FOR IMMEDIATE RELEASE NATIONSBANK REPORTS 31% EARNINGS GROWTH IN 1994 CHARLOTTE NC, January 17, 1995 -- NationsBank Corporation today reported 1994 net income of $1.7 billion, a 31-percent increase over the $1.3 billion earned from operations in 1993, before the change in accounting for income taxes. Earnings per common share for 1994 rose 22 percent to $6.12, compared to $5.00 per share in 1993 and return on common shareholders' equity rose to 16.10 percent, compared to 15.00 percent last year. After adjusting for the first-quarter 1993 accounting change of $200 million, or $.78 per share, 1993 net income was $1.5 billion, or $5.78 per common share. For the fourth quarter of 1994, net income rose nine percent to $405 million, compared to $373 million in the fourth quarter of 1993. Earnings per common share in the fourth quarter of 1994 increased seven percent to $1.46, from $1.37 per common share in 1993. "After having rapidly built a large, diverse financial institution, our 1994 results demonstrate our ability to successfully run the company," said Hugh McColl, chairman and chief executive officer. "Our 22-percent growth in earnings per share is a significant accomplishment given the challenging environment driven by changes in our customers, competitors, regulators, interest rates and the economy. "These earnings are a reflection of our excellent revenue growth, resulting from strong loan growth and increased fee income. In addition, continued improvement in our operating efficiency and further reductions in credit costs enhanced earnings for the year. During 1994, we made important strides in improving the profitability of NationsBank and we will continue taking actions to increase the value of our shareholders' investment." The 1994 results include the full impact of several acquisitions made throughout 1993 and the partial impact of acquisitions made during 1994. Thus, the annual growth comparisons reflect not only internal growth but the impact of these acquisitions. Average loans and leases of $95 billion in 1994 grew 20 percent over year-earlier levels. Excluding acquisitions over the last year and the fourth-quarter 1993 securitization of bank card assets, average loans and leases grew 12 percent from 1993. This growth was driven by an 18-percent increase in average consumer loans, primarily residential mortgage and bank card loans, and a nine-percent increase in commercial loans. Average deposits in 1994 were $93.7 billion versus $83.5 billion a year ago, reflecting the impact of 1993 and 1994 acquisitions. Core customer-based deposits of $84.2 billion made up 90 percent of this year's total. Net interest income on a taxable-equivalent basis grew 12 percent in 1994 to $5.3 billion. Strong loan growth coupled with disciplined loan and deposit pricing more than offset the adverse impact of higher short-term interest rates producing this increase in net interest income. The net interest yield in 1994 was 3.58 percent, compared to 3.96 percent last year. The decline in net interest yield reflected a narrowing of the spread between investment securities and market-based funds and higher trading asset levels of the Corporation's primary government securities Noninterest income rose 24 percent to $2.6 billion in 1994. After adjusting for acquisitions, noninterest income rose 11 percent on a year-over-year basis, driven by increased fees from investment banking, deposit servicing, and trading. 1994 results included $13 million of losses on the sale of securities, compared to securities gains of $84 million in 1993. Noninterest expense totaled $4.9 billion in 1994 compared to $4.3 billion in the prior year. After adjusting for acquisitions, noninterest expense rose slightly more than two percent on a year-over-year basis. Investment in personnel, particularly in the Capital Markets area, added to expenses, while efforts were implemented to reduce spending on general operating and administrative expenses. Credit quality indicators showed further substantial improvement throughout 1994 due to a strengthening economy, increased recoveries and improving commercial real estate markets. Total nonperforming assets fell by $645 million, or 36 percent, versus levels at December 31, 1993. Total nonperforming assets stood at $1.1 billion on December 31, or 1.10 percent of net loans, leases and factored receivables, and other real estate owned. This compared to nonperforming assets of $1.8 billion on December 31, 1993, or 1.92 percent of net levels. Net charge-offs declined to $316 million, or .33 percent of average net loans, leases and factored receivables, in 1994, from $412 million, or .51 percent of average levels in 1993. The allowance for credit losses totaled $2.2 billion at year-end 1994 and equaled 2.11 percent of net loans, leases and factored receivables. The allowance represented 273 percent of nonperforming loans at December 31, 1994, up dramatically from 193 percent at year-end As a result of these improving credit quality trends, provision expense in 1994 declined to $310 million, well below the 1993 level of $430 million. In 1994, there was a net recovery of $12 million in the other real estate owned category, versus an expense of $78 million in 1993, with the decrease primarily due to improving real estate markets in the Mid-Atlantic region. On December 31, 1994, total earning assets were $152 billion, of which net loans and leases were $102 billion and securities were $26 billion. Total shareholders' equity climbed 10 percent in 1994 to $11.0 billion on December 31. This represented 6.49 percent of year-end assets. Book value per common share rose nine percent to $39.70 on December 31, 1994. Common dividends paid per share for the calendar year 1994 increased 15 percent to $1.88 from $1.64 per share in 1993. Total market capitalization was $12.5 billion at year-end 1994. Tier 1 and total risk-based capital ratios of 7.43 percent and 11.47 percent, respectively, and a leverage ratio of 6.18 percent all compared favorably with regulatory guidelines at December 31, 1994. NationsBank Corporation is a bank holding company that provides financial products and services nationally and internationally to individuals, businesses, corporations, institutional investors and government agencies. Headquartered in Charlotte, N.C., NationsBank has a retail banking franchise in nine states and the District of Columbia and consumer finance offices in 31 states. As of December 31, 1994, NationsBank had total assets of $170 billion. NATIONSBANK CORPORATION FINANCIAL HIGHLIGHTS THREE MONTHS FOR THE YEAR ENDED DECEMBER 31 ENDED DECEMBER 31 1994 1993 1994 1993 FINANCIAL SUMMARY (In millions except per-share data) Income before effect of change in method of accounting for income taxes $405 $373 $1690 $1301 Net income 405 373 1690 1501 Earnings per common share before effect of change in method of accounting for income taxes 1.46 1.37 6.12 5.00 Earnings per common share 1.46 1.37 6.12 5.78 Fully diluted earnings per common share before effect of change in method of accounting for income taxes 1.45 1.36 6.06 4.95 Fully diluted earnings per common share 1.45 1.36 6.06 5.72 Average common shares issued 275.735 269.679 274.656 257.969 Average fully diluted common shares issued 279.242 273.832 278.573 262.453 Price per share of common stock at period end $45 1/8 $49 $45 1/8 $49 Common dividends paid 138 114 517 423 Common dividends paid per share .50 .42 1.88 1.64 Preferred dividends paid 2 3 10 10 EARNINGS SUMMARY (Taxable-equivalent in millions) Net interest income $1326 $1326 $5305 $4723 Provision for credit losses (70) (100) (310) (430) Gains(losses)on sales of securities (28) - (13) 84 Noninterest income 639 615 2597 2101 Other real estate owned expense 8 (22) 12 (78) Restructuring expense - - - (30) Noninterest expense (1261) (1222) (4942) (4293) Income before income taxes and effect of change in method of accounting for income taxes 614 597 2649 2077 Income taxes - including FTE adjustment* (209) (224) (959) (776) Income before effect of change in method of accounting for income taxes 405 373 1690 1301 Effect of change in method of accounting for income taxes --- --- --- 200 Net income $405 $373 $1690 $1501 *FTE adjustment $26 $23 $94 $86 AVERAGE BALANCE SHEET SUMMARY (In billions) Loans and leases, net $99.764 $89.147 $95.006 $78.984 Securities held for investment 17.966 27.273 15.048 24.823 Securities available for sale 8.560 2.211 12.386 1.017 Total securities 26.526 29.484 27.434 25.840 Earning assets 155.107 139.657 148.381 119.182 Total assets 174.554 157.790 166.319 134.400 Noninterest-bearing deposits 20.452 19.852 20.097 17.425 Interest-bearing deposits 78.122 70.486 73.640 66.046 Total deposits 98.574 90.338 93.737 83.471 Shareholders' equity 10.906 9.669 10.484 8.651 Common shareholders' equity 10.877 9.554 10.435 8.606 OTHER FINANCIAL DATA Net interest yield 3.40pct. 3.77pct. 3.58pct. 3.96pct. Return on average assets before effect of change in method of accounting for income taxes .92 .94 1.02 .97 Return on average assets .92 .94 1.02 1.12 Return on average common shareholders' equity before effect of change in method of accounting for income taxes 14.68 15.34 16.10 15.00 Return on average common shareholders' equity 14.68 15.34 16.10 17.33 Gross charge-offs (in millions) $155 $196 $533 $609 Net charge-offs (in millions) 98 136 316 412 Pct. of average loans, leases and factored accounts receivable, net .38pct. .60pct. .33pct. .51pct. DECEMBER 31 1994 1993 BALANCE SHEET SUMMARY (In billions) Loans and leases, net $102.367 $91.006 Securities held for investment 17.800 13.584 Securities available for sale 8.025 15.470 Total securities 25.825 29.054 Earning assets 151.722 140.890 Factored accounts receivable 1.004 1.001 Total intangibles 1.712 1.367 Total assets 169.604 157.686 Noninterest-bearing deposits 21.380 20.723 Interest-bearing deposits 79.090 70.390 Total deposits 100.470 91.113 Shareholders' equity 11.011 9.979 Common shareholders' equity 10.976 9.859 Per common share (not in billions) 39.70 36.39 RISK-BASED CAPITAL Tier 1 capital $ 9.511 $8.535 Tier 1 capital ratio 7.43pct. 7.41pct. Total capital $14.681 $13.505 Total capital ratio 11.47pct. 11.73pct. Leverage ratio 6.18 6.00 Common shares issued(in millions) 276.452 270.905 Allowance for credit losses $2.186 $2.169 Allowance as pct. of net loans, leases, and factored accounts receivable 2.11pct. 2.36pct. Allowance for credit losses as pct. of nonperforming loans 273.07 193.38 Nonperforming loans $.801 $1.122 Nonperforming assets 1.138 1.783 Nonperforming assets as pct. of: Total assets .67pct. 1.13pct. Net loans, leases, factored accounts receivable and other real estate owned 1.10 1.92 Full-time equivalent headcount 61,484 57,742 Banking centers 1,929 1,930