Bank of America 1998 Annual Report Download - page 6

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investment firm that experienced mounting losses in late September and October.
To address this problem, the D.E. Shaw relationship has been restructured. In
addition, steps have been taken to minimize future losses.
All of that said, our trading losses and the D.E. Shaw relationship
obscured what otherwise would have been a good overall financial performance
for the year. In fact, many of our core earnings drivers remain vibrant. For
example, Consumer Banking earned $4 billion in 1998, a number that would have
ranked this unit alone in the top six U.S. banking companies for net earnings.
While we anticipate earnings challenges in 1999 from continuing pressure
on spreads, we are confident that the corrective actions we’ve taken and the
strategic advantages of the company we’re building will quickly return profits to
healthy levels.
One expression of this confidence is our decision to invest $750 million
in 1999 on projects that will help make Bank of America the bank we all envision.
We are certainly taking steps in 1999 to reduce expenses — but we are keenly
aware that we cannot save our way into prosperity. We continue to believe our
future is bright, and we will continue to invest in it.
Bringing it all together. There were several key events over the course of
the year that contributed to the creation of your new company.
First, on January 9 we completed our acquisition of Barnett Banks, Inc.
At the time this was the largest acquisition in banking history, and it created the
premier banking franchise in Florida, one of our country’s fastest growing states.
As expected, we completed the Barnett transition in the fall of 1998. The
addition of the Barnett franchise ensures our leading position in one of the
fastest-growing and most profitable banking markets in the country.
Second, we completed the installation of the Model Bank throughout
the former NationsBank franchise. The technological cornerstone of our vision
for banking in the next century, the Model Bank provides associates complete
information about customer relationships across product lines, business lines
and state lines. Operating on one system also greatly eases product upgrades and
rollouts, internal communications and service consistency and uniformity across
the franchise. The system, installed over the past seven years, enables consumer
bankers and relationship managers to serve customers with unprecedented
efficiency, consistency and responsiveness.
In the states where the Model Bank has been in use for more than a year,
associates have demonstrated its power by increasing sales levels by more than
35 percent. Our current schedule for installing the system in our western states
95
96
97
98
3.03
3.58
3.86
3.73
Operating earnings per share
( Dollars)
95
96
97
98
5.15
6.06
6.81
6.49
Operating net income
( Dollars in billions)