7 FOR IMMEDIATE RELEASE NATIONSBANK EARNED $2.5 BILLION IN OPERATING PROFITS IN 1996, UP 26% CHARLOTTE, NC, Jan. 13, 1997 -- With solid revenue growth outpacing expense growth in 1996, NationsBank generated a 26-percent increase in 1996 operating profits to $2.45 billion. "During 1996, we continued to improve our performance for both customers and shareholders," said Hugh L. McColl Jr., chief executive officer. "We implemented programs, products and systems over the past year that enable us to more effectively meet customers' needs. "At the same time, we focused on using our capital wisely on behalf of our shareholders. This focus has been visible in our acquisitions, the shifting of capital away from less profitable businesses, the reduction of low-yielding assets and the aggressive repurchases of common stock. These actions, combined with excellent financial performance, were rewarded with a 40-percent increase in our stock price in 1996." Earnings Highlights (1996 compared to 1995) o Revenues (net interest income plus noninterest income) grew 17 percent to more than $10 billion o Operating earnings per share rose 16 percent to $8.26 o Operating return on average common shareholders' equity increased more than 150 basis points to 18.53 percent Efficiency ratio improved 351 basis points to 56.3 percent Capital ratios strengthened, with the total equity to assets ratio rising to 7.38 percent from 6.83 percent NationsBank earned $2.45 billion in 1996, before a merger charge primarily related to Bank South. This represented a 26-percent increase over the $1.95 billion earned in 1995. Operating earnings per common share for 1996 rose 16 percent to $8.26, from $7.13 per common share in 1995. Operating return on common shareholders' equity rose to 18.53 percent in 1996, up from 17.01 percent last year. 1 Cash basis earnings (operating net income excluding amortization of intangibles) increased 25 percent to $2.58 billion in 1996, equaling $8.69 per common share. As a result of the merger-related, after-tax charge of $77 million, reported net income and earnings per share were $2.38 billion and $8.00, respectively, in 1996. For the fourth quarter of 1996, net income rose 24 percent to $632 million, compared to $510 million in the fourth quarter of 1995. Earnings per common share in the fourth quarter of 1996 increased 17 percent to $2.19, from $1.87 per common share in 1995. 1996 results include the impact of several acquisitions and loan securitizations completed primarily in 1996 and at the end of 1995. Net Interest Income In 1996, average loans and leases grew 12 percent over year-earlier levels to $122 billion. This increase was driven primarily by a 19-percent increase in average consumer loans. This loan growth, combined with a taxable-equivalent 29-basis-point increase in the net interest yield, led to a 16-percent increase in net interest income to $6.42 billion in 1996. The continuing improvement in the net interest yield to 3.62 percent from 3.33 percent in 1995 was primarily driven by ongoing initiatives focused on balance sheet efficiency and discipline. Noninterest Income Noninterest income rose 18 percent to $3.65 billion in 1996. The year-over-year increase was driven by higher income from investment banking, deposit accounts and mortgage-related activities. Efficiency Revenue growth outpaced expense growth in 1996, improving the efficiency ratio 351 basis points to 56.3 percent, compared to 59.8 percent in 1995. This improvement reflected continued productivity increases and the rationalization of business units. Credit Quality Total nonperforming assets were $1.04 billion on Dec. 31, 1996, or .85 percent of net loans, leases and factored receivables and other real estate owned. This compared to $853 million, or .73 percent of net levels on Dec. 31, 1995. The allowance for credit losses totaled $2.32 billion at year-end, equaling 260 percent of nonperforming loans, compared to $2.16 billion, or 306 percent one year earlier. In 1996, net charge-offs were $598 million. This equaled .48 percent of average net loans, leases and factored receivables, compared to .38 percent of average levels in 1995. Capital Strength Total shareholders' equity climbed to $13.7 billion on Dec. 31, 1996, up 7 percent from levels one year ago. This represented 7.38 percent of period-end assets, compared to 6.83 percent at Dec. 31, 1995. Book value per common share rose to $47.38 at the end of the 1996. NationsBank repurchased approximately 17 million of its common shares in 1996. NationsBank Corporation, headquartered in Charlotte, N.C., is a bank holding company that provides financial products and services nationally and internationally to individuals, businesses, corporations, institutional investors and government agencies. Following its Jan. 7, 1997 merger with Boatmen's Bancshares Inc. of St. Louis, Mo., NationsBank has primary retail and commercial banking operations in 16 states and the District of Columbia. On a pro forma combined basis, NationsBank had total assets of approximately $227 billion at year-end. NATIONSBANK CORPORATION FINANCIAL HIGHLIGHTS THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31 ENDED DECEMBER 31 1996 1995 1996 1995 FINANCIAL OPERATING SUMMARY (In millions except per-share data) Net income $632 $510 $2,452 $1,950 Earnings per common share 2.19 1.87 8.26 7.13 Fully diluted earnings per common share 2.14 1.85 8.10 7.04 Cash basis earnings (1) 669 539 2,580 2,069 Cash basis earnings per share 2.31 1.98 8.69 7.56 Average common shares issued 287.173 271.558 295.108 272.480 Average fully diluted common shares issued 294.591 276.009 301.765 277.134 Price per share of common stock at period end $97.750 $69.625 $97.750 $69.625 Common dividends paid 189 158 707 567 Common dividends paid per share .66 .58 2.40 2.08 Preferred dividends paid 4 2 15 8 OPERATING EARNINGS SUMMARY (Taxable-equivalent in millions) Net interest income $1,612 $1,438 $6,423 $5,560 Provision for credit losses (150) (142) (605) (382) Gains on sales of securities 33 21 67 29 Noninterest income 958 846 3,646 3,078 Other real estate owned expense (7) (8) (20) (18) Other noninterest expense (1,466) (1,342) (5,665) (5,163) Income before income taxes 980 813 3,846 3,104 Income taxes - including FTE adjustment* 348 303 1,394 1,154 Net income $632 $510 $2,452 $1,950 *FTE adjustment $22 $25 $94 $113 AVERAGE BALANCE SHEET SUMMARY (In billions) Loans and leases, net $120.892 $114.604 $122.268 $109.487 Securities held for investment 2.585 12.945 3.442 15.521 Securities available for sale 11.540 10.689 17.295 10.272 Total securities 14.125 23.634 20.737 25.793 Earning assets 171.249 169.334 177.400 167.004 Total assets 194.321 191.693 200.885 188.547 Noninterest-bearing deposits 23.971 21.908 23.990 21.128 Interest-bearing deposits 81.794 76.694 83.595 78.150 Total deposits 105.765 98.602 107.585 99.278 Shareholders' equity 13.224 11.903 13.263 11.451 Common shareholders' equity 13.108 11.866 13.149 11.415 OTHER OPERATING FINANCIAL DATA Net interest yield 3.75% 3.38% 3.62% 3.33% Return on average assets 1.29 1.06 1.22 1.03 Return on average tangible assets 1.38 1.12 1.30 1.11 Return on average common shareholders' equity 19.06 16.98 18.53 17.01 Return on average tangible common shareholders' equity 23.81 20.46 22.80 20.74 Total equity to assets ratio (period end) 7.38 6.83 7.38 6.83 Gross charge-offs (in millions) $208 $211 $836 $636 Net charge-offs (in millions) 151 156 598 421 % of average loans, leases and factored accounts receivable, net .49% .53% .48% .38% Efficiency ratio 57.11 58.73 56.26 59.77 REPORTED RESULTS(Operating results including merger-related charge) Net income $632 $510 $2,375 $1,950 Earnings per common share 2.19 1.87 8.00 7.13 Fully diluted earnings per common share 2.14 1.85 7.85 7.04 Return on average common shareholders' equity 19.06 16.98 17.95 17.01 (1) Cash basis earnings equal net income excluding amortization of intangibles. DECEMBER 31 1996 1995 BALANCE SHEET SUMMARY (In billions) Loans and leases, net $121.583 $116.042 Securities held for investment 2.110 4.432 Securities available for sale 12.277 19.415 Total securities 14.387 23.847 Earning assets 165.276 167.945 Factored accounts receivable 1.047 .991 Mortgage servicing rights .946 .707 Goodwill, core deposit and other intangibles 2.030 1.514 Total assets 185.794 187.298 Noninterest-bearing deposits 25.738 23.414 Interest-bearing deposits 80.760 77.277 Total deposits 106.498 100.691 Shareholders' equity 13.709 12.801 Common shareholders' equity 13.586 12.759 Per common share (not in billions) 47.38 46.52 RISK-BASED CAPITAL Tier 1 capital $12.384 $10.799 Tier 1 capital ratio 7.76% 7.24% Total capital $20.208 $17.264 Total capital ratio 12.66% 11.58% Leverage ratio 7.09% 6.27% Common shares issued (in millions) 286.746 274.269 Allowance for credit losses $2.315 $2.163 Allowance for credit losses as % of net loans, leases and factored accounts receivable 1.89% 1.85% Allowance for credit losses as % of nonperforming loans 260.02 306.49 Nonperforming loans $.890 $.706 Nonperforming assets 1.043 .853 Nonperforming assets as % of: Total assets .56% .46% Net loans, leases, factored accounts receivable and other real estate owned .85% .73% OTHER DATA Full-time equivalent headcount 62,971 58,322 Banking centers 1,979 1,833 ATMs 3,948 2,292 6 BUSINESS UNIT RESULTS - Three months ended December 31, 1996 (in millions) Return on Average Loans Total Revenue Net Income Equity and Leases,net General Bank $1,786 70% $373 59% 21% $76,728 63% Global Finance 597 23 186 29 19 36,511 30 Financial Services 173 7 45 7 15 8,282 7