Bank of America Second Quarter Operating Earnings Rise

To a Record $2.06 Billion CHARLOTTE, N.C. (PROTEXT) - Bank of America Corporation (NYSE: BAC) today reported operating earnings of $2.06 billion, or $1.18 per share ($1.15 diluted), for the second quarter of 1999, up from $2.02 billion, or $1.16 per share ($1.13 diluted), a year earlier. The company's return on common equity was 17.64 percent and the return on average assets was 1.34 percent. Operating earnings increased 8 percent from the first quarter of 1999. After a merger-related charge of $145 million after taxes, net income in the latest quarter was $1.92 billion, or $1.10 per share ($1.07 diluted). In the second quarter of 1998, a $277 million after-tax gain on the sale of Florida branches brought net income to $2.30 billion, or $1.32 per share ($1.28 diluted). Cash operating earnings -- which exclude the amortization of intangibles -- were $2.28 billion, or $1.31 per share ($1.28 diluted). The return on tangible equity was 28.49 percent. A year earlier, cash operating earnings were $2.25 billion, or $1.29 per share ($1.25 diluted). "Bank of America continues to make significant progress toward our goals, as reflected in our successful merger integration efforts, solid core operating results and many new initiatives aimed at improving and expanding customer relationships," said Hugh L. McColl Jr., chairman and chief executive officer. For the first six months of 1999, operating earnings were $3.97 billion and net income was $3.83 billion. Operating earnings per share were $2.28 ($2.23 diluted) and reported earnings per share were $2.20 per share ($2.15 diluted). A year ago, operating income was $3.99 billion, or $2.30 per share ($2.23 diluted). For the first six months of 1998, net income was $3.63 billion, or $2.09 per share ($2.03 diluted). Second Quarter Earnings Highlights (compared to a year ago) The efficiency ratio improved nearly 300 basis points to 54 percent, led by a 7 percent decline in expenses. Average managed loans increased 11 percent, driven by a 16 percent increase in managed consumer loans and a 6 percent increase in managed commercial loans. Fee-based revenue was generally strong. Credit card and deposit fee income was up significantly while investment banking, although below last year's record, also had a strong performance. Net Interest Income Fully taxable-equivalent net interest income of $4.66 billion was essentially unchanged from a year earlier, as the impact of loan and deposit growth was mostly offset by the effects of asset securitizations, divestitures, loan sales and a higher level of lower-yielding securities. Average managed loans grew 11 percent to $389 billion, reflecting increases in both consumer and commercial loans. The net yield on earning assets declined by 27 basis points to 3.53 percent. Noninterest Income Noninterest income declined 3 percent to $3.52 billion, as gains in trading, credit card, brokerage, asset management and deposit fee revenues were offset by lower mortgage banking income, investment banking revenue and other income. The reduction in investment banking revenue resulted in part from the sale of one of the company's investment banking units in the second half of 1998. A year ago, other income included a gain on the sale of the Columbia Seafirst Center. Securities gains were $52 million compared to $120 million in the second quarter of 1998. Efficiency Noninterest expense was reduced by 7 percent to $4.46 billion, reflecting cost savings resulting from recent mergers somewhat offset by continued spending on merger transition projects. Personnel expense dropped by 7 percent, and other operating expenses were also reduced. The efficiency ratio was 54 percent, a significant improvement from 57 percent a year earlier. Credit Quality The provision for credit losses in the second quarter was $510 million, compared to $495 million a year earlier. Net charge-offs were $520 million versus $505 million a year ago. Net charge-offs represented .57 percent of loans and leases, a 2-basis-point improvement from a year ago. Nonperforming assets were $3.07 billion, or .84 percent of loans, leases and foreclosed properties on June 30, 1999, compared to $2.53 billion, or .73 percent a year earlier. The allowance for credit losses totaled $7.10 billion on June 30, 1999, equal to 252 percent of nonperforming loans and 1.95 percent of loans and leases. The allowance was $6.73 billion, or 300 percent of nonperforming loans and 1.95 percent of loans and leases, a year earlier. Capital Strength Shareholders' equity stood at $45.6 billion at June 30, 1999. Total capital was equal to 8.24% of assets. The company's market capitalization was $126 billion. On June 23, the company authorized the repurchase of up to 130 million common shares over 24 months, with an expectation to complete the program within 18 months. Through June 30, the company had purchased 25 million shares. Business Segment Results Consumer Banking, which serves individuals and small businesses, earned $979 million, while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $220 million. Together, they represented 58 percent of the company's operating income. Global Corporate and Investment Banking, which serves large corporate customers, earned $581 million, representing 28 percent of the company's earnings. Principal Investing and Asset Management, which encompasses the private bank, trust, investment management, mutual funds, retail brokerage and principal investing, earned $184 million, representing 9 percent. Bank of America, with $614 billion in assets, is the largest bank in the United States. The company serves more than 30 million households and 2 million businesses across the country, offering customers the largest and most convenient delivery network from offices and ATMs to telephone and internet access. It also provides comprehensive international corporate financial services for clients doing business around the world. The company creates financial relationships featuring a full array of financial services, from traditional banking products to investments and capital raising within the securities markets. Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange. Further investor information can be found at www.bankofamerica.com/investor . www.bankofamerica.com Bank of America Corporation Three Months SIX Months Ended JUNE 30 Ended JUNE 30 1999 1998 1999 1998 Financial Summary (In millions, except per-share data) Operating net income $2,060 $2,021 $3,974 $3,994 Operating earnings per common share 1.18 1.16 2.28 2.30 Diluted operating earnings per common share 1.15 1.13 2.23 2.23 Cash basis earnings (1) 2,285 2,248 4,421 4,449 Cash basis earnings per common share 1.31 1.29 2.54 2.56 Cash basis diluted earnings per common share 1.28 1.25 2.48 2.49 Dividends paid per common share .45 .38 .90 .76 Price per share of common stock at period end 73.31 76.69 73.31 76.69 Average common shares 1,743.503 1,732.168 1,740.549 1,728.35 Average diluted common shares 1,786.844 1,784.712 1,783.316 1,778.947 Summary Income Statement (Operating Basis) (Taxable-equivalent in millions) Net interest income $4,663 $4,668 $9,308 $9,327 Provision for credit losses (510) (495) (1,020)(1,005) Gains on sales of securities 52 120 182 333 Noninterest income 3,522 3,636 6,745 7,129 Other noninterest expense (4,457) (4,767) (8,910)(9,471) Income before income taxes 3,270 3,162 6,305 6,313 Income taxes - including FTE adjustment 1,210 1,141 2,331 2,319 Operating net income $2,060 $2,021 $3,974 $3,994 SUMMARY Balance Sheet (Average balances in billions) Loans and leases $364.753 $342.787 $362.760 $342.381 Managed loans and leases(2) 389.373 351.321 387.164 349.297 Securities 77.855 63.052 76.848 64.412 Earning assets 530.049 491.945 526.884 492.878 Total assets 615.364 573.975 612.510 576.394 Deposits 342.249 342.369 344.080 341.125 Shareholders' equity 46.891 44.857 46.587 44.246 Common shareholders' equity 46.821 44.198 46.516 43.579 PERFORMANCE INDICES (Operating Basis) Return on average common shareholders' equity 17.64% 18.24% 17.22% 18.38% Return on average tangible common shareholders' equity 28.49 31.23 27.97 31.88 Return on average assets 1.34 1.41 1.31 1.40 Return on average tangible assets 1.53 1.61 1.49 1.60 Net interest yield 3.53 3.80 3.55 3.81 Efficiency ratio 54.44 57.38 55.49 57.55 Cash basis efficiency ratio 51.70 54.65 52.71 54.79 Net charge-offs (in millions $520 $505 $1,039 $1,021 % of average loans and leases .57% .59% .58% .60% Managed bankcard net charge-offs as a % of average managed bankcard receivables 6.13 6.52 6.07 6.65 REPORTED RESULTS (Including Merger-Related Charges) (In millions, except per-share data) Net income $1,915 $2,298 $3,829 $3,629 Earnings per common share 1.10 1.32 2.20 2.09 Diluted earnings per common share 1.07 1.28 2.15 2.03 Return on average common shareholders' equity 16.40 20.76 16.59 16.69 (1) Cash basis earnings equal operating net income excluding amortization of intangibles. (2) Prior periods are restated for comparison (e.g. acquisitions, divestitures and securitizations). (3) Ratios and amounts for 1998 have not been restated to reflect the impact of the BankAmerica merger. JUNE 30 1999 1998 Balance Sheet highlights (In billions, except per-share data) Loans and leases $363.581 $344.358 Securities 76.511 60.853 Earning assets 528.797 486.339 Total assets 614.102 571.890 Deposits 339.045 347.877 Shareholders' equity 45.631 46.709 Common shareholders' equity 45.551 46.646 Per share 26.44 26.88 Total equity to assets ratio (period-end) 7.43% 8.17% Risk-based capital(3) Tier 1 capital ratio 7.38% 7.32% Total capital ratio 11.09 11.77 Leverage ratio(3) 6.34 6.21 Common shares issued and outstanding (in millions) 1,722.931 1,735.233 Allowance for credit losses $7.096 $6.731 Allowance for credit losses as a % of loans and leases 1.95% 1.95% Allowance for credit losses as a % of nonperforming loans 252.38 299.98 Nonperforming loans $2.812 $2.244 Nonperforming assets 3.070 2.526 Nonperforming assets as a % of: Total assets .50% .44% Loans, leases and foreclosed properties .84 .73 OTHER DATA Full-time equivalent headcount 161,919 178,729 Banking centers 4,531 4,866 ATMs 14,051 14,691 BUSINESS SEGMENT RESULTS - Three months ended June 30, 1999 (In millions) OPERATING AVERAGE RETURN ON TOTAL NET LOANS AVERAGE REVENUE INCOME AND LEASES EQUITY Consumer Banking $4,547 $979 $183,853 20% Commercial Banking 766 220 55,350 19 Global Corporate and Investment Banking 2,133 581 107,278 19 Principal Investing and Asset Management 634 184 18,864 25 Additional financial information for investors can be found at http://www.bankofamerica.com/newsroom/press/images/2q99fact.pd f ots Original Text Service: Bank of America Corporation Internet: http://www.newsaktuell.de Contact: investors, Susan Carr, 704-386-8059, or Kevin Stitt, 704-386-5667, or media, Bob Stickler or Rick Beebe, 704-386-8465, all of Bank of America Corporation Web site: http://www.bankofamerica.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. 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