Bank of America

Investor Relations

Bank of America Reports 2nd Quarter Earnings of $1.23 Per Share

Second Quarter 2000 Financial Information for Investors

CHARLOTTE, N.C., July 17 /PRNewswire/ -- Bank of America Corporation (NYSE: BAC) today reported second quarter earnings of $1.23 per share (diluted), up 7 percent from operating earnings per share of $1.15 a year ago.

Net income was $2.06 billion, essentially unchanged from operating earnings a year earlier. Net income in the second quarter of 1999 was $1.92 billion, or $1.07 per share, including a $145 million after-tax merger-related charge.

For the first six months of 2000, Bank of America earned $2.56 per share, up 15 percent from operating earnings per share of $2.23 a year earlier and up 19 percent from reported earnings per share of $2.15. Net income for the first half of 2000 was $4.30 billion, compared to operating earnings of $3.97 billion and net income of $3.83 billion, respectively, a year earlier.

The return on common equity in the latest quarter was 17.63 percent, virtually unchanged from a year earlier, and the return on assets was 1.23 percent.

Cash-basis earnings - which exclude the amortization of intangibles - were $2.28 billion, or $1.36 per share, in the latest quarter. The return on average tangible common shareholders' equity was 27.5 percent.

"A number of our businesses had a strong quarter - especially in consumer banking," said Hugh L. McColl Jr., chairman and chief executive officer. "Net interest income picked up as loan growth continued to be strong. Slower capital markets activity and depreciation in venture capital investments due to lower stock prices somewhat offset the significant improvement in these and other areas," he said, "Despite a slower market, we did gain market share in a number of key investment banking businesses."

"We are hard at work transforming our company to succeed in the new millennium," McColl continued. "We have many initiatives underway to streamline processes and make investments that will enhance our customers' experience with us. We expect these initiatives to boost our business in future quarters."

Second Quarter Strategic Highlights

  • Mutual fund assets rose by $12 billion, or 14 percent, during the first six months of the year. In addition, the company agreed to acquire the remaining 50 percent of Marsico Capital Management LLC, a highly successful and fast-growing investment management firm which manages more than $15 billion in assets.

  • Balances in Money Manager, the company's combination checking and brokerage product, increased 80 percent from a year ago to $16.5 billion. Total Money Manager accounts more than doubled to 121,000.

  • An alliance with Checkfree Holdings Corporation was announced, aimed at enhancing the company's advantage in online banking and creating a national platform for accelerating the development of electronic bill payment and presentment convenience for consumers in the United States.

Second Quarter Financial Highlights (compared to a year ago)

  • Consumer and Commercial Banking had a strong quarter, with earnings rising 5 percent from a year ago and 18 percent from the first quarter. The return on equity for this unit rose to 21 percent.

  • Card revenue rose 13 percent.

  • Consumer investment and brokerage revenue grew 16 percent.

  • Trading revenue was up 19 percent.

  • Corporate banking service revenue rose 9 percent.

  • Noninterest expense declined 1 percent.

  • Average managed consumer loans and leases increased 19 percent.

  • Net charge-offs declined to an annualized .48 percent of loans and leases - an improvement of 9 basis points.

Net Interest Income

Fully taxable-equivalent net interest income of $4.71 billion was 1 percent above a year earlier. The increase reflected 12 percent average managed loan growth, higher levels of core deposits and equity and an increased contribution from trading activities. These improvements were partially offset by the impact of loan sales and securitizations in 1999, margin compression and the cost of share repurchases, all of which also contributed to the decline in the net interest yield of 29 basis points to 3.24 percent.

Average managed loans and leases reached $419 billion, primarily reflecting a 19 percent increase in consumer loans and leases. Average core deposits grew by 3 percent, or $9.2 billion, to $300 billion.

Noninterest Income Noninterest income declined 1 percent to $3.50 billion, primarily because of the absence of loan sales and securitizations in other income which occurred a year ago.

Card revenue rose due to double-digit purchase volume growth across all card products and improved credit quality in the managed portfolio. Consumer investment and brokerage revenue increased, reflecting higher mutual fund, brokerage and tax preparation fees. Service charges and trading revenues also registered significant gains.

Investment banking results declined 11 percent due to slower market activity in the quarter. Other income, which includes loan sales and securitizations as well as other miscellaneous fee income, dropped 48 percent.

Realized equity investment gains totaled $221 million. The depreciation in fair value of equity investments was $87 million.

Securities gains were $6 million compared to $52 million in the second quarter of 1999.


Noninterest expense declined 1 percent to $4.41 billion, reflecting continued benefits from recent mergers. The efficiency ratio was 54 percent.

Credit Quality

The provision for credit losses in the second quarter was $470 million, down from $510 million a year earlier. Net charge-offs were $470 million, down from $520 million a year ago, driven primarily by lower losses on credit card loans. Net charge-offs were equal to an annualized .48 percent of loans and leases.

Nonperforming assets were $3.89 billion, or .97 percent of loans, leases and foreclosed properties at June 30, 2000, compared to $3.07 billion, or .84 percent a year earlier. The increase reflects a rise in nonperforming loans in the corporate portfolio that was not concentrated in any single industry or region. Non-performing loans also increased in real estate-secured consumer finance loans, reflecting the growth and maturing of that portfolio.

The allowance for credit losses totaled $6.82 billion at June 30, 2000, equal to 1.70 percent of loans and leases.

Capital Strength

Total shareholders' equity was $45.9 billion at June 30, 2000. This represented 6.75 percent of period-end assets of $680 billion. The Tier 1 Capital Ratio was 7.40 percent.

In June 1999, the company initiated a share buyback program of up to 130 million shares. Through June 2000, 112 million shares had been repurchased, representing an investment in Bank of America stock of $6.5 billion. Average (diluted) common shares outstanding were 1.676 billion in the second quarter, down from 1.787 billion a year earlier.

Business Segment Results

Consumer and Commercial Banking, which serves individuals and businesses with annual sales of up to $500 million, earned $1.25 billion and had a return on equity of 21 percent. This segment represented 61 percent of the company's net income.

Asset Management, which encompasses the private bank, trust, investment management, mutual funds and retail brokerage, earned $163 million, representing 8 percent of total net income. The return on equity was 37 percent.

Global Corporate and Investment Banking, which serves large corporate, institutional and government customers, earned $600 million, representing 29 percent of the company's earnings. The return on equity was 16 percent.

Bank of America is the largest bank in the United States. It has full- service operations in 21 states and the District of Columbia and provides financial products and services to 30 million households and two million businesses, as well as providing international corporate financial services for business transactions in 190 countries. The company's stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange.

NOTE: James H. Hance Jr., vice chairman and chief financial officer, will
discuss the quarter in a conference call at 9:30 a.m. (EDT) today. The call
can be accessed through a webcast available on the Bank of America website.

Forward Looking Statements

This press release contains forward-looking statements with respect to the financial conditions and results of operations of Bank of America, including, without limitation, statements relating to the earnings outlook of the company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) projected business increases following process changes and other investments are lower than expected; (2) competitive pressure among financial services companies increases significantly; (3) costs or difficulties related to the integration of acquisitions are greater than expected; (4) general economic conditions, internationally, nationally or in the states in which the company does business, are less favorable than expected, (5) changes in the interest rate environment reduce interest margins and affect funding sources; (6) changes in market rates and prices may adversely affect the value of financial products; and (7) legislation or regulatory requirements or changes adversely affect the businesses in which the company is engaged.

Bank of america Corporation

                                         Three Months            Six Months
                                         Ended JUNE 30          Ended JUNE 30
                                         2000    1999            2000    1999
    Financial Summary
    (In millions, except per share data)

    Operating net income             $2,063      $2,060     $4,303     $3,974
     Operating earnings
      per common share                 1.25        1.18       2.59       2.28
     Diluted operating earnings
      per common share                 1.23        1.15       2.56       2.23

    Cash basis earnings (A)           2,281       2,285      4,738      4,421
     Cash basis earnings per
      common share                     1.38        1.31       2.85       2.54
     Cash basis diluted earnings
      per common share                 1.36        1.28       2.82       2.48
    Dividends paid per common share     .50         .45       1.00        .90
    Price per share of common stock
      at period-end                   43.00       73.31      43.00      73.31
    Average common shares         1,653.495   1,743.503  1,661.403  1,740.549

Average diluted common shares 1,676.089 1,786.844 1,681.630 1,783.316

    Summary Income Statement (Operating Basis)
    (Taxable-equivalent basis in millions)

    Net interest income              $4,709      $4,663     $9,304     $9,308
    Provision for credit losses        (470)       (510)      (890)    (1,020)
    Gains on sales of securities          6          52         12        182
    Noninterest income                3,500       3,522      7,546      6,745
    Other noninterest expense        (4,413)     (4,457)    (9,036)    (8,910)

    Income before income taxes        3,332       3,270      6,936      6,305
    Income taxes - including
     FTE adjustment                   1,269       1,210      2,633      2,331
    Operating net income             $2,063      $2,060     $4,303     $3,974

    SUMMARY Balance Sheet
    (Average balances in billions)

    Loans and leases               $391.404    $364.753   $383.994   $362.760
    Managed loans and leases(B)     418.910     374.855    412.219    373.564
    Securities                       85.460      77.855     86.835     76.848
    Earning assets                  582.490     530.049    572.830    526.884
    Total assets                    672.588     615.364    661.804    612.510
    Deposits                        353.426     342.249    349.400    344.080
    Shareholders' equity             47.112      46.891     46.571     46.587
    Common shareholders' equity      47.037      46.821     46.495     46.516

    PERFORMANCE INDICES (Operating Basis)

    Return on average common
     shareholders' equity            17.63%      17.64%      18.60%    17.22%
    Return on average tangible
     common shareholders' equity     27.51       28.49       29.14     27.97
    Return on average assets          1.23        1.34        1.31      1.31
    Return on average tangible
     assets                           1.39        1.53        1.47      1.49
    Net interest yield                3.24        3.53        3.26      3.55
    Efficiency ratio                 53.77       54.44       53.63     55.49
    Cash basis efficiency ratio      51.12       51.70       51.04     52.71
    Net charge-offs (in millions)     $470        $520        $890    $1,039
     % of average loans and leases     .48%        .57%        .47%      .58%
    Managed bankcard net charge-offs
     as a % of average managed
     bankcard receivables             4.84        6.13        5.13      6.07

    REPORTED RESULTS (Including Merger-Related Charges)
    (In millions, except per share data)

    Net income                      $2,063      $1,915      $4,303    $3,829
     Earnings per common share        1.25        1.10        2.59      2.20
     Diluted earnings
      per common share                1.23        1.07        2.56      2.15
    Return on average common
     shareholders' equity            17.63%      16.40%      18.60%    16.59%

(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).

                                                            JUNE 30
                                                         2000       1999
    Balance Sheet highlights
    (In billions, except per share data)

    Loans and leases                                  $400.817    $363.581
    Securities                                          80.957      76.511
    Earning assets                                     587.985     528.797
    Total assets                                       679.538     614.102
    Deposits                                           356.664     339.045
    Shareholders' equity                                45.861      45.631
    Common shareholders' equity                         45.786      45.551
     Per share                                           27.82       26.44

    Total equity to assets ratio (period-end)             6.75%       7.43%

    Risk-based capital
     Tier 1 capital ratio                                 7.40        7.38
     Total capital ratio                                 11.03       11.09

    Leverage ratio                                        6.11        6.34

    Common shares issued and
     outstanding (in millions)                       1,645.701   1,722.931
    Allowance for credit losses                         $6.815      $7.096
    Allowance for credit losses
     as a % of loans and leases                           1.70%       1.95%
    Allowance for credit losses
     as a % of nonperforming loans                      184.66      252.38
    Nonperforming loans                                 $3.691      $2.812
    Nonperforming assets                                 3.886       3.070
    Nonperforming assets as a % of:
     Total assets                                         .57%        .50%
     Loans, leases and foreclosed properties              .97         .84


    Full-time equivalent headcount                     150,854     161,919
    Banking centers                                      4,450       4,531
    ATMs                                                13,944      14,051

BUSINESS SEGMENT RESULTS - Three Months Ended June 30, 2000

(In millions)

                                       OPERATING     AVERAGE      RETURN ON
                            TOTAL         NET         LOANS        AVERAGE
                           REVENUE       INCOME     AND LEASES      EQUITY

    Consumer and
     Commercial Banking     $5,214       $1,254     $261,091         20.6%
    Asset Management           579          163       21,772         37.2
    Global Corporate and
     Investment Banking      2,336          600      108,635         15.6
    Other                       80           46        n/m            n/m

n/m = not meaningful

Follow this link for the second quarter earnings analyst conference call handout.

CONTACT: investors, Susan Carr, 704-386-8059, or Kevin Stitt, 704-386-5667, or media, Bob Stickler or Cary Walker, 704-386-8465, all of Bank of America Corporation

Bank of America

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The financial and other information that may be accessed on this Investor Relations web site speaks only as of the particular dates referenced in the information or the dates the information was originally issued. This information may have since become superseded as a result of later circumstances or events. Bank of America does not undertake any obligation, and disclaims any duty, to update this information. In addition, this information may contain forward-looking statements that are subject to various risks and uncertainties that could cause actual outcomes or results to differ materially from those expressed in or implied by any forward-looking statement. The risks and uncertainties that could affect the company's actual outcomes or results are discussed more fully in our most recent Annual Report on Form 10-K, as well as any updated risks and uncertainties contained in subsequent reports filed with the Securities and Exchange Commission.