10-QPeriod: Q1 FY2001

BANK OF AMERICA CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2001

Filed May 15, 2001For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) reported its first quarter 2001 results, showing a decline in net income to $1.87 billion ($1.15 per diluted share) from $2.24 billion ($1.33 per diluted share) in the prior year's first quarter. This decrease was influenced by an increase in the provision for credit losses and lower noninterest income, particularly from equity investments and investment banking activities. Despite the income dip, the company saw growth in its net interest income, driven by increased loan and deposit balances. The balance sheet remained strong, with total assets decreasing to $609.8 billion from $642.2 billion at year-end 2000, while total shareholders' equity increased to $48.9 billion. The company continued its share repurchase program and maintained robust capital ratios, well above regulatory minimums, indicating a solid financial position for its investors.

Key Highlights

  • 1Net income decreased by 16.6% to $1.87 billion for the quarter ended March 31, 2001, compared to $2.24 billion for the same period in 2000.
  • 2Diluted earnings per share fell to $1.15 from $1.33 year-over-year.
  • 3Provision for credit losses significantly increased by $415 million to $835 million, reflecting a weaker economic environment and increased net charge-offs.
  • 4Total revenue saw a slight decrease of 1.6% to $8.5 billion, with noninterest income declining by 7.0% largely due to lower equity investment gains and investment banking income.
  • 5Net interest income, on a taxable-equivalent basis, increased by 3.17% to $4.7 billion, driven by higher loan and deposit growth.
  • 6Total assets decreased to $609.8 billion from $642.2 billion at the end of 2000, while total shareholders' equity increased to $48.9 billion from $47.6 billion.
  • 7The company continued its share repurchase program, with $6.1 billion remaining authority at March 31, 2001.

Frequently Asked Questions

The decrease in net income was primarily due to a significant increase in the provision for credit losses and a decline in noninterest income, particularly from equity investments and investment banking. The adoption of SFAS 133 also contributed a net loss of $83 million to trading account profits.

Total loans and leases decreased slightly to $382.7 billion. However, average managed loans and leases increased by $19.8 billion, driven by growth in consumer loans. The provision for credit losses rose substantially due to increased net charge-offs, especially in the commercial-domestic and consumer finance portfolios, reflecting a weakening economic environment.

The company maintained a strong capital position, with shareholders' equity increasing to $48.9 billion and regulatory capital ratios well above minimum requirements. During the quarter, the company repurchased approximately 14 million shares of common stock, reducing shareholders' equity but also enhancing earnings per share. Dividends per common share increased to $0.56 from $0.50 in the prior year.

The adoption of SFAS 133 on January 1, 2001, resulted in a transition adjustment loss of $52 million impacting net income and a net transition gain of $9 million impacting other comprehensive income. The loss to net income was recorded within trading account profits, and a separate $106 million loss was recorded in the Corporate Other segment. The company also recognized $577 million of derivative assets and $514 million of derivative liabilities on the balance sheet due to SFAS 133.