BANK OF AMERICA

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Bank Of America Reports Record Third Quarter Earnings

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CHARLOTTE, N.C., Oct. 18 /PRNewswire/ -- Bank of America Corporation (NYSE: BAC) today reported record third quarter earnings of $2.15 billion, or $1.25 per share ($1.23 diluted).

Results far surpassed the $374 million, or $.21 per share ($.21 diluted), earnings of a year earlier that were impacted by global financial turbulence. Excluding a $725 million pre-tax merger-related charge, operating earnings a year ago were $893 million, or $.51 per share ($.50 diluted).

Diluted operating earnings per share were up 7 percent from the second quarter of this year.

The company's return on equity rose to 18.40 percent in the third quarter, and the return on assets increased to 1.40 percent.

Cash operating earnings - which exclude the amortization of intangibles and merger-related charges - were $2.37 billion, or $1.38 per share ($1.35 diluted). The return on tangible equity was 29.48 percent. A year earlier, cash operating earnings were $1.12 billion, or $.64 per share ($.63 diluted).

"Bank of America made solid progress during the third quarter," said Hugh L. McColl Jr., chairman and chief executive officer. "Our merger transition continues to go smoothly and remains on schedule. We are successfully building out our investment banking platform and delivering those services to our huge middle market customer base. And we are refocusing a number of our businesses to achieve greater value for customers and higher profitability for shareholders. We are accomplishing all of these initiatives while increasing earnings and improving returns."

For the first nine months of 1999, operating earnings were up 25 percent to $6.13 billion, or $3.53 per share ($ 3.45 diluted) compared to $4.89 billion, or $2.81 per share ($2.73 diluted) a year earlier. Net income was 49 percent higher at $5.98 billion, or $3.45 per share ($3.37 diluted), compared to $4.00 billion, or $2.30 per share ($2.24 diluted), a year earlier.

Third Quarter Earnings Highlights (compared to a year ago)

* Revenue rose 21 percent, as noninterest income increased 55 percent and

fully-taxable equivalent net interest income was up 3 percent.

* Average managed consumer loans increased by 17 percent.

* Fee-based income recorded strong improvement in almost all areas and

rose to 45 percent of revenue.

* The efficiency ratio improved to 54 percent.

* Net charge-offs declined to .51 percent of loans.

Net Interest Income

Fully taxable-equivalent net interest income of $4.60 billion was 3 percent higher than a year earlier due to solid loan growth, somewhat offset by the impact of securitizations, loan sales and the funding cost of share repurchases. The net interest yield on earning assets was 3.46 percent compared to 3.60 percent a year earlier.

Noninterest Income

Noninterest income increased 55 percent to $3.73 billion due to widespread gains across the spectrum of Bank of America's fee-based businesses. The primary gains were recorded in credit card, trading, investment banking, mortgage banking and service charge income. Fee income rose to 45 percent of revenue.

Securities gains were $44 million compared to $280 million in the third quarter of 1998.

Efficiency

Noninterest expense declined 1 percent to $4.53 billion, reflecting cost savings resulting from recent mergers offset by increased revenue-based incentives, accelerated spending on merger transition projects and continued expansion of the investment banking business. The efficiency ratio improved to 54 percent.

Credit Quality

The provision for credit losses in the third quarter was $450 million, compared to $1.4 billion a year earlier. Net charge-offs were $460 million, well below $902 million a year ago which included a $372 million charge-off related to the D.E. Shaw relationship. Net charge-offs represented .51 percent of loans and leases in the latest period.

Nonperforming assets were $3.04 billion, or .84 percent of loans, leases and foreclosed properties on September 30, 1999, compared to $2.58 billion, or .73 percent a year earlier. The allowance for credit losses totaled $7.08 billion on September 30, 1999, equal to 252 percent of nonperforming loans and 1.96 percent of loans and leases. The allowance was $7.21 billion, or 315 percent of nonperforming loans and 2.05 percent of loans and leases, a year earlier.

Capital Strength

Shareholders' equity stood at $45.9 billion at September 30, 1999. The Tier 1 capital ratio was 7.71 percent. The company's market capitalization was $95 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 September 30, the company had purchased 43 million shares.

Business Segment Results

Consumer Banking, which serves individuals and small businesses, earned $1.10 billion, while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $216 million. Together, they represented 61 percent of the company's operating income. Global Corporate and Investment Banking, which serves large corporate customers, earned $530 million, representing 25 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 $244 million, representing 11 percent.

Bank of America, with $621 billion in assets, is the largest bank in the United States. The company serves more than 30 million households and 2 million businesses across the country, offering customers the largest and most convenient delivery network from offices and ATMs to telephone and internet access. It also provides comprehensive international corporate financial services for clients doing business around the world. The company creates financial relationships featuring a wide array of financial services, from traditional banking products to investments and capital raising within the securities markets. Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange. Further investor information can be found at www.bankofamerica.com/investor .

www.bankofamerica.com

Bank of America Corporation

                                         Three Months         Nine Months
                                     Ended September 30    Ended September 30
                                      1999        1998       1999       1998
    Financial Summary
    (In millions, except per-share data)

    Operating net income             $2,151        $893     $6,125     $4,887
     Operating earnings
      per common share                 1.25         .51       3.53       2.81
     Diluted operating earnings
      per common share                 1.23         .50       3.45       2.73
    Cash basis earnings (A)           2,373       1,117      6,794      5,566
     Cash basis earnings per
      common share                     1.38         .64       3.91       3.20
     Cash basis diluted earnings
      per common share                 1.35         .63       3.83       3.11
    Dividends paid per common share     .45         .38       1.35       1.14
    Price per share of common stock
      at period end                   55.69       53.50      55.69      53.50
    Average common shares         1,722.307   1,740.092  1,734.401  1,732.297
    Average diluted common shares 1,755.146   1,784.418  1,773.692  1,782.106

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

    Net interest income             $4,603      $4,484    $13,911    $13,811
    Provision for credit losses       (450)     (1,405)    (1,470)    (2,410)
    Gains on sales of securities        44         280        226        613
    Noninterest income               3,728       2,405     10,473      9,534
    Other noninterest expense       (4,526)     (4,583)   (13,436)   (14,054)

    Income before income taxes       3,399       1,181      9,704      7,494
    Income taxes - including
     FTE adjustment                  1,248         288      3,579      2,607
    Operating net income            $2,151        $893     $6,125     $4,887


    SUMMARY Balance Sheet
    (Average balances in billions)

    Loans and leases               $361.400   $348.785   $362.302   $344.539
    Managed loans and leases(B)     387.580    356.396    387.305    353.394
    Securities                       80.261     65.536     77.998     64.791
    Earning assets                  528.564    495.911    527.450    493.900
    Total assets                    611.448    578.353    612.152    577.055
    Deposits                        336.998    347.783    341.693    343.369
    Shareholders' equity             46.439     45.756     46.537     44.755
    Common shareholders' equity      46.360     45.693     46.464     44.291


    PERFORMANCE INDICES (Operating Basis)

    Return on average common
     shareholders' equity             18.40%      7.73%     17.61%     14.68%
    Return on average tangible
     common shareholders' equity      29.48      14.51      28.48      25.69
    Return on average assets           1.40        .61       1.34       1.13
    Return on average tangible
     assets                            1.58        .79       1.52       1.33
    Net interest yield                 3.46       3.60       3.52       3.74
    Efficiency ratio                  54.34      66.55      55.10      60.20
    Cash basis efficiency ratio       51.67      63.28      52.36      57.29
    Net charge-offs (in millions)      $460       $902     $1,499     $1,923
     % of average loans and leases      .51%      1.03%       .55%       .75%
    Managed bankcard net charge-offs
     as a % of average managed
     bankcard receivables              4.83       5.99       5.66       6.42

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

    Net income                       $2,151       $374     $5,980     $4,003
     Earnings per common share         1.25        .21       3.45       2.30
     Diluted earnings
      per common share                 1.23        .21       3.37       2.24
    Return on average common
     shareholders' equity             18.40       3.23      17.19      12.01

    (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).
                                                           September 30
                                                        1999        1998
    Balance Sheet highlights
    (In billions, except per-share data)

    Loans and leases                                  $360.236    $351.982
    Securities                                          79.836      72.139
    Earning assets                                     534.431     507.329
    Total assets                                       620.652     594.673
    Deposits                                           337.011     345.756
    Shareholders' equity                                45.889      47.307
    Common shareholders' equity                         45.811      47.245
     Per share                                           26.79       27.12

    Total equity to assets ratio
     (period-end)                                         7.39%       7.96%

    Risk-based capital
     Tier 1 capital ratio                                 7.71        7.29
     Total capital ratio                                 11.39       11.25

    Leverage ratio                                        6.59        6.64

    Common shares issued and
     outstanding (in millions)                       1,710.039   1,742.038
    Allowance for credit losses                         $7.076      $7.215
    Allowance for credit losses
     as a % of loans and leases                           1.96%       2.05%
    Allowance for credit losses
     as a % of nonperforming loans                      251.85      314.55
    Nonperforming loans                                 $2.810      $2.294
    Nonperforming assets                                 3.038       2.582
    Nonperforming assets as a % of:
     Total assets                                          .49%        .43%
     Loans, leases and foreclosed properties               .84         .73

    OTHER DATA

    Full-time equivalent headcount                     158,886     174,844
    Banking centers                                      4,535       4,870
    ATMs                                                14,042      14,333


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

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

    Consumer Banking       $4,657        $1,097     $182,732          22%
    Commercial Banking        780           216       56,653          20
    Global Corporate and
      Investment Banking    1,989           530      103,318          16
    Principal Investing
     and Asset Management     802           244       19,061          31

SOURCE Bank of America Corporation

Third Quarter 1999 Financial Information for Investors