PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 12, 1993)
$300,000,000
NATIONSBANK(Register mark)
7 3/4% SUBORDINATED NOTES, DUE 2004
Interest on the 7 3/4% Subordinated Notes, due 2004 (the "7 3/4% Notes") is
payable by NationsBank Corporation ("NationsBank" or the "Corporation")
semiannually on February 15 and August 15, commencing February 15, 1995. The
7 3/4% Notes will mature on August 15, 2004 and are not redeemable prior to
maturity. The 7 3/4% Notes will not be listed on a securities exchange.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS, ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF THE
CORPORATION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, THE
COMMISSIONER OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
[CAPTION]
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT (2) THE CORPORATION (1) (3)
Per 7 3/4% Note....................... 99.571% .65% 98.921%
Total................................. $298,713,000 $1,950,000 $296,763,000
(1) Plus accrued interest, if any, from August 8, 1994 to date of delivery.
(2) The Corporation has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Before deducting expenses payable by the Corporation estimated to be
$200,000.
The 7 3/4% Notes are offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to reject any order in whole or in part. It is
expected that delivery of the 7 3/4% Notes will be made in New York, New York on
or about August 8, 1994.
NATIONSBANC CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
CHEMICAL SECURITIES INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
The date of this Prospectus Supplement is August 1, 1994.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 7 3/4% NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF THE 7 3/4% NOTES
The information herein concerning the 7 3/4% Notes should be read in
conjunction with the statements under "Description of Debt Securities" in the
accompanying Prospectus.
The 7 3/4% Notes will be issued in the aggregate principal amount of
$300,000,000 under an Indenture dated as of November 1, 1992 between the
Corporation and The Bank of New York, Trustee, as supplemented by the First
Supplemental Indenture thereto dated as of July 1, 1993 between the Corporation
and the Trustee, as set forth in the Prospectus. The 7 3/4% Notes will be issued
in fully registered form in denominations of $1,000 and any integral multiple
thereof. The 7 3/4% Notes will bear interest from August 8, 1994 at the annual
rate specified on the cover page of this Prospectus Supplement. Interest on the
7 3/4% Notes shall be payable semiannually in arrears on each February 15 and
August 15, commencing February 15, 1995, to the persons in whose names the
7 3/4% Notes are registered at the close of business on the last day of the
calendar month next preceding each interest payment date (the "Registered
Holders"). The Corporation shall make payments of principal and interest at the
office of NationsBank of Georgia, National Association, 600 Peachtree Street,
Suite 900, Atlanta, Georgia 30308, as authenticating and paying agent, or such
other place as the Corporation may designate. In addition, interest may be paid
by check mailed to the Registered Holders. The 7 3/4% Notes will mature on
August 15, 2004 and are not redeemable prior to maturity. No sinking fund is
provided for the 7 3/4% Notes.
RECENT DEVELOPMENTS
ACQUISITIONS
On July 8, 1994, the Corporation entered into an Agreement and Plan of
Merger with RHNB Corporation ("RHNB") to acquire South Carolina-based RHNB, the
parent company of Rock Hill National Bank, in exchange for approximately
1,050,000 shares of NationsBank common stock, using an exchange ratio of .35
share of NationsBank common stock for each share of common stock of RHNB
outstanding on the effective date of the acquisition. At June 30, 1994, RHNB had
assets of approximately $258 million, deposits of approximately $216 million and
shareholders' equity of approximately $17 million. The merger is subject to
approval by RHNB shareholders and various regulatory agencies and to other
customary conditions and is expected to be completed by year end.
RETIREMENT OF DEBT
On May 6, 1994 and June 30, 1994, the Corporation redeemed, at par, $75
million and $150 million, respectively, of its outstanding floating rate
subordinated notes due 1997.
S-2
CAPITALIZATION
The following table sets forth the actual capitalization of NationsBank as
of June 30, 1994 and the capitalization of NationsBank as adjusted to give
effect to the issuance of the 7 3/4% Notes offered hereby.
NATIONSBANK AS
ACTUAL ADJUSTED
LONG-TERM DEBT (AMOUNTS IN MILLIONS)
Senior debt:
NationsBank Corporation (parent):
8.64% and 8.65% medium-term notes, due 1994........................................................... $ 75 $ 75
9.45% to 10.50% notes, due 1994 through 1996.......................................................... 45 45
5 3/8% notes, due 1995................................................................................ 399 399
11.70% notes, due 1995................................................................................ 75 75
4.36% to 5.70% medium-term notes, due 1995 through 2000............................................... 477 477
Floating rate medium-term notes, due 1995 through 1996................................................ 683 683
5.51% ESOP secured notes, due 1996 through 1999....................................................... 125 125
4 3/4% notes, due 1996................................................................................ 399 399
8 1/2% notes, due 1996................................................................................ 150 150
5 1/8% notes, due 1998................................................................................ 299 299
6 5/8% notes, due 1998................................................................................ 399 399
8 3/8% sinking fund debentures, due 1999.............................................................. 36 36
5 3/8% notes, due 2000................................................................................ 397 397
7 3/4% original issue discount debentures, due 2002................................................... 17 17
9 1/4% unsecured notes, due 2006...................................................................... 124 124
Other notes........................................................................................... 14 14
3,714 3,714
Subsidiaries (1):
Floating rate municipal financing, due 1994........................................................... 112 112
Floating rate consumer loan financing, due 1994 through 1996.......................................... 340 340
Floating rate homes financing, due 1994 through 1996.................................................. 308 308
9.54% note, due 1995.................................................................................. 10 10
Mortgage notes and other indebtedness................................................................. 30 30
Total senior debt.................................................................................. 4,514 4,514
Subordinated Debt:
NationsBank Corporation (parent):
9 3/8% capital notes, due 1997........................................................................ 83 83
9 3/4% capital notes, due 1999........................................................................ 99 99
10 1/2% notes, due 1999............................................................................... 299 299
9 1/8% notes, due 2001................................................................................ 299 299
8 1/8% notes, due 2002................................................................................ 349 349
6.20% medium-term notes, due 2003..................................................................... 75 75
6 1/2% notes, due 2003................................................................................ 600 600
7 3/4% notes, due 2004................................................................................ -- 299
6 7/8% notes, due 2005................................................................................ 398 398
9 3/8% notes, due 2009................................................................................ 397 397
10.20% notes, due 2015................................................................................ 200 200
Floating rate notes, due 2019, putable 1996........................................................... 10 10
Other notes........................................................................................... 1 1
2,810 3,109
Subsidiaries (1):
9 1/2% notes, due 2004................................................................................ 301 301
Floating rate notes, due 2019, putable 1999........................................................... 8 8
Other notes........................................................................................... 1 1
Total subordinated debt............................................................................ 3,120 3,419
Total long-term debt............................................................................... 7,634 7,933
SHAREHOLDERS' EQUITY
Preferred stock, authorized -- 45,000,000 shares; ESOP Convertible, Series C: issued: 2,644,526......... 112 112
Common stock, authorized -- 800,000,000 shares; issued -- 276,516,942 (2)............................... 4,747 4,747
Retained earnings....................................................................................... 5,884 5,884
Other, including loan to ESOP trust..................................................................... (270) (270)
Total shareholders' equity......................................................................... 10,473 10,473
$18,107 $ 18,406
S-3
(1) These obligations are direct obligations of certain of the subsidiaries of
NationsBank and, as such, constitute claims against such subsidiaries prior
to the Corporation's equity interest therein.
(2) As of June 30, 1994, (a) 13,666,406 shares of Common Stock were reserved for
issuance under various employee benefit plans of the Corporation and upon
the conversion of the ESOP Convertible Preferred Stock, Series C; (b)
5,363,694 shares of Common Stock were reserved for issuance under the
Corporation's Dividend Reinvestment and Stock Purchase Plan; and (c)
1,050,000 shares of Common Stock were reserved for issuance in connection
with the acquisition of RHNB. As authorized by the Board of Directors on
July 27, 1994, during the next twelve months the Corporation may from time
to time repurchase in the open market (x) up to 10,000,000 shares of Common
Stock, representing the number of shares of Common Stock it intends to issue
for its Dividend Reinvestment and Stock Purchase Plan and its various
employee benefit plans and (y) up to that number of shares of Common Stock
to be issued in connection with the acquisition of RHNB.
As of June 30, 1994, the Corporation had $2.2 billion of commercial paper
and other short-term notes payable outstanding. During the six months ended June
30, 1994, the amount of commercial paper and other short-term notes payable
outstanding averaged $2.3 billion and ranged from a high of $2.5 billion to a
low of $2.0 billion. At June 30, 1994, the Corporation had unused lines of
credit aggregating $1.0 billion, principally to support commercial paper
borrowings.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
the six months ended June 30, 1994 and the three months ended March 31, 1994 and
for each of the years in the five-year period ended December 31, 1993:
SIX MONTHS THREE MONTHS YEAR ENDED
ENDED JUNE 30, ENDED MARCH 31, DECEMBER 31,
1994 1994 1993 1992 1991 (1) 1990
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits................. 2.0 2.1 2.3 2.4 1.1 1.3
Including interest on deposits................. 1.6 1.6 1.5 1.4 1.0 1.1
1989 (2)
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits................. 1.7
Including interest on deposits................. 1.2
(1) Ratios include the 1991 restructuring expense of $330 million recorded in
connection with the merger of a subsidiary of the Corporation into
C&S/Sovran Corporation, effective December 31, 1991. On a pro forma basis,
excluding the 1991 restructuring expense of $330 million, the Ratio of
Earnings to Fixed Charges excluding interest on deposits was 1.3, and the
Ratio of Earnings to Fixed Charges including interest on deposits was 1.1.
For additional information regarding the restructuring expense, see the
Corporation's Annual Report on Form 10-K for the fiscal year ended December
31, 1993, incorporated by reference herein.
(2) Includes the interest of the Federal Deposit Insurance Corporation (the
"FDIC") in the earnings of NationsBank of Texas, National Association
("NationsBank Texas").
For purposes of computing the consolidated ratios, earnings represent net
income of the Corporation plus applicable income taxes and fixed charges, less
capitalized interest and the equity in undistributed earnings of unconsolidated
subsidiaries and associated companies. Fixed charges represent interest expense
(exclusive of interest on deposits in one case and inclusive of such interest in
the other), capitalized interest, amortization of debt discount and appropriate
issuance costs and one-third (the amount deemed to represent an appropriate
interest factor) of net rent expense under all lease commitments.
S-4
RECENT FINANCIAL INFORMATION
Second quarter 1994 net income of NationsBank was $437 million, an increase
of 43% from second quarter 1993 net income of $306 million. Earnings per common
share for the second quarter of 1994 increased 32% to $1.58 per common share
compared to $1.20 per common share in the second quarter of 1993.
For the first six months of 1994, net income was $854 million, or $3.10 per
common share, as compared to net income of $587 million, or $2.30 per common
share, in the first six months of 1993, before a change in method of accounting
for income taxes mandated by Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." Net income in the first six months of 1993,
including such accounting change, was $787 million, or $3.09 per common share.
Tax equivalent net interest income of $1.3 billion increased 18% for the
second quarter as compared to $1.1 billion in the same period of 1993. Excluding
the impact of the asset acquisition of Chicago Research & Trading Ltd., now
known as NationsBank-CRT, in the third quarter of 1993, the second quarter 1994
net interest yield decreased two basis points to 4.15% compared to the same
period in 1993. After giving effect to the NationsBank-CRT assets (whose trading
profits are recorded as noninterest income), the reported net interest yield in
the second quarter of 1994 was 3.70%.
Noninterest income in the second quarter of 1994 was $629 million, or 31%
higher than $481 million in the comparable 1993 quarter. After adjusting for the
impact of acquisitions, noninterest income increased approximately 7% over the
second quarter of 1993.
Second quarter noninterest expense was $1.2 billion compared to second
quarter 1993 noninterest expense of $1.0 billion. After adjusting for the impact
of acquisitions, noninterest expense for the second quarter of 1994 increased
approximately 2% as compared to the second quarter of 1993.
The provision for credit losses decreased to $70 million in the second
quarter of 1994 from $110 million in the second quarter of 1993 and $100 million
in the first quarter of 1994.
Net charge-offs were $64 million in the second quarter of 1994, or .27% of
average net loans, leases and factored receivables, compared to $93 million, or
.49% of average levels, in the second quarter of 1993. The allowance for credit
losses was $2.2 billion at June 30, 1994 or 2.30% of net loans, leases and
factored receivables. The allowance represented 234% of nonperforming loans at
June 30, 1994.
Average loans and leases were $92.6 billion in the second quarter, a 23%
increase compared to the 1993 second quarter. After adjusting for the impact of
acquisitions in 1993 and the securitization of bank card assets in the fourth
quarter of 1993, average loans and leases increased 12% since the second quarter
of 1993. Between March 31, 1994 and June 30, 1994, loans and leases increased
$2.5 billion, or 11% on an annualized basis.
Average deposits were $91.4 billion in the second quarter of 1994 compared
to $81.3 billion in the same period in 1993. After adjusting for acquisitions,
average deposits in the second quarter increased $614 million compared to the
comparable 1993 quarter.
Total earning assets on June 30, 1994 were $147 billion, of which net loans
and leases were $94.6 billion and securities were $28.4 billion, as compared to
total earning assets of $111 billion on June 30, 1993.
Total nonperforming assets were $1.4 billion on June 30, 1994, or 1.48% of
net loans, leases, factored receivables and other real estate owned. This
represents a 13% decline from March 31, 1994 levels.
Total shareholders' equity was $10.5 billion at June 30, 1994 or 6.37% of
total assets. Return on common shareholders' equity was 17.04% in the second
quarter of 1994 as compared to 14.65% in the second quarter of 1993. At June 30,
1994, the Corporation's Tier 1 and total risk-based capital ratios were 7.63%
and 11.57%, respectively. The Corporation's leverage ratio was 6.38% at June 30,
1994.
S-5
SELECTED FINANCIAL DATA
The following selected financial data for the five years ended December 31,
1993 are derived from financial statements of the Corporation audited by Price
Waterhouse, independent accountants. The financial data for the six months ended
June 30, 1994 and 1993 are derived from unaudited financial statements. The
unaudited financial statements include all adjustments, consisting of normal
recurring accruals, that the Corporation considers necessary for a fair
presentation of its financial position and the results of its operations as of
such dates and for such periods. Results for the six months ended June 30, 1994
are not necessarily indicative of the results that might be expected for any
other interim period or for the year as a whole.
UNAUDITED
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
(AMOUNTS IN MILLIONS EXCEPT PER SHARE INFORMATION AND RATIOS)
Income statement:
Income from earning assets.................. $ 4,910 $ 3,828 $ 8,327 $ 7,780 $ 9,398 $ 10,278 $ 9,666
Interest expense............................ 2,305 1,642 3,690 3,682 5,599 6,670 6,279
Net interest income......................... 2,605 2,186 4,637 4,098 3,799 3,608 3,387
Provision for credit losses................. 170 230 430 715 1,582 1,025 414
Gains on sales of securities................ 19 34 84 249 454 67 139
Noninterest income.......................... 1,309 962 2,101 1,913 1,742 1,605 1,414
Restructuring expense....................... -- -- 30 -- 330 91 --
Other noninterest expense................... 2,449 2,062 4,371 4,149 3,974 3,538 3,239
Income before income taxes and effect of
change in method of accounting for income
taxes (1)................................. 1,314 890 1,991 1,396 109 626 1,171
Income tax expense (benefit)................ 460 303 690 251 (93) 31 217
Income before effect of change in method of
accounting for income taxes (1)........... 854 587 1,301 1,145 202 595 954
Effect of change in method of accounting for
income taxes.............................. -- 200 200 -- -- -- --
Net income (1).............................. 854 787 1,501 1,145 202 595 954
Net income applicable to common shareholders
(1)....................................... 849 783 1,491 1,121 171 559 922
Per common share:
Earnings before effect of change in method
of accounting for income taxes............ 3.10 2.30 5.00 4.60 .76 2.61 4.48
Earnings.................................... 3.10 3.09 5.78 4.60 .76 2.61 4.48
Cash dividends paid......................... .92 .80 1.64 1.51 1.48 1.42 1.10
Shareholders' equity (period-end)........... 37.77 33.14 36.39 30.80 27.03 27.30 26.41
Balance sheet (period-end):
Total assets (2)............................ 164,398 123,784 157,686 118,059 110,319 112,791 110,246
Total loans, leases and factored accounts
receivable, net of unearned income........ 95,678 77,837 92,007 72,714 69,108 70,891 66,360
Total deposits.............................. 92,244 80,028 91,113 82,727 88,075 89,065 85,380
Capital leases and long-term debt........... 7,660 4,157 8,352 3,066 2,876 2,766 2,517
Common shareholders' equity................. 10,443 8,435 9,859 7,793 6,252 5,898 5,625
Total shareholders' equity.................. 10,473 8,459 9,979 7,814 6,518 6,283 6,003
Weighted average common shares outstanding (in
thousands).................................. 273,492 253,673 257,969 243,748 226,305 213,841 205,829
Performance ratios:
Return on average assets (2)(3)............. 1.07%(4) 1.31%(4) 1.12% 1.00% .17% .52% 1.06%
Return on average common shareholders'
equity.................................... 16.93(4) 19.45(4) 17.33 15.83 2.70 9.56 18.85
Risk-based capital ratios:
Tier 1...................................... 7.63 7.63 7.41 7.54 6.38 5.79 --
Total....................................... 11.57 11.75 11.73 11.52 10.30 9.58 --
Leverage capital ratio........................ 6.38 6.34 6.00 6.16 5.07 4.83 --
Total equity to total assets (2).............. 6.37 6.83 6.33 6.62 5.91 5.57 5.45
Asset quality ratios:
Allowance for credit losses as a percentage
of total loans, leases and factored
accounts receivable, net of unearned
income.................................... 2.30 2.03 2.36 2.00 2.32 1.86 1.32
Allowance for credit losses as a percentage
of nonperforming loans.................... 234.48 139.18 193.38 103.11 81.82 100.46 151.67
Net charge-offs as a percentage of average
loans, leases and factored accounts
receivable................................ .33(4) .47(4) .51 1.25 1.86 .88 .48
Nonperforming assets as a percentage of net
loans, leases, factored accounts
receivable and foreclosed properties...... 1.48 2.15 1.92 2.72 4.01 2.32 1.08
S-6
(1) Excludes the FDIC's interest in earnings of NationsBank Texas in 1989.
(2) Excludes assets of the Special Asset Division, a discrete business division
established by NationsBank for the purpose of managing the disposition of
certain assets specified by an assistance agreement between NationsBank and
certain of its subsidiaries and the FDIC. Pursuant to the terms of the
assistance agreement, the assets of the Special Asset Division were sold to
the FDIC effective November 30, 1991.
(3) Includes FDIC's interest in earnings of NationsBank Texas for 1989.
(4) Annualized.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated August 1, 1994 (the "Underwriting Agreement") among the Corporation and
the underwriters named therein (the "Underwriters"), the Corporation has agreed
to sell to each of the Underwriters and each of the Underwriters has severally
agreed to purchase the principal amount of the 7 3/4% Notes set forth opposite
its name below at the price set forth on the cover page of this Prospectus
Supplement. In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
7 3/4% Notes offered hereby if any of the 7 3/4% Notes are purchased. Under
certain circumstances, the commitments of non-defaulting Underwriters may be
increased as set forth in the Underwriting Agreement.
PRINCIPAL
AMOUNT OF
UNDERWRITER 7 3/4% NOTES
NationsBanc Capital Markets, Inc............................................................ $ 60,000,000
Bear, Stearns & Co. Inc..................................................................... 60,000,000
Chemical Securities Inc..................................................................... 60,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................................... 60,000,000
Salomon Brothers Inc........................................................................ 60,000,000
Total............................................................................. $300,000,000
The Underwriters have advised the Corporation that they propose initially to
offer the 7 3/4% Notes to the public at the Price to Public set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .40% of the principal amount of the 7 3/4%
Notes. The Underwriters may allow, and such dealers may reallow, a discount not
in excess of .25% of such principal amount on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
The Underwriting Agreement provides that the Corporation will indemnify the
Underwriters that participate in the distribution of the 7 3/4% Notes against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the Underwriters may be required to make in
respect thereof.
NationsBanc Capital Markets, Inc. ("NCMI") is an indirect, wholly owned
subsidiary of NationsBank. Under Schedule E to the By-Laws ("Schedule E") of the
National Association of Securities Dealers, Inc. (the "NASD"), when an NASD
member, such as NCMI, participates in the distribution of an affiliated
company's securities, the offering must be conducted in accordance with the
applicable provisions of Schedule E. NationsBank is considered to be an
"affiliate" (as such term is defined in Schedule E) of NCMI. The offer and sale
of any 7 3/4% Notes by NCMI will comply with the requirements of Schedule E
regarding the underwriting of securities of affiliates and with any restrictions
that may be imposed on NCMI by the Board of Governors of the Federal Reserve
System. In addition, under Schedule E, no NASD member participating in offers
and sales of the 7 3/4% Notes may execute a transaction in the 7 3/4% Notes in a
discretionary account without the specific prior written approval of the
member's customer.
This Prospectus Supplement and related Prospectus also may be used by direct
or indirect wholly owned subsidiaries of NationsBank acting in an agency
capacity in connection with offers and sales related to secondary market
transactions in the 7 3/4% Notes. Any such sales will be made at prices related
to prevailing market prices at the time of sale.
Each of the Underwriters provides or has provided investment banking
services to NationsBank from time to time in the ordinary course of business. In
addition, Chemical Securities Inc. is an affiliate of Chemical Bank which
provides credit facilities to NationsBank and certain of its affiliates.
Chemical Bank, or its affiliates, also participates on a regular basis in
various general financing and banking transactions for NationsBank and its
affiliates.
S-7
PROSPECTUS
NATIONSBANK(Register mark)
DEBT SECURITIES
NationsBank Corporation ("NationsBank" or the "Corporation") may offer from
time to time in one or more series up to
$4,000,000,000 in aggregate initial offering price of (i) its unsecured debt
securities, which may be either senior (the "Senior Debt Securities") or
subordinated (the "Subordinated Debt Securities" and, together with the Senior
Debt Securities, the "Debt Securities"), (ii) shares of its preferred stock (the
"Preferred Stock"), which may be represented by depositary shares (the
"Depositary Shares"), and (iii) shares of its common stock (the "Common Stock").
This Prospectus relates solely to the offer and sale of Debt Securities, which
may be offered, separately or together, in separate series in amounts, at prices
and on terms to be determined at the time of sale and set forth in an
accompanying supplement to this Prospectus (a "Prospectus Supplement"). Any
shares of Preferred Stock, Depositary Shares or Common Stock that may be offered
and issued under the Registration Statement of which this Prospectus forms a
part will be so offered and issued pursuant to the terms of a separate
Prospectus contained in such Registration Statement. The aggregate amount of
Debt Securities that may be offered and sold pursuant hereto is subject to
reduction as the result of the sale of any Preferred Stock, Depositary Shares or
Common Stock pursuant to such separate Prospectus.
The Senior Debt Securities will rank equally with all other unsubordinated
and unsecured indebtedness of the Corporation. The Subordinated Debt Securities
will be subordinate in right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Corporation.
The applicable Prospectus Supplement will set forth the specific terms of
each series of Debt Securities offered pursuant to this Prospectus, including
the specific designation, aggregate principal amount, authorized denominations,
maturity, any premium, any interest rate (which may be fixed or variable), any
interest payment dates, any optional or mandatory redemption terms, any sinking
fund provisions, any subordination terms, any terms for conversion into other
series of Debt Securities, Preferred Stock, Depositary Shares or Common Stock,
the initial public offering price and any other terms of such series of Debt
Securities.
The Debt Securities may be sold (i) through underwriting syndicates
represented by managing underwriters, or by underwriters without a syndicate,
with such underwriters to be designated at the time of sale; (ii) through agents
designated from time to time; or (iii) directly by the Corporation. The names of
any underwriters or agents of NationsBank involved in the sale of the Debt
Securities, the public offering price or purchase price and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement, in addition to any other terms of the offering of such Debt
Securities. The net proceeds to the Corporation from such sale also will be set
forth in such Prospectus Supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS, ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF THE CORPORATION, AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY
OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS
THE
SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is August 12, 1993.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Corporation with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), are
incorporated herein by reference:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1992;
(b) The Corporation's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993; and
(c) The Corporation's Current Reports on Form 8-K filed January 13,
1993, January 25, 1993, February 24, 1993 (as amended by Amendment No. 1 on
Form 8 filed March 1, 1993, Form 8-K/A Amendment No. 1 filed May 6, 1993
and Form 8-K/A Amendment No. 2 filed May 27, 1993), March 26, 1993, July 7,
1993, August 2, 1993 and August 11, 1993 (including a description of the
Common Stock).
All reports and any definitive proxy or information statements filed
by the Corporation with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the 1934 Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities offered
hereby shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM
THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO JOHN E. MACK, SENIOR VICE PRESIDENT AND
TREASURER, NATIONSBANK CORPORATION, NATIONSBANK CORPORATE CENTER, CORPORATE
TREASURY DIVISION, CHARLOTTE, NORTH CAROLINA 28255. TELEPHONE REQUESTS MAY
BE DIRECTED TO MR. MACK AT (704) 386-5833.
AVAILABLE INFORMATION
NationsBank is subject to the informational requirements of the 1934
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New
York 10048; and the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also
be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, upon payment of
prescribed rates. In addition, reports, proxy statements and other
information concerning NationsBank may be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
and at the offices of The Pacific Stock Exchange, Incorporated, 301 Pine
Street, San Francisco, California 94104.
2
NATIONSBANK CORPORATION
GENERAL
NationsBank is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended, with its principal assets being
the stock of its banking subsidiaries (the "Banks"). Through the Banks and
its various non-banking subsidiaries, NationsBank provides domestic banking
and banking-related services throughout the Southeastern and MidAtlantic
states and Texas. The principal executive offices of NationsBank are
located at NationsBank Corporate Center, Charlotte, North Carolina 28255.
Its telephone number is (704) 386-5000.
As part of its operations, the Corporation routinely analyzes its
lines of business and from time to time may increase, decrease or terminate
any of its activities as the result of such evaluations. In particular, the
Corporation regularly evaluates the potential acquisition of, and holds
discussions with, various financial institutions and other businesses of a
type eligible for bank holding company investment. The Corporation also
regularly analyzes the values of, and submits bids for, the acquisitions of
customer-based funds and other liabilities and assets of failed financial
institutions. As a general rule, the Corporation publicly announces such
material acquisitions when a definitive agreement has been reached.
BANKING OPERATIONS
NationsBank, through its various subsidiaries, provides a diversified
range of financial services to its customers. These services include
activities related to the general banking business as provided through the
General Bank Group (including comprehensive service in the commercial and
retail banking fields, the origination and servicing of home mortgage
loans, the issuance and servicing of credit cards, certain insurance
services and private banking services); the Institutional Bank Group
(including comprehensive service in the corporate and investment banking
fields, trading in financial futures through contractual arrangements with
members of the various commodities exchanges, options market making and
trading and arranging and structuring mergers, acquisitions, leveraged
buyouts, private debt placements, international financings and venture
capital; and international operations through representative offices,
branches or merchant banks located in London, Frankfurt, Singapore, Mexico
City, Grand Cayman and Nassau, including the traditional services of paying
and receiving, international collections, bankers acceptances, letters of
credit and foreign exchange services, as well as specialized international
services, such as tax-based leasing, export financing of certain capital
goods and raw materials and capital market services, for its corporate
customers); the Secured Lending Group (including real estate lending,
commercial finance and factoring, and leasing and financing a wide variety
of commercial equipment); and the Trust Group (including trust and
investment management services and mutual funds products).
NationsBank has banking operations in the following jurisdictions
(listed in declining order of total assets, with the approximate number of
banking offices in parentheses): Texas (271), North Carolina (239), Florida
(370), Georgia (205), Virginia (258), South Carolina (189), Tennessee
(104), Maryland (83), District of Columbia (11) and Kentucky (4). The
Company also has a banking subsidiary in Delaware that issues and services
credit cards.
In addition to the banking offices located in the above states, the
various Banks have loan production offices located in New York City,
Chicago, Los Angeles, Denver and Birmingham. The Banks also provide fully
automated, 24-hour cash dispensing and depositing and payment services
throughout the states in which they are located, through approximately
1,700 automated teller machines.
NON-BANKING OPERATIONS
NationsBank conducts its non-banking operations through several
subsidiaries. NationsCredit Corporation and several other subsidiaries
engage in consumer credit activities. NationsBanc Mortgage Corporation
originates and services loans for the Banks and for other investors.
NationsBanc Commercial Corporation and an additional subsidiary provide
services related to the factoring of accounts receivable. NationsBanc
Leasing Corporation and several additional subsidiaries engage in equipment
and leveraged leasing activities. NationsSecurities, A Dean
Witter/NationsBank Company, provides full service retail brokerage
services. NationsBanc Securities, Inc. conducts discount brokerage
activities.
In addition, NationsBanc Capital Markets, Inc. ("NCMI"), NationsBank's
institutional securities subsidiary, underwrites and deals in bank-eligible
securities (generally U.S. government and government agency securities,
certain municipal securities, primarily municipal general obligation
securities, and certain certificates of deposit, bankers acceptances and
money market instruments) and, to a limited extent, certain bank-ineligible
securities, including corporate debt, as authorized by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") under
3
Section 20 of the Glass-Steagall Act. Through NCMI's securities
underwriting authority, NationsBank provides corporate and institutional
customers a broad range of debt-related financial services.
SUPERVISION AND REGULATION
GENERAL
NationsBank is subject to the supervision of, and to regular
inspection by, the Federal Reserve Board. The Banks are organized as
national banking associations, which are subject to regulation, supervision
and examination by the Office of the Comptroller of the Currency (the
"Comptroller") and the FDIC. In addition to banking laws, regulations and
regulatory agencies, NationsBank and its subsidiaries and affiliates are
subject to various other laws and regulations and supervision and
examination by other regulatory agencies, all of which directly or
indirectly affect NationsBank's operations, management and ability to make
distributions.
The following discussion summarizes certain aspects of those laws and
regulations that affect NationsBank. Proposals to change the laws and
regulations governing the banking industry are frequently introduced in
Congress, in the state legislatures and before the various bank regulatory
agencies. For example, Federal interstate branching legislation may be
proposed in the future which, if enacted, would permit nationwide
interstate branching by NationsBank. In addition, North Carolina recently
revised its banking statutes, effective in 1996, to facilitate interstate
banking in other states that have similar statutes regarding interstate
banking. Other states in which NationsBank has banking operations are
considering similar legislation. However, the likelihood and timing of any
such changes and the impact such changes might have on NationsBank and its
subsidiaries are difficult to determine.
CAPITAL AND OPERATIONAL REQUIREMENTS
The Federal Reserve Board, the Comptroller and the FDIC have issued
substantially similar risk-based and leverage capital guidelines applicable
to United States banking organizations. In addition, those regulatory
agencies may from time to time require that a banking organization maintain
capital above the minimum levels, whether because of its financial
condition or actual or anticipated growth.
The Federal Reserve Board risk-based guidelines define a two-tier
capital framework. Tier 1 capital consists of common and qualifying
preferred shareholders' equity, less certain intangibles and other
adjustments. Tier 2 capital consists of subordinated and other qualifying
debt, and the allowance for credit losses up to 1.25 percent of risk-
weighted assets. The sum of Tier 1 and Tier 2 capital less investments in
unconsolidated subsidiaries represents qualifying total capital, at least
50 percent of which must consist of Tier 1 capital. Risk-based capital
ratios are calculated by dividing Tier 1 and total capital by risk-weighted
assets. Assets and off-balance sheet exposures are assigned to one of four
categories of risk-weights, based primarily on relative credit risk. The
minimum Tier 1 capital ratio is 4 percent and the minimum total capital
ratio is 8 percent. The Corporation's Tier 1 and total risk-based capital
ratios under these guidelines at June 30, 1993 were 7.63 percent and 11.75
percent, respectively.
The leverage ratio is determined by dividing Tier 1 capital by
adjusted total assets. Although the stated minimum ratio is 3 percent, most
banking organizations are required to maintain ratios of at least 100 to
200 basis points above 3 percent. The Corporation's leverage ratio at June
30, 1993 was 6.34 percent. Management believes that the Corporation meets
its leverage ratio requirement.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for
insured depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies
to implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category
in which an institution is classified. Failure to meet the capital
guidelines could also subject a banking institution to capital raising
requirements. An "undercapitalized" bank must develop a capital restoration
plan and its parent holding company must guarantee that bank's compliance
with the plan. The liability of the parent holding company under any such
guarantee is limited to the lesser of 5 percent of the bank's assets at the
time it became "undercapitalized" or the amount needed to comply with the
plan. Furthermore, in the event of the bankruptcy of the parent holding
company, such guarantee would take priority over the parent's general
unsecured creditors. In addition, FDICIA requires the various regulatory
agencies to prescribe within two years from the
4
date of enactment of FDICIA certain non-capital standards for safety and
soundness relating generally to operations and management, asset quality
and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA,
using the total risk-based capital, Tier 1 risk-based capital and leverage
capital ratios as the relevant capital measures. Such regulations establish
various degrees of corrective action to be taken when an institution is
considered undercapitalized. Under the regulations, a "well capitalized"
institution must have a Tier 1 capital ratio of at least 6 percent, a total
capital ratio of at least 10 percent and a leverage ratio of at least 5
percent and not be subject to a capital directive order. An "adequately
capitalized" institution must have a Tier 1 capital ratio of at least 4
percent, a total capital ratio of at least 8 percent and a leverage ratio
of at least 4 percent, or 3 percent in some cases. Under these guidelines,
each of the Banks is considered adequately or well capitalized.
DISTRIBUTIONS
NationsBank's funds for cash distributions to its shareholders are
derived from a variety of sources, including cash and temporary
investments. The primary source of such funds, however, is dividends
received from its banking subsidiaries. The amount of dividends that each
Bank may declare in a calendar year without approval of the Comptroller is
the Bank's net profits for that year, as defined by statute, combined with
its net retained profits, as defined, for the preceding two years. The
Banks can initiate dividend payments in 1993 without prior regulatory
approval of up to $386 million plus an additional amount equal to their net
profits for 1993 up to the date of any such dividend declaration.
In addition to the foregoing, the ability of NationsBank and its
national bank subsidiaries to pay dividends may be affected by the various
minimum capital requirements and the capital and non-capital standards to
be established under FDICIA as described above. Furthermore, the
Comptroller may prohibit the payment of a dividend by a national bank if it
determines that such payment would constitute an unsafe or unsound
practice. The right of NationsBank, its shareholders and its creditors to
participate in any distribution of the assets or earnings of its
subsidiaries is further subject to the prior claims of creditors of the
respective subsidiaries.
DEPOSIT INSURANCE
The deposits of each of the Banks are insured up to applicable limits
by the FDIC. Accordingly, the Banks are subject to deposit insurance
assessments to maintain the Bank Insurance Fund of the FDIC. As mandated by
FDICIA, the FDIC adopted regulations effective January 1, 1993 for the
transition from a flat-rate insurance assessment system to a risk-based
system by January 1, 1994. Pursuant to these regulations, a financial
institution's deposit insurance assessment will be within a range of 0.23
percent to 0.31 percent of its qualifying deposits, depending on the
institution's risk classification. The assessment for the Banks is
estimated to average 26 cents per $100 of eligible deposits in 1993,
resulting in an increase of approximately $13 million in FDIC insurance
premiums compared to 1992.
SOURCE OF STRENGTH
According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to each subsidiary bank
and to commit resources to support each such subsidiary. This support may
be required at times when a bank holding company may not be able to provide
such support. In the event of a loss suffered or anticipated by the
FDIC -- either as a result of default of a banking or thrift subsidiary of
the Corporation or related to FDIC assistance provided to a subsidiary in
danger of default -- the other banking subsidiaries of NationsBank may be
assessed for the FDIC's loss, subject to certain exceptions.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including NationsBank's working capital needs,
the funding of investments in, or extensions of credit to, NationsBank's
banking and nonbanking subsidiaries, possible acquisitions of other
financial institutions or their assets, possible acquisitions of failed
financial institutions offered for sale by regulatory authorities, possible
acquisitions of or investments in other businesses of a type eligible for
bank holding companies and possible reduction of outstanding indebtedness
or repurchase of outstanding equity securities of the Corporation. Pending
such use, the Corporation may temporarily invest the net proceeds in
investment grade securities. The Corporation may, from time to time, engage
in additional capital financings of a character and in amounts to be
determined by the Corporation in light of its needs at such time or times
5
and in light of prevailing market conditions. If the Corporation elects at
the time of issuance of Debt Securities to make different or more specific
use of proceeds other than that set forth herein, such use will be
described in the applicable Prospectus Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges
for the three months ended March 31, 1993 and for each of the years in the
five-year period ended December 31, 1992:
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
1993 1992 1991 (1) 1990 1989 (2)
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits............................. 2.6 2.4 1.1 1.3 1.7
Including interest on deposits............................. 1.5 1.4 1.0 1.1 1.2
1988
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits............................. 1.8
Including interest on deposits............................. 1.2
(1) Ratios include the 1991 restructuring expense of $330 million recorded
in connection with the merger of a subsidiary of the Corporation into
C&S/Sovran Corporation, effective December 31, 1991. On a pro forma
basis, excluding the 1991 restructuring expense of $330 million, the
Ratio of Earnings to Fixed Charges excluding interest on deposits was
1.3, and the Ratio of Earnings to Fixed Charges including interest on
deposits was 1.1. For additional information regarding the
restructuring expense, see the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, incorporated by reference
herein.
(2) Includes the FDIC's interest in the earnings of NationsBank of Texas,
National Association.
For purposes of computing the consolidated ratios, earnings represent
net income of the Corporation plus applicable income taxes and fixed
charges, less capitalized interest and the equity in undistributed earnings
of unconsolidated subsidiaries and associated companies. Fixed charges
represent interest expense (exclusive of interest on deposits in one case
and inclusive of such interest in the other), capitalized interest,
amortization of debt discount and appropriate issuance costs and one-third
(the amount deemed to represent an appropriate interest factor) of net rent
expense under all lease commitments.
PLAN OF DISTRIBUTION
The Corporation may offer and sell the Debt Securities in one or more
of the following ways: (i) through underwriters or dealers; (ii) through
agents; or (iii) directly by the Corporation to one or more purchasers.
Such underwriters, dealers or agents may be affiliates of NationsBank. The
Prospectus Supplement with respect to a particular offering of a series of
Debt Securities will set forth the terms of the offering of such Debt
Securities, including the name or names of any underwriters or agents with
whom NationsBank has entered into arrangements with respect to the sale of
such Debt Securities, the public offering or purchase price of such Debt
Securities and the proceeds to the Corporation from such sales, and any
underwriting discounts, agency fees or commissions and other items
constituting underwriters' compensation, the initial public offering price,
any discounts or concessions to be allowed or reallowed or paid to dealers
and any securities exchange, if any, on which such Debt Securities may be
listed.
If underwriters are used in the offer and sale of Debt Securities, the
Debt Securities will be acquired by the underwriters for their own account
and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. The Debt Securities may be offered
to the public either through underwriting syndicates represented by
managing underwriters, or by underwriters without a syndicate, all of which
underwriters in either case will be designated in the applicable Prospectus
Supplement. Unless otherwise set forth in the applicable Prospectus
Supplement, under the terms of the underwriting agreement, the obligations
of the underwriters to purchase Debt Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all
the Debt Securities if any are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Debt Securities may be offered and sold directly by the Corporation or
through agents designated by the Corporation from time to time. Any agent
involved in the offer or sale of the Debt Securities with respect to which
this Prospectus is delivered will be named in, and any commissions payable
by the Corporation to such agent will be set forth in or
6
calculable from, the applicable Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a
best-efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the
Corporation may authorize underwriters, dealers or agents to solicit offers
by certain institutions to purchase Debt Securities from the Corporation at
the public offering price set forth in such Prospectus Supplement pursuant
to delayed delivery contracts ("Delayed Delivery Contracts") providing for
payment and delivery on the date or dates stated in the Prospectus
Supplement. Each Delayed Delivery Contract will be for an amount of Debt
Securities not less than and, unless the Corporation otherwise agrees, the
aggregate amount of Debt Securities sold pursuant to Delayed Delivery
Contracts shall be not more than the respective amounts stated in the
Prospectus Supplement. Institutions with which Delayed Delivery Contracts,
when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies and educational
and charitable institutions, but shall in all cases be subject to the
approval of the Corporation in its sole discretion. The obligations of the
purchaser under any Delayed Delivery Contract to pay for and take delivery
of Debt Securities will not be subject to any conditions except that (i)
the purchase of Debt Securities by such institution shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which such
institution is subject; and (ii) any related sale of Debt Securities to
underwriters shall have occurred. A commission set forth in the Prospectus
Supplement will be paid to underwriters soliciting purchases of Debt
Securities pursuant to Delayed Delivery Contracts accepted by the
Corporation. The underwriters will not have any responsibility in respect
of the validity or performance of Delayed Delivery Contracts.
The Debt Securities will be new issues of securities with no
established trading market. Any underwriters to whom Debt Securities are
sold by the Corporation for public offering and sale may make a market in
such Debt Securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any
Debt Securities.
Any underwriter, dealer or agent participating in the distribution of
the Debt Securities may be deemed to be an underwriter, as that term is
defined in the Securities Act of 1933, as amended (the "1933 Act"), of the
Debt Securities so offered and sold, and any discounts or commissions
received by them from NationsBank and any profit realized by them on the
sale or resale of the Debt Securities may be deemed to be underwriting
discounts and commissions under the 1933 Act.
Under agreements entered into with the Corporation, underwriters,
dealers and agents may be entitled to indemnification by the Corporation
against certain civil liabilities, including liabilities under the 1933
Act, or to contribution with respect to payments which the underwriters or
agents may be required to make in respect thereof.
The participation of an affiliate or subsidiary of NationsBank in the
offer and sale of the Debt Securities will comply with the requirements of
Schedule E to the By-laws of the National Association of Securities
Dealers, Inc. (the "NASD") regarding the participation in a distribution of
securities by an affiliate. No NASD member participating in offers and
sales of the Debt Securities will execute a transaction in the Debt
Securities in a discretionary account without the prior written specific
approval of the member's customer.
This Prospectus and related Prospectus Supplements also may be used by
direct or indirect wholly owned subsidiaries of NationsBank in connection
with offers and sales related to secondary market transactions in the Debt
Securities. Such subsidiaries may act as principal or agent in such
transactions. Any such sales will be made at prices related to prevailing
market prices at the time of sale.
Underwriters, dealers and agents also may be customers of, engage in
transactions with, or perform other services for the Corporation in the
ordinary course of business.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such Debt
Securities.
The Senior Debt Securities are to be issued under an Indenture dated
as of January 1, 1992 between the Corporation and BankAmerica National
Trust Company (formerly BankAmerica Trust Company of New York), Trustee
(the "Senior
7
Trustee"), as supplemented by the First Supplemental Indenture thereto
dated as of July 1, 1993 between the Corporation and the Senior Trustee
(such indenture, as so supplemented, is referred to herein as the "Senior
Indenture"). The Subordinated Debt Securities are to be issued under an
Indenture dated as of November 1, 1992 between the Corporation and The Bank
of New York, Trustee (the "Subordinated Trustee" and, together with the
Senior Trustee, the "Trustees"), as supplemented by the First Supplemental
Indenture thereto dated as of July 1, 1993 between the Corporation and the
Subordinated Trustee (such indenture, as so supplemented, is referred to
herein as the "Subordinated Indenture"). A copy of each of the Senior
Indenture and the Subordinated Indenture (each, an "Indenture" and
together, the "Indentures") is incorporated by reference in the
Registration Statement of which this Prospectus forms a part. The following
summaries of certain provisions of the Indentures do not purport to be
complete and are subject to and qualified in their entirety by reference to
the provisions of the applicable Indentures. Whenever particular sections
or defined terms of the Indentures are referred to, it is intended that
such sections or defined items shall be incorporated herein by reference.
Unless otherwise indicated, capitalized terms shall have the meanings
ascribed to them in the Indentures.
GENERAL
The respective Indentures provide that there is no limitation on the
amount of debt securities that may be issued thereunder from time to time.
The amount of Debt Securities that may be offered and sold pursuant to this
Prospectus, however, is limited to the aggregate initial offering price of
the securities registered under the Registration Statement of which this
Prospectus forms a part, subject to reduction as the result of the sale of
other securities under the Registration Statement.
The Senior Debt Securities of each series will be unsecured and will
rank equally with all unsecured senior debt of the Corporation. The
Subordinated Debt Securities of each series will be unsecured and will be
subordinate and junior in right of payment to the prior payment in full of
the Senior Indebtedness of the Corporation. See "Description of Debt
Securities -- Subordination."
The Debt Securities will be issued in fully registered form only.
Principal of and premium, if any, and interest on the Debt Securities will
be payable, and the Debt Securities may be transferable or exchangeable,
without payment of any service charge other than any tax or governmental
charge payable in connection therewith, at the principal corporate trust
office of the respective Trustees, or at such other places as may be
designated from time to time pursuant to the Indentures. The Debt
Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. Federal income tax consequences and
special considerations applicable to any such Debt Securities will be
described in the Prospectus Supplement relating thereto.
The Debt Securities may be issued from time to time in one or more
series. The particular terms of each series of Debt Securities to be
offered and sold will be described in the Prospectus Supplement with
respect to such Debt Securities, including: (1) the specific title of the
series of Debt Securities; (2) whether such Debt Securities are Senior Debt
Securities or Subordinated Debt Securities; (3) the aggregate principal
amount of such series of Debt Securities; (4) the denominations in which
such series of Debt Securities are authorized to be issued, if other than
denominations of $1,000 or any integral multiple thereof; (5) any sinking
fund provisions; (6) the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which such series of Debt Securities
will be issued; (7) the date or dates on which such series of Debt
Securities will mature; (8) the rate or rates per annum or the method for
determining such rate or rates, if any, at which such series of Debt
Securities will bear interest (which rate may be fixed or variable), and
the date or dates from which any such interest will accrue; (9) any premium
payments; (10) the date or dates on which any such interest on such series
of Debt Securities will be payable and the record dates for any interest
payable on any such dates; (11) the person to whom any interest of such
series of Debt Securities will be payable, if other than the persons in
whose names such series of Debt Securities are registered at the close of
business on the record dates for such interest, and the extent to which, or
the manner in which, any interest payable on a permanent global Debt
Security on an interest payment date will be paid; (12) each office or
agency where, subject to the terms of the applicable Indenture, the
principal of and premium, if any, and interest on such series of Debt
Securities will be paid; (13) each office or agency where, subject to the
terms of the applicable Indenture, such series of Debt Securities may be
presented for registration of transfer or exchange; (14) any provisions
relating to optional redemption of such series of Debt Securities,
including the period or periods within which and the price or prices at
which such series of Debt Securities may, pursuant to any such provisions,
be redeemed, in whole or in part, and the other detailed terms of such
optional redemption provisions; (15) any provisions relating to the
obligation, if any, of the Corporation to redeem or purchase such series of
Debt Securities pursuant to any sinking fund or analogous provisions or at
the option of the holder thereof, including the
8
period or periods within which at the price or prices at which such series
of Debt Securities will, pursuant to any such provisions, be redeemed or
purchased, in whole or in part, and the other detailed terms and provisions
of such obligation; (16) any terms by which such series of Debt Securities
may be convertible into or exchanged for common stock or other securities,
including Debt Securities, of the Corporation; (17) whether such series of
Debt Securities is to be issuable in permanent global form; (18)
information with respect to book-entry procedures, if any; (19) the
currency or currency units of payment of principal of and premium, if any,
and interest on such series of Debt Securities, if other than U.S. dollars;
(20) any index or formula used to determine the amount of payments of
principal of and premium, if any, on such series of Debt Securities; (21)
any additional covenants and Events of Default (as described below) and the
remedies with respect thereto not currently set forth in the respective
Indenture; and (22) any other specific terms of such series of Debt
Securities.
The ability of NationsBank to make payments of principal of and
premium, if any, and interest on the Debt Securities may be affected by the
ability of the Banks to pay dividends. The ability of the Banks, as well as
of the Corporation, to pay dividends in the future currently is, and could
be further, influenced by bank regulatory requirements and capital
guidelines. See "Supervision and Regulation."
Neither the Senior Indenture nor the Subordinated Indenture contains
provisions that would provide protection to holders of Debt Securities
against a decline in credit quality resulting from takeovers,
recapitalizations, the incurrence of additional indebtedness or similar
restructurings by the Corporation. If credit quality declines as a result
of such an event, or otherwise, the ratings of any Debt Securities then
outstanding may be withdrawn or downgraded.
GLOBAL DEBT SECURITIES
If any Debt Securities of a series are issuable in global form, the
applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such global Debt Security
may exchange such interests for Debt Securities of such series and of like
tenor and principal amount in any authorized form and denomination.
Principal of and premium, if any, and interest on any global Debt Security
will be payable in the manner described in the applicable Prospectus
Supplement.
SUBORDINATION
The Subordinated Debt Securities are subordinate and subject, to the
extent and in the manner set forth in the Subordinated Indenture, in right
of payment to the prior payment in full of all Senior Indebtedness of the
Corporation. "Senior Indebtedness" is defined by the Subordinated Indenture
as any indebtedness for money borrowed (including all indebtedness of the
Corporation for borrowed and purchased money of the Corporation, all
obligations of the Corporation arising from off-balance sheet guarantees by
the Corporation and direct credit substitutes, and obligations of the
Corporation associated with derivative products such as interest and
foreign exchange rate contracts and commodity contracts) that is
outstanding on the date of execution of the Subordinated Indenture, or is
thereafter created, incurred or assumed, for the payment of which the
Corporation is at the time of determination responsible or liable as
obligor, guarantor or otherwise, and all deferrals, renewals, extensions
and refundings of any such indebtedness or obligations, other than the
Subordinated Debt Securities or any other indebtedness as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right
of payment to any other indebtedness of the Corporation.
No payment on account of principal of (and premium, if any, on) or
interest, if any, on the Subordinated Debt Securities shall be made, and no
Subordinated Debt Securities shall be purchased, either directly or
indirectly, by the Corporation or any of its subsidiaries, if any default
or event of default with respect to any Senior Indebtedness shall have
occurred and be continuing and the Corporation and the Subordinated Trustee
shall have received written notice thereof from the holders of at least 10
percent in principal amount of any kind or category of any Senior
Indebtedness (or the representative or representatives of such holders) or
the Subordinated Trustee shall have received written notice thereof from
the Corporation.
In the event that any Subordinated Debt Security is declared due and
payable before the date specified therein as the fixed date on which the
principal thereof is due and payable pursuant to the Subordinated
Indenture, or upon any payment or distribution of assets of the Corporation
of any kind or character to creditors upon any dissolution or winding up or
total or partial liquidation or reorganization of the Corporation, all
principal of (and premium, if any) and interest due or to become due upon
all Senior Indebtedness shall first be paid in full before the holders of
the Subordinated Debt Securities (the "Subordinated Debt Holders"), or the
Subordinated Trustee, shall be entitled to retain any
9
assets (other than shares of stock of the Corporation as reorganized or
readjusted or securities of the Corporation or any other corporation
provided for by a plan of reorganization or readjustment, the payment of
which is subordinated, at least to the same extent as the Subordinated Debt
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment) so
paid or distributed in respect of the Subordinated Debt Securities (for
principal or interest, if any). Upon such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets of the
Corporation of any kind or character, whether in cash, property or
securities (other than shares of stock of the Corporation as reorganized or
readjusted or securities of the Corporation or any other corporation
provided for by a plan of reorganization or readjustment, the payment of
which is subordinated, at least to the same extent as the Subordinated Debt
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment), to
which the Subordinated Debt Holders or the Subordinated Trustee would be
entitled, except for the subordination provisions of the Subordinated
Indenture, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment
or distribution, or by the Subordinated Debt Holders or the Subordinated
Trustee if received by them or it, directly to the holders of the Senior
Indebtedness (pro rata to each such holder on the basis of the respective
amounts of Senior Indebtedness held by such holder) or their
representatives, to the extent necessary to pay all Senior Indebtedness in
full, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Indebtedness, before any payment or distribution
is made to the Subordinated Debt Holders or to the Subordinated Trustee.
Subject to the payment in full of all Senior Indebtedness, the
Subordinated Debt Holders shall be subrogated (equally and ratably with the
holders of all indebtedness of the Corporation which, by its express terms,
ranks on a parity with the Subordinated Debt Securities and is entitled to
like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the
Corporation applicable to the Senior Indebtedness until the Subordinated
Debt Securities shall be paid in full.
SALE OR ISSUANCE OF CAPITAL STOCK OF BANKS
The Senior Indenture prohibits the issuance, sale or other disposition
of capital stock, or securities convertible into or options, warrants or
rights to acquire capital stock, of any Principal Subsidiary Bank (as
defined below) or of any subsidiary which owns shares of capital stock, or
securities convertible into or options, warrants or rights to acquire
capital stock, of any Principal Subsidiary Bank, with the following
exceptions: (a) sales of directors' qualifying shares; (b) sales or other
dispositions for fair market value, if, after giving effect to such
disposition and to conversion of any shares or securities convertible into
capital stock of a Principal Subsidiary Bank, the Corporation would own
directly or indirectly not less than 80 percent of each class of the
capital stock of such Principal Subsidiary Bank; (c) sales or other
dispositions made in compliance with an order of a court or regulatory
authority of competent jurisdiction; (d) any sale by a Principal Subsidiary
Bank (or any successor corporation thereto) of additional shares of its
capital stock to its shareholders at any price, so long as (i) prior to
such sale the Corporation owns, directly or indirectly, shares of the same
class and (ii) immediately after such sale, the Corporation owns, directly
or indirectly, at least as great a percentage of each class of capital
stock of such Principal Subsidiary Bank as it owned prior to such sale of
additional shares; (e) any sale by a Principal Subsidiary Bank (or any
successor corporation thereto) of additional securities convertible into
shares of its capital stock to its shareholders at any price, so long as
(i) prior to such sale the Corporation owns, directly or indirectly,
securities of the same class and (ii) immediately after such sale the
Corporation owns, directly or indirectly, at least as great a percentage of
each class of such securities convertible into shares of capital stock of
such Principal Subsidiary Bank as it owned prior to such sale of additional
securities; (f) any sale by a Principal Subsidiary Bank (or any successor
corporation thereto) of additional options, warrants or rights to subscribe
for or purchase shares of its capital stock to its shareholders at any
price, so long as (i) prior to such sale the Corporation owns, directly or
indirectly, options, warrants or rights, as the case may be, of the same
class and (ii) immediately after such sale, the Corporation owns, directly
or indirectly, at least as great a percentage of each class of such
options, warrants or rights, as the case may be, to subscribe for or
purchase shares of capital stock of such Principal Subsidiary Bank as it
owned prior to such sale of additional options, warrants or rights; or (g)
any issuance of shares of capital stock, or securities convertible into or
options, warrants or rights to subscribe for or purchase shares of capital
stock, of a Principal Subsidiary Bank or any subsidiary which owns shares
of capital stock, or securities convertible into or options, warrants or
rights to acquire capital stock, of any Principal Subsidiary Bank, to the
Corporation or a wholly owned subsidiary of the Corporation.
10
A Principal Subsidiary Bank is defined in the Senior Indenture as any
Subsidiary Bank (other than NationsBank of Delaware, National Association)
with total assets equal to more than 10 percent of the Corporation's total
consolidated assets.
WAIVER OF COVENANTS
Under the terms of either Indenture, compliance with certain covenants
or conditions of such Indenture may be waived by the holders of a majority
in principal amount of the Debt Securities of all series to be affected
thereby and at the time outstanding under that Indenture (including, in the
case of holders of Senior Debt Securities, the covenant described above).
MODIFICATION OF THE INDENTURES
Each Indenture contains provisions permitting the Corporation and the
applicable Trustee to modify such Indenture or the rights of the holders of
Debt Securities thereunder, with the consent of the holders of not less
than 66 2/3 percent in aggregate principal amount of the Debt Securities of
all series at the time outstanding under that Indenture and to be affected
thereby (voting as one class), except that no such modification shall (a)
extend (or, with respect to the Senior Indenture, otherwise change) the
fixed maturity of, reduce (or, with respect to the Senior Indenture,
otherwise change) the principal amount or redemption premium, if any, of,
or reduce (or, with respect to the Senior Indenture, otherwise change) the
rate of or extend (or, with respect to the Senior Indenture, otherwise
change) the time of payment of interest on, any Debt Security without the
consent of the holder of each security so affected, or (b) reduce the
aforesaid percentage of Debt Securities, the consent of holders of which is
required for any such modification, without the consent of the holders of
all Debt Securities then outstanding under that Indenture. Each Indenture
also provides that the Corporation and the respective Trustee may, from
time to time, execute supplemental indentures in certain limited
circumstances without the consent of any holders of outstanding Debt
Securities.
DEFAULTS AND RIGHTS OF ACCELERATION
An Event of Default is defined in the Subordinated Indenture as
bankruptcy of the Corporation under Federal bankruptcy laws. An Event of
Default is defined in the Senior Indenture as (i) the Corporation's failure
to pay principal (or premium, if any) when due, (ii) the Corporation's
failure to pay interest within 30 days after the same becomes due, (iii)
the Corporation's breach of its other covenants contained in the Senior
Debt Securities or the Senior Indenture, which breach is not cured within
90 days after written notice by the Senior Trustee or by the holders of at
least 25 percent in principal amount of the Senior Debt Securities then
outstanding under the Senior Indenture and affected thereby, and (iv)
certain events involving the bankruptcy, insolvency or liquidation of the
Corporation.
Each Indenture provides that if an Event of Default under the
respective Indenture occurs and is continuing, either the respective
Trustee or the holders of 25 percent in principal amount of the Debt
Securities then outstanding under that Indenture (or, with respect to an
Event of Default under the Senior Indenture due to a default in the payment
of principal (or premium, if any) or interest or performance of any other
covenant, the outstanding Debt Securities of all series affected by such
default) may declare the principal amount of all of such Debt Securities to
be due and payable immediately. Payment of principal of the Subordinated
Debt Securities may not be accelerated in the case of a default in the
payment of principal (or premium, if any) or interest or the performance of
any other covenant of the Corporation. Upon certain conditions a
declaration of an Event of Default may be annulled and past defaults may be
waived by the holders of a majority in principal amount of the Debt
Securities then outstanding (or of such series affected, as the case may
be).
COLLECTION OF INDEBTEDNESS, ETC.
Each Indenture also provides that in the event of a failure by the
Corporation to make payment of principal of or interest on the Debt
Securities (and, in the case of payment of interest, such failure to pay
shall have continued for 30 days), the Corporation will, upon demand of the
respective Trustee, pay to it, for the benefit of the holders of the Debt
Securities, the amount then due and payable on the Debt Securities for
principal and interest, with interest on the overdue principal and, to the
extent payment of interest shall be legally enforceable, upon overdue
installments of interest at the rate borne by the Debt Securities. Each
Indenture further provides that if the Corporation fails to pay such amount
forthwith upon such demand, the respective Trustee may, among other things,
institute a judicial proceeding for the collection thereof. However, each
Indenture provides that notwithstanding any other provision of the
Indenture, the holder of any Debt Security shall have the right to
institute suit for the enforcement of any payment of principal of and
11
interest on such Debt Security on the respective stated maturities
expressed in such Debt Security and that such right shall not be impaired
without the consent of such holder.
The holders of a majority in principal amount of the Debt Securities
then outstanding under an Indenture shall have the right to direct the
time, method and place of conducting any proceeding for any remedy
available to the Trustee under that Indenture, provided that the holders
shall have offered to the Trustee reasonable indemnity against expenses and
liabilities. Each Indenture requires the annual filing by the Corporation
with the respective Trustee of a certificate as to the absence of default
and as to compliance with the terms of that Indenture.
CONCERNING THE TRUSTEES
The Corporation and the Banks have from time to time maintained
deposit accounts and conducted other banking transactions with The Bank of
New York and BankAmerica National Trust Company and their affiliated
entities in the ordinary course of business. The Bank of New York also
serves as trustee for certain series of the Corporation's outstanding
subordinated indebtedness under other indentures.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for the
Corporation by Smith Helms Mulliss & Moore, Charlotte, North Carolina, and
for the Underwriters by Stroock & Stroock & Lavan, New York, New York. As
of the date of this Prospectus, certain members of Smith Helms Mulliss &
Moore beneficially owned approximately 25,000 shares of the Corporation's
Common Stock.
EXPERTS
The consolidated financial statements of the Corporation incorporated
in this Prospectus by reference to NationsBank's Annual Report on Form 10-K
for the year ended December 31, 1992 have been so incorporated in reliance
on the report of Price Waterhouse, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
12
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR BY THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT
Description of the 7 3/4% Notes................ S-2
Recent Developments............................ S-2
Capitalization................................. S-3
Ratios of Earnings to Fixed Charges............ S-4
Recent Financial Information................... S-5
Selected Financial Data........................ S-6
Underwriting................................... S-7
PROSPECTUS
Incorporation of Certain Documents by
Reference.................................... 2
Available Information.......................... 2
NationsBank Corporation........................ 3
Supervision and Regulation..................... 4
Use of Proceeds................................ 5
Ratios of Earnings to Fixed Charges............ 6
Plan of Distribution........................... 6
Description of Debt Securities................. 7
Legal Opinions................................. 12
Experts........................................ 12
$300,000,000
NATIONSBANK(Register mark)
7 3/4% SUBORDINATED NOTES,
DUE 2004
PROSPECTUS SUPPLEMENT
NATIONSBANC
CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
CHEMICAL SECURITIES INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
AUGUST 1, 1994