-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DO4RyW2TOvRXF8/lV/rNz5TGW/jmW05Nld020D3ECEkOc7ci8Pr8xwCkQzmSjKpj JtUW4cTn7Z2ZB+OvoD0hQw== 0000950149-94-000165.txt : 19940815 0000950149-94-000165.hdr.sgml : 19940815 ACCESSION NUMBER: 0000950149-94-000165 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940811 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKAMERICA CORP CENTRAL INDEX KEY: 0000009672 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 941681731 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07377 FILM NUMBER: 94543197 BUSINESS ADDRESS: STREET 1: BANK OF AMERICA CTR STREET 2: 555 CALIFORNIA ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156223530 MAIL ADDRESS: STREET 1: 555 CALIFORNIA STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104 8-K 1 FORM 8-K DATED AUGUST 11, 1994 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 August 11, 1994 ------------------------------------------ (Date of earliest event reported) BankAmerica Corporation ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-7377 94-1681731 - ---------------------------- --------------- ------------------------ (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification Number)
Bank of America Center 555 California Street San Francisco, California 94104 - ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code)
415-622-3530 ---------------------------------------------------- (Registrant's telephone number, including area code) 2 Item 5. Other Events. As previously reported, BankAmerica Corporation ("BAC") and Continental Bank Corporation ("CBC") have entered into a Restated Agreement and Plan of Merger dated as of January 27, 1994 (the "Agreement"), pursuant to which CBC will be merged with and into BAC in a transaction in which BAC will be the surviving entity (such transaction, the "Merger"). The following pro forma combined financial information is set forth in Exhibit 99.a: BankAmerica Corporation and Continental Bank Corporation. (1) BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries Pro Forma Combined Balance Sheet at June 30, 1994 (unaudited). (2) BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries Pro Forma Combined Statement of Operations for the six months ended June 30, 1994 (unaudited). (3) BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries Pro Forma Combined Statement of Operations for the year ended December 31, 1993 (unaudited). (4) BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries Notes to Pro Forma Combined Financial Information (unaudited). Also, set forth in Exhibit 99.b are historical and pro forma combined ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred stock dividends for the six months ended June 30, 1994 and for the year ended December 31, 1993 (unaudited). Portions of CBC's quarterly report on Form 10-Q for the quarter ended June 30, 1994 previously filed with the Securities and Exchange Commission are hereby incorporated by reference in this Current Report at Exhibit 99.c. The following unaudited consolidated financial statements and accompanying notes of CBC and its subsidiaries are incorporated: 1 3 Continental Bank Corporation. (1) Consolidated Balance Sheet - June 30, 1994. (2) Consolidated Income Statement - three months and six months ended June 30, 1994. (3) Consolidated Statement of Cash Flows - six months ended June 30, 1994. (4) Consolidated Statement of Changes in Stockholders' Equity - six months ended June 30, 1994. (5) Notes to Consolidated Financial Statements (to the extent applicable to the foregoing financial statements).
Information relating to CBC and its subsidiaries has been supplied by CBC and not by BAC, and BAC does not warrant the accuracy or completeness of such information. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired Not applicable. (b) Pro Forma Financial Information Not applicable. (c) Exhibits The following exhibits are filed with this Current Report, except for Exhibit 99.c, which is incorporated by reference from CBC's filing as indicated.
Exhibit Number Description -------------- ----------- 99.a. Pro Forma Combined Financial Information for BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries (unaudited). 99.b. BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries Historical and Pro Forma Combined Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends (unaudited). 99.c. The following unaudited financial statements of CBC and its subsidiaries and accompanying notes
2 4 are incorporated by reference from CBC's quarterly report on Form 10-Q for the quarter ended June 30, 1994 (File No. 1-5872): Consolidated Balance Sheet - June 30, 1994, Consolidated Income Statement for the three months and six months ended June 30, 1994, Consolidated Statement of Cash Flows and Consolidated Statement of Changes in Stockholders' Equity for the six months ended June 30, 1994; Notes to Consolidated Financial Statements (to the extent applicable to the foregoing financial statements). (Portions of CBC's Form 10-Q not specifically incorporated by reference are not required for this Current Report and are not incorporated by reference herein).
3 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANKAMERICA CORPORATION ____________________________ (Registrant) /s/ James H. Williams Date: August 11, 1994 By: ________________________ James H. Williams Group Executive Vice President 4 6 EXHIBIT INDEX*
Exhibit Number Description -------------- ----------- 99.a. Pro Forma Combined Financial Information for BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries (unaudited). 99.b. BankAmerica Corporation and Subsidiaries and Continental Bank Corporation and Subsidiaries Historical and Pro Forma Combined Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends (unaudited). 99.c. The following unaudited financial statements of CBC and its subsidiaries and accompanying notes are incorporated by reference from CBC's quarterly report on Form 10-Q for the quarter ended June 30, 1994 (File No. 1-5872): Consolidated Balance Sheet - June 30, 1994, Consolidated Income Statement for the three months and six months ended June 30, 1994, Consolidated Statement of Cash Flows and Consolidated Statement of Changes in Stockholders' Equity for the six months ended June 30, 1994; Notes to Consolidated Financial Statements (to the extent applicable to the foregoing financial statements). (Portions of CBC's Form 10-Q not specifically incorporated by reference are not required for this Current Report and are not incorporated by reference herein.)
__________________________________ * These exhibits are filed with this Current Report, except for Exhibit 99.c, which is incorporated by reference from CBC's filing as indicated. 5 EX-99.A 2 PRO FORMA COMBINED FINANCIAL INFORMATION 1 Exhibit 99.a PRO FORMA COMBINED FINANCIAL INFORMATION On January 27, 1994, BankAmerica Corporation ("BAC") and Continental Bank Corporation ("Continental") entered into a definitive agreement to merge (the "Merger"), as more fully explained in Note A of the Notes to Pro Forma Combined Financial Information. The following unaudited Pro Forma Combined Balance Sheet as of June 30, 1994 combines the historical consolidated balance sheets of BAC and subsidiaries and Continental and subsidiaries as if the Merger had been effective on June 30, 1994 after giving effect to the purchase accounting adjustments described in the Notes to Pro Forma Combined Financial Information. The unaudited Pro Forma Combined Statements of Operations present the combined results of operations of BAC and subsidiaries and Continental and subsidiaries for the six months ended June 30, 1994 and for the year ended December 31, 1993 as if the Merger had been effective on January 1, 1993 after giving effect to the purchase accounting adjustments described in the accompanying notes. These pro forma combined financial statements do not give effect to the proposed BAC acquisitions of Liberty Bank and United Mortgage Holding Company and subsidiaries as these transactions were not considered significant to BAC and subsidiaries. The unaudited pro forma combined financial statements and accompanying notes reflect the application of the purchase method of accounting. Under this method of accounting, the purchase price will be allocated to the assets acquired and liabilities assumed based on their estimated fair values at the effective time of the Merger (the "Effective Time"). As described in the accompanying notes, estimates of the fair values of Continental and subsidiaries' assets and liabilities have been combined with the recorded values of the assets and liabilities of BAC and subsidiaries. However, changes to the adjustments included in the unaudited pro forma combined financial statements are expected as evaluations of assets and liabilities are completed and as additional information becomes available. In addition, the results of operations of Continental subsequent to June 30, 1994 will affect the allocation of the purchase price. Accordingly, the final pro forma combined amounts will differ from those set forth in the unaudited pro forma combined financial statements. The unaudited pro forma combined financial statements are intended for informational purposes only and are not necessarily indicative of the future financial position or future results of operations of the combined company, or of the financial position or results of operations of the combined company that would have actually occurred had the Merger been in effect as of the date or for the periods presented. These unaudited pro forma combined financial statements and the accompanying notes should be read in conjunction with and are qualified in their entirety by the consolidated financial statements, including accompanying notes, of BAC in its Annual Report on Form 10-K for the year ended December 31, 1993 and in its quarterly report on Form 10-Q for the quarter ended June 30, 1994. These unaudited pro forma combined financial statements and the accompanying notes should also be read in conjunction with and are also qualified in their entirety by the consolidated financial statements, including the accompanying notes, of Continental in its Annual Report on Form 10-K for the year ended December 31, 1993 and in its quarterly report on Form 10-Q for the quarter ended June 30, 1994. Portions of Continental's quarterly report on Form 10-Q for the quarter ended June 30, 1994 are incorporated by reference and filed as part of BAC's report on Form 8-K, which includes this Exhibit, dated August 11, 1994. 1 2 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES PRO FORMA COMBINED BALANCE SHEET JUNE 30, 1994 (UNAUDITED)
PRO FORMA ADJUSTMENTS DEBIT PRO FORMA (IN MILLIONS) BAC CONTINENTAL (CREDIT) COMBINED -------- ----------- ----------- --------- ASSETS Cash and due from banks................ $ 10,137 $ 1,833 $ (948)(A) $ 11,022 Available-for-sale and held-to-maturity securities........................... 20,672 1,278 (4)(C) 21,946 Loans.................................. 124,874 11,771 (59)(D) 136,586 Less: Allowance for credit losses...... 3,414 312 -- (E) 3,726 -------- ------- ------- -------- Net loans............................ 121,460 11,459 (59) 132,860 Goodwill, net.......................... 3,886 -- -- 3,886 Identifiable intangibles, net.......... 2,078 -- -- 2,078 Unallocated portion of purchase price................................ -- -- 616 (B) 616 Other assets........................... 39,310 7,073 218 (F) 46,601 -------- ------- ------- -------- Total Assets.................... $197,543 $21,643 $ (177) $219,009 -------- ------- ------- -------- -------- ------- ------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Deposits............................... $142,035 $12,703 $ (97)(G) $154,835 Other liabilities...................... 24,198 5,771 (263)(H) 30,232 Long-term debt and subordinated capital notes................................ 14,217 1,189 (65)(I) 15,471 -------- ------- ------- -------- Total Liabilities.................... 180,450 19,663 (425) 200,538 STOCKHOLDERS' EQUITY Preferred stock........................ 2,979 389 389 (J) (389)(J) 3,368 Common stock........................... 561 216 216 (J) (15)(J) 576 Additional paid-in capital............. 7,150 1,000 1,000 (J) (427)(J) (26)(J) (39)(J) 7,642 Retained earnings...................... 7,131 461 461 (J) 18 (K) 7,113 Net unrealized losses on available- for-sale securities, net of income tax effect.................... (210) (23) (23)(J) (210) Common stock in treasury, at cost...... (518) (58) (58)(J) (500)(J) (18) Loans to ESOP trust.................... -- (5) (5)(J) -- -------- ------- ------- -------- Total stockholders' equity........... 17,093 1,980 602 18,471 -------- ------- ------- -------- Total Liabilities and Stockholders' Equity......... $197,543 $21,643 $ 177 $219,009 -------- ------- ------- -------- -------- ------- ------- --------
See notes to unaudited Pro Forma Combined Financial Information. 2 3 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
PRO FORMA ADJUSTMENTS DEBIT PRO FORMA (DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) BAC CONTINENTAL (CREDIT) COMBINED ------- ----------- ----------- --------- INTEREST INCOME: Loans, including fees...................................... $4,500 $375 $ (7)(D) $4,882 Trading account assets..................................... 233 37 -- 270 Available-for-sale and held-to-maturity securities......... 700 38 (1)(C) 739 Other...................................................... 319 121 -- 440 ------ ---- ---- ------ Total interest income.................................... 5,752 571 (8) 6,331 INTEREST EXPENSE: Deposits................................................... 1,450 194 (7)(G) 1,637 Long-term debt and subordinated capital notes.............. 374 37 (7)(I) 404 Other...................................................... 302 114 -- 416 ------ ---- ---- ------ Total interest expense................................... 2,126 345 (14) 2,457 ------ ---- ---- ------ Net interest income...................................... 3,626 226 (22) 3,874 Provision for credit losses................................ 250 50 -- 300 ------ ---- ---- ------ Net interest income after provision for credit losses.......................................... 3,376 176 (22) 3,574 NONINTEREST INCOME: Deposit account fees....................................... 584 -- -- 584 Credit card fees........................................... 167 -- -- 167 Trust fees................................................. 133 52 -- 185 Other fees and commissions................................. 528 98 -- 626 Trading income............................................. 180 33 -- 213 Other income............................................... 429 110 -- 539 ------ ---- ---- ------ Total noninterest income................................. 2,021 293 -- 2,314 NONINTEREST EXPENSE: Salaries................................................... 1,410 132 -- 1,542 Employee benefits.......................................... 338 28 -- 366 Occupancy.................................................. 332 24 (1)(F) (4)(H) 351 Equipment.................................................. 284 10 -- 294 Amortization of intangibles................................ 204 -- 20(B) 224 Communications............................................. 158 -- -- 158 Regulatory fees and related expenses....................... 142 -- -- 142 Professional services...................................... 111 -- -- 111 Other expense.............................................. 626 126 -- 752 ------ ---- ---- ------ Total noninterest expense................................ 3,605 320 15 3,940 ------ ---- ---- ------ Income from continuing operations before income taxes........................................... 1,792 149 (7) 1,948 Provision for income taxes................................. 754 9 50(L) 813 ------ ---- ---- ------ Income from continuing operations............. $1,038 $140 $ 43 $1,135 ------ ---- ---- ------ ------ ---- ---- ------ EARNINGS PER SHARE(M) Average number of shares (in thousands): Primary.................................................. 353,645 379,872 Fully diluted............................................ 359,125 385,352 Income from continuing operations per common share Primary.................................................. $2.59 $2.62(M) Fully diluted............................................ 2.58 2.59(M)
See notes to unaudited Pro Forma Combined Financial Information. 3 4 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993 (UNAUDITED)
PRO FORMA ADJUSTMENTS DEBIT PRO FORMA (DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) BAC CONTINENTAL (CREDIT) COMBINED ------- ----------- ----------- --------- INTEREST INCOME: Loans, including fees...................................... $9,463 $ 766 $ (8) (D) $10,237 Trading account assets..................................... 372 73 -- 445 Securities available for sale and securities held for investment........................................... 1,389 66 (2)(C) 1,457 Other...................................................... 403 216 -- 619 ------ ------- ---- ------- Total interest income.................................... 11,627 1,121 (10) 12,758 INTEREST EXPENSE: Deposits................................................... 2,971 391 (37)(G) 3,325 Long-term debt and subordinated capital notes.............. 840 78 (9)(I) 909 Other...................................................... 375 188 -- 563 ------ ------- ---- ------- Total interest expense................................... 4,186 657 (46) 4,797 ------ ------ ---- ------- Net interest income...................................... 7,441 464 (56) 7,961 Provision for credit losses................................ 803 181 -- 984 ------ ------ ---- ------- Net interest income after provision for credit losses.......................................... 6,638 283 (56) 6,977 NONINTEREST INCOME: Deposit account fees....................................... 1,198 -- -- 1,198 Credit card fees........................................... 354 -- -- 354 Trust fees................................................. 294 98 -- 392 Other fees and commissions................................. 1,083 194 -- 1,277 Trading income............................................. 569 102 -- 671 Other income............................................... 775 246 -- 1,021 ------ ------ ---- ------- Total noninterest income................................. 4,273 640 -- 4,913 NONINTEREST EXPENSE: Salaries................................................... 2,886 259 -- 3,145 Employee benefits.......................................... 573 54 -- 627 Occupancy.................................................. 684 50 (2)(F) (2)(H) 730 Equipment.................................................. 610 19 -- 629 Amortization of intangibles................................ 421 -- 43 (B) 464 Communications............................................. 330 -- -- 330 Regulatory fees and related expenses....................... 309 -- -- 309 Professional services...................................... 268 -- -- 268 Other expense.............................................. 1,402 301 -- 1,703 ------ ------ ---- ------- Total noninterest expense................................ 7,483 683 39 8,205 ------ ------ ---- ------- Income from continuing operations before income taxes........................................... 3,428 240 (17) 3,685 Provision for (benefit from) income taxes.................. 1,474 (18) 121 (L) 1,577 ------ ------ ---- ------- Income from continuing operations............. $1,954 $ 258 $104 $ 2,108 ------ ------ ---- ------- ------ ------ ---- ------- EARNINGS PER SHARE(M) Average number of shares (in thousands): Primary.................................................. 357,680 383,907 Fully diluted............................................ 363,244 389,471 Income from continuing operations per common share Primary.................................................. $4.79 $4.77(M) Fully diluted............................................ 4.76 4.71(M)
See notes to unaudited Pro Forma Combined Financial Information. 4 5 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION NOTE A: BASIS OF PRESENTATION The Restated Agreement and Plan of Merger dated as of January 27, 1994 (the "Merger Agreement") provides that, at the Effective Time and subject to the election and allocation procedures provided for therein, each share of Continental common stock, par value $4 per share ("Continental Common Stock") outstanding at the Effective Time (other than shares for which appraisal rights are perfected), subject to certain exceptions, will be converted into either a number of shares of common stock of BAC, par value $1.5625 per share (the "Stock Consideration") or an amount in cash without interest (the "Cash Consideration"). Under the Merger Agreement, the aggregate number of shares of common stock of BAC, par value $1.5625 per share (the "BAC Common Stock") to be issued in the Merger (the "Stock Amount") is equal to the product of (x) 0.8152 and (y) 51% of the total number of shares of Continental Common Stock outstanding on the tenth calendar day prior to the anticipated Effective Time (the "Determination Date"). The Merger Agreement also provides that if, at the Effective Time of the Merger, more shares of Continental Common Stock are outstanding than are contemplated to be outstanding or subject to option pursuant to the representations and warranties of Continental in the Merger Agreement, then, at BAC's election, the Stock Amount, the Cash Consideration and the Stock Consideration will be adjusted downward to reflect the greater number of shares outstanding. In the unaudited Pro Forma Combined Balance Sheet, the Stock Amount is assumed to be approximately 21,450,000 shares of BAC Common Stock which, in turn, assumes that the number of shares outstanding as of the Determination Date is the same as the approximately 51,600,000 shares of Continental Common Stock outstanding as of June 30, 1994. Under the Merger Agreement, in addition to the impact of the number of shares of Continental Common Stock outstanding or subject to option at the Determination Date, the Stock Amount (i) will not change if the average of the closing prices per share of BAC Common Stock as reported on the New York Stock Exchange, Inc. ("NYSE") composite transactions tape for the ten consecutive days on which shares of BAC Common Stock are traded on the NYSE ending on the Determination Date (such average price, the "Final BAC Stock Price") is between $36.16 (the "Floor Price") and $55.84 (the "Ceiling Price"), (ii) will be adjusted downward if the Final BAC Stock Price is greater than the Ceiling Price, and (iii) is subject to possible adjustment upward if the Final BAC Stock Price is less than the Floor Price and if BAC elects to make the per share stock and cash adjustments set forth in the Merger Agreement. Under the Merger Agreement, the aggregate cash payable by BAC to holders of record of Continental Common Stock ("Continental Common Stockholders") pursuant to the Merger will equal a fixed amount regardless of the Final BAC Stock Price (except for immaterial changes due to rounding) and will vary only according to the total number of shares of Continental Common Stock outstanding at the Determination Date. For example, if there are 51,600,000 shares of Continental Common Stock outstanding at the Determination Date, then the aggregate cash payable by BAC to Continental Common Stockholders who are to receive cash will equal approximately $948 million and this will not change (except for immaterial changes due to rounding) regardless of changes in the Final BAC Stock Price. Under the Merger Agreement, if the Final BAC Stock Price is less than the Floor Price, Continental will have the ability to terminate the Merger Agreement prior to the Effective Time unless BAC, within five days of Continental's election to terminate the Merger Agreement, exercises its option to adjust upward the Stock Consideration, the Cash Consideration and the Stock Amount so that the Stock Amount will be increased and the Stock Consideration and the Cash Consideration will be at least equal in value to the per share stock and cash consideration that would have been received if the Final BAC Stock Price had been equal to the Floor Price. This adjustment will only be made, at BAC's option, if the Final BAC Stock Price is less than the Floor Price, and may be made whether or not Continental has exercised its rights to terminate the Merger Agreement. If BAC elects to increase the Cash Consideration, the Stock Consideration and the Stock Amount, then such right of Continental to terminate the Merger Agreement will be extinguished. Under the Merger Agreement, if the Final BAC Stock Price is greater than the Ceiling Price, then the Cash Consideration, the Stock Consideration and the Stock Amount will be decreased so that the value of the per share cash and stock consideration that would be receivable by Continental Common Stockholders will be the same as if the Final BAC Stock Price were equal to the Ceiling Price. Under the Merger Agreement, such downward adjustment in the Cash Consideration, the Stock Consideration and the Stock Amount will automatically be made if the Final BAC Stock Price is greater than the Ceiling Price. At the Effective Time, subject to certain exceptions, each outstanding share of Continental Adjustable Rate Preferred Stock, Series 1, $50 stated value (the "Continental Series 1 Preferred Stock"), and Continental Adjustable Rate Cumulative Preferred Stock, Series 2, $100 stated value (the "Continental Series 2 Preferred Stock," and collectively with the Continental Series 1 Preferred Stock, the "Continental Preferred Stock") 5 6 NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED) will be converted into one share of BAC Adjustable Rate Preferred Stock, Series 1, $50 stated value (the "BAC Series 1 Preferred Stock") and one share of BAC Adjustable Rate Cumulative Preferred Stock, Series 2, $100 stated value (the "BAC Series 2 Preferred Stock," and together with the BAC Series 1 Preferred Stock, the "BAC Mirror Preferred"), respectively. The BAC Series 1 Preferred Stock and the BAC Series 2 Preferred Stock will have substantially the same terms as the Continental Series 1 Preferred Stock and the Continental Series 2 Preferred Stock, respectively. BAC currently anticipates that, after the Effective Time, it may redeem all or a portion of the BAC Mirror Preferred. The decision to redeem, and the amount of BAC Mirror Preferred to be so redeemed, are dependent upon receipt of regulatory approval, interest rates at the time such decision is made and the aggregate amount of cash and the aggregate value of shares of BAC Common Stock to be issued in the Merger, among other things. The following summarizes the total purchase price:
(IN MILLIONS, EXCEPT PER SHARE DATA) Total market price of the Stock Amount (based on market price per share of $45.75 of BAC Common Stock on January 27, 1994)........... $ 981 Estimated cash to be paid..................... 948 Estimated fair value of BAC Mirror Preferred................................... 415 Estimated BAC legal, investment banking and issuance costs.............................. 5 ------- Total purchase price................ $2,349 ------- -------
The closing of the Merger is subject to the satisfaction of certain conditions set forth in the Merger Agreement. The parties presently anticipate that the closing will take place on or about August 31, 1994. The Merger will be accounted for by BAC under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16, "Business Combinations" ("APB No. 16"), and accordingly, this method has been applied in the unaudited pro forma combined financial statements. Under this method of accounting, the purchase price will be allocated to assets acquired and liabilities assumed based on their estimated fair values at the Effective Time. Estimates of the fair values of Continental and subsidiaries' assets and liabilities as of June 30, 1994 have been combined with the recorded June 30, 1994 values of the assets and liabilities of BAC and subsidiaries in the unaudited pro forma combined financial statements. However, purchase accounting adjustment amounts included in these unaudited pro forma combined financial statements will change as additional information becomes available. Based upon the available information, management of BAC currently estimates that the combined company's results of operations in any of the next five years will not be significantly affected as a result of purchase accounting. The unaudited Pro Forma Combined Balance Sheet is based on the consolidated balance sheet of BAC and subsidiaries and on the consolidated balance sheet of Continental and subsidiaries as of June 30, 1994. The unaudited Pro Forma Combined Statements of Operations are based on the consolidated statements of operations of BAC and subsidiaries and of Continental and subsidiaries for the six months ended June 30, 1994 and for the year ended December 31, 1993. In addition, the unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 1993 presents Continental's income before cumulative effect of accounting change for income taxes. 6 7 NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED) NOTE B: ALLOCATION OF THE PURCHASE PRICE The purchase price has been allocated as described in the table below.
(IN MILLIONS) Net assets of Continental at June 30, 1994...................... $1,980 Increase (decrease) to Continental's net asset value at June 30, 1994 as a result of estimated fair value adjustments: Available-for-sale and held-to-maturity securities......... (4) Loans...................................................... (59) Other assets............................................... 206 Deposits................................................... (97) Other liabilities.......................................... (204) Long-term debt and subordinated capital notes.............. (65) ------- Total estimated fair value adjustments................ (223) Accrual of liability for Continental Merger-related costs....... (24) ------- Total preliminary allocation of the purchase price.... 1,733 Unallocated portion of the purchase price....................... 616 ------- Total purchase price.................................. $2,349 ------- -------
Each of the allocations in the table above is described in more detail in the following Notes to Pro Forma Combined Financial Information. As explained in Note A, purchase accounting adjustments will change as additional information becomes available, which will have an effect on the ultimate allocation of the purchase price. Accordingly, the allocation of the purchase price has not been finalized and the unallocated portion of the purchase price of $616 million has been separately disclosed in the unaudited Pro Forma Combined Balance Sheet. In addition, the unallocated portion of the purchase price will change as a result of Continental's results of operations for periods subsequent to June 30, 1994. When the ultimate allocation of the purchase price is made, identifiable intangible assets and goodwill will be recorded and the unallocated portion of the purchase price will be eliminated from the unaudited Pro Forma Combined Balance Sheet. For purposes of calculating the amortization of identifiable intangibles and goodwill, BAC's management has preliminarily estimated that the amount of identifiable intangibles, including customer list intangibles, will be approximately $200 million. The remaining amount of the current unallocated portion of the purchase price has been considered goodwill. Amortization expense of $20 million for the six months ended June 30, 1994 and $43 million for the year ended December 31, 1993 related to the unallocated portion of the purchase price has been included in the unaudited Pro Forma Combined Statements of Operations. These amounts were calculated based on an accelerated method of amortization over a 10-year life for the estimated identifiable intangible balance and on the straight-line method of amortization over a 25-year life for the estimated goodwill balance. However, the final amounts and periods of benefit of intangible assets, as well as the final methods of amortization, have not been determined. An increase in the amount of the unallocated portion of the purchase price will result in a greater final allocation to goodwill, which will have a corresponding impact on amortization expense and will reduce tangible common equity. Accordingly, pro forma combined income from continuing operations for the six months ended June 30, 1994 and for the year ended December 31, 1993 and the related pro forma combined per share amounts will change. NOTE C: AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES Continental's available-for-sale and held-to-maturity securities, primarily debt securities, have been valued at their estimated fair values as of June 30, 1994, resulting in a discount on held-to-maturity securities of $4 million from their recorded values. The amortization of this discount has been included in the unaudited Pro Forma Combined Statement of Operations based on the remaining maturities of the held-to-maturity securities as of June 30, 1994. 7 8 NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED) NOTE D: LOANS Continental's carrying value of loans has been adjusted to its estimated fair value based on interest rates as of June 30, 1994, resulting in a discount of $59 million. The discount related to changes in interest rates includes the effect resulting from futures contracts and interest rate swaps used to hedge certain loans. The total fair value discount resulting from changes in interest rates has been amortized to interest income on loans over the estimated remaining maturities of the related loans, which range from one to seven years. NOTE E: ALLOWANCE FOR CREDIT LOSSES Under the terms of the Merger Agreement, and consistent with generally accepted accounting principles ("GAAP") and Securities and Exchange Commission ("SEC") accounting procedures, Continental's reserving policies and practices will be modified prior to the Effective Time to the degree necessary to make them consistent with those of BAC. Any resulting adjustments to Continental's allowance for credit losses are not expected to be significant, will be recognized in Continental's statement of operations prior to the Effective Time and, therefore, have not been included in the pro forma combined financial statements. The pro forma combined allowance for credit losses will also be affected by other provisions for credit losses or net charge-offs of loans recorded by BAC or Continental subsequent to June 30, 1994 but prior to the Effective Time. NOTE F: OTHER ASSETS Continental's other assets have been adjusted as described in the table below.
(IN MILLIONS) DEBIT (CREDIT) Fair value adjustment for trading account assets and equity investments................................................... $ 54 Fair value adjustment for owned premises........................ (91) Net adjustment of prepaid pension expenses...................... (20) Net deferred tax asset resulting from purchase accounting adjustments................................................... 263 ------ Subtotal................................................... 206 Income tax effect of BAC Merger-related expenses (see Note K)... 12 ------ $ 218 ------ ------
A fair value adjustment for trading account assets of $6 million was recorded for those trading account assets that are traded in illiquid markets. These trading account assets were generally carried by Continental at the lower of cost or market value as of June 30, 1994. In addition, a fair value adjustment for equity investments of $48 million was recorded for those equity investments that are traded in illiquid markets. As of June 30, 1994, Continental generally carried these equity investments at cost. Continental's owned premises have been adjusted to their estimated fair values as of June 30, 1994 based on preliminary appraisals, valuations and other review procedures. Occupancy expense in the unaudited Pro Forma Combined Statements of Operations has been decreased by $1 million for the six months ended June 30, 1994 and by $2 million for the year ended December 31, 1993 to reflect amortization of the fair value adjustment to owned premises using the straight-line method over 33 years. A net deferred tax asset was recorded related to the book and tax bases differences of assets acquired and liabilities assumed that resulted from purchase accounting adjustments. Also, additional deferred tax assets were recorded for previously unrecognized 8 9 NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED) tax benefits of Continental that are expected to be realized in the future from the combined results of operations. NOTE G: DEPOSITS Continental's total deposits have been adjusted to their estimated fair values as of June 30, 1994 based on interest rates as of that date. The estimated fair value premium of $97 million relates to both domestic and foreign deposits and includes futures contracts and interest rate swaps used to hedge certain of these deposits. The premium has been amortized to offset interest expense over the estimated lives of the deposits, which range from one to ten years. NOTE H: OTHER LIABILITIES Other liabilities have been adjusted as described in the table below.
(IN MILLIONS) (CREDIT) ------------- Accrual of stock option liability................................ $(104) Accrual of pension and postretirement benefit liability.......... (82) Fair value adjustment for lease commitments...................... (12) Accrual of legal costs........................................... (4) Accrual of vacation liability.................................... (2) ------------- Subtotal.................................................... (204) Accrual of Continental Merger-related costs...................... (24) Accrual of BAC Merger-related expenses (see Note K).............. (30) Accrual of estimated BAC legal, investment banking and issuance costs.......................................................... (5) ------------- $(263) ------------- -------------
A liability of $104 million was recorded for the intrinsic value of Continental stock options outstanding at June 30, 1994. This liability represents the total of the differences between the option exercise prices and the value of the anticipated per share consideration to be received by Continental Common Stockholders in the Merger. This liability will be adjusted downward at the Effective Time to reflect the number of Continental stock options outstanding that will be converted to BAC stock options. The accrual of the pension and postretirement benefit liability represents the recognition of the existing benefit obligation related to Continental's supplemental retirement plan and postretirement healthcare plan. Continental's lease commitments have been adjusted to their estimated fair values based on market rental rates as of June 30, 1994. The fair value adjustment resulted in a liability of $12 million related to leased premises. The fair value adjustment related to these leased premises has been amortized to offset occupancy expense using the straight-line method over the remaining lives of the respective lease terms, which range from one to twenty years. A reduction to occupancy expense of $4 million for the six months ended June 30, 1994 and of $2 million for the year ended December 31, 1993 has been included in the unaudited Pro Forma Combined Statements of Operations related to the estimated amortization of this fair value adjustment. In addition, a liability for Continental Merger-related costs of $24 million has been recorded in the unaudited Pro Forma Combined Balance Sheet, reflecting management's best estimate of separation and benefits costs related to Continental employees and employment assistance costs for separated Continental employees. NOTE I: LONG-TERM DEBT AND SUBORDINATED CAPITAL NOTES Continental's long-term debt has been adjusted to its estimated fair value as of June 30, 1994 based on interest rates as of that date. The estimated fair value premium of $65 million includes the effect of futures 9 10 NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED) contracts and interest rate swaps used to hedge certain long-term debt instruments. The total fair value premium has been amortized to offset interest expense over the estimated lives of the instruments, which range from one to ten years. NOTE J: STOCKHOLDERS' EQUITY Continental's stockholders' equity balances have been eliminated. At the Effective Time, the Continental Preferred Stock will be converted into an equal number of shares of BAC Mirror Preferred. The BAC Mirror Preferred is included in the unaudited Pro Forma Combined Balance Sheet at its estimated market value as of January 27, 1994. The fair value premium of $26 million over the $389 million stated value of the BAC Mirror Preferred has been included in additional paid-in capital. As explained in Note A, Continental's Common Stock will be converted into approximately 21,450,000 shares of BAC Common Stock at the Effective Time at an aggregate market value of approximately $981 million based on the market price of BAC Common Stock as of January 27, 1994. In addition, BAC repurchased approximately 11,780,000 shares of BAC Common Stock for $500 million prior to June 30, 1994. The unaudited Pro Forma Combined Balance Sheet assumes these treasury shares will be issued, resulting in a decrease to treasury stock of $500 million and an increase to additional paid-in capital of $39 million. After consideration of treasury stock, the number of shares of newly issued BAC Common Stock will be reduced to approximately 9,670,000 shares. Common stock and additional paid-in capital have been increased by $15 million and $427 million, respectively, representing the value of the approximately 9,670,000 shares of newly issued BAC Common Stock. BAC's retained earnings have been reduced by $18 million for BAC Merger-related expenses, net of applicable income taxes (see Note K). NOTE K: BAC MERGER-RELATED EXPENSES A Merger-related liability of $30 million has been recorded in the unaudited Pro Forma Combined Balance Sheet to reflect management's best estimate of separation and benefits costs related to BAC employees, employment assistance costs for separated BAC employees, systems conversion costs, and other expenses of BAC associated with the Merger. This liability resulted in a $18 million charge (after applicable income tax effects of $12 million) to retained earnings in the unaudited Pro Forma Combined Balance Sheet (see Notes F, H, and J). These BAC Merger-related expenses are subject to change as further information becomes available. BAC Merger-related expenses will be recorded at or immediately prior to the Effective Time and have not been included in the unaudited Pro Forma Combined Statements of Operations. NOTE L: PROVISION FOR (BENEFIT FROM) INCOME TAXES The provision for (benefit from) income taxes has been increased by $50 million for the six months ended June 30, 1994 and by $121 million for the year ended December 31, 1993 in the unaudited Pro Forma Combined Statements of Operations to remove tax benefits that would not be reflected in the statement of operations under purchase accounting and to reflect the tax provision for purchase accounting adjustments and for state tax expense on Continental's results of operations if the Merger had been effective on January 1, 1993. The related tax provision for the amortization of fair value adjustments for the six months ended June 30, 1994 and for the year ended December 31, 1993 has been included in the unaudited Pro Forma Combined Statements of Operations. NOTE M: EARNINGS PER SHARE Primary earnings per share are computed by dividing income from continuing operations applicable to common shareholders (income from continuing operations reduced by dividends on preferred stock) by the 10 11 NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED) total of the average number of common shares outstanding and the additional dilutive effect of the stock options and warrants outstanding during the period. The dilutive effect of the stock options and warrants is computed using the average market price of BAC Common Stock for the period. Fully-diluted earnings per share are computed based on the average number of common shares outstanding during the period and the additional dilutive effect of stock options and warrants outstanding during the period. The dilutive effect of outstanding stock options and warrants is computed using the greater of the closing market price or the average market price of BAC Common Stock for the period. In addition, fully-diluted earnings per share for the six months ended June 30, 1994 and for the year ended December 31, 1993 for BAC included the additional dilution that would result if BAC's outstanding shares of 6 1/2% Cumulative Convertible Preferred Stock, Series G (the "BAC Series G Preferred") had been converted at the beginning of the period. Correspondingly, income from continuing operations applicable to common stock was adjusted for dividends declared on the BAC Series G Preferred. As explained in Note A, Continental's Common Stock will be converted into approximately 21,450,000 shares of BAC Common Stock at the Effective Time. In addition, BAC repurchased approximately 11,780,000 shares of BAC Common Stock for $500 million prior to June 30, 1994. The unaudited Pro Forma Combined Balance Sheet assumes that these treasury shares will be issued to Continental Common Stockholders. After consideration of treasury stock, the number of shares of newly issued BAC Common Stock will be reduced to approximately 9,670,000 shares. 11 EX-99.B 3 B OF A, CONTINENATAL BANK RATIOS OF EARNINGS 1 Exhibit 99.b BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES HISTORICAL AND PRO FORMA COMBINED RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. The ratio of earnings to combined fixed charges and preferred stock dividends is computed by dividing earnings by the sum of fixed charges and preferred stock dividend requirements. Earnings consist primarily of income (loss) before income taxes adjusted for fixed charges. Fixed charges consist primarily of interest expense on short- and long-term borrowings and one-third (the portion deemed representative of the interest factor) of net rents under long-term leases. The following table sets forth (i) the historical ratios of earnings to fixed charges and the ratios of earnings to combined fixed charges and preferred stock dividends for the periods indicated for BankAmerica Corporation and its consolidated subsidiaries ("BAC") and for Continental Bank Corporation and its consolidated subsidiaries ("Continental") and (ii) the pro forma combined ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred stock dividends for the periods indicated, giving effect to the merger provided for in the Restated Agreement and Plan of Merger dated as of January 27, 1994 between BAC and Continental (the "Merger") as if it had been consummated on January 1, 1993. The pro forma combined ratios do not give effect to the proposed BAC acquisitions of Liberty Bank and United Mortgage Holding Company and subsidiaries as these transactions were not considered significant to BAC and subsidiaries. The pro forma combined ratios have been calculated using the pro forma combined financial information for the six months ended June 30,1994 and for the year ended December 31, 1993, and should be read in conjunction with and are qualified in their entirety by such pro forma combined financial information at Exhibit 99.a of BAC's report on Form 8-K dated August 11, 1994, and the consolidated financial statements, including the accompanying notes, of BAC and Continental included in their respective 1993 Form 10-Ks and second quarter 1994 Form 10-Qs and elsewhere in BAC's report on Form 8-K dated August 11, 1994. Pro forma adjustments made to arrive at the pro forma combined ratios are based on the purchase method of accounting and a preliminary allocation of the purchase price. However, changes to the adjustments already included in the pro forma combined ratios set forth on the following pages are expected as evaluations of assets and liabilities are completed and additional information becomes available. In addition, the results of operations of Continental subsequent to June 30, 1994 will affect the allocation of the purchase price. Accordingly, the final pro forma combined ratios are expected to differ from those set forth on the following pages. The pro forma combined ratios are intended for informational purposes and are not necessarily indicative of the future ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred stock dividends of the combined company or the ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred stock dividends of the combined company that would have actually occurred had the Merger been effective on January 1, 1993. 1 2 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES Historical and Pro Forma Combined Ratio of Earnings to Fixed Charges
Six Months Ended June 30, 1994 --------------------------------------- Historical --------------------------------- Pro Forma (dollar amounts in millions) BAC Continental Combined -------- ----------- -------- EXCLUDING INTEREST ON DEPOSITS Fixed charges: Interest expense (other than interest on deposits) $ 676 $ 151 $ 820 Interest factor in rent expense 53 4 57 Other 2 - 2 --------- --------- --------- $ 731 $ 155 $ 879 ====== ====== ====== Earnings: Income from operations $1,038 $ 140 $1,135 Applicable income taxes 754 9 813 Fixed charges 731 155 879 Other (35) - (35) ------- -------- ------- $2,488 $ 304 $2,792 ====== ====== ====== Ratio of earnings to fixed charges, excluding interest on deposits 3.40 1.96 3.18 INCLUDING INTEREST ON DEPOSITS Fixed charges: Interest expense $2,126 $ 345 $2,455 Interest factor in rent expense 53 4 57 Other 2 - 2 -------- -------- -------- $2,181 $ 349 $2,514 ====== ====== ====== Earnings: Income from operations $1,038 $ 140 $1,135 Applicable income taxes 754 9 813 Fixed charges 2,181 349 2,514 Other (35) - (35) -------- -------- -------- $3,938 $ 498 $4,427 ====== ====== ====== Ratio of earnings to fixed charges, including interest on deposits 1.81 1.43 1.76 See notes attached to this exhibit.
2 3 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES Historical and Pro Forma Combined Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Six Months Ended June 30, 1994 --------------------------------------- Historical ------------------------------------ Pro Forma (dollar amounts in millions) BAC Continental Combined -------- ----------- -------- EXCLUDING INTEREST ON DEPOSITS Fixed charges and preferred dividends: Interest expense (other than interest on deposits) $ 676 $ 151 $ 820 Interest factor in rent expense 53 4 57 Preferred dividend requirements(a) 209 17 237 Other 2 - 2 --------- -------- --------- $ 940 $ 172 $1,116 ====== ====== ====== Earnings: Income from operations $1,038 $ 140 $1,135 Applicable income taxes 754 9 813 Fixed charges 731(b) 172(c) 879(b) Other (35) - (35) ------- ------ ------ $2,488 $ 321 $2,792 ====== ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends, excluding interest on deposits 2.65 1.87 2.50 INCLUDING INTEREST ON DEPOSITS Fixed charges and preferred dividends: Interest expense $2,126 $ 345 $2,455 Interest factor in rent expense 53 4 57 Preferred dividend requirements(a) 209 17 237 Other 2 - 2 ------- ------- ------- $2,390 $ 366 $2,751 ====== ====== ====== Earnings: Income from operations $1,038 $ 140 $1,135 Applicable income taxes 754 9 813 Fixed charges 2,181(b) 366(c) 2,514(b) Other (35) - (35) --------- ------- -------- $3,938 $ 515 $4,427 ====== ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends, including interest on deposits 1.65 1.41 1.61
See notes attached to this exhibit. 3 4 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES Historical and Pro Forma Combined Ratio of Earnings to Fixed Charges
Year Ended December 31, 1993 ---------------------------------------- Historical ------------------------- Pro Forma (dollar amounts in millions) BAC Continental Combined ------ ----------- --------- EXCLUDING INTEREST ON DEPOSITS Fixed charges: Interest expense (other than interest on deposits) $1,215 $ 266 $1,472 Interest factor in rent expense 112 7 119 Other 2 - 2 ------ ------ ------ $1,329 $ 273 $1,593 ====== ====== ====== Earnings: Income from operations $1,954 $ 258 $2,108 Applicable income taxes 1,474 (18) 1,577 Fixed charges 1,329 273 1,593 Other (39) - (39) ------ ------ ------ $4,718 $ 513 $5,239 ====== ====== ====== Ratio of earnings to fixed charges excluding interest on deposits 3.55 1.88 3.29 INCLUDING INTEREST ON DEPOSITS Fixed charges: Interest expense $4,186 $ 657 $4,797 Interest factor in rent expense 112 7 119 Other 2 - 2 ------ ------ ------ $4,300 $ 664 $4,918 ====== ====== ====== Earnings: Income from operations $1,954 $ 258 $2,108 Applicable income taxes 1,474 (18) 1,577 Fixed charges 4,300 664 4,918 Other (39) - (39) ------ ------ ------ $7,689 $ 904 $8,564 ====== ====== ====== Ratio of earnings to fixed charges, including interest on deposits 1.79 1.36 1.74
See notes attached to this exhibit. 4 5 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES Historical and Pro Forma Combined Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Year Ended December 31, 1993 --------------------------------------- Historical --------------------------------- Pro Forma (dollar amounts in millions) BAC Continental Combined -------- ----------- -------- EXCLUDING INTEREST ON DEPOSITS Fixed charges and preferred dividends: Interest expense (other than interest on deposits) $1,215 $ 266 $1,472 Interest factor in rent expense 112 7 119 Preferred dividend requirements(a) 423 34 481 Other 2 - 2 --------- -------- --------- $1,752 $ 307 $2,074 ====== ====== ====== Earnings: Income from operations $1,954 $ 258 $2,108 Applicable income taxes 1,474 (18) 1,577 Fixed charges 1,329(b) 307(c) 1,593(b) Other (39) - (39) ------- ------ ------ $4,718 $ 547 $5,239 ====== ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends, excluding interest on deposits 2.69 1.78 2.53 INCLUDING INTEREST ON DEPOSITS Fixed charges and preferred dividends: Interest expense $4,186 $ 657 $4,797 Interest factor in rent expense 112 7 119 Preferred dividend requirements(a) 423 34 481 Other 2 - 2 ------- ------- ------- $4,723 $ 698 $5,399 ====== ====== ====== Earnings: Income from operations $1,954 $ 258 $2,108 Applicable income taxes 1,474 (18) 1,577 Fixed charges 4,300(b) 698(c) 4,918(b) Other (39) - (39) --------- ------- -------- $7,689 $ 938 $8,564 ====== ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends, including interest on deposits 1.63 1.34 1.59
See notes attached to this exhibit. 5 6 BANKAMERICA CORPORATION AND SUBSIDIARIES AND CONTINENTAL BANK CORPORATION AND SUBSIDIARIES Notes to Historical and Pro Forma Combined Ratios of Earnings To Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends (a) Preferred dividend requirements represent pretax earnings necessary to cover preferred dividends declared during the six months ended June 30, 1994 of $121 million by BAC, $17 million by Continental, and $138 million on a pro forma combined basis. In addition, preferred dividends declared during the year ended December 31, 1993 were $241 million for BAC, $34 million for Continental, and $275 million on a pro forma combined basis. (b) Excluding preferred dividend requirements. (c) Including preferred dividend requirements. 6 -----END PRIVACY-ENHANCED MESSAGE-----