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