Bank of America

Investor Relations

Bank Of America Second Quarter Operating Earnings Rise To A Record $2.06 Billion

CHARLOTTE, NC, July 19, 1999 - Bank of America Corporation today reported operating earnings of $2.06 billion, or $1.18 per share ($1.15 diluted), for the second quarter of 1999, up from $2.02 billion, or $1.16 per share ($1.13 diluted), a year earlier. The company's return on common equity was 17.64 percent and the return on average assets was 1.34 percent. Operating earnings increased 8 percent from the first quarter of 1999.

After a merger-related charge of $145 million after taxes, net income in the latest quarter was $1.92 billion, or $1.10 per share ($1.07 diluted). In the second quarter of 1998, a $277 million after-tax gain on the sale of Florida branches brought net income to $2.30 billion, or $1.32 per share ($1.28 diluted).

Cash operating earnings - which exclude the amortization of intangibles - were $2.28 billion, or $1.31 per share ($1.28 diluted). The return on tangible equity was 28.49 percent. A year earlier, cash operating earnings were $2.25 billion, or $1.29 per share ($1.25 diluted).

"Bank of America continues to make significant progress toward our goals, as reflected in our successful merger integration efforts, solid core operating results and many new initiatives aimed at improving and expanding customer relationships," said Hugh L. McColl Jr., chairman and chief executive officer.

For the first six months of 1999, operating earnings were $3.97 billion and net income was $3.83 billion. Operating earnings per share were $2.28 ($2.23 diluted) and reported earnings per share were $2.20 per share ($2.15 diluted). A year ago, operating income was $3.99 billion, or $2.30 per share ($2.23 diluted). For the first six months of 1998, net income was $3.63 billion, or $2.09 per share ($2.03 diluted).

Second Quarter Earnings Highlights (compared to a year ago)

  • The efficiency ratio improved nearly 300 basis points to 54 percent, led by a 7 percent decline in expenses.
  • Average managed loans increased 11 percent, driven by a 16 percent increase in managed consumer loans and a 6 percent increase in managed commercial loans.
  • Fee-based revenue was generally strong. Credit card and deposit fee income was up significantly while investment banking, although below last year's record, also had a strong performance.

Net Interest Income
Fully taxable-equivalent net interest income of $4.66 billion was essentially unchanged from a year earlier, as the impact of loan and deposit growth was mostly offset by the effects of asset securitizations, divestitures, loan sales and a higher level of lower-yielding securities. Average managed loans grew 11 percent to $389 billion, reflecting increases in both consumer and commercial loans. The net yield on earning assets declined by 27 basis points to 3.53 percent.

Noninterest Income
Noninterest income declined 3 percent to $3.52 billion, as gains in trading, credit card, brokerage, asset management and deposit fee revenues were offset by lower mortgage banking income, investment banking revenue and other income. The reduction in investment banking revenue resulted in part from the sale of one of the company's investment banking units in the second half of 1998. A year ago, other income included a gain on the sale of the Columbia Seafirst Center.

Securities gains were $52 million compared to $120 million in the second quarter of 1998.

Efficiency Noninterest expense was reduced by 7 percent to $4.46 billion, reflecting cost savings resulting from recent mergers somewhat offset by continued spending on merger transition projects. Personnel expense dropped by 7 percent, and other operating expenses were also reduced. The efficiency ratio was 54 percent, a significant improvement from 57 percent a year earlier.

Credit Quality The provision for credit losses in the second quarter was $510 million, compared to $495 million a year earlier. Net charge-offs were $520 million versus $505 million a year ago. Net charge-offs represented .57 percent of loans and leases, a 2-basis-point improvement from a year ago.

Nonperforming assets were $3.07 billion, or .84 percent of loans, leases and foreclosed properties on June 30, 1999, compared to $2.53 billion, or .73 percent a year earlier. The allowance for credit losses totaled $7.10 billion on June 30, 1999, equal to 252 percent of nonperforming loans and 1.95 percent of loans and leases. The allowance was $6.73 billion, or 300 percent of nonperforming loans and 1.95 percent of loans and leases, a year earlier.

Capital Strength Shareholders' equity stood at $45.6 billion at June 30, 1999. Total capital was equal to 8.24% of assets. The company's market capitalization was $126 billion. On June 23, the company authorized the repurchase of up to 130 million common shares over 24 months, with an expectation to complete the program within 18 months. Through June 30, the company had purchased 25 million shares.

Business Segment Results Consumer Banking, which serves individuals and small businesses, earned $979 million, while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $220 million. Together, they represented 58 percent of the company's operating income. Global Corporate and Investment Banking, which serves large corporate customers, earned $581 million, representing 28 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 $184 million, representing 9 percent.

Bank of America, with $614 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 full 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


                                           THREE MONTHS          SIX MONTHS
                                           ENDED JUNE 30        ENDED JUNE 30
                                           1999    1998         1999    1998
    (In millions, except per-share data)

    Operating net income               $2,060      $2,021     $3,974     $3,994
     Operating earnings
      per common share                   1.18        1.16       2.28       2.30
     Diluted operating earnings
      per common share                   1.15        1.13       2.23       2.23
    Cash basis earnings (1)             2,285       2,248      4,421      4,449
     Cash basis earnings per 
      common share                       1.31        1.29       2.54       2.56
     Cash basis diluted earnings
      per common share                   1.28        1.25       2.48       2.49
    Dividends paid per common share       .45         .38        .90        .76
    Price per share of common stock
      at period end                     73.31       76.69      73.31      76.69
    Average common shares           1,743.503   1,732.168  1,740.549  1,728.353
    Average diluted common shares   1,786.844   1,784.712  1,783.316  1,778.947
    (Taxable-equivalent in millions)
    Net interest income                $4,663      $4,668     $9,308     $9,327
    Provision for credit losses         (510)       (495)    (1,020)    (1,005)
    Gains on sales of securities           52         120        182        333
    Noninterest income                  3,522       3,636      6,745      7,129
    Other noninterest expense         (4,457)     (4,767)    (8,910)    (9,471)

    Income before income taxes          3,270       3,162      6,305      6,313
    Income taxes - including
     FTE adjustment                     1,210       1,141      2,331      2,319
    Operating net income               $2,060      $2,021     $3,974     $3,994

    (Average balances in billions)

    Loans and leases                 $364.753    $342.787   $362.760   $342.381
    Managed loans and leases(2)       389.373     351.321    387.164    349.297
    Securities                         77.855      63.052     76.848     64.412
    Earning assets                    530.049     491.945    526.884    492.878
    Total assets                      615.364     573.975    612.510    576.394
    Deposits                          342.249     342.369    344.080    341.125
    Shareholders' equity               46.891      44.857     46.587     44.246
    Common shareholders' equity        46.821      44.198     46.516     43.579
    PERFORMANCE INDICES (Operating Basis)
    Return on average common 
     shareholders' equity              17.64%      18.24%      17.22%    18.38%
    Return on average tangible
     common shareholders' equity       28.49       31.23       27.97     31.88
    Return on average assets            1.34        1.41        1.31      1.40
    Return on average tangible 
     assets                             1.53        1.61        1.49      1.60
    Net interest yield                  3.53        3.80        3.55      3.81
    Efficiency ratio                   54.44       57.38       55.49     57.55
    Cash basis efficiency ratio        51.70       54.65       52.71     54.79
    Net charge-offs (in millions)       $520        $505      $1,039    $1,021
     % of average loans and leases       .57%        .59%        .58%      .60%
    Managed bankcard net charge-offs 
     as a % of average managed 
     bankcard receivables               6.13        6.52        6.07      6.65

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

    Net income                        $1,915      $2,298      $3,829    $3,629
     Earnings per common share          1.10        1.32        2.20      2.09
     Diluted earnings
      per common share                  1.07        1.28        2.15      2.03
    Return on average common
     shareholders' equity              16.40       20.76       16.59     16.69

    (1) Cash basis earnings equal operating net income excluding
        amortization of intangibles.
    (2) Prior periods are restated for comparison (e.g. acquisitions,
        divestitures and securitizations).
    (3) Ratios and amounts for 1998 have not been restated to reflect
        the impact of the BankAmerica merger.

                                                           JUNE 30
                                                         1999    1998
    (In billions, except per-share data)

    Loans and leases                                  $363.581    $344.358
    Securities                                          76.511      60.853
    Earning assets                                     528.797     486.339
    Total assets                                       614.102     571.890
    Deposits                                           339.045     347.877
    Shareholders' equity                                45.631      46.709
    Common shareholders' equity                         45.551      46.646
     Per share                                           26.44       26.88
    Total equity to assets ratio
     (period-end)                                         7.43%       8.17%

    Risk-based capital(3)
     Tier 1 capital ratio                                 7.38%       7.32%
     Total capital ratio                                 11.09       11.77

    Leverage ratio(3)                                     6.34        6.21
    Common shares issued and
     outstanding (in millions)                       1,722.931   1,735.233
    Allowance for credit losses                         $7.096      $6.731
    Allowance for credit losses
     as a % of loans and leases                           1.95%       1.95%
    Allowance for credit losses 
     as a % of nonperforming loans                      252.38      299.98
    Nonperforming loans                                 $2.812      $2.244
    Nonperforming assets                                 3.070       2.526
    Nonperforming assets as a % of:
     Total assets                                         .50%        .44%
     Loans, leases and foreclosed properties              .84         .73


    Full-time equivalent headcount                     161,919     178,729
    Banking centers                                      4,531       4,866
    ATMs                                                14,051      14,691

    BUSINESS SEGMENT RESULTS - Three months ended June 30, 1999
    (In millions)

                                       OPERATING     AVERAGE      RETURN ON
                            TOTAL         NET         LOANS        AVERAGE
                           REVENUE       INCOME     AND LEASES      EQUITY
    Consumer Banking       $4,547         $979     $183,853          20%
    Commercial Banking        766          220       55,350          19 
    Global Corporate and
      Investment Banking    2,133          581      107,278          19 
    Principal Investing
     and Asset Management     634          184       18,864          25 

Second Quarter 1999 Financial Information for Investors

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.