SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Date of Report (Date of Earliest Event Reported): January 7, 1997
NATIONSBANK CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
North Carolina 1-6523 56-0906609
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
NationsBank Corporate Center, Charlotte, North Carolina 28255
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(Address of Principal Executive Offices) (Zip Code)
(704) 386-5000
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(Registrant's Telephone Number, including Area Code)
ITEM 5. OTHER EVENTS
(a) Financial Statements of businesses acquired.
The following consolidated financial statements of Boatmen's Bancshares,
Inc. ("Boatmen's") and its subsidiaries are incorporated herein by
reference to Exhibit 99.1 filed herewith:
1. Consolidated Balance Sheets as of December 31, 1996 and 1995.
2. Consolidated Statements of Income for the years ended December 31,
1996, 1995 and 1994.
3. Consolidated Statement of Changes in Stockholders' Equity for the
years ended December 31, 1996, 1995 and 1994.
4. Consolidated Statement of Cash Flows for the years ended December 31,
1996, 1995 and 1994.
5. Notes to the Consolidated Financial Statements.
The information presented in Exhibit 99.1 with respect to the year ended
December 31, 1994 is not incorporated herein.
The report of Ernst & Young LLP, independent accountants, on the
consolidated financial statements of Boatmen's Bancshares, Inc. as of
December 31, 1996 and 1995 and for the three years in the period ended
December 31, 1996, is filed herewith as Exhibit 99.1 and the related
consent is filed herewith as Exhibit 99.2. Both the opinion and consent
are incorporated herein by reference.
(b) Pro forma financial information.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Financial Information and
explanatory notes are presented to show the impact on the historical financial
position and results of operations of NationsBank Corporation ("NationsBank")
of the acquisition of Boatmen's effective January 7, 1997, (the "Merger").
In accordance with the merger agreement, each share of Boatmen's Common Stock
outstanding at the Effective Time of the merger (the "Effective Time") was
converted in the Merger into the right to receive 1.305 shares of NationsBank
common stock (adjusted for 2-for-1 stock split on February 27, 1997) or, at
the election of each of the holders of Boatmen's Common Stock, $63.11 in cash
(such cash consideration in the aggregate not to exceed 40% of the aggregate
consideration paid by NationsBank for Boatmen's Common Stock), and each share
of Boatmen's preferred stock was converted into new shares of NationsBank
preferred stock having substantially similar terms.
The unaudited Pro Forma Condensed Financial Information reflects the Merger
using the purchase method of accounting. The cash component of the purchase
price is assumed to equal 40% of the purchase price in the unaudited Pro Forma
Condensed Financial Information; the cash component of the purchase price was
funded by NationsBank through the issuance of additional debt securities
included in the NationsBank historical balance sheet. The actual cash election
made by the holders of Boatmen's common stock was approximately 4%. However,
NationsBank currently expects to and has previously disclosed its intent to
repurchase shares of NationsBank common stock from time to time so that the
pro forma impact of the Boatmen's acquisition will be the issuance of
approximately 60% of the aggregate consideration in NationsBank common stock
and 40% of the aggregate consideration in cash.
The unaudited Pro Forma Condensed Balance Sheet assumes that the Merger was
consummated on December 31, 1996. The unaudited Pro Forma Condensed Statement
of Income reflects the consolidation of the results of operation of NationsBank
and Boatmen's for the year ended December 31, 1996.
The unaudited Pro Forma Condensed Financial Information reflects preliminary
purchase accounting adjustments. Estimates relating to fair value of certain
assets, liabilities and other items have been made as more fully described in
the Notes to the Pro Forma Condensed Financial Information. Actual adjustments,
which may include adjustments to additional assets, liabilities and other items,
will be made on the basis of appraisals and evaluations as of the Effective Time
and, therefore, will differ from those reflected in the unaudited Pro Forma
Condensed Financial Information.
The combined company expects to achieve substantial merger benefits including
operating cost savings and revenue enhancements. The pro forma earnings, which
do not reflect any potential savings or revenue enhancements which are expected
to result from the consolidation of operations of NationsBank and Boatmen's, are
not indicative of the results of future operations. No assurances can be given
with respect to the ultimate level of expense savings and revenue enhancements
to be realized.
The unaudited Pro Forma Condensed Financial Information and explanatory notes
presented also show the impact on the historical financial position and results
of operations of NationsBank of the acquisitions of Bank South Corporation
("Bank South"), completed January 10, 1996, TAC Bancshares, Inc. and its
subsidiary, Chase Federal Bank FSB ("Chase Federal"), completed August 13, 1996,
and CSF Holdings, Inc. ("CSF") completed January 10, 1996 (collectively, the
"Other Acquisitions"). The Other Acquisitions are reflected net of pro forma
adjustments in the Pro Forma Condensed Financial Information and explanatory
notes.
The Other Acquisitions were all closed prior to December 31, 1996 and are
reflected in the December 31, 1996 NationsBank historical balance
sheet. The unaudited Pro Forma Condensed Statement of Income reflects the
results of operation of the Other Acquisitions for the year ended December 31,
1996 as if the Other Acquisitions had occurred on January 1, 1996. Chase
Federal and CFS are reflected in the unaudited Pro Forma Condensed Financial
Information using the purchase method of accounting and Bank South is
reflected as a pooling of interests. The Other Acquisitions pro forma earnings
do not reflect any potential savings or revenue enhancements that may result
from the consolidation of operations of the Other Acquisitions and therefore
are not indicative of the results of future operations.
PRO FORMA BALANCE SHEET
(Dollars in Millions)
(Unaudited)
At December 31, 1996
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NationsBank
Boatmen's Pro Forma Boatmen's
NationsBank Bancshares Adjustments Combined
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ASSETS
Cash and cash equivalents............ $ 8,933 $ 2,733 $ (3,926) (1) $ 7,740
Time deposits placed................. 1,843 72 1,915
Investment securities................ 14,387 11,522 41 (1) 19,950
(6,000) (2)
Federal funds sold and securities
purchased under agreements to resell. 6,959 446 7,405
Trading account assets............... 19,288 28 19,316
Loans, leases and factored accounts
receivable, net of unearned income.. 122,630 24,605 147,235
Allowance for credit losses.......... (2,315) (458) (2,773)
Premmises, equipment and lease
rights, net......................... 2,712 776 3,488
Customers' acceptance liability...... 858 - 858
Other assets......................... 10,499 1,476 6,477 (1) 18,549
97 (1)
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Total assets....................... $ 185,794 $ 41,200 $ (3,311) $ 223,683
========== ========== ========== ==========
LIABILITIES
Deposits............................. $ 106,498 $ 31,954 $ $ 138,452
Borrowed funds....................... 24,001 4,311 (6,000) (2) 22,312
Trading account liabilities.......... 11,752 - 11,752
Acceptances outstanding.............. 858 - 858
Accrued expenses and other
liabilities......................... 5,026 618 390 (1) 6,034
Long-term debt....................... 23,950 646 24,596
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Total liabilities.................. 172,085 37,529 (5,610) 204,004
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SHAREHOLDERS' EQUITY
Preferred stock...................... 171 82 253
Common stock......................... 3,855 158 (158) (1) 9,743
5,888 (1)
Surplus.............................. - 1,200 (1,200) (1) -
Retained earnings.................... 9,673 2,405 (2,405) (1) 9,673
Less: Treasury stock................. - (168) 168 (1) -
Other including loan to ESOP trust... 10 (6) 6 (1) 10
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Total shareholders' equity......... 13,709 3,671 2,299 19,679
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Total liabilities and
shareholders' equity.............. $ 185,794 $ 41,200 $ (3,311) $ 223,683
========== ========== ========== ==========
See accompanying notes to the pro forma balance sheet.
PRO FORMA CONDENSED STATEMENT OF INCOME
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
For the Year Ended December 31, 1996
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NationsBank
Boatmen's Pro Forma Boatmen's Other Pro Forma
NationsBank Bancshares Adjustments Combined Acquisitions Combined
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Income from Earning Assets
Interest and fees on loans and leases.. $ 10,440 $ 2,110 $ $ 12,550 $ 55 $ 12,605
Interest and dividends on securities... 1,306 737 (4) (3) 1,645 45 1,690
(394) (5)
Interest on federal funds sold and
securities purchased under
agreements to resell................. 666 24 690 - 690
Trading account securities............ 1,225 4 1,229 - 1,229
Other................................. 159 6 165 - 165
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Total income from earning assets.... 13,796 2,881 (398) 16,279 100 16,379
Interest Expense
Deposits.............................. 3,322 994 4,316 45 4,361
Borrowed funds........................ 2,155 249 (364) (5) 2,040 9 2,049
Long-term debt........................ 1,337 53 307 (4) 1,697 21 1,718
Other................................. 653 - 653 - 653
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Total interest expense.............. 7,467 1,296 (57) 8,706 75 8,781
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Net interest income..................... 6,329 1,585 (341) 7,573 25 7,598
Provision for credit losses............. 605 85 690 6 696
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Net credit income................... 5,724 1,500 (341) 6,883 19 6,902
Gains on sales of securities............ 67 2 69 2 71
Noninterest income...................... 3,646 839 (6) (3) 4,479 3 4,482
Merger-related charge................... 118 70 188 - 188
Noninterest expense..................... 5,685 1,453 297 (3) 7,435 25 7,460
----------- ---------- ----------- --------- ------------ ---------
Income before taxes..................... 3,634 818 (644) 3,808 (1) 3,807
Income taxes............................ 1,259 295 (125) (7) 1,429 - 1,429
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Net income.............................. 2,375 523 (519) 2,379 (1) 2,378
Preferred dividends..................... 15 7 22 - 22
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Net income available to common
shareholders.......................... $ 2,360 $ 516 $ (519) $ 2,357 $ (1) $ 2,356
=========== ========== =========== ========= ============ =========
Primary earnings per common share....... $ 4.00 $ 3.30 $ 3.30
=========== ========= =========
Fully diluted earnings per common share. $ 3.92 $ 3.25 $ 3.25
=========== ========= =========
Average Common Shares - Primary......... 590,214 714,318 714,318
=========== ========= =========
Average Common Shares - Fully Diluted... 603,528 727,632 727,632
=========== ========= =========
NOTES TO THE UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
(Amounts in Millions, Shares in Thousands, Per-Share Amounts Actuals)
The unaudited Pro Forma Condensed Financial Information is based upon the
following adjustments and related assumptions; the actual purchase accounting
adjustments will be made on the basis of appraisals and evaluations as of the
date of consummation of the transaction and, therefore, will differ from those
reflected in the unaudited Pro Forma Condensed Financial Information.
Note 1
The purchase accounting adjustments to record the Merger used in the preparation
of the unaudited Pro Forma Condensed Balance Sheet are summarized below:
Shares of Boatmen's Common Stock outstanding..................... 155,501 (A)
Exchange ratio................................................... 1.305
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NationsBank common share equivalents............................. 202,929
Consideration to be paid in NationsBank Common Stock........ 60% (B)
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NationsBank Common Stock assumed issued..................... 121,757
Assumed NationsBank Share Price............................. $48.3625 (C)
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Assumed additional shareholders' equity..................... $5,888
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Consideration to be paid in cash............................ 40% (B)
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NationsBank Common Stock assumed issued..................... 81,172
Assumed NationsBank Share Price............................. $48.3625 (C)
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Assumed cash consideration.................................. $3,926
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Purchase price of acquisition (from above)....................... $9,814
Historical net assets acquired................................... $3,671
Less: Boatmen's preferred stock.................................. (82)
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3,589
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Premium to allocate.............................................. $6,225
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Adjustments to fair value of net assets acquired:
Investment Securities....................................... 41 (D)
Deferred Income Taxes....................................... 97 (E)
Other Accrued Expenses...................................... (390)(G)
Intangibles................................................. 6,477 (F)
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$6,225
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(A) Represents the number of shares of Boatmen's Common Stock outstanding at
the Effective Time.
(B) Each share of Boatmen's Common Stock outstanding at the Effective Time was
converted in the Merger into the right to receive 1.305 shares of
NationsBank common stock or, at the election of each of the holders of
Boatmen's Common Stock, an amount in cash in respect of each share of
Boatmen's Common Stock that is equal to the Exchange Ratio times the market
value of the NationsBank Common Stock during the 10 consecutive trading day
period during which the shares of NationsBank Common Stock were traded on
the New York Stock Exchange ending on the tenth calendar day immediately
prior to the Effective Time (such cash consideration in the aggregate not
to exceed 40% of the aggregate consideration paid by NationsBank for
Boatmen's Common Stock). An assumed cash election of 40% has been used in
the pro forma computations. The unaudited Pro Forma Condensed Financial
Information reflects funding of the cash component of the purchase price
from issuance of additional debt securities. As indicated above, the
actual cash election was approximately 4%. However, NationsBank currently
expects to repurchase shares of NationsBank common staock from time to time
so that the pro forma impact of the Boatmen's acquisition will be the
issuance of approximately 60% of the aggregate consideration in NationsBank
common stock and 40% of the aggregate consideration in cash.
(C) NationsBank Common Stock price average over the ten consecutive trading day
period from December 13, 1996 through December 27, 1996 as explained in (B)
above, adjusted to reflect the 2-for-1 stock split on February 27, 1997.
(D) Reflects the net appreciation in the securities portfolio at December 31,
1996.
(E) Represents the amount of deferred tax associated with adjustments to the
carrying value of investments securities, mortgage servicing rights and
certain identifiable intangible assets.
(F) Includes identifiable intangibles, estimated fair value in excess of
carrying value of mortgage servicing rights at December 31, 1996, and
goodwill.
(G) Includes personnel related items, write-offs of premises and equipment,
transition costs and other merger-related expenses.
Note 2
Reflects the planned reduction of discretionary investment securities and
related paydown of borrowed funds.
Note 3
The purchase accounting adjustments related to the Merger reflected in the
unaudited Pro Forma Condensed Statement of Income are summarized as follows:
Year Ended
December 31,
1996
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Interest income
Amortization of securities fair value adjustment....... $4
Noninterest income
Amortization of mortgage servicing rights ............. $6
Noninterest expense
Amortization of intangibles fair value adjustment......$297
Note 4
Purchase accounting adjustments related to NationsBank's funding of the Merger
have been reflected in the unaudited Pro Forma Condensed Statement of Income as
follows:
Year Ended
December 31,
1996
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Interest expense
Increase in interest expense on debt securities
to fund the cash component of the Common Stock
Consideration....................................... $307
Note 5
Foregone interest income on discretionary investment security portfolio
reduction and related reduction in funding cost.
Year Ended
December 31,
1996
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Interest income................................. $394
Interest expense................................ $364
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$ 30
Note 6
The following assumptions were used in establishing the purchase accounting
adjustments related to the Merger in the unaudited Pro Forma Condensed Statement
of Income.
Securities
Amortize the premium into interest income on a straight-line method over the
estimated maturities of the affected securities, 3 years.
Mortgage Servicing Rights
Amortize the excess of fair value over carrying value on a straight-line method
over the estimated maturities of the underlying mortgages of 7 years.
Intangibles
Amortize the identifiable intangible value as noninterest expense over 10 years
and goodwill on a straight-line basis over 25 years.
Note 7
Income tax expense on pro forma adjustments is reflected using a 36% tax rate.
ITEM 7. EXHIBITS
The following Exhibits are filed herewith:
Exhibit No. Description of Exhibit
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99.1 Consolidated financial statements of
Boatmen's Bancshares, Inc. and
Report of Ernst & Young LLP.
99.2 Consent of Ernst & Young LLP.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NATIONSBANK CORPORATION
By: /s/ Marc D. Oken
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Marc D. Oken
Chief Accounting Officer
Dated: March 28, 1997
EXHIBIT INDEX
Exhibit No. Description of Exhibit
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99.1 Consolidated financial statements of
Boatmen's Bancshares, Inc. and Report of
Ernst & Young LLP.
99.2 Consent of Ernst & Young LLP.