 7.55
Construction and development loans secured by real estate 2,269 292 12.88/e/
Agricultural 1,656 144 8.70
Other 1,511 93 6.17
-------- -------
Total domestic loans 138,597 11,809 8.52
Foreign loans 27,429 2,073 7.56
-------- -------
Total loans/c/ 166,026 13,882 8.36
-------- -------
Total earning assets 214,323 $17,483 8.16
Nonearning assets 45,010 =======
Less: Allowance for credit losses 3,532
--------
TOTAL ASSETS/f/ $255,801
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 5,657 $ 89 1.57%
Savings 11,757 242 2.06
Money market 39,918 1,111 2.78
Time 30,419 1,674 5.50
-------- -------
Total domestic interest-bearing deposits 87,751 3,116 3.55
Foreign interest-bearing deposits:
Banks located in foreign countries 13,156 794 6.04
Governments and official institutions 10,802 590 5.47
Time, savings, and other 21,260 1,293 6.08
-------- -------
Total foreign interest-bearing deposits 45,218 2,677 5.92
-------- -------
Total interest-bearing deposits 132,969 5,793 4.36
Federal funds purchased 1,176 64 5.43
Securities sold under repurchase agreements 11,583 810 6.99
Other short-term borrowings 17,911 1,099 6.13
Long-term debt 14,665 1,022 6.97
-------- -------
Total interest-bearing liabilities 178,304 $ 8,788 4.93
Domestic noninterest-bearing deposits 34,655 =======
Foreign noninterest-bearing deposits 1,643
Other noninterest-bearing liabilities 19,344
--------
Total liabilities/f/ 233,946
Trust preferred securities/g/ 1,857
Stockholders' equity 19,998
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $255,801
========
Interest income as a percentage of average earning assets 8.16%
Interest expense as a percentage of average earning assets (4.10)
-----
NET INTEREST MARGIN 4.06%
=====
==============================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------
BALANCE/a/ INTEREST/b/ Rate/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,717 $ 453 7.93%
Federal funds sold 533 29 5.41
Securities purchased under resale agreements 10,334 653 6.32
Trading account assets 12,541 1,004 8.01
Available-for-sale securities/c/,/d/ 11,383 848 7.45
Held-to-maturity securities/d/ 4,347 322 7.42
Domestic loans:
Consumer--residential first mortgages 37,572 2,806 7.47
Consumer--residential junior mortgages 14,264 1,225 8.59
Consumer--credit card 8,837 1,284 14.53
Other consumer 17,465 1,720 9.85
Commercial and industrial 32,944 2,581 7.83
Commercial loans secured by real estate 11,508 1,018 8.84
Financial institutions 2,815 124 4.40
Lease financing 2,127 147 6.92
Loans for purchasing or carrying securities 1,270 86 6.78
Construction and development loans secured by real estate 2,816 301 10.69
Agricultural 1,570 137 8.70
Other 1,176 75 6.39
-------- -------
Total domestic loans 134,364 11,504 8.56
Foreign loans 24,087 1,863 7.73
-------- -------
TOTAL LOANS/c/ 158,451 13,367 8.44
-------- -------
Total earning assets 203,306 $16,676 8.20
Nonearning assets 42,060 =======
Less: Allowance for credit losses 3,524
--------
TOTAL ASSETS/f/ $241,842
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 12,205 $ 149 1.22%
Savings 12,872 263 2.05
Money market 28,772 905 3.14
Time 30,132 1,545 5.13
-------- -------
Total domestic interest-bearing deposits 83,981 2,862 3.41
Foreign interest-bearing deposits:
Banks located in foreign countries 12,957 763 5.89
Governments and official institutions 9,579 502 5.23
Time, savings, and other 19,058 1,232 6.47
-------- -------
Total foreign interest-bearing deposits 41,594 2,497 6.00
-------- -------
Total interest-bearing deposits 125,575 5,359 4.27
Federal funds purchased 1,492 79 5.29
Securities sold under repurchase agreements 11,702 695 5.94
Other short-term borrowings 14,448 883 6.11
Long-term debt 15,396 1,056 6.86
-------- -------
Total interest-bearing liabilities 168,613 $ 8,072 4.79
Domestic noninterest-bearing deposits 34,415 =======
Foreign noninterest-bearing deposits 1,557
Other noninterest-bearing liabilities 16,898
--------
Total liabilities/f/ 221,483
Trust preferred securities/g/ 90
Stockholders' equity 20,269
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $241,842
========
Interest income as a percentage of average earning assets 8.20%
Interest expense as a percentage of average earning assets (3.97)
-----
NET INTEREST MARGIN 4.23%
=====
====================================================================================================================================
</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 7 for more detail on average balances, interest,
and average rates on available-for-sale and held-to-maturity securities.
/e/ Rates reflect a higher level of interest recoveries on nonaccrual loans
during 1997 as compared to the same period in 1996.
3
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/
- -----------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,853 $ 466 7.95%
Federal funds sold 548 32 5.89
Securities purchased under resale agreements 8,823 618 7.00
Trading account assets 9,106 745 8.18
Available-for-sale securities/c/,/d/ 9,768 764 7.83
Held-to-maturity securities/d/ 7,192 524 7.29
Domestic loans:
Consumer--residential first mortgages 35,407 2,500 7.06
Consumer--residential junior mortgages 13,832 1,252 9.05
Consumer--credit card 8,230 1,230 14.95
Other consumer 14,149 1,399 9.89
Commercial and industrial 30,927 2,619 8.47
Commercial loans secured by real estate 10,586 957 9.04
Financial institutions 2,511 143 5.69
Lease financing 1,835 111 6.06
Loans for purchasing or carrying securities 1,303 91 7.02
Construction and development loans secured by real estate 3,367 373 11.07
Agricultural 1,619 157 9.67
Other 1,394 91 6.56
-------- -------
Total domestic loans 125,160 10,923 8.73
Foreign loans 21,754 1,792 8.24
-------- -------
Total loans/c/ 146,914 12,715 8.65
-------- -------
Total earning assets 188,204 $15,864 8.43
Nonearning assets 42,641 =======
Less: Allowance for credit losses 3,672
--------
TOTAL ASSETS/f/ $227,173
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,241 $ 159 1.20%
Savings 13,550 282 2.08
Money market 29,070 870 2.99
Time 30,002 1,471 4.90
-------- -------
Total domestic interest-bearing deposits 85,863 2,782 3.24
Foreign interest-bearing deposits:
Banks located in foreign countries 10,245 679 6.63
Governments and official institutions 6,845 397 5.80
Time, savings, and other 16,131 1,065 6.60
-------- -------
Total foreign interest-bearing deposits 33,221 2,141 6.44
-------- -------
Total interest-bearing deposits 119,084 4,923 4.13
Federal funds purchased 2,222 131 5.89
Securities sold under repurchase agreements 9,110 581 6.38
Other short-term borrowings 9,301 630 6.77
Long-term debt 15,761 1,113 7.06
-------- -------
Total interest-bearing liabilities 155,478 $ 7,378 4.75
Domestic noninterest-bearing deposits 33,272 =======
Foreign noninterest-bearing deposits 1,630
Other noninterest-bearing liabilities 17,238
--------
Total liabilities/f/ 207,618
Trust preferred securities/g/ -
Stockholders' equity 19,555
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $227,173
========
Interest income as a percentage of average earning assets 8.43%
Interest expense as a percentage of average earning assets (3.92)
-----
NET INTEREST MARGIN 4.51%
=====
===========================================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FOURTH QUARTER 1997
------------------------------------------------
BALANCE/a/ INTEREST/b/ RATE/b/
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,808 $ 104 7.09%
Federal funds sold 726 10 5.49
Securities purchased under resale agreements 11,108 233 8.32
Trading account assets 16,205 341 8.35
Available-for-sale securities/c/,/d/ 12,878 227 7.03
Held-to-maturity securities/d/ 3,621 66 7.26
Domestic loans:
Consumer--residential first mortgages 33,156 606 7.31
Consumer--residential junior mortgages 14,876 314 8.39
Consumer--credit card 6,892 247 14.30
Other consumer 20,692 487 9.35
Commercial and industrial 35,230 718 8.08
Commercial loans secured by real estate 12,888 284 8.80
Financial institutions 3,388 53 6.28
Lease financing 2,767 42 5.92
Loans for purchasing or carrying securities 2,062 15 2.78/h/
Construction and development loans secured by real estate 2,287 66 11.49
Agricultural 1,715 37 8.59
Other 1,747 26 5.99
-------- ------
Total domestic loans 137,691 2,895 8.37
Foreign loans 28,078 536 7.58
-------- ------
TOTAL LOANS/c/ 165,769 3,431 8.23
-------- ------
Total earning assets 216,115 $4,412 8.12
Nonearning assets 45,968 ======
Less: Allowance for credit losses 3,495
--------
TOTAL ASSETS/f/ $258,588
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 5,238 $ 22 1.68%
Savings 11,201 58 2.07
Money market 47,974 295 2.43
Time 31,307 439 5.56
-------- ------
Total domestic interest-bearing deposits 95,720 814 3.37
Foreign interest-bearing deposits:
Banks located in foreign countries 12,920 211 6.48
Governments and official institutions 9,755 139 5.71
Time, savings, and other 21,693 337 6.15
-------- ------
Total foreign interest-bearing deposits 44,368 687 6.15
-------- ------
Total interest-bearing deposits 140,088 1,501 4.25
Federal funds purchased 1,494 21 5.54
Securities sold under repurchase agreements 13,195 256 7.69
Other short-term borrowings 16,431 269 6.50
Long-term debt 14,152 253 7.09
-------- ------
Total interest-bearing liabilities 185,360 $2,300 4.92
Domestic noninterest-bearing deposits 29,750 ======
Foreign noninterest-bearing deposits 1,465
Other noninterest-bearing liabilities 20,366
--------
Total liabilities/f/ 236,941
Trust preferred securities/g/ 1,873
Stockholders' equity 19,774
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $258,588
========
Interest income as a percentage of average earning assets 8.12%
Interest expense as a percentage of average earning assets (4.22)
-----
NET INTEREST MARGIN 3.90%
=====
===========================================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FOURTH QUARTER 1996
-------------------------------------------------
BALANCE/a/ INTEREST/b/ RATE/b/
- ---------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,878 $ 145 9.86%
Federal funds sold 499 7 5.49
Securities purchased under resale agreements 9,077 144 6.30
Trading account assets 13,393 271 8.05
Available-for-sale securities/c/,/d/ 11,763 210 7.12
Held-to-maturity securities/d/ 4,160 76 7.34
Domestic loans:
Consumer--residential first mortgages 37,291 695 7.46
Consumer--residential junior mortgages 14,625 312 8.48
Consumer--credit card 8,338 296 14.24
Other consumer 18,731 457 9.68
Commercial and industrial 33,454 669 7.95
Commercial loans secured by real estate 12,185 269 8.82
Financial institutions 2,695 29 4.29
Lease financing 2,508 51 8.15
Loans for purchasing or carrying securities 1,565 28 7.08
Construction and development loans secured by real estate 2,402 61 10.13
Agricultural 1,486 32 8.51
Other 1,241 17 5.33
-------- ------
Total domestic loans 136,521 2,916 8.52
Foreign loans 25,024 475 7.55
-------- ------
TOTAL LOANS/c/ 161,545 3,391 8.37
-------- ------
Total earning assets 206,315 $4,244 8.20
Nonearning assets 42,682 ======
Less: Allowance for credit losses 3,520
--------
TOTAL ASSETS/f/ $245,477
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 9,287 $ 30 1.32%
Savings 12,479 64 2.04
Money market 31,699 243 3.04
Time 30,357 415 5.44
-------- ------
Total domestic interest-bearing deposits 83,822 752 3.57
Foreign interest-bearing deposits:
Banks located in foreign countries 12,318 182 5.87
Governments and official institutions 9,996 130 5.17
Time, savings, and other 19,657 342 6.92
-------- ------
Total foreign interest-bearing deposits 41,971 654 6.20
-------- ------
Total interest-bearing deposits 125,793 1,406 4.45
Federal funds purchased 1,553 20 5.22
Securities sold under repurchase agreements 10,457 155 5.90
Other short-term borrowings 16,453 254 6.14
Long-term debt 15,790 273 6.88
-------- ------
Total interest-bearing liabilities 170,046 $2,108 4.93
Domestic noninterest-bearing deposits 35,585 ======
Foreign noninterest-bearing deposits 1,435
Other noninterest-bearing liabilities 17,429
--------
Total liabilities/f/ 224,495
Trust preferred securities/g/ 366
Stockholders' equity 20,616
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $245,477
========
Interest income as a percentage of average earning assets 8.20%
Interest expense as a percentage of average earning assets (4.07)
-----
NET INTEREST MARGIN 4.13%
=====
===========================================================================================================================
</TABLE>
/f/ The percentage of average total assets attributable to foreign operations
for the years ended December 31, 1997, 1996, and 1995 was 21 percent, 20
percent, and 18 percent, respectively. The percentage of average total
liabilities attributable to foreign operations for the same periods was 21
percent, 20 percent, and 19 percent, respectively.
/g/ Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation. Related
expenses are included in noninterest expense.
/h/ Rates reflect a decrease in fees during the fourth quarter of 1997 as
compared to the same period in 1996.
4
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================
NET INTEREST INCOME ANALYSIS
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997 OVER 1996
--------------------------------------------------
INCREASE (DECREASE)/a/
--------------------------------------------------
(IN MILLIONS) VOLUME RATE NET
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME/b/
Interest-bearing deposits in banks $ 36 $ (74) $ (38)
Federal funds sold 11 1 12
Securities purchased under resale agreements (20) 143 123
Trading account assets 238 (6) 232
Available-for-sale securities:
U.S. Treasury and other government agency securities (2) (3) (5)
Mortgage-backed securities 47 1 48
Other domestic securities 8 (1) 7
Foreign securities (22) (37) (59)
-----
Total available-for-sale securities (9)
Held-to-maturity securities:
U.S. Treasury and other government agency securities (1) - (1)
Mortgage-backed securities (21) (3) (24)
State, county, and municipal securities (4) - (4)
Other domestic securities (3) - (3)
Foreign securities (6) 10 4
-----
Total held-to-maturity securities (28)
Domestic loans:
Consumer-residential first mortgages (171) (34) (205)
Consumer-residential junior mortgages 55 (19) 36
Consumer-credit card (154) 3 (151)
Other consumer 284 (46) 238
Commercial and industrial 105 39 144
Commercial loans secured by real estate 102 10 112
Financial institutions 17 27 44
Lease financing 39 (29) 10
Loans for purchasing or carrying securities 50 11 61
Construction and development loans secured by real estate (64) 55 (9)
Agricultural 7 - 7
Other 21 (3) 18
-----
Total domestic loans 305
Foreign loans 252 (42) 210
-----
Total loans 515
-----
NET INCREASE $ 807
=====
INTEREST EXPENSE
Domestic interest-bearing deposits:
Transaction $ (95) $ 35 $ (60)
Savings (22) 1 (21)
Money market 319 (113) 206
Time 15 114 129
-----
Total domestic interest-bearing deposits 254
Foreign interest-bearing deposits:
Banks located in foreign countries 12 19 31
Governments and official institutions 65 23 88
Time, savings, and other 138 (77) 61
-----
Total foreign interest-bearing deposits 180
-----
Total interest-bearing deposits 434
Federal funds purchased (17) 2 (15)
Securities sold under repurchase agreements (7) 122 115
Other short-term borrowings 213 3 216
Long-term debt (51) 17 (34)
-----
NET INCREASE $ 716
=====
===================================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 OVER 1995
---------------------------------------------------
INCREASE (DECREASE)/a/
---------------------------------------------------
(IN MILLIONS) VOLUME RATE NET
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME/b/
Interest-bearing deposits in banks $ (12) $ (1) $ (13)
Federal funds sold (1) (2) (3)
Securities purchased under resale agreements 99 (64) 35
Trading account assets 275 (16) 259
Available-for-sale securities:
U.S. Treasury and other government agency securities (15) 4 (11)
Mortgage-backed securities 92 (6) 86
Other domestic securities 7 3 10
Foreign securities 38 (39) (1)
-----
Total available-for-sale securities 84
Held-to-maturity securities:
U.S. Treasury and other government agency securities (19) (5) (24)
Mortgage-backed securities (165) 19 (146)
State, county, and municipal securities (2) (2) (4)
Other domestic securities (5) (1) (6)
Foreign securities (14) (8) (22)
-----
Total held-to-maturity securities (202)
Domestic loans:
Consumer-residential first mortgages 157 149 306
Consumer-residential junior mortgages 38 (65) (27)
Consumer-credit card 89 (35) 54
Other consumer 327 (6) 321
Commercial and industrial 166 (204) (38)
Commercial loans secured by real estate 82 (21) 61
Financial institutions 16 (35) (19)
Lease financing 19 17 36
Loans for purchasing or carrying securities (2) (3) (5)
Construction and development loans secured by real estate (60) (12) (72)
Agricultural (5) (15) (20)
Other (14) (2) (16)
-----
Total domestic loans 581
Foreign loans 186 (115) 71
-----
Total loans 652
-----
NET INCREASE $ 812
=====
INTEREST EXPENSE
Domestic interest-bearing deposits:
Transaction $ (13) $ 3 $ (10)
Savings (15) (4) (19)
Money market (9) 44 35
Time 6 68 74
-----
Total domestic interest-bearing deposits 80
Foreign interest-bearing deposits:
Banks located in foreign countries 166 (82) 84
Governments and official institutions 147 (42) 105
Time, savings, and other 188 (21) 167
-----
Total foreign interest-bearing deposits 356
-----
Total interest-bearing deposits 436
Federal funds purchased (40) (12) (52)
Securities sold under repurchase agreements 156 (42) 114
Other short-term borrowings 319 (66) 253
Long-term debt (27) (30) (57)
-----
NET INCREASE $ 694
=====
===================================================================================================================
</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.
5
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES-AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------ -----------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/ BALANCE/a/ INTEREST/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency
securities $ 1,418 $ 92 6.51% 6.48% $ 1,440 $ 97
Mortgage-backed securities 7,000 479 6.85 6.88 6,305 431
Other domestic securities 911 51 5.56 6.21 786 44
Foreign securities 2,605/c/ 217 8.31/d/ 8.05/d/ 2,852/c/ 276
- -----------------------------------------------------------------------------------------------------------------------
$11,934 $839 7.03% 7.05% $11,383 $848
- -----------------------------------====================================================================================
<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) FAIR VALUE/b/ COST/b/ BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency
securities 6.72% 6.70% $1,659 $108 6.49% 6.45%
Mortgage-backed securities 6.83 6.82 4,962 344 6.94 6.89
Other domestic securities 5.64 6.61 660 34 5.22 5.84
Foreign securities 9.69/d/ 9.19/d/ 2,487/c/ 278 11.17/d/ 10.10/d/
- -----------------------------------------------------------------------------------------------------------------------------
7.45% 7.42% $9,768 $764 7.83% 7.64%
- -----------------------------------==========================================================================================
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------- ---------------------------------------
(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 $ 11 $ 1 5.18% $ 33 $ 2 4.95%
Mortgage-backed securities 2,022 151 7.47 2,308 175 7.60
State, county, and municipal
securities 353 27 7.66 416 31 7.57
Other domestic securities 54 4 6.86 99 7 7.28
Foreign securities 1,410 111 7.89 1,491 107 7.15
- ------------------------------------------------------------------------------------------------------------------
$3,850 $294 7.63% $4,347 $322 7.42%
- ----------------------------------------==========================================================================
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------
(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 $ 388 $ 26 6.72%
Mortgage-backed securities 4,490 321 7.15
State, county, and municipal
securities 445 35 7.89
Other domestic securities 178 13 7.62
Foreign securities 1,691 129 7.62
- ------------------------------------------------------------------------------------------
$7,192 $524 7.29%
- -------------------------------------------------------===================================
<CAPTION>
FOURTH QUARTER 1997
-------------------------------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,420 $ 22 6.24% 6.34%
Mortgage-backed securities 7,685 132 6.86 6.97
Other domestic securities 973 13 5.27 5.92
Foreign securities 2,800/c/ 60 8.51 8.39
- ---------------------------------------------------------------------------------------
$12,878 $227 7.03% 7.81%
- -----------------------------------====================================================
<CAPTION>
FOURTH QUARTER 1996
------------------------------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,346 $ 23 6.74% 6.72%
Mortgage-backed securities 6,566 113 6.87 6.90
Other domestic securities 926 12 5.44 6.43
Foreign securities 2,925/c/ 62 8.38 8.06
- ---------------------------------------------------------------------------------------
$11,763 $210 7.12% 7.15%
- -----------------------------------====================================================
<CAPTION>
FOURTH QUARTER 1997 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>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government agency securities $ 8 $ - 3.13% $ 19 $ - 5.51%
Mortgage-backed securities 1,911 36 7.48 2,190 42 7.60
State, county, and municipal securities 310 6 7.79 401 7 7.55
Other domestic securities 54 1 6.87 58 1 7.12
Foreign securities 1,338 23 6.85 1,492 26 6.93
- ---------------------------------------------------------------------------------------------------------------------------------
$3,621 $66 7.26% $4,160 $76 7.34%
- -------------------------------------------------------==========================================================================
</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.
6
<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, 1997/a/ DECEMBER 31, 1997
----------------------------- ---------------------------
(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 $ 83 3.56% $ 15 4.98%
Mortgage-backed securities - - - -
State, county, and municipal securities - - 32 5.35
Other securities 1,206 7.83 248 7.20
------- ------
1,289 7.55 295 6.89
DUE AFTER ONE YEAR THROUGH FIVE YEARS
U.S. Treasury and other government agency securities 292 6.29 - -
Mortgage-backed securities 6 8.00 63 7.90
State, county, and municipal securities - - 94 5.49
Other securities 415 6.71 128 8.01
------- ------
713 6.55 285 7.16
DUE AFTER FIVE YEARS THROUGH TEN YEARS
U.S. Treasury and other government agency securities 945 6.07 - -
Mortgage-backed securities 986 6.94 696 7.63
State, county, and municipal securities 2 5.51 88 5.61
Other securities 124 7.04 46 9.37
------- ------
2,057 6.54 830 7.51
DUE AFTER TEN YEARS
U.S. Treasury and other government agency securities 146 8.83 1 4.47
Mortgage-backed securities 6,515 7.13 1,118 7.47
State, county, and municipal securities 1 5.05 117 5.34
Other securities 1,631 5.94 1,021 4.00
------- ------
8,293 6.92 2,257 5.79
------- ------
$12,352 $3,667
======= ======
==================================================================================================================================
</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.
<TABLE>
<CAPTION>
CARRYING VALUE BY INVESTMENT CATEGORY
==================================================================================================================================
DECEMBER 31,
------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other government agency securities $ 1,466 $ 1,494 $ 1,810
Mortgage-backed securities 7,507 6,622 6,749
State, county, and municipal securities 3 2 7
Other securities 3,376 3,698 3,180
------- ------- --------
$12,352 $11,816 $ 11,746
======= ======= ========
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government agency securities $ 16 $ 19 $ 66
Mortgage-backed securities 1,877 2,163 2,481
State, county, and municipal securities 331 423 467
Other securities 1,443 1,533 1,642
------- ------- --------
$ 3,667 $ 4,138 $ 4,656
======= ======= ========
</TABLE>
Additional information on the securities portfolios is incorporated by reference
from page 60 of Note 1 and pages 66 and 67 of Note 7 of the 1997 Annual Report
to Shareholders.
7
<PAGE>
================================================================================
LOAN PORTFOLIO LOAN OUTSTANDINGS BY TYPE
========================================================
Information on loan outstandings by type is incorporated
by reference from page 34 of the 1997 Annual Report to
Shareholders.
<TABLE>
<CAPTION>
MATURITY DISTRIBUTION AND INTEREST RATE CHARACTERISTICS OF CERTAIN TYPES OF LOANS
======================================================================================================
REMAINING MATURITIES AS OF DECEMBER 31, 1997
------------------------------------------------------------------------------------------------------
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 $ 692 $ 3,359 $ 8,846 $12,897
Construction and development secured by
real estate 1,219 787 200 2,206
Commercial and industrial, financial institutions,
and agricultural 31,022 8,955 1,934 41,911
Foreign loans 19,005 4,837 4,690 28,532
-------------------------------------------------------------------------------------------------------
$51,938 $17,938 $15,670 $85,546
---------------------------------------------------------==============================================
LOANS DUE AFTER ONE YEAR
Predetermined interest rates $ 4,272 $ 5,435 $ 9,707
Floating or adjustable interest rates 13,666 10,235 23,901
-------------------------------------------------------------------------------------------------------
$17,938 $15,670 $33,608
------------------------------------------------------------------------===============================
</TABLE>
Principal repayments of loans are reported in the table
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.
Information concerning recent international
developments, cross-border outstandings exceeding one
percent of total assets, and regional foreign exposure,
along with a discussion of the risks, including credit
risk, inherent in BAC's foreign operations are
incorporated by reference from pages 35 through 37,
pages 44 through 45, and Note 8 on page 67 of the 1997
Annual Report to Shareholders.
8
<PAGE>
================================================================================
OFF-BALANCE-SHEET CREDIT-RELATED FINANCIAL INSTRUMENTS
===============================================================
Information on off-balance-sheet credit-related financial
instruments is incorporated by reference from page 43 and pages
80 and 81 of Note 25 of the 1997 Annual Report to Shareholders.
NONPERFORMING ASSETS
===============================================================
Information on nonperforming assets is incorporated by
reference from pages 41 and 42 of the 1997 Annual Report to
Shareholders.
<TABLE>
<CAPTION>
INTEREST INCOME FOREGONE ON NONACCRUAL ASSETS
=============================================================================================
YEAR ENDED
(IN MILLIONS) DECEMBER 31,1997
---------------------------------------------------------------------------------------------
<S> <C>
DOMESTIC
Interest income that would have been recognized had the assets performed in
accordance with their original terms $178
Less: Interest income included in the results of operations 66
---------------------------------------------------------------------------------------------
Domestic interest income foregone 112
FOREIGN
Interest income that would have been recognized had the assets performed in
accordance with their original terms 21
Less: Interest income included in the results of operations 4
---------------------------------------------------------------------------------------------
Foreign interest income foregone 17
---------------------------------------------------------------------------------------------
$129
-----------------------------------------------------------------------------------------====
</TABLE>
Information on nonaccrual loan accounting policies and interest
income foregone on restructured loans is incorporated by
reference from pages 60 and 61 of Note 1, and Notes 8 and 9 on
pages 67 and 68 of the 1997 Annual Report to Shareholders.
9
<PAGE>
================================================================================
<TABLE>
<CAPTION>
RESTRUCTURED LOANS
=====================================================================================================
YEAR ENDED DECEMBER 31
-------------------------------------------------
(IN MILLIONS) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Commercial and industrial $ 5 $ 25 $ 78 $71 $ 66
Commercial loans secured
by real estate 265 255 18 15 21
Lease financing - - - - 1
Construction and development
loans secured by real estate 3 16 15 2 10
Agricultural 1 1 1 7 -
-----------------------------------------------------------------------------------------------------
274 297 112 95 98
FOREIGN/a/ - 5 1 2 36
-----------------------------------------------------------------------------------------------------
$274 $302 $113 $97 $134
-----------------------------------------------------------------------------------------------------
/a/ Excludes debt restructurings with countries that have experienced liquidity problems of $1.4
billion, $1.6 billion, $1.6 billion, $1.8 billion, and $2.4 billion at December 31, 1997, 1996, 1995,
1994, and 1993, 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 67 of the 1997 Annual Report to Shareholders.
Information on other debt restructurings is incorporated by reference from Note 8 on page 67 of the
1997 Annual Report to Shareholders.
OTHER INTEREST-BEARING ASSETS ON NONACCRUAL STATUS
=====================================================================================================
Other interest-bearing assets on nonaccrual status primarily include other assets and accounts
receivable. Information on other interest-bearing assets on nonaccrual status is incorporated by
reference from pages 41 and 42 of the 1997 Annual Report to Shareholders.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
SUMMARY OF ANNUAL CREDIT LOSS EXPERIENCE
CREDIT LOSS =========================================================================================================
EXPERIENCE Information on annual credit loss experience is
incorporated by reference from pages 38 through
40 of the 1997 Annual Report to Shareholders.
ALLOWANCE FOR FOREIGN CREDIT LOSSES/a/
=========================================================================================================
Year Ended December 31
--------------------------------------------------
(IN MILLIONS) 1997 1996 1995 1994 1993
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, BEGINNING OF YEAR $ 425 $428 $391 $ 392 $ 559
Credit losses 66 39 15 42 36
Credit loss recoveries 27 60 99 124 66
-----------------------------------------------------------------------------------------------
Net credit (losses) recoveries (39) 21 84 82 30
Provision for credit losses 624/b/ (26) (54) - -
Losses on the sale or swap of loans
to restructuring countries - - - - (3)
Other net additions (deductions) (5) 2 7 (13) (264)/a,c/
-----------------------------------------------------------------------------------------------
BALANCE, END OF YEAR $1,005 $425 $428 $ 391 $ 322
==================================================================================================
/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 in 1993. 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/ The increase in the provision for credit losses was primarily related to the volatile conditions in
emerging markets towards the end of 1997.
/c/ 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. This deduction included $88 million of
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 on page 39 of the 1997 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 DISTIBUTION OF DOMESTIC TIME DEPOSITS OF $100,000 OR MORE
=====================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Decemeber 31, 1997
------------------------------------------------------------
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 $ 6,747 $ 61
After three months through six months 2,164 -
After six months through twelve months 1,719 -
After twelve months 1,551 40
----------------------------------------------------------------------------------------------------
$ 12,181 $101
-------------------------------------------------------------=======================================
</TABLE>
11
<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, 1997, 1996, and 1995
are incorporated by reference from page 21 of the 1997
Annual Report to Shareholders.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===========================================================================================================
SHORT-TERM DECEMBER 31 AVERAGE DURING YEAR
BORROWINGS ----------------------------- ---------------------------
MAXIMUM WEIGHTED
OUTSTANDINGS AVERAGE AVERAGE
(DOLLAR AMOUNTS IN MILLIONS) DURING YEAR OUTSTANDINGS INTEREST RATE OUTSTANDINGS INTEREST RATE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997
Federal funds purchased/a/ $ 3,751 $ 3,751 5.58% $ 1,176 5.43%
Securities sold under repurchase
agreements/a/ 15,106 11,159 7.95 11,583 6.99
Other short-term borrowings 20,163 15,702 6.52 17,911 6.13
-----------------------------------------------------------------------------------------------------------
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
===========================================================================================================
</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 changes in 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
12
<PAGE>
================================================================================
now 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 AND The banking and financial services businesses in which BAC
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 continually under review by
Congress, state legislatures, and federal and state
regulatory agencies. Changes in the laws, regulations, or
policies that affect 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 subsidiary of the Parent is primarily
regulated by the FDIC and 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 that are insured
institutions are subject to the authority of the FDIC. The
activities of
13
<PAGE>
================================================================================
the Parent's broker/dealers, which include BancAmerica
Robertson Stephens 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, the
state-chartered banking subsidiary is 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 30 on pages 88 through
90 of the 1997 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 or savings association 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, 1997, 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 50 through 53
and Note 20 on pages 73 and 74 of the 1997 Annual Report to
Shareholders.
14
<PAGE>
================================================================================
As deposits of BAC's subsidiary banks are insured by the 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 the cost of
funding Financing Corporation interest payments. The cost
of funding these interest payments will be in the form of an
assessment on both BIF and SAIF insured deposits. BIF
insured deposit assessment rates will be lower than the SAIF
rates. 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, which was enacted in 1994, authorizes bank holding
companies to 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 were authorized to merge with other banks
in states that do not "opt out" of the interstate
legislation prior to June 1, 1997. Interstate mergers were
permitted to be conducted prior to June 1, 1997 in states
that specifically permit such mergers. The ability to merge
with other banks across state lines has enabled BAC to
consolidate a number of its affiliate banking operations.
However, Texas has "opted out."
2. Pending Legislation and Regulation
During 1997, Congress considered reform of the Glass-
Steagall Act and the BHCA, 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 affect the ability of
BAC to offer a broader range of financial products.
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.
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<PAGE>
================================================================================
3. Environmental Regulation
Since BAC is not a manufacturer using or a transporter
conveying 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 in an effort 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, 1997, BAC's staff level on a full-time-
equivalent basis was approximately 77,000. BAC had
approximately 90,500 employees, both full-time and part-
time, at December 31, 1997.
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<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.
April 2, 1998 BANKAMERICA CORPORATION
by /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:
DAVID A. COULTER Chairman of the Board, President
---------------------------------------------------- and Chief Executive Officer
(David A. Coulter)
Principal Financial Officer:
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>
Directors:
JOSEPH F. ALIBRANDI* Director WALTER E. MASSEY* Director
PETER B. BEDFORD* Director JOHN M. RICHMAN* Director
RICHARD A. CLARKE* Director SANFORD R. ROBERTSON* Director
TIMM F. CRULL* Director RICHARD M. ROSENBERG* Director
KATHLEEN FELDSTEIN* Director A. MICHAEL SPENCE* Director
DONALD E. GUINN* Director SOLOMON D. TRUJILLO* Director
FRANK L. HOPE, JR.* Director
A majority of the members of the Board of Directors.
*By CHERYL A. SOROKIN
-------------------------------------
(Cheryl A. Sorokin, Attorney-in-Fact)
Dated: April 2, 1998
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