FOR IMMEDIATE RELEASE
NATIONSBANK REPORTED 1997 NET INCOME OF $3.1 BILLION, AN
INCREASE OF 30 PERCENT
CHARLOTTE, NC, January 12, 1998 -- NationsBank increased net income in 1997 by
30 percent to $3.08 billion, or $4.27 per common share, due to growth in
revenue, core expense management and the benefit from recent acquisitions.
"Our associates are to be commended for achieving record earnings while
continuing to integrate some very important acquisitions," said Hugh L. McColl
Jr., chief executive officer.
"The integration of Boatmen's and Montgomery Securities has added new dimensions
to our company's market power and ability to compete in the financial sector,"
McColl added. "Combined with last week's merger with Barnett, we enter 1998 with
added momentum and focus on serving the needs of our customers."
Net income for 1997 of $3.08 billion, or $4.27 per common share, compared to net
income of $2.38 billion, or $4.00 per common share, in 1996. Excluding a merger-
related charge in the first quarter of 1996, operating net income and earnings
per common share for 1996 were $2.45 billion and $4.13, respectively.
Results in 1997 included the benefit of several acquisitions completed in 1996
and 1997, primarily the acquisition of Boatmen's Bancshares, Inc. on January 7,
1997, and Montgomery Securities Inc. on October 1, 1997.
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Earnings Highlights (1997 compared to 1996)
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o Cash basis earnings (net income excluding amortization of intangibles)
were $4.89 per common share, up 16 percent from $4.21 per share.
o Return on average tangible common shareholders' equity increased 850
basis points to 30.6 percent, from 22.1 percent.
o Noninterest income increased 37 percent to $5.00 billion driven by
increases in nearly all major categories.
o The cash basis efficiency ratio improved to 53.8 percent from 55.0
percent, reflecting successful integration efforts and expense
containment.
o Shareholders' equity at year-end was $21.34 billion, or 8.07 percent of
year-end assets, compared to 7.38 percent at year-end 1996.
Fourth-Quarter Earnings
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In the fourth quarter of 1997, NationsBank earned $818 million, an increase of
29 percent over the $632 million earned in the fourth quarter of 1996. Earnings
per common share rose 6 percent to $1.15, from $1.09 in the year-ago quarter.
Return on average common shareholders' equity was 15.9 percent, down from 19.1
percent in the year-ago quarter due primarily to the equity issued in the
Boatmen's acquisition.
Cash basis earnings increased 40 percent in the quarter to $936 million, or
$1.31 per common share. This compared to $669 million, or $1.16 per common
share, in the fourth quarter of 1996. The return on average tangible common
shareholders' equity rose to 33.9 percent, from 23.8 percent in the year-ago
quarter.
Taxable-equivalent net interest income increased 25 percent in the quarter to
$2.02 billion compared to the fourth quarter of 1996. The growth was achieved
through an increase in average managed loans and leases, as well as higher
levels of securities.
Noninterest income rose 57 percent in the quarter to $1.50 billion from $958
million in the fourth quarter of 1996 and represented 43 percent of total
revenues. The growth was attributable to higher levels of income from several
areas including investment banking, deposit accounts and brokerage.
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The cash basis efficiency ratio improved to 55.0 percent in the quarter,
compared to 55.6 percent in the fourth quarter of 1996. Including the
amortization of intangibles, the efficiency ratio was 58.3 percent in the fourth
quarter of 1997 compared to 57.1 percent in the fourth quarter of 1996.
Full-Year Earnings
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NationsBank earned $3.08 billion in 1997, an increase of 30 percent over the
$2.38 billion earned in 1996. Earnings per common share for the year rose 7
percent to $4.27, from $4.00 in 1996.
Cash basis earnings increased 41 percent to $3.52 billion in 1997, or $4.89 per
common share. This compared to $2.50 billion, or $4.21 per share, in 1996. The
return on average tangible common shareholders' equity rose to 30.6 percent in
1997, from 22.1 percent in 1996.
Taxable-equivalent net interest income increased 25 percent to $8.01 billion in
1997, compared to $6.42 billion in 1996. The growth was achieved through an
increase in average loans and leases and a 17 basis point expansion in the net
interest yield. The improvement in the net interest yield to 3.79 percent from
3.62 percent was primarily the result of the improved contribution of the
securities portfolios and deposit expense management efforts.
Noninterest income rose 37 percent to $5.00 billion in the 1997 from $3.65
billion in 1996. As reflected in the quarter comparisons, this growth was
attributable to higher levels of income from virtually all areas, including
deposit accounts, investment banking, asset management and brokerage income.
The cash basis efficiency ratio in 1997 improved to 53.8 percent from 55.0
percent in 1996. Including the amortization of intangibles, the efficiency ratio
was 57.2 percent in 1997 compared to 56.3 percent in 1996.
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Credit Quality
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Total nonperforming assets were $1.14 billion on December 31, 1997, or .79
percent of net loans, leases and factored receivables and foreclosed properties,
down from .85 percent of net levels on December 31, 1996. The allowance for
credit losses totaled $2.78 billion at year-end, equaling 276 percent of
nonperforming loans, compared to $2.32 billion, or 260 percent, one year
earlier. In 1997, provision for credit losses was $800 million. Net charge-offs
for the year were $798 million, or .54 percent of average net loans, leases and
factored receivables, compared to .48 percent in 1996.
Capital Strength
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Total shareholders' equity was $21.34 billion on December 31, 1997. This
represented 8.07 percent of period-end assets, compared to 7.38 percent at
year-end 1996. Book value per common share rose 26 percent to $29.87 at December
31, 1997, from year-end 1996.
NationsBank Corporation, headquartered in Charlotte, N.C., is a bank holding
company that provides financial products and services nationally and
internationally to individuals, businesses, corporations, institutional
investors and government agencies. NationsBank has primary retail and commercial
banking operations in 16 states and the District of Columbia. With the completed
acquisition of Barnett Banks on January 9, 1998, NationsBank had total assets of
approximately $310 billion.
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NATIONSBANK CORPORATION FINANCIAL HIGHLIGHTS
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31 ENDED DECEMBER 31
1997 1996 1997 1996(1)
---- ---- ---- -------
FINANCIAL SUMMARY
(In millions except per-share data)
Net income $818 $632 $3,077 $2,375
Earnings per common share 1.15 1.09 4.27 4.00
Diluted earnings per
common share 1.12 1.07 4.17 3.92
Cash basis earnings (2) 936 669 3,518 2,503
Cash basis earnings per
common share 1.31 1.16 4.89 4.21
Cash basis diluted earnings
per common share 1.28 1.14 4.76 4.13
Average common shares issued 711.400 574.345 717.450 590.216
Average diluted common
shares issued 729.503 589.182 737.791 603.530
Price per share of common
stock at period end $60.8125 $48.8750 $60.8125 $48.8750
Common dividends paid 271 189 985 707
Common dividends paid per share .38 .33 1.37 1.20
Preferred dividends paid 2 4 11 15
EARNINGS SUMMARY
(Taxable-equivalent in millions)
Net interest income $2,018 $1,612 $8,014 $6,423
Provision for credit losses (230) (150) (800) (605)
Gains on sales of securities 62 33 153 67
Noninterest income 1,500 958 5,002 3,646
Foreclosed properties expense (3) (7) (10) (20)
Noninterest expense (2,051) (1,466) (7,447) (5,783)
Income before income taxes 1,296 980 4,912 3,728
Income taxes - including
FTE adjustment* 478 348 1,835 1,353
Net income $818 $632 $3,077 $2,375
*FTE adjustment $30 $22 $116 $94
AVERAGE BALANCE SHEET SUMMARY
(In billions)
Loans and leases, net $139.737 $120.892 $145.251 $122.268
Managed loans and
leases, net (3) 150.673 144.002 147.970 142.700
Securities held for investment 1.231 2.585 1.554 3.442
Securities available for sale 39.059 11.540 26.364 17.295
Total securities 40.290 14.125 27.918 20.737
Earning assets 218.289 171.249 211.226 177.400
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Total assets 253.342 194.321 244.504 200.885
Noninterest-bearing deposits 32.740 23.971 31.577 23.990
Interest-bearing deposits 99.654 81.794 102.084 83.595
Total deposits 132.394 105.765 133.661 107.585
Shareholders' equity 20.366 13.224 20.187 13.263
Common shareholders' equity 20.311 13.108 20.088 13.149
OTHER FINANCIAL DATA
Net interest yield 3.68% 3.75% 3.79% 3.62%
Return on average assets 1.28 1.29 1.26 1.18
Return on average
tangible assets 1.52 1.38 1.49 1.26
Return on average common
shareholders' equity 15.93 19.06 15.26 17.95
Return on average tangible
common shareholders' equity 33.86 23.81 30.59 22.12
Total equity to assets ratio
(period-end) 8.07 7.38 8.07 7.38
Gross charge-offs (in millions) $313 $208 $1,106 $836
Net charge-offs (in millions) 231 151 798 598
% of average loans, leases and
factored accounts receivable, net .65% .49% .54% .48%
Managed credit card net charge-offs
as a % of average managed credit
card receivables 6.88% 5.23% 6.49% 4.54%
Efficiency ratio 58.31 57.11 57.22 56.26
Cash basis efficiency ratio 54.96 55.63 53.84 54.99
(1) 1996 results included a merger-related charge of $118
million($77 million, net of tax, or $.13 per common share).
(2) Cash basis earnings equal net income excluding amortization
of intangibles.
(3) Prior periods are restated for comparison (e.g. acquisitions
and securitizations).
DECEMBER 31
1997 1996
BALANCE SHEET SUMMARY
(In billions)
Loans and leases, net $142.718 $121.583
Securities held for investment 1.156 2.110
Securities available for sale 46.047 12.277
Total securities 47.203 14.387
Earning assets 228.927 164.676
Factored accounts receivable 1.074 1.047
Mortgage servicing rights 1.282 .946
Goodwill, core deposit and
other intangibles 9.380 2.030
Total assets 264.562 185.794
Noninterest-bearing deposits 34.674 25.738
Interest-bearing deposits 103.520 80.760
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Total deposits 138.194 106.498
Shareholders' equity 21.337 13.709
Common shareholders' equity 21.274 13.586
Per share (not in billions) 29.87 23.69
Risk-based capital
Tier 1 capital $13.593 $12.384
Tier 1 capital ratio 6.50% 7.76%
Total capital $22.787 $20.208
Total capital ratio 10.89% 12.66%
Leverage ratio 5.57% 7.09%
Common shares issued (in millions) 712.188 573.492
Allowance for credit losses $2.782 $2.315
Allowance for credit losses
as a % of net loans, leases
and factored accounts receivable 1.94% 1.89%
Allowance for credit losses
as a % of nonperforming loans 273.34 260.02
Nonperforming loans $1.018 $.890
Nonperforming assets 1.135 1.043
Nonperforming assets as a % of:
Total assets .43% .56%
Net loans, leases, factored accounts
receivable foreclosed properties .79% .85%
OTHER DATA
Full-time equivalent headcount 80,360 62,971
Banking centers 2,594 1,979
ATMs 6,079 3,948
BUSINESS UNIT RESULTS - Three months ended December 31, 1997 (In millions)
General Bank Global Finance Financial Services
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Total revenue $2,360 67% $937 27% $196 6%
Net income 475 58% 245 30% 48 6%
Return on average
tangible equity 30% 23% 17%
Average loans and
leases, net $90,654 65% $40,928 29% $8,868 6%