Bank of America

Investor Relations

Strong Revenue Growth Fuels Record 2003 Earnings Of $10.8 Billion At Bank Of America; Fourth Quarter Earnings Rise To $1.83 Per Share

Supplemental fourth quarter 2003 financial information

Major business lines all achieve double-digit earnings growth in 2003
Revenue rises 10% for the year
Core deposits grow 10% from 2002
Total 2003 average loans grow 6%
Nonperforming assets decline 43% in 2003

CHARLOTTE, N.C., Jan. 15 /PRNewswire-FirstCall/ -- Bank of America Corporation today reported fourth quarter earnings of $2.73 billion, or $1.83 per share (diluted), 4 and 8 percent increases, respectively, from $2.61 billion, or $1.69 per share, earned a year ago.

For the full year, Bank of America reported net income of $10.8 billion, or $7.13 per share (diluted), 17 and 21 percent increases, respectively, from $9.25 billion, or $5.91 per share reported in 2002.

During the year, all three of the company's major businesses significantly increased their net income. The company's ability to grow deposits and increase market share coupled with strong performance in mortgage, card and investment banking income and a significant improvement in credit quality drove these record earnings.

"Our emphasis this year was on improving the customer's banking experience and increasing their satisfaction level," said Kenneth D. Lewis, Bank of America chairman and chief executive officer. "That led to their doing more business with us. Process improvement and a focus on execution were the foundation of these efforts and the driver of why revenue and earnings have exceeded rising investor expectations for 12 straight quarters."

    Fourth quarter financial highlights  (compared to a year earlier)

     * Return on common equity was 22.4 percent.

     * Shareholder Value Added (SVA) grew 19 percent to $1.44 billion.

     * Product sales in the banking centers increased 23 percent.

     * Consumer loans grew to 65 percent of total loans.

     * Mortgage banking income increased 39 percent to $292 million.

     * Card income increased 11 percent to $815 million.

     * Investment banking income increased 9 percent to $458 million.

     * Net charge-offs fell 38 percent.

    Customer highlights

     * The company grew consumer checking accounts by 1.24 million in 2003,
       compared to an increase of 528,000 in 2002.  The number of accounts
       increased by 220,000 in the fourth quarter.

     * The company grew consumer savings products by 640,000 in 2003, compared
       to a net decline of 265,000 in 2002.  The number of net new savings
       products was 128,000 in the fourth quarter.  This growth was driven by
       initiatives to improve the sales process and by the introduction of
       Risk Free CDs in late 2002.

     * The company opened 4.3 million new credit card accounts in 2003,
       compared to 2.7 million in 2002.  The number of new credit card
       accounts increased by 414,000 in the fourth quarter.  This growth was
       driven by the development of more competitive offers, improved
       technology at the point of sale and an increase in direct mail

     * During the fourth quarter, the company opened 94 new banking centers,
       meeting the goal of opening 150 new centers in 2003.  The goal is to
       open at least 150 centers in each of the next two years.

     * The number of customers expressing the highest level of satisfaction
       with the company increased 8 percent.  This equates to an increase of
       1.1 million customers being highly satisfied with their banking
       experience.  These customers are more likely to expand their
       relationships and lead to long-term revenue growth.  In addition,
       attrition of newly acquired customers declined 9 percent:

       -- Commercial customer satisfaction improved 19 percent.
       -- Mortgage customer satisfaction increased 16 percent.
       -- Check and debit card satisfaction increased 7 percent.
       -- Customer dissatisfaction declined 14 percent.

     * Marsico Funds doubled its assets under management to $30.2 billion.

Fourth quarter financial summary (compared to a year ago)


Revenue on a fully taxable-equivalent basis grew 9 percent from the previous year to $9.79 billion.

Net interest income on a fully taxable-equivalent basis increased 4 percent to $5.75 billion. This increase was driven by consumer loan growth, the impact of interest rate movements and higher asset/liability management portfolio and core deposit levels. This was partially offset by the impact of lower corporate and foreign loan balances, lower trading-related contributions and lower mortgage warehouse levels. The net interest yield declined 27 basis points to 3.39 percent.

Noninterest income increased 18 percent to $4.04 billion driven by improvements in equity investments, mortgage banking, card, investment and brokerage services and investment banking income. Equity investment gains included $212 million of gains on securities sold that had been received in satisfaction of debt previously charged off in 2002.

During the quarter, the company realized $139 million in net securities gains compared to $304 million a year ago.


Expenses increased 9 percent from a year ago to $5.28 billion. This rise was driven primarily by an increase in benefits cost and revenue-based employee incentives. Marketing expense also increased as the company reinvested productivity gains into advertising and direct mail campaigns. The company also recorded a pre-tax charge of $32 million related to expensing employee stock options. The efficiency ratio was 53.95 percent.

Credit quality

Overall credit quality continued to improve. Net charge-offs and nonperforming assets continued to decline as a percentage of loans and leases. All major commercial asset quality indicators are showing positive trends while consumer credit quality performance remains stable.

     * Provision for credit losses was $583 million, down 10 percent from $651
       million in the third quarter and down 50 percent from $1.17 billion a
       year earlier.

     * Net charge-offs were $725 million, or 0.77 percent of loans and leases,
       down 7 percent from $776 million, or 0.86 percent, in the third quarter
       and down 38 percent from $1.17 billion, or 1.35 percent, a year
       earlier.   Large corporate loans reflected a net recovery of $38
       million excluding a $114 million charge-off related to a single
       European credit.  Also related to that credit was a writedown of
       $92 million on derivatives.

     * Nonperforming assets were $3.02 billion, or 0.81 percent of loans,
       leases and foreclosed properties as of December 31, 2003. This was down
       17 percent from $3.66 billion in the third quarter and down 43 percent
       from $5.26 billion a year earlier.   During the quarter, the company
       sold $469 million in nonperforming assets, resulting in a modest net

     * The allowance for loan and lease losses stood at $6.16 billion, or 1.66
       percent of loans and leases on December 31, 2003. That was down from
       $6.26 billion or 1.68 percent, in the third quarter and down from $6.36
       billion or 1.85 percent, at the end of 2002. As of December 31, 2003,
       the allowance for loan and lease losses represented 215 percent of
       nonperforming loans, up from 183 percent in the third quarter and 126
       percent a year earlier.  During the quarter, $416 million of reserves
       related to unfunded lending commitments were reclassified to other
       liabilities from the allowance for loan and lease losses and all prior
       periods have been reclassified.

Capital management

Total shareholders' equity was $48.0 billion at December 31, 2003, down 5 percent from a year ago, and represented 7 percent of period-end assets of $736 billion. The Tier 1 Capital Ratio was 7.85 percent, a decline of 37 basis points from a year ago and 40 basis points from the September 30, 2003 level.

During the quarter, Bank of America issued 7 million shares related to employee options and stock ownership plans and repurchased 56 million shares. Average common shares outstanding were 1.46 billion in the fourth quarter, down 2 percent from 1.50 billion a year earlier.

2003 full-year financial summary


Fully taxable-equivalent revenue, at $38.5 billion, rose 10 percent from $35.1 billion in 2002.

Fully taxable-equivalent net interest income rose 3 percent to $22.1 billion. This growth was driven by higher asset-liability management portfolio and consumer loan levels, as well as larger trading-related contributions, and higher mortgage warehouse and core deposit levels partially offset by the impact of lower interest rates and reductions in the corporate, foreign, and exited consumer loan portfolios. The net interest yield declined 39 basis points to 3.36 percent.

Noninterest income grew 21 percent to $16.4 billion, driven by solid growth in fee income, primarily from mortgages and debit and credit cards.

Other income was up 76 percent due to higher levels of residential loan sale gains and income generated from the company's investment in Mexican bank, Grupo Financiero Santander Serfin.

Net security gains were $941 million as compared to $630 million a year ago.


Based on strong revenue growth, the efficiency ratio improved to 52.23 percent. Noninterest expense grew 9 percent to $20.1 billion, driven by higher benefits costs, revenue-related incentive compensation, increased professional fees including legal expense and increased marketing expense.

Credit quality

Provision expense was $2.84 billion in 2003, a 23 percent decline from 2002. Net charge-offs totaled $3.11 billion, or 0.87 percent of loans and leases, down from $3.70 billion, or 1.10 percent of loans and leases, in 2002.

2003 full-year business segment results

Consumer and Commercial Banking

Consumer and Commercial Banking (CCB) earned $7.52 billion for the year, a 15 percent rise from 2002. Total revenue grew 11 percent to $26.3 billion while noninterest expense was up 9 percent, driven primarily by marketing and volume-related expenses in mortgage banking. Return on equity was 36.8 percent and SVA grew $1.1 billion to $5.5 billion.

Net interest income increased 5 percent to $16.0 billion.

Noninterest income was up 23 percent to $10.3 billion, driven by higher mortgage banking and card income.

The deepening of customer relationships drove the year's outstanding CCB results as customers did more business with the bank. Consumer loans increased 6 percent. Average deposits grew 10 percent. Consumer credit and debit card purchase volumes increased 13 and 22 percent, respectively. Sales per day per sales associate increased 22 percent.

Commercial banking also benefited from deeper customer relationships and improved credit quality as earnings increased 17 percent to $1.15 billion in 2003. This was driven by a 12 percent growth in deposits, a 38 percent growth in middle market investment banking fees, including a 37 percent growth in M&A advisory activity, and a 33 percent decline in net charge-offs. Commercial loans rose 4 percent from December 31, 2002 to December 31, 2003.

Global Corporate and Investment Banking

Global Corporate and Investment Banking (GCIB) earnings exceeded $2 billion for the first time, rising 29 percent to $2.01 billion. Revenue increased 3 percent to $8.93 billion due to an increase in market-based activity and strong growth in investment banking fee activity. Provision expense dropped to $477 million from $1.2 billion as credit quality improved significantly. Net charge-offs declined 43 percent and nonperforming assets declined $1.7 billion, or 57 percent. Net interest income was relatively unchanged at $4.83 billion. Expenses increased 7 percent, driven by higher legal and employee incentive costs. Return on equity was 20.9 percent and SVA increased $732 million to $983 million.

The year was marked by the strength of the core businesses as investment banking revenue grew 13 percent to $1.67 billion, led by strong demand for securities underwriting, which grew 34 percent to $963 million. Total trading-related revenue was unchanged at $2.8 billion. Excluding the mark-to- market of credit default swaps used to hedge the portfolio, total trading- related revenue increased 15 percent to $3.1 billion driven by fixed income sales and trading results.

Period-end corporate loans and leases in the quarter were $41.2 billion, down 29 percent from $57.8 billion in 2002.

Asset Management

Asset Management net income rose 79 percent in 2003 to $670 million, reflecting lower provision expense and $199 million of gains on securities sold that had been received in satisfaction of debt previously charged off in 2002. Revenue increased 11 percent to $2.63 billion. Expenses increased 8 percent due to costs associated with growing distribution, marketing, and revenue-driven employee incentives. Return on equity was 24 percent and SVA increased $287 million to $368 million.

Assets under management increased 8 percent to $335.7 billion, led by increases in equities and fixed income products due to increases in market valuations and net sales. Balances in equity funds grew 41 percent from a year earlier, led by Marisco Capital Management.

In 2003, Asset Management exceeded its goal of increasing financial advisors 20 percent and ended the year with 1,150 financial advisors. Additionally, the business completed the roll out of its advice-focused High Net Worth client service model to the franchise.

Equity Investments

Equity Investments reported a loss of $249 million, compared to a loss of $331 million a year ago. Principal Investing reported cash gains of $273 million and $47 million in mark-to-market adjustments during the year offset by $438 million in impairments.

Note: James H. Hance, Jr., vice chairman and chief financial officer, will discuss fourth quarter results in a conference call at 9:30 a.m. (Eastern Time) today. The call can be accessed via a webcast available on the Bank of America Web site at .

Bank of America is one of the world's largest financial institutions, serving individual consumers, small businesses and large corporations and institutions with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience for consumers in the United States, serving 1 in 3 American households with 4,200 banking centers, more than 13,100 ATMs and an award-winning internet site with more than seven million active online users. Bank of America is rated the number one Small Business Administration Lender in the United States by the SBA. The company serves clients in 150 countries and has relationships with 94 percent of the U.S. Fortune 500 companies and 76 percent of the Global Fortune 500. The seventh most profitable company in the United States, Bank of America had $736 billion in assets, $414 billion in deposits and a market capitalization of $115.9 billion at December 31, 2003. Bank of America Corporation stock (ticker: BAC) is listed on the New York Stock Exchange. For more information, please go to .

Forward-Looking Statements

This press release contains forward-looking statements, including statements about the financial conditions, results of operations and earnings outlook of Bank of America Corporation. The forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, the following: 1) projected business increases following process changes and other investments are lower than expected; 2) competitive pressure among financial services companies increases significantly; 3) general economic conditions are less favorable than expected; 4) costs related to the integration of acquisitions are greater than expected; 5) political conditions and related actions by the United States military abroad adversely affect the company's businesses and economic conditions as a whole; 6) changes in the interest rate environment reduce interest margins and impact funding sources; 7) changes in foreign exchange rates increase exposure; 8) changes in market rates and prices adversely impact the value of financial products and assets; 9) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 10) litigation and regulatory liabilities, including costs, expenses, settlements and judgments, adversely affect the company or its businesses; and 11) decisions to downsize, sell or close units or otherwise change the business mix of any of the company. For further information regarding Bank of America Corporation, please read the Bank of America reports filed with the SEC and available at .

    Bank of America

                                Three Months             Twelve Months
                             Ended December 31         Ended December 31
                             2003         2002         2003         2002
    (Dollars in millions,
     except per share
     data; shares in

    Financial Summary

    Earnings                  $2,726       $2,614      $10,810       $9,249
        Earnings per
         common share           1.86         1.74         7.27         6.08
        Diluted earnings
         per common share       1.83         1.69         7.13         5.91

    Dividends per common
     share                      0.80         0.64         2.88         2.44
    Closing market price
     per common share          80.43        69.57        80.43        69.57
    Average common shares
     issued and
     outstanding           1,463,247    1,499,557    1,486,703    1,520,042
    Average diluted common
     shares issued and
     outstanding           1,489,481    1,542,482    1,515,178    1,565,467

    Summary Income

    Net interest income       $5,586       $5,374      $21,464      $20,923
    Noninterest income         4,043        3,430       16,422       13,571
    Total revenue              9,629        8,804       37,886       34,494
    Provision for credit
     losses                      583        1,165        2,839        3,697
    Gains on sales of
     securities                  139          304          941          630
    Noninterest expense        5,282        4,832       20,127       18,436
    Income before income
     taxes                     3,903        3,111       15,861       12,991
    Income tax expense         1,177          497        5,051        3,742
    Net income                $2,726       $2,614      $10,810       $9,249

    Summary Average
     Balance Sheet

    Loans and leases        $371,071     $343,099     $356,148     $336,819
    Securities                60,801       83,751       72,267       75,298
    Earning assets           675,212      601,881      657,503      573,521
    Total assets             780,534      695,559      764,132      662,424
    Deposits                 418,840      381,381      406,233      371,479
    Shareholders' equity      48,293       48,074       49,204       47,613
    Common shareholders'
     equity                   48,238       48,015       49,148       47,552

    Performance Indices

    Return on average
     assets                     1.39 %       1.49 %       1.41 %       1.40 %
    Return on average
     common shareholders'
     equity                    22.42        21.58        21.99        19.44

    Credit Quality

    Net Charge-offs             $725       $1,165       $3,106       $3,697
        % of average loans
         and leases             0.77 %       1.35 %       0.87  %      1.10 %
    Managed bankcard net
     charge-offs as a % of
     average managed bankcard
     receivables                5.14         4.99         5.36         5.28

                                                     At December 31
                                                 2003              2002

    Balance Sheet Highlights

    Loans and leases                            $371,463          $342,755
    Securities                                    68,240            69,148
    Earning assets                               628,554           562,432
    Total assets                                 736,445           660,951
    Deposits                                     414,113           386,458
    Shareholders' equity                          47,980            50,319
    Common shareholders' equity                   47,926            50,261
        Book value per share                       33.26             33.49

    Total equity to assets ratio (period
     end)                                           6.52 %            7.61 %

    Risk-based capital ratios:
         Tier 1                                     7.85              8.22
         Total                                     11.87             12.43

    Leverage ratio                                  5.73              6.29

    Period-end common shares issued and
     outstanding                               1,441,144         1,500,691

    Allowance for credit losses:
      Loans and leases                            $6,163            $6,358
      Unfunded lending commitments                   416               493
           Total                                  $6,579            $6,851
    Allowance for loans and leases as a %
     of loans and leases                            1.66 %            1.85 %
    Allowance for loans and leases as a %
     of nonperforming loans                          215               126
    Nonperforming loans                           $2,873            $5,037
    Nonperforming assets                           3,021             5,262
    Nonperforming assets as a % of:
         Total assets                               0.41 %            0.80 %
         Loans, leases and foreclosed
          properties                                0.81              1.53
    Nonperforming loans as a % of loans
     and leases                                     0.77              1.47

    Other Data

    Full-time equivalent employees               133,549           133,944
    Number of banking centers                      4,227             4,208
    Number of ATM's                               13,241            13,013


                         Consumer               Corporate
                            and                   and
                         Commercial    Asset   Investment  Equity   Corporate
                          Banking   Management   Banking Investments  Other
     Three Months Ended
      December 31, 2003

    Total revenue           $6,786       $830     $2,075     $(55)       $152
    Net income               1,914        262        576      (67)         41
    Shareholder value
     added                   1,337        183        341     (124)       (294)
    Return on equity          33.9 %     36.0 %     26.2 %  (12.4)%       n/m
    Average loans and
     leases               $192,685    $23,805    $43,565     $100    $110,916

     Three Months Ended
      December 31, 2002
    Total revenue           $6,192       $587     $2,086    $(100)       $202
    Net Income               1,721        108        207      (83)        661
    Shareholder value
     added                   1,168         26       (119)    (146)        285
    Return on equity          34.7 %     15.6 %      7.4 %  (15.6)%       n/m
    Average loans and
     leases               $184,243    $22,950    $60,475     $438     $74,993

    n/m = not meaningful

                                    Three Months Ended  Twelve Months Ended
                                       December 31          December 31
                                      2003      2002      2003       2002


    Taxable-equivalent basis data(1)
    Net interest income              $5,745    $5,537    $22,107    $21,511
    Total revenue                     9,788     8,967     38,529     35,082
    Net interest yield                 3.39 %    3.66 %     3.36 %     3.75 %
    Efficiency Ratio                  53.95     53.90      52.23      52.55 %

    Reconciliation of net income to
     shareholder value added
    Net income                       $2,726    $2,614    $10,810     $9,249
    Amortization expense                 54        54        217        218
    Capital charge                   (1,337)   (1,454)    (5,406)    (5,707)
    Shareholder value added          $1,443    $1,214     $5,621     $3,760

    (1) Fully taxable-equivalent (FTE) is a performance measure used by
        management in operating the business which management believes
        provides investors with a more accurate picture of the interest margin
        for comparative purposes.

SOURCE Bank of America Corporation
-0- 01/15/2004

/CONTACT: Investors, Kevin Stitt, +1-704-386-5667, or Lee McEntire, +1-704-388-6780, or Media, Eloise Hale, +1-704-387-0013, or, all of Bank of America/
/Web site: /

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