Bank of America Announces 15 Percent Increase in Earnings Per Share
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Supplemental first quarter 2003 financial information
Net income is $2.42 billion Consumer loans increase 21% Convertibles, Mortgage-backed securities achieve significant market share gains Domestic deposits grow 9% Domestic deposits grow 9% Large corporate nonperforming loans decline for first time in six quarters CHARLOTTE, Apr 14, 2003 /PRNewswire-FirstCall via COMTEX/ -- Bank of America Corporation today reported first quarter earnings of $2.42 billion, or $1.59 per share (diluted), a 15 percent increase in earnings per share from $2.18 billion, or $1.38 per share, a year ago. The return on common equity increased to 19.92 percent. All three of the company's major businesses increased their net income, a significant accomplishment in the current economic environment. These results reflect the success of the company's customer relationship strategy as multiple products recorded substantial increases, including strong mortgage sales, further penetration in debit and credit card and growth in deposits and loans. "Bank of America's results show that we are uniquely positioned to leverage our brand and scale," said Kenneth D. Lewis, chairman and chief executive officer. "We are clearly demonstrating the benefits of our customer-focused strategy and how it is achieving high shareholder returns." Financial highlights (compared to a year earlier)
Customer highlights
Revenue Revenue grew 4 percent from the previous year to $8.89 billion. Net interest income of $5.21 billion was relatively unchanged from the previous year. Noninterest income increased 7 percent to $3.69 billion. Strong refinance levels continued to drive higher mortgage banking income results. Card income rose as a result of higher interchange and other fees. Total service charges increased 8 percent. Other income was up due primarily to $242 million in gains on residential loan sales taken to reduce prepayment risk. During the quarter, the company realized $273 million in net securities gains as the discretionary portfolio was repositioned in line with market conditions and the company's belief on the direction of interest rates. Efficiency Expenses increased 5 percent from a year ago to $4.72 billion. This growth was driven by the development and launch of a new, national advertising campaign and an increase in employee benefits as healthcare costs escalated. Additionally, the company began expensing employee stock options this quarter, a pre-tax impact of $26 million. Credit quality Credit losses improved from the fourth quarter. The consumer and middle market portfolios continue to be stable to improving. While there were declines in nonperforming large corporate loans, the company remains cautious about this portfolio.
Capital management Total shareholders' equity was $50.05 billion at March 31, 2003, up 4 percent from a year ago and represented 7 percent of period-end assets of $680 billion. The Tier 1 Capital Ratio was 8.20 percent, a decrease of 28 basis points from a year ago and 2 basis points from the December 31, 2002 level. During the quarter, Bank of America repurchased 18.4 million shares and issued 15.2 million shares related to employee options and stock ownership plans. Average common shares outstanding were 1.50 billion in the first quarter, down 3 percent from 1.54 billion a year earlier. Consumer and Commercial Banking Consumer and Commercial Banking (CCB) earned $1.59 billion, up 2 percent from a year ago. Total revenue grew 7 percent to $6.03 billion while expenses increased 9 percent due to marketing costs and an increase in mortgage banking personnel. Return on equity was 32.6 percent and SVA grew $75 million to $1.1 billion. The successful results were driven by the ongoing strength of the consumer and middle market businesses. Not only were transaction levels of credit and debit cards higher, but overall transaction dollar amounts also increased. The credit card delinquency rates decreased. Checking, credit card and debit card accounts increased along with middle market investment banking services. Noninterest income was up 17 percent to $2.30 billion, driven by higher consumer service charges, mortgage banking income and card income. It was also driven by a 48 percent increase in middle market investment banking income. Net interest income was relatively unchanged at $3.73 billion. Average loans grew 2 percent, led by consumer loan growth as customers continued to take advantage of the interest rate environment for mortgages, home equity lines, automobile loans and credit card accounts. Middle market loans and deposits saw positive growth. Global Corporate and Investment Banking Global Corporate and Investment Banking (GCIB) earned $481 million, up 5 percent from last year, due to favorable market conditions in fixed-income products. Revenue increased 3 percent to $2.34 billion while expenses remained flat. Return on equity was 18.6 percent and SVA increased $80 million to $203 million. Strong trading revenue and expense management drove these results. Investment banking income increased 14 percent to $373 million from last year. The increase in fees was led by the strong demand for fixed income and convertible securities. Net interest income was up 10 percent to $1.28 billion from a year ago, primarily driven by the growth in trading assets and lower funding costs. Total trading-related revenue in GCIB, which includes trading-related net interest income and trading fees, was $911 million, up 15 percent from last year primarily due to gains in fixed income. Asset Management Asset Management net income rose 2 percent from a year ago to $140 million as a result of lower provision expense. Despite more than 20% declines in market indices, overall revenue decreased only 3 percent to $578 million. Expenses increased 2 percent, reflecting the increase in distribution capabilities over the last several quarters. Return on equity was 20.3 percent and SVA declined $4 million to $66 million. Assets under management decreased 6 percent to $297 billion. Continuing to focus on expanding distribution capabilities, Asset Management will increase its number of financial advisors by approximately 20 percent again this year. More than 75% of the mutual fund assets managed by Banc of America Capital Management LLC were ranked in the top two performance quartiles in their respective Lipper categories for the one-year, three-year and five-year periods ended March 31. Equity Investments Equity Investments reported a loss of $86 million, compared to a loss of $32 million a year ago. Principal Investing reported cash gains of $45 million in the first quarter offset by $77 million in impairments and $41 million in mark-to-market adjustments. Note: James H. Hance, Jr., vice chairman and chief financial officer, will discuss first 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 http://www.bankofamerica.com/investor/. These comments will include certain non-GAAP (generally accepted accounting principles) financial measures that are discussed in more detail on the company's website. One of the world's leading financial services companies, Bank of America is committed to making banking work for customers and clients like it never has before. Through innovative technologies and the ingenuity of its people, Bank of America provides individuals, small businesses and commercial, corporate and institutional clients across the United States and around the world new and better ways to manage their financial lives. Shares of Bank of America (ticker: BAC), the second largest banking company in the United States by market capitalization, are listed on the New York, Pacific and London stock exchanges. The company's Web site is www.bankofamerica.com. News, speeches and other corporate information may be found at www.bankofamerica.com/newsroom. Additional financial tables are available at www.bankofamerica.com/investor/. 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) political conditions including the threat of future terrorist activity and related actions by the United States military abroad may adversely affect the company's businesses and economic conditions as a whole; 4) changes in the interest rate environment reduce interest margins and impact funding sources; 5) changes in foreign exchange rates increases exposure; 6) changes in market rates and prices may adversely impact the value of financial products; 7) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 8) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; and 9) 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 www.sec.gov.
Bank of America
Supplemental Information
First Quarter 2003
April 14, 2003
This information is preliminary and based on company data available at
the time of the presentation. It speaks only as of the particular date or
dates included in the accompanying pages. Bank of America does not
undertake an obligation to, and disclaims any duty to, correct or update
any of the information provided. Any forward-looking statements in this
information are subject to the forward-looking language contained in Bank
of America's reports filed with the SEC pursuant to the Securities
Exchange Act of 1934, which are available at the SEC's website
(www.sec.gov) or at Bank of America's website (www.bankofamerica.com).
Bank of America's future financial performance is subject to risks and
uncertainties as described in its SEC filings.
Bank of America Corporation
Results Overview
* Diluted EPS of $1.59, up 15% over same period last year, down 6% from
prior quarter. Net income in fourth quarter 2002 included $.32 per
share in tax benefits related to the settlement of federal income tax
returns through 1999.
* Diversity of businesses produced fee-based revenue growth across all
businesses of 7% versus prior quarter and first quarter a year ago.
* Net interest income was up 1% over first quarter 2002 but down 3% from
the fourth quarter, as expected, due to the rate environment.
* Net charge-offs declined $332 million from the prior quarter.
* Nonperforming asset levels declined 4% below year-end 2002 levels.
* Growth in consumer loans of 21% and deposit levels of 8% over the first
quarter 2002 continues to benefit from improved quality and
productivity initiatives.
* Net new checking account growth of 243,000 in first quarter doubled the
level of prior year quarter.
* Banking center product sales have grown more than 20% in the most
recent quarter.
* Banc of America Securities continues to gain important product market
share gains in investment banking.
Bank of America Corporation
Consolidated Financial Highlights
(Dollars in millions, except per share information; shares in thousands)
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
2003 2002 2002 2002 2002
Income statement
Total revenue $8,894 $8,804 $8,522 $8,575 $8,593
Provision for credit
losses 833 1,165 804 888 840
Gains on sales of
securities 273 304 189 93 44
Noninterest expense 4,717 4,832 4,620 4,490 4,494
Income tax expense 1,193 497 1,052 1,069 1,124
Net income 2,424 2,614 2,235 2,221 2,179
Diluted earnings per
common share 1.59 1.69 1.45 1.40 1.38
Average diluted
common shares
outstanding 1,526,288 1,542,482 1,546,347 1,592,250 1,581,848
Cash dividends paid
per common share $0.64 $0.64 $0.60 $0.60 $0.60
Performance ratios
Return on average
assets 1.38% 1.49% 1.33% 1.38% 1.39%
Return on average
common shareholders'
equity 19.92 21.58 19.02 18.47 18.64
Book value per share of
common stock 33.38 $33.49 $32.07 $31.47 $31.15
Market price per share
of common stock:
High for the period $72.50 $71.99 $71.94 $77.08 $69.61
Low for the period 64.26 53.98 57.90 66.82 57.51
Closing price 66.84 69.57 63.80 70.36 68.02
Market capitalization 100,095 104,403 95,838 106,642 105,058
Number of banking
centers 4,202 4,208 4,226 4,232 4,246
Number of ATM's 13,266 13,013 12,489 12,827 13,161
Full-time equivalent
employees 132,583 133,944 134,135 135,489 137,240
Certain prior period amounts have been reclassified to conform to current
period presentation.
Bank of America Corporation
Supplemental Financial Data and Reconciliations to GAAP Financial
Measures
(Dollars in millions)
Certain non-GAAP (generally accepted accounting principles) performance
measures and ratios, including shareholder value added and
taxable-equivalent net interest income, net interest yield and operating
efficiency calculated on a taxable-equivalent basis are used in managing
the business. Management believes that these measures provide users of
this financial information a more accurate picture of the interest margin
for comparative purposes. Other companies may define or calculate
supplemental financial data differently. See the Table below for
supplemental financial data and corresponding reconciliations to GAAP
financial measures for the three months ended March 31, 2003,
December 31, 2002, September 30, 2002, June 30, 2002, and March 31, 2002.
Management reviews net interest income on a taxable-equivalent basis. In
this non-GAAP presentation, net interest income is adjusted to reflect
tax-exempt interest income on an equivalent before-tax basis. This
measure ensures comparability of net interest income arising from both
taxable and tax-exempt sources. Net interest income on a
taxable-equivalent basis is also used in the calculation of the
efficiency ratio and the net interest yield. The efficiency ratio, which
is calculated by dividing noninterest expense by total revenue, measures
how much it costs to produce one dollar of revenue. Net interest income
on a taxable-equivalent basis is also used in business segment reporting.
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
2003 2002 2002 2002 2002
Net interest income
Taxable-equivalent
basis data
Net interest income $5,361 $5,537 $5,465 $5,262 $5,247
Total revenue 9,046 8,967 8,685 8,743 8,687
Net interest yield 3.52% 3.66% 3.75% 3.75% 3.85%
Net interest yield
without taxable-
equivalent income 3.45 3.54 3.63 3.63 3.81
Efficiency ratio 52.14 53.90 53.19 51.34 51.74
Efficiency ratio
without taxable-
equivalent income 53.03 54.90 54.21 52.35 52.30
Reconciliation of net
income to shareholder
value added
Net income $2,424 $2,614 $2,235 $2,221 $2,179
Amortization expense 54 54 54 55 55
Capital charge (1,338) (1,454) (1,409) (1,442) (1,402)
Shareholder value
added 1,140 1,214 880 834 832
Certain prior period amounts have been reclassified to conform to current
period presentation.
Bank of America Corporation
Consolidated Statement of Income
(Dollars in millions, except per share information; shares in thousands)
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
2003 2002 2002 2002 2002
Interest income
Interest and fees on
loan and leases $5,348 $5,502 $5,553 $5,530 $5,445
Interest and dividends
on securities 778 1,061 1,104 924 946
Federal funds sold and
securities purchased
under agreements to
resell 194 208 177 270 215
Trading account assets 1,042 979 1,006 948 878
Other interest income 363 371 345 312 387
Total interest income 7,725 8,121 8,185 7,984 7,871
Interest expense
Deposits 1,183 1,292 1,414 1,384 1,344
Short-term borrowings 453 557 526 529 477
Trading account
liabilities 308 289 342 344 285
Long-term debt 572 609 601 633 612
Total interest
expense 2,516 2,747 2,883 2,890 2,718
Net interest income 5,209 5,374 5,302 5,094 5,153
Noninterest income
Consumer service charges 777 802 761 732 691
Corporate service charges 577 571 586 566 567
Total service charges 1,354 1,373 1,347 1,298 1,258
Consumer investment and
brokerage services 378 370 373 420 381
Corporate investment and
brokerage services 165 171 174 178 170
Total investment and
brokerage services 543 541 547 598 551
Mortgage banking income 405 209 220 138 195
Investment banking income 378 422 318 464 341
Equity investment gains
(losses) (68) (54) (216) (36) 26
Card income 681 736 686 621 577
Trading account profits 114 99 71 263 345
Other income 278 104 247 135 147
Total noninterest
income 3,685 3,430 3,220 3,481 3,440
Total revenue 8,894 8,804 8,522 8,575 8,593
Provision for credit
losses 833 1,165 804 888 840
Gains on sales of
securities 273 304 189 93 44
Noninterest expense
Personnel 2,459 2,482 2,368 2,386 2,446
Occupancy 472 450 457 441 432
Equipment 284 292 291 279 262
Marketing 230 203 210 170 170
Professional fees 125 186 126 122 91
Amortization of
intangibles 54 54 54 55 55
Data processing 266 291 295 226 205
Telecommunications 124 120 119 123 119
Other general operating 703 754 700 688 714
Total noninterest
expense 4,717 4,832 4,620 4,490 4,494
Income before income
taxes 3,617 3,111 3,287 3,290 3,303
Income tax expense 1,193 497 1,052 1,069 1,124
Net income $2,424 $2,614 $2,235 $2,221 $2,179
Net income available
to common
shareholders $2,423 $2,613 $2,233 $2,220 $2,178
Per common share
information
Earnings $1.62 $1.74 $1.49 $1.45 $1.41
Diluted earnings $1.59 $1.69 $1.45 $1.40 $1.38
Dividends $0.64 $0.64 $0.60 $0.60 $0.60
Average common shares
issued and
outstanding 1,499,405 1,499,557 1,504,017 1,533,783 1,543,471
Average diluted
common shares
issued and
outstanding 1,526,288 1,542,482 1,546,347 1,592,250 1,581,848
Certain prior period amounts have been reclassified to conform to current
period presentation.
Bank of America Corporation
Consolidated Balance Sheet
(Dollars in millions)
March 31 December 31 March 31
2003 2002 2002
Assets
Cash and cash equivalents $25,069 $24,973 $22,444
Time deposits placed and other short-term
investments 5,523 6,813 7,056
Federal funds sold and securities purchased
under agreements to resell 49,809 44,878 40,771
Trading account assets 65,733 63,996 58,569
Derivative assets 35,409 34,310 19,116
Securities:
Available-for-sale 75,511 68,122 74,306
Held-to-maturity 927 1,026 1,037
Total securities 76,438 69,148 75,343
Loans and leases 343,412 342,755 331,210
Allowance for credit losses (6,853) (6,851) (6,869)
Loans and leases, net of allowance for
credit losses 336,559 335,904 324,341
Premises and equipment, net 6,643 6,717 6,748
Mortgage banking assets 1,995 2,110 4,104
Goodwill 11,396 11,389 10,950
Core deposit intangibles and other
intangibles 1,065 1,095 1,256
Other assets 64,126 59,125 49,223
Total assets $679,765 $660,458 $619,921
Liabilities
Deposits in domestic offices:
Noninterest-bearing $121,127 $122,686 $108,409
Interest-bearing 242,287 232,320 224,630
Deposits in foreign offices:
Noninterest-bearing 2,331 1,673 1,677
Interest-bearing 29,431 29,779 32,484
Total deposits 395,176 386,458 367,200
Federal funds purchased and securities
sold under agreements to repurchase 72,976 65,079 48,545
Trading account liabilities 23,578 25,574 25,258
Derivative liabilities 22,876 23,566 12,053
Commercial paper and other short-term
borrowings 29,729 25,234 21,992
Accrued expenses and other liabilities 15,905 17,052 31,138
Long-term debt 63,442 61,145 60,036
Trust preferred securities 6,031 6,031 5,530
Total liabilities 629,713 610,139 571,752
Shareholders' equity
Preferred stock, $0.01 par value;
authorized - 100,000,000 shares; issued
and outstanding 1,336,200; 1,356,749;
and 1,452,249 shares 57 58 62
Common stock, $0.01 par value; authorized -
5,000,000,000 shares; issued and outstanding
1,497,530,740; 1,500,691,103; and
1,544,521,073 shares 127 496 3,949
Retained earnings 49,978 48,517 44,245
Accumulated other comprehensive income
/(loss) 74 1,232 (72)
Other (184) 16 (15)
Total shareholders' equity 50,052 50,319 48,169
Total liabilities and shareholders'
equity $679,765 $660,458 $619,921
Bank of America Corporation
Capital Management
(Dollars in Millions)
1Q02 2Q02 3Q02 4Q02 1Q03*
Tier 1 capital $42,078 $41,097 $41,732 $43,105 $43,821
Total capital 64,158 63,108 63,505 65,169 65,695
Net risk-weighted
assets 496,227 508,008 513,085 524,175 534,722
Tier 1 capital ratio 8.48% 8.09% 8.13% 8.22% 8.20%
Total capital ratio 12.93 12.42 12.38 12.43 12.29
Ending equity /
ending assets 7.77 7.48 7.31 7.62 7.36
Ending capital /
ending assets 8.66 8.35 8.22 8.53 8.25
Average equity /
average assets 7.44 7.47 6.97 6.91 6.92
*Preliminary
Share Repurchase Program
18 million common shares were repurchased in the first quarter of 2003 as
a part of ongoing share repurchase programs.
135 million shares remain outstanding under the current authorized
program (133 million net of outstanding put options)
15 million shares were issued in the first quarter of 2003, mostly due to
stock incentive plans.
Bank of America Corporation
Average Balances and Interest Rates - Taxable-Equivalent Basis
(Dollars in millions)
First Quarter 2003
Interest/
Average Income Yield/
Balance Expense Rate
Earning assets
Time deposits placed
and other short-term
investments $ 6,987 $ 43 2.49 %
Federal funds sold and
securities purchased under
agreements to resell 57,873 194 1.35
Trading account assets 99,085 1,053 4.27
Securities (1) 67,784 793 4.69
Loans and leases (2) :
Commercial - domestic 103,663 1,836 7.18
Commercial - foreign 18,876 156 3.35
Commercial real estate
- domestic 19,955 215 4.37
Commercial real
estate - foreign 301 3 3.88
Total commercial 142,795 2,210 6.27
Residential mortgage 113,695 1,582 5.59
Home equity lines 23,054 267 4.70
Direct/Indirect consumer 31,393 503 6.49
Consumer finance 8,012 154 7.76
Credit card 24,684 644 10.57
Foreign consumer 2,029 17 3.45
Total consumer 202,867 3,167 6.30
Total loans and leases 345,662 5,377 6.29
Other earning assets 35,701 417 4.71
Total earning assets (3) 613,092 7,877 5.18
Cash and cash equivalents 21,699
Other assets, less allowance
for credit losses 78,508
Total assets $713,299
Interest-bearing liabilities
Domestic interest-
bearing deposits:
Savings $ 22,916 $ 34 0.59 %
NOW and money market
deposit accounts 142,338 291 0.83
Consumer CDs and IRAs 66,937 695 4.21
Negotiable CDs, public funds
and other time deposits 3,598 16 1.78
Total domestic interest-
bearing deposits 235,789 1,036 1.78
Foreign interest-bearing
deposits (4)
Banks located in foreign
countries 14,218 80 2.27
Governments and official
institutions 1,785 6 1.31
Time, savings, and other 18,071 61 1.38
Total foreign interest-
bearing deposits 34,074 147 1.75
Total interest-bearing
deposits 269,863 1,183 1.78
Federal funds purchased,
securities sold under
agreements to repurchase
and other short-term borrowings 123,041 453 1.49
Trading account liabilities 34,858 308 3.58
Long-term debt and trust
preferred securities 67,399 572 3.40
Total interest-bearing
liabilities (3) 495,161 2,516 2.05
Noninterest-bearing sources:
Noninterest-bearing deposits 115,897
Other liabilities 52,841
Shareholders' equity 49,400
Total liabilities and
shareholders' equity $713,299
Net interest spread 3.13
Impact of noninterest-
bearing sources 0.39
Net interest income/yield
on earning assets $5,361 3.52 %
Fourth Quarter 2002
Interest/
Average Income Yield/
Balance Expense Rate
Earning assets
Time deposits placed and
other short-term
investments $ 8,853 $ 56 2.49 %
Federal funds sold and
securities purchased under
agreements to resell 49,169 208 1.68
Trading account assets 84,181 994 4.71
Securities (1) 83,751 1,078 5.15
Loans and leases (2) :
Commercial - domestic 105,333 1,777 6.70
Commercial - foreign 20,538 180 3.48
Commercial real estate
- domestic 20,359 245 4.77
Commercial real
estate - foreign 426 4 3.93
Total commercial 146,656 2,206 5.97
Residential mortgage 108,019 1,699 6.28
Home equity lines 23,347 300 5.10
Direct/Indirect consumer 30,643 523 6.76
Consumer finance 8,943 174 7.75
Credit card 23,535 613 10.33
Foreign consumer 1,956 17 3.48
Total consumer 196,443 3,326 6.74
Total loans and leases 343,099 5,532 6.41
Other earning assets 32,828 417 5.07
Total earning assets (3) 601,881 8,285 5.48
Cash and cash equivalents 21,242
Other assets, less allowance
for credit losses 72,345
Total assets $695,468
Interest-bearing liabilities
Domestic interest-bearing deposits:
Savings $ 22,142 $ 35 0.63 %
NOW and money market
deposit accounts 137,229 325 0.94
Consumer CDs and IRAs 66,266 728 4.36
Negotiable CDs, public funds
and other time deposits 3,400 17 1.97
Total domestic interest-
bearing deposits 229,037 1,105 1.91
Foreign interest-bearing
deposits (4)
Banks located in foreign countries 15,286 104 2.70
Governments and official
institutions 1,737 7 1.68
Time, savings, and other 17,929 76 1.68
Total foreign interest-
bearing deposits 34,952 187 2.12
Total interest-bearing
deposits 263,989 1,292 1.94
Federal funds purchased,
securities sold under
agreements to repurchase
and other short-term borrowings 123,434 558 1.79
Trading account liabilities 30,445 289 3.77
Long-term debt and trust
preferred securities 65,702 609 3.71
Total interest-bearing
liabilities (3) 483,570 2,748 2.26
Noninterest-bearing sources:
Noninterest-bearing deposits 117,392
Other liabilities 46,432
Shareholders' equity 48,074
Total liabilities and
shareholders' equity $695,468
Net interest spread 3.22
Impact of noninterest-bearing sources 0.44
Net interest income/yield
on earning assets $5,537 3.66 %
First Quarter 2002
Interest/
Average Income Yield/
Balance Expense Rate
Earning assets
Time deposits placed
and other short-term
investments $ 10,242 $ 61 2.43 %
Federal funds sold and
securities purchased under
agreements to resell 44,682 215 1.94
Trading account assets 70,613 888 5.06
Securities (1) 73,542 963 5.24
Loans and leases (2) :
Commercial - domestic 116,160 1,978 6.90
Commercial - foreign 21,917 226 4.17
Commercial real estate
- domestic 22,251 275 5.01
Commercial real estate
- foreign 389 4 4.00
Total commercial 160,717 2,483 6.26
Residential mortgage 81,104 1,389 6.88
Home equity lines 22,010 294 5.42
Direct/Indirect consumer 30,360 550 7.34
Consumer finance 12,134 255 8.46
Credit card 19,383 490 10.26
Foreign consumer 2,093 19 3.71
Total consumer 167,084 2,997 7.24
Total loans and leases 327,801 5,480 6.76
Other earning assets 22,231 358 6.52
Total earning assets (3) 549,111 7,965 5.86
Cash and cash equivalents 22,037
Other assets, less allowance
for credit losses 66,530
Total assets $637,678
Interest-bearing liabilities
Domestic interest-bearing
deposits:
Savings $ 20,716 $ 33 0.64 %
NOW and money market
deposit accounts 127,218 335 1.07
Consumer CDs and IRAs 69,359 730 4.27
Negotiable CDs, public funds
and other time deposits 4,671 32 2.82
Total domestic interest-
bearing deposits 221,964 1,130 2.06
Foreign interest-
bearing deposits (4)
Banks located in
foreign countries 15,464 107 2.79
Governments and official
institutions 2,904 14 1.96
Time, savings, and other 19,620 93 1.93
Total foreign interest-
bearing deposits 37,988 214 2.29
Total interest-bearing
deposits 259,952 1,344 2.10
Federal funds purchased,
securities sold under
agreements to repurchase
and other short-term borrowings 86,870 477 2.23
Trading account liabilities 31,066 285 3.72
Long-term debt and trust
preferred securities 67,694 612 3.62
Total interest-bearing
liabilities (3) 445,582 2,718 2.47
Noninterest-bearing sources:
Noninterest-bearing deposits 104,451
Other liabilities 40,189
Shareholders' equity 47,456
Total liabilities and
shareholders' equity $637,678
Net interest spread 3.39
Impact of noninterest-
bearing sources .46
Net interest income/yield
on earning assets $5,247 3.85 %
(1) The average balance and yield on securities are based on the average
of historical amortized cost balances.
(2) Nonperforming loans are included in the respective average loan
balances. Income on such nonperforming loans is recognized on a cash
basis.
(3) Interest income includes the impact of interest rate risk management
contracts, which increased interest income on the underlying assets
$563 in the first quarter of 2003 and $517 and $560 in the fourth and
first quarters of 2002, respectively. These amounts were substantially
offset by corresponding decreases in the income earned on the
underlying assets. Interest expense includes the impact of interest
rate risk management contracts, which (increased) decreased interest
expense on the underlying liabilities $(46) in the first quarter of
2003 and $(62) and $55 in the fourth and first quarters of 2002,
respectively. These amounts were substantially offset by corresponding
decreases or increases in the interest paid on the underlying
liabilities.
(4) Primarily consists of time deposits in denominations of $100,000 or
more.
Bank of America Corporation
Consumer and Commercial Banking Segment Results
(Dollars in millions)
Quarterly
Key Measures 1 Qtr 03 4 Qtr 02 3 Qtr 02 2 Qtr 02 1 Qtr 02
Total revenue* $6,033 $6,192 $6,051 $5,723 $5,650
Provision for credit
losses 488 510 420 449 427
Net income 1,591 1,721 1,679 1,587 1,556
Shareholder value
added 1,099 1,169 1,145 1,056 1,024
Return on average
equity 32.6 % 34.7 % 34.9 % 33.1 % 32.4 %
Efficiency ratio* 50.0 47.5 49.4 48.3 49.1
Selected Average Balance
Sheet Components
Total loans and
leases $185,779 $184,161 $182,083 $181,955 $181,415
Total deposits 295,654 292,259 283,769 280,161 276,655
Total earning
assets 321,945 314,604 286,248 279,025 275,108
Period End (in billions)
Mortgage servicing
portfolio $257.2 $264.5 $278.7 $287.8 $289.9
Mortgage originations
Retail 21.8 22.2 15.3 9.5 13.0
Wholesale 10.8 9.7 8.6 4.9 4.9
* Taxable-equivalent basis
Certain prior period amounts have been reclassified between segments to
conform to the current period presentation.
Bank of America Corporation
E-Commerce & BankofAmerica.com
Bank of America has the largest active online banking customer base with
over 5.2 million subscribers. This represents an active customer
penetration rate of 35%.
Bank of America uses a strict Active User standard -- customers must have
used our online services within the last 90 days.
2.0 million active bill pay users paid over $9.5 billion worth of bills
this quarter. The number of customers who sign up and use Bank of America
Bill Pay Service continues to far surpass that of any other financial
institution.
Currently, 225 companies are presenting nearly 3.0 million e-bills per
quarter.
Bank of America Corporation
Consumer Credit Card Results
Included within Consumer Products
(Dollars in millions)
Quarterly
Key Measures 1 Qtr 03 4 Qtr 02 3 Qtr 02 2 Qtr 02 1 Qtr 02
Outstandings:
Held (Period-End) $24,819 $24,729 $23,062 $21,155 $19,535
Managed
(Period-End) 29,064 29,461 28,057 27,089 26,558
Held (Average) 24,684 23,535 22,263 20,402 19,383
Managed (Average) 29,161 28,406 27,540 26,902 26,539
Managed Income Statement:
Total revenue $965 $943 $895 $806 $826
Provision for credit
losses 409 386 392 393 371
Noninterest expense 275 244 254 249 244
Income before income
taxes 281 313 249 164 211
Shareholder Value
Added $128 $152 $114 $62 $92
Credit Quality:
Held:
Charge-off $ $323 $299 $285 $269 $241
Charge-off % 5.31 % 5.03 % 5.09 % 5.28 % 5.05 %
Managed:
Losses $ $378 $357 $356 $375 $355
Losses % 5.25 % 4.99 % 5.13 % 5.59 % 5.43 %
Managed Delinquency %:
30+ 4.18 % 3.94 % 3.63 % 3.78 % 4.16 %
90+ 1.91 1.71 1.66 1.76 1.95
Bank of America Corporation
Global Corporate and Investment Banking Segment Results
(Dollars in millions)
Quarterly
Key Measures 1 Qtr 03 4 Qtr 02 3 Qtr 02 2 Qtr 02 1 Qtr 02
Total revenue* $2,343 $2,085 $2,001 $2,306 $2,285
Provision for credit
losses 272 524 203 216 264
Net income 481 206 385 509 457
Shareholder value added 203 (120) 62 183 123
Return on average
equity 18.6 % 7.4 % 14.0 % 18.3 % 16.0 %
Efficiency ratio* 56.5 60.4 60.5 56.2 57.1
Selected Average Balance
Sheet Components
Total loans and
leases $56,521 $60,558 $61,091 $64,172 $67,018
Total deposits 67,315 65,879 66,163 63,770 63,212
Total earning
assets 226,122 207,850 203,596 201,458 192,570
* Taxable-equivalent basis
Certain prior period amounts have been reclassified between segments to
conform to the current period presentation.
Bank of America Corporation
Global Corporate & Investment Banking Strategic Progress Continues
Significant US market share gains
Largest market share gain of the quarter was dollar-denominated
convertible debt where market share quadrupled from 3.3% and an eighth
place rank in the first quarter 2002 to 14.2% and a third place rank.
Mortgage-backed securities market share doubled from one year ago to
finish with a 7.8% share and a seventh place rank.
Banc of America Securities maintained its second place market share
ranking for both syndicated and leveraged lending while continuing its
dominance in number of deals.
Common stock issuance market share moved form 2.3% to 4.1% while the
ranking moved from 10th to 8th.
Bank of America Corporation
Asset Management Segment Results
(Dollars in millions)
Quarterly
Key Measures 1 Qtr 03 4 Qtr 02 3 Qtr 02 2 Qtr 02 1 Qtr 02
Total revenue* $578 $588 $571 $622 $598
Provision for credit
losses (4) 30 118 143 26
Net income 140 108 63 66 137
Shareholder value
added 66 26 (14) (2) 70
Return on average
equity 20.3 % 15.5 % 9.6 % 11.4 % 23.9 %
Efficiency ratio* 63.3 67.3 63.8 61.0 59.9
Selected Average Balance
Sheet Components
Total loans and
leases $22,683 $22,950 $23,637 $24,308 $24,794
Total deposits 12,859 12,531 11,967 11,776 11,837
Total earning assets 23,415 23,693 24,238 24,907 25,445
Period End (in billions)
Assets under
management $297.0 $310.4 $271.9 $295.2 $314.9
Client brokerage
assets 90.8 90.8 87.1 90.5 96.6
Assets in custody 45.1 46.6 42.1 41.0 46.0
Total client
assets $432.9 $447.8 $401.1 $426.7 $457.5
* Taxable-equivalent basis
Certain prior period amounts have been reclassified between segments to
conform to the current period presentation.
Bank of America Corporation
Equity Investments Segment Results
(Dollars in millions)
Quarterly
Key Measures 1 Qtr 03 4 Qtr 02 3 Qtr 02 2 Qtr 02 1 Qtr 02
Total revenue* ($107) ($100) ($233) ($84) ($28)
Provision for credit
losses 1 7 -- -- --
Net income (86) (83) (161) (55) (32)
Shareholder value
added (141) (146) (223) (120) (94)
Return on average
equity (16.7) % (15.6) % (30.7) % (10.1) % (6.2) %
Efficiency ratio* (24.2) (27.5) (11.6) (10.5) (98.4)
Selected Average Balance
Sheet Components
Total loans and leases $434 $438 $446 $448 $427
Total deposits -- -- -- -- --
Total earning assets 434 438 446 448 433
Period End
Investment balances for
principal investing $5,435 $5,395 $5,429 $5,429 $5,520
* Taxable-equivalent basis
Certain prior period amounts have been reclassified between segments to
conform to the current period presentation.
Bank of America Corporation
Corporate Other Results (1)
(Dollars in millions)
Quarterly
Key Measures 1 Qtr 03 4 Qtr 02 3 Qtr 02 2 Qtr 02 1 Qtr 02
Total revenue* $199 $202 $295 $176 $182
Provision for credit
losses 76 94 63 80 123
Net income (2) 298 662 269 114 61
Shareholder value
added (87) 285 (90) (283) (291)
Selected Average Balance
Sheet Components
Total loans and
leases $80,245 $74,992 $73,228 $64,802 $54,147
Total deposits 9,932 10,713 12,034 10,279 12,699
Total earning
assets 161,018 171,269 158,047 138,771 132,263
* Taxable-equivalent basis
(1) Corporate Other consists primarily of gains and losses associated
with managing the balance sheet of the Corporation, certain consumer
finance and commercial lending businesses being liquidated, and
certain residential mortgages originated by the mortgage group or
otherwise acquired and held for asset/liability management purposes.
(2) Includes $488 tax benefit in the fourth quarter of 2002 related to
the settlement of federal income tax returns through 1999.
Certain prior period amounts have been reclassified between segments to
conform to the current period presentation.
Bank of America Corporation
Net Charge-offs and Net Charge-off Ratios
(Dollars in millions)
1Q02 2Q02 3Q02
Amt. Ratio Amt. Ratio Amt. Ratio
Commercial - domestic $370 1.29 % $383 1.38 % $240 0.90 %
Commercial - foreign 49 0.90 119 2.23 148 2.77
Commercial real estate -
domestic 14 0.25 8 0.14 6 0.12
Total commercial 433 1.09 510 1.32 394 1.05
Residential mortgage 11 0.05 8 0.03 5 0.02
Home equity lines 8 0.15 7 0.12 5 0.08
Direct/indirect consumer 64 0.86 38 0.50 48 0.63
Consumer finance 75 2.49 49 1.77 54 2.13
Credit card 241 5.05 269 5.28 285 5.09
Other consumer domestic 7 n/m 7 n/m 11 n/m
Foreign consumer 1 0.16 -- -- 2 0.32
Total consumer 407 0.99 378 0.84 410 0.85
Total net
charge-offs $840 1.04 $888 1.06 $804 0.94
By Business Segment:
Consumer & commercial
banking $427 0.95 % $449 0.99 % $420 0.92 %
Global corporate &
investment banking 264 1.60 216 1.35 203 1.32
Asset management 26 0.44 143 2.37 118 1.99
Equity investments -- -- -- -- -- --
Corporate other 123 0.92 80 0.50 63 0.34
Total net charge-offs $840 1.04 $888 1.06 $804 0.94
4Q02 1Q03
Amt. Ratio Amt. Ratio
Commercial - domestic $478 1.80 % $239 0.94 %
Commercial - foreign 205 3.95 120 2.57
Commercial real estate -
domestic 9 0.20 9 0.18
Total commercial 692 1.87 368 1.04
Residential mortgage 18 0.07 2 0.01
Home equity lines 6 0.10 6 0.11
Direct/indirect consumer 60 0.78 56 0.72
Consumer finance 77 3.44 68 3.42
Credit card 299 5.03 323 5.31
Other consumer domestic 11 n/m 9 n/m
Foreign consumer 2 0.38 1 0.20
Total consumer 473 0.95 465 0.93
Total net charge-offs $1,165 1.35 $833 0.98
By Business Segment:
Consumer & commercial
banking $509 1.10 % $488 1.06 %
Global corporate & investment
banking 526 3.44 272 1.96
Asset management 30 0.52 (4) (0.06)
Equity investments 7 6.26 1 0.72
Corporate other 93 0.50 76 0.38
Total net charge-offs $1,165 1.35 $833 0.98
Loans are classified as domestic or foreign based upon the domicile of the
borrower.
Bank of America Corporation
Nonperforming Assets
(Dollars in millions)
1Q02 2Q02 3Q02 4Q02 1Q03
Commercial - domestic $3,207 $2,847 $3,132 $2,781 $2,605
Commercial - foreign 583 980 854 1,359 1,279
Commercial real estate -
domestic 216 202 172 161 173
Commercial real estate -
foreign 2 3 3 3 3
Total commercial 4,008 4,032 4,161 4,304 4,060
Residential mortgage 477 503 585 612 628
Home equity lines 73 64 57 66 63
Direct/Indirect consumer 26 27 31 30 28
Consumer finance 8 8 8 19 18
Foreign consumer 9 8 7 6 9
Total consumer 593 610 688 733 746
Total nonperforming
loans 4,601 4,642 4,849 5,037 4,806
Foreclosed properties 391 297 282 225 227
Total nonperforming
assets(1) $4,992 $4,939 $5,131 5,262 5,033
Loans past due 90 days
or more and still
accruing $662 $605 $726 $764 $808
Nonperforming Assets /
Total Assets 0.81% 0.77% 0.78% 0.80% 0.74%
Nonperforming Assets /
Total Loans, Leases
and Foreclosed
Properties 1.51 1.45 1.50 1.53 1.46
Nonperforming Loans /
Total Loans and Leases 1.39 1.36 1.42 1.47 1.40
Allowance for Loan
Losses $6,869 $6,873 $6,861 $6,851 $6,853
Allowance / Total Loans 2.07% 2.02% 2.01% 2.00% 2.00%
Allowance / Total
Nonperforming Loans 149 148 142 136 143
Loans are classified as domestic or foreign based upon the domicile of
the borrower.
(1) Balances do not include $174, $120, $184, $221, and $304 of
nonperforming assets included in other assets at March 31, 2003,
December 31, 2002, September 30, 2002, June 30, 2002, and March 31,
2002, respectively.
Bank of America Corporation
Significant Industry Non-Real Estate Outstanding Commercial Loans and
Leases
(Dollars in millions)
March 31, December 31, Increase/(Decrease)
2003 2002 from 12/31/02
Retailing $10,710 $10,165 5 %
Transportation 8,189 8,030 2
Leisure and sports, hotels
and restaurants 7,986 8,139 (2)
Materials 7,820 7,972 (2)
Food, beverage and tobacco 7,563 7,335 3
Diversified financials 7,507 8,344 (10)
Capital goods 7,098 7,088 0
Commercial services and
supplies 6,216 6,449 (4)
Education and government 5,565 5,206 7
Utilities 4,938 5,590 (12)
Media 4,883 5,911 (17)
Health care equipment and
services 3,987 3,912 2
Energy 3,003 3,076 (2)
Telecommunications services 2,796 3,105 (10)
Consumer durables and apparel 2,545 2,591 (2)
Religious and social
organizations 2,512 2,426 4
Banks 1,602 1,881 (15)
Insurance 1,409 1,616 (13)
Technology hardware and
equipment 1,305 1,368 (5)
Food and drug retailing 1,232 1,344 (8)
Other (1) 22,591 23,417 (4)
Total $121,457 $124,965 (3) %
(1) At March 31, 2003 and December 31, 2002, Other includes $9,403 and
$9,090, respectively, of loans outstanding to individuals and
trusts, representing 2.7% of total outstanding loans and leases for
both period ends. The remaining balance in Other includes loans to
industries which primarily include automobiles and components,
software and services, pharmaceuticals and biotechnology, and
household and personal products.
Bank of America Corporation
Selected Emerging Markets
(Dollars in Millions)
Loans and Securities /
Loan Other Derivative Other
Commitments Financing (1) Assets Investments (2)
Region/Country
Asia
China $59 $9 $40 $27
Hong Kong (5) 294 57 88 137
India 392 59 73 32
Indonesia 58 -- 16 30
Korea (South) 227 346 34 23
Malaysia 8 3 -- 2
Pakistan 6 -- -- --
Philippines 28 19 3 20
Singapore 118 15 189 3
Taiwan 321 201 32 7
Thailand 36 9 16 26
Other 3 17 1 --
Total $1,550 $735 $492 $307
Central and Eastern
Europe
Russian Federation $-- $-- $-- $--
Turkey 29 5 -- 19
Other 24 32 32 46
Total $53 $37 $32 $65
Latin America
Argentina $210 $45 $2 $88
Brazil 289 226 42 87
Chile 111 24 7 10
Colombia 80 7 5 4
Mexico 852 154 125 497
Venezuela 112 2 -- 102
Other 108 91 -- 40
Total $1,762 $549 $181 $828
Total $3,365 $1,321 $705 $1,200
Total Increase /
Total Gross Foreign (Decrease)
Cross- Local Exposure from
border Country March 31, December 31,
Exposure (3) Exposure (4) 2003 2002
Region/Country
Asia
China $135 $62 $197 $(47)
Hong Kong (5) 576 3,395 3,971 167
India 556 899 1,455 82
Indonesia 104 2 106 (14)
Korea (South) 630 902 1,532 296
Malaysia 13 170 183 (57)
Pakistan 6 -- 6 (1)
Philippines 70 58 128 (28)
Singapore 325 1,464 1,789 121
Taiwan 561 556 1,117 28
Thailand 87 258 345 82
Other 21 80 101 5
Total $3,084 $7,846 $10,930 $634
Central and Eastern
Europe
Russian Federation $-- $-- $-- $(5)
Turkey 53 -- 53 (5)
Other 134 -- 134 (167)
Total $187 $-- $187 $(177)
Latin America
Argentina $345 $93 $438 $(27)
Brazil 644 428 1,072 (103)
Chile 152 -- 152 11
Colombia 96 -- 96 8
Mexico 1,628 312 1,940 351
Venezuela 216 -- 216 (16)
Other 239 -- 239 14
Total $3,320 $833 $4,153 $238
Total $6,591 $8,679 $15,270 $695
(1) Includes acceptances, standby letters of credit, commercial letters
of credit and formal guarantees.
(2) Amounts outstanding in the table above for Philippines, Argentina,
Mexico, Venezuela and Latin America Other have been reduced by $12,
$85, $332, $137 and $38, respectively, at March 31, 2003, and $12,
$90, $505, $131 and $37, respectively, at December 31, 2002. Such
amounts represent the fair value of U.S. Treasury securities held as
collateral outside the country of exposure.
(3) Cross-border exposure includes amounts payable to the Corporation by
residents of countries other than the one in which the credit is
booked, regardless of the currency in which the claim is denominated,
consistent with FFIEC reporting rules.
(4) Gross local country exposure includes amounts payable to the
Corporation by residents of countries in which the credit is booked,
regardless of the currency in which the claim is denominated.
Management does not net local funding or liabilities against local
exposures as allowed by the FFIEC.
(5) Gross local country exposure to Hong Kong consisted of $1,811 of
consumer loans and $1,584 of commercial exposure at March 31, 2003.
The consumer loans were collateralized primarily by residential real
estate. The commercial exposure was primarily to local clients and
was diversified across many industries.
SOURCE Bank of America Corporation
Investors
Lee McEntire
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