Bank of America Operating Earnings Per Share Rise 35% to $1.23 In The Fourth Quarter; 1999 Operating Earnings Per Share up 29% to $4.68
CHARLOTTE, N.C., Jan. 18 /PRNewswire/ -- Bank of America Corporation (NYSE: BAC) today reported that operating earnings per share increased 35 percent in the fourth quarter of 1999 to $1.23 (diluted) from $.91 a year earlier. Operating net income rose 32 percent to $2.12 billion from $1.60 billion.
As previously disclosed, the company recorded a $213 million after-tax charge to cover costs associated with the merger of NationsBank and BankAmerica in the latest quarter compared to a $441 million after-tax charge a year earlier. As a result, net income for the fourth quarter of 1999 was $1.90 billion, or $1.10 per share, compared to $1.16 billion, or $.66 per share, a year earlier. Bank of America earned $2.15 billion, or $1.23 per share in the third quarter of 1999.
For all of 1999, Bank of America's operating earnings rose 27 percent to $8.24 billion from $6.49 billion while operating earnings per share increased 29 percent to $4.68 from $3.64. Including merger-related charges, net income in 1999 was up 53 percent to $7.88 billion, or $4.48 per share, compared to $5.17 billion, or $2.90 per share, a year earlier.
"1999 was a significant step in the right direction," said Hugh L. McColl, Jr., Bank of America chairman and chief executive officer. "We delivered above-average earnings growth and either met or made progress toward our other financial targets. Our merger transition effort could not have gone more smoothly. We ended the year having consolidated all of our business lines, expanded our investment banking platform, and made substantial progress in our relationship-based strategies. Bank of America is now positioned to work to achieve our next goal, which is to become the most widely recognized and respected financial services brand."
Fourth Quarter Earnings (compared to a year ago)
Revenue rose 11 percent, paced by significant improvements in every fee-based business, especially investment banking, trading, mortgage banking and card income. Meanwhile, expenses and provision expense were lower. The completion of annual tax planning strategies resulted in a lower effective tax rate. Operating earnings represented an 18 percent return on common equity.
Net Interest Income
Taxable-equivalent net interest income decreased 2 percent from a year earlier to $4.54 billion. Average managed loans and leases grew an annualized 8 percent, led by increases of more than 30 percent in residential real estate lending. Contributing to the reduction in net interest income were the cost of funding share repurchases and the decisions during the year to sell or securitize loans. Securitizations have the effect of transferring interest revenue to noninterest income. The net yield on earning assets declined 26 basis points to 3.32 percent, reflecting continued margin compression and higher levels of lower-yielding assets.
Noninterest income grew 35 percent to $3.60 billion. Investment banking and trading income were up sharply, in part due to the impact of market turbulence in the previous year as well as the build out of investment banking capabilities. Mortgage servicing income, card services fees and service charges on deposit accounts also had healthy gains. Other income was also up. Noninterest income has been increasing as a percentage of the company's revenues and reached 44 percent in the fourth quarter.
Securities gains were $14 million, compared to $404 million a year earlier.
Noninterest expense decreased 3 percent to $4.55 billion, reflecting cost reductions resulting from recent mergers, somewhat offset by continued spending on technology-related projects associated with the merger of NationsBank and BankAmerica and higher incentive payments associated with the build out of the investment banking platform. The efficiency ratio was 56 percent, an improvement of 825 basis points.
Nonperforming assets were $3.20 billion, or .86 percent of loans, leases and foreclosed properties on December 31, 1999, compared to $2.76 billion, or .77 percent, a year earlier. The allowance for credit losses totaled $6.8 billion on December 31, 1999, equal to 224 percent of nonperforming loans and 1.84 percent of loans and leases. It was $7.1 billion, or 1.99 percent of loans and leases, a year earlier.
The provision for credit losses in the fourth quarter was $350 million compared to $510 million a year earlier. Net charge-offs declined to $501 million, equal to an annualized .55 percent of average loans and leases, from $544 million, or .60 percent, a year earlier.
The lower provision expense reflects the significant reduction in the risk and size of the company's emerging markets portfolio since September 1998. In addition, foreign losses in 1999 were lower than expected, as several Latin American and Asian economies have stabilized or progressed and their prospects improved. The company's credit outlook for 2000 remains favorable, driven by the expectation of continued healthy economic conditions and growth in loans with historically lower credit risk.
Results for the year also reflected favorable operating leverage created by a 6 percent increase in revenue combined with a 4 percent reduction in expenses and a lower tax rate. The return on equity rose more than 300 basis points to 18 percent.
Taxable-equivalent net interest income was virtually unchanged at $18.5 billion, as a 9 percent increase in average managed loans and core deposit growth was offset by securitizations, loan sales and spread compression. The net yield on earning assets declined 22 basis points to 3.47 percent.
Noninterest income rose 15 percent, paced by strong increases in trading, deposit services, investment banking, mortgage banking and card income.
Noninterest expense declined 4 percent to $18.0 billion, reflecting cost savings from recent mergers. The efficiency ratio for the year was 55 percent compared to 61 percent last year.
The provision for credit losses was $1.82 billion, down from $2.92 billion a year earlier. Net charge-offs declined to $2.00 billion, equal to .55 percent of average net loans and leases, from $2.47 billion, or .71 percent, a year earlier.
Total shareholders' equity was $44.4 billion at December 31, 1999. This represented 7.02 percent of period-end assets, compared to 7.44 percent on December 31, 1998.
In June, the company initiated a share buyback program of up to 130 million shares. Through December, 78 million shares had been purchased, representing an investment in Bank of America stock of almost $5 billion.
Business Segment Results
Consumer Banking, which serves individuals and small businesses, earned $3.9 billion for all of 1999 while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $878 million. Together, they represented 58 percent of the company's operating income. Global Corporate and Investment Banking, which serves large corporate customers, earned $2.3 billion, representing 27 percent of the company's earnings. Principal Investing and Asset Management, which encompasses the private bank, trust, investment management, mutual funds, retail brokerage and principal investing, earned $841 million, representing 10 percent.
Bank of America, with $633 billion in assets, is the largest bank in the United States. The company serves more than 30 million households and 2 million businesses across the country, offering customers the largest and most convenient delivery network from offices and ATMs to telephone and internet access. It also provides comprehensive international corporate financial services for clients doing business around the world. The company creates financial relationships featuring a wide array of financial services, from traditional banking products to investments and capital raising within the securities markets. Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange. Further investor information can be found at www.bankofamerica.com/investor .
Bank of America Corporation
Three Months TWELVE Months Ended DECEMBER 31 Ended DECEMBER 31 1999 1998 1999 1998 Financial Summary (In millions, except per-share data) Operating net income $2,115 $1,603 $8,240 $6,490 Operating earnings per common share 1.24 .92 4.77 3.73 Diluted operating earnings per common share 1.23 .91 4.68 3.64 Cash basis earnings (A) 2,334 1,825 9,128 7,391 Cash basis earnings per common share 1.37 1.05 5.28 4.25 Cash basis diluted earnings per common share 1.35 1.04 5.19 4.15 Dividends paid per common share .50 .45 1.85 1.59 Price per share of common stock at period end 50.19 60.13 50.19 60.13 Average common shares 1,701.092 1,731.314 1,726.006 1,732.057 Average diluted common shares 1,725.187 1,763.055 1,760.058 1,775.760 Summary Income Statement (Operating Basis) (Taxable-equivalent basis in millions) Net interest income $4,541 $4,650 $18,452 $18,461 Provision for credit losses (350) (510) (1,820) (2,920) Gains on sales of securities 14 404 240 1,017 Noninterest income 3,596 2,655 14,069 12,189 Other noninterest expense (4,550) (4,687) (17,986) (18,741) Income before income taxes 3,251 2,512 12,955 10,006 Income taxes - including FTE adjustment 1,136 909 4,715 3,516 Operating net income $2,115 $1,603 $8,240 $6,490 SUMMARY Balance Sheet (Average balances in billions) Loans and leases $364.210 $357.636 $362.783 $347.840 Managed loans and leases(B) 393.708 365.297 388.918 356.802 Securities 86.442 72.302 80.127 66.684 Earning assets 543.564 517.066 531.511 499.739 Total assets 630.743 606.541 616.838 584.487 Deposits 341.913 351.766 341.748 345.485 Shareholders' equity 46.792 45.051 46.601 44.829 Common shareholders' equity 46.714 44.989 46.527 44.467 PERFORMANCE INDICES (Operating Basis) Return on average common shareholders' equity 17.95% 14.12% 17.70% 14.54% Return on average tangible common shareholders' equity 28.38 23.97 28.46 25.24 Return on average assets 1.33 1.05 1.34 1.11 Return on average tangible assets 1.50 1.22 1.52 1.30 Net interest yield 3.32 3.58 3.47 3.69 Efficiency ratio 55.91 64.16 55.30 61.15 Cash basis efficiency ratio 53.22 61.12 52.57 58.20 Net charge-offs (in millions) $501 $544 $2,000 $2,467 % of average loans and leases .55% .60% .55% .71% Managed bankcard net charge-offs as a % of average managed bankcard receivables 5.29 5.83 5.57 6.27 REPORTED RESULTS (Including Merger-Related Charges) (In millions, except per-share data) Net income $1,902 $1,162 $7,882 $5,165 Earnings per common share 1.12 .67 4.56 2.97 Diluted earnings per common share 1.10 .66 4.48 2.90 Return on average common shareholders' equity 16.14 10.23 16.93 11.56 (A) Cash basis earnings equal operating net income excluding amortization of intangibles. (B) Prior periods are restated for comparison (e.g. acquisitions, divestitures and securitizations). DECEMBER 31 1999 1998 Balance Sheet highlights (In billions, except per-share data) Loans and leases $370.662 $357.328 Securities 83.069 80.587 Earning assets 544.940 525.149 Total assets 632.574 617.679 Deposits 347.273 357.260 Shareholders' equity 44.432 45.938 Common shareholders' equity 44.355 45.866 Per share 26.44 26.60 Total equity to assets ratio (period-end) 7.02% 7.44% Risk-based capital Tier 1 capital ratio 7.35 7.06 Total capital ratio 10.88 10.94 Leverage ratio 6.26 6.22 Common shares issued and outstanding (in millions) 1,677.273 1,724.484 Allowance for credit losses $6.828 $7.122 Allowance for credit losses as a % of loans and leases 1.84% 1.99% Allowance for credit losses as a % of nonperforming loans 224.48 287.01 Nonperforming loans $3.042 $2.482 Nonperforming assets 3.205 2.764 Nonperforming assets as a % of: Total assets .51% .45% Loans, leases and foreclosed properties .86 .77 OTHER DATA Full-time equivalent headcount 155,906 170,975 Banking centers 4,524 4,708 ATMs 14,019 14,327 BUSINESS SEGMENT RESULTS - Three months ended December 31, 1999 (In millions) OPERATING AVERAGE RETURN ON TOTAL NET LOANS AVERAGE REVENUE INCOME AND LEASES EQUITY Consumer Banking $4,551 $951 $183,244 19% Commercial Banking 813 256 56,912 24 Global Corporate and Investment Banking 1,975 630 103,999 19 Principal Investing and Asset Management 704 214 20,165 26
SOURCE Bank of America Corporation
CONTACT: investors, Susan Carr, 704-386-8059, or Kevin Stitt, 704-386-5667, or media, Bob Stickler or Sharon Tucker, 704-386-8465, all of Bank of America Corporation/