Bank of America 2002 Annual Report Download

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Annual Report 2002

Table of contents

  • Page 1
    Annual Report 2002

  • Page 2
    ... Review Board of Directors and Corporate Information Financial Highlights (Dollars in millions, except per share information) Year Ended December 31 2002 2001 Asset Management $2,399 2002 Revenue** ($ in millions) Equity Investments $(433) For the Year Revenue* Net income Shareholder value added...

  • Page 3
    ...and gained market share in most of its major businesses; and, • Won recognition from two major financial publications (U.S. Banker and American Banker) as the best American banking story of the year. We are fulfilling our vision for a fully integrated, multi-product financial services company, and...

  • Page 4
    ... to risk, we employ three lines of accountability to protect shareholder value: first, the line of business; second, Risk Management, joined by other units such as Finance and Legal; and third, our corporate audit function. Our management processes, structures and policies help us ensure compliance...

  • Page 5
    ... growth in our customer base as net new checking accounts increased by more than half a million and active users of Online Banking surged to more than 4.7 million. Commercial loan levels declined 12% as companies paid down loan balances. We also took steps this year to open new markets and to expand...

  • Page 6
    ...demonstrates a great advantage of our diverse revenue streams. During a year in which most market-sensitive businesses struggled greatly, our corporate earning power enabled us to continue to invest in our investment banking and asset management businesses. By adding program trading capabilities for...

  • Page 7
    ... managers and associates throughout the company, we all are building customer and client relationships and delivering the financial products and services our customers need to help them achieve their dreams. In regard to our focus on building relationships - the foundation of our corporate strategy...

  • Page 8
    Executive Officers Richard M. DeMartini President, Asset Management James H. Hance, Jr. Vice Chairman and Chief Financial Officer Barbara J. Desoer President, Consumer Products Edward J. Brown, III President, Global Corporate and Investment Banking 6 BANK OF AMERICA 2002

  • Page 9
    Amy Woods Brinkley Chief Risk Officer R. Eugene Taylor President, Consumer and Commercial Banking Kenneth D. Lewis Chairman, Chief Executive Officer and President BANK OF AMERICA 2002 7

  • Page 10
    ... as pulling out your keys (and should be on the key chains of 11 million of our customers by the end of 2003). It's new digital check imaging that can provide copies of checks to customers and small business owners via the Internet or at a neighborhood banking center. It's talking ATMs to make life...

  • Page 11
    9

  • Page 12
    ...payments - saving them time and reducing cost for the company. Banking centers continue to be a primary point in serving all of our customers, including businesses of all sizes. They remain consumers' top choice in selecting where to open personal accounts to help manage their household finances. We...

  • Page 13
    11

  • Page 14
    12

  • Page 15
    ..., we're expanding access to mortgage financing, home ownership counseling and other money management information. Our Asian-American customers benefit daily from our bilingual retail service through more than 175 Asian-language banking centers. America's diversity adds great richness to the...

  • Page 16
    ... with assets up to $3 million, to enhance access to investment services for more of our customers through our major market banking centers. Banc of America Investments' financial advisors partner with affluent clients in developing effective financial plans to achieve both near- and long-term goals...

  • Page 17
    15

  • Page 18
    16

  • Page 19
    ..., offering traditional credit, capital markets, treasury services and personal wealth management services. In a tough year for mid-size companies, we realized a 19% increase in Commercial net income. Among the largest U.S. bank providers of real estate financing for our commercial and corporate...

  • Page 20
    ... call centers, and Merchant Card and Treasury Management sales officers. Add more than 13,000 ATMs and award-winning Online Banking with Bill Pay, and we provide the 24/7 access that small business owners require. More than 375,000 of our small business clients are active users of our online service...

  • Page 21
    19

  • Page 22
    ... own money. Our corporate and associate spirit also extends to hands-on civic engagement. We provided more than 650,000 hours of volunteer time through the efforts of more than 135,000 associates participating in more than 3,000 bank-sponsored activities with an estimated financial value of nearly...

  • Page 23
    21

  • Page 24
    ... traditional bank deposit and loan products. We also provide cash management and payments services. Investor clients are served by strong equity and debt sales and trading capabilities. Clients benefit from extensive derivatives and other risk management products. • Increase fee-based business by...

  • Page 25
    ...• Introduced Business Advantage, a preferred pricing and service account that rewards owners for deepening their relationships with us • Online Banking ranked No. 1 for small businesses by Gomez, an Internet publication Card Services • Introduced Total Security Protection™ - offering greater...

  • Page 26
    ... of Management Report of Independent Accountants Consolidated Statement of Income Consolidated Balance Sheet Consolidated Statement of Changes in Shareholders' Equity Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements Board of Directors and Senior Managers 24 BANK OF...

  • Page 27
    ... banking and certain non-banking financial services and products both domestically and internationally through four business segments: Consumer and Commercial Banking, Asset Management, Global Corporate and Investment Banking and Equity Investments. The following Management's Discussion and Analysis...

  • Page 28
    ... higher volumes of online bill pay activity, check imaging and higher item processing and check clearing expenses. Marketing expense increased in 2002 as we expanded our advertising campaign. Advertising efforts primarily focused on card, mortgage, online banking and bill pay. Income tax expense was...

  • Page 29
    ... total average assets Dividend payout ratio Per common share data Earnings Diluted earnings Cash dividends paid Book value Average balance sheet Total loans and leases Total assets Total deposits Long-term debt Trust preferred securities Common shareholders' equity Total shareholders' equity $ 336...

  • Page 30
    ... to exiting unprofitable commercial loan relationships, the decline in subprime real estate loans (net of the remaining securitization) and auto lease financing, partially offset by higher levels of securities and residential mortgage loans. The core net interest yield increased 20 basis points in...

  • Page 31
    ... charge Shareholder value added (1) $ $ $ $ $ Operating basis excludes exit, merger and restructuring charges. Exit charges in 2001 represented provision for credit losses of $395 and noninterest expense of $1,305, both of which were related to the exit of certain consumer finance businesses...

  • Page 32
    ... Commercial Banking, Asset Management, Global Corporate and Investment Banking and Equity Investments. In managing our four business segments, we evaluate results using both financial and non-financial measures. Financial measures consist primarily of revenue, net income and shareholder value added...

  • Page 33
    ... credit losses Noninterest expense(4) Net income Shareholder value added Return on average equity Efficiency ratio (taxable-equivalent basis) Net interest yield (taxable-equivalent basis) Average: Total loans and leases Total assets Total deposits Common equity/Allocated equity Year end: Total loans...

  • Page 34
    ... ATMs, telephone, and Internet channels on www.bankofamerica.com. Banking Regions provides a wide range of products and services, including deposit products such as checking, money market savings accounts, time deposits and IRAs, debit card products and credit products such as home equity, mortgage...

  • Page 35
    ... Bank of America Pension Plan. The increase in marketing and promotional fees for the segment was primarily due to increased advertising and marketing investments in mortgage, online banking and bill pay and card products. The increase in data processing expense was primarily due to costs associated...

  • Page 36
    ... banking activities and risk management products. Global Investment Banking underwrites and makes markets in equity securities, high-grade and high-yield corporate debt securities, commercial paper, and mortgage-backed and asset-backed securities as well as provides correspondent clearing services...

  • Page 37
    ... in trading account profits and a decline in investment banking income, partially offset by increases in investment and brokerage services and service charges. Service charges increased four percent to $1.2 billion as many corporate customers chose to pay higher fees rather than increase deposit...

  • Page 38
    ... for managing liquidity, market and credit portfolio risks as well as interest rate risk inherent in our balance sheet and trading risk inherent in our customer and proprietary trading portfolio. ALCO approves Value at Risk (VAR) limits for various trading activities in the Corporation. The Credit...

  • Page 39
    ... customer deposits and other customer-based funding sources. Deposit rates and levels are monitored, and trends and significant changes are reported to ALCO and the Finance Committee. Deposit marketing strategies are reviewed for consistency with our liquidity policy objectives. Asset securitization...

  • Page 40
    ... increased money market accounts due to an emphasis on total relationship balances and customer preference for stable investments in these uncertain economic times. The decline in consumer CDs and IRAs was primarily driven by a change in product mix to money market and other deposit accounts. Market...

  • Page 41
    ...-grade short-term commercial paper that is collateralized by the assets sold. Additionally, some customers receive the benefit of commercial paper financing rates related to certain lease arrangements. We facilitate these transactions and collect fees from the financing entity for the services it...

  • Page 42
    ... credit or market risk on commitments or derivatives through normal underwriting and risk management processes. Derivative activity related to these entities is included in Note 5 of the consolidated financial statements. At December 31, 2002 and 2001, the Corporation had off-balance sheet liquidity...

  • Page 43
    ... closing market price of the Corporation's common stock on December 31, 2002 was $69.57 per share. Commercial Portfolio Credit Risk Management Commercial credit risk management begins with an assessment of the credit risk profile of an individual borrower (or counterparty) based on an analysis of...

  • Page 44
    ... America Strategic Solutions, Inc. (SSI) is a wholly-owned subsidiary of the Corporation which manages problem asset resolution and the coordination of exit strategies, if applicable, including bulk sales, collateralized debt obligations and other resolutions of domestic and international commercial...

  • Page 45
    ... Emerging Markets Asia Central and Eastern Europe Latin America Total (1) $ 18,065 Total By Property Type Office buildings Apartments Residential Shopping centers/retail Industrial/warehouse Land and land development Hotels/motels Multiple use Miscellaneous commercial Unsecured Other Non-US...

  • Page 46
    ... commercial - foreign loans increased $898 million to 6.83 percent of commercial - foreign loans at December 31, 2002 from 2.00 percent at December 31, 2001. The increase was primarily attributable to media and telecommunications services firms located in Western Europe and in Latin America. Credit...

  • Page 47
    ...Activity (Dollars in millions) 2002 2001 Balance, January 1 Commercial Additions to nonperforming assets: New nonaccrual loans and foreclosed properties Advances on loans Total commercial additions Reductions in nonperforming assets: Paydowns, payoffs and sales Returns to performing status Charge...

  • Page 48
    ... on the Corporation's allowance for credit losses. The specific component of the allowance for credit losses covers those commercial loans that are our nonperforming or impaired. An allowance is established when the discounted cash flows (or collateral value or observable market price) is lower...

  • Page 49
    ...) 2002 2001 Balance, January 1 Loans and leases charged off Commercial - domestic Commercial - foreign Commercial real estate - domestic Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance(1) Credit card Other consumer domestic Foreign consumer Total...

  • Page 50
    ..., the Corporation realigned certain problem loan management activities into a wholly-owned subsidiary, Banc of America Strategic Solutions, Inc. (SSI). SSI was established to better align the management of commercial loan credit workout operations. The Corporation believes that economic returns will...

  • Page 51
    .... Market Risk Management Market risk is the potential loss due to adverse changes in market prices and yields. Market risk is inherent in most of the Corporation's operating positions and/or activities including customers' loans, deposits, securities and long-term debt (interest rate risk), trading...

  • Page 52
    ... our trading activities, we focus on the actual and potential volatility of individual positions as well as portfolios. At a portfolio and corporate level, we use Value at Risk (VAR) modeling and stress testing. VAR is a key limit used to measure market risk. Trader limits and VAR are used to manage...

  • Page 53
    ... the changes in cash flows or market values of our balance sheet. See Note 5 of the consolidated financial statements for additional information on the Corporation's hedging activities. Our interest rate contracts are generally non-leveraged generic interest rate and basis swaps, options, futures...

  • Page 54
    ... 20 Asset and Liability Management Interest Rate and Foreign Exchange Contracts December 31, 2002 Expected Maturity (Dollars in millions, average estimated duration in years) Fair Value Total 2003 2004 2005 2006 2007 Thereafter Average Estimated Duration Open interest rate contracts Total...

  • Page 55
    ... assessments of vendor management processes and key vendor processes, the latter including on-site work at our more significant vendors. To manage corporate-wide risks, we maintain specialized support groups, such as Legal, Information Security, Business Recovery, Supply Chain Management, Finance...

  • Page 56
    ... money market deposit pricing initiative and a decrease in auto lease financing contributions. Noninterest income was $14.3 billion, a $234 million decrease. Service charges increased $401 million, or nine percent, driven by higher business volumes and corporate customers opting to pay higher fees...

  • Page 57
    ... money market deposit pricing initiative as the Corporation offered more competitive money market savings rates. Noninterest income increased $736 million, or 10 percent, driven by a nine percent increase in service charges, a nine percent increase in card income and strong mortgage banking revenue...

  • Page 58
    ... Trading account assets Securities(1) Loans and leases(2): Commercial - domestic Commercial - foreign Commercial real estate - domestic Commercial real estate - foreign Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance Credit card Foreign consumer...

  • Page 59
    2001 Average Balance Interest Income/Expense Yield/Rate Average Balance 2000 Interest Income/Expense Yield Rate $ 6,723 35,202 66,418 60,372 $ 318 1,414 3,653 3,761 9,879 1,567 1,700 20... 5.71 4.20 6.05 3.74 7.06 5.09 $ 20,633 2.96 0.72 3.68% $ 18,671 2.36 0.84 3.20% BANK OF AMERICA 2002 57

  • Page 60
    ... to resell Trading account assets Securities Loans and leases: Commercial - domestic Commercial - foreign Commercial real estate - domestic Commercial real estate - foreign Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance Credit card Foreign consumer...

  • Page 61
    ... Add: Impact of trading-related activities Add: Impact of revolving securitizations Core net interest yield on earning assets TABLE IV Selected Loan Maturity Data(1) December 31, 2002 Due in 1 Year or Less Due After 1 Year Through 5 Years Due After 5 Years (Dollars in millions) Total Commercial...

  • Page 62
    ...93 - 6.54 6.41 - 5.97 6.18 - Securities sold under agreements to repurchase At December 31 Average during year Maximum month-end balance during year Commercial paper At December 31 Average during year Maximum month-end balance during year Other short-term borrowings At December 31 Average during...

  • Page 63
    ...1998 Amount Percent Amount Percent Commercial - domestic Commercial - foreign Commercial real estate - domestic Commercial real estate - foreign Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance Credit card Foreign consumer Total consumer $ 105,053...

  • Page 64
    ... credit is booked, regardless of the currency in which the claim is denominated. Management does not net local funding or liabilities against local exposures as allowed by the FFIEC. (5) Gross local country exposure to Hong Kong consisted of $1,828 of consumer loans and $1,572 of commercial exposure...

  • Page 65
    ... 2000 1999 1998 Nonperforming loans Commercial - domestic Commercial - foreign Commercial real estate - domestic Commercial real estate - foreign Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance Foreign consumer Total consumer Total nonperforming...

  • Page 66
    ... 1999 1998 Balance, January 1 Loans and leases charged off Commercial - domestic Commercial - foreign Commercial real estate - domestic Commercial real estate - foreign Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance(1) Credit card Other consumer...

  • Page 67
    ...16 0.55 0.46 1.00 Germany Canada Japan (1) Exposure includes cross-border claims by the Corporation's foreign offices as follows: loans, accrued interest receivable, acceptances, time deposits placed, trading account assets, securities, derivative assets, other interest-earning investments and...

  • Page 68
    ... Return Daily VAR and Trading-related Revenue 80 60 (Dollars in millions) 40 20 0 -20 -40 -60 -80 12/31/01 3/31/02 6/30/02 9/30/02 12/31/02 VAR Daily Tradingrelated Revenue TABLE XV Non-Exchange Traded Commodity Contracts Asset Positions Liability Positions (Dollars in millions) Net fair value...

  • Page 69
    ...period end) Total average equity to total average assets Dividend payout ratio Per common share data Earnings Diluted earnings Cash dividends paid Book value Average balance sheet Total loans and leases Total assets Total deposits Common shareholders' equity Total shareholders' equity $343,099 695...

  • Page 70
    ... Trading account assets Securities(1) Loans and leases(2): Commercial - domestic Commercial - foreign Commercial real estate - domestic Commercial real estate - foreign Total commercial Residential mortgage Home equity lines Direct/Indirect consumer Consumer finance Credit card Foreign consumer...

  • Page 71
    ...Balance Interest Income/ Expense Yield/ Rate Second Quarter 2002 Average Balance Interest Income/ Expense Yield/ Rate First Quarter 2002 Average Balance Interest Income/ Expense Yield/ Rate Fourth Quarter 2001 Average Balance Interest Income/ Expense Yield/ Rate...57 3.95% BANK OF AMERICA 2002 69

  • Page 72
    ... 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, 2002, management believes that the internal controls are in place and operating effectively. The Corporate Audit Division reviews, evaluates...

  • Page 73
    ... Accountants Bank of America Corporation and Subsidiaries 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...

  • Page 74
    ... charges Corporate service charges Total service charges Consumer investment and brokerage services Corporate investment and brokerage services Total investment and brokerage services Mortgage banking income Investment banking income Equity investment gains (losses) Card income Trading account...

  • Page 75
    ...) Held-to-maturity, at cost (market value - $1,001 and $1,009) Total securities Loans and leases Allowance for credit losses Loans and leases, net of allowance for credit losses Premises and equipment, net Mortgage banking assets Goodwill Core deposit intangibles and other intangibles Other...

  • Page 76
    ... gains on available-for-sale and marketable equity securities Net unrealized gains on foreign currency translation adjustments Cash dividends: Common Preferred Common stock issued under employee plans Common stock repurchased Conversion of preferred stock Other Balance, December 31, 2000 Net...

  • Page 77
    ... to net cash provided by (used in) operating activities: Provision for credit losses Gains on sales of securities Business exit costs Restructuring charges Depreciation and premises improvements amortization Amortization of intangibles Deferred income tax (benefit) expense Net (increase) decrease in...

  • Page 78
    ... net amount added to the Corporation's balance sheet and the amount of any previously recognized interest in the newly consolidated entity shall be recognized as the cumulative effect of an accounting change. Management is currently evaluating the impact of this new rule on the financial statements...

  • Page 79
    ... options granted was estimated on the date of grant using the BlackScholes option-pricing model and assumptions appropriate to each plan. The Black-Scholes model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes...

  • Page 80
    ... master netting agreements which allow the Corporation to settle positive and negative positions with the same counterparty on a net basis. For exchange traded contracts, fair value is based on quoted market prices. For non-exchange traded contracts, fair value is based on dealer quotes, pricing...

  • Page 81
    ... activities as either fair value hedges, cash flow hedges or hedges of net investments in foreign operations. The Corporation primarily manages interest rate and foreign currency exchange rate sensitivity through the use of derivatives. Fair value hedges are used to limit the Corporation's exposure...

  • Page 82
    ... for credit losses is established for individual impaired commercial 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...

  • Page 83
    ... cash flows of the underlying mortgage loans. The MSR and the Certificates are classified as mortgage banking assets (MBAs). The Certificates are carried at estimated fair value with the corresponding adjustment reported in trading account profits. The Corporation seeks to manage changes in value...

  • Page 84
    ... securitizes, sells and services interests in residential mortgage, consumer finance, commercial and credit card loans. When the Corporation securitizes assets, it may retain interest-only strips, one or more subordinated tranches and, in some cases, a cash reserve account, all of which are...

  • Page 85
    ... approximately $75 million was used for other costs related to process change and channel consolidation. At December 31, 2002, the restructuring reserve had been utilized. Foreign Currency Translation Assets, liabilities and operations of foreign branches and subsidiaries are recorded based on the...

  • Page 86
    ...Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Dollars in millions) Available-for-sale debt securities 2002 U.S. Treasury securities and agency debentures Mortgage-backed securities Foreign sovereign securities Other taxable securities Total taxable Tax-exempt securities...

  • Page 87
    ... assets and liabilities as well as derivative positions and mortgage banking certificates. Trading account profits, as reported in the Consolidated Statement of Income, does not include the net interest income recognized on trading positions or the related funding charge or benefit. BANK OF AMERICA...

  • Page 88
    ... to policies set by the exchange involved, including counterparty approval, margin requirements and security deposit requirements. Management believes the credit risk associated with these types of instruments is minimal. Trading account assets U.S. government & agency securities Foreign sovereign...

  • Page 89
    ....3 billion and $17.4 billion, respectively. Asset and Liability Management (ALM) Activities Interest rate contracts and foreign exchange contracts are utilized in the Corporation's ALM process. The Corporation maintains an overall interest rate risk management strategy that incorporates the use of...

  • Page 90
    ... rate and foreign currency exchange rate derivative contracts to protect against changes in the fair value of its fixed-rate assets and liabilities due to fluctuations in interest rates and exchange rates. The Corporation also uses these types of contracts to protect against changes in the cash...

  • Page 91
    ... with the strategic decision to exit the subprime real estate lending business, the Corporation securitized $17.5 billion of subprime real estate loans in two bond-insured transactions and retained all of the related AAA-rated securities in the available-for-sale portfolio. During 2002, the...

  • Page 92
    ... of the current fair value of residual cash flows to changes in those assumptions are as follows: Consumer Finance(1) 2001 2002 2001 Commercial - Domestic(2) 2001 Credit Card (Dollars in millions) 2002 Carrying amount of residual interests (at fair value) Balance of unamortized securitized loans...

  • Page 93
    The Corporation reviews its loan and lease portfolio on a managed basis. Managed loans and leases are defined as on-balance sheet loans and leases as well as securitized credit card loans. New advances under these previously securitized balances will be recorded on the Corporation's balance sheet ...

  • Page 94
    ... sources of cost-efficient funding for the Corporation's customers and expects that the amount of assets consolidated will be less than the $25.0 billion due to these actions and those of its customers. Revenues from administration, liquidity, letters of credit and other services provided to...

  • Page 95
    ...billion at December 31, 2001. These short-term bank notes, along with Treasury tax and loan notes, term federal funds purchased and commercial paper, are reflected in commercial paper and other short-term borrowings in the Consolidated Balance Sheet. Long-Term Debt The following table presents long...

  • Page 96
    ...-month London InterBank Offered Rates (LIBOR). Bank of America Corporation and Bank of America, N.A. maintain various domestic and international debt programs to offer both senior and subordinated notes. The notes may be denominated in U.S. dollars or foreign currencies. Foreign currency contracts...

  • Page 97
    ...to the indicated redemption period upon the occurrence and certification of a tax event, an investment company event or a capital treatment event. The Corporation may extend the stated maturity date of the junior subordinated notes to a date no later than December 15, 2050. BANK OF AMERICA 2002 95

  • Page 98
    .... If the customer fails to pay, the Corporation would, as applicable, liquidate collateral and/or set off accounts. Other Guarantees The Corporation sells products that offer book value protection primarily to plan sponsors of ERISA-governed pension plans such as 401(k) plans, 457 plans, etc. The...

  • Page 99
    ...to mortgage loans sold and other guarantees related to securitizations, see Note 8 of the consolidated financial statements. 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...

  • Page 100
    ... Litigation On April 8, 2002, the Corporation was named as a defendant along with, among others, commercial and investment banks, certain current and former Enron officers and directors, lawyers and accountants in a putative consolidated class action complaint filed in the United States District...

  • Page 101
    ... the Corporation's banking subsidiaries to maintain reserve balances based on a percentage of certain deposits. Average daily reserve balances required by the Federal Reserve Board were $3.7 billion and $4.0 billion for 2002 and 2001, respectively. Currency and coin residing in branches and cash...

  • Page 102
    ... determine the earnings rate on the individual participant account balances in the Pension Plan. Participants may elect to modify earnings measure allocations on a daily basis. The benefits become vested upon completion of five years of service. It is the policy of the Corporation to fund not...

  • Page 103
    ...Dollars in millions) 2002 2001 Change in fair value of plan assets (Primarily listed stocks, fixed income and real estate) Fair value at January 1 Actual return on plan assets Company contributions Plan participant contributions Acquisition/transfer Benefits paid Fair value at December 31 $ 8,264...

  • Page 104
    ... an employee stock ownership plan (ESOP) and a profit-sharing plan. Prior to 2001, the ESOP component of the 401(k) Plan featured leveraged ESOP provisions. See Note 14 of the consolidated financial statements for additional information on the ESOP provisions. At December 31, 2002, the Corporation...

  • Page 105
    ... level. Under the plan, eligible employees received 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. All options are non-qualified. The options, which were granted on the first business...

  • Page 106
    ... Barnett Employee Stock Option Plan, ten-year options to purchase a predetermined number of shares of the Corporation's common stock were granted to all associates below a specified executive grade level in 1997. All options are non-qualified and have an exercise price equal to the fair market value...

  • Page 107
    ...available-for-sale and marketable equity securities, foreign currency translation adjustments and derivatives 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 decreased by...

  • Page 108
    ... on quoted market prices. For non-exchange traded contracts, fair value is based on dealer quotes, pricing models or quoted prices for instruments with similar characteristics. The fair value of the Corporation's derivative assets and liabilities is presented in Note 5. 106 BANK OF AMERICA 2002

  • Page 109
    ... prepayment models and term structure modeling via Monte Carlo simulation. 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. The carrying value of foreign time deposits...

  • Page 110
    ... in 2002. (5) Corporate Other includes exit charges consisting of provision for credit losses of $395 and noninterest expense of $1,305 related to the exit of certain consumer finance businesses in 2001 and restructuring charges of $550 in noninterest expense in 2000. 108 BANK OF AMERICA 2002

  • Page 111
    ... charge Litigation expense Exit charges Restructuring charges Tax benefit associated with basis difference in subsidiary stock Tax settlement Other Consolidated net income Segments' total assets Adjustments: Securities portfolio Asset/liability management mortgage portfolio Liquidating businesses...

  • Page 112
    ... in commercial paper and other notes payable Proceeds from issuance of long-term debt Retirement of long-term debt Proceeds from issuance of common stock Common stock repurchased Cash dividends paid Other financing activities Net cash used in financing activities Net increase (decrease) in cash held...

  • Page 113
    ...(loss) before income taxes and net income (loss) by geographic area. The Corporation identifies At December 31 its geographic performance based upon the business unit structure used to manage the capital or expense deployed in the region as applicable. This requires certain judgments related to the...

  • Page 114
    ... plan, electronic deposit of dividends, tax information, transferring ownership, address changes or lost or stolen stock certificates, contact Mellon Investor Services LLC, PO Box 3315, South Hackensack, NJ 07606-1915; call Bank of America Shareholder Services at 1.800.642.9855; or use online access...

  • Page 115
    ... Officer Edward J. Brown, III President, Global Corporate and Investment Banking Richard M. DeMartini President, Asset Management Barbara J. Desoer President, Consumer Products Charles P. Goslee Quality & Productivity Executive R. Eugene Taylor President, Consumer and Commercial Banking Portraits...

  • Page 116
    ©2003 Bank of America Corporation 00-04-1226B 3/2003