Form: 10-K

Annual report pursuant to Section 13 and 15(d)

March 20, 2000

Documents

10-K: Annual report pursuant to Section 13 and 15(d)

Published on March 20, 2000


================================================================================
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999 - Commission File Number 1-6523


---------------
Bank of America Corporation
(Exact name of registrant as specified in its charter)

Delaware 56-0906609
- -------------------------------------- --------------------------------------
(State of incorporation) (IRS Employer Identification No.)



Bank of America Corporate Center
Charlotte, North Carolina 28255
- ------------------------------------- ---------------------------------------
(Address of principal executive (Zip Code)
offices)



704/386-5000
- --------------------------------------
(Registrant's telephone number,
including area code)




SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:





Title of each class Name of each exchange on which registered

Common Stock New York Stock Exchange
London Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
7 3/4% Debentures, due 2002 American Stock Exchange
9 7/8% Subordinated Notes, due 2001 New York Stock Exchange
8 1/2% Subordinated Notes, due 2007 New York Stock Exchange
10 7/8% Subordinated Notes, due 2003 New York Stock Exchange
.25% Senior Basket-Indexed Notes, due 2006 New York Stock Exchange


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or in any amendment to
this Form 10-K. [ ]

The aggregate market value of the registrant's common stock ("Common Stock")
held by non-affiliates is approximately $73,223,927,000 (based on the March 6,
2000, closing price of Common Stock of $44.50 per share). As of March 6, 2000,
there were 1,664,844,358 shares of Common Stock outstanding.


DOCUMENTS INCORPORATED BY REFERENCE





Document of the Registrant Form 10-K Reference Location

Portions of the 2000 Proxy Statement PART III


================================================================================


Bank of America Corporation



Form 10-K
- --------------------------------------------------------------------------------



Page
INDEX -----------

Part I Item 1. Business 2
General 2
Primary Market Areas 2
Acquisition and Disposition Activity 2
Government Supervision and Regulation 2
Competition 5
Employees 6
Business Segment Operations 13-16
Net Interest Income 17-19
Securities 26, 58-59,
67-69
Loans and Leases 20, 26-27,
30-41,
59-60,
71-72
Deposits 27, 72
Short-Term Borrowings and Trading Account Liabilities 28, 70,
73-75
Market Risk Management 42-46
Selected Quarterly Operating Results 47
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 4A. Executive Officers of the Registrant 7
- -----------------------------------------------------------------------------------------------------------
Part II Item 5. Market for Registrant's Common Stock and Related Security Holder
Matters 8
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition 9
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 52
Item 8. Consolidated Financial Statements and Supplementary Data 52
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 100
- -----------------------------------------------------------------------------------------------------------
Part III Item 10. Directors and Executive Officers of the Registrant 100
Item 11. Executive Compensation 100
Item 12. Security Ownership of Certain Beneficial Owners and Management 100
Item 13. Certain Relationships and Related Transactions 100
- -----------------------------------------------------------------------------------------------------------
Part IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 101



PART I

Item 1. BUSINESS

General

Bank of America Corporation (the "Corporation") is a Delaware corporation,
a bank holding company and, effective March 11, 2000, a financial holding
company under the Gramm-Leach-Bliley Act. The Corporation and its subsidiaries
are subject to supervision by various federal and state banking and other
regulatory authorities. For additional information about the Corporation and
its operations, see Table Two and the narrative comments under the caption
"Management's Discussion and Analysis of Results of Operations and Financial
Condition - Business Segment Operations." For additional information regarding
regulatory matters, see "Government Supervision and Regulation" below.

The principal executive offices of the Corporation are located in the Bank
of America Corporate Center, Charlotte, North Carolina 28255.


Primary Market Areas

Through its banking subsidiaries (the "Banks") and various nonbanking
subsidiaries, the Corporation provides a diversified range of banking and
nonbanking financial services and products, primarily throughout the
Mid-Atlantic (Maryland, Virginia and the District of Columbia), the Midwest
(Illinois, Iowa, Kansas and Missouri), the Southeast (Florida, Georgia, North
Carolina, South Carolina and Tennessee), the Southwest (Arizona, Arkansas, New
Mexico, Oklahoma and Texas), the Northwest (Oregon and Washington) and the West
(California, Idaho and Nevada) regions of the United States and in selected
international markets. The Corporation serves an aggregate of approximately 30
million households and two million businesses in these regions, and management
believes that these are desirable regions in which to be located. Based on the
most recent available data, personal income levels in the states in these
regions as a whole rose 5.9 percent year-to-year through mid-year 1999, a
slight moderation from the six percent year-to-year rate for those states one
year earlier. In addition, the population in these states as a whole rose an
estimated 1.4 percent between 1998 and 1999. The number of housing permits
authorized moderated in the second half of 1999 from record high activity
mid-year. By November 1999, housing permits authorized were on track to end the
year 2.6 percent above year-end 1998. Through December 1999, the average rate
of unemployment in these states was four percent ranging from Iowa's 2.2
percent to the District of Columbia's cyclical low of 6.1 percent. These states
created almost 1.8 million new jobs in 1999, 2.3 percent above year-end 1998,
compared to 1.2 percent job growth in the other states.

The Corporation has the leading bank deposit market share position in
California, Florida, Georgia, Maryland, Nevada, North Carolina, Texas and
Washington. In addition, the Corporation ranks second in terms of bank deposit
market share in Arizona, Arkansas, Kansas, New Mexico, Missouri, Oklahoma,
South Carolina and the District of Columbia; third in Oregon and Virginia;
fourth in Idaho; fifth in Tennessee; seventh in Iowa; and ninth in Illinois.


Acquisition and Disposition Activity

As part of its operations, the Corporation regularly evaluates the
potential acquisition of, and holds discussions with, various financial
institutions and other businesses of a type eligible for bank holding company
or financial holding company ownership or control. In addition, the Corporation
regularly analyzes the values of, and submits bids for, the acquisition of
customer-based funds and other liabilities and assets of such financial
institutions and other businesses. The Corporation also regularly considers the
potential disposition of certain of its assets, branches, subsidiaries or lines
of businesses. As a general rule, the Corporation publicly announces any
material acquisitions or dispositions when a definitive agreement has been
reached.

For additional information regarding the Corporation's acquisition
activity, see Note Two of the consolidated financial statements on page 64.


Government Supervision and Regulation

General

As a registered bank holding company and, effective March 11, 2000, a
financial holding company, the Corporation is subject to the supervision of,
and to regular inspection by, the Board of Governors of the Federal


2

Reserve System (the "Federal Reserve Board"). The Banks are organized
predominantly as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller" or "OCC"). The Banks are also subject to regulation
by the Federal Deposit Insurance Corporation (the "FDIC") and other federal and
state regulatory agencies. In addition to banking laws, regulations and
regulatory agencies, the Corporation and its subsidiaries and affiliates are
subject to various other laws and regulations and supervision and examination
by other regulatory agencies, all of which directly or indirectly affect the
operations and management of the Corporation and its ability to make
distributions. The following discussion summarizes certain aspects of those
laws and regulations that affect the Corporation.

The Gramm-Leach-Bliley Act amended a number of the federal banking laws
affecting the Corporation and the Banks. In particular, the Gramm-Leach-Bliley
Act permits a bank holding company to elect to become a "financial holding
company" effective March 11, 2000, provided that certain conditions are met.
The Corporation filed such an election on February 1, 2000 and became a
financial holding company effective March 11, 2000.

A financial holding company, and the companies under its control, are
permitted to engage in activities considered "financial in nature" as defined
by the Gramm-Leach-Bliley Act and Federal Reserve Board interpretations
(including, without limitation, insurance and securities activities), and
therefore may engage in a broader range of activities than permitted to bank
holding companies and their subsidiaries. A financial holding company may
directly or indirectly engage in activities considered financial in nature,
either de novo or by acquisition, provided the financial holding company gives
the Federal Reserve Board after-the-fact notice of the new activities. The
Gramm-Leach-Bliley Act also permits national banks, such as the Banks, to
engage in activities considered financial in nature through a financial
subsidiary, subject to certain conditions and limitations and with the prior
approval of the Comptroller.

Bank holding companies (including bank holding companies that are also
financial holding companies) are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than five percent of any class
of voting stock of any bank which is not already majority-owned by the bank
holding company. Pursuant to the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking and Branching Act"), a bank
holding company may acquire banks in states other than its home state without
regard to the permissibility of such acquisitions under state law, but subject
to any state requirement that the bank has been organized and operating for a
minimum period of time, not to exceed five years, and the requirement that the
bank holding company, prior to or following the proposed acquisition, controls
no more than 10 percent of the total amount of deposits of insured depository
institutions in the United States and no more than 30 percent of such deposits
in that state (or such lesser or greater amount set by state law).

Subject to certain restrictions, the Interstate Banking and Branching Act
also authorizes banks to merge across state lines, thereby creating interstate
branches. Furthermore, pursuant to the Interstate Banking and Branching Act, a
bank may open new branches in a state in which it does not already have banking
operations if such state enacts a law permitting such de novo branching. The
Corporation has consolidated its retail subsidiary banks into a single
interstate bank (Bank of America, N.A.) headquartered in Charlotte, North
Carolina, with full service branch offices in Arizona, Arkansas, California,
Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maryland, Missouri, Nevada,
New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas,
Virginia, Washington and the District of Columbia. In addition, the Corporation
operates a limited purpose nationally chartered credit card bank (Bank of
America, N.A. (USA)) headquartered in Phoenix, Arizona, a nationally chartered
banker's bank (Bank of America Oregon, N.A.) headquartered in Portland, Oregon,
as well as a California-chartered nonmember bank (Bank of America Community
Development Bank) headquartered in Walnut Creek, California. As previously
described, the Corporation regularly evaluates merger and acquisition
opportunities, and it anticipates that it will continue to evaluate such
opportunities.

Proposals to change the laws and regulations governing the banking
industry are frequently introduced in Congress, in the state legislatures and
before the various bank regulatory agencies. The likelihood and timing of any
such proposals or legislation and the impact they might have on the Corporation
and its subsidiaries cannot be determined at this time.


3

Capital and Operational Requirements

The Federal Reserve Board, the Comptroller and the FDIC have issued
substantially similar risk-based and leverage capital guidelines applicable to
United States banking organizations. In addition, these regulatory agencies may
from time to time require that a banking organization maintain capital above
the minimum levels, whether because of its financial condition or actual or
anticipated growth. The Federal Reserve Board risk-based guidelines define a
three-tier capital framework. Tier 1 capital consists of common and qualifying
preferred shareholders' equity, less certain intangibles and other adjustments.
Tier 2 capital consists of preferred stock not qualifying as Tier 1 capital,
subordinated and other qualifying debt, and the allowance for credit losses up
to 1.25 percent of risk-weighted assets. Tier 3 capital includes subordinated
debt that is unsecured, fully paid, has an original maturity of at least two
years, is not redeemable before maturity without prior approval by the Federal
Reserve and includes a lock-in clause precluding payment of either interest or
principal if the payment would cause the issuing bank's risk-based capital
ratio to fall or remain below the required minimum. The sum of Tier 1 and Tier
2 capital less investments in unconsolidated subsidiaries represents qualifying
total capital, at least 50 percent of which must consist of Tier 1 capital.
Risk-based capital ratios are calculated by dividing Tier 1 and total capital
by risk-weighted assets. Assets and off-balance sheet exposures are assigned to
one of four categories of risk-weights, based primarily on relative credit
risk. The minimum Tier 1 capital ratio is four percent and the minimum total
capital ratio is eight percent. The Corporation's Tier 1 and total risk-based
capital ratios under these guidelines at December 31, 1999 were 7.35 percent
and 10.88 percent, respectively. At December 31, 1999, the Corporation had no
subordinated debt that qualified as Tier 3 capital.

The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is three percent, most
banking organizations are required to maintain ratios of at least 100 to 200
basis points above three percent. The Corporation's leverage ratio at December
31, 1999 was 6.26 percent. The Corporation meets its leverage ratio
requirement.

The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines
could also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of five percent of the bank's assets at the time it became
"undercapitalized" or the amount needed to comply with the plan. Furthermore,
in the event of the bankruptcy of the parent holding company, such guarantee
would take priority over the parent's general unsecured creditors. In addition,
FDICIA requires the various regulatory agencies to prescribe certain
non-capital standards for safety and soundness relating generally to operations
and management, asset quality and executive compensation and permits regulatory
action against a financial institution that does not meet such standards.

The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 risk-based capital ratio of at least six percent, a total
risk-based capital ratio of at least 10 percent and a leverage ratio of at
least five percent and not be subject to a capital directive order. Under these
guidelines, each of the Banks is considered well capitalized.

Banking agencies have also adopted final regulations which mandate that
regulators take into consideration (i) concentrations of credit risk; (ii)
interest rate risk (when the interest rate sensitivity of an institution's
assets does not match the sensitivity of its liabilities or its
off-balance-sheet position); and (iii) risks from non-traditional activities,
as well as an institution's ability to manage those risks, when determining the
adequacy of an institution's capital. That evaluation will be made as a part of
the institution's regular safety and soundness examination. In addition, the
banking agencies have amended their regulatory capital guidelines to
incorporate a measure for market risk. In accordance with the amended
guidelines, the Corporation and any Bank with significant trading activity (as
defined in the amendment) must incorporate a measure for market risk in their


4

regulatory capital calculations effective for reporting periods after January
1, 1998. The revised guidelines did not have a material impact on the
Corporation or the Banks' regulatory capital ratios or their well capitalized
status.


Distributions

The Corporation's funds for cash distributions to its stockholders are
derived from a variety of sources, including cash and temporary investments.
The primary source of such funds, however, is dividends received from the
Banks. Each of the Banks is subject to various regulatory policies and
requirements relating to the payment of dividends, including requirements to
maintain capital above regulatory minimums. The appropriate federal regulatory
authority is authorized to determine under certain circumstances relating to
the financial condition of the bank or bank holding company that the payment of
dividends would be an unsafe or unsound practice and to prohibit payment
thereof.

In addition to the foregoing, the ability of the Corporation and the Banks
to pay dividends may be affected by the various minimum capital requirements
and the capital and non-capital standards established under FDICIA, as
described above. The right of the Corporation, its stockholders and its
creditors to participate in any distribution of the assets or earnings of its
subsidiaries is further subject to the prior claims of creditors of the
respective subsidiaries.


Source of Strength

According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to each subsidiary bank and
to commit resources to support each such subsidiary. This support may be
required at times when a bank holding company may not be able to provide such
support. Similarly, under the cross-guarantee provisions of the Federal Deposit
Insurance Act, in the event of a loss suffered or anticipated by the FDIC -
either as a result of default of a banking subsidiary of the Corporation or
related to FDIC assistance provided to a subsidiary in danger of default - the
other Banks may be assessed for the FDIC's loss, subject to certain exceptions.



Competition

The activities in which the Corporation and its four major business
segments (Consumer Banking, Commercial Banking, Global Corporate and Investment
Banking, and Principal Investing and Asset Management) engage are highly
competitive. Generally, the lines of activity and markets served involve
competition with other banks, thrifts, credit unions and other nonbank
financial institutions, such as investment banking firms, investment advisory
firms, brokerage firms, investment companies and insurance companies, as well
as other entities which offer financial services, located both domestically and
internationally and through alternative delivery channels such as the World
Wide Web. The methods of competition center around various factors, such as
customer services, interest rates on loans and deposits, lending limits and
customer convenience, such as location of offices.

The commercial banking business in the various local markets served by the
Corporation's business segments is highly competitive. The four major business
segments compete with other commercial banks, thrifts, finance companies and
other businesses which provide similar services. The business segments actively
compete in commercial lending activities with local, regional and international
banks and nonbank financial organizations, some of which are larger than
certain of the Corporation's nonbanking subsidiaries and the Banks. In its
consumer lending operations, the competitors of the business segments include
other banks, thrifts, credit unions, regulated small loan companies and other
nonbank organizations offering financial services. In the investment banking,
investment advisory and brokerage business, the Corporation's nonbanking
subsidiaries compete with other banking and investment banking firms,
investment advisory firms, brokerage firms, investment companies and other
organizations offering similar services. The Corporation's mortgage banking
units compete with commercial banks, thrifts, government agencies, mortgage
brokers and other nonbank organizations offering mortgage banking services. In
the trust business, the Banks compete with other banks, investment counselors
and insurance companies in national markets for institutional funds and
corporate pension and profit sharing accounts. The Banks also compete with
other banks, trust companies, insurance agents, thrifts, financial counselors
and other fiduciaries for personal trust business. The Corporation and its four
major business segments also actively compete for funds. A primary source of
funds for the Banks is deposits, and competition for deposits


5

includes other deposit-taking organizations, such as commercial banks, thrifts,
and credit unions, as well as money market mutual funds.

The Corporation's ability to expand into additional states remains subject
to various federal and state laws. See "Government Supervision and Regulation -
General" for a more detailed discussion of interstate banking and branching
legislation and certain state legislation.


Employees

As of December 31, 1999, there were 155,906 full-time equivalent employees
within the Corporation and its subsidiaries. Of the foregoing employees, 82,908
were employed within Consumer Banking, 4,597 were employed within Commercial
Banking, 9,068 were employed within Global Corporate and Investment Banking,
and 5,962 were employed within Principal Investing and Asset Management. The
remainder were employed elsewhere within the Corporation.

Approximately 5,000 non-officer employees in the State of Washington are
covered by a collective bargaining agreement. These employees work for the
Washington Division of Bank of America, N.A. None of the other domestic
employees within the Corporation are covered by a collective bargaining
agreement. Management considers its employee relations to be good.


Item 2. PROPERTIES

As of December 31, 1999, the principal offices of the Corporation, and its
Consumer and Commercial Banking business segments, were located in the 60-story
Bank of America Corporate Center in Charlotte, North Carolina, which is owned
by a subsidiary of the Corporation. The Corporation occupies approximately
513,000 square feet and leases approximately 601,000 square feet to third
parties at market rates, which represents substantially all of the space in
this facility. As of December 31, 1999, the principal offices of Global
Corporate and Investment Banking and Principal Investing and Asset Management
were located at 555 California Street in San Francisco, California. A
subsidiary of the Corporation has a 50 percent ownership interest in this
building through a joint venture partnership, and the Corporation leases
approximately 479,000 square feet in this building from the partnership.

The Corporation also leases or owns a significant amount of space
worldwide, in addition to these facilities in Charlotte and San Francisco. As
of December 31, 1999, the Corporation and its subsidiaries owned or leased
approximately 13,200 locations in 47 states, the District of Columbia and 37
foreign countries.


Item 3. LEGAL PROCEEDINGS

In the ordinary course of business, the Corporation and its subsidiaries
are routinely defendants in or parties to a number of pending and threatened
legal actions and proceedings, including actions brought on behalf of various
classes of claimants. In certain of these actions and proceedings, substantial
money damages are asserted against the Corporation and its subsidiaries and
certain of these actions and proceedings are based on alleged violations of
consumer protection, securities, environmental, banking and other laws.

The Corporation and certain present and former officers and directors have
been named as defendants in a number of actions filed in several federal courts
that have been consolidated for pretrial purposes before a Missouri federal
court. The amended complaint in the consolidated actions alleges, among other
things, that the defendants failed to disclose material facts about losses of
the former BankAmerica Corporation ("BankAmerica") relating to D.E. Shaw
Securities Group, L.P. and related entities until mid-October 1998, in
violation of various provisions of federal and state laws. The amended
complaint also alleges that the proxy statement-prospectus of August 4, 1998,
falsely stated that the merger (the "Merger") between BankAmerica and
NationsBank Corporation ("NationsBank") would be one of equals and alleges a
scheme to have NationsBank gain control over the newly merged entity. The
Missouri federal court has certified classes consisting generally of persons
who were stockholders of NationsBank or BankAmerica on September 30, 1998, or
were entitled to vote on the Merger, or who purchased or acquired securities of
the Corporation or its predecessors between August 4, 1998 and October 13,
1998. The amended complaint substantially survived a motion to dismiss, and
discovery is underway. Claims against certain director-defendants were
dismissed with leave to replead. Similar uncertified class actions (including
one limited to California residents raising the claim that the proxy
statement-prospectus of August 4,


6
1998, falsely stated that the Merger would be one of equals) were filed in
California state court, alleging violations of the California Corporations Code
and other state laws. The action on behalf of California residents was
certified, but has since been dismissed and an appeal is pending. Of the
remaining actions, one has been stayed, and a motion for class certification is
pending in the others. The Corporation believes the actions lack merit and will
defend them vigorously. The amount of any ultimate exposure cannot be
determined with certainty at this time.

Management believes that the actions and proceedings and the losses, if
any, resulting from the final outcome thereof, will not be material in the
aggregate to the Corporation's financial position or results of operations.


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of stockholders during the
quarter ended December 31, 1999.


Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to the Instructions to Form 10-K and Item 401(b) of Regulation
S-K, the name, age and position of each current executive officer and the
principal accounting officer of the Corporation are listed below along with
such officer's business experience during the past five years. Officers are
appointed annually by the Board of Directors at the meeting of directors
immediately following the annual meeting of stockholders.

James H. Hance, Jr., age 55, Vice Chairman and Chief Financial Officer.
Mr. Hance was named Chief Financial Officer in August 1988, and was named Vice
Chairman in October 1993. He first became an officer in 1987. He also serves as
a director of the Corporation and as Vice Chairman and a director of Bank of
America, N.A.

Kenneth D. Lewis, age 52, President and Chief Operating Officer. Mr. Lewis
was named President in January 1999 and Chief Operating Officer in October
1999. Prior to that time, he served as President, Consumer and Commercial
Banking, from October 1998 to January 1999, and as President from October 1993
to October 1998. He first became an officer in 1971. Mr. Lewis also serves as a
director of the Corporation and as President and a director of Bank of America,
N.A.

Hugh L. McColl, Jr., age 64, Chairman of the Board and Chief Executive
Officer. Mr. McColl has served as Chairman of the Board for at least five years
except from January 7, 1997 until September 30, 1998. He first became an
officer in 1962. He also serves as a director of the Corporation and as Chief
Executive Officer and a director of Bank of America, N.A.

Michael J. Murray, age 55, President, Global Corporate and Investment
Banking. Mr. Murray first became an officer and was named to his present
position in October 1998. Prior to that time, he served as President, Global
Wholesale Bank of BankAmerica from 1997 to 1998 and as Vice Chairman of
BankAmerica from 1995 to 1997. He also serves as Chairman and a director of
Bank of America, N.A.

Marc D. Oken, age 53, Executive Vice President and Principal Financial
Executive. Mr. Oken was named to his present position in October 1998. From
June 1989 to October 1998, he served as Chief Accounting Officer. He first
became an officer in 1989.

F. William Vandiver, Jr., age 57, Corporate Risk Management Executive. Mr.
Vandiver was named to his present position in October 1998. From June 1997 to
October 1998, he served as Chairman, Corporate Risk Policy. Prior to that time,
from January 1996 to June 1997, he served as President, Global Finance, and
from January 1994 to January 1996 he served as President, Specialized Finance
Group. He first became an officer in 1968. He also serves as Vice Chairman and
a director of Bank of America, N.A.

7

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS

The principal market on which the Common Stock is traded is the New York
Stock Exchange. The Common Stock is also listed on the London Stock Exchange
and the Pacific Stock Exchange, and certain shares are listed on the Tokyo
Stock Exchange. The following table sets forth the high and low sales prices of
the Common Stock on the New York Stock Exchange Composite Transactions List for
the periods indicated:





Quarter High Low
--------- ----------- -----------

1998 first $75 1/8 $56 1/4
second 85 72 1/16
third 88 7/16 47 7/8
fourth 66 5/8 44
1999 first 74 1/2 59 1/2
second 76 1/8 61 1/2
third 76 3/8 53 1/4
fourth 67 1/2 47 5/8


As of March 6, 2000, there were 276,300 record holders of Common Stock.
During 1998 and 1999, the Corporation paid dividends on the Common Stock on a
quarterly basis. The following table sets forth dividends declared per share of
Common Stock for the periods indicated:





Quarter Dividend
--------- ---------

1998 first $.38
second .38
third .38
fourth .45
1999 first .45
second .45
third .45
fourth .50


For additional information regarding the Corporation's ability to pay
dividends, see "Government Supervision and Regulation - Distributions" and Note
Twelve of the consolidated financial statements on page 82.

As part of its share repurchase program, during the fourth quarter of
1999, the Corporation sold put options to purchase an aggregate of one million
shares of Common Stock. These put options were sold to two independent third
parties for an aggregate purchase price of $6.0 million. The put option
exercise prices range from $64.20 to $65.30 per share and expire in April 2000.
The put option contracts allow the Corporation to determine the method of
settlement (cash or stock). Each of these transations was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended.

In accordance with an Agreement and Plan of Reorganization (the
"Agreement") between the Corporation (as the successor of Oxford Resources
Corp.) and the selling stockholders of Electronic Vehicle Remarketing, Inc.
("EVRI"), the Corporation was required to issue shares of Common Stock to the
selling stockholders as additional contingent purchase price consideration in
the event that EVRI achieved the five performance milestones set forth in the
Agreement. Achievement of each milestone entitled the selling stockholders to
receive a certain number of shares of Common Stock calculated in accordance
with the terms of the Agreement. Each of the five milestones was achieved in
1999, and an aggregate of 41,911 shares of Common Stock was issued on four
dates in 1999. Each of these transactions was exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended.


8

Item 6. SELECTED FINANCIAL DATA

See Table One in Item 7 for Selected Financial Data.


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

On September 30, 1998, Bank of America Corporation (the Corporation),
formerly NationsBank Corporation (NationsBank), completed its merger with the
former BankAmerica Corporation (BankAmerica). In addition, on January 9, 1998,
the Corporation completed its merger with Barnett Banks, Inc. (Barnett). The
BankAmerica and Barnett mergers were each accounted for as a pooling of
interests and, accordingly, all financial information has been restated for all
periods presented.

This report on Form 10-K contains certain forward-looking statements that
are subject to risks and uncertainties and include information about possible
or assumed future results of operations. Many possible events or factors could
affect the future financial results and performance of the Corporation. This
could cause results or performance to differ materially from those expressed in
our forward-looking statements. Words such as "expects", "anticipates",
"believes", "estimates", variations of such words and other similar expressions
are intended to identify such forward-looking statements. These statements are
not guarantees of future performance and involve certain risks, uncertainties
and assumptions which are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in, or
implied by, such forward-looking statements. Readers of the Corporation's Form
10-K should not rely solely on the forward-looking statements and should
consider all uncertainties and risks discussed throughout this report. These
statements are representative only on the date hereof, and the Corporation
undertakes no obligation to update any forward-looking statements made.

The possible events or factors include the following: the Corporation's
loan growth is dependent on economic conditions, as well as various
discretionary factors, such as decisions to securitize, sell, or purchase
certain loans or loan portfolios; syndications or participations of loans;
retention of residential mortgage loans; and the management of borrower,
industry, product and geographic concentrations and the mix of the loan
portfolio. The rate of charge-offs and provision expense can be affected by
local, regional and international economic and market conditions,
concentrations of borrowers, industries, products and geographic locations, the
mix of the loan portfolio and management's judgments regarding the
collectibility of loans. Liquidity requirements may change as a result of
fluctuations in assets and liabilities and off-balance sheet exposures, which
will impact the capital and debt financing needs of the Corporation and the mix
of funding sources. Decisions to purchase, hold or sell securities are also
dependent on liquidity requirements and market volatility, as well as on- and
off-balance sheet positions. Factors that may impact interest rate risk include
local, regional and international economic conditions, levels, mix, maturities,
yields or rates of assets and liabilities, utilization and effectiveness of
interest rate contracts and the wholesale and retail funding sources of the
Corporation. Factors that may cause actual noninterest expense to differ from
estimates include the ability of third parties with whom the Corporation has
business relationships to fully accommodate any uncertainties relating to the
Corporation's Year 2000 efforts, as well as uncertainties relating to the
ability of third parties with whom the Corporation has business relationships
to continue to address Year 2000 issues. The Corporation is also exposed to the
potential of losses arising from adverse changes in market rates and prices
which can adversely impact the value of financial products, including
securities, loans, deposits, debt and derivative financial instruments, such as
futures, forwards, swaps, options and other financial instruments with similar
characteristics.

In addition, the banking industry in general is subject to various
monetary and fiscal policies and regulations, which include those determined by
the Federal Reserve Board, the OCC, the FDIC, state regulators and the Office
of Thrift Supervision, whose policies and regulations could affect the
Corporation's results. Other factors that may cause actual results to differ
from the forward-looking statements include the following: competition with
other local, regional and international banks, thrifts, credit unions and other
nonbank financial institutions, such as investment banking firms, investment
advisory firms, brokerage firms, investment companies and insurance companies,
as well as other entities which offer financial services, located both within
and outside the United States and through alternative delivery channels such as
the World Wide Web; interest rate, market and monetary fluctuations; inflation;
market volatility; general economic conditions and economic conditions in the
geographic regions and industries in which the Corporation operates;
introduction and acceptance of new banking-related products, services and
enhancements; fee pricing strategies, mergers and acquisitions and their
integration into the Corporation and management's ability to manage these and
other risks.


9

1999 Compared to 1998

Overview

The Corporation is a bank holding company and, effective March 11, 2000, a
financial holding company, headquartered in Charlotte, North Carolina. The
Corporation provides a diversified range of banking and certain nonbanking
financial services both domestically and internationally through four major
business segments: Consumer Banking, Commercial Banking, Global Corporate and
Investment Banking, and Principal Investing and Asset Management. At December
31, 1999, the Corporation had $633 billion in assets. On September 30, 1998,
the Corporation completed its merger with BankAmerica. In addition, on January
9, 1998, the Corporation merged with Barnett. The Corporation accounted for
each transaction as a pooling of interests and, accordingly, all financial
information has been restated for all periods presented.

On October 1, 1997, the Corporation completed the acquisitions of
Montgomery Securities, Inc. (NationsBanc Montgomery Securities) and Robertson,
Stephens & Company Group, L.L.C. (Robertson Stephens). The Corporation
accounted for both acquisitions as purchases. The Corporation sold the
investment banking operations of Robertson Stephens on August 31, 1998 and sold
the investment management operations on February 26, 1999.

Significant changes in the Corporation's results of operations and
financial position are described in the following sections.

Refer to Table One and Table Twenty for annual and quarterly selected
financial data, respectively.


Key performance highlights for 1999 were:

o Operating net income (net income excluding merger-related charges) totaled
$8.24 billion, or diluted operating earnings of $4.68 per common share
(diluted) in 1999 compared to $6.49 billion, or $3.64 per common share in
1998 (diluted). Excluding merger-related charges, the return on average
common shareholders' equity increased 316 basis points to 17.70 percent in
1999 from 14.54 percent in 1998. The efficiency ratio, excluding
merger-related charges, improved 585 basis points to 55.30 percent in 1999
from 61.15 percent in 1998. Including net merger-related charges, net income
was $7.88 billion or $4.48 per common share (diluted) in 1999 compared to
$5.17 billion or $2.90 per common share (diluted) in 1998, respectively.

o Operating cash basis ratios measure operating performance excluding
merger-related charges, goodwill and other intangible assets and their
related amortization expense. Cash basis diluted earnings per common share
increased to $5.19 in 1999 compared to $4.15 in 1998. Return on average
tangible common shareholders' equity increased to 28.46 percent compared to
25.24 percent in 1998. The cash basis efficiency ratio was 52.57 percent in
1999, an improvement of 563 basis points from 58.20 percent in 1998, due to
a decline in noninterest expense of four percent and an increase in
noninterest income of 15.4 percent.

o Net interest income on a taxable-equivalent basis remained essentially
unchanged at $18.5 billion from 1998. Managed loan growth, particularly in
consumer loan products, and higher core funding levels due to higher levels
of equity and core deposits was primarily offset by the impact of
securitizations, divestitures and asset sales in both years, as well as the
impact of changing rates and spread compression during 1999. The net
interest yield decreased to 3.47 percent in 1999 compared to 3.69 percent in
1998, mainly due to higher levels of lower-yielding investment securities, a
shift in loan mix to lower-yielding residential mortgages, changes in
interest rates and spread compression and the cost of the Corporation's
share repurchase program during 1999.

o The provision for credit losses was $1.8 billion in 1999 compared to $2.9
billion in 1998. The decrease in the provision for credit losses was
primarily due to a significant reduction in the inherent risk and size of
the Corporation's emerging markets portfolio and a change in the composition
of the loan portfolio from commercial real estate and foreign to more
consumer residential mortgage loans as well as a $467 million decline in net
charge-offs. Net charge-offs totaled $2.0 billion in 1999 compared to $2.5
billion in 1998, while net charge-offs as a percentage of average loans and
leases outstanding were 0.55 percent in 1999 compared to 0.71 percent in
1998. Commercial - domestic net charge-offs were significantly impacted in
1998 by a partial charge-off of a credit to a trading and investment firm,
D.E. Shaw Securities Group, L.P. and related entities (DE Shaw). In
addition, the decrease in net charge-offs in 1999 was driven by a reduction
in bankcard and consumer finance


10

losses which was partially offset by an increase in commercial - domestic
charge-offs. The increase in commercial - domestic losses was attributable to
certain troubled industries, including healthcare and sub-prime finance.

o Gains on sales of securities were $240 million in 1999 compared to $1.0
billion in 1998. Securities gains were higher in 1998 as a result of
favorable market conditions for certain debt instruments and higher activity
in connection with the Corporation's overall risk management operations.

o Noninterest income increased 15.4 percent to $14.1 billion in 1999. This
growth was attributable to higher levels of income from most categories,
including service charges on deposit accounts, mortgage servicing income,
investment banking income, trading account profits and fees, and credit card
income. Trading account profits and fees increased $1.3 billion to $1.5
billion in 1999 compared to $171 million in 1998 primarily due to higher
levels of revenue from equities, interest rate contracts and fixed income.
Prior year profits and fees were negatively impacted by a write-down of
Russian securities and losses in corporate bonds and commercial mortgages
due to widening spreads. Partially offsetting these increases was a decline
in other income, which reflected greater revenue from the sale of certain
businesses and higher securitization gains in 1998.

o Merger-related charges totaled $525 million and $1.8 billion in 1999 and
1998, respectively. The total $525 million charge for 1999 was attributable
to the Merger compared to $1.3 billion in 1998. See Note Two of the
consolidated financial statements on page 64 for additional information.

o Other noninterest expense decreased $755 million to $18.0 billion in 1999
compared to $18.7 billion in 1998. This decrease is primarily attributable
to merger-related savings, which lowered personnel, professional fees, other
general operating expense and general administrative and other expense in
1999.

The remainder of management's discussion and analysis of the Corporation's
results of operations and financial condition should be read in conjunction
with the consolidated financial statements and related notes presented on pages
52 through 99.


11

Table One
Five-Year Summary of Selected Financial Data



(Dollars in millions, except per share information) 1999 1998
- -----------------------------------------------------------------------------------------

Operating Basis (1)
- -------------------
Income statement
Interest income $ 37,323 $ 38,588
Interest expense 19,086 20,290
Net interest income 18,237 18,298
Net interest income (taxable-equivalent basis) 18,452 18,461
Provision for credit losses 1,820 2,920
Gains on sales of securities 240 1,017
Noninterest income 14,069 12,189
Other noninterest expense 17,986 18,741
Income before income taxes 12,740 9,843
Income tax expense 4,500 3,353
Net income 8,240 6,490
Net income available to common shareholders 8,234 6,465
Performance ratios
Return on average assets 1.34% 1.11%
Return on average common shareholders' equity 17.70 14.54
Efficiency ratio 55.30 61.15
Per common share data
Earnings $ 4.77 $ 3.73
Diluted earnings 4.68 3.64
Cash basis financial data (2)
Earnings per common share 5.28 4.25
Diluted earnings per common share 5.19 4.15
Return on average tangible assets 1.52% 1.30%
Return on average tangible common shareholders' equity 28.46 25.24
Efficiency ratio 52.57 58.20

As Reported
- -----------
Income statement
Merger-related charges, net $ 525 $ 1,795
Income before income taxes 12,215 8,048
Income tax expense 4,333 2,883
Net income 7,882 5,165
Net income available to common shareholders 7,876 5,140
Average common shares issued and outstanding (in thousands) 1,726,006 1,732,057
Performance ratios
Return on average assets 1.28% .88%
Return on average common shareholders' equity 16.93 11.56
Total equity to total assets (at year end) 7.02 7.44
Total average equity to total average assets 7.55 7.67
Dividend payout ratio 40.54 50.18
Per common share data
Earnings $ 4.56 $ 2.97
Diluted earnings 4.48 2.90
Cash dividends paid 1.85 1.59
Book value 26.44 26.60
Cash basis financial data (2)
Earnings per common share 5.08 3.49
Diluted earnings per common share 4.98 3.41
Return on average tangible assets 1.46% 1.07%
Return on average tangible common shareholders' equity 27.34 20.70
Ending tangible equity to tangible assets 4.92 5.18
Balance sheet (at year end)
Total loans and leases $ 370,662 $ 357,328
Total assets 632,574 617,679
Total deposits 347,273 357,260
Long-term debt 55,486 45,888
Common shareholders' equity 44,355 45,866
Total shareholders' equity 44,432 45,938
Risk-based capital ratios (at year end) (3)
Tier 1 capital 7.35% 7.06%
Total capital 10.88 10.94
Leverage ratio 6.26 6.22
Market price per share of common stock
Closing $ 50 3/16 $ 60 1/8
High 76 3/8 88 7/16
Low 47 5/8 44
=========================================================================================




(Dollars in millions, except per share information) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------

Operating Basis (1)
- -------------------
Income statement
Interest income $ 37,333 $ 33,636 $ 32,158
Interest expense 18,901 16,682 16,369
Net interest income 18,432 16,954 15,789
Net interest income (taxable-equivalent basis) 18,589 17,082 15,824
Provision for credit losses 1,904 1,645 945
Gains on sales of securities 271 147 68
Noninterest income 11,756 9,604 8,132
Other noninterest expense 17,625 15,351 14,667
Income before income taxes 10,930 9,709 8,377
Income tax expense 4,124 3,651 3,230
Net income 6,806 6,058 5,147
Net income available to common shareholders 6,695 5,856 4,896
Performance ratios
Return on average assets 1.25% 1.25% 1.13%
Return on average common shareholders' equity 15.88 17.04 15.52
Efficiency ratio 58.08 57.52 61.22
Per common share data
Earnings $ 3.86 $ 3.58 $ 3.03
Diluted earnings 3.76 3.51 2.98
Cash basis financial data (2)
Earnings per common share 4.36 3.91 3.38
Diluted earnings per common share 4.24 3.84 3.32
Return on average tangible assets 1.45% 1.39% 1.27%
Return on average tangible common shareholders' equity 27.77 24.60 23.56
Efficiency ratio 55.27 55.49 58.89

As Reported
- -----------
Income statement
Merger-related charges, net $ 374 $ 398 $ --
Income before income taxes 10,556 9,311 8,377
Income tax expense 4,014 3,498 3,230
Net income 6,542 5,813 5,147
Net income available to common shareholders 6,431 5,611 4,896
Average common shares issued and outstanding (in thousands) 1,733,194 1,638,382 1,613,404
Performance ratios
Return on average assets 1.20% 1.20% 1.13%
Return on average common shareholders' equity 15.26 16.32 15.52
Total equity to total assets (at year end) 7.81 7.91 7.86
Total average equity to total average assets 8.02 7.61 7.51
Dividend payout ratio 32.09 30.05 29.13
Per common share data
Earnings $ 3.71 $ 3.42 $ 3.03
Diluted earnings 3.61 3.36 2.98
Cash dividends paid 1.37 1.20 1.04
Book value 25.49 22.10 20.89
Cash basis financial data (2)
Earnings per common share 4.20 3.76 3.38
Diluted earnings per common share 4.09 3.69 3.32
Return on average tangible assets 1.40% 1.34% 1.27%
Return on average tangible common shareholders' equity 26.80 23.65 23.56
Ending tangible equity to tangible assets 5.19 6.31 6.19
Balance sheet (at year end)
Total loans and leases $ 342,140 $ 317,709 $ 302,804
Total assets 570,983 477,702 461,775
Total deposits 346,297 309,100 296,316
Long-term debt 42,887 40,041 34,349
Common shareholders' equity 43,907 35,429 33,532
Total shareholders' equity 44,584 37,793 36,295
Risk-based capital ratios (at year end) (3)
Tier 1 capital 6.50% 7.76% 7.24%
Total capital 10.89 12.66 11.58
Leverage ratio 5.57 7.09 6.27
Market price per share of common stock
Closing $ 60 13/16 $ 48 7/8 $ 34 13/16
High 71 11/16 52 5/8 37 3/8
Low 48 32 3/16 22 5/16
=====================================================================================================


(1) Operating basis excludes merger-related charges.
(2) Cash basis calculations exclude goodwill and other intangible assets and
their related amortization expense.
(3) Ratios prior to 1998 have not been restated to reflect the impact of the
BankAmerica and Barnett mergers.

12

Business Segment Operations

The Corporation provides a diversified range of banking and certain
nonbanking financial services and products through its various subsidiaries.
Management reports the results of the Corporation's operations through four
business segments: Consumer Banking, Commercial Banking, Global Corporate and
Investment Banking, and Principal Investing and Asset Management.

The business segments summarized in Table Two are primarily managed with a
focus on various performance objectives including net income, return on average
equity and operating efficiency. These performance objectives are also
presented on a cash basis, which excludes the impact of goodwill and other
intangible assets and their related amortization expense. The net interest
income of the business segments reflects the results of a funds transfer
pricing process which derives net interest income by matching assets and
liabilities with similar interest rate sensitivity and maturity
characteristics. Equity capital is allocated to each business segment based on
an assessment of its inherent risk.

See Note Seventeen of the consolidated financial statements on page 95 for
additional business segment information and reconciliations to consolidated
amounts.


Consumer Banking

The Consumer Banking segment provides comprehensive retail banking
products and services to individuals and small businesses through multiple
delivery channels including approximately 4,500 banking centers and 14,000
automated teller machines (ATMs). These banking centers and ATMs are located
principally throughout the Corporation's franchise and serve approximately 30
million households in 21 states and the District of Columbia. This segment also
provides specialized services such as the origination and servicing of
residential mortgage loans, issuance and servicing of credit and debit cards,
direct banking via telephone and internet, student lending and certain
insurance services. The consumer finance component provides mortgage, home
equity and automobile loans to consumers, retail finance programs to dealers
and lease financing to purchasers of new and used cars.

Consumer Banking's net income remained essentially unchanged at $3.9
billion in 1999 compared to 1998. Taxable-equivalent net interest income
decreased $283 million to $11.5 billion in 1999 from $11.8 billion in 1998,
reflecting the impact of securitizations, loan sales, divestitures and lower
loan spreads, particularly in consumer finance, partially offset by managed
loan growth and increased core deposit levels. As the Corporation continues to
securitize loans, its role becomes that of a servicer and the servicing income,
as well as the gains on securitizations, are reflected in noninterest income.
Average managed loans and leases increased $25.6 billion to $203.0 billion in
1999 compared to $177.4 billion in 1998. Average total deposits increased
slightly to $229.7 billion from $228.9 billion in 1998, and reflected a
favorable shift toward more core deposits. The net interest yield increased
five basis points during 1999 to 4.93 percent from 4.88 percent in 1998.

Noninterest income in Consumer Banking declined $93 million in 1999 to
$6.5 billion from $6.6 billion in 1998, due to lower other income resulting
from gains realized on the sale of a manufactured housing unit and the sale of
real estate included in premises and equipment during 1998. The decline in
other income was partially offset by increased mortgage servicing and
production fees and credit card income. Mortgage servicing and production fees
increased $145 million to $662 million in 1999 compared to $517 million in
1998, primarily due to benefits from slower prepayments, reductions in the cost
to service loans and higher revenue from portfolio growth.

Other noninterest expense decreased $479 million to $10.5 billion in 1999
from $11.0 billion in 1998 primarily due to reductions in personnel expense,
data processing expense and other general operating expense. These decreases
mainly reflect successful merger-related savings efforts. The efficiency ratio
improved to 58.5 percent in 1999 compared to 59.9 percent in 1998. The cash
basis efficiency ratio improved 160 basis points to 55.0 percent in 1999,
compared to 56.6 percent in 1998. The return on average equity increased to
19.9 percent in 1999 from 19.2 percent in 1998. The return on tangible equity
increased to 30.4 percent in 1999 compared to 29.3 percent in 1998.


13

Commercial Banking

The Commercial Banking segment provides a wide range of commercial banking
services for businesses with annual revenues of up to $500 million. Services
provided include commercial lending, treasury and cash management services,
asset-backed lending and factoring. Also included in this segment are the
Corporation's commercial finance operations which provide equipment loans and
leases, loans for debt restructuring, mergers and working capital, real estate
and health care financing and inventory financing to manufacturers,
distributors and dealers.

Commercial Banking's net income decreased $75 million to $878 million in
1999 compared to $953 million in 1998 primarily due to increased provision
expense. Taxable-equivalent net interest income remained essentially unchanged
at $2.2 billion for the years ended December 31, 1999 and 1998, primarily
reflecting loan and deposit growth, offset by lower loan spreads due to
competitive pricing and changes in the product composition. Commercial
Banking's average managed loan and lease portfolio during 1999 increased
slightly to $55.4 billion compared to $53.5 billion during 1998.

Noninterest income increased $164 million to $894 million in 1999 from
$730 million in 1998. This increase included higher revenue from investment
banking activities.

Other noninterest expense for the period increased $88 million to $1.5
billion in 1999 from $1.4 billion in 1998, primarily due to an increase in
other general operating expense. The efficiency ratio improved to 47.8 percent
in 1999 from 48.1 percent in 1998. The cash basis efficiency ratio increased
130 basis points to 45.9 percent in 1999 from 44.6 percent in 1998. Return on
average equity increased to 20.7 percent in 1999 from 20.1 percent in 1998. The
return on tangible equity decreased to 24.6 percent in 1999 compared to 27.1
percent in 1998.


Global Corporate and Investment Banking

The Global Corporate and Investment Banking segment provides a broad array
of financial products such as investment banking, trade finance, treasury
management, capital markets, leasing and financial advisory services to
domestic and international corporations, financial institutions and government
entities. Clients are supported through offices in 37 countries in four
distinct geographic regions: U.S. and Canada; Asia; Europe, Middle East and
Africa; and Latin America. Products and services provided include loan
origination, cash management, foreign exchange, leasing, leveraged finance,
project finance, real estate finance, senior bank debt, structured finance and
trade services. Through a separate subsidiary, Banc of America Securities LLC,
formerly NationsBanc Montgomery Securities, Global Corporate and Investment
Banking is a primary dealer of U.S. Government securities, underwrites and
makes markets in equity securities, and underwrites and deals in high-grade and
high-yield corporate debt securities, commercial paper, mortgage-backed and
asset-backed securities, federal agencies securities and municipal securities.
Banc of America Securities LLC also provides correspondent clearing services
for other securities broker/dealers, offers traditional brokerage service to
high-net-worth individuals and provides prime-brokerage services. Debt and
equity securities research, loan syndications, mergers and acquisitions
advisory services and private placements are also provided through Banc of
America Securities LLC. Additionally, Global Corporate and Investment Banking
is a market maker in derivative products which include swap agreements, option
contracts, forward settlement contracts, financial futures, and other
derivative products in certain interest rate, foreign exchange, commodity and
equity markets. In support of these activities, Global Corporate and Investment
Banking takes positions in securities and derivatives to support client demands
and for its own account.

Global Corporate and Investment Banking's net income increased
significantly to $2.3 billion in 1999 compared to $292 million in 1998, an
increase of $2.0 billion. Taxable-equivalent net interest income remained
essentially unchanged at $3.8 billion for the years ended December 31, 1999 and
1998, as slightly higher contributions from trading-related activities were
offset by strategic reductions in both the foreign and commercial real estate
loan portfolios and lower loan spreads. The average managed loan and lease
portfolio increased $1.2 billion to $111.9 billion in 1999 compared to $110.7
billion in 1998.

Noninterest income for 1999 increased $1.4 billion to $4.3 billion in 1999
from $2.9 billion in 1998, reflecting an increase in trading account profits
and fees in 1999 which was driven by strong activities in most areas,
particularly equity and advisory, as well as the write-down of Russian
securities and losses in corporate bonds in 1998.


14

Other noninterest expense decreased $110 million to $4.6 billion in 1999
from $4.7 billion in 1998, due primarily to decreased personnel expense and
other general operating expense. The efficiency ratio improved to 56.4 percent
in 1999 from 70.6 percent in 1998. The cash basis efficiency ratio improved to
54.5 percent for 1999 compared to 68.1 percent for 1998. Return on average
equity increased to 17.6 percent in 1999 from 2.3 percent in 1998. The return
on tangible equity increased to 21.1 percent in 1999 from 4.1 percent in 1998.


Principal Investing and Asset Management

The Principal Investing and Asset Management segment includes Principal
Investing and the three businesses of Asset Management. Principal Investing
includes direct equity investments in businesses and investments in general
partnership funds. Asset Management includes the Private Bank, Banc of America
Capital Management and Banc of America Investment Services, Inc. The Private
Bank offers financial solutions to high-net-worth clients and foundations in
the U.S. and internationally by providing customized asset management and
credit, financial advisory, fiduciary and trust services, and banking services.
Banc of America Capital Management, offering management of equity, fixed
income, cash and alternative investments, manages the assets of individuals,
corporations, municipalities, foundations and universities, and public and
private institutions, as well as provides advisory services to the
Corporation's affiliated family of mutual funds. Banc of America Investment
Services, Inc. provides both full-service and discount brokerage services
through investment professionals located throughout the franchise and a
highly-rated brokerage website that provides customers a wide array of market
analyses, investment research and self-help tools, as well as account
information and transaction capabilities.

The Asset Management Group seeks to help all customers and clients
accumulate, grow and preserve their wealth by providing intellectual solutions
for their needs. These businesses continually build on their strong
capabilities and align with other lines of businesses within the Corporation to
strengthen partnerships to better meet the needs of all customers and clients.

Principal Investing and Asset Management's net income increased $350
million to $841 million in 1999 compared to $491 million in 1998.
Taxable-equivalent net interest income in 1999 increased $42 million to $501
million compared to $459 million in 1998, reflecting strong loan growth in
commercial and residential mortgage loans partially offset by spread
compression on loans and deposits. The average managed loan and lease portfolio
in 1999 increased $3.8 billion to $19.0 billion compared to $15.2 billion
during 1998.

Noninterest income for 1999 increased $410 million to $2.3 billion in 1999
compared to $1.9 billion in 1998, primarily attributable to growth in principal
investing income, brokerage income and asset management fees. Principal
investing income reflected continued growth in this business and a gain on the
sale of an investment in a sub-prime mortgage lender in 1999. Brokerage income
and asset management fees had strong core growth during 1999 which was somewhat
offset by the sale of the investment management operations of Robertson
Stephens.

Other noninterest expense decreased $236 million to $1.4 billion in 1999
from $1.6 billion in 1998, due primarily to lower personnel expense,
professional fees, other general operating expense and processing expense. The
efficiency ratio improved to 48.0 percent in 1999 from 67.1 percent in 1998.
The cash basis efficiency ratio improved to 46.7 percent in 1999 from 65.9
percent in 1998. Return on average equity increased to 26.9 percent in 1999
from 20.1 percent in 1998. The return on tangible equity increased to 30.7
percent in 1999 from 22.8 percent in 1998.


15

Table Two
Business Segment Summary



Consumer Banking Commercial Banking
--------------------- -----------------------
(Dollars in millions) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------

Net income $ 3,899 $ 3,879 $ 878 $ 953
Cash basis earnings (1) 4,537 4,485 935 1,054
Net interest yield 4.93% 4.88% 3.93% 3.97%
Average equity to average assets 7.53 7.59 7.13 7.92
Return on average equity 19.9 19.2 20.7 20.1
Return on tangible equity (1) 30.4 29.3 24.6 27.1
Efficiency ratio 58.5 59.9 47.8 48.1
Cash basis efficiency ratio (1) 55.0 56.6 45.9 44.6
Average:
Total loans and leases $181,278 $169,251 $55,421 $53,887
Total deposits 229,652 228,938 22,124 20,342
Total assets 259,980 265,889 59,392 59,931
Year-end:
Total loans and leases 186,950 171,252 57,508 56,330
Total deposits 228,481 233,317 26,389 23,942
Total assets 255,401 271,695 63,066 61,772
==================================================================================





Principal Investing
Global Corporate and and
Investment Banking Asset Management
------------------------ ---------------------
(Dollars in millions) 1999 1998 1999 1998
- ---------------------------------------------------------------------------------

Net income $ 2,254 $ 292 $ 841 $ 491
Cash basis earnings (1) 2,412 460 876 518
Net interest yield 2.10% 2.12% 2.57% 2.94%
Average equity to average assets 5.88 5.84 13.30 12.77
Return on average equity 17.6 2.3 26.9 20.1
Return on tangible equity (1) 21.1 4.1 30.7 22.8
Efficiency ratio 56.4 70.6 48.0 67.1
Cash basis efficiency ratio (1) 54.5 68.1 46.7 65.9
Average:
Total loans and leases $107,514 $109,543 $19,034 $15,174
Total deposits 64,702 64,262 11,416 11,784
Total assets 217,409 217,709 23,482 19,173
Year-end:
Total loans and leases 105,315 112,903 21,004 17,810
Total deposits 64,195 67,827 11,179 12,542
Total assets 223,930 229,441 26,004 21,579
=================================================================================


(1) Cash basis calculations exclude goodwill and other intangible assets and
their related amortization expense.

16

Results of Operations

Net Interest Income

An analysis of the Corporation's net interest income on a
taxable-equivalent basis and average balance sheet for the last three years and
most recent five quarters is presented in Tables Three and Twenty-One,
respectively. The changes in net interest income from year to year are analyzed
in Table Four.

As reported, net interest income on a taxable-equivalent basis remained
essentially unchanged at $18.5 billion in 1999 compared to 1998. Management
also reviews "Core net interest income", which adjusts reported net interest
income for the impact of trading-related activities, securitizations, asset
sales and divestitures. For purposes of internal analysis, management combines
trading-related net interest income with trading revenue, as discussed in the
"Noninterest Income" section below, as trading strategies are typically
evaluated on total revenue. The determination of core net interest income also
requires adjustment for the impact of securitizations (primarily home equity
and credit card), asset sales (primarily residential and commercial real estate
loans) and divestitures. Net interest income associated with assets that have
been securitized is predominantly offset in noninterest income, as the
Corporation takes on the role of servicer and records servicing income and
gains on securitizations, where appropriate.

The table below provides a reconciliation between net interest income on a
taxable-equivalent basis presented in Table Three and core net interest income
for the year ended December 31:





(Dollars in millions) 1999 1998 Change
- -------------------------------------------------------------------------------------------------------

Net interest income
As reported (1) $ 18,452 $ 18,461 (0.05)%
Less: Trading-related net interest income (662) (608)
Add: Impact of securitizations, asset sales and divestitures 874 313
- -------------------------------------------------------------------------------------------------------
Core net interest income $ 18,664 $ 18,166 2.74%
- -------------------------------------------------------------------------------------------------------
Average earning assets
As reported $ 531,511 $ 499,739 6.36%
Less: Trading-related earning assets (85,772) (71,576)
Add: Earning assets securitized, sold and divested 20,105 5,950
- ------------------------------------------------------------------------------------------------------
Core average earning assets $ 465,844 $ 434,113 7.31%
- ------------------------------------------------------------------------------------------------------
Net yield on earning assets (1,2)
As reported 3.47% 3.69% (22)bp
Add: Impact of trading-related activities 0.52 0.48 4
Impact of securitizations, asset sales and divestitures 0.03 0.02 1
- ------------------------------------------------------------------------------------------------------
Core net interest yield on earning assets 4.02% 4.19% (17)bp
======================================================================================================


(1) Net interest income is presented on a taxable-equivalent basis.
(2) bp denotes basis points; 100 bp equals 1%.


Core net interest income on a taxable-equivalent basis increased $498
million, or 2.7 percent, to $18.7 billion in 1999 compared to $18.2 billion in
1998. Managed loan growth, particularly in consumer loan products, and higher
levels of core deposits and equity were partially offset by the impact of
changing rates and spread compression during 1999.

Core average earning assets increased $31.7 billion to $465.8 billion in
1999 compared to $434.1 billion in 1998, primarily reflecting managed loan
growth of nine percent and higher levels of investment securities. Managed
consumer loans increased 15 percent, led by growth in residential mortgages and
real-estate secured consumer finance loans of 21 percent and 34 percent,
respectively. Loan growth is dependent on economic conditions, as well as
various discretionary factors, such as decisions to securitize certain loan
portfolios and the management of borrower, industry, product and geographic
concentrations.

The core net interest yield decreased 17 basis points to 4.02 percent in
1999 compared to 4.19 percent in 1998, mainly due to higher levels of
lower-yielding investment securities, a shift in loan mix to lower-yielding
residential mortgages, changes in interest rates and spread compression and the
cost of the Corporation's share repurchase program during 1999.


17

Table Three
Average Balances and Interest Rates -- Taxable-Equivalent Basis



1999 1998
--------------------------------- ---------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
(Dollars in millions) Balance Expense Rate Balance Expense Rate
- ------------------------------------------------------------------------------------------------------------------------------

Earning assets
Time deposits placed and other short-term investments $ 5,268 $ 295 5.59% $ 7,649 $ 514 6.72%
Federal funds sold and securities purchased under
agreements to resell 32,252 1,666 5.17 27,288 1,828 6.70
Trading account assets 39,206 2,102 5.36 39,774 2,634 6.62
Securities:
Available-for-sale(1) 78,552 4,809 6.12 62,571 4,286 6.85
Held-for-investment 1,575 112 7.16 4,113 282 6.88
- ----------------------------------------------------------------------------------------------------------------------------
Total securities 80,127 4,921 6.14 66,684 4,568 6.85
- ----------------------------------------------------------------------------------------------------------------------------
Loans and leases(2):
Commercial - domestic 138,339 10,112 7.31 130,177 9,988 7.67
Commercial - foreign 29,374 1,897 6.46 31,015 2,246 7.24
Commercial real estate - domestic 25,533 2,115 8.28 28,418 2,503 8.81
Commercial real estate - foreign 294 25 8.76 330 33 10.05
- ----------------------------------------------------------------------------------------------------------------------------
Total commercial 193,540 14,149 7.31 189,940 14,770 7.78
- ----------------------------------------------------------------------------------------------------------------------------
Residential mortgage 78,948 5,667 7.18 70,842 4,880 6.89
Home equity lines 16,152 1,268 7.85 16,129 1,741 10.79
Direct/Indirect consumer 42,274 3,469 8.21 40,204 3,506 8.72
Consumer finance 18,752 1,670 8.91 14,368 1,529 10.64
Bankcard 9,778 1,134 11.59 12,960 1,638 12.64
Foreign consumer 3,339 316 9.45 3,397 357 10.51
- ----------------------------------------------------------------------------------------------------------------------------
Total consumer 169,243 13,524 7.99 157,900 13,651 8.65
- ----------------------------------------------------------------------------------------------------------------------------
Total loans and leases 362,783 27,673 7.63 347,840 28,421 8.17
- ----------------------------------------------------------------------------------------------------------------------------
Other earning assets 11,875 881 7.41 10,504 786 7.49
- ----------------------------------------------------------------------------------------------------------------------------
Total earning assets(3) 531,511 37,538 7.06 499,739 38,751 7.75
- ----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 25,766 24,907
Other assets, less allowance for credit losses 59,561 59,841
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $616,838 $584,487
============================================================================================================================

Interest-bearing liabilities
Domestic interest-bearing deposits:
Savings $ 23,655 300 1.27 $ 22,692 421 1.86
NOW and money market deposit accounts 98,649 2,374 2.41 96,541 2,536 2.63
Consumer CDs and IRAs 74,010 3,534 4.78 74,655 3,915 5.24
Negotiated CDs, public funds and other time deposits 6,646 361 5.44 7,604 414 5.44
- ----------------------------------------------------------------------------------------------------------------------------
Total domestic interest-bearing deposits 202,960 6,569 3.24 201,492 7,286 3.62
- ----------------------------------------------------------------------------------------------------------------------------
Foreign interest-bearing deposits(4):
Banks located in foreign countries 16,301 802 4.92 24,587 1,405 5.72
Governments and official institutions 7,884 400 5.08 10,517 590 5.61
Time, savings and other 25,949 1,231 4.74 24,261 1,530 6.30
- ----------------------------------------------------------------------------------------------------------------------------
Total foreign interest-bearing deposits 50,134 2,433 4.85 59,365 3,525 5.94
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 253,094 9,002 3.56 260,857 10,811 4.14
- ----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased, securities sold under agreements
to repurchase and other short-term borrowings 116,150 5,826 5.02 90,630 5,239 5.78
Trading account liabilities 15,458 658 4.26 17,472 895 5.12
Long-term debt(5) 57,574 3,600 6.25 49,969 3,345 6.69
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities(6) 442,276 19,086 4.32 418,928 20,290 4.84
- ----------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing sources:
Noninterest-bearing deposits 88,654 84,628
Other liabilities 39,307 36,102
Shareholders' equity 46,601 44,829
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $616,838 $584,487
============================================================================================================================
Net interest spread 2.74 2.91
Impact of noninterest-bearing sources .73 .78
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income/yield on earning assets $18,452 3.47% $18,461 3.69%
============================================================================================================================




1997
--------------------------------
Interest
Average Income/ Yield/
(Dollars in millions) Balance Expense Rate
- -------------------------------------------------------------------------------------------

Earning assets
Time deposits placed and other short-term investments $ 8,379 $ 541 6.46%
Federal funds sold and securities purchased under
agreements to resell 23,437 1,516 6.47
Trading account assets 38,284 2,588 6.76
Securities:
Available-for-sale(1) 42,867 2,959 6.90
Held-for-investment 5,402 389 7.19
- ------------------------------------------------------------------------------------------
Total securities 48,269 3,348 6.94
- ------------------------------------------------------------------------------------------
Loans and leases(2):
Commercial - domestic 117,465 9,386 7.99
Commercial - foreign 28,295 1,995 7.05
Commercial real estate - domestic 29,468 2,748 9.33
Commercial real estate - foreign 156 30 19.24
- ------------------------------------------------------------------------------------------
Total commercial 175,384 14,159 8.07
- ------------------------------------------------------------------------------------------
Residential mortgage 80,593 5,683 7.05
Home equity lines 14,760 1,813 12.29
Direct/Indirect consumer 39,270 3,464 8.82
Consumer finance 13,845 1,625 11.73
Bankcard 15,920 2,127 13.36
Foreign consumer 3,379 301 8.90
- ------------------------------------------------------------------------------------------
Total consumer 167,767 15,013 8.95
- ------------------------------------------------------------------------------------------
Total loans and leases 343,151 29,172 8.50
- ------------------------------------------------------------------------------------------
Other earning assets 3,442 325 9.46
- ------------------------------------------------------------------------------------------
Total earning assets(3) 464,962 37,490 8.06
- ------------------------------------------------------------------------------------------
Cash and cash equivalents 24,187
Other assets, less allowance for credit losses 54,647
- ------------------------------------------------------------------------------------------
Total assets $543,796
==========================================================================================

Interest-bearing liabilities
Domestic interest-bearing deposits:
Savings $ 24,559 490 2.00
NOW and money market deposit accounts 95,204 2,529 2.66
Consumer CDs and IRAs 77,479 4,101 5.29
Negotiated CDs, public funds and other time deposits 6,412 360 5.62
- ------------------------------------------------------------------------------------------
Total domestic interest-bearing deposits 203,654 7,480 3.67
- ------------------------------------------------------------------------------------------
Foreign interest-bearing deposits(4):
Banks located in foreign countries 22,100 1,274 5.77
Governments and official institutions 10,801 591 5.47
Time, savings and other 22,093 1,339 6.06
- ------------------------------------------------------------------------------------------
Total foreign interest-bearing deposits 54,994 3,204 5.83
- ------------------------------------------------------------------------------------------
Total interest-bearing deposits 258,648 10,684 4.13
- ------------------------------------------------------------------------------------------
Federal funds purchased, securities sold under agreements
to repurchase and other short-term borrowings 70,399 4,105 5.83
Trading account liabilities 15,285 975 6.38
Long-term debt(5) 46,337 3,137 6.77
- ------------------------------------------------------------------------------------------
Total interest-bearing liabilities(6) 390,669 18,901 4.84
- ------------------------------------------------------------------------------------------
Noninterest-bearing sources:
Noninterest-bearing deposits 78,235
Other liabilities 31,282
Shareholders' equity 43,610
- ------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $543,796
==========================================================================================
Net interest spread 3.22
Impact of noninterest-bearing sources .78
- ------------------------------------------------------------------------------------------
Net interest income/yield on earning assets $18,589 4.00%
==========================================================================================


(1) The average balance and yield on available-for-sale securities are based on
the average of historical amortized cost balances.
(2) Nonperforming loans are included in the average loan balances. Income on
such nonperforming loans is recognized on a cash basis.
(3) Interest income includes taxable-equivalent basis adjustments of $215, $163
and $157 in 1999, 1998 and 1997, respectively. Interest income also
includes the impact of risk management interest rate contracts, which
increased interest income on the underlying assets $306, $174 and $159 in
1999, 1998 and 1997, respectively.
(4) Primarily consists of time deposits in denominations of $100,000 or more.
(5) Long-term debt includes trust preferred securities.
(6) Interest expense includes the impact of risk management interest rate
contracts, which decreased (increased) interest expense on the underlying
liabilities $116, $(45) and $15 in 1999, 1998 and 1997, respectively.


18

Table Four
Analysis of Changes in Net Interest Income -- Taxable-Equivalent Basis



From 1998 to 1999
---------------------------------------
Due to Change in(1)
-------------------------
Net
(Dollars in millions) Volume Rate Change
- -----------------------------------------------------------------------------------------------------

Increase (decrease) in interest income
Time deposits placed and other short-term investments $(143) $ (76) $ (219)
Federal funds sold and securities purchased under
agreements to resell 299 (461) (162)
Trading account assets (37) (495) (532)
Securities:
Available-for-sale 1,013 (490) 523
Held-for-investment (180) 10 (170)
- -----------------------------------------------------------------------------------------------------
Total securities 353
- -----------------------------------------------------------------------------------------------------
Loans and leases:
Commercial - domestic 609 (485) 124
Commercial - foreign (115) (234) (349)
Commercial real estate - domestic (245) (143) (388)
Commercial real estate - foreign (3) (5) (8)
- -----------------------------------------------------------------------------------------------------
Total commercial (621)
- -----------------------------------------------------------------------------------------------------
Residential mortgage 576 211 787
Home equity lines 2 (475) (473)
Direct/Indirect consumer 176 (213) (37)
Consumer finance 417 (276) 141
Bankcard (377) (127) (504)
Foreign consumer (6) (35) (41)
- -----------------------------------------------------------------------------------------------------
Total consumer (127)
- -----------------------------------------------------------------------------------------------------
Total loans and leases (748)
- -----------------------------------------------------------------------------------------------------
Other earning assets 102 (7) 95
- -----------------------------------------------------------------------------------------------------
Total interest income (1,213)
- -----------------------------------------------------------------------------------------------------
Increase (decrease) in interest expense
Domestic interest-bearing deposits:
Savings 17 (138) (121)
NOW and money market deposit accounts 54 (216) (162)
Consumer CDs and IRAs (34) (347) (381)
Negotiated CDs, public funds and other time deposits (52) (1) (53)
- -----------------------------------------------------------------------------------------------------
Total domestic interest-bearing deposits (717)
- -----------------------------------------------------------------------------------------------------
Foreign interest-bearing deposits:
Banks located in foreign countries (427) (176) (603)
Governments and official institutions (137) (53) (190)
Time, savings and other 101 (400) (299)
- -----------------------------------------------------------------------------------------------------
Total foreign interest-bearing deposits (1,092)
- -----------------------------------------------------------------------------------------------------
Total interest-bearing deposits (1,809)
- -----------------------------------------------------------------------------------------------------
Federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings 1,342 (755) 587
Trading account liabilities (96) (141) (237)
Long-term debt 486 (231) 255
- -----------------------------------------------------------------------------------------------------
Total interest expense (1,204)
- -----------------------------------------------------------------------------------------------------
Net decrease in net interest income $ (9)
=====================================================================================================




From 1997 to 1998
---------------------------------
Due to Change in(1)
-------------------
Net
(Dollars in millions) Volume Rate Change
- -----------------------------------------------------------------------------------------------

Increase (decrease) in interest income
Time deposits placed and other short-term investments $ (48) $ 21 $ (27)
Federal funds sold and securities purchased under
agreements to resell 256 56 312
Trading account assets 99 (53) 46
Securities:
Available-for-sale 1,350 (23) 1,327
Held-for-investment (89) (18) (107)
- -----------------------------------------------------------------------------------------------
Total securities 1,220
- -----------------------------------------------------------------------------------------------
Loans and leases:
Commercial - domestic 986 (384) 602
Commercial - foreign 196 55 251
Commercial real estate - domestic (96) (149) (245)
Commercial real estate - foreign 22 (19) 3
- -----------------------------------------------------------------------------------------------
Total commercial 611
- -----------------------------------------------------------------------------------------------
Residential mortgage (674) (129) (803)
Home equity lines 159 (231) (72)
Direct/Indirect consumer 82 (40) 42
Consumer finance 60 (156) (96)
Bankcard (379) (110) (489)
Foreign consumer 2 54 56
- -----------------------------------------------------------------------------------------------
Total consumer (1,362)
- -----------------------------------------------------------------------------------------------
Total loans and leases (751)
- -----------------------------------------------------------------------------------------------
Other earning assets 541 (80) 461
- -----------------------------------------------------------------------------------------------
Total interest income 1,261
- -----------------------------------------------------------------------------------------------
Increase (decrease) in interest expense
Domestic interest-bearing deposits:
Savings (36) (33) (69)
NOW and money market deposit accounts 35 (28) 7
Consumer CDs and IRAs (148) (38) (186)
Negotiated CDs, public funds and other time deposits 65 (11) 54
- -----------------------------------------------------------------------------------------------
Total domestic interest-bearing deposits (194)
- -----------------------------------------------------------------------------------------------
Foreign interest-bearing deposits:
Banks located in foreign countries 142 (11) 131
Governments and official institutions (16) 15 (1)
Time, savings and other 135 56 191
- -----------------------------------------------------------------------------------------------
Total foreign interest-bearing deposits 321
- -----------------------------------------------------------------------------------------------
Total interest-bearing deposits 127
- -----------------------------------------------------------------------------------------------
Federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings 1,170 (36) 1,134
Trading account liabilities 128 (208) (80)
Long-term debt 243 (35) 208
- -----------------------------------------------------------------------------------------------
Total interest expense 1,389
- -----------------------------------------------------------------------------------------------
Net decrease in net interest income $ (128)
===============================================================================================


(1) The changes for each category of interest income and expense are divided
between the portion of change attributable to the variance in volume or
rate for that category. The amount of change that cannot be separated is
allocated to each variance proportionately.


19

Provision for Credit Losses

The provision for credit losses was $1.8 billion in 1999 compared to $2.9
billion in 1998. The decrease in the provision for credit losses was primarily
due to a significant reduction in the inherent risk and size of the
Corporation's emerging markets portfolio and a change in the composition of the
loan portfolio from commercial real estate and foreign to more consumer
residential mortgage loans as well as a $467 million decline in net
charge-offs. For additional information on the allowance for credit losses,
certain credit quality ratios and credit quality information on specific loan
categories, see the "Credit Risk Management and Credit Portfolio Review"
section on page 30.


Gains on Sales of Securities

Gains on sales of securities were $240 million in 1999 compared to $1.0
billion in 1998. Securities gains were higher in 1998 as a result of favorable
market conditions for certain debt instruments and higher activity in
connection with the Corporation's overall risk management operations.


Noninterest Income

As presented in Table Five, noninterest income increased $1.9 billion to
$14.1 billion in 1999, primarily reflecting higher levels of trading account
profits and fees, mortgage servicing income and credit card income, partially
offset by declines in nondeposit-related service fees and other income.


Table Five
Noninterest Income



Change
----------------------
(Dollars in millions) 1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------

Service charges on deposit accounts $ 3,645 $ 3,396 $ 249 7.3%
Mortgage servicing income 673 389 284 73.0
Investment banking income 2,244 2,009 235 11.7
Trading account profits and fees 1,495 171 1,324 n/m
Brokerage income 724 728 (4) (.5)
Nondeposit-related service fees 554 652 (98) (15.0)
Asset management and fiduciary service fees 1,023 973 50 5.1
Credit card income 1,791 1,448 343 23.7
Other income 1,920 2,423 (503) (20.8)
- --------------------------------------------------------------------------------------
Total $14,069 $12,189 $1,880 15.4%
======================================================================================


n/m = not meaningful

o Service charges on deposit accounts include ATM and checkcard, interchange
fees, overdraft fees and other deposit-related fees. Service charges on
deposit accounts increased by $249 million to $3.6 billion in 1999 primarily
due to increases in commercial checking account service charges and
increased debit card activity.

o Mortgage servicing income increased $284 million to $673 million in 1999,
primarily due to lower prepayment speeds as a result of higher interest
rates and a reduction in servicing costs primarily due to service operation
consolidations. The average managed portfolio of loans serviced increased
$36 billion to $273 billion in 1999 compared to $237 billion in 1998. First
mortgage loans originated through the Corporation decreased to $63.2 billion
in 1999 compared to $79.1 billion in 1998, reflecting a slowdown in
refinancings as a result of a general increase in levels of interest rates.
Origination volume in 1999 was composed of approximately $33.2 billion of
retail loans and $30.0 billion of correspondent and wholesale loans.

In conducting its mortgage production activities, the Corporation is exposed
to interest rate risk for the period between the loan commitment date and the
loan funding date. To manage this risk, the Corporation enters into various
financial instruments including forward delivery and option contracts. The
notional amount of such contracts was $2.7 billion at December 31, 1999 with
associated net unrealized gains of $18 million. At December 31, 1998, the
notional amount of such contracts was $9.8 billion with associated net
unrealized losses of $8 million. These contracts have an average expected
maturity of less than 90 days. To manage risk associated with changes in
prepayment rates and the impact on mortgage servicing rights, the Corporation
uses various financial instruments including options and certain swap
contracts. At December 31, 1999, deferred


20

net losses from mortgage servicing rights hedging activity were $20 million,
comprised of unamortized realized deferred gains of $313 million and
unrealized losses of $333 million on closed and open positions, respectively.
At December 31, 1998, by comparison, deferred net gains from mortgage
servicing rights hedging activity were $456 million, comprised of unamortized
realized deferred gains of $266 million and unrealized gains of $190 million
on closed and open positions, respectively. The change in net deferred hedge
results is attributable to the overall change in interest rates which resulted
in slower mortgage prepayment speeds. Notional amounts of hedge instruments
used for mortgage servicing rights hedging activities were $43.4 billion and
$22.4 billion at December 31, 1999 and 1998, respectively. For additional
information on mortgage banking activities, see Note One of the consolidated
financial statements on page 58.

o Investment banking income increased $235 million to $2.2 billion in 1999,
mainly due to increased levels of activity in principal investing,
syndications and other investment banking income. Principal investing income
increased $254 million to $833 million in 1999, primarily reflecting
continued growth in this business and a gain on the sale of an investment in
a sub-prime mortgage lender in 1999. Syndication fees increased $113 million
to $514 million, reflecting the Corporation's strengthened position as lead
arranger on syndication deals during 1999. Other investment banking income
increased $55 million to $172 million in 1999, primarily due to a gain on
the sale of other assets in 1999. The increases in investment banking income
were partially offset by lower levels of securities underwriting fees and
advisory services fees, primarily due to the sale of the investment banking
operations of Robertson Stephens in the third quarter of 1998. Securities
underwriting fees decreased $123 million to $461 million in 1999. Advisory
services fees decreased $64 million to $264 million in 1999. Investment
banking income by major activity follows:





(Dollars in millions) 1999 1998
- ------------------------------------------------

Investment banking income
Principal investing $ 833 $ 579
Securities underwriting 461 584
Syndications 514 401
Advisory services 264 328
Other 172 117
- ----------------------------------------------
Total $2,244 $2,009
==============================================


o Trading account profits and fees represent the net amount earned from the
Corporation's trading positions including trading account assets and
liabilities as well as derivative-dealer positions. These transactions
include positions to meet customer demand and positions for the
Corporation's own trading account. Trading positions are taken in a diverse
range of financial instruments and markets. The profitability of these
trading positions is largely dependent on the volume and type of
transactions, the level of risk assumed, and the volatility of price and
rate movements. Trading account profits and fees, as reported in the
Corporation's consolidated statement of income, includes neither the net
interest recognized on interest-earning and interest-bearing trading
positions, nor the related funding. Trading account profits and fees, as
well as trading-related net interest income ("trading-related revenue") are
presented in the table on the following page as they are both considered in
evaluating the overall profitability of the Corporation's trading positions.
Trading-related revenue is derived from foreign exchange spot, forward and
cross-currency contracts, debt and equity securities and derivative
contracts in interest rates, equities, credit and commodities.
Trading-related revenue increased $1.4 billion to $2.2 billion in 1999,
primarily due to higher levels of revenue from equities, interest rate
contracts and fixed income. Income from equities was favorably impacted by
growth in the equity business in 1999. Prior year interest rate contracts
and fixed income were negatively impacted by a write-down of Russian
securities and losses in corporate bonds and commercial mortgages due to
widening spreads.


21




(Dollars in millions) 1999 1998
- ------------------------------------------------------------------------------

Trading account profits and fees - as reported $1,495 $ 171
Net interest income 662 608
==============================================================================
Total trading-related revenue $2,157 $ 779
- ------------------------------------------------------------------------------
Trading-related revenue by product
Foreign exchange contracts $ 570 $ 617
Interest rate contracts 533 172
Fixed income 499 (256)
Equities 503 184
Commodities and other 52 62
- ------------------------------------------------------------------------------
Total trading-related revenue $2,157 $ 779
==============================================================================


o Nondeposit-related fees decreased 15 percent to $554 million in 1999,
primarily due to reduced general banking services and official check and
draft fees.

o Asset management and fiduciary service fees increased $50 million to $1.0
billion in 1999, primarily due to growth in core operations reflecting
increases in market value and new business, partially offset by the sale of
the investment management operations of Robertson Stephens in 1999. An
analysis of asset management and fiduciary service fees by major business
activity follows:





(Dollars in millions) 1999 1998
- ---------------------------------------------------------------------------

Asset management and fiduciary service fees
Private bank $ 750 $728
Funds and institutional investment management 246 182
Retirement services, corporate trust and other 27 63
- ----------------------------------------------------------------------------
Total $1,023 $973
============================================================================





December 31
-----------------------
1999 1998
----------- -----------

Market value of assets
Assets under management $247,458 $233,500
Assets under administration 309,581 300,167
======================================================


o Credit card income increased $343 million to $1.8 billion in 1999, primarily
due to higher interchange and merchant volumes, as well as higher excess
servicing income, a result of higher levels of securitizations. Credit card
income includes securitization gains of $18 million and $32 million in 1999
and 1998, respectively, and revenue from the securitized portfolio of $226
million and $178 million in 1999 and 1998, respectively.

o Other income totaled $1.9 billion in 1999, a decrease of $503 million from
1998. Other income in 1998 included a $479 million gain on the sale of a
manufactured housing unit, $144 million from securitization gains, a $110
million gain on the sale of a partial ownership interest in a mortgage
company and an $84 million gain on the sale of real estate included in
premises and equipment, partially offset by write-downs associated with an
investment in DE Shaw and other equity investments in 1998. Other income in
1999 included an $89 million gain on the sale of certain businesses, $80
million from securitization gains, a $63 million gain on the sale of
substantially all remaining out-of-franchise credit card loans and a $17
million gain on the sale of certain branches. Other income also includes
certain prepayment fees and other fees, net rental income on automobile
leases classified as operating leases, servicing and related fees from the
consumer finance business, insurance commissions and earnings and bankers'
acceptances and letters of credit fees.


22

Other Noninterest Expense

As presented in Table Six, the Corporation's other noninterest expense
decreased $755 million to $18.0 billion in 1999. This decrease was attributable
to merger-related savings, resulting in lower levels of personnel, professional
fees, other general operating expense and general administrative and other
expense.


Table Six
Other Noninterest Expense



1999 1998 Change
----------------------- ----------------------- -------------------------
(Dollars in millions) Amount Percent(1) Amount Percent(1) Amount Percent
- ------------------------------------------------------------------------------------------------------------

Personnel $ 9,308 28.7% $ 9,412 30.7% $(104) ( 1.1)%
Occupancy 1,627 5.0 1,643 5.4 (16) ( 1.0)
Equipment 1,346 4.1 1,404 4.6 (58) ( 4.1)
Marketing 537 1.7 581 1.9 (44) ( 7.6)
Professional fees 630 1.9 843 2.8 (213) (25.3)
Amortization of intangibles 888 2.7 902 2.9 (14) ( 1.6)
Data processing 763 2.3 765 2.5 (2) ( .3)
Telecommunications 549 1.7 563 1.8 (14) ( 2.5)
Other general operating 1,820 5.6 2,044 6.6 (224) (11.0)
General administrative and other 518 1.6 584 1.9 (66) (11.3)
- ------------------------------------------------------------------------------------------------------------
Total $17,986 55.3% $18,741 61.1% $(755) ( 4.0)%
============================================================================================================


(1) Percent of net interest income on a taxable-equivalent basis and
noninterest income.

o Personnel expense decreased $104 million to $9.3 billion in 1999, primarily
attributable to the merger-related savings in salaries and wages, partially
offset by higher incentive compensation. At December 31, 1999, the
Corporation had approximately 156,000 full-time equivalent employees
compared to approximately 171,000 at December 31, 1998.

o Professional fees decreased $213 million from 1998 to $630 million in 1999,
primarily due to decreases in use of outside legal and other professional
services.

o Other general operating expense decreased $224 million to $1.8 billion in
1999, primarily due to lower loan collection expense and insurance expense,
partially offset by increased credit card processing expense and postage
expense.

o General administrative and other expense decreased $66 million to $518
million in 1999, mainly as a result of decreased travel expense, personal
property taxes and other taxes and licenses.


23

Year 2000 Project

For the past several years, the Corporation has been taking corrective
measures to ensure that, on January 1, 2000, its computer systems and equipment
that use embedded computer chips would be able to distinguish between "1900"
and "2000." The Corporation also undertook corrective measures to avoid any
business disruptions on February 29, 2000 as a result of the millennium's first
leap year. Due to these efforts, the Corporation has not experienced any
material system errors or failures as a result of Year 2000 issues.

Prior to December 31, 1999, the Corporation designed and implemented an
event management communications center as a single point of coordination and
information about all Year 2000 events, whether internal or external, that
could impact normal business processes. The Corporation will continue to staff
this center as needed through the end of the first quarter of 2000. In
addition, the Corporation will continue its business as usual practices to
monitor its computer systems and infrastructure, as well as the Year 2000
efforts of third parties with which the Corporation does business. Although the
Corporation does not anticipate that any future Year 2000 issues will result in
a material impact on the Corporation, there can be no assurance that this will
be the case.

The Corporation has incurred cumulative Year 2000 costs of approximately
$532 million through December 31, 1999. A significant portion of these costs
was not incremental to the Corporation but instead constituted a reallocation
of existing internal systems technology resources and, accordingly, was funded
from normal operations. Remaining costs are expected to be immaterial and
similarly funded.

Forward-looking statements contained in the foregoing "Year 2000 Project"
section should be read in conjunction with the cautionary statements included
in the introductory paragraphs under "Management's Discussion and Analysis of
Results of Operations and Financial Condition" on page 9.


Income Taxes

The Corporation's income tax expense for 1999 and 1998 was $4.3 billion
and $2.9 billion, respectively. The effective tax rates for 1999 and 1998 were
35.5 percent and 35.8 percent, respectively. Note Fifteen of the consolidated
financial statements on page 91 includes a reconciliation of expected federal
income tax expense computed using the federal statutory rate of 35 percent to
actual income tax expense.


24

Balance Sheet Review and Liquidity Risk Management

The Corporation utilizes an integrated approach in managing its balance
sheet, which includes management of interest rate sensitivity, credit risk,
liquidity risk and its capital position. The average balances discussed below
can be derived from Table Three.

Average levels of customer-based funds increased $5.5 billion to $291.6
billion in 1999 compared to $286.1 billion in 1998, primarily due to an
increase in demand deposits. As a percentage of total sources, average levels
of customer-based funds decreased to 47 percent in 1999 from 49 percent in
1998.

Average levels of market-based funds increased $14.3 billion in 1999 to
$181.7 billion. In addition, 1999 average levels of long-term debt increased by
$7.6 billion over 1998, mainly the result of borrowings to fund earning asset
growth and business development opportunities, build liquidity, repay maturing
debt and fund share repurchases.

The average securities portfolio in 1999 increased $13.4 billion over 1998
levels, representing 13 percent of total uses of funds in 1999 compared to 11
percent in 1998. See the following "Securities" section for additional
information on the securities portfolio.

Average loans and leases, the Corporation's primary use of funds,
increased $14.9 billion to $362.8 billion in 1999. Average managed loans and
leases increased $32.1 billion, or 9.0 percent, to $388.9 billion in 1999,
reflecting strong loan growth in consumer products throughout the franchise due
to continued strength in consumer product introductions in certain regions.

Average other assets and cash and cash equivalents increased $579 million
to $85.3 billion in 1999, primarily due to increases in the average balances of
cash and cash equivalents, derivative-dealer assets and mortgage servicing
rights, partially offset by a decrease in customers' acceptance liability.

At December 31, 1999, cash and cash equivalents were $27.0 billion, a
decrease of $1.3 billion from December 31, 1998. During 1999, net cash provided
by operating activities was $12.1 billion, net cash used in investing
activities was $31.3 billion and net cash provided by financing activities was
$17.9 billion. For further information on cash flows, see the Consolidated
Statement of Cash Flows on page 56 of the consolidated financial statements.

Liquidity is a measure of the Corporation's ability to fulfill its cash
requirements and is managed by the Corporation through its asset and liability
management process. The Corporation monitors its assets and liabilities and
modifies these positions as liquidity requirements change. This process,
coupled with the Corporation's ability to raise capital and debt financing, is
designed to cover the liquidity needs of the Corporation. The Corporation also
takes into consideration the ability of its subsidiary banks to pay dividends
to the parent company. See Note Twelve of the consolidated financial statements
on page 82 for further details on dividend capabilities of its subsidiary
banks. Management believes that the Corporation's sources of liquidity are more
than adequate to meet its cash requirements.


25

Securities

The securities portfolio serves a primary role in the Corporation's
balance sheet management. The decision to purchase or sell securities is based
upon the current assessment of economic and financial conditions, including the
interest rate environment, liquidity requirements and on- and off-balance sheet
positions.

The securities portfolio at December 31, 1999 consisted of
available-for-sale securities totaling $81.7 billion and held-for-investment
securities totaling $1.4 billion compared to $78.6 billion and $2.0 billion,
respectively, at December 31, 1998. See Note Three of the consolidated
financial statements on page 67 for further details on securities.

The valuation allowance for available-for-sale securities and marketable
equity securities included in shareholders' equity at December 31, 1999,
reflects unrealized losses of $2.5 billion, net of related income taxes of $1.1
billion, primarily reflecting market valuation adjustments of $3.8 billion
pre-tax net unrealized losses on available-for-sale securities and $248 million
pre-tax net unrealized gains on marketable equity securities. The valuation
allowance included in shareholders' equity at December 31, 1998, reflects
unrealized gains of $303 million, net of related income taxes of $216 million,
primarily reflecting pre-tax net unrealized gains of $354 million on
available-for-sale securities and $165 million on marketable equity securities.
The change in the valuation allowance was primarily attributable to an upward
shift in certain segments of the U.S. Treasury yield curve during 1999.

At December 31, 1999 and 1998, the market value of the Corporation's
held-for-investment securities reflected pre-tax net unrealized losses of $152
million and $144 million, respectively.

The estimated average duration of the available-for-sale securities
portfolio was 4.05 years at December 31, 1999 compared to 4.14 years at
December 31, 1998.


Loans and Leases

Total loans and leases increased four percent to $370.7 billion at
December 31, 1999 compared to $357.3 billion at December 31, 1998. As presented
in Table Three, average total loans and leases increased four percent to $362.8
billion in 1999 compared to $347.8 billion in 1998, primarily due to core loan
growth, partially offset by the impact of securitizations and loan sales of
$24.2 billion in 1999 compared to $22.6 billion in 1998.

Average commercial loans increased to $193.5 billion in 1999 compared to
$189.9 billion in 1998, due largely to core loan growth. Average domestic
commercial real estate loans decreased to $25.5 billion in 1999 compared to
$28.4 billion in 1998, reflecting the impact of $1.6 billion of securitizations
and loan sales in 1999 compared to $2.6 billion in 1998.

Average residential mortgage loans increased 11 percent to $78.9 billion
in 1999 compared to $70.8 billion in 1998, primarily due to core loan growth,
partially offset by the impact of $13.4 billion of securitizations and loan
sales in 1999 and $9.6 billion in 1998.

Average bankcard loans declined $3.2 billion to $9.8 billion in 1999
compared to $13.0 billion in 1998 due to reductions in retail outstandings and
securitizations and loan sales of $2.9 billion in 1999 compared to $2.4 billion
in 1998.

Average other consumer loans, including direct and indirect consumer loans
and home equity loans, increased $6.4 billion to $80.5 billion in 1999 due
primarily to consumer finance loan growth, partially offset by the impact of
$6.3 billion of securitizations and loan sales in 1999 and $8.0 billion in
1998.

A significant source of liquidity for the Corporation is the repayments
and maturities of loans. Table Seven presents the contractual maturity
distribution and interest sensitivity of selected loan categories at December
31, 1999, and indicates that approximately 34 percent of the selected loans had
maturities of one year or less. The securitization and sale of certain loans
and the use of loans as collateral in asset-backed financing arrangements are
also sources of liquidity.


26

Table Seven
Selected Loan Maturity Data(1,2)



December 31, 1999 Due after
Due in 1 year
1 year through Due after
(Dollars in millions) or less 5 years 5 years Total
- -----------------------------------------------------------------------------------------------------------

Commercial - domestic $ 47,760 $ 64,394 $ 21,803 $ 133,957
Commercial real estate - domestic 2,818 6,189 6,952 15,959
Construction real estate - domestic 3,990 3,715 362 8,067
Foreign 8,311 14,458 4,298 27,067
- -----------------------------------------------------------------------------------------------------------
Total selected loans $ 62,879 $ 88,756 $ 33,415 $ 185,050
===========================================================================================================
Percent of total 34.0% 48.0% 18.0% 100.0%
Cumulative percent of total 34.0 82.0 100.0
Sensitivity of loans to changes in interest rates for
loans due after one year:
Predetermined interest rates $ 13,723 $ 13,772 $ 27,495
Floating or adjustable interest rates 75,033 19,643 94,676
- -----------------------------------------------------------------------------------------------------------
Total $ 88,756 $ 33,415 $ 122,171
===========================================================================================================


(1) Loan maturities are based on the remaining maturities under contractual
terms.
(2) Loan maturities exclude residential mortgage, bankcard, home equity lines
and direct/indirect consumer loans.



Deposits

Table Three provides information on the average amounts of deposits and
the rates paid by deposit category. Through the Corporation's diverse retail
banking network, deposits remain a primary source of funds for the Corporation.
Average deposits decreased $3.7 billion in 1999 over 1998 to $341.7 billion,
primarily due to a $9.2 billion decrease in average foreign interest-bearing
deposits due to a strategic reduction in foreign wholesale deposits, which was
partially offset by a $4.0 billion increase in average noninterest-bearing
deposits. See Note Seven of the consolidated financial statements on page 72
for further details on deposits.


27

Short-Term Borrowings and Trading Account Liabilities

The Corporation uses short-term borrowings as a funding source and in its
management of interest rate risk. Table Eight presents the categories of
short-term borrowings.

During 1999, total average short-term borrowings increased $25.5 billion
to $116.1 billion from $90.6 billion in 1998. This growth was primarily due to
a $16.5 billion increase of securities sold under agreements to repurchase to
fund securities portfolio growth and a $10.2 billion increase in other
short-term borrowings primarily due to a $10.0 billion increase in bank notes
to fund loan growth not funded by deposit growth. Average trading account
liabilities decreased $2.0 billion to $15.5 billion in 1999 from $17.5 billion
in 1998, due to a decline in trading-related short sales. See Note Four of the
consolidated financial statements on page 69 for further details on trading
account liabilities.


Table Eight
Short-Term Borrowings



1999 1998 1997
-------------------- -------------------- ---------------------
(Dollars in millions) Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------------------

Federal funds purchased
At December 31 $ 4,806 3.04% $ 7,316 5.25% $10,111 5.80%
Average during year 5,835 5.03 8,201 5.42 6,551 5.54
Maximum month-end balance during year 8,311 -- 11,187 -- 10,111 --
Securities sold under agreements to repurchase
At December 31 69,755 4.12 60,227 5.08 51,303 5.83
Average during year 73,242 4.89 56,710 5.66 45,403 5.58
Maximum month-end balance during year 83,046 -- 71,595 -- 51,820 --
Commercial paper
At December 31 7,331 5.83 6,749 5.19 5,925 5.65
Average during year 7,610 5.17 6,419 5.56 6,184 5.64
Maximum month-end balance during year 8,379 -- 7,913 -- 6,689 --
Other short-term borrowings
At December 31 40,340 5.18 24,742 4.52 12,120 6.52
Average during year 29,463 5.30 19,300 6.35 12,261 7.02
Maximum month-end balance during year 40,340 -- 25,927 -- 13,974 --
==============================================================================================================



28

Long-Term Debt and Trust Preferred Securities

Long-term debt increased $9.6 billion to $55.5 billion at December 31,
1999, from $45.9 billion at December 31, 1998, mainly as a result of borrowings
to fund earning asset growth and business development opportunities, build
liquidity, repay maturing debt and fund share repurchases. During 1999, the
Corporation issued, domestically and internationally, $17.6 billion in
long-term senior and subordinated debt, a $5.1 billion increase from $12.5
billion during 1998. In 1999, the Corporation had no issuance of trust
preferred securities compared to $350 million in 1998. See Notes Eight and Nine
of the consolidated financial statements on pages 73 and 75 for further details
on long-term debt and trust preferred securities, respectively.

From January 1, 2000 through March 15, 2000, the Corporation issued $1.4
billion of long-term senior and subordinated debt, with maturities ranging from
2002 to 2023. During this same time period, Bank of America, N.A. issued $6.0
billion of bank notes with maturities ranging from 2001 to 2004 and $1.0
billion of Euro medium-term notes maturing in 2002 and 2003.


Debt Ratings

The financial position of the Corporation and Bank of America, N.A at
December 31, 1999 is reflected in the following debt ratings:





Bank of America,
Bank of America Corporation N.A.
------------------------------------ ---------------
Commercial Senior Subordinated Short- Long-
Paper Debt Debt term term
------------ -------- -------------- -------- ------

Moody's Investors Service P-1 Aa2 Aa3 P-1 Aa1
Standard & Poor's Corporation A-1 A+ A A-1+ AA-
Duff and Phelps, Inc D-1+ AA- A+ D-1+ AA
Fitch IBCA, Inc F-1+ AA- A+ F-1+ AA
Thomson BankWatch TBW-1 AA- A+ TBW-1 -
======================================================================================


Capital Resources and Capital Management

Shareholders' equity at December 31, 1999, was $44.4 billion compared to
$45.9 billion at December 31, 1998, a decrease of $1.5 billion. The decrease
was attributable to the repurchase of 78 million shares of common stock for
approximately $4.9 billion combined with a $2.8 billion reduction in
shareholders' equity resulting primarily from the recognition of after-tax net
unrealized losses on available-for-sale securities and marketable equity
securities. Offsetting these decreases are the increases to shareholders'
equity due to net earnings (net income less dividends) of $4.7 billion and the
issuance of approximately 30.5 million shares of common stock under various
employee plans for $1.4 billion.

Under the current repurchase program which was authorized by the
Corporation's Board of Directors in June 1999, the Corporation had remaining
buyback authority of its common stock outstanding of $5.1 billion or 52 million
shares of common stock at December 31, 1999.

The regulatory capital ratios of the Corporation and Bank of America N.A.,
along with a description of the components of risk-based capital, capital
adequacy requirements and prompt corrective action provisions, are included in
Note Twelve of the consolidated financial statements on page 82.


29

Credit Risk Management and Credit Portfolio Review

In conducting business activities, the Corporation is exposed to the risk
that borrowers or counterparties may default on their obligations to the
Corporation. Credit risk arises through the extension of loans and leases,
certain securities, letters of credit, financial guarantees and through
counterparty exposure on trading and capital markets transactions. To manage
this risk, the Credit Risk Management group establishes policies and procedures
to manage both on- and off-balance sheet credit risk and communicates and
monitors the application of these policies and procedures throughout the
Corporation.

The Corporation's overall objective in managing credit risk is to minimize
the adverse impact of any single event or set of occurrences. To achieve this
objective, the Corporation strives to maintain a credit risk profile that is
diverse in terms of product type, industry concentration, geographic
distribution and borrower or counterparty concentration.

The Credit Risk Management group works with lending officers, trading
personnel and various other line personnel in areas that conduct activities
involving credit risk and is involved in the implementation, refinement and
monitoring of credit policies and procedures.

The Corporation manages credit exposure to individual borrowers and
counterparties on an aggregate basis including loans and leases, securities,
letters of credit, bankers' acceptances, derivatives and unfunded commitments.
In addition, the creditworthiness of individual borrowers or counterparties is
determined by experienced personnel, and limits are established for the total
credit exposure to any one borrower or counterparty. Credit limits are subject
to varying levels of approval by senior line and credit risk management.

The Corporation also manages exposure to a single borrower, industry,
product-type, country or other concentration through syndications of credits,
credit derivatives, participations, loan sales and securitizations. Through the
Global Corporate and Investment Banking segment, the Corporation is a major
participant in the syndications market. In a syndicated facility, each
participating lender funds only its portion of the syndicated facility,
therefore limiting its exposure to the borrower.

In conducting derivatives activities, the Corporation may choose to reduce
credit risk to any one counterparty through the use of legally enforceable
master netting agreements which allow the Corporation to settle positive and
negative positions with the same counterparty on a net basis. For more
information on the Corporation's off-balance sheet credit risk, see Note Eleven
of the consolidated financial statements on page 79.

For commercial lending, the originating credit officer assigns borrowers
or counterparties an initial risk rating which is based primarily on a thorough
analysis of each borrower's financial capacity in conjuction with industry and
economic trends. Approvals are made based upon the amount of inherent credit
risk specific to the transaction and the counterparty and are reviewed for
appropriateness by senior line and credit risk personnel. Credits are monitored
by line and credit risk management personnel for deterioration in a borrower's
or counterparty's financial condition which would impact the ability of the
borrower or counterparty to perform under the contract. Risk ratings are
adjusted as necessary.

For consumer and small business lending, credit scoring systems are
utilized to determine the relative riskiness of new underwritings and provide
standards for extensions of credit. Consumer portfolio credit risk is monitored
primarily using statistical models and regular reviews of actual payment
experience to predict portfolio behavior.

When required, the Corporation obtains collateral to support credit
extensions and commitments. Generally, such collateral is in the form of real
and personal property, cash on deposit or other highly liquid instruments. In
certain circumstances, the Corporation obtains real property as security for
some loans that are made on the general creditworthiness of the borrower and
whose proceeds were not used for real estate-related purposes.

An independent Credit Review group conducts ongoing reviews of credit
activities and portfolios, reexamining on a regular basis risk assessments for
credit exposures and overall compliance with policy.


30

Loan and Lease Portfolio Review - The Corporation's primary credit
exposure is focused in its loans and leases portfolio, which totaled $370.7
billion and $357.3 billion at December 31, 1999 and 1998, respectively. In an
effort to minimize the adverse impact of any single event or set of
occurrences, the Corporation strives to maintain a diverse credit portfolio.
Table Nine presents the distribution of loans and leases by category.
Additional information on the Corporation's real estate, industry and foreign
exposures can be found in the "Concentrations of Credit Risk" section beginning
on page 38.


Table Nine
Distribution of Loans and Leases



December 31
-----------------------------------------------
1999 1998
----------------------- -----------------------

(Dollars in millions) Amount Percent Amount Percent
- --------------------------------------------------------------------------
Commercial - domestic $143,450 38.7% $137,422 38.5%
Commercial - foreign 27,978 7.5 31,495 8.8
Commercial real
estate - domestic 24,026 6.5 26,912 7.5
Commercial real
estate - foreign 325 .1 301 .1
- --------------------------------------------------------------------------
Total commercial 195,779 52.8 196,130 54.9
- --------------------------------------------------------------------------
Residential mortgage 81,860 22.1 73,608 20.6
Home equity lines 17,273 4.7 15,653 4.4
Direct/Indirect consumer 42,161 11.4 40,510 11.3
Consumer finance 22,326 6.0 15,400 4.3
Bankcard 9,019 2.4 12,425 3.5
Foreign consumer 2,244 .6 3,602 1.0
- --------------------------------------------------------------------------
Total consumer 174,883 47.2 161,198 45.1
- --------------------------------------------------------------------------
Total loans and
leases $370,662 100.0% $357,328 100.0%
==========================================================================




December 31
----------------------------------------------------------------------
1997 1996 1995
----------------------- ----------------------- ----------------------

(Dollars in millions) Amount Percent Amount Percent Amount Percent
- -------------------------------------------------------------------------------------------------
Commercial - domestic $122,463 35.8% $105,737 33.3% $ 99,922 33.1%
Commercial - foreign 30,080 8.8 26,781 8.4 23,395 7.7
Commercial real
estate - domestic 28,567 8.3 25,881 8.1 26,381 8.7
Commercial real
estate - foreign 324 .1 239 .1 361 .1
- -----------------------------------------------------------------------------------------------
Total commercial 181,434 53.0 158,638 49.9 150,059 49.6
- -----------------------------------------------------------------------------------------------
Residential mortgage 71,540 20.9 80,400 25.3 77,078 25.5
Home equity lines 16,536 4.8 12,541 3.9 11,143 3.7
Direct/Indirect consumer 40,058 11.7 33,352 10.6 34,071 11.1
Consumer finance 14,566 4.3 13,081 4.1 10,375 3.4
Bankcard 14,908 4.4 16,561 5.2 17,455 5.8
Foreign consumer 3,098 .9 3,136 1.0 2,623 .9
- -----------------------------------------------------------------------------------------------
Total consumer 160,706 47.0 159,071 50.1 152,745 50.4
- -----------------------------------------------------------------------------------------------
Total loans and
leases $342,140 100.0% $317,709 100.0% $302,804 100.0%
===============================================================================================


Commercial Portfolio


Commercial - domestic loans outstanding totaled $143.5 billion and $137.4
billion at December 31, 1999 and 1998, respectively, or 39 percent of total
loans and leases for both years. The Corporation had commercial - domestic loan
net charge-offs in 1999 of $711 million, or 0.51 percent of average commercial
- - domestic loans, compared to $617 million, or 0.47 percent of average
commercial - domestic loans, in 1998. Nonperforming commercial - domestic loans
were $1.2 billion, or 0.81 percent of commercial - domestic loans, at December
31, 1999, compared to $812 million, or 0.59 percent, at December 31, 1998. The
increase in charge-offs and nonperforming loans was attributable to a few large
credits and several smaller credits primarily related to certain recently
troubled industries, including healthcare and sub-prime finance. Commercial -
domestic loans past due 90 days or more and still accruing interest remained
essentially unchanged at $135 million, or 0.09 percent and 0.10 percent of
commercial-domestic loans at December 31, 1999 and 1998, respectively. Table
Sixteen presents aggregate loan and lease exposures by certain significant
industries.

Commercial - foreign loans outstanding totaled $28.0 billion and $31.5
billion at December 31, 1999 and 1998, respectively, or eight percent and nine
percent of total loans and leases, respectively. The decrease reflects the
Corporation's strategy to reduce both the size and risk of its emerging market
portfolio in Asia, Latin America and Central and Eastern Europe. The
Corporation had commercial - foreign loan net charge-offs in 1999 of $144
million, or 0.49 percent of average commercial - foreign loans, compared to
$242 million, or 0.78 percent of the average commercial - foreign loans in
1998. Nonperforming commercial - foreign loans were $486 million, or 1.74
percent of commercial - foreign loans, at December 31, 1999, compared to $314
million, or 1.00 percent, at December 31, 1998. The increase was primarily due
to one large credit that was classified as nonperforming in 1999. Commercial -
foreign loans past due 90 days or more and still accruing interest were $58
million, or 0.21 percent of commercial - foreign loans, at December 31, 1999
compared to $23 million, or 0.07 percent, at December 31, 1998. For additional
information see the Regional Foreign Exposure discussion beginning on page 39.


31

Commercial real estate - domestic loans totaled $24.0 billion and $26.9
billion at December 31, 1999 and 1998, respectively, or seven percent and eight
percent of total loans and leases, respectively. At December 31, 1999,
commercial real estate - domestic loans past due 90 days or more and still
accruing interest were $6 million, or 0.02 percent of total commercial real
estate - domestic loans, compared to $12 million, or 0.04 percent, at December
31, 1998. Table Fifteen displays commercial real estate loans by geographic
region and property type, including the portion of such loans which are
nonperforming, and other real estate credit exposures.

Consumer Portfolio

At December 31, 1999 and 1998, domestic consumer loans outstanding totaled
$172.6 billion and $157.6 billion, respectively, or 47 percent and 44 percent
of total loans and leases, respectively.

Residential mortgage loans increased to $81.9 billion at December 31, 1999
compared to $73.6 billion at December 31, 1998, reflecting originations in
excess of prepayments and sales.

Bankcard receivables decreased to $9.0 billion at December 31, 1999
compared to $12.4 billion at December 31, 1998, reflecting a portfolio sale of
out-of-market receivables and $2.0 billion in securitizations in 1999.

Consumer finance loans outstanding totaled $22.3 billion and $15.4 billion
at December 31, 1999 and 1998, respectively, or six percent and four percent of
total loans and leases, respectively. The increase is primarily attributable to
the growth in the consumer finance - real estate sector. The Corporation had
consumer finance net charge-offs in 1999 of $229 million or 1.22 percent of
average consumer finance loans, compared to $383 million, or 2.67 percent in
1998. The decrease in charge-offs is primarily the result of the sale of a
sub-prime business in 1998.

Other domestic consumer loans, which include direct and indirect consumer
loans and home equity lines of credit increased to $59.4 billion at December
31, 1999 compared to $56.2 billion at December 31, 1998.

Total domestic consumer net charge-offs during 1999 decreased $465 million
to $1.1 billion, or .68 percent of average domestic consumer loans and leases.
The decrease was due mainly to lower bankcard and consumer finance net
charge-offs.

Total consumer nonperforming loans were $1.2 billion, or 0.69 percent of
total consumer loans, at December 31, 1999 compared to $1.1 billion, or 0.65
percent, at December 31, 1998. The increase was due to higher nonperforming
loans in consumer finance driven by portfolio growth and seasoning. This
increase was partially offset by lower residential mortgage nonperforming
loans. Total consumer loans past due 90 days or more and still accruing
interest were $322 million, or 0.18 percent of total consumer loans, at
December 31, 1999 compared to $441 million, or 0.27 percent, at December 31,
1998.

Nonperforming Assets

As presented in Table Ten, nonperforming assets were $3.2 billion, or 0.86
percent of net loans, leases and foreclosed properties at December 31, 1999,
compared to $2.8 billion, or 0.77 percent, at December 31, 1998. Nonperforming
loans increased to $3.0 billion at December 31, 1999 compared to $2.5 billion
at December 31, 1998 primarily due to increased consumer finance and commercial
nonperforming loans, which were offset by continued reductions in residential
mortgage nonperforming loans. The allowance coverage of nonperforming loans was
224 percent at December 31, 1999 compared to 287 percent at December 31, 1998.
At December 31, 1999, there were no material commitments to lend additional
funds with respect to nonperforming loans.

In order to respond when deterioration of a credit occurs, internal loan
workout units are devoted to provide specialized expertise and full-time
management and/or collection of certain nonperforming assets as well as certain
performing loans. Management believes concerted collection strategies and a
proactive approach to managing overall problem assets have expedited the
disposition, collection and renegotiation of nonperforming and other
lower-quality assets. As part of this process, management routinely evaluates
all reasonable alternatives, including the sale of assets individually or in
groups, and selects the optimal strategy.

At December 31, 1999 and 1998, residential mortgage loans comprised 17
percent and 26 percent, respectively, of total nonperforming assets. Due to the
nature of the collateral securing residential mortgage loans and a history of
low losses, the Corporation considers these loans to be low risk nonperforming
assets.


32

Foreclosed properties decreased to $163 million at December 31, 1999
compared to $282 million at December 31, 1998.

Note Five of the consolidated financial statements on page 71 provides the
reported investment in specific loans considered to be impaired at December 31,
1999 and 1998. The Corporation's investment in specific loans that were
considered to be impaired at December 31, 1999 were $2.1 billion compared to
$1.7 billion at December 31, 1998. Commercial - domestic impaired loans
increased to $1.1 billion at December 31, 1999 from $0.8 billion at December
31, 1998 due to the increases in commercial - domestic nonperforming assets
described previously. Commercial - foreign impaired loans increased to $0.5
billion at December 31, 1999 from $0.3 billion at December 31, 1998 primarily
due to one large credit that was classified as impaired in 1999. Commercial
real estate - domestic impaired loans decreased to $0.4 billion at December 31,
1999 from $0.6 billion at December 31, 1998.


Table Ten
Nonperforming Assets



December 31
-----------------------------------------------------------
(Dollars in millions) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------

Nonperforming loans
Commercial - domestic $ 1,163 $ 812 $ 563 $ 713 $ 914
Commercial - foreign 486 314 155 110 121
Commercial real estate - domestic 191 299 342 491 1,027
Commercial real estate - foreign 3 4 2 2 22
- ------------------------------------------------------------------------------------------------------
Total commercial 1,843 1,429 1,062 1,316 2,084
- ------------------------------------------------------------------------------------------------------
Residential mortgage 529 722 744 676 464
Home equity lines 46 50 52 36 42
Direct/Indirect consumer 19 21 43 53 57
Consumer finance 598 246 210 116 118
Foreign consumer 7 14 -- 1 2
- ------------------------------------------------------------------------------------------------------
Total consumer 1,199 1,053 1,049 882 683
- ------------------------------------------------------------------------------------------------------
Total nonperforming loans 3,042 2,482 2,111 2,198 2,767
- ------------------------------------------------------------------------------------------------------
Foreclosed properties 163 282 309 511 675
- ------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 3,205 $ 2,764 $ 2,420 $ 2,709 $ 3,442
======================================================================================================
Nonperforming assets as a percentage of:
Total assets .51% .45% .42% .57% .75%
Loans, leases and foreclosed properties .86 .77 .71 .85 1.14
======================================================================================================


The loss of income associated with nonperforming loans and the cost of
carrying foreclosed properties for the five years ended December 31, 1999 were:




(Dollars in millions) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------

Income that would have been recorded in accordance
with original terms $ 419 $ 367 $ 349 $ 388 $ 457
Less income actually recorded (123) (130) (130) (130) (135)
- -----------------------------------------------------------------------------------------------------
Loss of income $ 296 $ 237 $ 219 $ 258 $ 322
- -----------------------------------------------------------------------------------------------------
Cost of carrying foreclosed properties $ 13 $ 16 $ 26 $ 35 $ 51
=====================================================================================================




33

Loans Past Due 90 Days or More

Table Eleven presents total loans past due 90 days or more and still
accruing interest. At December 31, 1999, loans past due 90 days or more and
still accruing interest were $521 million, or 0.14 percent of loans and leases,
compared to $611 million, or 0.17 percent, at December 31, 1998.


Table Eleven
Loans Past Due 90 Days or More and Still Accruing Interest



December 31, 1999 December 31, 1998
--------------------- --------------------
(Dollars in millions) Amount Percent(1) Amount Percent(1)
- ------------------------------------------------------------------------------

Commercial - domestic $135 .09% $135 .10%
Commercial - foreign 58 .21 23 .07
Commercial real estate - domestic 6 .02 12 .04
- ------------------------------------------------------------------------------
Total commercial 199 .10 170 .09
- ------------------------------------------------------------------------------
Residential mortgage 26 .03 31 .04
Direct/Indirect consumer 136 .32 174 .43
Consumer finance 22 .10 16 .10
Bankcard 138 1.53 214 1.72
Foreign consumer -- -- 6 .17
- ------------------------------------------------------------------------------
Total consumer 322 .18 441 .27
- ------------------------------------------------------------------------------
Total $521 .14% $611 .17%
==============================================================================


(1) Represents amounts past due 90 days or more and still accruing interest as
a percentage of loans and leases for each loan category.


Net Charge-offs - Net charge-offs by loan category are presented in Table
Twelve.


Table Twelve
Net Charge-offs in Dollars and as a Percentage of Average Loans and Leases
Outstanding(1)



(Dollars in millions) 1999 1998 1997
- ------------------------------------------------------------------------------------------

Commercial - domestic $ 711 .51% $ 617 .47% $ 102 .09%
Commercial - foreign 144 .49 242 .78 29 .10
Commercial real
estate - domestic (6) n/m -- -- -- --
Commercial real
estate - foreign 1 .39 -- -- -- --
- ------------------------------------------------------------------------------------------
Total commercial 850 .44 859 .45 131 .07
- ------------------------------------------------------------------------------------------
Residential mortgage 28 .04 29 .04 45 .06
Home equity lines 12 .07 17 .11 27 .18
Direct/Indirect consumer 370 .88 405 1.01 436 1.11
Consumer finance 229 1.22 383 2.67 271 1.96
Bankcard 495 5.08 764 6.03 919 5.90
Other consumer - domestic (1) n/m -- -- 12 --
Foreign consumer 17 .52 10 .31 11 .32
- ------------------------------------------------------------------------------------------
Total consumer 1,150 .68 1,608 1.02 1,721 1.03
- ------------------------------------------------------------------------------------------
Total net charge-offs $2,000 .55% $2,467 .71% $1,852 .54%
==========================================================================================
Managed bankcard net
charge-offs and ratios(2) $1,077 5.57% $1,284 6.27% $1,254 6.19%
==========================================================================================




(Dollars in millions) 1996 1995
- -------------------------------------------------------------------------

Commercial - domestic $ 182 .18% $ 32 .03%
Commercial - foreign (11) n/m (53) n/m
Commercial real
estate - domestic 81 .31 52 .19
Commercial real
estate - foreign (5) n/m (5) n/m
- -------------------------------------------------------------------------
Total commercial 247 .16 26 .02
- -------------------------------------------------------------------------
Residential mortgage 57 .07 57 .08
Home equity lines 40 .34 40 .39
Direct/Indirect consumer 349 1.01 263 .79
Consumer finance 237 1.98 172 1.98
Bankcard 730 4.47 572 3.88
Other consumer - domestic 5 -- -- --
Foreign consumer 2 .10 1 .04
- -------------------------------------------------------------------------
Total consumer 1,420 .89 1,105 .77
- -------------------------------------------------------------------------
Total net charge-offs $1,667 .53% $1,131 .39%
=========================================================================
Managed bankcard net
charge-offs and ratios(2) $ 888 4.67% $ 651 4.10%
=========================================================================


n/m =not meaningful
(1) Percentage amounts are calculated as net charge-offs divided by average
outstanding loans and leases for each loan category.
(2) Includes both on-balance sheet and securitized loans.

34

Allowance for Credit Losses

The Corporation performs periodic and systematic detailed reviews of its
loan and lease portfolios to identify risks inherent in and to assess the
overall collectibility of those portfolios. Certain homogeneous loan portfolios
are evaluated collectively based on individual loan type, while remaining
portfolios are reviewed on an individual loan basis. These detailed reviews,
combined with historical loss experience and other factors, result in the
identification and quantification of specific allowances for credit losses and
loss factors which are used in determining the amount of the allowance and
related provision for credit losses. The actual amount of incurred credit
losses that may be confirmed may vary from the estimate of incurred losses due
to changing economic conditions or changes in industry or geographic
concentrations. The Corporation has procedures in place to monitor differences
between estimated and actual incurred credit losses, which include detailed
periodic assessments by senior management of both individual loans and credit
portfolios and the models used to estimate incurred credit losses in those
portfolios.

Portions of the allowance for credit losses, as presented on Table
Thirteen, are assigned to cover the estimated probable incurred losses in each
loan and lease category based on the results of the Corporation's detail review
process as described above. Further assignments are made based on general and
specific economic conditions, as well as performance trends within specific
portfolio segments and individual concentrations of credit, including
geographic and industry concentrations. The assigned portion of the allowance
for credit losses continues to be weighted toward the commercial loan
portfolio, reflecting a higher level of nonperforming loans and the potential
for higher individual losses. The remaining unassigned portion of the allowance
for credit losses, determined separately from the procedures outlined above,
addresses certain industry and geographic concentrations, including global
economic conditions, thereby minimizing the risk related to the margin of
imprecision inherent in the estimation of the assigned allowance for credit
losses. Due to the subjectivity involved in the determination of the unassigned
portion of the allowance for credit losses, the relationship of the unassigned
component to the total allowance for credit losses may fluctuate from period to
period. Management evaluates the adequacy of the allowance for credit losses
based on the combined total of the assigned and unassigned components and
believes that the allowance for credit losses reflects management's best
estimate of incurred credit losses as of the balance sheet date.

Period to period changes in the assigned allowance for credit losses are
driven by portfolio level and product mix changes, specific allowance for
credit loss assignments on impaired loans, as well as any changes in assigned
levels driven by the review process. In the first quarter of 1999, a review of
the Corporation's portfolio and combined loss history resulted in adjustments
to selected loss factors, which in some instances were higher or lower than the
1998 rates. This resulted in a redistribution of the allowance between select
product categories. The allowance assigned to commercial - domestic loans,
commercial real estate - domestic loans and direct/indirect consumer loans at
December 31, 1999 was impacted by this revision of loss factors as well as by
portfolio level changes. The consumer finance loan portfolio experienced a
redistribution of portfolio risk in 1999 as a result of the sale of a sub-prime
business in 1998 and reductions of manufactured housing exposures in 1999.
Changes in the assigned allowance for credit losses in 1999 for all other
product categories were commensurate with portfolio level changes.

The level of the unassigned allowance for credit losses remained stable
from 1998 to 1999, although there was a shift in the mix of the components as
certain industry concentration risks, such as healthcare, sub-prime finance and
textiles and apparel, increased and offshore risk expectations have generally
improved.


35

Table Thirteen
Allocation of the Allowance for Credit Losses



December 31
-------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------ ------------------ ------------------ ------------------ -------------------
(Dollars in millions) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
- -------------------------- -------- --------- -------- --------- -------- --------- -------- --------- -------- ----------

Commercial - domestic $1,875 27.4% $1,540 21.6% $1,580 23.4% $1,436 22.7% $1,306 21.1%
Commercial - foreign 930 13.6 1,327 18.6 1,013 14.9 427 6.8 432 6.9
Commercial real
estate - domestic 927 13.6 925 13.0 847 12.5 764 12.1 992 15.9
Commercial real
estate - foreign 11 .2 -- -- -- -- -- -- -- --
- -------------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total commercial 3,743 54.8 3,792 53.2 3,440 50.8 2,627 41.6 2,730 43.9
- -------------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Residential mortgage 160 2.3 137 1.9 181 2.7 214 3.4 202 3.2
Home equity lines 60 .9 46 .6 84 1.2 87 1.4 74 1.2
Direct/Indirect consumer 416 6.1 527 7.5 608 9.0 618 9.8 604 9.7
Consumer finance 651 9.5 658 9.2 785 11.6 645 10.2 460 7.4
Bankcard 348 5.1 501 7.0 790 11.7 671 10.6 709 11.4
Foreign consumer 11 .2 26 .4 23 .3 21 .3 17 .3
- -------------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total consumer 1,646 24.1 1,895 26.6 2,471 36.5 2,256 35.7 2,066 33.2
- -------------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Unassigned 1,439 21.1 1,435 20.2 867 12.7 1,433 22.7 1,426 22.9
- -------------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total $6,828 100.0% $7,122 100.0% $6,778 100.0% $6,316 100.0% $6,222 100.0%
========================== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====



36

The nature of the process by which the Corporation determines the
appropriate allowance for credit losses requires the exercise of considerable
judgment. After review of all relevant matters affecting loan collectibility,
management believes that the allowance for credit losses is appropriate given
its analysis of estimated incurred credit losses at December 31, 1999. Table
Fourteen provides the changes in the allowance for credit losses for the five
years ended December 31, 1999.


Table Fourteen
Allowance For Credit Losses



(Dollars in millions) 1999 1998
- ---------------------------------------------------------------- -------------- ------------

Balance, January 1 $ 7,122 $ 6,778
- ---------------------------------------------------------------- -------- --------
Loans and leases charged off
Commercial - domestic 820 714
Commercial - foreign 161 262
Commercial real estate - domestic 19 21
Commercial real estate - foreign 1 --
- ---------------------------------------------------------------- -------- --------
Total commercial 1,001 997
- ---------------------------------------------------------------- -------- --------
Residential mortgage 35 33
Home equity lines 24 27
Direct/Indirect consumer 545 562
Consumer finance 387 561
Bankcard 571 857
Other consumer domestic (1) --
Foreign consumer 20 13
- ---------------------------------------------------------------- --------- --------
Total consumer 1,581 2,053
- ---------------------------------------------------------------- --------- --------
Total loans and leases charged off 2,582 3,050
- ---------------------------------------------------------------- --------- --------
Recoveries of loans and leases previously charged off
Commercial - domestic 109 97
Commercial - foreign 17 20
Commercial real estate - domestic 25 21
Commercial real estate - foreign -- --
- ---------------------------------------------------------------- --------- --------
Total commercial 151 138
- ---------------------------------------------------------------- --------- --------
Residential mortgage 7 4
Home equity lines 12 10
Direct/Indirect consumer 175 157
Consumer finance 158 178
Bankcard 76 93
Foreign consumer 3 3
- ---------------------------------------------------------------- --------- --------
Total consumer 431 445
- ---------------------------------------------------------------- --------- --------
Total recoveries of loans and leases previously charged off 582 583
- ---------------------------------------------------------------- --------- --------
Net charge-offs 2,000 2,467
- ---------------------------------------------------------------- --------- --------
Provision for credit losses 1,820 2,920
Other, net (114) (109)
- ---------------------------------------------------------------- --------- --------
Balance, December 31 $ 6,828 $ 7,122
================================================================ ========= ========
Loans and leases outstanding at December 31 $370,662 $357,328
Allowance for credit losses as a percentage of loans and leases
outstanding at December 31 1.84% 1.99%
Average loans and leases outstanding during the year $362,783 $347,840
Net charge-offs as a percentage of average loans and leases
outstanding during the year .55% .71%
Ratio of the allowance for credit losses at December 31 to net
charge-offs 3.41 2.89
Allowance for credit losses as a percentage of nonperforming
loans 224.48 287.01
================================================================ ========= ========




(Dollars in millions) 1997 1996 1995
- ---------------------------------------------------------------- ------------- ------------- -------------

Balance, January 1 $ 6,316 $ 6,222 $ 6,377
- ---------------------------------------------------------------- --------- --------- ---------
Loans and leases charged off
Commercial - domestic 328 376 329
Commercial - foreign 54 29 11
Commercial real estate - domestic 59 131 105
Commercial real estate - foreign -- -- 2
- ---------------------------------------------------------------- --------- --------- ---------
Total commercial 441 536 447
- ---------------------------------------------------------------- --------- --------- ---------
Residential mortgage 50 61 60
Home equity lines 36 47 47
Direct/Indirect consumer 582 486 374
Consumer finance 426 393 241
Bankcard 1,043 838 648
Other consumer domestic 12 5 --
Foreign consumer 13 3 2
- ---------------------------------------------------------------- --------- --------- ---------
Total consumer 2,162 1,833 1,372
- ---------------------------------------------------------------- --------- --------- ---------
Total loans and leases charged off 2,603 2,369 1,819
- ---------------------------------------------------------------- --------- --------- ---------
Recoveries of loans and leases previously charged off
Commercial - domestic 226 194 297
Commercial - foreign 25 40 64
Commercial real estate - domestic 59 50 53
Commercial real estate - foreign -- 5 7
- ---------------------------------------------------------------- --------- --------- ---------
Total commercial 310 289 421
- ---------------------------------------------------------------- --------- --------- ---------
Residential mortgage 5 4 3
Home equity lines 9 7 7
Direct/Indirect consumer 146 137 111
Consumer finance 155 156 69
Bankcard 124 108 76
Foreign consumer 2 1 1
- ---------------------------------------------------------------- --------- --------- ---------
Total consumer 441 413 267
- ---------------------------------------------------------------- --------- --------- ---------
Total recoveries of loans and leases previously charged off 751 702 688
- ---------------------------------------------------------------- --------- --------- ---------
Net charge-offs 1,852 1,667 1,131
- ---------------------------------------------------------------- --------- --------- ---------
Provision for credit losses 1,904 1,645 945
Other, net 410 116 31
- ---------------------------------------------------------------- --------- --------- ---------
Balance, December 31 $ 6,778 $ 6,316 $ 6,222
================================================================ ========= ========= =========
Loans and leases outstanding at December 31 $ 342,140 $ 317,709 $ 302,804
Allowance for credit losses as a percentage of loans and leases
outstanding at December 31 1.98% 1.99% 2.05%
Average loans and leases outstanding during the year $ 343,151 $ 312,331 $ 286,770
Net charge-offs as a percentage of average loans and leases
outstanding during the year .54% .53% .39%
Ratio of the allowance for credit losses at December 31 to net
charge-offs 3.66 3.79 5.50
Allowance for credit losses as a percentage of nonperforming
loans 321.03 287.35 224.86
================================================================ ========= ========= =========



37

Concentrations of Credit Risk


In an effort to minimize the adverse impact of any single event or set of
occurrences, the Corporation strives to maintain a diverse credit portfolio as
outlined in Tables Fifteen, Sixteen and Seventeen.

The exposures presented in Table Fifteen represent credit extensions for
real estate-related purposes to borrowers or counterparties who are primarily
in the real estate development or investment business and for which the
ultimate repayment of the credit is dependent on the sale, lease, rental or
refinancing of the real estate. The exposures included in the table do not
include credit extensions which were made on the general creditworthiness of
the borrower for which real estate was obtained as security and for which the
ultimate repayment of the credit is not dependent on the sale, lease, rental or
refinancing of the real estate. Accordingly, the exposures presented do not
include commercial loans secured by owner-occupied real estate, except where
the borrower is a real estate developer. In addition to the amounts presented
in the table, at December 31, 1999, the Corporation had approximately $15.2
billion of commercial loans which were not real estate dependent but for which
the Corporation had obtained real estate as secondary repayment security.


Table Fifteen
Commercial Real Estate Loans, Foreclosed Properties and Other Real Estate
Credit Exposures



December 31, 1999
Loans Other
----------------------------- Foreclosed Credit
(Dollars in millions) Outstanding Nonperforming Properties(1) Exposures(2)
- ---------------------------- ------------- --------------- -------------- -------------

By Geographic Region(3)
California $ 5,382 $ 15 $ 6 $ 699
Southwest 3,720 20 1 401
Northwest 2,557 5 1 239
Florida 2,395 28 3 458
Midwest 2,334 41 38 105
Mid-Atlantic 1,563 37 1 188
Carolinas 1,175 7 2 36
Midsouth 1,157 4 2 98
Northeast 632 19 -- 128
Other states 630 15 10 59
Non-US 325 3 -- 12
Geographically diversified 2,481 -- -- 264
- ---------------------------- ------- ---- --- ------
Total $24,351 $194 $64 $2,687
============================ ======= ==== === ======
By Property Type
Apartments $ 4,715 $ 32 $ 1 $ 724
Office buildings 4,677 35 2 162
Shopping centers/retail 3,094 29 30 316
Residential 2,836 15 3 292
Industrial/warehouse 2,091 15 2 53
Hotels/motels 1,247 1 -- 125
Land and land development 1,176 12 8 148
Multiple use 790 3 -- 14
Miscellaneous commercial 709 6 6 23
Unsecured 635 5 -- 4
Non-US 325 3 -- 12
Other 2,056 38 12 814
- ---------------------------- ------- ---- --- ------
Total $24,351 $194 $64 $2,687
============================ ======= ==== === ======


(1) Foreclosed properties include commercial real estate loans only.
(2) Other credit exposures include letters of credit and loans held for sale.
(3) Distribution based on geographic location of collateral.

38

Table Sixteen below presents aggregate loan and lease exposures by certain
significant industries at December 31, 1999.


Table Sixteen
Significant Industry Loans and Leases(1)



December 31, 1999
(Dollars in millions) Outstanding
- ------------------------------------- ------------

Transportation $11,133
Media 8,783
Healthcare 8,539
Equipment and general manufacturing 8,183
Business services 8,153
Agribusiness 8,110
Retail 7,040
Oil and gas 6,839
Autos 6,331
Telecommunications 5,298
- ------------------------------------- -------


(1) Includes only non-real estate commercial loans and leases.




Regional Foreign Exposure

Through its credit and market risk management activities, the Corporation
has been devoting particular attention to those countries that have been
negatively impacted by global economic pressure, including particular attention
to those Asian countries that have experienced currency and other economic
problems, as well as countries within Latin America and Eastern Europe which
have also recently experienced problems.

In connection with its efforts to maintain a diversified portfolio, the
Corporation limits its exposure to any one geographic region or country and
monitors this exposure on a continuous basis. Table Seventeen sets forth
selected regional foreign exposure at December 31, 1999. At December 31, 1999,
the Corporation's total exposure to these select countries was $27.8 billion,
decreases of $8.9 billion from December 31, 1998 and $19.0 billion from
December 31, 1997.


39

Table Seventeen presents the Corporation's selected regional foreign
exposure at December 31, 1999. The following table is based on the Federal
Financial Institutions Examination Council's instructions for periodic
reporting of foreign exposures. The table has been expanded to include "Gross
Local Country Claims" as defined in the table below and may not be consistent
with disclosures by other financial institutions.


Table Seventeen
Regional Foreign Exposure



Increase Increase
Total Gross Other Total (Decrease) (Decrease)
Cross- Local Cross- Exposure from from
Border Country Border December 31, December 31, December 31,
(Dollars in millions) Loans Claims(1) Claims(2) 1999 1998 1997
- --------------------------- -------- ----------- ----------- -------------- -------------- -------------

Region/Country
Asia
China $ 84 $ 104 $ 168 $ 356 $ (93) $ (409)
Hong Kong 42 4,004 273 4,319 (869) (1,312)
India 592 1,214 178 1,984 (534) (515)
Indonesia 352 110 60 522 (201) (988)
Japan 176 1,128 2,497 3,801 (1,260) (3,169)
Korea (South) 374 672 1,092 2,138 259 (1,666)
Malaysia -- 529 61 590 (138) (664)
Pakistan 12 298 13 323 (29) (227)
Philippines 227 117 159 503 (80) (260)
Singapore 48 1,006 238 1,292 (714) (1,120)
Taiwan 234 591 136 961 (1,329) (1,477)
Thailand 88 438 82 608 (342) (1,349)
Other 4 121 25 150 (3) (47)
- --------------------------- ------ ------- ------ ------- ---------- ---------
Total 2,233 10,332 4,982 17,547 (5,333) (13,203)
- --------------------------- ------ ------- ------ ------- --------- ---------
Central and Eastern Europe
Russian Federation 12 -- 6 18 (42) (429)
Other 256 38 159 453 (251) (245)
- --------------------------- ------ ------- ------ ------- --------- ---------
Total 268 38 165 471 (293) (674)
- --------------------------- ------ ------- ------ ------- --------- ---------
Latin America
Argentina 554 370 214 1,138 (129) (505)
Brazil 1,088 619 801 2,508 (910) (1,122)
Chile 659 219 121 999 (652) (681)
Colombia 330 53 109 492 (306) (293)
Mexico 1,756 215 1,904 3,875 (1,063) (2,237)
Venezuela 133 40 240 413 (144) (210)
Other 191 -- 156 347 (83) (96)
- --------------------------- ------ ------- ------ ------- --------- ---------
Total 4,711 1,516 3,545 9,772 (3,287) (5,144)
- --------------------------- ------ ------- ------ ------- --------- ---------
Total $7,212 $11,886 $8,692 $27,790 $(8,913) $ (19,021)
=========================== ====== ======= ====== ======= ========= =========


(1) Includes the following claims by the Corporation's foreign offices on local
country residents regardless of the currency: loans, accrued interest
receivable, acceptances, time deposits placed, trading account assets,
other interest-earning investments, other short-term monetary assets,
unused commitments, standby letters of credit, commercial letters of
credit, formal guarantees, and available-for-sale (at fair value) and
held-for-investment (at cost) securities.
(2) All instruments in (1) that are cross-border claims excluding loans but
including derivative-dealer assets (at fair value) and available-for-sale
(at fair value) and held-for-investment (at cost) securities that are
collateralized by U.S. Treasury securities as follows: Mexico - $1,120,
Venezuela - $168, Philippines - $22, and Latin America Other - $73.
Held-for-investment securities (at cost) amounted to $772 with a fair
value of $607.


40

Exposure Exceeding One Percent of Total Assets(1,2)




Exposure
Public Private Total as a Percentage
(Dollars in millions) December 31 Sector Banks Sector Exposure of Total Assets
- ----------------------- ------------- -------- -------- --------- ---------- ----------------

Japan 1999 $2,208 $ 573 $1,020 $3,801 .60%
1998 2,452 1,519 1,090 5,061 .82
1997 2,485 1,555 2,930 6,970 1.22
==== ====== ====== ====== ====== ====


(1) Exposure includes local country and cross-border claims by the
Corporation's foreign offices as follows: loans, accrued interest
receivable, acceptances, time deposits placed, trading account assets,
available-for-sale (at fair value) and held-for-investment (at cost)
securities, other interest-earning investments, and other monetary assets.
Amounts also include derivative-dealer assets, unused commitments, standby
letters of credit, commercial letters of credit, and formal guarantees.
(2) Sector definitions are based on Federal Financial Institutions Examination
Council instructions for preparing the Country Exposure Report.


International Developments


During 1998, and continuing into 1999, a number of countries in Asia,
Latin America and Central and Eastern Europe experienced economic difficulties
due to a combination of structural problems and negative market reaction that
resulted from increased awareness of these problems. While each country's
situation is unique, many share common factors such as: (1) government actions
which restrain normal functioning of free markets in physical goods, capital
and/or currencies; (2) perceived weaknesses of the banking systems; and (3)
perceived overvaluation of local currencies and/or pegged exchange rate
systems. These factors resulted in capital movement out of these countries or
in reduced capital inflows, and, as a result, many of these countries
experienced liquidity problems in addition to the structural problems.

More recently, many of the Asian economies are showing signs of recovery
from prior troubles and are slowly implementing structural reforms. However,
there can be no assurance that this will continue and setbacks could be
expected from time to time. Since early 1999, several Latin American economies
have replaced their pegged exchange rate systems with free-floating currencies.
While sustained recovery is not assured, much of Latin America is showing signs
of recovery.

Where appropriate, the Corporation has adjusted its activities (including
its borrower selection) in light of the risks and opportunities discussed
above. The Corporation continued to reduce its exposures in Asia, Latin America
and Central and Eastern Europe throughout 1999. The Corporation will continue
to monitor and adjust its foreign activities on a country-by-country basis
depending on management's judgment of the likely developments in each country
and will take action as deemed appropriate.


41

Market Risk Management

In the normal course of conducting its business activities, the
Corporation is exposed to market risks including price and liquidity risk.
Market risk is the potential of loss arising from adverse changes in market
rates and prices, such as interest rates (interest rate risk), foreign currency
exchange rates (foreign exchange risk), commodity prices (commodity risk) and
prices of equity securities (equity risk). Financial products that expose the
Corporation to market risk include securities, loans, deposits, debt and
derivative financial instruments such as futures, forwards, swaps, options and
other financial instruments with similar characteristics. Liquidity risk arises
from the possibility that the Corporation may not be able to satisfy current or
future financial commitments or that the Corporation may be more reliant on
alternative funding sources such as long-term debt.

Market risk is managed by the Corporation's Finance Committee, which
formulates policy based on desirable levels of market risk. In setting
desirable levels of market risk, the Finance Committee considers the impact on
both earnings and capital of the current outlook in market rates, potential
changes in market rates, world and regional economies, liquidity, business
strategies and other factors.


Trading Portfolio

The Corporation manages its exposure to market risk resulting from trading
activities through a risk management function which is independent of the
various business units. The Trading Risk Committee (TRC) establishes and
monitors various limits on trading activities. These limits include product
volume, gross and net positions, and value-at-risk (VAR) and stress profit and
loss simulation limits. Product volume limits establish maximum aggregate
amounts of specific types of derivatives, foreign exchange contracts and
securities that the Corporation may hold in its trading account at any point in
time. Position limits restrict the gross and net amount of contracts that can
be held in the trading account in any specific maturity and product grouping.
VAR measures the potential loss in future earnings due to market rate movements
within the trading portfolio using proprietary models that are based on
statistical probability. VAR limits establish the maximum amount of potential
loss, based upon sophisticated modeling techniques, that the Corporation is
willing to assume at any point in time to a certain degree of confidence.
Additionally, the Corporation uses profit and loss simulations to measure the
potential for loss in various segments of the trading portfolio resulting from
specific and extremely adverse scenarios. These scenarios are projected without
regard to the statistical probability of their occurrences. Loss simulation
limits establish the maximum amount of projected loss computed by the
simulation that the Corporation is willing to assume.

The Corporation reduces the market risk to which it is exposed in the
trading account by executing offsetting transactions with other counterparties.
However, the Corporation retains open or uncovered trading account positions in
an effort to generate revenue by correctly anticipating future market
conditions and customer demands or by taking advantage of price differentials
among the various markets in which it operates.

The day-to-day management of interest rate and foreign exchange risks
takes place at a decentralized level within the Corporation's various trading
centers. Limits established by the TRC are assigned to each trading center. In
addition, documented trading policies and procedures define acceptable
boundaries within which traders can execute transactions in their assigned
markets.

The Corporation uses a VAR methodology to measure the interest rate,
foreign exchange, commodity and equity risks inherent in its trading
activities. Under this methodology, management models historical data to
statistically calculate, with 99 percent confidence, the potential loss in
earnings the Corporation might experience if an adverse one-day shift in market
prices was to occur.

The Corporation performs the VAR calculation for each major trading
portfolio segment on a daily basis. It then calculates the combined VAR across
these portfolio segments using two different sets of assumptions. The first
calculation assumes that each portfolio segment experiences adverse price
movements at the same time (i.e., the price movements are perfectly
correlated). The second calculation assumes that these adverse price movements
within the major portfolio segments do not occur at the same time (i.e., they
are uncorrelated).


42


Trading Activities Market Risk



1999 1998
-------------------------------- ----------------------------------
Average High Low Average High Low
(US Dollar equivalents in millions) VAR VAR(1) VAR(1) VAR VAR(1) VAR(1)
- -------------------------------------- --------- ----------- ---------- ----------- ----------- ----------

Based on perfect positive correlation
Interest rate $ 85.6 $ 126.8 $ 66.8 $ 120.2 $ 163.8 $ 92.7
Foreign currency 12.9 23.5 7.9 28.5 46.0 8.3
Commodities 2.1 6.4 0.8 3.6 6.9 1.4
Equity 14.0 28.0 3.0 2.0 5.2 0.5
Based on zero correlation
Interest rate 25.7 41.2 18.6 37.6 49.9 29.3
Foreign currency 10.8 21.7 6.1 24.0 40.0 6.4
Commodities 1.6 5.8 0.6 2.7 5.3 1.1
Equity 13.1 26.8 2.6 1.7 5.2 0.5
====================================== ======= ======== ======= ======== ======== =======


(1) The high and low for the entire trading account may not equal the sum of
the individual components as the highs or lows of the components occurred
on different trading days.

The table above sets forth the calculated VAR amounts for 1999 and 1998.
The amounts are calculated on a pre-tax basis. Interest rate and foreign
exchange risks were generally lower in 1999 than in 1998 due to the decreased
emphasis on proprietary risk-taking and the establishment of the Euro as a
currency. Equity risk was generally higher in 1999 than in 1998 due to growth
in the equity business.

VAR modeling on trading is subject to numerous limitations. In addition,
the Corporation recognizes that there are numerous assumptions and estimates
associated with modeling and actual results could differ from these assumptions
and estimates. The Corporation mitigates these uncertainties through close
monitoring and by examining and updating assumptions on an ongoing basis. The
continual trading risk management process considers the impact of unanticipated
risk exposure and updates assumptions to reduce loss exposure.


Asset and Liability Management Activities

Non-Trading Portfolio

The Corporation's Asset and Liability Management (ALM) process is used to
manage interest rate risk through the structuring of balance sheet and
off-balance sheet portfolios and identifying and linking such off-balance sheet
positions to specific assets and liabilities. Interest rate risk represents the
only material market risk exposure to the Corporation's non-trading on-balance
sheet financial instruments. To effectively measure and manage interest rate
risk, the Corporation uses sophisticated computer simulations which determine
the impact on net interest income of numerous interest rate scenarios, balance
sheet trends and strategies. These simulations cover the following financial
instruments: short-term financial instruments, securities, loans, deposits,
borrowings and off-balance sheet financial instruments. These simulations
incorporate assumptions about balance sheet dynamics, such as loan and deposit
growth and pricing, changes in funding mix and asset and liability repricing
and maturity characteristics. Simulations are run under various interest rate
scenarios to determine the impact on net income and capital. From these
scenarios, interest rate risk is quantified and appropriate strategies are
developed and implemented. The overall interest rate risk position and
strategies are reviewed on an ongoing basis by senior management. Additionally,
duration and market value sensitivity measures are selectively utilized where
they provide added value to the overall interest rate risk management process.

At December 31, 1999, the interest rate risk position of the Corporation
was relatively neutral as the impact of a gradual parallel 100 basis-point rise
or fall in interest rates over the next 12 months was estimated to be less than
one percent of net interest income.

Table Eighteen summarizes the expected maturities, unrealized gains and
losses and weighted average effective yields and rates associated with the
Corporation's significant non-trading on-balance sheet financial instruments.
Cash and cash equivalents, time deposits placed and other short-term
investments, federal funds sold and purchased, resale and repurchase
agreements, commercial paper, other short-term borrowings and foreign deposits,
which are similar in nature to other short-term borrowings, are excluded from
Table Eighteen as their respective carrying values approximate fair values.
These financial instruments generally expose the Corporation to insignificant
market risk as they have either no stated maturities or an average maturity of
less than 30 days and interest rates that approximate market rates. However,
these financial instruments could expose the Corporation to interest rate risk
by requiring more or less reliance on alternative funding sources, such as
long-term debt. Loans held for sale are also excluded as their carrying values
approximate their fair values, generally exposing the Corporation to
insignificant market risk. For further information on the fair value of
financial instruments see Note Sixteen of the consolidated financial statements
on page 93.


43

Table Eighteen
Non-Trading On-Balance Sheet Financial Instruments



December 31, 1999
Expected Maturity
--------------------------------------------------------------

Unrealized After
(Dollars in millions) Total Gains/(Losses) 2000 2001 2002 2003 2004 2004
- ---------------------------------- ------ ------------- ---- ---- ---- ---- ---- -------
Assets(1)
Available-for-sale securities(2)
Fixed rate
Book value $ 74,873 $(3,777) $ 568 $ 5,884 $ 4,522 $13,849 $10,475 $39,575
Weighted average effective yield 5.86%
Variable rate
Book value $ 10,612 (61) 4 349 3,823 1,690 458 4,288
Weighted average effective yield 7.18%
Held-for-investment securities(2)
Fixed rate
Book value $ 1,344 (152) 124 34 21 31 29 1,105
Weighted average effective yield 7.81%
Variable rate
Book value $ 78 -- 33 13 5 15 7 5
Weighted average effective yield 6.34%
Loans(2, 3)
Fixed rate
Book value $120,445 635 32,359 20,484 15,064 10,451 7,608 34,479
Weighted average effective yield 7.90%
Variable rate
Book value $228,345 2,044 99,595 35,680 25,452 19,532 14,421 33,665
Weighted average effective yield 7.87%
Liabilities(1)
Total deposits(4, 5)
Fixed rate
Book value $215,841 20 70,463 14,144 13,954 11,604 11,615 94,061
Weighted average effective rate 2.52%
Variable rate
Book value $ 87,734 2 17,210 14,369 11,734 9,846 8,297 26,278
Weighted average effective rate 3.10%
Long-term debt(6, 7)
Fixed rate
Book value $ 27,082 579 2,103 2,988 2,837 2,936 4,385 11,833
Weighted average effective rate 7.07%
Variable rate
Book value $ 28,303 (31) 9,507 5,309 4,746 2,521 4,509 1,711
Weighted average effective rate 6.18%
Trust preferred securities(6)
Fixed rate
Book value $ 3,812 352 -- 900 -- 350 -- 2,562
Weighted average effective rate 8.03%
Variable rate
Book value $ 1,143 -- -- -- 400 -- -- 743
Weighted average effective rate 6.93%
=================================== ========


(1) Fixed and variable rate classifications are based on contractual rates and
are not modified for the impact of asset and liability management
contracts.
(2) Expected maturities reflect the impact of prepayment assumptions.
(3) Excludes leases.
(4) When measuring and managing market risk associated with domestic deposits,
such as savings and demand deposits, the Corporation considers its
long-term relationships with depositors. The unrealized gain on deposits
in this table does not consider these long-term relationships, therefore
only certificates of deposits reflect a change in value.
(5) Excludes foreign time deposits.
(6) Expected maturities of long-term debt and trust preferred securities
reflect the Corporation's ability to redeem such debt prior to contractual
maturities.
(7) Excludes obligations under capital leases.

44

Interest Rate and Foreign Exchange Contracts

Risk management interest rate contracts and foreign exchange contracts are
utilized in the Corporation's ALM process. Interest rate contracts, which are
generally non-leveraged generic interest rate and basis swaps, options, futures
and forwards allow the Corporation to effectively manage its interest rate risk
position. Generic interest rate swaps involve the exchange of fixed-rate and
variable-rate interest payments based on the contractual underlying notional
amount. Basis swaps involve the exchange of interest payments based on the
contractual underlying notional amounts, where both the pay rate and the
receive rate are floating rates based on different indices. Option products
primarily consist of caps and floors. Interest rate caps and floors are
agreements where, for a fee, the purchaser obtains the right to receive
interest payments when a variable interest rate moves above or below a
specified cap or floor rate, respectively. Futures contracts used for ALM
activities are primarily index futures providing for cash payments based upon
the movements of an underlying rate index. In addition, the Corporation uses
foreign currency contracts to manage the foreign exchange risk associated with
foreign-denominated assets and liabilities, as well as the Corporation's equity
investments in foreign subsidiaries. Foreign exchange contracts, which include
spot, futures and forward contracts, represent agreements to exchange the
currency of one country for the currency of another country at an agreed-upon
price, on an agreed-upon date.

Table Nineteen shows the notional amount of the Corporation's open
interest rate and foreign exchange contracts. The notional amount of the
Corporation's receive fixed and pay fixed interest rate swaps at December 31,
1999 was $63.0 billion and $25.7 billion, respectively. The receive fixed
interest rate swaps are primarily converting variable-rate commercial loans to
fixed rate. The net receive fixed position at December 31, 1999 was $37.3
billion compared to $34.7 billion notional at December 31, 1998. The
Corporation had $8.0 billion and $7.7 billion notional of basis swaps at
December 31, 1999 and 1998, respectively, linked primarily to loans and
long-term debt. The Corporation had $35.1 billion and $26.8 billion notional of
option products at December 31, 1999 and 1998, respectively. In addition, open
foreign exchange contracts at December 31, 1999 had a notional amount of $6.2
billion compared to $3.3 billion notional at December 31, 1998.

Table Nineteen also summarizes the estimated duration, weighted average
receive and pay rates and the net unrealized gains and losses at December 31,
1999 and 1998 of the Corporation's open ALM interest rate swaps, as well as the
average estimated duration and the net unrealized gains and losses at December
31, 1999 and 1998 of the Corporation's ALM basis swaps, options, futures and
forward rate and foreign exchange contracts. Unrealized gains and losses are
based on the last repricing and will change in the future primarily based on
movements in one-, three- and six-month LIBOR rates. The ALM swap portfolio had
a net unrealized loss of $1.6 billion at December 31, 1999 and a net unrealized
gain of $942 million at December 31, 1998. The change is primarily attributable
to an increase in interest rates. The ALM option products had a net unrealized
gain of $5 million at December 31, 1999 compared to a net unrealized loss of
$46 million at December 31, 1998. At December 31, 1999 and 1998, open foreign
exchange contracts had a net unrealized loss of $30 million and a net
unrealized gain of $72 million, respectively.

The amount of unamortized net realized deferred gains associated with
closed ALM swaps was $174 million and $294 million at December 31, 1999 and
1998, respectively. The amount of unamortized net realized deferred gains
associated with closed ALM options was $82 million and $26 million at December
31, 1999 and 1998, respectively. The amount of unamortized net realized
deferred losses associated with closed ALM futures and forward rate contracts
was $21 million and $1 million at December 31, 1999 and 1998, respectively.
There were no unamortized net realized deferred gains or losses associated with
closed foreign exchange contracts at December 31, 1999 and 1998.

Management believes the fair value of the ALM interest rate and foreign
exchange portfolios should be viewed in the context of the overall balance
sheet, and the value of any single component of the balance sheet or
off-balance sheet positions should not be viewed in isolation.

For a discussion of the Corporation's management of risk associated with
mortgage production and servicing activities, see the "Noninterest Income"
section on page 20. See Note Eleven of the consolidated financial statements on
page 79 for information on the Corporation's ALM contracts.


45

Table Nineteen
Asset and Liability Management Interest Rate and Foreign Exchange Contracts



December 31, 1999
(Dollars in millions, average Fair
estimated duration in years) Value
- -------------------------------------- --------------

Open interest rate contracts
Total receive fixed swaps $(1,747)
Notional amount
Weighted average receive rate
Total pay fixed swaps 115
Notional amount
Weighted average pay rate
Basis swaps (6)
----------
Notional amount
Total swaps (1,638)
- -------------------------------------- ---------
Option products 5
Notional amount
Futures and forward rate contracts 3
Notional amount
- --------------------------------------
Total open interest rate contracts (1,630)
- -------------------------------------- ---------
Closed interest rate contracts(1) 235
- -------------------------------------- ---------
Net interest rate contract
position (1,395)
- -------------------------------------- ---------
Open foreign exchange contracts (30)
Notional amount
- -------------------------------------- ---------
Total ALM contracts $(1,425)
====================================== =========




December 31, 1999
Expected Maturity
----------------------------------------------------------------------------------------
(Dollars in millions, average After
estimated duration in years) Total 2000 2001 2002 2003 2004 2004
- -------------------------------------- ------------ ------------ ------------ ----------- ------------ ----------- ------------

Open interest rate contracts
Total receive fixed swaps
Notional amount $ 63,002 $ 13,539 $ 11,493 $ 1,637 $ 12,894 $ 7,104 $ 16,335
Weighted average receive rate 6.15% 5.98% 6.43% 6.88% 5.60% 6.57% 6.28%
Total pay fixed swaps
Notional amount $ 25,701 $ 6,893 $ 8,232 $ 3,175 $ 2,475 $ 719 $ 4,207
Weighted average pay rate 6.68% 6.84% 6.57% 6.23% 7.10% 7.46% 6.61%
Basis swaps
Notional amount $ 7,971 $ 743 $ 601 $ 1,669 $ 4,958 $ -- $ --
Total swaps
- --------------------------------------
Option products
Notional amount $ 35,134 $ 505 $ 2,088 $ 868 $ 1,950 $15,661 $ 14,062
Futures and forward rate contracts
Notional amount $ 931 $ 931 $ -- $ -- $ -- $ -- $ --
- -------------------------------------- -------- -------- -------- ------- -------- ------- --------
Total open interest rate contracts
- --------------------------------------
Closed interest rate contracts(1)
- --------------------------------------
Net interest rate contract
position
- --------------------------------------
Open foreign exchange contracts
Notional amount $ 6,231 $ 273 $ 1,499 $ 2,552 $ 112 $ 623 $ 1,172
- -------------------------------------- -------- -------- -------- ------- -------- ------- --------
Total ALM contracts
======================================




December 31, 1999
Average
(Dollars in millions, average Estimated
estimated duration in years) Duration
- -------------------------------------- ----------

Open interest rate contracts
Total receive fixed swaps 2.75
Notional amount
Weighted average receive rate
Total pay fixed swaps 2.11
Notional amount
Weighted average pay rate
Basis swaps 3.19
Notional amount
Total swaps
- --------------------------------------
Option products
Notional amount
Futures and forward rate contracts
Notional amount
- --------------------------------------
Total open interest rate contracts
- --------------------------------------
Closed interest rate contracts(1)
- --------------------------------------
Net interest rate contract
position
- --------------------------------------
Open foreign exchange contracts
Notional amount
- --------------------------------------
Total ALM contracts
======================================





December 31, 1998
(Dollars in millions, average Fair
estimated duration in years) Value
- --------------------------------------- ----------

Open interest rate contracts
Total receive fixed swaps $ 1,958
Notional value
Weighted average receive rate
Total pay fixed swaps (1,006)
Notional value
Weighted average pay rate
Basis swaps (10)
--------
Notional value
Total swaps 942
- --------------------------------------- --------
Option products (46)
Notional amount
Futures and forward rate contracts 2
Notional amount
- --------------------------------------- --------
Total open interest rate contracts 898
- --------------------------------------- --------
Closed interest rate contracts(1) 319
- --------------------------------------- --------
Net interest rate contract position 1,217
- --------------------------------------- --------
Open foreign exchange contracts 72
Notional amount
- --------------------------------------- --------
Total ALM contracts $ 1,289
======================================= ========



December 31, 1998
Expected Maturity
----------------------------------------------------------------------------------------
(Dollars in millions, average After
estimated duration in years) Total 1999 2000 2001 2002 2003 2003
- --------------------------------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------

Open interest rate contracts
Total receive fixed swaps
Notional value $ 60,450 $ 4,492 $ 8,220 $ 12,213 $ 2,599 $ 15,826 $ 17,100
Weighted average receive rate 6.16% 6.16% 6.28% 6.31% 6.93% 5.59% 6.43%
Total pay fixed swaps
Notional value $ 25,770 $ 6,062 $ 6,900 $ 4,356 $ 1,177 $ 2,481 $ 4,794
Weighted average pay rate 6.73% 6.46% 6.89% 6.47% 7.31% 7.14% 6.76%
Basis swaps
Notional value $ 7,736 $ 1,685 $ 743 $ 625 $ 1,669 $ 3,014 $ --
Total swaps
- --------------------------------------- -------- ------- ------- -------- -------- -------- --------
Option products
Notional amount $ 26,836 $ 3,225 $ 543 $ 1,088 $ 938 $ 1,950 $ 19,092
Futures and forward rate contracts
Notional amount $ 6,348 $ 6,348 $ -- $ -- $ -- $ -- $ --
- --------------------------------------- -------- ------- ------- -------- -------- -------- --------
Total open interest rate contracts
- ---------------------------------------
Closed interest rate contracts(1)
- ---------------------------------------
Net interest rate contract position
- ---------------------------------------
Open foreign exchange contracts
Notional amount $ 3,314 $ 300 $ 273 $ 1,084 $ 527 $ 112 $ 1,018
- --------------------------------------- -------- ------- ------- -------- -------- -------- --------
Total ALM contracts
=======================================




December 31, 1998
Average
(Dollars in millions, average Estimated
estimated duration in years) Duration
- --------------------------------------- ----------

Open interest rate contracts
Total receive fixed swaps 4.55
Notional value
Weighted average receive rate
Total pay fixed swaps 3.18
Notional value
Weighted average pay rate
Basis swaps 2.88
Notional value
Total swaps
- ---------------------------------------
Option products
Notional amount
Futures and forward rate contracts
Notional amount
- ---------------------------------------
Total open interest rate contracts
- ---------------------------------------
Closed interest rate contracts(1)
- ---------------------------------------
Net interest rate contract position
- ---------------------------------------
Open foreign exchange contracts
Notional amount
- ---------------------------------------
Total ALM contracts
=======================================


(1) Represents the unamortized net realized deferred gains associated with
closed contracts. As a result, no notional amount is reflected for
expected maturity.


46

Table Twenty
Selected Quarterly Operating Results



1999 Quarters
-------------------------------------------------------
(Dollars in millions, except per share information) Fourth Third Second First
- ----------------------------------------------------- ------------- ------------- ------------- -------------

Operating Basis (1)
- -------------------
Income statement
Interest income $ 9,622 $ 9,294 $ 9,206 $ 9,201
Interest expense 5,147 4,744 4,594 4,601
Net interest income 4,475 4,550 4,612 4,600
Net interest income (taxable-equivalent basis) 4,541 4,603 4,663 4,645
Provision for credit losses 350 450 510 510
Gains on sales of securities 14 44 52 130
Noninterest income 3,596 3,728 3,522 3,223
Other noninterest expense 4,550 4,526 4,457 4,453
Income before income taxes 3,185 3,346 3,219 2,990
Income tax expense 1,070 1,195 1,159 1,076
Net income 2,115 2,151 2,060 1,914
Performance ratios
Return on average assets 1.33% 1.40% 1.34% 1.27%
Return on average common shareholders' equity 17.95 18.40 17.64 16.78
Per common share data
Earnings $ 1.24 $ 1.25 $ 1.18 $ 1.10
Diluted earnings 1.23 1.23 1.15 1.08
Cash basis financial data (2)
Earnings per common share 1.37 1.38 1.31 1.23
Diluted earnings per common share 1.35 1.35 1.28 1.20
Return on average tangible assets 1.50% 1.58% 1.53% 1.46%
Return on average tangible common
shareholders' equity 28.38 29.48 28.49 27.44

As Reported
- -----------
Income statement
Merger-related charges, net $ 325 $ -- $ 200 $ --
Income before income taxes 2,860 3,346 3,019 2,990
Income tax expense 958 1,195 1,104 1,076
Net income 1,902 2,151 1,915 1,914
Performance ratios
Return on average assets 1.20% 1.40% 1.25% 1.27%
Return on average common shareholders' equity 16.14 18.40 16.40 16.78
Per common share data
Earnings $ 1.12 $ 1.25 $ 1.10 $ 1.10
Diluted earnings 1.10 1.23 1.07 1.08
Cash dividends paid .50 .45 .45 .45
Cash basis financial data (2)
Earnings per common share 1.25 1.38 1.23 1.23
Diluted earnings per common share 1.23 1.35 1.20 1.20
Return on average tangible assets 1.36% 1.58% 1.43% 1.46%
Return on average tangible common
shareholders' equity 25.79 29.48 26.68 27.44
Average balance sheet
Average total assets $ 630,743 $ 611,448 $ 615,364 $ 609,624
Average total deposits 341,913 336,998 342,249 345,931
Average total shareholders' equity 46,792 46,439 46,891 46,279
Yield on average earning assets 7.09% 7.03% 7.00% 7.13%
Rate on average interest-bearing liabilities 4.54 4.30 4.16 4.26
Net interest spread 2.55 2.73 2.84 2.87
Net interest yield 3.32 3.46 3.53 3.58
Risk-based capital ratios (at period end)(3)
Tier 1 capital 7.35 7.71 7.38 7.40
Total capital 10.88 11.39 11.09 11.17
Leverage ratio 6.26 6.59 6.34 6.47
Market price per share of common stock
Closing $ 50 3/16 $55 11/16 $ 73 5/16 $ 70 5/8
High 67 1/2 76 3/8 76 1/8 74 1/2
Low 47 5/8 53 1/4 61 1/2 59 1/2
===================================================== ========= ========= ========= =========


1998 Quarters
------------------------------------------------------
(Dollars in millions, except per share information) Fourth Third Second First
- ----------------------------------------------------- ------------- ------------- ------------- ------------

Operating Basis (1)
- -------------------
Income statement
Interest income $ 9,638 $ 9,608 $ 9,637 $ 9,705
Interest expense 5,029 5,164 5,011 5,086
Net interest income 4,609 4,444 4,626 4,619
Net interest income (taxable-equivalent basis) 4,650 4,484 4,668 4,659
Provision for credit losses 510 1,405 495 510
Gains on sales of securities 404 280 120 213
Noninterest income 2,655 2,405 3,636 3,493
Other noninterest expense 4,687 4,583 4,767 4,704
Income before income taxes 2,471 1,141 3,120 3,111
Income tax expense 868 248 1,099 1,138
Net income 1,603 893 2,021 1,973
Performance ratios
Return on average assets 1.05% .61% 1.41% 1.38%
Return on average common shareholders' equity 14.12 7.73 18.24 18.52
Per common share data
Earnings $ .92 $ .51 $ 1.16 $ 1.14
Diluted earnings .91 .50 1.13 1.11
Cash basis financial data (2)
Earnings per common share 1.05 .64 1.29 1.27
Diluted earnings per common share 1.04 .63 1.25 1.24
Return on average tangible assets 1.22% .79% 1.61% 1.59%
Return on average tangible common
shareholders' equity 23.97 14.51 31.23 32.57

As Reported
- -----------
Income statement
Merger-related charges, net $ 600 $ 725 $ (430) $ 900
Income before income taxes 1,871 416 3,550 2,211
Income tax expense 709 42 1,252 880
Net income 1,162 374 2,298 1,331
Performance ratios
Return on average assets .76% .26% 1.61% .93%
Return on average common shareholders' equity 10.23 3.23 20.76 12.46
Per common share data
Earnings $ .67 $ .21 $ 1.32 $ .77
Diluted earnings .66 .21 1.28 .75
Cash dividends paid .45 .38 .38 .38
Cash basis financial data (2)
Earnings per common share 0.80 .34 1.45 .90
Diluted earnings per common share .79 .34 1.41 .87
Return on average tangible assets .93% .42% 1.81% 1.12%
Return on average tangible common
shareholders' equity 18.18 7.76 35.10 23.02
Average balance sheet
Average total assets $ 606,541 $ 578,353 $ 573,975 $ 578,841
Average total deposits 351,766 347,783 342,369 339,867
Average total shareholders' equity 45,051 45,756 44,857 43,628
Yield on average earning assets 7.44% 7.73% 7.89% 7.98%
Rate on average interest-bearing liabilities 4.60 4.94 4.90 4.93
Net interest spread 2.84 2.79 2.99 3.05
Net interest yield 3.58 3.60 3.80 3.83
Risk-based capital ratios (at period end)(3)
Tier 1 capital 7.06 7.29 7.32 6.80
Total capital 10.94 11.25 11.77 11.19
Leverage ratio 6.22 6.64 6.21 5.64
Market price per share of common stock
Closing $ 60 1/8 $ 53 1/2 $76 11/16 $72 15/16
High 66 5/8 88 7/16 85 75 1/8
Low 44 47 7/8 72 1/16 56 1/4
===================================================== ========= ========= ========= =========


(1) Operating basis excludes merger-related charges.
(2) Cash basis calculations exclude goodwill and other intangible assets and
their related amortization expense.
(3) Ratios for the first and second quarters of 1998 have not been restated to
reflect the impact of the BankAmerica merger.

47

Table Twenty-One
Quarterly Average Balances and Interest Rates -- Taxable-Equivalent Basis



Fourth Quarter 1999 Third Quarter 1999
--------------------------------- --------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
(Dollars in millions) Balance Expense Rate Balance Expense Rate
- ---------------------------------------------------------- ----------- ---------- ---------- ----------- --------- ----------

Earning assets
Time deposits placed and other short-term investments $ 4,512 $ 73 6.33% $ 5,018 $ 69 5.50%
Federal funds sold and securities purchased under
agreements to resell 39,700 458 4.60 33,074 440 5.30
Trading account assets 38,453 544 5.63 37,453 483 5.14
Securities:
Available-for-sale(1) 85,009 1,301 6.10 78,779 1,208 6.12
Held-for-investment 1,433 25 7.25 1,482 26 7.02
- --------------------- -------- ------ ----- -------- ------ -----
Total securities 86,442 1,326 6.12 80,261 1,234 6.13
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Loans and leases(2)
Commercial - domestic 140,674 2,707 7.64 136,149 2,488 7.25
Commercial - foreign 27,430 453 6.56 28,348 494 6.93
Commercial real estate - domestic 24,345 506 8.23 25,056 517 8.19
Commercial real estate - foreign 306 6 8.96 295 7 8.80
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total commercial 192,755 3,672 7.56 189,848 3,506 7.33
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Residential mortgage 79,783 1,450 7.26 80,015 1,431 7.14
Home equity lines 16,882 345 8.12 16,316 321 7.79
Direct/Indirect consumer 42,442 888 8.30 42,740 875 8.13
Consumer finance 21,340 440 8.18 19,923 433 8.62
Bankcard 8,578 245 11.32 8,923 256 11.38
Foreign consumer 2,430 54 8.77 3,635 86 9.36
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total consumer 171,455 3,422 7.94 171,552 3,402 7.89
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total loans and leases 364,210 7,094 7.74 361,400 6,908 7.59
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Other earning assets 10,247 193 7.51 11,358 213 7.40
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total earning assets(3) 543,564 9,688 7.09 528,564 9,347 7.03
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Cash and cash equivalents 25,467 25,905
Other assets, less allowance for credit losses 61,712 56,979
- ---------------------------------------------------------- -------- --------
Total assets $630,743 $611,448
========================================================== ======== ========
Interest-bearing liabilities
Domestic interest-bearing deposits:
Savings $ 25,082 80 1.27 $ 26,037 82 1.25
NOW and money market deposit accounts 97,481 639 2.60 96,402 579 2.38
Consumer CDs and IRAs 74,653 932 4.95 73,429 898 4.85
Negotiated CDs, public funds and other time deposits 6,825 98 5.73 6,609 94 5.66
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total domestic interest-bearing deposits 204,041 1,749 3.40 202,477 1,653 3.24
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Foreign interest-bearing deposits(4)
Banks located in foreign countries 14,305 178 4.93 13,668 160 4.65
Governments and official institutions 7,121 99 5.53 7,185 90 4.99
Time, savings and other 24,993 298 4.72 25,500 295 4.57
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total foreign interest-bearing deposits 46,419 575 4.91 46,353 545 4.66
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total interest-bearing deposits 250,460 2,324 3.68 248,830 2,198 3.50
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Federal funds purchased, securities sold under agreements
to repurchase and other short-term borrowings 120,858 1,638 5.38 114,934 1,437 4.96
Trading account liabilities 19,223 190 3.92 15,677 189 4.78
Long-term debt(5) 59,972 995 6.63 59,283 920 6.21
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Total interest-bearing liabilities(6) 450,513 5,147 4.54 438,724 4,744 4.30
- ---------------------------------------------------------- -------- ------ ----- -------- ------ -----
Noninterest-bearing sources
Noninterest-bearing deposits 91,453 88,168
Other liabilities 41,985 38,117
Shareholders' equity 46,792 46,439
- ---------------------------------------------------------- -------- --------
Total liabilities and shareholders' equity $630,743 $611,448
========================================================== ======== ========
Net interest spread 2.55 2.73
Impact of noninterest-bearing sources .77 .73
- ---------------------------------------------------------- ----- -----
Net interest income/yield on earning assets $4,541 3.32% $4,603 3.46%
========================================================== ====== ===== ====== =====


(1) The average balance and yield on available-for-sale securities are based on
the average of historical amortized cost balances.
(2) Nonperforming loans are included in the average loan balances. Income on
such nonperforming loans is recognized on a cash basis.
(3) Interest income includes taxable-equivalent basis adjustments of $66, $53,
$51 and $45 in the fourth, third, second and first quarters of 1999 and
$41 in the fourth quarter of 1998, respectively. Interest income also
includes the impact of risk management interest rate contracts, which
increased interest income on the underlying assets $57, $103, $83 and $63
in the fourth, third, second and first quarters of 1999 and $70 in the
fourth quarter of 1998, respectively.
(4) Primarily consists of time deposits in denominations of $100,000 or more.
(5) Long-term debt includes trust preferred securities.
(6) Interest expense includes the impact of risk management interest rate
contracts, which (increased) decreased interest expense on the underlying
liabilities $(2), $6, $52 and $60 in the fourth, third, second and first
quarters of 1999 and $27 in the fourth quarter of 1998, respectively.


48





Second Quarter 1999 First Quarter 1999 Fourth Quarter 1998
- ------------------------------------- ------------------------------------- ------------------------------------
Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
- ----------- ---------- ---------- ----------- ---------- ---------- ----------- --------- ----------

$ 5,159 $ 65 5.03% $ 6,408 $ 88 5.58% $ 6,702 $ 111 6.56%

29,521 387 5.25 26,561 381 5.80 29,564 486 6.53
39,837 528 5.31 41,129 547 5.36 39,391 613 6.19

76,373 1,139 5.97 73,925 1,161 6.31 69,354 1,162 6.68
1,482 28 7.61 1,905 33 6.84 2,948 44 6.09
- -------- ------ ----- -------- ------ ----- -------- ------ -----
77,855 1,167 6.00 75,830 1,194 6.33 72,302 1,206 6.66
- -------- ------ ----- -------- ------ ----- -------- ------ -----

138,257 2,473 7.17 138,272 2,444 7.16 136,629 2,542 7.39
30,209 456 6.05 31,568 494 6.35 32,893 569 6.86
25,938 533 8.25 26,827 559 8.45 28,427 601 8.38
289 6 8.48 286 6 8.79 319 8 9.39
- -------- ------ ----- -------- ------ ----- -------- ------ -----
194,693 3,468 7.14 196,953 3,503 7.21 198,268 3,720 7.45
- -------- ------ ----- -------- ------ ----- -------- ------ -----
80,151 1,430 7.14 75,789 1,356 7.18 73,033 1,336 7.30
15,857 304 7.68 15,537 298 7.79 15,781 326 8.17
42,240 859 8.15 41,652 847 8.24 40,557 876 8.57
17,794 424 9.56 15,880 373 9.53 14,368 338 9.33
10,365 306 11.83 11,287 327 11.76 12,078 366 12.01
3,653 87 9.55 3,648 89 9.90 3,551 94 10.47
- -------- ------ ----- -------- ------ ----- -------- ------ -----
170,060 3,410 8.03 163,793 3,290 8.11 159,368 3,336 8.32
- -------- ------ ----- -------- ------ ----- -------- ------ -----
364,753 6,878 7.56 360,746 6,793 7.62 357,636 7,056 7.84
- -------- ------ ----- -------- ------ ----- -------- ------ -----
12,924 232 7.23 13,008 243 7.53 11,471 207 7.19
- -------- ------ ----- -------- ------ ----- -------- ------ -----
530,049 9,257 7.00 523,682 9,246 7.13 517,066 9,679 7.44
- -------- ------ ----- -------- ------ ----- -------- ------ -----
25,868 25,826 25,834
59,447 60,116 63,641
- -------- -------- --------
$615,364 $609,624 $606,541
======== ======== ========


$ 21,799 67 1.24 $ 21,637 71 1.33 $ 21,702 91 1.67
100,897 581 2.31 99,864 575 2.33 97,589 622 2.53
73,601 847 4.61 74,362 857 4.68 74,923 956 5.06
6,238 80 5.14 6,914 89 5.20 7,388 96 5.16
- -------- ------ ----- -------- ------ ----- -------- ------ -----
202,535 1,575 3.12 202,777 1,592 3.18 201,602 1,765 3.47
- -------- ------ ----- -------- ------ ----- -------- ------ -----

16,947 196 4.62 20,379 268 5.34 24,938 325 5.17
8,089 98 4.81 9,172 113 5.02 10,278 143 5.54
26,354 299 4.56 26,980 339 5.10 26,868 365 5.39
- -------- ------ ----- -------- ------ ----- -------- ------ -----
51,390 593 4.62 56,531 720 5.17 62,084 833 5.32
- -------- ------ ----- -------- ------ ----- -------- ------ -----
253,925 2,168 3.42 259,308 2,312 3.62 263,686 2,598 3.91
- -------- ------ ----- -------- ------ ----- -------- ------ -----

116,339 1,396 4.82 112,384 1,355 4.88 104,416 1,422 5.40
14,178 150 4.25 12,679 129 4.13 14,194 165 4.62
58,302 880 6.03 52,642 805 6.12 51,779 844 6.52
- -------- ------ ----- -------- ------ ----- -------- ------ -----
442,744 4,594 4.16 437,013 4,601 4.26 434,075 5,029 4.60
- -------- ------ ----- -------- ------ ----- -------- ------ -----

88,324 86,623 88,080
37,405 39,709 39,335
46,891 46,279 45,051
- -------- -------- --------
$615,364 $609,624 $606,541
======== ======== ========
2.84 2.87 2.84
.69 .71 .74
- -------- ----- ----- -----
$4,663 3.53% $4,645 3.58% $4,650 3.58%
======== ====== ===== ====== ===== ====== =====



49

1998 Compared to 1997

The following discussion and analysis provides a comparison of the
Corporation's results of operations for the years ended December 31, 1998 and
1997. This discussion should be read in conjunction with the consolidated
financial statements and related notes on pages 52 through 99.


Overview

The Corporation's operating net income decreased five percent to $6.49
billion in 1998 from $6.81 billion in 1997. Operating earnings per common share
for 1998 decreased to $3.73 from $3.86 in 1997. Diluted operating earnings per
common share decreased to $3.64 for 1998 compared to $3.76 for 1997. Including
merger-related charges of $1.80 billion ($1.33 billion, net of tax), net income
decreased 21 percent to $5.17 billion in 1998 compared to $6.54 billion in
1997. Earnings per common share and diluted earnings per common share were
$2.97 and $2.90, respectively, in 1998 compared to $3.71 and $3.61,
respectively, in 1997.


Business Segment Operations

Consumer Banking's net income increased 16 percent to $3.9 billion in 1998
compared to $3.4 billion in 1997. Taxable-equivalent net interest income
decreased three percent to $11.8 billion in 1998 compared to $12.2 billion in
1997. Noninterest income increased six percent in 1998 to $6.6 billion compared
to $6.2 billion in 1997. The net interest yield increased 10 basis points from
1997 to 4.88 percent. Return on average equity increased to 19.2 percent in
1998 from 16.3 percent in 1997. Return on tangible equity increased to 29.3
percent in 1998 from 26.2 percent in 1997. Revenue growth and expense control
led to a 190 basis point improvement in the efficiency ratio in 1998 to 59.9
percent from 61.8 percent in 1997. The cash basis efficiency ratio improved to
56.6 percent in 1998 from 58.4 percent in 1997.

Commercial Banking's net income decreased two percent to $953 million in
1998 compared to $977 million in 1997. Taxable-equivalent net interest income
remained essentially flat at $2.2 billion. Noninterest income increased 19
percent in 1998 to $730 million compared to $613 million in 1997. The net
interest yield decreased 36 basis points from 1997 to 3.97 percent. Return on
average equity decreased to 20.1 percent in 1998 from 21.6 percent in 1997.
Return on tangible equity decreased to 27.1 percent in 1998 from 29.9 percent
in 1997. The efficiency ratio increased to 48.1 percent in 1998 from 43.5
percent in 1997. The cash basis efficiency ratio increased to 44.6 percent in
1998 from 40.0 percent in 1997.

Global Corporate and Investment Banking's net income decreased 83 percent
to $292 million in 1998 compared to $1.7 billion in 1997. Taxable-equivalent
net interest income increased seven percent in 1998 to $3.8 billion compared to
$3.6 billion in 1997. Noninterest income decreased seven percent in 1998 to
$2.9 billion compared to $3.1 billion in 1997. The net interest yield decreased
one basis point from 1997 to 2.12 percent. Return on average equity decreased
to 2.3 percent in 1998 from 15.9 percent in 1997. Return on tangible equity
decreased to 4.1 percent in 1998 from 18.8 percent in 1997. The efficiency
ratio increased to 70.6 percent in 1998 from 53.8 percent in 1997. The cash
basis efficiency ratio increased to 68.1 percent in 1998 from 52.1 percent in
1997.

Principal Investing and Asset Management's net income decreased 10 percent
to $491 million in 1998 compared to $544 million in 1997. Taxable-equivalent
net interest income increased 12 percent in 1998 to $459 million compared to
$409 million in 1997. Noninterest income remained essentially flat at $1.9
billion. The net interest yield decreased 36 basis points from 1997 to 2.94
percent. Return on average equity decreased to 20.1 percent in 1998 from 27.0
percent in 1997. Return on tangible equity decreased to 22.8 percent in 1998
from 31.2 percent in 1997. The efficiency ratio increased to 67.1 percent in
1998 compared to 62.0 percent in 1997. The cash basis efficiency ratio
increased to 65.9 percent in 1998 from 61.0 percent in 1997.


50

Net Interest Income

Net interest income on a taxable-equivalent basis remained essentially
unchanged at $18.5 billion in 1998 compared to $18.6 billion in 1997, primarily
due to a reduction in the net difference between loan and deposit rates and the
impact of securitizations, divestitures and assets sales. The decrease was
partially offset by loan growth and increased core funding.

The net interest yield decreased 31 basis points to 3.69 percent in 1998
compared to 4.00 percent in 1997, primarily reflecting higher levels of
investment securities, which have a lower yield than loans, and a reduction in
the net difference between loan and deposit rates.


Provision for Credit Losses

The provision for credit losses was $2.9 billion in 1998 compared to $1.9
billion in the prior year, reflecting the impact of certain nonrecurring
charges in 1998, including a provision related to weaknesses in global economic
conditions in the third quarter of 1998 and higher net commercial charge-offs.
The provision for credit losses covered net charge-offs, which increased $615
million to $2.5 billion in 1998, primarily due to higher commercial net
charge-offs, partially offset by lower net charge-offs in the consumer loan
portfolio.

The allowance for credit losses was $7.1 billion, or 1.99 percent of loans
and leases, at December 31, 1998 compared to $6.8 billion, or 1.98 percent, at
December 31, 1997. The allowance for credit losses was 287.01 percent of
nonperforming loans at December 31, 1998 compared to 321.03 percent at December
31, 1997.


Gains on Sales of Securities

Gains on sales of securities were $1.0 billion in 1998 compared to $271
million in 1997. Securities gains were higher in 1998 as a result of increased
activity in connection with the Corporation's overall risk management activity
and favorable market conditions for certain debt instruments caused by
turbulence in equity markets.


Noninterest Income

Noninterest income increased four percent to $12.2 billion in 1998,
primarily reflecting higher levels of income from investment banking,
brokerage, and credit card activities, offset by declines in mortgage banking
and trading income.


Other Noninterest Expense

Other noninterest expense increased six percent to $18.7 billion in 1998
compared to $17.6 billion in 1997, primarily due to increases in personnel,
data processing and general administrative and other expenses associated with
the NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto
Leasing, Inc. acquisitions in 1997.


Income Taxes

The Corporation's income tax expense for 1998 and 1997 was $2.9 billion
and $4.0 billion, respectively, for an effective tax rate of 35.8 percent and
38.0 percent, repectively. The reduction in the effective tax rate was due
primarily to the reorganization of certain subsidiaries of the Corporation in
1998.


51

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Management's Discussion and Analysis of Results of Operations and
Financial Condition - Market Risk Management" on page 42 for Quantitative and
Qualitative Disclosures about Market Risk.


Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Report of Management

The management of Bank of America Corporation is responsible for the
preparation, integrity and objectivity of the consolidated financial statements
of the Corporation. The consolidated financial statements and notes have been
prepared by the Corporation in accordance with accounting principles generally
accepted in the United States and, in the judgment of management, present
fairly the Corporation's financial position and results of operations. The
financial information contained elsewhere in this report is consistent with
that in the consolidated financial statements. The financial statements and
other financial information in this report include amounts that are based on
management's best estimates and judgments giving due consideration to
materiality.

The Corporation maintains a system of internal accounting controls to
provide reasonable assurance that assets are safe-guarded and that transactions
are executed in accordance with management's authorization and recorded
properly to permit the preparation of consolidated financial statements in
accordance with accounting principles generally accepted in the United States.
Management recognizes that even a highly effective internal control system has
inherent risks, including the possibility of human error and the circumvention
or overriding of controls, and that the effectiveness of an internal control
system can change with circumstances. However, management believes that the
internal control system provides reasonable assurance that errors or
irregularities that could be material to the consolidated financial statements
are prevented or would be detected on a timely basis and corrected through the
normal course of business. As of December 31, 1999, management believes that
the internal controls are in place and operating effectively.

The Internal Audit Division of the Corporation reviews, evaluates,
monitors and makes recommendations on both administrative and accounting
control, which acts as an integral, but independent, part of the system of
internal controls.

The independent accountants were engaged to perform an independent audit
of the consolidated financial statements. In determining the nature and extent
of their auditing procedures, they have evaluated the Corporation's accounting
policies and procedures and the effectiveness of the related internal control
system. An independent audit provides an objective review of management's
responsibility to report operating results and financial condition. Their
report appears on page 53.

The Board of Directors discharges its responsibility for the Corporation's
consolidated financial statements through its Audit Committee. The Audit
Committee meets periodically with the independent accountants, internal
auditors and management. Both the independent accountants and internal auditors
have direct access to the Audit Committee to discuss the scope and results of
their work, the adequacy of internal accounting controls and the quality of
financial reporting.


/s/ HUGH L. MCCOLL, JR.
- -------------------------
Hugh L. McColl, Jr.
Chairman of the Board and
Chief Executive Officer


/s/ JAMES H. HANCE, JR.
- -------------------------
James H. Hance, Jr.
Vice Chairman and
Chief Financial Officer

52

Report of Independent Accountants

To the Board of Directors and Shareholders of Bank of America Corporation

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Bank of America Corporation and its subsidiaries at December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Corporation's management; our responsibility is
to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.



/s/ PricewaterhouseCoopers LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
Charlotte, North Carolina
January 13, 2000


53

- --------------------------------------------------------------------------------
Bank of America Corporation and Subsidiaries

Consolidated Statement of Income



Year Ended December 31
--------------------------------------
(Dollars in millions, except per share information) 1999 1998 1997
- ------------------------------------------------------------------------ ------------ ------------ ------------

Interest income
Interest and fees on loans and leases $ 27,569 $ 28,331 $ 29,085
Interest and dividends on securities 4,826 4,502 3,283
Federal funds sold and securities purchased under agreements to resell 1,666 1,828 1,516
Trading account assets 2,087 2,626 2,582
Other interest income 1,175 1,301 867
- ------------------------------------------------------------------------ ---------- ---------- ----------
Total interest income 37,323 38,588 37,333
- ------------------------------------------------------------------------ ---------- ---------- ----------
Interest expense
Deposits 9,002 10,811 10,684
Short-term borrowings 5,826 5,239 4,105
Trading account liabilities 658 895 975
Long-term debt 3,600 3,345 3,137
- ------------------------------------------------------------------------ ---------- ---------- ----------
Total interest expense 19,086 20,290 18,901
- ------------------------------------------------------------------------ ---------- ---------- ----------
Net interest income 18,237 18,298 18,432
Provision for credit losses 1,820 2,920 1,904
- ------------------------------------------------------------------------ ---------- ---------- ----------
Net interest income after provision for credit losses 16,417 15,378 16,528

Gains on sales of securities 240 1,017 271

Noninterest income
Service charges on deposit accounts 3,645 3,396 3,373
Mortgage servicing income 673 389 543
Investment banking income 2,244 2,009 1,476
Trading account profits and fees 1,495 171 976
Brokerage income 724 728 355
Nondeposit-related service fees 554 652 680
Asset management and fiduciary service fees 1,023 973 990
Credit card income 1,791 1,448 1,231
Other income 1,920 2,423 2,132
- ------------------------------------------------------------------------ ---------- ---------- ----------
Total noninterest income 14,069 12,189 11,756
- ------------------------------------------------------------------------ ---------- ---------- ----------
Merger-related charges, net 525 1,795 374

Other noninterest expense
Personnel 9,308 9,412 8,703
Occupancy 1,627 1,643 1,576
Equipment 1,346 1,404 1,408
Marketing 537 581 655
Professional fees 630 843 763
Amortization of intangibles 888 902 855
Data processing 763 765 626
Telecommunications 549 563 491
Other general operating 1,820 2,044 2,059
General administrative and other 518 584 489
- ------------------------------------------------------------------------ ---------- ---------- ----------
Total other noninterest expense 17,986 18,741 17,625
- ------------------------------------------------------------------------ ---------- ---------- ----------
Income before income taxes 12,215 8,048 10,556
Income tax expense 4,333 2,883 4,014
- ------------------------------------------------------------------------ ---------- ---------- ----------
Net income $ 7,882 $ 5,165 $ 6,542
======================================================================== ========== ========== ==========
Net income available to common shareholders $ 7,876 $ 5,140 $ 6,431
======================================================================== ========== ========== ==========
Per share information(1)
Earnings per common share $ 4.56 $ 2.97 $ 3.71
======================================================================== ========== ========== ==========
Diluted earnings per common share $ 4.48 $ 2.90 $ 3.61
======================================================================== ========== ========== ==========
Dividends per common share $ 1.85 $ 1.59 $ 1.37
======================================================================== ========== ========== ==========
Average common shares issued and outstanding (in thousands)(1) 1,726,006 1,732,057 1,733,194
======================================================================== ========== ========== ==========


(1) Share and per share data reflect a two-for-one stock split on February 27,
1997.

See accompanying notes to consolidated financial statements.


54

- --------------------------------------------------------------------------------
Bank of America Corporation and Subsidiaries

Consolidated Balance Sheet



December 31
-------------------------
(Dollars in millions) 1999 1998
- ---------------------------------------------------------------------------- ------------ ------------

Assets
Cash and cash equivalents $ 26,989 $ 28,277
Time deposits placed and other short-term investments 4,838 6,750
Federal funds sold and securities purchased under agreements to resell 37,928 27,146
Trading account assets 38,460 39,602
Securities:
Available-for-sale 81,647 78,590
Held-for-investment, at cost (market value - $1,270 and $1,853) 1,422 1,997
- ---------------------------------------------------------------------------- -------- --------
Total securities 83,069 80,587
- ---------------------------------------------------------------------------- -------- --------
Loans and leases 370,662 357,328
Allowance for credit losses (6,828) (7,122)
- ---------------------------------------------------------------------------- -------- --------
Loans and leases, net of allowance for credit losses 363,834 350,206
- ---------------------------------------------------------------------------- -------- --------
Premises and equipment, net 6,713 7,289
Customers' acceptance liability 1,869 2,671
Derivative-dealer assets 16,055 16,400
Interest receivable 3,777 3,734
Mortgage servicing rights 4,093 2,376
Goodwill 12,262 12,695
Core deposits and other intangibles 1,730 2,013
Other assets 30,957 37,933
- ---------------------------------------------------------------------------- -------- --------
Total assets $632,574 $617,679
============================================================================ ======== ========
Liabilities
Deposits in domestic offices:
Noninterest-bearing $ 93,476 $ 92,623
Interest-bearing 207,048 203,644
Deposits in foreign offices:
Noninterest-bearing 1,993 1,713
Interest-bearing 44,756 59,280
- ---------------------------------------------------------------------------- -------- --------
Total deposits 347,273 357,260
- ---------------------------------------------------------------------------- -------- --------
Federal funds purchased and securities sold under agreements to repurchase 74,561 67,543
Trading account liabilities 20,958 14,170
Derivative-dealer liabilities 16,200 16,835
Commercial paper 7,331 6,749
Other short-term borrowings 40,340 24,742
Acceptances outstanding 1,869 2,671
Accrued expenses and other liabilities 19,169 30,929
Long-term debt 55,486 45,888
Trust preferred securities 4,955 4,954
- ---------------------------------------------------------------------------- -------- --------
Total liabilities 588,142 571,741
- ---------------------------------------------------------------------------- -------- --------
Commitments and contingencies (Notes Eleven and Thirteen)

Shareholders' equity
Preferred stock, $0.01 par value; authorized-100,000,000 shares; issued and
outstanding - 1,797,702 and 1,952,039 shares 77 83
Common stock, $0.01 par value; authorized-5,000,000,000 shares; issued and
outstanding - 1,677,273,267 and 1,724,484,305 shares 11,671 14,837
Retained earnings 35,681 30,998
Accumulated other comprehensive income (loss) (2,658) 152
Other (339) (132)
- ---------------------------------------------------------------------------- -------- --------
Total shareholders' equity 44,432 45,938
- ---------------------------------------------------------------------------- -------- --------
Total liabilities and shareholders' equity $632,574 $617,679
============================================================================ ======== ========


See accompanying notes to consolidated financial statements.


55

- --------------------------------------------------------------------------------
Bank of America Corporation and Subsidiaries

Consolidated Statement of Cash Flows



Year Ended December 31
------------------------------------
(Dollars in millions) 1999 1998 1997
- ---------------------------------------------------------------------------------- ------------ ----------- -----------

Operating activities
Net income $ 7,882 $ 5,165 $ 6,542
Reconciliation of net income to net cash provided by operating activities:
Provision for credit losses 1,820 2,920 1,904
Gains on sales of securities (240) (1,017) (271)
Merger-related charges, net 525 1,795 374
Depreciation and premises improvements amortization 1,029 1,096 1,108
Amortization of intangibles 888 902 855
Deferred income tax expense 2,098 216 971
Net decrease (increase) in trading instruments 7,640 (1,378) (4,679)
Net increase in interest receivable (51) (157) (542)
Net increase in interest payable 332 94 179
Net decrease (increase) in other assets 2,611 (11,271) (3,797)
Net (decrease) increase in other accrued expenses and other liabilities (12,965) 13,702 1,780
Other operating activities, net 496 1,450 (175)
- ---------------------------------------------------------------------------------- --------- --------- ---------
Net cash provided by operating activities 12,065 13,517 4,249
- ---------------------------------------------------------------------------------- --------- --------- ---------
Investing activities
Net decrease (increase) in time deposits placed and other short-term investments 1,625 1,612 (857)
Net increase in federal funds sold and securities purchased
under agreements to resell (10,782) (7,028) (3,531)
Proceeds from sales and maturities of available-for-sale securities 48,590 81,254 44,268
Purchases of available-for-sale securities (48,917) (93,136) (56,825)
Proceeds from maturities of held-for-investment securities 575 1,162 1,898
Purchases of held-for-investment securities -- (249) (570)
Proceeds from sales and securitizations of loans and leases 44,574 59,297 30,936
Purchases and net originations of loans and leases (63,401) (91,681) (42,218)
Purchases and originations of mortgage servicing rights (2,258) (853) (419)
Net purchases of premises and equipment (465) (437) (888)
Proceeds from sales of foreclosed properties 350 525 610
Sales and acquisitions of business activities, net of cash (1,212) (335) 1,289
- ---------------------------------------------------------------------------------- --------- --------- ---------
Net cash used in investing activities (31,321) (49,869) (26,307)
- ---------------------------------------------------------------------------------- --------- --------- ---------
Financing activities
Net (decrease) increase in deposits (8,299) 16,476 4,774
Net increase in federal funds purchased and securities
sold under agreements to repurchase 7,018 6,137 26,680
Net increase (decrease) in commercial paper and other short-term borrowings 16,214 13,672 (1,440)
Proceeds from issuance of long-term debt 17,630 12,166 7,823
Retirement of long-term debt (7,763) (8,809) (6,740)
Proceeds from issuance of trust preferred securities -- 340 1,613
Proceeds from issuance of common stock 1,158 1,367 1,892
Common stock repurchased (4,858) (1,751) (8,540)
Cash dividends paid (3,199) (2,604) (2,175)
Other financing activities, net 12 (863) (2,036)
- ---------------------------------------------------------------------------------- --------- --------- ---------
Net cash provided by financing activities 17,913 36,131 21,851
- ---------------------------------------------------------------------------------- --------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents 55 32 102
- ---------------------------------------------------------------------------------- --------- --------- ---------
Net decrease in cash and cash equivalents (1,288) (189) (105)
Cash and cash equivalents at January 1 28,277 28,466 28,571
- ---------------------------------------------------------------------------------- --------- --------- ---------
Cash and cash equivalents at December 31 $ 26,989 $ 28,277 $ 28,466
================================================================================== ========= ========= =========
Supplemental cash flow disclosures
Cash paid for interest $ 18,754 $ 20,198 $ 18,585
Cash paid for income taxes 1,595 2,695 1,760
- ---------------------------------------------------------------------------------- --------- --------- ---------


Loans transferred to foreclosed properties amounted to $305, $353 and $431 in
1999, 1998 and 1997, respectively.

Loans securitized and retained in the trading and available-for-sale
securities portfolios amounted to $6,682, $6,083 and $7,842 in 1999, 1998 and
1997, respectively.

The fair value of noncash assets acquired and liabilities assumed in
acquisitions during 1999 was approximately $1,557 and $74, net of cash
acquired. The fair value of noncash assets acquired in acquisitions during 1998
was approximately $109, net of cash acquired. The fair value of noncash assets
acquired and liabilities assumed in acquisitions during 1997 were approximately
$52,226 and $43,024, respectively, net of cash acquired.

See accompanying notes to consolidated financial statements.

56

- --------------------------------------------------------------------------------
Bank of America Corporation and Subsidiaries

Consolidated Statement of Changes in Shareholders' Equity



Common Stock
(Dollars in millions, Preferred ------------------------ Retained
shares in thousands) Stock Shares Amount Earnings
- ------------------------------- ------------- ------------- ---------- --------------

Balance, December 31, 1996 $ 2,413 1,602,764 $ 11,419 $24,071
Net income 6,542
Other comprehensive income,
net of tax
Comprehensive income
Cash dividends:
Common (2,064)
Preferred (111)
Common stock issued under
dividend reinvestment and
employee plans 47,431 1,888
Stock issued in acquisitions 82 219,024 10,320
Common stock repurchased (150,016) (8,540)
Conversion of preferred stock (86) 3,859 86
Redemption of preferred stock (1,701)
Other (524) (33)
- ------------------------------- -------- --------- -------- --------
Balance, December 31, 1997 708 1,722,538 15,140 28,438
=============================== ======== ========= ======== ========
Net income 5,165
Other comprehensive loss, net
of tax
Comprehensive income
Cash dividends:
Common (2,579)
Preferred (25)
Common stock issued under
dividend reinvestment and
employee plans 30,489 1,417
Stock issued in acquisitions 385 15
Common stock repurchased (29,349) (1,751)
Conversion of preferred stock (11) 444 11
Redemption of preferred stock (614)
Other (23) 5 (1)
- ------------------------------- -------- --------- -------- --------
Balance, December 31, 1998 83 1,724,484 14,837 30,998
=============================== ======== ========= ======== ========
Net income 7,882
Other comprehensive loss, net
of tax
Comprehensive income
Cash dividends:
Common (3,193)
Preferred (6)
Common stock issued under
employee plans 30,501 1,423
Common stock repurchased (78,000) (4,858)
Conversion of preferred stock (6) 284 6
Other 4 263
- ------------------------------- -------- --------- -------- --------
Balance, December 31, 1999 $ 77 1,677,273 $ 11,671 $35,681
=============================== ======== ========= ======== ========




Accumulated Total
Other Share-
(Dollars in millions, Comprehensive holders' Comprehensive
shares in thousands) Income (Loss)(1,2) Other Equity Income
- ------------------------------- -------------------- ---------- ------------- --------------

Balance, December 31, 1996 $ 20 $ (130) $37,793
Net income 6,542 $ 6,542
Other comprehensive income,
net of tax 387 387 387
---------
Comprehensive income $ 6,929
=========
Cash dividends:
Common (2,064)
Preferred (111)
Common stock issued under
dividend reinvestment and
employee plans 4 1,892
Stock issued in acquisitions 10,402
Common stock repurchased (8,540)
Conversion of preferred stock
Redemption of preferred stock (1,701)
Other 17 (16)
- ------------------------------- -------- ------ --------
Balance, December 31, 1997 407 (109) 44,584
=============================== ======== ====== ========
Net income 5,165 $ 5,165
Other comprehensive loss, net
of tax (255) (255) (255)
---------
Comprehensive income $ 4,910
=========
Cash dividends:
Common (2,579)
Preferred (25)
Common stock issued under
dividend reinvestment and
employee plans (50) 1,367
Stock issued in acquisitions 15
Common stock repurchased (1,751)
Conversion of preferred stock
Redemption of preferred stock (614)
Other 27 31
- ------------------------------- -------- ------ --------
Balance, December 31, 1998 152 (132) 45,938
=============================== ======== ====== ========
Net income 7,882 $ 7,882
Other comprehensive loss, net
of tax (2,810) (2,810) (2,810)
---------
Comprehensive income $ 5,072
=========
Cash dividends:
Common (3,193)
Preferred (6)
Common stock issued under
employee plans (265) 1,158
Common stock repurchased (4,858)
Conversion of preferred stock
Other 58 321
- ------------------------------- -------- ------ --------
Balance, December 31, 1999 $ (2,658) $ (339) $44,432
=============================== ======== ====== =========


(1) Changes in Accumulated Other Comprehensive Income (Loss) include after-tax
net unrealized gains (losses) on available-for-sale securities and
marketable equity securities of $(2,773), $(242) and $419 and after-tax
net unrealized losses on foreign currency translation adjustments of
$(37), $(13), and $(32) in 1999, 1998 and 1997, respectively.

(2) Accumulated Other Comprehensive Income (Loss) consists of the after-tax
valuation allowance for available-for-sale securities and marketable
equity securities of $(2,470), $303 and $545 and foreign currency
translation adjustments of $(188), $(151) and $(138) at December 31, 1999,
1998, and 1997, respectively.

See accompanying notes to consolidated financial statements.


57

Bank of America Corporation and Subsidiaries

Notes to Consolidated Financial Statements

On September 30, 1998, BankAmerica Corporation (BankAmerica) merged (the
Merger) with and into Bank of America Corporation (Corporation), formerly
NationsBank Corporation (NationsBank). On January 9, 1998, the Corporation
completed its merger (the Barnett merger) with Barnett Banks, Inc. (Barnett).
These transactions were accounted for as pooling of interests. The consolidated
financial statements have been restated to present the combined results of the
Corporation as if the Merger and the Barnett merger had been in effect for all
periods presented.

The Corporation is a Delaware corporation, a bank holding company and,
effective March 11, 2000, a financial holding company. Through its banking
subsidiaries and nonbanking subsidiaries, the Corporation provides a diverse
range of financial services and products throughout the U.S. and in selected
international markets.


Note One - Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the
Corporation and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Results of operations of
companies purchased are included from the dates of acquisition. Certain prior
period amounts have been reclassified to conform to current year
classifications. Assets held in an agency or fiduciary capacity are not
included in the consolidated financial statements.

The preparation of the consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect reported amounts and
disclosures. Actual results could differ from those estimates. Significant
estimates made by management are discussed in these footnotes as applicable.

On February 27, 1997, the Corporation completed a two-for-one split of its
common stock. Accordingly, the consolidated financial statements for all years
presented reflect the impact of the stock split.


Cash and Cash Equivalents

Cash on hand, cash items in the process of collection and amounts due from
correspondent banks and the Federal Reserve Bank (FRB) are included in cash and
cash equivalents.


Securities Purchased Under Agreements To Resell And
Securities Sold Under Agreements To Repurchase

Securities purchased under agreements to resell and securities sold under
agreements to repurchase are treated as collateralized financing transactions
and are recorded at the amounts at which the securities were acquired or sold
plus accrued interest. The Corporation's policy is to obtain the use of
securities purchased under agreements to resell. The market value of the
underlying securities, which collateralize the related receivable on agreements
to resell, is monitored, including accrued interest, and additional collateral
is requested when deemed appropriate.


Trading Instruments

Instruments utilized in trading activities include securities stated at
fair value. Fair value is generally based on quoted market prices. If quoted
market prices are not available, fair values are estimated based on dealer
quotes, pricing models or quoted prices for instruments with similar
characteristics. Realized and unrealized gains and losses are recognized as
trading account profits and fees.


Securities

Debt securities are classified based on management's intention on the date
of purchase. Debt securities which management has the intent and ability to
hold to maturity are classified as held-for-investment and reported at
amortized cost. Securities that are bought and held principally for the purpose
of resale in the near term are


58

classified as trading instruments and are stated at fair value. All other debt
securities are classified as available-for-sale and carried at fair value with
net unrealized gains and losses included in shareholders' equity on an
after-tax basis.

Interest and dividends on securities, including amortization of premiums
and accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.

Marketable equity securities, which are included in other assets, are
carried at fair value with net unrealized gains and losses included in
shareholders' equity, net of tax. Income on marketable equity securities is
included in noninterest income.


Loans and Leases

Loans are reported at their outstanding principal balances net of any
unearned income, charge-offs, unamortized deferred fees and costs on originated
loans and premiums or discounts on purchased loans. Loan origination fees and
certain direct origination costs are deferred and recognized as adjustments to
income over the lives of the related loans. Unearned income, discounts and
premiums are amortized to income using methods that approximate the interest
method.

The Corporation provides equipment financing to its customers through a
variety of lease arrangements. Direct financing leases are carried at the
aggregate of lease payments receivable plus estimated residual value of the
leased property, less unearned income. Leveraged leases, which are a form of
financing lease, are carried net of nonrecourse debt. Unearned income on
leveraged and direct financing leases is amortized over the lease terms by
methods that approximate the interest method.


Allowance for Credit Losses

The allowance for credit losses is available to absorb management's
estimate of incurred credit losses in the loan and lease portfolios. Additions
to the allowance for credit losses are made by charges to the provision for
credit losses. Credit exposures deemed to be uncollectible are charged against
the allowance for credit losses. Recoveries of previously charged off amounts
are credited to the allowance for credit losses.

The Corporation performs periodic and systematic detailed reviews of its
loan and lease portfolios to identify risks inherent in and to assess the
overall collectibility of those portfolios. The nature of the process by which
the Corporation determines the appropriate allowance for credit losses requires
the exercise of considerable judgment. As discussed below, certain homogeneous
loan portfolios are evaluated collectively, based on individual loan type,
while remaining portfolios are reviewed on an individual loan basis. These
detailed reviews, combined with historical loss experience and other factors,
result in the identification and quantification of specific allowances for
credit losses and loss factors which are used in determining the amount of the
allowance and related provision for credit losses. The actual amount of
incurred credit losses confirmed may vary from the estimate of incurred losses
due to changing economic conditions or changes in industry or geographic
concentrations. The Corporation has procedures in place to monitor differences
between estimated and actual incurred credit losses, which include detailed
periodic assessments by senior management of both individual loans and credit
portfolios and the models used to estimate incurred credit losses in those
portfolios.

Due to their homogeneous nature, consumer loans and certain smaller
business loans and leases, which includes residential mortgages, home equity
lines, direct/indirect consumer, consumer finance, bankcard, and foreign
consumer loans, are generally evaluated as a group, based on individual loan
type. This evaluation is based primarily on historical and current delinquency
and loss trends and provides a basis for establishing an appropriate level of
allowance for credit losses.

Commercial and commercial real estate loans and leases are generally
evaluated individually due to a general lack of uniformity among individual
loans within each loan type and business segment. If necessary, an allowance
for credit losses is established for individual impaired loans. A loan is
considered impaired when, based on current information and events, it is
probable that the Corporation will be unable to collect all amounts due,
including principal and interest, according to the contractual terms of the
agreement. Once a loan has been identified as impaired, management measures
impairment in accordance with Statement of Financial Accounting


59

Standards No. 114, "Accounting by Creditors for Impairment of a Loan" (SFAS
114). Impaired loans are measured based on the present value of payments
expected to be received, observable market prices, or for loans that are solely
dependent on the collateral for repayment, the estimated fair value of the
collateral. If the recorded investment in impaired loans exceeds the measure of
estimated fair value, a valuation allowance is established as a component of
the allowance for credit losses,

Portions of the allowance for credit losses are assigned to cover the
estimated incurred losses in each loan and lease category based on the results
of the Corporation's detail review process as described above. Further
assignments are made based on general and specific economic conditions, as well
as performance trends within specific portfolio segments and individual
concentrations of credit, including geographic and industry concentrations. The
remaining unassigned portion of the allowance for credit losses, determined
separately from the procedures outlined above, addresses certain industry and
geographic concentrations, including global economic conditions, thereby
minimizing the risk related to the margin of imprecision inherent in the
estimation of the assigned allowance for credit losses. Due to the subjectivity
involved in the determination of the unassigned portion of the allowance for
credit losses, the relationship of the unassigned component to the total
allowance for credit losses may fluctuate from period to period. Management
evaluates the adequacy of the allowance for credit losses based on the combined
total of the assigned and unassigned components.


Nonperforming Loans

Commercial loans and leases that are past due 90 days or more as to
principal or interest, or where reasonable doubt exists as to timely
collection, including loans that are individually identified as being impaired,
are generally classified as nonperforming loans unless well secured and in the
process of collection. Loans whose contractual terms have been restructured in
a manner which grants a concession to a borrower experiencing financial
difficulties are classified as nonperforming until the loan is performing for
an adequate period of time under the restructured agreement. Interest accrued
but not collected is reversed when a commercial loan is classified as
nonperforming. Interest collections on commercial nonperforming loans and
leases for which the ultimate collectibility of principal is uncertain are
applied as principal reductions. Otherwise, such collections are credited to
income when received.

Credit card loans that are 180 days past due are charged off and not
classified as nonperforming. Real estate secured consumer loans are classified
as nonperforming at 90 days past due. The amount deemed to be uncollectible on
real estate secured loans is charged off upon determination. Other consumer
loans are charged off at 120 days past due and not classified as nonperforming.
Interest accrued but not collected is generally written off along with the
principal.


Loans Held for Sale

Loans held for sale include residential mortgage, commercial real estate
and other loans and are carried at the lower of aggregate cost or market value.
Loans originated with the intent to sell are included in other assets.


Foreclosed Properties

Assets are classified as foreclosed properties and included in other
assets upon actual foreclosure or when physical possession of the collateral is
taken regardless of whether foreclosure proceedings have taken place.

Foreclosed properties are carried at the lower of the recorded amount of
the loan or lease for which the property previously served as collateral, or
the fair value of the property less estimated costs to sell. Prior to
foreclosure, any write-downs, if necessary, are charged to the allowance for
credit losses.

Subsequent to foreclosure, gains or losses on the sale of and losses on
the periodic revaluation of foreclosed properties are credited or charged to
expense. Net costs of maintaining and operating foreclosed properties are
expensed as incurred.


Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are recognized principally
using the straight-line method over the estimated useful lives of the assets.


60

Derivative-Dealer Positions

Derivative-dealer assets and liabilities represent trading positions
including unrealized gains and losses, respectively, on interest rate, foreign
exchange, commodity, equity, credit derivative and other derivative contract
positions included in the Corporation's trading portfolio. Derivative-dealer
positions are reflected at fair value with changes in fair value reflected in
trading account profits and fees. Fair values are estimated based on dealer
quotes, pricing models or quoted prices for instruments with similar
characteristics.


Mortgage Servicing Rights

The total cost of mortgage loans originated for sale or purchased is
allocated between the cost of the loans and the mortgage servicing rights (MSR)
based on the relative fair values of the loans and the MSR. MSR acquired
separately are capitalized at cost. The Corporation capitalized $1.6 billion,
$1.5 billion and $749 million of MSR during 1999, 1998 and 1997, respectively.
The cost of the MSR is amortized in proportion to and over the estimated period
of net servicing revenues. Amortization was $566 million, $476 million and $303
million during 1999, 1998 and 1997, respectively.

The fair value of capitalized MSR was approximately $4.1 billion and $2.4
billion at December 31, 1999 and 1998, respectively. Total loans serviced
approximated $294.6 billion, $249.7 billion and $224.0 billion at December 31,
1999, 1998 and 1997, respectively, including loans serviced on behalf of the
Corporation's banking subsidiaries. The predominant characteristics used as the
basis for stratifying MSR are loan type and interest rate. The MSR strata are
evaluated for impairment by estimating their fair value based on anticipated
future net cash flows, taking into consideration prepayment predictions. If the
carrying value of the MSR, including the results of risk management activities,
exceeds the estimated fair value, a valuation allowance is established for any
decline which is viewed to be temporary. Changes to the valuation allowance are
charged against or credited to mortgage servicing income and fees. The
valuation allowance was $6 million and $180 million at December 31, 1999 and
1998, respectively. To manage risk associated with changes in prepayment rates,
the Corporation uses various financial instruments including purchased options
and swaps. The notional amounts of such contracts at December 31, 1999 and 1998
were $43.4 billion and $22.4 billion, respectively, and the related unrealized
loss was $333 million and unrealized gain was $190 million, respectively.


Goodwill and Other Intangibles

Net assets of companies acquired in purchase transactions are recorded at
fair value at the date of acquisition. Identified intangibles are amortized on
an accelerated or straight-line basis over the period benefited. Goodwill is
amortized on a straight-line basis over a period not to exceed 25 years. The
recoverability of goodwill and other intangibles is evaluated if events or
circumstances indicate a possible impairment. Such evaluation is based on
various analyses, including undiscounted cash flow projections.


Securitizations

The Corporation securitizes, sells and services interests in home equity,
installment, commercial and bankcard loans. When the Corporation sells assets
in securitizations, it may retain interest only strips, one or more
subordinated tranches and, in some cases, a cash reserve account, all of which
are considered retained interests in the securitized assets. Gains upon sale of
the assets depend, in part, on the Corporation's allocation of the previous
carrying amount of the assets to the retained interests. Previous carrying
amounts are allocated in proportion to the relative fair values of the assets
sold and interests retained.

To obtain fair values, quoted market prices are used, if available.
Generally, quoted market prices for retained interests are not available,
therefore the Corporation estimates fair values based upon the present value of
the associated expected future cash flows. This may require management to
estimate credit losses, prepayment speeds, forward yield curves, discount rates
and other factors that impact the value of retained interests.

After the securitization, any of these retained interests that can be
contractually settled in such a way that the Corporation could not recover
substantially all of its recorded investment are adjusted to fair value with
the adjustment reflected as an unrealized gain or loss in shareholders' equity.
If a decline in the fair value is determined to be unrecoverable, it is
expensed.


61

Income Taxes

There are two components of income tax expense: current and deferred.
Current income tax expense approximates taxes to be paid or refunded for the
applicable period. Balance sheet amounts of deferred taxes are recognized on
the temporary differences between the bases of assets and liabilities as
measured by tax laws and their bases as reported in the financial statements.
Deferred tax expense or benefit is then recognized for the change in deferred
tax liabilities or assets between periods.

Recognition of deferred tax assets is based on management's belief that it
is more likely than not that the tax benefit associated with certain temporary
differences, tax operating loss carryforwards and tax credits will be realized.
A valuation allowance is recorded for those deferred tax items for which it is
more likely than not that realization will not occur.


Retirement Benefits

The Corporation has established qualified retirement plans covering
full-time, salaried employees and certain part-time employees. Pension expense
under these plans is charged to current operations and consists of several
components of net pension cost based on various actuarial assumptions regarding
future experience under the plans.

In addition, the Corporation and its subsidiaries have established
unfunded supplemental benefit plans providing any benefits that could not be
paid from a qualified retirement plan because of Internal Revenue Code
restrictions and supplemental executive retirement plans for selected officers
of the Corporation and its subsidiaries. These plans are nonqualified and,
therefore, in general, a participant's or beneficiary's claim to benefits is as
a general creditor.

The Corporation and its subsidiaries have established several unfunded
postretirement medical benefit plans.


Risk Management Instruments

Risk management instruments are utilized to modify the interest rate
characteristics of related assets or liabilities or hedge against fluctuations
in interest rates, currency exchange rates or other such exposures as part of
the Corporation's asset and liability management process. Instruments must be
designated as hedges and must be effective throughout the hedge period. To
qualify as hedges, risk management instruments must be linked to specific
assets or liabilities or pools of similar assets or liabilities. For risk
management instruments that fail to qualify as hedges, the instruments are
recorded at market value with changes in market value reflected in trading
account profits and fees.

Swaps, principally interest rate, used in the asset and liability
management process are accounted for on the accrual basis with revenues or
expenses recognized as adjustments to income or expense on the underlying
linked assets or liabilities.

Gains and losses associated with interest rate futures and forward
contracts used as effective hedges of existing risk positions or anticipated
transactions are deferred as an adjustment to the carrying value of the related
asset or liability and recognized in income over the remaining term of the
related asset or liability.

Risk management instruments used to hedge or modify the interest rate
characteristics of debt securities classified as available-for-sale are carried
at fair value with unrealized gains or losses deferred as a component of
shareholders' equity, net of tax.

To manage interest rate risk, the Corporation also uses interest rate
option products, primarily purchased caps and floors. Interest rate caps and
floors are agreements where, for a fee, the purchaser obtains the right to
receive interest payments when a variable interest rate moves above or below a
specified cap or floor rate, respectively. Such instruments are primarily
linked to long-term debt, short-term borrowings and pools of similar
residential mortgages. The Corporation also purchases options to protect the
value of certain assets, principally MSR, against changes in prepayment rates.
Option premiums are amortized over the option life on a straight-line basis.
Such contracts are designated as hedges, and gains or losses are recorded as
adjustments to the carrying value of the MSR, which are then subjected to
impairment valuations.

The Corporation also utilizes forward delivery contracts and options to
reduce the interest rate risk inherent in mortgage loans held for sale and the
commitments made to borrowers for mortgage loans which have not


62

been funded. These financial instruments are considered in the Corporation's
lower of cost or market valuation of its mortgage loans held for sale.

The Corporation has made investments in a number of operations in foreign
countries. Certain assets and liabilities of these operations are often
denominated in foreign currencies, which exposes the Corporation to foreign
currency risks. To qualify for hedge accounting, a foreign exchange contract
must reduce risk at the level of the specific transaction. Realized and
unrealized gains and losses on instruments that hedge firm commitments are
deferred and included in the measurement of the subsequent transaction;
however, losses are deferred only to the extent of expected gains on the future
commitment. Realized and unrealized gains and losses on instruments that hedge
net foreign capital exposure are recorded in shareholders' equity as foreign
currency translation adjustments and included in accumulated other
comprehensive income (loss).

Risk management instruments generally are not terminated. When
terminations do occur, gains or losses are recorded as adjustments to the
carrying value of the underlying assets or liabilities and recognized as income
or expense over either the remaining expected lives of such underlying assets
or liabilities or the remaining life of the instrument. In circumstances where
the underlying assets or liabilities are sold, any remaining carrying value
adjustments and the cumulative change in value of any open positions are
recognized immediately as a component of the gain or loss on disposition of
such underlying assets or liabilities. If a forecasted transaction to which a
risk management instrument is linked fails to occur, any deferred gain or loss
on the instrument is recognized immediately in income.


Earnings Per Common Share

Earnings per common share for all periods presented is computed by
dividing net income, reduced by dividends on preferred stock, by the weighted
average number of common shares issued and outstanding. Diluted earnings per
common share is computed by dividing net income available to common
shareholders, adjusted for the effect of assumed conversions, by the weighted
average number of common shares issued and outstanding and dilutive potential
common shares, which include convertible preferred stock and stock options.
Dilutive potential common shares are calculated using the treasury stock
method.


Foreign Currency Translation

Assets, liabilities and operations of foreign branches and subsidiaries
are recorded based on the functional currency of each entity. For the majority
of the foreign operations, the functional currency is the local currency, in
which case the assets, liabilities and operations are translated, for
consolidation purposes, at current exchange rates from the local currency to
the reporting currency, the U.S. dollar. The resulting gains or losses are
reported as a component of accumulated other comprehensive income (loss) within
shareholders' equity on a net-of-tax basis. When the foreign entity is not a
free-standing operation or is in a hyperinflationary economy, the functional
currency used to measure the financial statements of a foreign entity is the
U.S. dollar. In these instances, the resulting gains and losses are included in
income.


Recently Issued Accounting Pronouncements

In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). This standard requires all derivative
instruments to be recognized as either assets or liabilities and measured at
their fair values. In addition, SFAS 133 provides special hedge accounting for
fair value, cash flow and foreign currency hedges, provided certain criteria
are met. Pursuant to Statement of Financial Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities -- Deferral of
Effective Date of Financial Accounting Standards Board Statement No. 133", the
Corporation is required to adopt the standard on or before January 1, 2001.
Upon adoption, all hedging relationships must be designated and documented
pursuant to the provisions of the statement. The Corporation is in the process
of evaluating the impact of this statement on its risk management strategies
and processes, information systems and financial statements.

In 1999, the Federal Financial Institutions Examination Council issued The
Uniform Classification and Account Management Policy (the Policy) which updated
and expanded the classification of delinquent retail credits. The Policy
provides guidance for banks on the treatment of delinquent open-end and
close-end loans. The Corporation is required to implement the Policy by
December 31, 2000. The Corporation does not expect the adoption of this Policy
to have a material impact on its results of operations or financial condition.


63
Note Two - Merger-Related Activity

At December 31, 1999, the Corporation operated its banking activities
primarily under two charters: Bank of America, National Association (Bank of
America, N.A.) and Bank of America, N.A. (USA). On March 31, 1999, NationsBank
of Delaware, N.A. merged with and into Bank of America, N.A. (USA), a national
association headquartered in Phoenix, Arizona (formerly known as Bank of
America National Association), which operates the Corporation's credit card
business. On April 1, 1999, the mortgage business of BankAmerica transferred to
NationsBanc Mortgage Corporation. On December 1, 1999, NationsBanc Mortgage
Corporation merged with and into BA Mortgage, LLC, a Delaware limited liability
company and a Bank of America, N.A. subsidiary. On April 8, 1999, the
Corporation merged Bank of America Texas, N.A. into NationsBank, N.A. On July
5, 1999, NationsBank, N.A. changed its name to Bank of America, N.A. On July
23, 1999, Bank of America, N.A. merged into Bank of America National Trust and
Savings Association (Bank of America NT&SA), and the surviving entity of that
merger changed its name to Bank of America, N.A. On December 1, 1999, Bank of
America FSB, a federal savings bank formerly headquartered in Portland, Oregon,
was converted into a national bank and merged into Bank of America, N.A.

On September 30, 1998, the Corporation completed the Merger. As a result
of the Merger, each outstanding share of BankAmerica common stock was converted
into 1.1316 shares of the Corporation's common stock, resulting in the net
issuance of approximately 779 million shares of the Corporation's common stock
to the former BankAmerica shareholders. Each share of NationsBank common stock
continued as one share in the combined company's common stock. In addition,
approximately 88 million options to purchase the Corporation's common stock
were issued to convert stock options granted to certain BankAmerica employees.
This transaction was accounted for as a pooling of interests. Under this method
of accounting, the recorded assets, liabilities, shareholders' equity, income
and expense of NationsBank and BankAmerica have been combined and reflected at
their historical amounts. NationsBank's total assets, total deposits and total
shareholders' equity on the date of the Merger were approximately $331.9
billion, $166.8 billion and $27.7 billion, respectively. BankAmerica's total
assets, total deposits and total shareholders' equity on the date of the Merger
amounted to approximately $263.4 billion, $179.0 billion and $19.6 billion,
respectively.

In connection with the Merger, the Corporation recorded a $1,325 million
pre-tax merger-related charge ($960 million after-tax) in 1998 of which $725
million ($519 million after-tax) and $600 million ($441 million after-tax) were
recorded in the third and fourth quarters of 1998, respectively. The total
pre-tax charge for 1998 consisted of approximately $740 million primarily of
severance, change in control and other employee-related costs, $150 million of
conversion and related costs including occupancy and equipment expenses
(primarily lease exit costs and the elimination of duplicate facilities and
other capitalized assets) and customer communication expenses, $300 million of
exit and related costs and $135 million of other merger costs (including legal,
investment banking and filing fees).

In 1999, the Corporation also recorded a pre-tax merger-related charge of
$525 million ($358 million after-tax) in connection with the Merger of which
$200 million ($145 million after-tax) and $325 million ($213 million after-tax)
were recorded in the second and fourth quarters of 1999, respectively. The
total pre-tax charge for 1999 consisted of approximately $219 million primarily
of severance, change in control and other employee-related costs, $187 million
of conversion and related costs including occupancy, equipment and customer
communication expenses, $128 million of exit and related costs and a $9 million
reduction of other merger costs.

Total severance, change in control and other employee-related costs
included amounts related to job eliminations of former associates of
BankAmerica and NationsBank impacted by the Merger. Through December 31, 1999,
approximately 12,600 employees had entered the severance process.
Employee-related costs of the Merger were principally in overlapping functions,
operations and businesses of the Corporation. Approximately one-third of the
employee-related merger costs was attributable to the Corporation's staff and
operations areas while the business segments accounted for the remaining
employee-related merger costs.

64
The following tables summarize the activity in the BankAmerica
merger-related reserve during 1999 and 1998:



BankAmerica Merger-Related Reserve
- -------------------------------------------------
Noncash
Balance, Amount Cash Payments Reductions Balance,
January 1, Included in Applied to Applied to December 31,
(Dollars in millions) 1999 Expense Reserve Reserve 1999
- ----------------------------------- ------------- ----------------- ------------------- ---------------- ---------------

Severance, change in control
and other employee-related costs $487 $ 219 $(588) $ -- $118
Conversion and related costs 143 187 (62) (133) 135
Exit and related costs 194 128 (183) (93) 46
Other merger costs 18 (9) (8) -- 1
- ----------------------------------- ---- -------- ------- ----- ----
Total $842 $ 525 $(841) $(226) $300
=================================== ==== ======= ====== ===== ====


Noncash
Balance, Amount Cash Payments Reductions Balance,
January 1, Included in Applied to Applied to December 31,
(Dollars in millions) 1998 Expense Reserve Reserve 1998
- ----------------------------------- ---------- ----------- ------------- ---------- ------------
Severance, change in control
and other employee-related costs $ -- $ 740 $(155) $ (98) $487
Conversion and related costs -- 150 (3) (4) 143
Exit and related costs -- 300 (62) (44) 194
Other merger costs -- 135 (117) -- 18
- ----------------------------------- ---- ---------- -------- ------- ----
Total $ -- $1,325 $(337) $(146) $842
=================================== ==== ========== ======== ======= ====


On January 9, 1998, the Corporation completed the Barnett merger.
Barnett's total assets, total deposits and total shareholders' equity on the
date of the merger were approximately $46.0 billion, $35.4 billion and $3.4
billion, respectively. As a result of the Barnett merger, each outstanding
share of Barnett common stock was converted into 1.1875 shares of the
Corporation's common stock, resulting in the net issuance of approximately 233
million common shares to the former Barnett shareholders. In addition,
approximately 11 million options to purchase the Corporation's common stock
were issued to convert stock options granted to certain Barnett employees. This
transaction was also accounted for as a pooling of interests.

In connection with the Barnett merger, the Corporation incurred a pre-tax
merger-related charge during the first quarter of 1998 of approximately $900
million ($642 million after-tax), which consisted of approximately $375 million
primarily in severance and change in control payments, $300 million of
conversion and related costs including occupancy and equipment expenses
(primarily lease exit costs and the elimination of duplicate facilities and
other capitalized assets), $125 million of exit costs related to contract
terminations and $100 million of other merger costs (including legal,
investment banking and filing fees). In the second quarter of 1998, the
Corporation recognized a $430 million gain resulting from the regulatory
required divestitures of certain Barnett branches. At December 31, 1999,
substantially all of the Barnett merger-related reserves have been utilized.
Through December 31, 1999, approximately 2,400 employees had entered the
severance process as a result of the Barnett merger.

As previously disclosed, NationsBank, BankAmerica and Barnett merged in
separate transactions accounted for as pooling of interests. The following
table summarizes the impact of the BankAmerica and Barnett mergers on the
Corporation's net interest income, noninterest income and net income for 1997,
the period prior to the respective mergers:

65




(Dollars in millions) 1997
- ----------------------- --------------------------------------
Net Interest Noninterest Net
Income Income Income
-------------- ------------- ---------

NationsBank $ 7,898 $ 5,002 $3,077
BankAmerica 8,669 6,012 3,210
Barnett 1,840 971 255
- ----------------------- ------- ------- ------
Total $18,407 $11,985 $6,542
======================= ======= ======= ======


The amounts presented above represent results of operations of the
previously separate companies and do not reflect reclassifications of certain
revenue and expense items which were made to conform to the reporting policies
of the Corporation.

On October 1, 1997, the Corporation completed the acquisition of
Montgomery Securities, Inc., an investment banking and institutional brokerage
firm. The purchase price consisted of $840 million in cash and approximately
5.3 million unregistered shares of the Corporation's common stock for an
aggregate amount of approximately $1.1 billion. The Corporation accounted for
this acquisition as a purchase.

On October 1, 1997, the Corporation also acquired Robertson, Stephens &
Company Group, LLC (Robertson Stephens), an investment banking and investment
management firm. The acquisition was accounted for as a purchase. The
Corporation sold the investment banking operations of Robertson Stephens on
August 31, 1998 and sold the investment management operations on February 26,
1999.

On January 7, 1997, the Corporation completed the acquisition of Boatmen's
Bancshares, Inc. (Boatmen's), headquartered in St. Louis, Missouri, resulting
in the issuance of approximately 195 million shares of the Corporation's common
stock valued at $9.4 billion on the date of the acquisition and aggregate cash
payments of $371 million to Boatmen's shareholders. On the date of the
acquisition, Boatmen's total assets and total deposits were approximately $41.2
billion and $32.0 billion, respectively. The Corporation accounted for this
acquisition as a purchase.

In 1996, the Corporation completed the initial public offering of 16.1
million shares of Class A Common Stock of BA Merchant Services, Inc. (BAMS), a
subsidiary of the Corporation. On December 22, 1998, the Corporation and BAMS
signed a definitive merger agreement on which the Corporation agreed to
purchase the remaining BAMS outstanding shares of Class A Common Stock it did
not own. On April 28, 1999, BAMS became a wholly-owned subsidiary of Bank of
America, N.A. and each outstanding share of BAMS common stock other than the
shares owned by the Corporation was converted into the right to receive a cash
payment equal to $20.50 per share without interest, or $339.2 million.


66

Note Three - Securities

The amortized cost, gross unrealized gains and losses, and fair value of
available-for-sale securities and held-for-investment securities at December
31, 1999, 1998 and 1997 were:



Gross Gross
Amortized Unrealized Unrealized Fair
(Dollars in millions) Cost Gains Losses Value
- ------------------------------------------------- ------------ ------------- ------------- ----------

Available-for-sale securities
1999
U.S. Treasury securities and agency debentures $ 30,085 $ -- $ 1,800 $ 28,285
Mortgage-backed securities 43,673 21 1,709 41,985
Foreign sovereign securities 4,607 16 256 4,367
Other taxable securities 4,985 -- 29 4,956
- ------------------------------------------------- ---------- ----------- ----------- --------
Total taxable 83,350 37 3,794 79,593
Tax-exempt securities 2,135 21 102 2,054
- ------------------------------------------------- ---------- ----------- ----------- --------
Total $ 85,485 $ 58 $ 3,896 $ 81,647
================================================= ========== =========== =========== ========
1998
U.S. Treasury securities and agency debentures $ 17,355 $ 52 $ 157 $ 17,250
Mortgage-backed securities 51,259 567 36 51,790
Foreign sovereign securities 5,693 25 138 5,580
Other taxable securities 2,293 76 32 2,337
- ------------------------------------------------- ---------- ----------- ----------- --------
Total taxable 76,600 720 363 76,957
Tax-exempt securities 1,636 68 71 1,633
- ------------------------------------------------- ---------- ----------- ----------- --------
Total $ 78,236 $ 788 $ 434 $ 78,590
================================================= ========== =========== =========== ========
1997
U.S. Treasury securities and agency debentures $ 10,614 $ 268 $ 6 $ 10,876
Mortgage-backed securities 36,256 363 30 36,589
Foreign sovereign securities 10,797 43 96 10,744
Other taxable securities 2,271 13 3 2,281
- ------------------------------------------------- ---------- ----------- ----------- --------
Total taxable 59,938 687 135 60,490
Tax-exempt securities 1,661 58 -- 1,719
- ------------------------------------------------- ---------- ----------- ----------- --------
Total $ 61,599 $ 745 $ 135 $ 62,209
================================================= ========== =========== =========== ========
Gross Gross
Amortized Unrealized Unrealized Fair
(Dollars in millions) Cost Gains Losses Value
- ------------------------------------------------ ---------- ----------- ----------- --------
Held-for-investment securities
1999
U.S. Treasury securities and agency debentures $ 87 $ -- $ -- $ 87
Mortgage-backed securities 106 -- -- 106
Foreign sovereign securities 902 -- 157 745
Other taxable securities 26 -- 2 24
- ------------------------------------------------- ---------- ----------- ----------- --------
Total taxable 1,121 -- 159 962
Tax-exempt securities 301 11 4 308
- ------------------------------------------------- ---------- ----------- ----------- --------
Total $ 1,422 $ 11 $ 163 $ 1,270
================================================= ========== =========== =========== ========
1998
U.S. Treasury securities and agency debentures $ 478 $ 1 $ -- $ 479
Mortgage-backed securities 203 -- -- 203
Foreign sovereign securities 914 1 168 747
Other taxable securities 29 2 -- 31
- ------------------------------------------------- ---------- ----------- ----------- --------
Total taxable 1,624 4 168 1,460
Tax-exempt securities 373 20 -- 393
- ------------------------------------------------- ---------- ----------- ----------- --------
Total $ 1,997 $ 24 $ 168 $ 1,853
================================================= ========== =========== =========== ========
1997
U.S. Treasury securities and agency debentures $ 516 $ 1 $ 1 $ 516
Mortgage-backed securities 2,408 43 3 2,448
Foreign sovereign securities 1,448 61 39 1,470
Other taxable securities 56 9 4 61
- ------------------------------------------------- ---------- ----------- ----------- --------
Total taxable 4,428 114 47 4,495
Tax-exempt securities 394 17 1 410
- ------------------------------------------------- ---------- ----------- ----------- --------
Total $ 4,822 $ 131 $ 48 $ 4,905
================================================= ========== =========== =========== ========


67

The expected maturity distribution and yields (computed on a
taxable-equivalent basis) of the Corporation's securities portfolio at December
31, 1999 are summarized below. Actual maturities may differ from contractual
maturities or maturities shown below since borrowers may have the right to
prepay obligations with or without prepayment penalties.





Due after 1 Due after 5
Due in 1 year through 5 through 10
or less years years
------------------- --------------------- ---------------------
(Dollars in millions) Amount Yield Amount Yield Amount Yield
- ------------------------------------- -------- ---------- ---------- ---------- ---------- ----------

Fair value of available-for-sale
securities
U.S. Treasury securities and agency
debentures $114 5.56% $19,625 5.06% $ 8,286 5.01%
Mortgage-backed securities 332 6.80 15,086 6.49 21,809 6.17
Foreign sovereign securities 13 4.97 1,876 7.34 310 4.27
Other taxable securities 92 6.74 3,011 9.51 1,499 6.30
- ------------------------------------- ---- ---- ------- ---- ------- ----
Total taxable 551 6.49 39,598 6.05 31,904 5.86
Tax-exempt securities 33 6.83 216 6.93 668 7.29
- ------------------------------------- ---- ---- ------- ---- ------- ----
Total $584 6.51% $39,814 6.06% $32,572 5.88%
===================================== ==== ==== ======= ==== ======= ====
Amortized cost of available-for-sale
securities $572 $41,050 $31,890
===================================== ==== ======= =======
Amortized cost of held-for-
investment securities
U.S. Treasury securities
and agency debentures $ 86 5.60% $ -- --% $ 1 6.61%
Mortgage-backed securities 31 6.20 15 6.38 60 6.23
Foreign sovereign securities 3 7.49 29 6.66 5 5.95
Other taxable securities -- -- -- -- -- --
- ------------------------------------- ---- ---- ------- ---- ------- ----
Total taxable 120 5.80 44 6.56 66 6.21
Tax-exempt securities 37 9.28 111 9.42 78 8.41
- ------------------------------------- ---- ---- ------- ---- ------- ----
Total $157 6.62% $ 155 8.61% $ 144 8.24%
===================================== ==== ==== ======= ==== ======= ====
Fair value of held-for-investment
securities $147 $ 151 $ 93
===================================== ==== ======= =======




Due after
10 years Total
--------------------- ---------------------
(Dollars in millions) Amount Yield Amount Yield
- ------------------------------------- ---------- ---------- ---------- ----------

Fair value of available-for-sale
securities
U.S. Treasury securities and agency
debentures $ 260 6.32% $28,285 5.07%
Mortgage-backed securities 4,758 6.24 41,985 6.29
Foreign sovereign securities 2,168 5.39 4,367 6.14
Other taxable securities 354 7.90 4,956 8.37
- ------------------------------------- ------- ---- ------- ----
Total taxable 7,540 6.08 79,593 5.98
Tax-exempt securities 1,137 8.01 2,054 7.68
- ------------------------------------- ------- ---- ------- ----
Total $ 8,677 6.33% $81,647 6.02%
===================================== ======= ==== ======= ====
Amortized cost of available-for-sale
securities $11,973 $85,485
===================================== ======= =======
Amortized cost of held-for-
investment securities
U.S. Treasury securities
and agency debentures $ -- --% $ 87 5.61%
Mortgage-backed securities -- -- 106 6.24
Foreign sovereign securities 865 7.88 902 7.83
Other taxable securities 26 6.62 26 6.62
- ------------------------------------- ------- ---- ------- ----
Total taxable 891 7.84 1,121 7.48
Tax-exempt securities 75 7.38 301 8.63
- ------------------------------------- ------- ---- ------- ----
Total $ 966 7.35% $ 1,422 7.73%
===================================== ======= ==== ======= ====
Fair value of held-for-investment
securities $ 879 $ 1,270
===================================== ======= =======


The components of gains and losses on sales of securities for the years
ended December 31, 1999, 1998 and 1997 were:





(Dollars in millions) 1999 1998 1997
- ---------------------------------------- ------ --------- -------

Gross gains on sales of securities $289 $1,039 $289
Gross losses on sales of securities 49 22 18
- ---------------------------------------- ---- ------ ----
Net gains on sales of securities $240 $1,017 $271
======================================== ==== ====== ====


During 1999 and 1997, the Corporation did not sell any held-for-investment
securities. In 1998, the Corporation sold $19.5 million of held-for-investment
securities, resulting in net gains of approximately $2.0 million included
above. The sale resulted from a realignment of the securities portfolio in
connection with the Barnett merger.

Excluding securities issued by the U.S. government and its agencies and
corporations, there were no investments in securities from one issuer that
exceeded 10 percent of consolidated shareholders' equity at December 31, 1999
or 1998.

The income tax expense attributable to realized net gains on securities
sales was $84 million, $363 million and $101 million in 1999, 1998 and 1997,
respectively.

Securities are pledged or assigned to secure borrowed funds, government
and trust deposits and for other purposes. The carrying value of pledged
securities was $65.8 billion and $65.6 billion at December 31, 1999 and 1998,
respectively.

At December 31, 1999, the valuation allowance for available-for-sale
securities and marketable equity securities included in shareholders' equity
reflects unrealized losses of $2.5 billion, net of related income taxes of


68

$1.1 billion, primarily reflecting $3.8 billion of pre-tax net unrealized
losses on available-for-sale securities and $248 million of pre-tax net
unrealized gains on marketable equity securities. At December 31, 1998, the
valuation allowance included in shareholders' equity reflects unrealized gains
of $303 million, net of related income taxes of $216 million, primarily
reflecting pre-tax unrealized gains of $354 million on available-for-sale
securities and $165 million on marketable equity securities. The change in the
valuation allowance was primarily attributable to an upward shift in certain
segments of the U.S. Treasury yield curve during 1999.



Note Four - Trading Activities

Trading-Related Income

Trading account profits and fees represent the net amount earned from the
Corporation's trading positions, including trading account assets and
liabilities as well as derivative-dealer positions. These transactions include
positions to meet customer demand and positions for the Corporation's own
trading account. Trading positions are taken in a diverse range of financial
instruments and markets. The profitability of these trading positions is
largely dependent on the volume and type of transactions, the level of risk
assumed, and the volatility of price and rate movements. Trading account
profits and fees, as reported in the Corporation's consolidated statement of
income, includes neither the net interest recognized on interest-earning and
interest-bearing trading positions, nor the related funding. Trading account
profits and fees, as well as trading-related net interest income
("trading-related revenue") are presented in the table below as they are both
considered in evaluating the overall profitability of the Corporation's trading
positions. Trading-related revenue is derived from foreign exchange spot,
forward and cross-currency contracts, debt and equity securities and derivative
contracts in interest rates, equities, credit and commodities.





(Dollars in millions) 1999 1998
- -------------------------------------------------------- --------- ---------

Trading account profits and fees - as reported $1,495 $ 171
Net interest income 662 608
- -------------------------------------------------------- ------ ------
Total trading-related revenue $2,157 $ 779
- -------------------------------------------------------- ------ ------
Trading-related revenue by product
Foreign exchange contracts $ 570 $ 617
Interest rate contracts 533 172
Fixed income 499 (256)
Equities 503 184
Commodities and other 52 62
- -------------------------------------------------------- ------ ------
Total trading-related revenue $2,157 $ 779
======================================================== ====== ======


69

Trading Account Assets and Liabilities

The fair value of the components of trading account assets and liabilities
at December 31, 1999 and 1998 and the average fair value for the years ended
December 31, 1999 and 1998 were:





Fair Value Average Fair Value
-------------------- -------------------
(Dollars in millions) 1999 1998 1999 1998
- -------------------------------------------------------------------- --------- ---------- --------- ---------

Trading account assets
U.S. Treasury securities $ 6,793 $ 7,854 $ 6,492 $ 9,802
Securities of other U.S. Government agencies and corporations 3,554 524 1,589 841
Certificates of deposit, bankers' acceptances and commercial paper 3,039 2,723 2,637 2,746
Corporate debt 2,993 1,666 2,246 2,428
Foreign sovereign debt 9,532 11,774 11,070 13,241
Mortgage-backed securities 6,748 7,489 8,039 4,802
Equity securities 2,856 4,476 4,599 1,970
Other securities 2,945 3,096 2,534 3,944
- -------------------------------------------------------------------- ------- ------- ------- -------
Total $38,460 $39,602 $39,206 $39,774
==================================================================== ======= ======= ======= =======
Trading account liabilities
U.S. Treasury securities $ 8,414 $ 8,534 $ 5,761 $ 8,538
Corporate debt -- 82 -- 833
Foreign sovereign debt 3,490 3,166 2,679 3,192
Equity securities 7,840 1,481 5,710 459
Other securities 1,214 907 1,308 4,450
- -------------------------------------------------------------------- ------- ------- ------- -------
Total $20,958 $14,170 $15,458 $17,472
==================================================================== ======= ======= ======= =======


The net change in the valuation allowance for unrealized gains or losses
related to trading account assets held at December 31, 1999 and 1998 was
included in the income statement as trading account profits and fees and
amounted to gains of $2.6 billion and $1.7 billion for 1999 and 1998,
respectively.

See Note Eleven on page 79 for additional information on derivative-dealer
positions, including credit risk.

70

Note Five - Loans and Leases

Loans and leases at December 31, 1999 and 1998 were:




1999 1998
--------------------- ----------------------
(Dollars in millions) Amount Percent Amount Percent
- ----------------------------------- ----------- --------- ----------- ----------

Commercial - domestic $143,450 38.7% $137,422 38.5%
Commercial - foreign 27,978 7.5 31,495 8.8
Commercial real estate - domestic 24,026 6.5 26,912 7.5
Commercial real estate - foreign 325 .1 301 .1
- ----------------------------------- -------- ----- -------- -----
Total commercial 195,779 52.8 196,130 54.9
- ----------------------------------- -------- ----- -------- -----
Residential mortgage 81,860 22.1 73,608 20.6
Home equity lines 17,273 4.7 15,653 4.4
Direct/Indirect consumer 42,161 11.4 40,510 11.3
Consumer finance 22,326 6.0 15,400 4.3
Bankcard 9,019 2.4 12,425 3.5
Foreign consumer 2,244 .6 3,602 1.0
- ----------------------------------- -------- ----- -------- -----
Total consumer 174,883 47.2 161,198 45.1
- ----------------------------------- -------- ----- -------- -----
Total loans and leases $370,662 100.0% $357,328 100.0%
=================================== ======== ===== ======== =====


The following table presents the recorded investment in specific loans
that were considered individually impaired in accordance with SFAS 114 at
December 31, 1999 and 1998:




(Dollars in millions) 1999 1998
- ------------------------------------- --------- --------

Commercial - domestic $1,133 $ 796
Commercial - foreign 503 314
Commercial real estate - domestic 449 554
- ------------------------------------- ------ ------
Total impaired loans $2,085 $1,664
===================================== ====== ======


The average recorded investment in certain impaired loans for the years
ended December 31, 1999, 1998 and 1997 was approximately $2.0 billion, $1.6
billion and $1.4 billion, respectively. At December 31, 1999 and 1998, the
recorded investment on impaired loans requiring an allowance for credit losses
was $1.1 billion and $876 million, and the related allowance for credit losses
was $370 million and $326 million, respectively. For the years ended December
31, 1999, 1998 and 1997, interest income recognized on impaired loans totaled
$84 million, $50 million and $80 million, respectively, all of which was
recognized on a cash basis.

At December 31, 1999, 1998 and 1997, nonperforming loans, including
certain loans which were considered impaired, totaled $3.0 billion, $2.5
billion and $2.1 billion, respectively. The net amount of interest recorded
during each year on loans that were classified as nonperforming or restructured
at December 31, 1999, 1998 and 1997 was $123 million in 1999 and $130 million
in both 1998 and 1997. If these loans had been accruing interest at their
originally contracted rates, related income would have been $419 million, $367
million and $349 million in 1999, 1998 and 1997, respectively.

Foreclosed properties amounted to $163 million, $282 million and $309
million at December 31, 1999, 1998 and 1997, respectively. The cost of carrying
foreclosed properties amounted to $13 million, $16 million and $26 million in
1999, 1998 and 1997, respectively.


71

Note Six - Allowance for Credit Losses

The table below summarizes the changes in the allowance for credit losses
on loans and leases for 1999, 1998 and 1997:





(Dollars in millions) 1999 1998 1997
- ------------------------------------------------------------- ------- ------- -------

Balance, January 1 $ 7,122 $ 6,778 $ 6,316
- ------------------------------------------------------------- ------- ------- -------
Loans and leases charged off (2,582) (3,050) (2,603)
Recoveries of loans and leases previously charged off 582 583 751
- ------------------------------------------------------------- ------- ------- -------
Net charge-offs (2,000) (2,467) (1,852)
- ------------------------------------------------------------- ------- ------- -------
Provision for credit losses 1,820 2,920 1,904
Other, net (114) (109) 410
- ------------------------------------------------------------- ------- ------- -------
Balance, December 31 $ 6,828 $ 7,122 $ 6,778
============================================================= ======= ======= =======


Note Seven - Deposits

At December 31, 1999, the Corporation had domestic certificates of deposit
of $100 thousand or greater totaling $32.7 billion compared to $27.3 billion at
December 31, 1998. The Corporation had $19.6 billion of domestic certificates
of deposit maturing within three months, $5.5 billion maturing within three to
six months, $4.0 billion maturing within six to twelve months and $3.6 billion
maturing after twelve months at December 31, 1999. The Corporation had other
domestic time deposits of $100 thousand or greater totaling $843 million and
$887 million at December 31, 1999 and 1998, respectively. At December 31, 1999,
the Corporation had $197 million of other domestic time deposits maturing
within three months, $103 million maturing within three to six months, $116
million maturing within six to twelve months and $427 million maturing after
twelve months. Foreign office certificates of deposit and other time deposits
of $100 thousand or greater totaled $43.3 billion and $40.8 billion at December
31, 1999 and 1998, respectively.

At December 31, 1999, the scheduled maturities for time deposits were as
follows:





(Dollars in millions)
- -----------------------

Due in 2000 $111,342
Due in 2001 9,361
Due in 2002 3,636
Due in 2003 933
Due in 2004 934
Thereafter 2,020
- ----------------------- --------
Total $128,226
======================= ========


72

Note Eight - Short-Term Borrowings and Long-Term Debt

The contractual maturities of long-term debt at December 31, 1999 and 1998
were:





1999
-----------------------------------------------
Various Various
Fixed-Rate Floating-Rate 1998
Debt Debt Amount Amount
(Dollars in millions) Obligations(1) Obligations(1) Outstanding Outstanding
- ---------------------------------------------------------- ---------------- ---------------- ------------- ------------

Parent company
Senior debt:
Due in 1999 $ -- $ -- $ -- $ 2,628
Due in 2000 488 1,725 2,213 2,213
Due in 2001 671 3,430 4,101 4,001
Due in 2002 130 2,932 3,062 2,285
Due in 2003 499 2,073 2,572 2,578
Due in 2004 -- 3,822 3,822 1,290
Thereafter 320 4,344 4,664 2,775
- ---------------------------------------------------------- ------- ------- ------- -------
2,108 18,326 20,434 17,770
- ---------------------------------------------------------- ------- ------- ------- -------
Subordinated debt:
Due in 1999 -- -- -- 680
Due in 2000 411 -- 411 411
Due in 2001 1,312 30 1,342 1,342
Due in 2002 2,199 26 2,225 2,225
Due in 2003 1,711 323 2,034 2,034
Due in 2004 800 -- 800 1,000
Thereafter 5,146 3,470 8,616 8,249
- ---------------------------------------------------------- ------- ------- ------- -------
11,579 3,849 15,428 15,941
- ---------------------------------------------------------- ------- ------- ------- -------
Total parent company long-term debt 13,687 22,175 35,862 33,711
- ---------------------------------------------------------- ------- ------- ------- -------
Bank and other subsidiaries
Senior debt:
Due in 1999 -- -- -- 4,011
Due in 2000 47 7,627 7,674 4,558
Due in 2001 48 3,919 3,967 1,297
Due in 2002 96 2,200 2,296 393
Due in 2003 498 253 751 702
Due in 2004 833 3,140 3,973 11
Thereafter 106 94 200 166
- ---------------------------------------------------------- ------- ------- ------- -------
1,628 17,233 18,861 11,138
- ---------------------------------------------------------- ------- ------- ------- -------
Subordinated debt:
Due in 1999 -- -- -- --
Due in 2000 -- -- -- --
Due in 2001 200 -- 200 227
Due in 2002 -- -- -- --
Due in 2003 100 -- 100 104
Due in 2004 300 -- 300 300
Thereafter -- 8 8 8
- ---------------------------------------------------------- ------- ------- ------- -------
600 8 608 639
- ---------------------------------------------------------- ------- ------- ------- -------
Total bank and other subsidiaries long-term debt 2,228 17,241 19,469 11,777
- ---------------------------------------------------------- ------- ------- ------- -------
Total parent company, bank and other
subsidiaries long-term debt $15,915 $39,416 55,331 45,488
- ---------------------------------------------------------- ------- ------- ------- -------
Notes payable to finance the purchase of leased vehicles 54 279
Obligations under capital leases 101 121
- ---------------------------------------------------------- ------- -------
Total long-term debt $55,486 $45,888
========================================================== ======= =======


(1) Fixed-rate and floating-rate classifications of long-term debt include the
effect of interest rate swap contracts.

73

The majority of the floating rates are based on three- and six-month
London InterBank Offered Rates (LIBOR). At December 31, 1999, the interest
rates on floating-rate long-term debt, as classified in the table on the
previous page, ranged from 5.38 percent to 8.12 percent compared to 4.75
percent to 7.07 percent at December 31, 1998. These obligations were
denominated primarily in U.S. dollars. The interest rates on fixed-rate
long-term debt ranged from 4.50 percent to 12.50 percent at December 31, 1999
and 1998.

In 1999, all commercial paper back-up lines of credit expired or were
terminated at the option of the Corporation. At December 31, 1998, the
Corporation had commercial paper back-up lines of credit totaling $2.7 billion,
of which there were no amounts outstanding.

The Corporation had the authority to issue approximately $19.3 billion and
$9.4 billion of corporate debt and other securities under its existing shelf
registration statements at December 31, 1999 and 1998, respectively.

The Corporation and Bank of America, N.A. maintain a joint Euro
medium-term note program to offer up to $15.0 billion of senior, or in the case
of the Corporation, subordinated notes exclusively to non-United States
residents. The notes bear interest at fixed- or floating-rates and may be
denominated in U.S. dollars or foreign currencies. The Corporation uses foreign
currency contracts to convert certain foreign-denominated debt into U.S.
dollars. The Corporation's notes outstanding under this program totaled $4.5
billion and $3.7 billion at December 31, 1999 and 1998, respectively. At
December 31, 1999 and 1998, $3.3 billion and $3.5 billion, respectively, of
notes were outstanding under the former BankAmerica Euro medium-term note
program, which was terminated in connection with the Merger.

Bank of America, N.A. maintains a program to offer up to $35.0 billion of
bank notes from time to time with fixed- or floating-rates and maturities
ranging from seven days or more from date of issue. Bank of America N.A.'s
long-term debt under the current and former programs totaled $10.1 billion and
$7.9 billion at December 31, 1999 and 1998, respectively. At December 31, 1999,
short-term bank notes outstanding totaled $15.2 billion. At December 31, 1998,
short-term bank notes outstanding under current and former programs totaled
$14.7 billion. These short-term bank notes, along with Treasury tax and loan
notes and term federal funds purchased are reflected in other short-term
borrowings in the consolidated balance sheet.

Through a limited purpose subsidiary, the Corporation had $4.0 billion and
$2.5 billion of mortgage-backed bonds outstanding at December 31, 1999 and
1998, respectively. These bonds were collateralized by $6.8 billion and $4.0
billion of mortgage loans and cash at December 31, 1999 and 1998, respectively.


As part of its interest rate risk management activities, the Corporation
enters into interest rate contracts for certain long-term debt issuances. At
December 31, 1999 and 1998, through the use of interest rate swaps, $13.3
billion and $8.8 billion of fixed-rate debt with rates ranging primarily from
5.30 percent to 8.57 percent, had been effectively converted to floating rates
primarily at spreads to LIBOR.

Through the use of interest rate options, the Corporation has the right to
purchase interest rate caps to hedge its risk on floating-rate debt against a
rise in interest rates. At December 31, 1999, the interest rate options had a
notional amount of approximately $1.6 billion compared to $3.4 billion at
December 31, 1998. In addition, the Corporation entered into other interest
rate contracts, primarily futures, with notional amounts of approximately $802
million at December 31, 1998, to reduce its interest rate risk by shortening
the repricing profile on floating-rate debt that reprices within one year.
There were no such other interest rate contracts at December 31, 1999.

Including the effects of interest rate contracts for certain long-term
debt issuances, the weighted average effective interest rates for total
long-term debt, total fixed-rate debt and total floating-rate debt (based on
the rates in effect at December 31, 1999) were 6.60 percent, 7.54 percent and
6.23 percent, respectively, at December 31, 1999 and (based on the rates in
effect at December 31, 1998) were 6.11 percent, 7.73 percent, and 5.24 percent,
respectively, at December 31, 1998. These obligations were denominated
primarily in U.S. dollars.


74

As described below, certain debt obligations outstanding at December 31,
1999 may be redeemed prior to maturity at the option of the Corporation:





Amount
Outstanding
Year Redeemable Year of Maturities (Dollars in millions)
- ------------------------ -------------------- ----------------------

Currently Redeemable 2001 - 2027 $ 765
2000 2001 - 2011 1,593
2001 - 2002 2003 - 2028 1,530
2003 - 2008 2005 - 2028 675
======================== ==================== ======


Note Nine - Trust Preferred Securities

Trust preferred securities are Corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest notes of the Corporation.

Since October 1996, the Corporation has formed thirteen wholly-owned
grantor trusts to issue trust preferred securities to the public. The grantor
trusts have invested the proceeds of such trust preferred securities in junior
subordinated notes of the Corporation. Certain of the trust preferred
securities were issued at a discount. Such trust preferred securities may be
redeemed prior to maturity at the option of the Corporation. The sole assets of
each of the grantor trusts are the Junior Subordinated Deferrable Interest
Notes of the Corporation (the Notes) held by such grantor trusts. Each issue of
the Notes has an interest rate equal to the corresponding trust preferred
securities distribution rate. The Corporation has the right to defer payment of
interest on the Notes at any time or from time to time for a period not
exceeding five years provided that no extension period may extend beyond the
stated maturity of the relevant Notes. During any such extension period,
distributions on the trust preferred securities will also be deferred and the
Corporation's ability to pay dividends on its common and preferred stock will
be restricted.

The trust preferred securities are subject to mandatory redemption upon
repayment of the related Notes at their stated maturity dates or their earlier
redemption at a redemption price equal to their liquidation amount plus accrued
distributions to the date fixed for redemption and the premium, if any, paid by
the Corporation upon concurrent repayment of the related Notes.

Payment of periodic cash distributions and payment upon liquidation or
redemption with respect to trust preferred securities are guaranteed by the
Corporation to the extent of funds held by the grantor trusts (the Preferred
Securities Guarantee). The Preferred Securities Guarantee, when taken together
with the Corporation's other obligations, including its obligations under the
Notes, will constitute a full and unconditional guarantee, on a subordinated
basis, by the Corporation of payments due on the trust preferred securities.

The Corporation is required by the FRB to maintain certain levels of
capital for bank regulatory purposes. The FRB has determined that certain
cumulative preferred securities having the characteristics of trust preferred
securities qualify as minority interest, which is included in Tier 1 capital
for bank holding companies. Such Tier 1 capital treatment provides the
Corporation with a more cost-effective means of obtaining capital for bank
regulatory purposes than if the Corporation were to issue preferred stock.


75

The following table is a summary of the outstanding trust preferred securities
and the Notes at December 31, 1999 and 1998:




Aggregate
Principal
Amount of
Trust Preferred
Securities Aggregate
------------------- Principal
Issuance December 31, 1999 Amount of
(Dollars in millions) Date and 1998 the Notes
- ------------------------- --------------- ------------------- -----------

NationsBank
Capital Trust I December 1996 $ 600 $ 619
Capital Trust II December 1996 365 376
Capital Trust III February 1997 500 516
Capital Trust IV April 1997 500 516
BankAmerica
Institutional Capital A November 1996 450 464
Institutional Capital B November 1996 300 309
Capital I December 1996 300 309
Capital II December 1996 450 464
Capital III January 1997 400 412
Capital IV February 1998 350 361
Barnett
Capital I November 1996 300 309
Capital II December 1996 200 206
Capital III January 1997 250 258
Total $ 4,965(13) $5,119
========================= =========== ======




Per
Annum
Stated Interest Interest
Maturity of Rate of Payment Redemption
(Dollars in millions) the Notes the Notes Dates Period
- ------------------------- ------------------ --------------- ------------- -----------------------

NationsBank
Capital Trust I December 2026 7.84% 3/31,6/30, On or after
9/30,12/31 12/31/01(1)
Capital Trust II December 2026 7.83 6/15,12/15 On or after
12/15/06(2,4)
Capital Trust III January 2027 3-mo. LIBOR 1/15,4/15, On or after
+55 bps 7/15,10/15 1/15/07(2)
Capital Trust IV April 2027 8.25 4/15,10/15 On or after
4/15/07(2,6)
BankAmerica
Institutional Capital A December 2026 8.07 6/30,12/31 On or after
12/31/06(3,7)
Institutional Capital B December 2026 7.70 6/30,12/31 On or after
12/31/06(3,8)
Capital I December 2026(9) 7.75 3/31,6/30, On or after
9/30,12/31 12/20/01(5)
Capital II December 2026 8.00 6/15,12/15 On or after
12/15/06(3,10)
Capital III January 2027 3-mo. LIBOR 1/15,4/15, On or after
+57 bps 7/15,10/15 1/15/02(3)
Capital IV March 2028 7.00 3/31,6/30, On or after
9/30,12/31 2/24/03(3)
Barnett
Capital I December 2026 8.06 6/1,12/1 On or after
12/1/06(2,11)
Capital II December 2026 7.95 6/1,12/1 On or after
12/1/06(2,12)
Capital III February 2027 3-mo. LIBOR 2/1,5/1, On or after
+62.5 bps 8/1,11/1 2/1/07(2)
--------- ---------- ----------------
Total
=========================


(1) The Corporation may redeem the Notes prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Notes, at a redemption price at least equal to
the principal amount of the Notes.
(2) The Corporation may redeem the Notes prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Notes or relating to capital treatment of the
trust preferred securities or relating to a change in the treatment of the
related trust under the Investment Company Act of 1940, as amended, at a
redemption price at least equal to the principal amount of the Notes.
(3) The Corporation may redeem the Notes prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Notes or relating to capital treatment of the
trust preferred securities at a redemption price at least equal to the
principal amount of the Notes.
(4) The Notes may be redeemed on or after December 15, 2006 and prior to
December 15, 2007 at 103.915% of the principal amount, and thereafter at
prices declining to 100% on December 15, 2016 and thereafter.
(5) The Corporation may redeem the Notes (i) during the indicated redemption
period or (ii) upon the occurrence of certain events relating to tax
treatment of the trust or the Notes or relating to capital treatment of
the trust preferred securities, prior to the indicated redemption period,
in each case, at a redemption price of 100% of the principal amount.
(6) The Notes may be redeemed on or after April 15, 2007 and prior to April 14,
2008 at 103.85% of the principal amount, and thereafter at prices
declining to 100% on April 15, 2017 and thereafter.
(7) The Notes may be redeemed on or after December 31, 2006 and prior to
December 31, 2007 at 104.0350% of the principal amount, and thereafter at
prices declining to 100% on December 31, 2016 and thereafter.
(8) The Notes may be redeemed on or after December 31, 2006 and prior to
December 31, 2007 at 103.7785% of the principal amount, and thereafter at
prices declining to 100% on December 31, 2016 and thereafter.
(9) At the option of the Corporation, the stated maturity may be shortened to a
date not earlier than December 20, 2001 or extended to a date not later
than December 31, 2045, in each case if certain conditions are met.
(10) The Notes may be redeemed on or after December 15, 2006 and prior to
December 15, 2007 at 103.9690% of the principal amount, and thereafter at
prices declining to 100% on December 15, 2016 and thereafter.
(11) The Notes may be redeemed on or after December 1, 2006 and prior to
December 1, 2007 at 104.030% of the principal amount, and thereafter at
prices declining to 100% on December 1, 2016 and thereafter.
(12) The Notes may be redeemed on or after December 1, 2006 and prior to
December 1, 2007 at 103.975% of the principal amount, and thereafter at
prices declining to 100% on December 1, 2016 and thereafter.
(13) Excludes $10 and $11 of deferred issuance costs and unamortized discount
at December 31, 1999 and 1998, respectively.

76

Note Ten - Shareholders' Equity and Earnings Per Common Share

On June 23, 1999 the Corporation's Board of Directors authorized the
repurchase of up to 130 million shares of the Corporation's common stock at an
aggregate cost of up to $10.0 billion. In 1999, the Corporation repurchased 78
million shares of its common stock in open market repurchases and under
accelerated share repurchase programs at an average per-share price of $62.28,
which reduced shareholders' equity by $4.9 billion. The remaining buyback
authority for common stock under the current program totaled $5.1 billion or 52
million shares at December 31, 1999. In 1998 and 1997, the Corporation also
repurchased 29 million shares and 150 million shares, respectively, of common
stock under various stock repurchase programs.

In October 1999, the Board of Directors of the Corporation raised the
common dividend for the fourth quarter of 1999 by 11 percent to $0.50 per share
from $0.45 per share.

Other shareholders' equity consisted of restricted stock award plan
deferred compensation of $340 million and $74 million, as well as a loan to the
ESOP trust of $47 million and $58 million at December 31, 1999 and 1998,
respectively. At December 31, 1999, other shareholders' equity reflected $48
million of premiums received on written put options.

On June 29, 1998, BankAmerica redeemed all of its remaining outstanding
nonconvertible preferred shares. The Corporation's Preferred Stock at December
31, 1997, included BankAmerica's outstanding preferred stock of $614 million.
These preferred shares were nonvoting except in certain limited circumstances.
The shares were redeemable at the option of BankAmerica during the redemption
period and at the redemption price per share plus accrued and unpaid dividends
to the redemption date. During 1997, BankAmerica redeemed a portion of its
preferred shares for an aggregate of $1.6 billion.

In April 1988, BankAmerica declared a dividend of one preferred share
purchase right (a Right) for each outstanding share of BankAmerica's common
stock pursuant to the Rights Agreement dated April 11, 1988 between BankAmerica
and Manufacturers Hanover Trust Company of California, as rights agent (the
Rights Agreement). Each Right entitled the holder, upon the occurrence of
certain events, to buy from BankAmerica, until the earlier of April 22, 1998 or
the redemption of the Rights, one two-hundredth of a share of Cumulative
Participating Preferred Stock, Series E, at an exercise price of $25.00 per
Right (subject to adjustment). On April 22, 1998, the Rights Agreement expired
in accordance with its terms.

As of December 31, 1999, the Corporation had 1.8 million shares issued and
outstanding of employee stock ownership plan (ESOP) Convertible Preferred
Stock, Series C (ESOP Preferred Stock). The ESOP Preferred Stock has a stated
and liquidation value of $42.50 per share, provides for an annual cumulative
dividend of $3.30 per share and each share is convertible into 1.68 shares of
the Corporation's common stock. ESOP Preferred Stock in the amounts of $6
million, $11 million and $86 million was converted into the Corporation's
common stock in 1999, 1998 and 1997, respectively.

In November 1989, Barnett incorporated ESOP provisions into its existing
401(k) employee benefit plan (Barnett ESOP). The Barnett ESOP acquired $141
million of common stock using the proceeds of a loan from the Corporation. The
terms of the loan include equal monthly payments of principal and interest
through September 2015. Interest is at 9.75 percent and prepayments of
principal are allowed. The loan is generally being repaid from contributions to
the plan by the Corporation and dividends on unallocated shares held by the
Barnett ESOP. Shares held by the Barnett ESOP are allocated to plan
participants as the loan is repaid. At December 31, 1999, 2.4 million shares of
unallocated common stock remained in the Barnett ESOP. During 1999, 1998 and
1997, the Barnett ESOP released and allocated common stock amounting to $15
million, $6 million and $8 million, respectively.

As consideration in the merger of NationsBank, N.A. (South) and
NationsBank, N.A. during 1997, NationsBank, N.A. exchanged approximately $73
million for preferred stock issued by NationsBank, N.A. (South) in the 1996
acquisition of Citizens Federal Bank, a federal savings bank. Such preferred
stock consisted of approximately 0.5 million shares of NationsBank, N.A.
(South) 8.50% Series H Noncumulative Preferred Stock and approximately 2.4
million shares of NationsBank, N.A. (South) 8.75% Series 1993A Noncumulative
Preferred Stock.

Earnings per common share is computed by dividing net income available to
common shareholders by the weighted average common shares issued and
outstanding. For diluted earnings per common share, net income available to
common shareholders can be affected by the conversion of the registrant's
convertible preferred


77

stock. Where the effect of this conversion would have been dilutive, net income
available to common shareholders is adjusted by the associated preferred
dividends. This adjusted net income is divided by the weighted average number
of common shares issued and outstanding for each period plus amounts
representing the dilutive effect of stock options outstanding and the dilution
resulting from the conversion of the registrant's convertible preferred stock,
if applicable. The effect of convertible preferred stock is excluded from the
computation of diluted earnings per common share in periods in which the effect
would be antidilutive.

The calculation of earnings per common share and diluted earnings per
common share for 1999, 1998 and 1997 is presented below:





(Shares in thousands; dollars in millions, except per share information) 1999 1998 1997
- -------------------------------------------------------------------------- ---------------- ------------- -------------

Earnings per common share
Net income $ 7,882 $ 5,165 $ 6,542
Preferred stock dividends (6) (25) (111)
- -------------------------------------------------------------------------- ------------ ---------- ----------
Net income available to common shareholders $ 7,876 $ 5,140 $ 6,431
- -------------------------------------------------------------------------- ----------- ---------- ----------
Average common shares issued and outstanding 1,726,006 1,732,057 1,733,194
- -------------------------------------------------------------------------- ----------- ---------- ----------
Earnings per common share $ 4.56 $ 2.97 $ 3.71
========================================================================== =========== ========== ==========
Diluted earnings per common share
Net income available to common shareholders $ 7,876 $ 5,140 $ 6,431
- -------------------------------------------------------------------------- ----------- ---------- ----------
Preferred stock dividends 6 25 111
Preferred stock dividends on nonconvertible stock -- (19) (104)
- -------------------------------------------------------------------------- ----------- ---------- ----------
Effect of assumed conversions 6 6 7
- -------------------------------------------------------------------------- ----------- ---------- ----------
Net income available to common shareholders and assumed
conversions $ 7,882 $ 5,146 $ 6,438
- -------------------------------------------------------------------------- ----------- ---------- ----------
Average common shares issued and outstanding 1,726,006 1,732,057 1,733,194
- -------------------------------------------------------------------------- ----------- ---------- ----------
Incremental shares from assumed conversions:
Convertible preferred stock 3,006 3,290 3,736
Stock options 31,046 40,413 45,242
- -------------------------------------------------------------------------- ----------- ---------- ----------
Dilutive potential common shares 34,052 43,703 48,978
- -------------------------------------------------------------------------- ----------- ---------- ----------
Total dilutive average common shares issued and outstanding 1,760,058 1,775,760 1,782,172
- -------------------------------------------------------------------------- ----------- ---------- ----------
Diluted earnings per common share $ 4.48 $ 2.90 $ 3.61
========================================================================== =========== ========== ==========




78

Note Eleven - Commitments and Contingencies

In the normal course of business, the Corporation enters into a number of
off-balance sheet commitments. These commitments expose the Corporation to
varying degrees of credit and market risk and are subject to the same credit
and risk limitation reviews as those recorded on the balance sheet.


Credit Extension Commitments

The Corporation enters into commitments to extend credit, standby letters
of credit (SBLC) and commercial letters of credit to meet the financing needs
of its customers. The commitments shown below have been reduced by amounts
collateralized by cash and amounts participated to other financial
institutions. The following summarizes outstanding commitments to extend credit
at December 31, 1999 and 1998:





(Dollars in millions) 1999 1998
- ---------------------------------------------------- ---------- ----------

Credit card commitments $ 67,394 $ 67,018
Other loan commitments 246,827 234,453
Standby letters of credit and financial guarantees 32,993 33,311
Commercial letters of credit 3,690 3,035
==================================================== ======== ========


Commitments to extend credit are legally binding, generally have specified
rates and maturities and are for specified purposes. The Corporation manages
the credit risk on these commitments by subjecting these commitments to normal
credit approval and monitoring processes and protecting against deterioration
in the borrowers' ability to pay through adverse-change clauses which require
borrowers to maintain various credit and liquidity measures. At December 31,
1999 and 1998, there were no unfunded commitments to any industry or country
greater than 10 percent of total unfunded commitments to lend. Credit card
lines are unsecured commitments, which are reviewed at least annually by
management. Upon evaluation of the customers' creditworthiness, the Corporation
has the right to terminate or change the terms of the credit card lines. Of the
December 31, 1999 other loan commitments, $94.1 billion is scheduled to expire
in less than one year, $105.2 billion in one to five years and $47.5 billion
after five years.

SBLC and financial guarantees are issued to support the debt obligations
of customers. If an SBLC or financial guarantee is drawn upon, the Corporation
looks to its customer for payment. SBLCs and financial guarantees are subject
to the same approval and collateral policies as other extensions of credit. At
December 31, 1999, substantially all of the SBLCs and financial guarantees are
scheduled to expire in less than one year.

Commercial letters of credit, issued primarily to facilitate customer
trade finance activities, are collateralized by the underlying goods being
shipped by the customer and are generally short-term.

For each of these types of instruments, the Corporation's maximum exposure
to credit loss is represented by the contractual amount of these instruments.
Many of the commitments are collateralized or are expected to expire without
being drawn upon; therefore, the total commitment amounts do not necessarily
represent risk of loss or future cash requirements.


Derivatives

Derivatives utilized by the Corporation include swaps, financial futures
and forward settlement contracts and option contracts. A swap agreement is a
contract between two parties to exchange cash flows based on specified
underlying notional amounts, assets and/or indices. Financial futures and
forward settlement contracts are agreements to buy or sell a quantity of a
financial instrument, index, currency or commodity at a predetermined future
date and rate or price. An option contract is an agreement that conveys to the
purchaser the right, but not the obligation, to buy or sell a quantity of a
financial instrument, index, currency or commodity at a predetermined rate or
price at a time or during a period in the future. These option agreements can
be transacted on organized exchanges or directly between parties.


Credit Risk Associated with Derivative Activities

Credit risk associated with derivatives is measured as the net replacement
cost should the counterparties with contracts in a gain position to the
Corporation completely fail to perform under the terms of those contracts and
any collateral underlying the contracts proves to be of no value. In managing
derivatives credit risk, both


79

the current exposure, which is the replacement cost of contracts on the
measurement date, as well as an estimate of the potential change in value of
contracts over their remaining lives are considered. In managing credit risk
associated with its derivative activities, the Corporation deals primarily with
U.S. and foreign commercial banks, broker-dealers and corporates.

During 1999, 1998 and 1997, there were no significant credit losses
associated with derivative contracts. At December 31, 1999 and 1998, there were
no nonperforming derivative positions that were material to the Corporation. To
minimize credit risk, the Corporation enters into legally enforceable master
netting agreements, which reduce risk by permitting the close out and netting
of transactions with the same counterparty upon the occurrence of certain
events.

A portion of the derivative-dealer activity involves exchange-traded
instruments. Because exchange-traded instruments conform to standard terms and
are subject to policies set by the exchange involved, including counterparty
approval, margin requirements and security deposit requirements, the credit
risk is minimal.

The following table presents the notional or contract amounts at December
31, 1999 and 1998 and the credit risk amounts (the net replacement cost of
contracts in a gain position) of the Corporation's derivative-dealer positions
which are primarily executed in the over-the-counter market for trading
purposes. The notional or contract amounts indicate the total volume of
transactions and significantly exceed the amount of the Corporation's credit or
market risk associated with these instruments. The credit risk amounts
presented in the following table do not consider the value of any collateral,
but generally take into consideration the effects of legally enforceable master
netting agreements.


Derivative-Dealer Positions



December 31, 1999 December 31, 1998
------------------------ -----------------------
Contract/ Credit Contract/ Credit
(Dollars in millions) Notional Risk Notional Risk
- --------------------------------------- ------------- ---------- ------------- ---------

Interest rate contracts
Swaps $2,597,886 $ 5,691 $1,584,317 $ 6,377
Futures and forwards 644,795 58 809,231 290
Written options 560,070 -- 496,570 --
Purchased options 638,517 1,747 640,703 2,492
Foreign exchange contracts
Swaps 55,278 1,058 40,069 1,443
Spot, futures and forwards 537,719 3,298 623,977 5,136
Written options 28,450 -- 56,287 --
Purchased options 26,820 424 53,426 703
Commodity and other contracts
Swaps 13,078 1,232 5,685 370
Futures and forwards 22,496 41 5,292 --
Written options 28,868 -- 22,382 --
Purchased options 32,216 4,890 22,134 989
Credit derivatives 19,028 70 16,943 62
- --------------------------------------- ---------- ------- ---------- -------
Total before cross-product netting 18,509 17,862
Cross-product netting 2,454 1,462
- --------------------------------------- ------- -------
Net replacement cost $16,055 $16,400
======================================= ======= =======


The table above includes both long and short derivative-dealer positions.
The average fair value of derivative-dealer assets for the years ended December
31, 1999 and 1998 was $16.0 billion and $14.3 billion, respectively. The
average fair value of derivative-dealer liabilities for the years ended
December 31, 1999 and 1998 was $16.5 billion and $13.3 billion, respectively.
The fair value of derivative-dealer assets at December 31, 1999 and 1998 was
$16.1 billion and $16.4 billion, respectively. The fair value of
derivative-dealer liabilities at December 31, 1999 and 1998 was $16.2 billion
and $16.8 billion, respectively. See Note Four on page 69 for a discussion of
trading-related revenue.


80

In addition to credit risk management activities, the Corporation uses
credit derivatives to generate revenue by taking on exposure to underlying
credits. The Corporation also provides credit derivatives to sophisticated
customers who wish to hedge existing credit exposures or take on additional
credit exposure to generate revenue. The Corporation's credit derivative
positions at December 31, 1999 and 1998 consisted of credit default swaps and
total return swaps.


Asset and Liability Management (ALM) Activities

Risk management interest rate contracts and foreign exchange contracts are
utilized in the Corporation's ALM process. Interest rate contracts, which are
generally non-leveraged generic interest rate and basis swaps, options and
futures, allow the Corporation to effectively manage its interest rate risk
position. Generic interest rate swaps involve the exchange of fixed-rate and
variable-rate interest payments based on the contractual underlying notional
amount. Basis swaps involve the exchange of interest payments based on the
contractual underlying notional amounts, where both the pay rate and the
receive rate are floating rates based on different indices. Option products
primarily consist of caps and floors. Interest rate caps and floors are
agreements where, for a fee, the purchaser obtains the right to receive
interest payments when a variable interest rate moves above or below a
specified cap or floor rate, respectively. Futures contracts used for ALM
activities are primarily index futures providing for cash payments based upon
the movements of an underlying rate index.

The Corporation uses foreign currency contracts to manage the foreign
exchange risk associated with certain foreign-denominated assets and
liabilities, as well as the Corporation's equity investments in foreign
subsidiaries. Foreign exchange contracts, which include spot, futures and
forward contracts, represent agreements to exchange the currency of one country
for the currency of another country at an agreed-upon price, on an agreed-upon
settlement date. Foreign exchange option contracts are similar to interest rate
option contracts except that they are based on currencies rather than interest
rates. Exposure to loss on these contracts will increase or decrease over their
respective lives as currency exchange and interest rates fluctuate.

The Corporation's credit risk exposure for exchange-traded instruments is
minimal as these instruments conform to standard terms and are subject to
policies set by the exchange involved, including counterparty approval, margin
requirements and security deposit requirements.

The following table outlines the notional amount and fair value of the
Corporation's open and closed ALM contracts at December 31, 1999 and 1998:





December 31, 1999 December 31, 1998
------------------------- ------------------------
Notional Fair Notional Fair
(Dollars in millions) Amount Value Amount Value
- -------------------------------------------- ---------- -------------- ---------- -------------

Open interest rate contracts
Receive fixed swaps $63,002 $(1,747) $60,450 $ 1,958
Pay fixed swaps 25,701 115 25,770 (1,006)
- -------------------------------------------- ------- ------- ------- -------
Net open receive fixed 37,301 (1,632) 34,680 952
Basis swaps 7,971 (6) 7,736 (10)
- -------------------------------------------- ------- ---------- ------- -------
Total net swap position 45,272 (1,638) 42,416 942
Option products 35,134 5 26,836 (46)
Futures and forwards 931 3 6,348 2
- -------------------------------------------- ------- --------- ------- -------
Total open interest rate contracts(1) (1,630) 898
============================================ ========= =======
Closed interest rate contracts
Swap positions 174 294
Option products 82 26
Futures and forwards (21) (1)
- -------------------------------------------- --------- ----------
Total closed interest rate contracts(2) 235 319
- -------------------------------------------- --------- ---------
Net interest rate contract position (1,395) 1,217
- -------------------------------------------- --------- ---------
Open foreign exchange contracts(1) 6,231 (30) 3,314 72
- -------------------------------------------- ------- --------- ------- ---------
Total ALM contracts $(1,425) $ 1,289
============================================ ========= =========


(1) Fair value represents the net unrealized gains (losses) on open contracts.
(2) Represents the unamortized net realized deferred gains associated with
closed contracts.

81

When Issued Securities

When issued securities are commitments to purchase or sell securities
during the time period between the announcement of a securities offering and
the issuance of those securities. At December 31, 1999, the Corporation had
commitments to purchase and sell when issued securities of $12.0 billion and
$16.8 billion, respectively.


Litigation

In the ordinary course of business, the Corporation and its subsidiaries
are routinely defendants in or parties to a number of pending and threatened
legal actions and proceedings, including actions brought on behalf of various
classes of claimants. In certain of these actions and proceedings, substantial
money damages are asserted against the Corporation and its subsidiaries and
certain of these actions and proceedings are based on alleged violations of
consumer protection, securities, environmental, banking and other laws.

The Corporation and certain present and former officers and directors have
been named as defendants in a number of actions filed in several federal courts
that have been consolidated for pretrial purposes before a Missouri federal
court. The amended complaint in the consolidated actions alleges, among other
things, that the defendants failed to disclose material facts about
BankAmerica's losses relating to D.E. Shaw Securities Group, L.P. and related
entities until mid-October 1998, in violation of various provisions of federal
and state laws. The amended complaint also alleges that the proxy
statement-prospectus of August 4, 1998, falsely stated that the Merger would be
one of equals and alleges a scheme to have NationsBank gain control over the
newly merged entity. The Missouri federal court has certified classes
consisting generally of persons who were stockholders of NationsBank or
BankAmerica on September 30, 1998, or were entitled to vote on the Merger, or
who purchased or acquired securities of the Corporation or its predecessors
between August 4, 1998 and October 13, 1998. The amended complaint
substantially survived a motion to dismiss, and discovery is underway. Claims
against certain director-defendants were dismissed with leave to replead.
Similar uncertified class actions (including one limited to California
residents raising the claim that the proxy statement-prospectus of August 4,
1998, falsely stated that the Merger would be one of equals) were filed in
California state court, alleging violations of the California Corporations Code
and other state laws. The action on behalf of California residents was
certified, but has since been dismissed and an appeal is pending. Of the
remaining actions, one has been stayed, and a motion for class certification is
pending in the others. The Corporation believes the actions lack merit and will
defend them vigorously. The amount of any ultimate exposure cannot be
determined with certainty at this time.

Management believes that the actions and proceedings and the losses, if
any, resulting from the final outcome thereof, will not be material in the
aggregate to the Corporation's financial position or results of operations.


Note Twelve - Regulatory Requirements and Restrictions

The Corporation's banking subsidiaries are required to maintain average
reserve balances with the FRB based on a percentage of certain deposits.
Average reserve balances held with the FRB to meet these requirements amounted
to $22 million and $288 million for 1999 and 1998, respectively.

The primary source of funds for cash distributions by the Corporation to
its shareholders is dividends received from its banking subsidiaries. The
subsidiary national banks can initiate aggregate dividend payments in 2000,
without prior regulatory approval, of $2.2 billion plus an additional amount
equal to their net profits for 2000, as defined by statute, up to the date of
any such dividend declaration. The amount of dividends that each subsidiary
bank may declare in a calendar year without approval by the Office of the
Comptroller of the Currency (OCC) is the bank's net profits for that year
combined with its net retained profits, as defined, for the preceding two
years.

Regulations also restrict banking subsidiaries in lending funds to
affiliates. At December 31, 1999 and 1998, the total amount which could be
loaned to the Corporation by its banking subsidiaries was approximately $5.6
billion. At December 31, 1999 and 1998, no loans to the Corporation from its
banking subsidiaries were outstanding.

The FRB, the OCC, the Federal Deposit Insurance Corporation and the Office
of Thrift Supervision (collectively, the Agencies) have issued regulatory
capital guidelines for U.S. banking organizations. Failure to meet the capital
requirements can initiate certain mandatory and discretionary actions by
regulators that could have a material effect on the Corporation's financial
statements. At December 31, 1999 and 1998, the Corporation and


82

each of its banking subsidiaries were well capitalized under this regulatory
framework. There have been no conditions or events since December 31, 1999 that
management believes have changed either the Corporation's or its banking
subsidiaries' capital classifications.

The regulatory capital guidelines measure capital in relation to the
credit and market risks of both on- and off-balance sheet items using various
risk weights. Under the regulatory capital guidelines, Total Capital consists
of three tiers of capital. Tier 1 Capital includes common shareholders' equity
and qualifying preferred stock, less goodwill and other adjustments. Tier 2
Capital consists of preferred stock not qualifying as Tier 1 Capital, mandatory
convertible debt, limited amounts of subordinated debt, other qualifying term
debt and the allowance for credit losses up to 1.25 percent of risk-weighted
assets. Tier 3 capital includes subordinated debt that is unsecured, fully
paid, has an original maturity of at least two years, is not redeemable before
maturity without prior approval by the FRB and includes a lock-in clause
precluding payment of either interest or principal if the payment would cause
the issuing bank's risk-based capital ratio to fall or remain below the
required minimum. At December 31, 1999 and 1998, the Corporation had no
subordinated debt that qualified as Tier 3 capital.

In accordance with the FRB's amendment to its capital adequacy guidelines
effective for periods beginning after December 31, 1997, the Corporation is now
required to include its broker/dealer subsidiary, Banc of America Securities
LLC, when calculating regulatory capital ratios. Previously, the Corporation
had been required to exclude the equity, assets and off-balance sheet exposures
of its broker/dealer subsidiary.

To meet minimum, adequately capitalized regulatory requirements, an
institution must maintain a Tier 1 Capital ratio of four percent and a Total
Capital ratio of eight percent. A well-capitalized institution must maintain a
Tier 1 Capital ratio of six percent and a Total Capital ratio of ten percent.
The risk-based capital rules have been further supplemented by a leverage
ratio, defined as Tier 1 capital divided by average total assets, after certain
adjustments. The leverage ratio guidelines establish a minimum of 100 to 200
basis points above three percent. Banking organizations must maintain a
leverage capital ratio of at least five percent to be classified as well
capitalized.

The valuation allowance for available-for-sale securities and marketable
equity securities included in shareholders' equity at December 31, 1999 and
1998 is excluded in the calculations of Tier 1 capital and Tier 1 leverage
ratios. Effective October 1, 1998, the risk-based capital guidelines were
changed to allow the inclusion of 45% of the pre-tax unrealized gains on equity
securities in the calculation of Tier 2 capital. This change in the risk-based
capital guidelines had an immaterial impact on the Corporation's Tier 2 and
Total Capital ratios.

On September 12, 1996, the Agencies amended their regulatory capital
guidelines to incorporate a measure for market risk. In accordance with the
amended guidelines, the Corporation and any of its banking subsidiaries with
significant trading activity, as defined in the amendment, must incorporate a
measure for market risk in their regulatory capital calculations effective for
reporting periods after January 1, 1998. The revised guidelines have not had a
material impact on the Corporation or its subsidiaries' regulatory capital
ratios or their well-capitalized status.

The following table presents the actual capital ratios and amounts and
minimum required capital amounts for the Corporation and Bank of America, N.A.
at December 31, 1999 and 1998:





1999 1998
---------------------------------- ----------------------------------
Actual Actual
--------------------- Minimum --------------------- Minimum
(Dollars in millions) Ratio Amount Required(1) Ratio Amount Required(1)
- ----------------------------- ---------- ---------- ------------ ---------- ---------- ------------

Tier 1 Capital
Bank of America Corporation 7.35% $38,651 $21,025 7.06% $36,849 $20,866
Bank of America, N.A.(2) 7.78 38,616 19,844 7.72 19,317 10,007
Total Capital
Bank of America Corporation 10.88 57,192 42,050 10.94 57,055 41,733
Bank of America, N.A.(2) 10.91 54,132 39,688 10.27 25,691 20,014
Leverage
Bank of America Corporation 6.26 38,651 24,687 6.22 36,849 23,697
Bank of America, N.A.(2) 6.74 38,616 22,922 6.55 19,317 11,805
============================= ===== ======= ======= ===== ======= =======


(1) Dollar amount required to meet the Agencies' guidelines for adequately
capitalized institutions.
(2) Bank of America, N.A.'s ratios and amounts for 1998 have not been restated
to reflect the impact of mergers as discussed in Note 2 of the
consolidated financial statements.


83

Note Thirteen - Employee Benefit Plans

Pension and Postretirement Plans

The Corporation sponsors noncontributory trusteed pension plans that cover
substantially all officers and employees. The plans provide defined benefits
based on an employee's compensation, age and years of service. It is the policy
of the Corporation to fund not less than the minimum funding amount required by
ERISA. Individually, BankAmerica, Barnett Banks and NationsBank each sponsored
defined benefit pension plans prior to each of the respective mergers of these
banks. The BankAmerica plan was a cash balance design plan, providing
participants with compensation credits, based on age and period of service,
applied at each pay period and a defined earnings rate on all participant
account balances in the plan. The NationsBank plan was amended to a cash
balance plan effective July 1, 1998 and provides a similar crediting basis for
all participants. The NationsBank plan allows participants to select from
various earnings measures, which are based on the returns of certain funds
managed by subsidiaries of the Corporation or common stock of the Corporation.
The participant selected earnings measures determine the earnings rate on the
individual participant account balances in the plan. In addition, a one time
opportunity to transfer certain assets from the company's savings plan to the
cash balance plan was extended to NationsBank plan participants. Assets with an
approximate fair value of $1.4 billion were transferred by plan participants.
The Barnett plan was amended to merge into the NationsBank plan and, effective
January 1, 1999, to provide the cash balance plan design feature to those
participants. The opportunity to transfer certain savings plan assets to the
cash balance plan was extended to Barnett participants in 1999. Assets with an
approximate fair value of $133 million, were transferred by plan participants.
The BankAmerica and NationsBank plans were merged effective December 31, 1998.
However, the participants in each plan will retain the cash balance plan design
followed by their predecessor plans until the plan is amended in 2000. The
opportunity to transfer certain savings plan assets to the cash balance plan
will be extended to BankAmerica participants in 2000.

In addition to retirement pension benefits, substantially all employees
may become eligible to continue participation as retirees in health care and/or
life insurance plans sponsored by the Corporation. Based on the other
provisions of the individual plans, certain retirees may also have the cost of
these benefits partially paid by the Corporation.


84

The following tables summarize the balances and changes in fair value of
plan assets and benefit obligations as of and for the years ended December 31,
1999 and 1998:



Postretirement
Pension Plan Health and Life Plans
------------------------- -------------------------
(Dollars in millions) 1999 1998 1999 1998
- -------------------------------------------------------- ------------ ------------ ------------ ------------

Change in fair value of plan assets
(Primarily listed stocks, fixed income and real estate)
Fair value at January 1 $7,660 $5,725 $ 187 $ 164
Actual return on plan assets 809 890 16 24
Company contributions -- -- 65 65
Plan participant contributions -- -- 33 28
Acquisition/transfer 141 1,429 -- --
Benefits paid (547) (384) (99) (94)
- -------------------------------------------------------- ------ ------ ----- -----
Fair value at December 31 $8,063 $7,660 $ 202 $ 187
======================================================== ====== ====== ===== =====
Change in benefit obligation
Benefit obligation at January 1 $6,377 $4,692 $ 882 $ 930
Service cost 115 144 12 10
Interest cost 433 371 58 61
Plan participant contributions -- -- 33 28
Plan amendments 106 95 (2) 16
Actuarial loss (gain) (380) (66) (48) (67)
Acquisition/transfer 148 1,539 -- --
Effect of curtailments -- (14) -- (2)
Benefits paid (547) (384) (99) (94)
- -------------------------------------------------------- ------ ------ ------- -------
Benefit obligation at December 31 $6,252 $6,377 $ 836 $ 882
======================================================== ====== ====== ======= =======
Funded status
Overfunded (unfunded) status at December 31 $1,811 $1,283 $(634) $(695)
Unrecognized net actuarial gain (600) (132) (87) (96)
Unrecognized transition obligation (asset) (6) (9) 439 473
Unrecognized prior service cost 195 108 12 13
- -------------------------------------------------------- ------- ------- ------- -------
Prepaid (accrued) benefit cost $1,400 $1,250 $(270) $(305)
======================================================== ======= ======= ======= =======


Prepaid and accrued benefit costs are reflected in other assets and other
liabilities, respectively, in the consolidated balance sheet.

The following are the weighted average discount rate, expected return on
plan assets and rate of increase in future compensation assumptions used in
determining the actuarial present value of the benefit obligation.



Postretirement
Pension Plan Health and Life Plans
----------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------

Weighted average assumptions at December 31
Discount rate 7.50% 7.00% 7.50% 7.00%
Expected return on plan assets 10.00 10.00 10.00 10.00
Rate of compensation increase 4.00 4.00 N/A N/A
============================================ ===== ===== ===== =====


85

Net periodic pension benefit cost (income) for the years ended December
31, 1999, 1998 and 1997, included the following components:





(Dollars in millions) 1999 1998 1997
- --------------------------------------------------------- ----------- ----------- -----------

Components of net periodic pension benefit cost (income)
Service cost $ 115 $ 144 $ 122
Interest cost 433 371 320
Expected return on plan assets (713) (552) (434)
Amortization of transition asset (4) (3) (3)
Amortization of prior service cost 20 (2) (10)
Recognized net actuarial loss -- 16 16
Recognized gain due to settlements and curtailments -- (2) --
- --------------------------------------------------------- ------- -------- -------
Net periodic pension benefit cost (income) $(149) $ (28) $ 11
========================================================= ======= ======= =======


The Corporation uses the market valuation method to recognize pension
plan-related market gains and losses. This method recognizes 60 percent of the
market gains or losses in the first year, with the remaining 40 percent spread
equally over the next four years.

In addition to the trusteed pension plan, the Corporation sponsors a
number of unfunded executive pension plans. The total benefit obligation for
these plans as of December 31, 1999 and 1998 was $535 million and $386 million,
respectively. The net periodic pension expense for these plans in 1999, 1998
and 1997 totaled $58 million, $49 million and $46 million, respectively.

For the years ended December 31, 1999, 1998 and 1997, net periodic
postretirement benefit expense included the following components:





(Dollars in millions) 1999 1998 1997
- ------------------------------------------------------- -------- ----------- ----------

Components of net periodic postretirement benefit cost
Service cost $ 12 $ 10 $ 9
Interest cost 58 61 62
Expected return on plan assets (19) (14) (12)
Amortization of transition asset 34 34 34
Amortization of prior service cost -- (1) (2)
Recognized net actuarial gain (54) (10) (4)
Recognized gain due to settlements and curtailments -- (2) --
- ------------------------------------------------------- ----- ------- ------
Net periodic postretirement benefit cost $ 31 $ 78 $ 87
======================================================= ===== ====== ======


Net periodic postretirement health and life expense was determined using
the "projected unit credit" actuarial method. Gains and losses for all benefits
except postretirement health care are recognized in accordance with the minimum
amortization provisions of the applicable accounting standards. For the
postretirement health care plans, 50 percent of the unrecognized gain or loss
at the beginning of the fiscal year (or at subsequent remeasurement) is
recognized on a level basis during the year. Prior to the Merger (and
conformance of accounting methods), BankAmerica used the minimum amortization
method for all plans. Application of the "50 percent" method to cumulative
unrecognized gains in the BankAmerica health care plans at the beginning of the
1999 fiscal year is the primary reason for the reduction in net periodic
postretirement benefit cost from 1998.

Assumed health care cost trend rates affect the postretirement benefit
obligation and benefit cost reported for the health care plan. The assumed
health care cost trend rates for the next year used to measure the expected
cost of benefits covered for the postretirement health and life plans was 6.25
percent and 6.00 percent for pre-65 benefits in 1999 and 1998, respectively,
and 4.75 percent and 4.50 percent for post-65 benefits in 1999 and 1998,
respectively. A one percentage point increase in assumed health care cost trend
rates would have increased the service and interest costs and the benefit
obligation by $7 million and $62 million, respectively, in 1999 and $6 million
and $57 million, respectively, in 1998. A one-percentage point decrease in
assumed health care cost trends would have lowered the service and interest
costs and the benefit obligation by $6 million and $56 million, respectively,
in 1999 and $5 million and $49 million, respectively, in 1998.


86

Defined Contribution Plans

The Corporation maintains several defined contribution savings and profit
sharing plans and certain nonqualified defined contribution retirement plans.
Two of the savings and profit sharing plans feature leveraged ESOP provisions.
See Note Ten on page 77 for additional information on the two ESOP provisions.


ESOP Plans

The Corporation contributed approximately $20 million, $63 million, and
$68 million for 1999, 1998, and 1997, respectively, in cash and stock which was
utilized primarily to purchase the Corporation's common stock under the terms
of these plans. At December 31, 1999 and 1998, an aggregate of 23,776,820
shares and 22,997,096 shares, respectively, of the Corporation's common stock
and 1,789,230 shares and 1,937,730 shares, respectively, of ESOP preferred
stock were held by the Corporation's various savings and profit sharing plans.

As previously discussed, during 1999, the Corporation offered former
Barnett plan participants a one-time opportunity to transfer certain assets
from the savings plan to the cash balance plan. In 1998, the Corporation
offered the same opportunity to former NationsBank plan participants. This
one-time transfer opportunity will be provided to BankAmerica plan participants
in 2000.

Under the terms of the ESOP Preferred Stock provision, payments to the
plan for dividends on the ESOP Preferred Stock were $3 million, $6 million, and
$7 million, for 1999, 1998, and 1997, respectively. Interest incurred to
service the debt of the ESOP Preferred Stock amounted to $0.3 million, $1
million, and $2 million for 1999, 1998, and 1997, respectively. This loan was
paid off in June 1999.

The Corporation's ESOP and the Barnett ESOP were combined effective at the
close of business at December 31, 1998.


BankAmerica Plans

Aggregate contributions for all former BankAmerica-related defined
contribution plans were $171 million, $175 million, and $169 million, in 1999,
1998, and 1997, respectively. Certain employer and employee contributions to
the plans are used to purchase the Corporation's common stock at prices that
approximate market values. Contributions, including dividends, to the plans
were used to purchase 816,457 shares for $50 million in 1999, 697,741 shares
for $44 million in 1998, and 598,958 shares for $34 million in 1997. Sales by
the plans of the Corporation's common stock were 1,163,489 for $76 million in
1999, 571,058 for $46 million in 1998, and 528,829 shares for $32 million in
1997. The plans held 31,122,254 shares, 33,186,515 shares, and 34,252,005
shares, of the Corporation's common stock at December 31, 1999, 1998, and 1997,
respectively.

The Corporation maintains certain nonqualified defined contribution
retirement plans for certain employees of the former BankAmerica Corporation.
In addition, certain non-U.S. employees within the Corporation are covered
under defined contribution pension plans that are separately administered in
accordance with local laws.

The Corporation and the BankAmerica retirement plans will be combined
effective July 1, 2000.

87

Note Fourteen - Stock Option Award Plans

At December 31, 1999, the Corporation had certain stock-based compensation
plans (the Plans) which are described below. The Corporation applies the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," in accounting for its stock option and award plans. In
accordance with Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock Based Compensation," the Corporation has also elected to
provide disclosures as if the Corporation had adopted the fair-value based
method of measuring outstanding employee stock options in 1999, 1998 and 1997
as indicated below:





As Reported Pro Forma
----------------------------------- -----------------------------------
(Dollars in millions, except per share data) 1999 1998 1997 1999 1998 1997
- ---------------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------

Net income $ 7,882 $ 5,165 $ 6,542 $ 7,563 $ 4,838 $ 6,254
Net income available to common shareholders 7,876 5,140 6,431 7,557 4,819 6,143
Earnings per common share 4.56 2.97 3.71 4.38 2.78 3.54
Diluted earnings per common share 4.48 2.90 3.61 4.30 2.71 3.46
============================================== ======== ======== ======== ======== ======== ========


In determining the pro forma disclosures above, the fair value of options
granted was estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes model was developed to estimate the
fair value of traded options, which have different characteristics than
employee stock options, and changes to the subjective assumptions used in the
model can result in materially different fair value estimates. The weighted
average grant-date fair values of the options granted during 1999, 1998 and
1997 were based on the following assumptions:





Risk-Free Dividend
Interest Rates Yield
-------------------------------- --------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------

Key Employee Stock Plan 5.19% 5.64% 6.29% 2.91% 3.50% 3.50%
Take Ownership! 4.73 N/A N/A 3.06 N/A N/A
NationsBank 1996 Associates Stock Option
Award Plan N/A N/A 6.31 N/A N/A 3.50
Barnett 1997 Employee Stock Option Plan N/A N/A 5.60 N/A N/A 3.50
Barnett Long-Term Incentive Plan N/A N/A 6.33 N/A N/A 3.50
BankAmerica Management Stock Plan N/A 5.48 6.23 N/A 2.62 2.96
BankAmerica PEP Plan N/A N/A 6.23 N/A N/A 2.96
BankAmerica Take Ownership! N/A 5.58 6.23 N/A 1.83 2.96
========================================= ===== ======== ======== ===== ======== ========




Expected
Lives (Years) Volatility
-------------------- -----------------------------------
1999 1998 1997 1999 1998 1997
------ ------ ------ ----------- ----------- -----------

Key Employee Stock Plan 7 7 7 24.91% 22.94% 27.80%
Take Ownership! 4 N/A N/A 27.67 N/A N/A
NationsBank 1996 Associates Stock Option
Award Plan N/A N/A 3 N/A N/A 21.40
Barnett 1997 Employee Stock Option Plan N/A N/A 1 N/A N/A 24.70
Barnett Long-Term Incentive Plan N/A N/A 6 N/A N/A 34.30
BankAmerica Management Stock Plan N/A 4 4 N/A 28.40 24.50
BankAmerica PEP Plan N/A N/A 7 N/A N/A 24.50
BankAmerica Take Ownership! N/A 1 3 N/A 28.80 24.50
========================================= == == == ====== ========= =========


Compensation expense under the fair-value based method is recognized over
the vesting period of the related stock options. Accordingly, the pro forma
results of applying SFAS 123 in 1999, 1998 and 1997 may not be indicative of
future amounts.


Key Employee Stock Plan

The Key Employee Stock Plan (KEYSOP), as amended and restated, provides
for different types of awards including stock options, restricted stock and
performance shares (or restricted stock units). Under the KEYSOP, ten-year
options to purchase approximately 42.2 million shares of common stock have been
granted through December 31, 1999 to certain employees at the closing market
price on the respective grant dates. Options granted under the KEYSOP generally
vest in three or four equal annual installments. At December 31, 1999,
approximately 32.8 million options were outstanding under this plan.
Additionally, 10.2 million shares of restricted stock were granted during 1999.
These shares of restricted stock generally vest in two or three equal annual
installments beginning one year from the grant date. Additionally, 1.2 million
shares of restricted stock units were granted during 1999. These units
generally vest three or five years from the grant date and are paid in the year
following retirement in cash or common stock or a combination of cash and
common stock.

On January 3, 2000, ten-year options to purchase approximately 20.1
million shares of common stock at $48.4375 per share were granted to certain
employees. On February 1, 2000, ten-year options to purchase approximately 4.1
million shares of common stock at $48.4375 per share were granted to certain
employees. For both grants, options vest in three equal annual installments
beginning one year from the grant date. Additionally, on January 3, 2000, and
February 1, 2000, approximately 241,000 and 331,000 shares, respectively, of
restricted


88

stock were granted to certain employees. These shares of restricted stock
generally vest in three equal annual installments beginning one year from the
grant date.


Take Ownership!

On September 23, 1998, the Board of Directors of the Corporation approved
Take Ownership! The Bank of America Global Associate Stock Option Program (Take
Ownership!) which covers all employees below a specified executive grade level.
Under the plan, eligible employees receive an award of a predetermined number
of stock options entitling them to purchase shares of the Corporation's common
stock at the fair market value on the grant date. Options granted on the first
business day of 1999, 2000 and 2001 vest 25% on the first anniversary of the
date of grant, 25% on the second anniversary of the date of grant and 50% on
the third anniversary of the date of grant. These options have a term of five
years after the grant date. On January 4, 1999, options to purchase
approximately 53.1 million shares of common stock at $60.50 per share were
granted under the plan. At December 31, 1999, approximately 41.9 million
options were outstanding under this plan. On January 3, 2000, options to
purchase approximately 24.5 million shares of common stock at $48.4375 per
share were granted under the plan.


Other Plans

Under the NationsBank 1996 Associates Stock Option Award Plan (ASOP), as
amended, the Corporation granted in 1996 and 1997 to certain full- and
part-time associates options to purchase an aggregate of approximately 47
million shares of the Corporation's common stock. All options granted under the
ASOP are vested and expire June 29, 2001. At December 31, 1999, approximately
10.5 million options were outstanding under this plan. No further awards may be
granted under this plan.

Under the Barnett 1997 Employee Stock Option Plan, ten-year options to
purchase an aggregate of approximately 5.7 million shares of the Corporation's
common stock in 1997 were granted to certain full- and part-time associates.
All options granted under this plan are vested. No further awards may be
granted under this plan.

Under the Barnett Long-Term Incentive Plan, ten-year options to purchase
an aggregate of approximately 2.2 million shares of the Corporation's common
stock in 1997 were granted to certain key employees. All options granted under
this plan are vested. No further awards may be granted under this plan.

Under the BankAmerica 1992 Management Stock Plan, ten-year options to
purchase approximately 14.3 million shares of the Corporation's common stock
were granted to certain key employees in 1997 and 1998. Options awarded
generally vest in three equal annual installments beginning one year from the
grant date. At December 31, 1999, approximately 28.6 million options were
outstanding under this plan. Additionally, 2.9 million shares of restricted
stock were granted to certain key employees in 1997 and 1998. These shares
generally vest in four equal annual installments beginning the second year from
the date of grant. No further awards may be granted under this plan.

Under the BankAmerica Performance Equity Program, ten-year options to
purchase approximately 12.3 million shares of the Corporation's common stock
were granted to certain key employees in 1997 and 1998 in the form of market
price options and premium price options. All options issued under this plan to
persons who were employees as of the merger date vested. At December 31, 1999,
approximately 11.8 million options were outstanding under this plan. No further
awards may be granted under this plan.

On October 1, 1996, BankAmerica adopted the BankAmerica Global Stock
Option Program (BankAmerica Take Ownership!) which covered substantially all
associates. Options awarded under this plan vest in three equal installments
beginning one year from the grant date and have a term of five years after the
grant date. Approximately 37.5 million shares were granted in 1997 and 1998. At
December 31, 1999, approximately 25.2 million options were outstanding under
this plan. No further awards may be granted under this plan.

Additional stock options assumed in connection with various acquisitions
remain outstanding and are included in the tables below. No further awards may
be granted under these plans.


89

The following tables present the status of all plans at December 31, 1999,
1998 and 1997, and changes during the years then ended:





1999 1998 1997
---------------------------- ---------------------------- ---------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
(Option) (Option) (Option)
Employee stock options Shares Price Shares Price Shares Price
- ------------------------------- ---------------- ----------- ---------------- ----------- ---------------- ----------

Outstanding at January 1 126,465,501 $ 51.01 136,409,218 $ 44.08 106,432,319 $ 30.79
Shares due to acquisitions -- -- -- -- 6,688,329 21.99
Granted 68,341,012 61.30 25,744,102 72.10 76,963,367 58.42
Exercised (21,872,532) 38.45 (28,295,737) 33.62 (44,990,054) 33.34
Forfeited (16,728,346) 62.59 (7,392,082) 63.04 (8,684,743) 45.23
- ------------------------------- ----------- -------- ----------- -------- ----------- --------
Outstanding at December 31 156,205,635 $ 56.03 126,465,501 $ 51.01 136,409,218 $ 44.18
=============================== =========== ======== =========== ======== =========== ========
Options exercisable at
December 31 85,753,568 $ 49.97 99,530,313 $ 46.02 63,927,295 $ 30.90
=============================== =========== ======== =========== ======== =========== ========
Weighted-average fair value of
options granted during the
year $ 13.88 $ 15.52 $ 9.35
=============================== ======== ======== ========





1999 1998 1997
--------------------------- --------------------------- --------------------------
Weighted- Weighted- Weighted-
Average Average Average
Restricted stock awards Grant Grant Grant
(include KEYSOP) Shares Price Shares Price Shares Price
- ------------------------------- --------------- ----------- --------------- ----------- --------------- ----------

Outstanding unvested grants at
January 1 3,781,154 $ 61.85 5,180,012 $ 38.94 6,459,158 $ 24.68
Granted 11,413,497 61.99 3,852,739 65.79 2,120,681 57.76
Vested (1,732,513) 57.19 (4,896,614) 41.07 (3,112,871) 22.76
Canceled (434,801) 67.96 (354,983) 56.94 (286,956) 32.43
- ------------------------------- ---------- -------- ---------- -------- ---------- --------
Outstanding unvested grants at
December 31 13,027,337 $ 62.39 3,781,154 $ 61.85 5,180,012 $ 38.94
=============================== ========== ======== ========== ======== ========== ========


The following table summarizes information about stock options outstanding
at December 31, 1999:





Outstanding Options Options Exercisable
------------------------------------------------------ ----------------------------------
Number Weighted Average Number
Range of Outstanding Remaining Weighted-Average Exercisable Weighted-Average
Exercise Prices at December 31 Contractual Life Exercise Price at December 31 Exercise Price
- ----------------- ---------------- ------------------ ------------------ ---------------- -----------------

$0.00 - $30.00 18,114,375 4.1 years $ 21.89 18,114,375 $ 21.89
$30.01 - $46.50 22,305,419 3.5 years 39.20 22,305,419 39.20
$46.51 - $65.50 88,269,836 5.0 years 60.24 31,362,618 59.71
$65.51 - $99.00 27,516,005 6.6 years 78.61 13,971,156 81.70
- ----------------- ---------- --- -------- ---------- --------
Total 156,205,635 4.9 years $ 56.03 85,753,568 $ 49.97
================= =========== === ======== ========== ========


90

Note Fifteen - Income Taxes

The components of income tax expense for the years ended December 31,
1999, 1998 and 1997 were as follows:





(Dollars in millions) 1999 1998 1997
- ------------------------------ --------- --------- ------------

Current expense:
Federal $1,739 $2,163 $2,267
State 169 155 239
Foreign 327 349 537
- ------------------------------ ------ ------ ------
Total current expense 2,235 2,667 3,043
- ------------------------------ ------ ------ ------
Deferred (benefit) expense:
Federal 1,929 274 840
State 168 (68) 132
Foreign 1 10 (1)
- ------------------------------ ------ ------ --------
Total deferred expense 2,098 216 971
- ------------------------------ ------ ------ -------
Total income tax expense $4,333 $2,883 $4,014
============================== ====== ====== =======


The preceding table does not reflect the tax effects of unrealized gains
and losses on available-for-sale securities and marketable securities that are
included in shareholders' equity and certain tax benefits associated with the
Corporation's employee stock plans. As a result of these tax effects,
shareholders' equity increased by $1,538 million, $418 million and $161 million
in 1999, 1998 and 1997, respectively. The Corporation's current income tax
expense approximates the amounts payable for those years. Deferred income tax
expense represents the change in the deferred tax asset or liability and is
discussed further below.

A reconciliation of the expected federal income tax expense using the
federal statutory rate of 35 percent to the actual income tax expense for the
years ended December 31, 1999, 1998 and 1997 follows:





(Dollars in millions) 1999 1998 1997
- --------------------------------------------- --------- --------- ------------

Expected federal income tax expense $4,275 $2,817 $3,695
Increase (decrease) in taxes resulting from:
Tax-exempt income (88) (79) (83)
State tax expense, net of federal benefit 278 33 287
Goodwill amortization 211 259 228
Reorganization of certain subsidiaries -- (323) --
Nondeductible merger-related charges 26 183 32
Foreign tax differential (83) 28 (2)
Other (286) (35) (143)
- --------------------------------------------- ------ ------ -------
Total income tax expense $4,333 $2,883 $4,014
============================================= ====== ====== =======


91

Significant components of the Corporation's deferred tax (liabilities)
assets at December 31, 1999 and 1998 were as follows:





(Dollars in millions) 1999 1998
- ---------------------------------------------------------- ------------ ------------

Deferred tax liabilities:
Equipment lease financing $ (4,873) $ (3,838)
Intangibles (826) (779)
State taxes (400) (196)
Employee retirement benefits (379) (328)
Investments (368) (340)
Securities valuation (278) --
Depreciation (258) (296)
Deferred gains and losses (49) (65)
Loan fees and expenses (55) (17)
Available-for-sale securities -- (227)
Other (353) (272)
- ---------------------------------------------------------- -------- --------
Gross deferred tax liabilities (7,839) (6,358)
- ---------------------------------------------------------- -------- --------
Deferred tax assets:
Allowance for credit losses 2,167 2,257
Available-for-sale securities 1,121 --
Employee benefits 621 395
Accrued expenses 398 606
Net operating loss carryforwards 151 181
Foreclosed properties 62 63
Securities valuation -- 321
Other 120 137
- ---------------------------------------------------------- -------- --------
Gross deferred tax assets 4,640 3,960
- ---------------------------------------------------------- -------- --------
Valuation allowance (131) (161)
- ---------------------------------------------------------- -------- --------
Gross deferred tax assets, net of valuation allowance 4,509 3,799
- ---------------------------------------------------------- -------- --------
Net deferred tax liabilities $ (3,330) $ (2,559)
========================================================== ======== ========


The Corporation's deferred tax assets at December 31, 1999 and 1998
included a valuation allowance of $131 million and $161 million, respectively,
primarily representing net operating loss carryforwards for which it is more
likely than not that realization will not occur. The net change in the
valuation allowance for deferred tax assets resulted from a portion of net
operating loss carryforwards of foreign subsidiaries being used to offset
taxable income where realization was not expected to occur.

At December 31, 1999 and 1998, federal income taxes had not been provided
on $676 million and $380 million, respectively, of undistributed earnings of
foreign subsidiaries, earned prior to 1987 and after 1997, that have been
reinvested for an indefinite period of time. If the earnings were distributed,
an additional $148 million and $80 million of tax expense, net of credits for
foreign taxes paid on such earnings and for the related foreign withholding
taxes, would result in 1999 and 1998, respectively.


92

Note Sixteen - Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" (SFAS 107), requires the disclosure of the
estimated fair value of financial instruments. The fair value of a financial
instrument is the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. Quoted market prices, if available, are utilized as estimates
of the fair values of financial instruments. Since no quoted market prices
exist for a significant part of the Corporation's financial instruments, the
fair values of such instruments have been derived based on management's
assumptions, the estimated amount and timing of future cash flows and estimated
discount rates. The estimation methods for individual classifications of
financial instruments are described more fully below. Different assumptions
could significantly affect these estimates. Accordingly, the net realizable
values could be materially different from the estimates presented below. In
addition, the estimates are only indicative of the value of individual
financial instruments and should not be considered an indication of the fair
value of the combined Corporation.

The provisions of SFAS 107 do not require the disclosure of nonfinancial
instruments, including intangible assets such as goodwill, franchise, credit
card and trust relationships and MSR. In addition, the disclosure of fair value
amounts does not include lease financing.


Short-Term Financial Instruments

The carrying value of short-term financial instruments, including cash and
cash equivalents, federal funds sold and purchased, resale and repurchase
agreements, commercial paper and other short-term borrowings, approximates the
fair value of these instruments. These financial instruments generally expose
the Corporation to limited credit risk and have no stated maturities, or have
an average maturity of less than 30 days and carry interest rates which
approximate market.


Financial Instruments Traded in the Secondary Market

Held-for-investment securities, available-for-sale securities, trading
account instruments, long-term debt and trust preferred securities traded
actively in the secondary market have been valued using quoted market prices.
The fair value of securities and trading account instruments is reported in
Notes Three and Four on pages 67 and 69.


Loans

Fair values were estimated for groups of similar loans based upon type of
loan, credit quality and maturity. The fair value of loans was determined by
discounting estimated cash flows using interest rates approximating the
Corporation's December 31 origination rates for similar loans. Where quoted
market prices were available, primarily for certain residential mortgage loans,
such market prices were utilized as estimates for fair values. Contractual cash
flows for residential mortgage loans were adjusted for estimated prepayments
using published industry data. Where credit deterioration has occurred,
estimated cash flows for fixed- and variable-rate loans have been reduced to
incorporate estimated losses.

The fair values of domestic commercial loans that do not reprice or mature
within relatively short time frames were estimated using discounted cash flow
models. The discount rates were based on current market interest rates for
similar types of loans, remaining maturities and credit ratings. For domestic
commercial loans that reprice within relatively short time frames, the carrying
values were assumed to approximate their fair values. Substantially all of the
foreign loans reprice within relatively short time frames. Accordingly, for the
majority of foreign loans, the carrying values were assumed to approximate
their fair values. For purposes of these fair value estimates, the fair values
of nonaccrual loans were computed by deducting an estimated market discount
from their carrying values to reflect the uncertainty of future cash flows. The
fair values of commitments to extend credit were not significant at either
December 31, 1999 or 1998.


93

Mortgage Servicing Rights

Note One on page 58 discloses the fair value of capitalized MSR as well as
the fair value of ALM contracts associated with capitalized MSR.


Deposits

The fair value for deposits with stated maturities was calculated by
discounting contractual cash flows using current market rates for instruments
with similar maturities. For deposits with no stated maturities, the carrying
amount was considered to approximate fair value and does not take into account
the significant value of the cost advantage and stability of the Corporation's
long-term relationships with depositors.


Derivative Financial Instruments

The fair value of the Corporation's derivative-dealer assets and
liabilities and ALM contracts is presented in Note Eleven on page 79.

The book and fair value of certain financial instruments at December 31,
1999 and 1998 were as follows:




1999 1998
----------------------- -----------------------
Book Fair Book Fair
(Dollars in millions) Value Value Value Value
- ----------------------------- ----------- ----------- ----------- -----------

Financial assets
Loans $348,790 $351,469 $337,303 $342,936
Financial liabilities
Deposits 347,273 347,251 357,260 357,915
Trust preferred securities 4,955 4,603 4,954 5,244
Long-term debt(1) 55,385 54,837 45,767 47,135
============================= ======== ======== ======== ========


(1) Excludes obligations under capital leases.

For all other financial instruments, book value approximates fair value.

94

Note Seventeen - Business Segment Information

Management reports the results of operations of the Corporation through
four business segments: Consumer Banking, which provides comprehensive retail
banking products and services to individuals and small businesses through
multiple delivery channels; Commercial Banking, which provides a wide range of
commercial banking services for businesses with annual revenues of up to $500
million; Global Corporate and Investment Banking, which provides a broad array
of financial products such as investment banking, trade finance, treasury
management, capital markets, leasing and financial advisory services to
domestic and international corporations, financial institutions and government
entities; and Principal Investing and Asset Management includes direct equity
investments in businesses and investments in general partnership funds;
customized asset management, advisory and trust services for high-net-worth
clients through its Private Bank; equity, fixed income, cash, and alternative
investments management to individuals, corporations and a wide array of
institutional clients as well as advisory services for the Corporation's
affiliated family of mutual funds; and full service and discount brokerage
services.

The following table includes revenue and net income for the years ended
December 31, 1999, 1998 and 1997 and total assets at December 31, 1999 and 1998
for each business segment:


Business Segments



Total Corporation Consumer Banking(2) Commercial Banking(2)
-------------------------------- -------------------------------- -----------------------------
(Dollars in millions) 1999 1998 1997 1999 1998 1997 1999 1998 1997
- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- ---------

Net interest income(1) $ 18,452 $ 18,461 $18,589 $ 11,523 $ 11,806 $12,180 $ 2,191 $ 2,152 $2,193
Noninterest income 14,069 12,189 11,756 6,511 6,604 6,210 894 730 613
- ------------------------------ -------- -------- ------- -------- -------- ------- ------- ------- ------
Total revenue 32,521 30,650 30,345 18,034 18,410 18,390 3,085 2,882 2,806
Provision for credit losses 1,820 2,920 1,904 1,327 1,259 1,569 164 64 (16)
Gains on sales of securities 240 1,017 271 42 10 38 -- 4 --
Amortization of intangibles 888 902 855 638 606 612 57 101 101
Depreciation expense 1,028 1,096 1,107 664 678 679 66 74 76
Merger-related charges, net 525 1,795 374 -- -- -- -- -- --
Other noninterest expense 16,070 16,743 15,663 9,247 9,744 10,068 1,351 1,211 1,045
- ------------------------------ -------- -------- ------- -------- -------- ------- ------- ------- ------
Income before income taxes 12,430 8,211 10,713 6,200 6,133 5,500 1,447 1,436 1,600
Income tax expense 4,548 3,046 4,171 2,301 2,254 2,148 569 483 623
- ------------------------------ -------- -------- ------- -------- -------- ------- ------- ------- ------
Net income $ 7,882 $ 5,165 $ 6,542 $ 3,899 $ 3,879 $ 3,352 $ 878 $ 953 $ 977
============================== ======== ======== ======= ======== ======== ======= ======= ======= ======
Period-end total assets $632,574 $617,679 $255,401 $271,695 $63,066 $61,772
============================== ======== ======== ======== ======== ======= =======





Global Corporate and Principal Investing and
Investment Banking(2) Asset Management(2)
------------------------------------ -------------------------------
(Dollars in millions) 1999 1998 1997 1999 1998 1997
- --------------------------------------- ----------- -------------- --------- ---------- ---------- ---------

Net interest income(1) $ 3,830 $ 3,799 $3,554 $ 501 $ 459 $ 409
Noninterest income 4,341 2,887 3,103 2,321 1,911 1,930
- --------------------------------------- -------- ------- ------ ------- ------- -------
Total revenue 8,171 6,686 6,657 2,822 2,370 2,339
Provision for credit losses 205 1,571 344 124 26 7
Gains (losses) on sales of securities 9 (5) 10 -- -- 4
Amortization of intangibles 158 168 118 35 27 24
Depreciation expense 231 280 300 67 64 52
Merger-related charges, net -- -- -- -- -- --
Other noninterest expense 4,220 4,271 3,165 1,252 1,499 1,375
- --------------------------------------- -------- --------- ------ ------- ------- -------
Income before income taxes 3,366 391 2,740 1,344 754 885
Income tax expense (benefit) 1,112 99 1,024 503 263 341
- --------------------------------------- -------- --------- ------ ------- ------- -------
Net income $ 2,254 $ 292 $1,716 $ 841 $ 491 $ 544
======================================= ======== ========= ====== ======= ======= =======
Period-end total assets $223,930 $229,441 $26,004 $21,579
======================================= ======== ========= ======= =======




Corporate Other
-------------------------------
(Dollars in millions) 1999 1998 1997
- --------------------------------------- ---------- ---------- ---------

Net interest income(1) $ 407 $ 245 $ 253
Noninterest income 2 57 (100)
- --------------------------------------- ------- ------- ------
Total revenue 409 302 153
Provision for credit losses -- -- --
Gains (losses) on sales of securities 189 1,008 219
Amortization of intangibles -- -- --
Depreciation expense -- -- --
Merger-related charges, net 525 1,795 374
Other noninterest expense -- 18 10
- --------------------------------------- ------- ------- ------
Income before income taxes 73 (503) (12)
Income tax expense (benefit) 63 (53) 35
- --------------------------------------- ------- ------- ------
Net income $ 10 $ (450) $ (47)
======================================= ======= ======= ======
Period-end total assets $64,173 $33,192
======================================= ======= =======


(1) Net interest income is presented on a taxable-equivalent basis.
(2) There were no material intersegment revenues among the four business
segments.

95

Following is a reconciliation of the business segments' revenue and net
income for the years ended December 31, 1999, 1998 and 1997 and total assets at
December 31, 1999 and 1998 to the consolidated totals:





(Dollars in millions) 1999 1998 1997
- -------------------------------------------------- ------------ ------------ ----------

Segments' revenue $ 32,112 $ 30,348 $30,192
Adjustments:
Earnings associated with unassigned capital 407 245 253
Gains on sales of subsidiary companies -- 57 --
Other 2 -- (100)
- -------------------------------------------------- --------- --------- -------
Consolidated revenue $ 32,521 $ 30,650 $30,345
================================================== ========= ========= =======
Segments' net income $ 7,872 $ 5,615 $ 6,589
Adjustments, net of taxes:
Earnings associated with unassigned capital 251 157 158
Gains on sales of subsidiary companies -- 37 --
Gains on sales of securities 117 649 140
Merger-related charges, net (358) (1,325) (264)
Other -- 32 (81)
- -------------------------------------------------- --------- --------- -------
Consolidated net income $ 7,882 $ 5,165 $ 6,542
================================================== ========= ========= =======
Segments' total assets $ 568,401 $ 584,487
Adjustments:
Investment securities 58,310 63,311
Elimination of excess earning asset allocations (20,612) (52,817)
Other, net 26,475 22,698
- -------------------------------------------------- --------- ---------
Consolidated total assets $ 632,574 $ 617,679
================================================== ========= =========


The adjustments presented in the table above represent consolidated
income, expense and asset balances not specifically allocated to individual
business segments. In addition, reconciling items also include the effect of
earnings allocations not assigned to specific business segments, as well as the
related earning asset balances.


96

Note Eighteen - Bank of America Corporation (Parent Company Only)

The following tables present the Parent Company Only financial
information:


Condensed Statement of Income



Year Ended December 31
-----------------------------
(Dollars in millions) 1999 1998 1997
- ------------------------------------------------------------------------- --------- --------- ---------

Income
Dividends from subsidiaries:
Bank subsidiaries $ 7,700 $4,795 $5,730
Other subsidiaries 171 202 728
Interest from subsidiaries 2,197 1,911 1,690
Other income 987 709 647
- ------------------------------------------------------------------------- ------- ------ ------
11,055 7,617 8,795
- ------------------------------------------------------------------------- ------- ------ ------
Expense
Interest on borrowed funds 2,626 2,805 2,529
Noninterest expense 1,155 835 632
- ------------------------------------------------------------------------- ------- ------ ------
3,781 3,640 3,161
- ------------------------------------------------------------------------- ------- ------ ------
Income before income tax benefit and equity in undistributed earnings of
subsidiaries 7,274 3,977 5,634
Income tax benefit 494 461 331
- ------------------------------------------------------------------------- ------- ------ ------
Income before equity in undistributed earnings of subsidiaries 7,768 4,438 5,965
Equity in undistributed earnings of subsidiaries:
Bank subsidiaries 10 553 471
Other subsidiaries 104 174 106
- ------------------------------------------------------------------------- ------- ------ ------
114 727 577
- ------------------------------------------------------------------------- ------- ------ ------
Net income $ 7,882 $5,165 $6,542
========================================================================= ======= ====== ======
Net income available to common shareholders $ 7,876 $5,140 $6,431
========================================================================= ======= ====== ======


Condensed Balance Sheet



December 31
--------------------
(Dollars in millions) 1999 1998
- --------------------------------------------- ---------- ---------

Assets
Cash held at bank subsidiaries $15,932 $ 3,069
Temporary investments 1,458 1,525
Receivables from subsidiaries:
Bank subsidiaries 12,292 10,456
Other subsidiaries 9,832 20,321
Investments in subsidiaries:
Bank subsidiaries 49,476 48,984
Other subsidiaries 1,624 5,108
Other assets 3,693 4,190
- --------------------------------------------- ------- -------
Total assets $94,307 $93,653
============================================= ======= =======
Liabilities and shareholders' equity
Commercial paper and other notes payable $ 7,146 $ 5,289
Accrued expenses and other liabilities 2,381 2,711
Payables to subsidiaries 4,486 6,004
Long-term debt 35,862 33,711
Shareholders' equity 44,432 45,938
- --------------------------------------------- ------- -------
Total liabilities and shareholders' equity $94,307 $93,653
============================================= ======= =======


97

Condensed Statement of Cash Flows



Year Ended December 31
-----------------------------------
(Dollars in millions) 1999 1998 1997
- --------------------------------------------------------------------------- ----------- ----------- -----------

Operating activities
Net income $ 7,882 $ 5,165 $ 6,542
Reconciliation of net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries (114) (727) (577)
Other operating activities (191) (412) 214
- --------------------------------------------------------------------------- -------- -------- --------
Net cash provided by operating activities 7,577 4,026 6,179
- --------------------------------------------------------------------------- -------- -------- --------
Investing activities
Net (increase) decrease in temporary investments (274) 632 4,037
Net decrease (increase) in receivables from subsidiaries 8,707 (6,145) (2,814)
Additional capital investment in subsidiaries 485 3,752 60
Acquisitions of subsidiaries, net of cash -- (822) (194)
Other investing activities -- (747) 191
- --------------------------------------------------------------------------- -------- -------- --------
Net cash provided by (used in) investing activities 8,918 (3,330) 1,280
- --------------------------------------------------------------------------- -------- -------- --------
Financing activities
Net increase (decrease) in commercial paper and other notes payable 1,600 1,726 (400)
Proceeds from issuance of long-term debt 5,912 7,283 4,887
Retirement of long-term debt (3,760) (4,533) (4,055)
Proceeds from issuance of common stock 1,158 1,367 1,892
Common stock repurchased (4,858) (1,751) (8,540)
Redemption of preferred stock -- (614) (1,701)
Cash dividends paid (3,199) (1,990) (2,175)
Other financing activities (485) (1,633) 182
- --------------------------------------------------------------------------- -------- -------- --------
Net cash used in financing activities (3,632) (145) (9,910)
- --------------------------------------------------------------------------- -------- -------- --------
Net increase (decrease) in cash held at bank subsidiaries 12,863 551 (2,451)
Cash held at bank subsidiaries at January 1 3,069 2,518 4,969
- --------------------------------------------------------------------------- -------- -------- --------
Cash held at bank subsidiaries at December 31 $ 15,932 $ 3,069 $ 2,518
=========================================================================== ======== ======== ========


On January 1, 1999, NationsCredit Corporation, a nonbank subsidiary,
merged into Bank of America Corporation. In addition, during 1999, Bank of
America, FSB, a nonbank subsidiary, merged into Bank of America, N.A. and
EquiCredit Corporation of America, also a nonbank subsidiary, became an
indirect subsidiary of Bank of America, N.A. Amounts presented above for 1998
and 1997 have not been restated to reflect these transactions.


98

Note Nineteen - Performance by Geographic Area

Since the Corporation's operations are highly integrated, certain asset,
liability, income and expense amounts must be allocated to arrive at total
assets and total revenue by geographic area. The Corporation identifies its
geographic performance based upon the business unit in which the assets are
recorded and where the income is earned and the expenses are incurred. In
certain circumstances, units may transact business with customers who are out
of their immediate geographic area. For example, a U.S. domiciled unit may have
made a loan to a borrower who resides in Latin America. In this instance, the
loan and related income would be included in domestic activities. Translation
gains, for those units in hyperinflationary economies, net of hedging, totaled
$4 million in 1999, compared to translation losses of $12 million and $27
million in 1998 and 1997, respectively. These amounts, which are reported in
other noninterest income, are included in the table below:





Total
Revenue(2)
for the year
Total Assets(1) ended
(Dollars in millions) Year at December 31 December 31
- --------------------------------- ------ ----------------- -------------

Domestic (3) 1999 $583,390 $30,156
1998 $551,800 $29,226
1997 $511,085 $28,368
- --------------------------------- ---- -------- -------
Asia 1999 20,923 1,023
1998 22,108 765
1997 26,187 924

Europe, Middle East and Africa 1999 20,152 641
1998 32,590 256
1997 27,220 533

Latin America and the Caribbean 1999 8,109 486
1998 11,181 240
1997 6,491 363
- --------------------------------- ---- -------- -------
Total Foreign 1999 49,184 2,150
1998 65,879 1,261
1997 59,898 1,820
- --------------------------------- ---- -------- -------
Total Consolidated 1999 $632,574 $32,306
1998 $617,679 $30,487
1997 $570,983 $30,188
- --------------------------------- ---- -------- -------


(1) Total assets includes long-lived assets, primarily all of which were
located in the U.S.
(2) Total revenues includes net interest income plus noninterest income. There
were no material intercompany revenues between geographic regions for any
of the years presented.
(3) Includes the Corporation's Canadian operations, which had total assets of
$1,202, $1,622 and $2,719 and total revenues of $29, $63 and $64 at and
for the years ended December 31, 1999, 1998 and 1997, respectively.


99

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There were no changes in or disagreements with accountants on accounting
and financial disclosure.


PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information set forth under the caption "Election of Directors" on pages 2
through 5 of the definitive 2000 Proxy Statement of the registrant furnished to
stockholders in connection with its Annual Meeting to be held on April 25, 2000
(the "2000 Proxy Statement") with respect to the name of each nominee or
director, that person's age, positions and offices with the registrant,
business experience, directorships in other public companies, service on the
registrant's Board and certain family relationships, and information set forth
under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" on
page 8 of the 2000 Proxy Statement with respect to Section 16 matters, is
hereby incorporated by reference. In addition, information set forth under the
caption "Special Compensation Arrangements -- Employment Agreements with
Messrs. Lewis, Hance and Murray" on page 13 of the 2000 Proxy Statement is
hereby incorporated by reference. Additional information required by Item 10
with respect to executive officers is set forth in Part I, Item 4A hereof.


Item 11. EXECUTIVE COMPENSATION

Information with respect to current remuneration of executive officers,
certain proposed remuneration to them, their options and certain indebtedness
and other transactions set forth in the 2000 Proxy Statement (i) under the
caption "Board of Directors' Compensation" on page 9 thereof, (ii) under the
caption "Executive Compensation" on pages 10 and 11 thereof, (iii) under the
caption "Retirement Plans" on page 12 thereof, (iv) under the caption "Deferred
Compensation Plan" on pages 12 and 13 thereof, (v) under the caption "Special
Compensation Arrangements" on page 13 thereof, (vi) under the caption
"Compensation Committee Interlocks and Insider Participation" on page 17
thereof, and (vii) under the caption "Certain Transactions" on page 17 thereof,
is, to the extent such information is required by Item 402 of Regulation S-K,
hereby incorporated by reference.


Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The security ownership information required by Item 403 of Regulation S-K
relating to persons who beneficially own five percent or more of the
outstanding shares of Common Stock, ESOP Preferred Stock or 7% Cumulative
Redeemable Preferred Stock, Series B, as well as security ownership information
relating to directors, nominees and named executive officers individually and
directors and executive officers as a group, is hereby incorporated by
reference to the ownership information set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" on pages 6 through 8 of
the 2000 Proxy Statement.


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to relationships and related transactions between
the registrant and any director, nominee for director, executive officer,
security holder owning five percent or more of the registrant's voting
securities or any member of the immediate family of any of the above, as set
forth in the 2000 Proxy Statement under the caption "Compensation Committee
Interlocks and Insider Participation" on page 17 and under the caption "Certain
Transactions" on page 17 thereof, is, to the extent such information is
required by Item 404 of Regulation S-K, hereby incorporated by reference.


100

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a. The following documents are filed as part of this report:





Page
-----

(1) Financial Statements:
Report of Independent Accountants 53
Consolidated Statement of Income for the years ended December 31, 1999, 1998 and 1997 54
Consolidated Balance Sheet at December 31, 1999 and 1998 55
Consolidated Statement of Cash Flows for the years ended December 31, 1999, 1998 and
1997 56
Consolidated Statement of Changes in Shareholders' Equity for the years ended
December 31, 1999, 1998 and 1997 57
Notes To Consolidated Financial Statements 58
(2) Schedules:
None


b. The following report on Form 8-K was filed by the registrant during the
quarter ended December 31, 1999:

Current Report on Form 8-K dated October 18, 1999 and filed October 22,
1999, Items 5 and 7.

c. The exhibits filed as part of this report and exhibits incorporated
herein by reference to other documents are listed in the Index to
Exhibits to this Annual Report on Form 10-K (pages E-1 through E-6,
including executive compensation plans and arrangements which are
identified separately by asterisk).

With the exception of the information herein expressly incorporated by
reference, the 2000 Proxy Statement is not to be deemed filed as part of this
Annual Report on Form 10-K.


101
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

BANK OF AMERICA CORPORATION

Date: March 20, 2000
By: */s/ HUGH L. MCCOLL, JR.
------------------------------------------
Hugh L. McColl, Jr.
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


Signature Title Date
- ------------------------------------ -------------------------------- ---------------

*/s/HUGH L. McCOLL, JR. Chairman of the Board, Chief March 20, 2000
---------------------------------- Executive Officer and Director
Hugh L. McColl, Jr. (Principal Executive Officer)


*/s/JAMES H. HANCE, JR. Vice Chairman, Chief Financial March 20, 2000
---------------------------------- Officer and Director (Principal
James H. Hance, Jr. Financial Officer)


*/s/MARC D. OKEN Executive Vice President and March 20, 2000
---------------------------------- Principal Financial Executive
Marc D. Oken (Principal Accounting Officer)


*/s/CHARLES W. COKER Director March 20, 2000
----------------------------------
Charles W. Coker

*/s/TIMM F. CRULL Director March 20, 2000
----------------------------------
Timm F. Crull

*/s/ALAN T. DICKSON Director March 20, 2000
----------------------------------
Alan T. Dickson

*/s/KATHLEEN F. FELDSTEIN Director March 20, 2000
----------------------------------
Kathleen F. Feldstein

*/s/PAUL FULTON Director March 20, 2000
----------------------------------
Paul Fulton

*/s/DONALD E. GUINN Director March 20, 2000
----------------------------------
Donald E. Guinn

*/s/RAY HOLMAN Director March 20, 2000
----------------------------------
C. Ray Holman

*/s/W. W. JOHNSON Director March 20, 2000
----------------------------------
W. W. Johnson

102




Signature Title Date
- ----------------------------------------- ------------------------------------ ---------------

*/s/ KENNETH D. LEWIS President, Chief Operating Officer March 20, 2000
---------------------------------- and Director
Kenneth D. Lewis

*/s/ WALTER E. MASSEY Director March 20, 2000
----------------------------------
Walter E. Massey

*/s/ RICHARD M. ROSENBERG Director March 20, 2000
----------------------------------
Richard M. Rosenberg

Director March , 2000
----------------------------------
O. Temple Sloan, Jr.

*/s/ MEREDITH R. SPANGLER Director March 20, 2000
----------------------------------
Meredith R. Spangler

*/s/ RONALD TOWNSEND Director March 20, 2000
----------------------------------
Ronald Townsend

*/s/ SOLOMON D. TRUJILLO Director March 20, 2000
----------------------------------
Solomon D. Trujillo

*/s/ JACKIE M. WARD Director March 20, 2000
----------------------------------
Jackie M. Ward

*/s/ VIRGIL R. WILLIAMS Director March 20, 2000
----------------------------------
Virgil R. Williams

*/s/ SHIRLEY YOUNG Director March 20, 2000
----------------------------------
Shirley Young

*By:/s/ CHARLES M. BERGER
----------------------------------
Charles M. Berger, Attorney-in-Fact




103

INDEX TO EXHIBITS





Exhibit No. Description
- ------------- ---------------------------------------------------------------------------------

3(a) Amended and Restated Certificate of Incorporation of registrant, as in effect
on the date hereof, incorporated by reference to Exhibit 99.1 of registrant's
Current Report on Form 8-K filed May 7, 1999.
(b) Amended and Restated Bylaws of registrant, as in effect on the date hereof,
incorporated by reference to Exhibit 99.2 of registrant's Current Report on
Form 8-K filed May 7, 1999.
4(a) Specimen certificate of registrant's Common Stock, incorporated by reference
to Exhibit 4.13 of registrant's Registration No. 333-83503.
(b) Specimen certificate of registrant's ESOP Convertible Preferred Stock, Series
C, incorporated by reference to Exhibit 4(c) of registrant's Annual Report on
Form 10-K dated March 25, 1992.
(c) Specimen certificate of registrant's 7% Cumulative Redeemable Preferred
Stock, Series B, incorporated by reference to Exhibit 4(c) of registrant's
Annual Report on Form 10-K dated March 22, 1999 (the "1998 Form 10-K").
(d) Indenture dated as of August 1, 1982 between registrant and Morgan
Guaranty Trust Company of New York, pursuant to which registrant issued its
7 3/4% Debentures, due 2002, incorporated by reference to Exhibit 4.2 of
registrant's Registration No. 2-78530; and First Supplemental Indenture
thereto dated as of September 18, 1998, incorporated by reference to
Exhibit 4(e) of the 1998 Form 10-K.
(e) Indenture dated as of September 1, 1989 between registrant and The Bank of
New York, pursuant to which registrant issued its 9 3/8% Subordinated Notes,
due 2009; its 10.20% Subordinated Notes, due 2015; its 9 1/8% Subordinated
Notes, due 2001; and its 8 1/8% Subordinated Notes, due 2002, incorporated by
reference to Exhibit 4.1 of registrant's Registration No. 33-30717; and First
Supplemental Indenture thereto dated as of August 28, 1998, incorporated by
reference to Exhibit 4(f) of the 1998 Form 10-K.
(f) Indenture dated as of January 1, 1992 between registrant and BankAmerica
Trust Company of New York, incorporated by reference to Exhibit 4.1 of
registrant's Registration No. 33-54784; and First Supplemental Indenture
thereto dated as of July 1, 1993 between registrant and BankAmerica National
Trust Company (formerly BankAmerica Trust Company of New York),
pursuant to which registrant issued its Senior Medium-Term Notes, Series A,
B and C; and its 5 3/8% Senior Notes, due 2000, incorporated by reference to
Exhibit 4.1 of registrant's Current Report on Form 8-K dated July 6, 1993; and
Second Supplemental Indenture thereto dated as of September 18, 1998,
incorporated by reference to Exhibit 4(g) of the 1998 Form 10-K.
(g) Indenture dated as of November 1, 1992 between registrant and The Bank of
New York, pursuant to which registrant issued its 6 7/8% Subordinated Notes,
due 2005, incorporated by reference to Exhibit 4.1 of registrant's Amendment
to Application or Report on Form 8 dated March 1, 1993.
(h) First Supplemental Indenture dated as of July 1, 1993 to the Indenture dated
as of November 1, 1992 between registrant and The Bank of New York,
pursuant to which registrant issued its Subordinated Medium-Term Notes,
Series A and B; its 6 1/2% Subordinated Notes, due 2003; and its 7 3/4%
Subordinated Notes, due 2004, incorporated by reference to Exhibit 4.4 of
registrant's Current Report on Form 8-K dated July 6, 1993; and Second
Supplemental Indenture thereto dated as of August 28, 1998, incorporated by
reference to Exhibit 4(i) of the 1998 Form 10-K.
(i) Indenture dated as of January 1, 1995 between registrant and BankAmerica
National Trust Company, pursuant to which registrant issued its 7% Senior
Notes, due 2003; its 7% Senior Notes, due 2001; its 5 3/4% Senior Notes, due
2001; its 6 3/8% Senior Notes, due 2005; its 6 1/8% Senior Notes, due 2004; its
5 7/8% Senior Notes, due 2009; its 6 5/8% Senior Notes, due 2004; and its Senior
Medium-Term Notes, Series D, E, F, G and H, incorporated by reference to
Exhibit 4.1 of registrant's Registration No. 33-57533; and First Supplemental
Indenture thereto dated as of September 18, 1998, incorporated by reference to
Exhibit 4.3 of registrant's Current Report on Form 8-K filed November 18,
1998.


E-1




Exhibit No. Description
- ------------- ---------------------------------------------------------------------------------

(j) Indenture dated as of January 1, 1995 between registrant and The Bank of
New York, pursuant to which registrant issued its 7 5/8% Subordinated Notes,
due 2005; its 7 3/4% Subordinated Notes, due 2015; its 7 1/4% Subordinated
Notes, due 2025; its 6 1/2% Subordinated Notes, due 2006; its 7.80%
Subordinated Notes, due 2016; its 6 3/8% Subordinated Notes, due 2008; its
6.80% Subordinated Notes, due 2028; its 6.60% Subordinated Notes, due 2010;
its 7.80% Subordinated Notes due 2010; and its Subordinated Medium-Term
Notes, Series D, E, F, G and H, incorporated by reference to Exhibit 4.8 of
registrant's Registration No. 33-57533; and First Supplemental Indenture
thereto dated as of August 28, 1998, incorporated by reference to Exhibit 4.8 of
registrant's Current Report on Form 8-K filed November 18, 1998.
(k) Fiscal and Paying Agency Agreement dated as of July 5, 1995, between
registrant and The Chase Manhattan Bank, N.A. (London Branch), pursuant
to which registrant issued its Floating Rate Senior Notes, due 2000,
incorporated by reference to Exhibit 4(l) of registrant's Annual Report on
Form 10-K dated March 29, 1996 (the "1995 Form 10-K").
(l) Amended and Restated Agency Agreement dated as of July 30, 1999 between
registrant, Bank of America, N.A., The Chase Manhattan Bank (London
Branch) and The Chase Manhattan Bank Luxembourg S.A.
(m) Issuing and Paying Agency Agreement dated as of July 30, 1999 between Bank
of America, N.A., as Issuer, and Bankers Trust Company, as Issuing and Paying
Agent.
(n) Indenture dated as of November 27, 1996 between registrant and The Bank of
New York, incorporated by reference to Exhibit 4.10 of registrant's
Registration No. 333-15375.
(o) First Supplemental Indenture dated as of December 4, 1996 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York
pursuant to which registrant issued its 7.84% Junior Subordinated Deferrable
Interest Notes due 2026, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated November 27, 1996.
(p) Second Supplemental Indenture dated as of December 17, 1996 to the
Indenture dated as of November 27, 1996 between registrant and The Bank of
New York pursuant to which registrant issued its 7.83% Junior Subordinated
Deferrable Interest Notes due 2026, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated December 10, 1996.
(q) Third Supplemental Indenture dated as of February 3, 1997 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York
pursuant to which registrant issued its Floating Rate Junior Subordinated
Deferrable Interest Notes due 2027, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated January 22, 1997.
(r) Fourth Supplemental Indenture dated as of April 22, 1997 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York
pursuant to which registrant issued its 8 1/4% Junior Subordinated Deferrable
Interest Notes, due 2027, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated April 15, 1997.
(s) Fifth Supplemental Indenture dated as of August 28, 1998 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York,
incorporated by reference to Exhibit 4(t) of the 1998 Form 10-K.
(t) Indenture dated as of November 27, 1996, between Barnett Banks, Inc. and
The First National Bank of Chicago, as Trustee, and First Supplemental
Indenture dated as of January 9, 1998, among registrant, NB Holdings
Corporation, Barnett Banks, Inc. and The First National Bank of Chicago, as
Trustee, pursuant to which registrant (as successor to Barnett Banks, Inc.)
issued its 8.06% Junior Subordinated Debentures, due 2026, incorporated by
reference to Exhibit 4(u) of registrant's Annual Report on Form 10-K dated
March 13, 1998 (the "1997 Form 10-K").


E-2




Exhibit No. Description
- ------------- -------------------------------------------------------------------------------

(u) Indenture dated as of September 1, 1990 between the former BankAmerica
Corporation and Chase Manhattan Bank and Trust Company, N. A. (formerly
Manufacturers Hanover Trust Company of California), pursuant to which
registrant (as successor to the former BankAmerica Corporation) issued its
Subordinated Medium Term Notes, Series E; its 9.375% Subordinated Notes
due 2001; its 10.00% Subordinated Notes due 2003; its 9.625% Subordinated
Notes due 2001; its 9.50% Subordinated Notes due 2001; and its 9.20%
Subordinated Notes due 2003; and First Supplemental Indenture thereto
dated as of September 15, 1998, incorporated by reference to Exhibit 4(v) of
the 1998 Form 10-K.
(v) Indenture dated as of November 1, 1991 between the former BankAmerica
Corporation and Chase Manhattan Bank and Trust Company, N. A. (formerly
Manufacturers Hanover Trust Company of California), pursuant to which
registrant (as successor to the former BankAmerica Corporation) issued its
8.125% Subordinated Notes due 2002; its 7.75% Subordinated Notes due 2002;
its 8.375% Subordinated Notes due 2002; its 7.50% Subordinated Notes due
2002; its 7.20% Subordinated Notes due 2002; its 7.875% Subordinated Notes
due 2002; its 6.85% Subordinated Notes due 2003; its 6.875% Subordinated
Notes due 2003; its Floating Subordinated Notes due 2003; its 7.20%
Subordinated Notes due 2006; its 7.625% Subordinated Notes due 2004; its
8.125% Subordinated Notes due 2004; its 8.95% Subordinated Notes due 2004;
its 6.75% Subordinated Notes due 2005; its 6.20% Subordinated Notes due
2006; its 7.125% Subordinated Notes due 2006; its 6.625% Subordinated Notes
due 2007; its 6.625% Subordinated Notes due 2007; its 7.125% Subordinated
Notes due 2009; its 7.125% Subordinated Notes due 2011; and its 6.25%
Subordinated Notes due 2008; First Supplemental Indenture thereto dated as
of September 8, 1992; and Second Supplemental Indenture thereto dated as of
September 15, 1998, incorporated by reference to Exhibit 4(w) of the 1998
Form 10-K.
(w) Indenture dated as of November 1, 1991 between the former BankAmerica
Corporation and U.S. Bank Trust, N. A. (successor to Bankers Trust Company
of California, National Association, and First Trust of California, National
Association), pursuant to which registrant (as successor to the former
BankAmerica Corporation) issued its 6.65% Note due 2001; its 6.625% Note
due 2001; and its Senior Medium-Term Notes, Series H and I; First
Supplemental Indenture thereto dated as of August 1, 1994; and Second
Supplemental Indenture thereto dated as of September 30, 1998, incorporated
by reference to Exhibit 4(x) of the 1998 Form 10-K.
(x) Second Amended and Restated Agency Agreement dated as of November 15,
1996 between the former BankAmerica Corporation and First Trust of New
York, National Association, pursuant to which registrant (as successor to the
former BankAmerica Corporation) issued its Senior and Subordinated Euro
Medium-Term Notes; and Amendment thereto dated as of September 30, 1998,
incorporated by reference to Exhibit 4(y) of the 1998 Form 10-K.
(y) Junior Subordinated Indenture dated as of November 27, 1996 between the
former BankAmerica Corporation and Bankers Trust Company, pursuant to
which registrant (as successor to the former BankAmerica Corporation) issued
its 8.07% Series A Preferred Securities due 2026; and its 7.70% Series B
Preferred Securities due 2026; and First Supplemental Indenture thereto
dated as of September 15, 1998, incorporated by reference to Exhibit 4(z) of
the 1998 Form 10-K.
(z) Junior Subordinated Indenture dated as of December 20, 1996 between the
former BankAmerica Corporation and Bankers Trust Company, pursuant to
which registrant (as successor to the former BankAmerica Corporation) issued
its 7.75% Trust Originated Preferred Securities, Series 1 due 2026; its 8.00%
Cumulative Semi-Annual Income Preferred Securities, Series 2 due 2026; its
Floating Rate Capital Securities, Series 3 due 2027; and its 7.00% Trust
Originated Preferred Securities, Series 4 due 2028; and First Supplemental
Indenture thereto dated as of September 15, 1998, incorporated by reference to
Exhibit 4(aa) of the 1998 Form 10-K.



E-3




Exhibit No. Description
- ------------- ---------------------------------------------------------------------------------

The registrant has other long-term debt agreements, but these are not material in amount. Copies of these
agreements will be furnished to the Commission on request.
10(a) NationsBank Corporation and Designated Subsidiaries Directors' Retirement *
Plan, incorporated by reference to Exhibit 10(f) of registrant's Annual Report
on Form 10-K dated March 27, 1991; Amendment thereto dated as of
September 28, 1994, incorporated by reference to Exhibit 10(i) of registrant's
Annual Report on Form 10-K dated March 30, 1995; and Amendment thereto
dated as of April 24, 1996, incorporated by reference to Exhibit 10(g) of
registrant's Annual Report on Form 10-K dated March 28, 1997 (the "1996
Form 10-K").
(b) NationsBank Corporation and Designated Subsidiaries Supplemental *
Executive Retirement Plan, incorporated by reference to Exhibit 10(j) of
registrant's Annual Report on Form 10-K dated March 30, 1995; Amendment
thereto dated as of June 28, 1989, incorporated by reference to Exhibit 10(g) of
registrant's Annual Report on Form 10-K dated March 28, 1990; Amendment
thereto dated as of June 27, 1990, incorporated by reference to Exhibit 10(g) of
registrant's Annual Report on Form 10-K dated March 27, 1991; Amendment
thereto dated as of July 21, 1991, incorporated by reference to Exhibit 10(bb)
of registrant's Annual Report on Form 10-K dated March 25, 1992;
Amendments thereto dated as of December 3, 1992 and December 15, 1992,
both of which are incorporated by reference to Exhibit 10(l) of registrant's
Annual Report on Form 10-K dated March 24, 1993; Amendment thereto dated
as of September 28, 1994, incorporated by reference to Exhibit 10(j) of
registrant's Annual Report on Form 10-K dated March 30, 1995; Amendments
thereto dated March 27, 1996 and June 25, 1997, incorporated by reference to
Exhibit 10(c) of the 1997 Form 10-K; Amendments thereto dated April 10,
1998, June 24, 1998 and October 1, 1998, incorporated by reference to
Exhibit 10(b) of the 1998 Form 10-K; and Amendment thereto dated
December 14, 1999.
(c) NationsBank Corporation and Designated Subsidiaries Deferred *
Compensation Plan for Key Employees, incorporated by reference to Exhibit
10(k) of registrant's Annual Report on Form 10-K dated March 30, 1995;
Amendment thereto dated as of June 28, 1989, incorporated by reference to
Exhibit 10(h) of registrant's Annual Report on Form 10-K dated March 28,
1990; Amendment thereto dated as of June 27, 1990, incorporated by reference
to Exhibit 10(h) of registrant's Annual Report on Form 10-K dated March 27,
1991; Amendment thereto dated as of July 21, 1991, incorporated by reference
to Exhibit 10(bb) of registrant's Annual Report on Form 10-K dated March 25,
1992; Amendment thereto dated as of December 3, 1992, incorporated by
reference to Exhibit 10(m) of registrant's Annual Report on Form 10-K dated
March 24, 1993; and Amendments thereto dated April 10, 1998 and October 1,
1998 (filed as Exhibit 10(b) hereto).
(d) NationsBank Corporation and Designated Subsidiaries Supplemental *
Retirement Plan, incorporated by reference to Exhibit 10(o) of registrant's
Annual Report on Form 10-K dated March 30, 1994; Amendment thereto dated
as of June 28, 1989, incorporated by reference to Exhibit 10(k) of registrant's
Annual Report on Form 10-K dated March 28, 1990; Amendment thereto dated
as of June 27, 1990, incorporated by reference to Exhibit 10(k) of registrant's
Annual Report on Form 10-K dated March 27, 1991; Amendment thereto dated
as of July 21, 1991, incorporated by reference to Exhibit 10(bb) of registrant's
Annual Report on Form 10-K dated March 25, 1992; Amendments thereto
dated as of December 3, 1992 and December 4, 1992, both of which are
incorporated by reference to Exhibit 10(p) of registrant's Annual Report on
Form 10-K dated March 24, 1993; Amendment thereto dated as of July 5, 1995,
incorporated by reference to Exhibit 10(l) of the 1995 Form 10-K; and
Amendments thereto dated April 10, 1998 and October 1, 1998 (filed as
Exhibit 10(b) hereto).
(e) Split Dollar Agreement dated as of February 1, 1990 between registrant and *
Hugh L. McColl III, as Trustee for the benefit of Hugh L. McColl, Jr. and
Jane S. McColl, incorporated by reference to Exhibit 10(s) of registrant's
Annual Report on Form 10-K dated March 27, 1991.


E-4




Exhibit No. Description
- ------------- --------------------------------------------------------------------------------

(f) NationsBank Corporation Benefit Security Trust dated as of June 27, 1990, *
incorporated by reference to Exhibit 10(t) of registrant's Annual Report on
Form 10-K dated March 27, 1991; First Supplement thereto dated as of
November 30, 1992, incorporated by reference to Exhibit 10(v) of registrant's
Annual Report on Form 10-K dated March 24, 1993; and Trustee Removal/
Appointment Agreement dated as of December 19, 1995, incorporated by
reference to Exhibit 10(o) of the 1995 Form 10-K.
(g) The NationsBank 401(k) Restoration Plan, as amended and restated effective *
April 1, 1998 and as further amended and restated effective July 1, 1998,
incorporated by reference to Exhibit 10(g) of the 1998 Form 10-K.
(h) Bank of America Executive Incentive Compensation Plan, as amended and *
restated effective April 1, 1998, incorporated by reference to Exhibit 10(h) of
the 1998 Form 10-K.
(i) Bank of America Director Deferral Plan, as amended and restated effective *
January 27, 1999, incorporated by reference to Exhibit 10(i) of the 1998 Form
10-K.
(j) NationsBank Corporation Directors' Stock Plan, incorporated by reference to *
Exhibit 99.1 of registrant's Registration No. 333-02875.
(k) Amendment to Restricted Stock Award Plan Agreements with Hugh L. McColl, *
Jr. dated December 20, 1996, incorporated by reference to Exhibit 10(x) of the
1996 10-K.
(l) Bank of America Corporation Key Employee Stock Plan, as amended and *
restated effective September 24, 1998, incorporated by reference to Exhibit
10(a) of registrant's Quarterly Report on Form 10-Q dated November 16, 1998
(the "Third Quarter 1998 Form 10-Q").
(m) BankAmerica Corporation and Bank of America National Trust and Savings *
Association Deferred Compensation Plan for Directors, as amended and
restated, incorporated by reference to Exhibit 10(b) of the Third Quarter 1998
Form 10-Q.
(n) BankAmerica Deferred Compensation Plan as amended and restated, *
incorporated by reference to Exhibit 10(c) of the Third Quarter 1998 Form
10-Q.
(o) BankAmerica Corporation Senior Management Incentive Plan, as amended, *
incorporated by reference to Exhibit 10(d) of the Third Quarter 1998 Form
10-Q.
(p) BankAmerica Supplemental Retirement Plan, as amended and restated, *
incorporated by reference to Exhibit 10(e) of the Third Quarter 1998 Form
10-Q.
(q) BankAmerica Corporation Performance Equity Program, incorporated by *
reference to Exhibit 99.1 of Post-Effective Amendment No. 3 to registrant's
Registration No. 333-60553.
(r) BankAmerica Corporation 1992 Management Stock Plan, incorporated by *
reference to Exhibit 99.2 of Post-Effective Amendment No. 3 to registrant's
Registration No. 333-60553.
(s) BankAmerica Corporation 1987 Management Stock Plan, incorporated by *
reference to Exhibit 99.3 of Post-Effective Amendment No. 3 to registrant's
Registration No. 333-60553.
(t) Continental Bank Corporation 1991 Equity Performance Incentive Plan, *
incorporated by reference to Exhibit 99.5 of Post-Effective Amendment No. 3
to registrant's Registration No. 333-60553.
(u) Continental Bank Corporation 1982 Performance Restricted Stock and Stock *
Option Plan, incorporated by reference to Exhibit 99.1 of Post-Effective
Amendment No. 4 to registrant's Registration No. 333-60553.
(v) Split Dollar Life Insurance Agreement dated as of October 15, 1998 between *
registrant and NationsBank, N. A., as Trustee under that certain Irrevocable
Trust Agreement dated October 2, 1998, by and between Hugh L. McColl, Jr.,
as Grantor, and NationsBank, N. A., as Trustee, incorporated by reference to
Exhibit 10(cc) of the 1998 Form 10-K.


E-5




Exhibit No. Description
- ------------- --------------------------------------------------------------------------------

(w) Split Dollar Life Insurance Agreement dated as of October 16, 1998 between *
registrant and NationsBank, N. A., as Trustee under that certain Irrevocable
Trust Agreement No. 2 dated October 1, 1998, by and between James H.
Hance, Jr., as Grantor, and NationsBank, N. A., as Trustee, incorporated by
reference to Exhibit 10(dd) of the 1998 Form 10-K.
(x) Split Dollar Life Insurance Agreement dated as of September 28, 1998 between *
registrant and J. Steele Alphin, as Trustee under that certain Irrevocable
Trust Agreement dated June 23, 1998, by and between Kenneth D. Lewis, as
Grantor, and J. Steele Alphin, as Trustee, incorporated by reference to Exhibit
10(ee) of the 1998 Form 10-K.
(y) Employment Agreement dated as of April 10, 1998 between registrant and *
James H. Hance, Jr., incorporated by reference to Exhibit 10.4 of registrant's
Registration No. 333-60553.
(z) Employment Agreement dated as of April 10, 1998 between registrant and *
Kenneth D. Lewis, incorporated by reference to Exhibit 10.5 of registrant's
Registration No. 333-60553.
(aa) Employment Agreement dated as of April 10, 1998 between registrant and *
Michael J. Murray, incorporated by reference to Exhibit 10.2 of registrant's
Registration No. 333-60553.
(bb) Agreement and Plan of Reorganization by and between registrant and the
former BankAmerica Corporation, dated as of April 10, 1998, incorporated by
reference to Exhibit 2.1 of registrant's Registration No. 333-60553.
(cc) Plan of Reincorporation Merger by and between registrant and NationsBank
(DE) Corporation, dated as of August 3, 1998, incorporated by reference to
Exhibit 2.2 of registrant's Registration No. 333-60553.
(dd) Split Dollar Life Insurance Agreement dated as of August, 1999 between *
registrant and Bank of America, N.A., as Trustee under The Vandiver Family
Trust Dated August 12, 1999.
(ee) Split Dollar Life Insurance Agreement dated as of December 31, 1999 between *
registrant and Bank of America, N.A., as Trustee under the Michael J. Murray
and Christine A. Murray 1999 Irrevocable Trust dated December 11, 1999.
11 Earnings per share computation. Included in Note 10 of the consolidated
financial statements.
12 (a) Ratio of Earnings to Fixed Charges.
(b) Ratio of Earnings to Fixed Charges and Preferred Dividends.
21 List of Subsidiaries.
23 Consent of PricewaterhouseCoopers LLP.
24 (a) Power of Attorney.
(b) Corporate Resolution.
27 Financial Data Schedule.


- ---------
* Denotes executive compensation plan or arrangement.

E-6