10-KPeriod: FY2004

BANK OF AMERICA CORP /DE/ Annual Report, Year Ended Dec 31, 2004

Filed March 1, 2005For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) reported a strong 2004, marked by record earnings driven significantly by its merger with FleetBoston Financial Corporation completed in April 2004. The integration of FleetBoston contributed positively to all business segments, bolstering Total Revenue and Net Income. Key operational highlights include substantial growth in Global Consumer and Small Business Banking and Global Business and Financial Services, supported by increased loan and deposit balances. The company also saw improvements in Global Capital Markets and Investment Banking due to reduced provisions for credit losses and increased investment banking income. While the company's overall financial health appears robust, investors should note the increase in noninterest expense, largely due to merger-related integration costs and personnel expenses, and a rise in the provision for credit losses, particularly in the credit card portfolio. The company's capital ratios remain strong, with Tier 1 and Total Capital ratios exceeding regulatory requirements, and management is actively engaged in strategic capital allocation, including share repurchases. The firm is also proactively managing market and credit risks through various hedging strategies and robust internal control processes. The successful completion of the FleetBoston merger positions Bank of America for continued growth and market leadership.

Key Highlights

  • 1Record Net Income of $14.1 billion in 2004, a 31% increase from 2003.
  • 2Completed the merger with FleetBoston Financial Corporation on April 1, 2004, integrating its operations and contributing significantly to revenue and earnings across all segments.
  • 3Acquired National Processing, Inc. (NPC) for $1.4 billion, strengthening its merchant processing capabilities.
  • 4Approved and implemented a 2-for-1 stock split and increased quarterly cash dividends.
  • 5Demonstrated strong capital adequacy with Tier 1 Capital ratio of 8.10% and Total Capital ratio of 11.63% at year-end 2004, classifying the company as 'well-capitalized' by regulators.
  • 6Managed credit risk effectively, with overall commercial credit quality improving and a decrease in net charge-offs for the commercial portfolio.
  • 7Repurchased approximately 147.9 million shares of common stock for $6.3 billion during 2004.

Frequently Asked Questions

The primary driver of Bank of America's strong financial performance in 2004 was the successful completion of its merger with FleetBoston Financial Corporation on April 1, 2004. This merger significantly contributed to the increase in total revenue, net income, and assets across all business segments.

The FleetBoston merger led to an increase in noninterest expense, primarily due to merger and restructuring charges related to integration activities, as well as higher personnel expenses and other general operating costs associated with the combined entity. Noninterest expense increased by $6.9 billion to $27.0 billion in 2004, with FleetBoston contributing $5.0 billion of this increase.

While overall credit quality improved in the commercial portfolio, the company noted an increase in credit card net charge-offs in the consumer segment. This was attributed to organic portfolio growth, account seasoning, the return of securitized loans to the balance sheet, and increases in minimum payment requirements. The company expects higher consumer net charge-offs in 2005 due to these factors.

Bank of America maintains strong capital adequacy, with its Tier 1 Capital ratio at 8.10% and Total Capital ratio at 11.63% as of December 31, 2004, exceeding regulatory requirements and classifying the company as 'well-capitalized'. The company is actively managing its capital through share repurchases and dividend payments and is preparing for the implementation of new Basel II risk-based capital standards.