BANK OF AMERICA

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Bank of America Reports Record Quarterly Earnings of $4.7 Billion, or $1.14 Per Share

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Supplemental first quarter 2005 financial information

Revenue and earnings momentum strong across enterprise Commercial loans up significantly in Northeast Efficiency ratio beats target

CHARLOTTE, N.C., April 18 /PRNewswire-FirstCall/ -- Bank of America Corporation today reported that first quarter net income rose to $4.70 billion, or $1.14 per share (diluted), from $2.68 billion, or $0.91 per share, a year ago. Under purchase accounting rules, results reported for the first quarter of 2004 do not include the impact of FleetBoston Financial Corporation, which was acquired on April 1, 2004. Return on common equity in the first quarter was 19.30 percent.

In addition to the impact of Fleet, net income increased due to strong results throughout the company's businesses, lower credit costs, increasing merger-related efficiencies and gains from the sales of securities.

The integration of Fleet remained on schedule as several systems conversions were completed during the quarter and additional conversions were started. Direct cost savings achieved in the quarter totaled $437 million.

First quarter earnings included merger and restructuring charges of $112 million pre-tax, which reduced net income by 2 cents per share.

"I am very pleased with the continued momentum of our businesses," said Kenneth D. Lewis, chairman and chief executive officer. "The continuing successful integration of the Fleet franchise has bolstered our ability to achieve future growth and value creation for our shareholders. In particular, we saw the strongest commercial loan growth in many quarters across our company and deposit growth continues to be robust.

"This quarter shows how our balanced business mix is paying off," Lewis continued. "The power of our franchise is evident in our ability this quarter to deliver an efficiency ratio below our target of 50 percent."

Business Highlights (Unless otherwise stated, the following highlights compare results in the first quarter of 2005 to the fourth quarter of 2004. Both periods include the impact of the Fleet merger.)

  • Net new retail consumer checking accounts in the first quarter of 2005 were a record 610,000, surpassing the 602,000 new accounts in the fourth quarter of 2004.
  • Net new retail savings accounts in the first quarter of 2005 were a record 759,000, versus 742,000 new accounts in the fourth quarter of 2004.
  • Bank of America opened 1.3 million new consumer credit card accounts in the first quarter of 2005, as average managed outstandings for consumer credit card exceeded $58 billion.
  • Average loans grew 2 percent from the fourth quarter of 2004 to $525 billion, with strength in both consumer and commercial lending. Excluding residential mortgages, average loans grew 3 percent from the fourth quarter of 2004. Bank of America carries residential mortgages on its balance sheet for asset/liability management.
  • Active online banking users increased to 13.1 million, while online bill payers reached 6.3 million in the first quarter of 2005.
  • Trading-related revenue in the Global Capital Markets and Investment Banking segment climbed 74 percent in the first quarter of 2005 as compared to the fourth quarter of 2004.
  • Customer "Delight" among all Bank of America customers in the first quarter was 52.5 percent, compared to 50.1 percent one year ago. These results include all Bank of America businesses and the former Fleet franchise.
    Fleet Merger Highlights
  • Approximately 10 million Fleet consumer credit card accounts were converted to the Bank of America system, and BAC completed the issuance of Bank of America credit and debit cards to active Fleet cardholders.
  • Net new checking accounts in the former Fleet footprint increased to 79,000 in the quarter as compared to 45,000 in the fourth quarter of 2004.
  • Net new savings accounts in the former Fleet footprint increased to 96,000 in the quarter as compared to net new savings accounts of 82,000 in the fourth quarter of 2004.
  • Global Business and Financial Services grew loans more than $200 million in the former Fleet footprint during the first quarter of 2005 in Middle Market and Business Banking.

2005 First Quarter Versus 2004 First Quarter Financial Summary Revenue

Revenue on a fully taxable-equivalent basis grew to $14.22 billion from $9.70 billion the previous year.

Net interest income on a fully taxable-equivalent basis was $8.07 billion compared to $5.97 billion a year earlier. In addition to the impact of Fleet, the increase was driven by consumer and middle-market business loan growth, higher domestic deposit levels and asset-liability management portfolio activity net of the impact of rates. These increases were partially offset by a lower trading-related contribution and lower levels of foreign loans.

Noninterest income was $6.15 billion compared to $3.73 billion a year earlier. In addition to the impact of Fleet, these results were driven by higher investment and brokerage services, equity investment gains, trading account profits and card income.

During the quarter, the company realized $659 million in securities gains. The company realized $495 million in securities gains in the first quarter of 2004.

Efficiency

With strong revenue growth and expense control, the efficiency ratio, including merger and restructuring charges, improved to 49.62 percent. Noninterest expense was $7.06 billion compared to $5.43 billion a year ago, driven by the addition of Fleet.

Credit Quality

All major commercial credit quality indicators continued to show positive trends. Credit card charge-offs grew as a result of the Fleet acquisition, card portfolio growth and seasoning and increases in minimum payment requirements as compared to the first quarter of 2004. Consumer credit quality remained strong in all other categories.

  • Provision for credit losses was $580 million, down from $706 million in the fourth quarter of 2004 and $624 million a year earlier.
  • Net charge-offs were $889 million, or 0.69 percent of average loans and leases. This compared to $845 million, or 0.65 percent, in the fourth quarter of 2004 and $720 million, or 0.77 percent of average loans and leases in the first quarter of 2004.
  • Nonperforming assets decreased to $2.34 billion, or 0.44 percent of total loans, leases and foreclosed properties, at March 31, 2005. This compared to $2.46 billion, or 0.47 percent, at December 31, 2004 and $2.49 billion, or 0.66 percent, at March 31, 2004.
  • The allowance for loan and lease losses was $8.31 billion, or 1.57 percent of loans and leases, at March 31, 2005. This compared to $8.63 billion, or 1.65 percent, at December 31, 2004 and $6.08 billion, or 1.62 percent, at March 31, 2004. At March 31, 2005, the allowance for loan and lease losses represented 401 percent of nonperforming loans and leases, compared to 390 percent at December 31, 2004 and 258 percent at March 31, 2004.

Capital Management

Total shareholders' equity was $98.52 billion at March 31, 2005. Period- end assets grew to $1.21 trillion. The Tier 1 Capital Ratio was 8.20 percent, compared to 8.10 percent at December 31, 2004 and 7.73 percent a year ago.

During the quarter, Bank of America paid a cash dividend of $0.45 per share. The company also issued 32 million shares, primarily related to employee stock options and ownership plans, and repurchased 43 million shares. Average common shares issued and outstanding were 4.03 billion in the first quarter, compared to 4.03 billion in the fourth quarter of 2004 and 2.88 billion in the first quarter of 2004.

First Quarter 2005 Business Segment Results

Global Consumer and Small Business Banking

Global Consumer and Small Business Banking earnings in the first quarter were $1.90 billion. Revenue in the first quarter was $6.96 billion.

As compared to the first quarter of 2004, improvement in mortgage banking income and continued growth in card income and service charges was somewhat offset by an increase in provision.

Excluding the impact of Fleet, average deposits increased slightly while loan balances continued to grow, led by growth in credit card and home equity loans. Credit and debit card purchase volumes also grew as more customers moved away from writing checks and using cash. Loan production in Consumer Real Estate was led by significant improvement in home equity volume as compared to the first quarter of 2004.

Global Business and Financial Services

Global Business and Financial Services earnings in the first quarter were $1.12 billion. Revenue in the first quarter was $2.73 billion.

Excluding the impact of Fleet, steady growth in commercial lending continued. The benefit of steady loan and deposit growth was partially offset by a slight compression in loan margin spreads as compared to the first quarter of 2004.

Global Capital Markets and Investment Banking

Global Capital Markets and Investment Banking earnings in the first quarter were $721 million. Revenue in the first quarter was $2.63 billion.

The business recorded its best quarter ever in earnings and revenue. This was primarily due to increases in trading profits, led by increased sales of interest rate products, equities and strong portfolio management in fixed income. Also contributing to the increase in trading-related revenue were gains on credit portfolio hedges. These increases were somewhat offset by lower investment banking fees as compared to the first quarter of 2004.

Due to the favorable credit environment, Global Capital Markets and Investment Banking had a negative provision in the large corporate loan book in the first quarter of 2005.

Global Wealth and Investment Management

Global Wealth and Investment Management earnings in the first quarter were $576 million. Revenue in the first quarter was $1.79 billion.

Excluding the impact of Fleet, revenue and earnings growth was led by increases from the impact of loan and deposit growth and asset management fees, as well as strong expense management. These factors were partially offset by lower brokerage volume and price compression in addition to a drop in assets under management.

All Other

All Other reflected $379 million of net income for the quarter. Securities gains related to asset/liability management are included in this reporting segment. Equity Investments earned $98 million compared to a loss of $29 million in the first quarter of 2004.

Note: Marc Oken, 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/.

Bank of America is one of the world's largest financial institutions, serving individual consumers, small businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving 33 million consumer relationships through more than 5,800 retail banking offices and 16,700 ATMs and through award-winning online banking with more than thirteen million active users. Bank of America is the No. 1 Small Business Administration Lender in the United States by the SBA. The company serves clients in 150 countries and has relationships with 96 percent of the U.S. Fortune 500 companies and 82 percent of the Global Fortune 500. Bank of America Corporation stock (ticker: BAC) is listed on the New York Stock Exchange.

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 abroad may adversely affect the company's businesses and economic conditions as a whole; 5) changes in the interest rate environment reduce interest margins and impact funding sources; 6) changes in foreign exchange rates increases exposure; 7) changes in market rates and prices may adversely impact the value of financial products; 8) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 9) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; and 10) 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 http://www.sec.gov.



    Bank of America
    Selected Financial Data(1)
                                                       Three Months
                                                      Ended March 31
                                                  2005             2004
    (Dollars in millions, except per
     share data; shares in thousands)

    Financial Summary

    Earnings                                     $4,695           $2,681
        Earnings per common share                  1.16             0.93
        Diluted earnings per common share          1.14             0.91

    Dividends paid per common share                0.45             0.40
    Closing market price per common share         44.10            40.49
    Average common shares issued and
     outstanding                              4,032,550        2,880,306
    Average diluted common shares issued
     and outstanding                          4,099,062        2,933,402

    Summary Income Statement

    Net interest income                          $7,873           $5,801
    Total noninterest income                      6,149            3,730
    Total revenue                                14,022            9,531
    Provision for credit losses                     580              624
    Gains on sales of debt securities               659              495
    Other noninterest expense                     6,945            5,430
    Merger and restructuring charges                112               --
    Income before income taxes                    7,044            3,972
    Income tax expense                            2,349            1,291
    Net income                                   $4,695           $2,681

    Summary Average Balance Sheet

    Total loans and leases                     $524,944         $374,077
    Securities                                  204,574           99,755
    Total earning assets                      1,044,914          734,808
    Total assets                              1,200,883          833,192
    Total deposits                              627,419          425,075
    Shareholders' equity                         98,814           48,686
    Common shareholders' equity                  98,542           48,632

    Performance Indices

    Return on average assets                       1.59 %           1.29 %
    Return on average common
     shareholders' equity                         19.30            22.16

    Credit Quality

    Net charge-offs                                $889             $720
      Annualized net charge-offs as a %
       of average loans and leases
       outstanding                                 0.69 %           0.77 %
    Managed credit card net losses as a %
     of average managed credit card receivables    6.17             5.05



                                                       At March 31
                                                  2005              2004

    Balance Sheet Highlights

    Loans and leases                            $529,466          $375,968
    Total securities                             218,950           139,788
    Total earning assets                       1,059,816           705,039
    Total assets                               1,212,239           799,974
    Total deposits                               629,987           435,592
    Total shareholders' equity                    98,519            48,776
    Common shareholders' equity                   98,248            48,723
      Book value per share                         24.35             16.85

    Total equity to assets ratio (period-
     end)                                           8.13 %            6.10 %

    Risk-based capital ratios:
      Tier 1                                        8.20 *            7.73
      Total                                        11.46 *           11.46

    Leverage ratio                                  5.82 *            5.43

    Period-end common shares issued and
     outstanding                               4,035,319         2,890,975

    Allowance for credit losses:
      Allowance for loan and lease losses         $8,313            $6,080
      Reserve for unfunded lending
       commitments                                   394               401
        Total                                     $8,707            $6,481
    Allowance for loan and lease losses
     as a % of total loans and leases               1.57 %            1.62 %
    Allowance for loan and lease losses
     as a % of total nonperforming loans
     and leases                                      401               258
    Total nonperforming loans and leases          $2,073            $2,354
    Total nonperforming assets                     2,338             2,485
    Nonperforming assets as a % of:
        Total assets                                0.19 %            0.31 %
        Total loans, leases and
         foreclosed properties                      0.44              0.66
    Nonperforming loans and leases as a %
     of total loans and leases                      0.39              0.63

    Other Data

    Full-time equivalent employees               175,365           134,374
    Number of banking centers - domestic           5,889             4,272
    Number of ATMs - domestic                     16,798            13,168


    * Preliminary data


     Information for periods after April 1, 2004 includes the
       FleetBoston acquisition; prior periods have not been
                            restated.



    BUSINESS SEGMENT RESULTS
                                                        Global      Global
                                            Global     Business     Capital
                                         Consumer and    and     Markets and
                                        Small Business Financial  Investment
                                           Banking     Services    Banking
     Three Months Ended March 31, 2005
    Total revenue (FTE) (2)                   $6,961      $2,734     $2,632
    Net income                                 1,899       1,120        721
    Shareholder value added                    1,154         350        449
    Return on average equity                   23.54 %     15.33 %    27.90 %
    Average loans and leases                $138,670    $171,500    $35,508

     Three Months Ended March 31, 2004
    Total revenue (FTE) (2)                   $4,724      $1,569     $2,173
    Net income                                 1,070         582        453
    Shareholder value added                      716         385        253
    Return on average equity                   30.30 %     31.36 %    24.28 %
    Average loans and leases                 $86,082    $109,193    $29,333


    BUSINESS SEGMENT RESULTS
                                                 Global
                                                 Wealth
                                             and Investment            All
                                               Management             Other
     Three Months Ended March 31, 2005
    Total revenue (FTE) (2)                        $1,794                $100
    Net income                                        576                 379
    Shareholder value added                           328                  24
    Return on average equity                        23.74  %              n/m
    Average loans and leases                      $50,759            $128,507

     Three Months Ended March 31, 2004
    Total revenue (FTE) (2)                        $1,101                $133
    Net income                                        246                 330
    Shareholder value added                           127                 (76)
    Return on average equity                        21.78  %              n/m
    Average loans and leases                      $38,442            $111,027


    n/m = not meaningful



                                                    Three Months Ended
                                                         March 31
                                                  2005             2004
    SUPPLEMENTAL FINANCIAL DATA

    Fully taxable-equivalent basis data (2)
    Net interest income                          $8,072           $5,970
    Total revenue                                14,221            9,700
    Net interest yield                             3.11 %           3.26 %
    Efficiency ratio                              49.62            55.98


    Reconciliation of net income to
     operating earnings
    Net income                                   $4,695           $2,681
    Merger and restructuring charges                112               --
    Related income tax benefit                      (37)              --
    Operating earnings                           $4,770           $2,681


    Operating Basis
    Diluted earnings per common share             $1.16            $0.91
    Return on average assets                       1.61 %           1.29 %
    Return on avg common shareholders'
     equity                                       19.61            22.16
    Efficiency ratio                              48.83            55.98


    Reconciliation of net income to
     shareholder value added
    Net income                                   $4,695           $2,681
    Amortization of intangibles                     208               54
    Merger and restructuring charges, net
     of tax benefit                                  75               --
    Capital charge                               (2,673)          (1,330)
    Shareholder value added                      $2,305           $1,405


    (1) Certain prior period amounts have been reclassified to conform to
        current period presentation.
    (2) Fully taxable-equivalent (FTE) basis is a performance measure used by
        management in operating the business that management believes provides
        investors with a more accurate picture of the interest margin for
        comparative purposes.


     Information for periods after April 1, 2004 includes the FleetBoston
              acquisition; prior periods have not been restated.

SOURCE Bank of America Corporation

CONTACT:
Investors contact:
Kevin Stitt, +1-704-386-5667, or Lee McEntire, +1-704-388-6780,
Media contact: Terry Francisco, +1-704-386-4343, all of Bank of America
Web site: http://www.bankofamerica.com