Bank of America 2003 Annual Report Download - page 14

24 BANK OF AMERICA 2003
Financial Review
25 Management’s Discussion and Analysis of
Results of Operations, Financial Condition and
Statistical Financial Information
72 Report of Management
73 Report of Independent Auditors
74 Consolidated Statement of Income
75 Consolidated Balance Sheet
76 Consolidated Statement of Changes
in Shareholders’ Equity
77 Consolidated Statement of Cash Flows
78 Notes to Consolidated Financial Statements
116 Executive Officers and Board of Directors
Inside Back Cover: Corporate Information
Contents
This re port contains ce rtain state me nts that are forward-lo oking within
the me aning of the Private Se curities Litigation Re form Act of 19 95.
The se state me nts are not guarante e s of future pe rformance and
involve c e rtain risks, unce rtaintie s and assumptions that are difficult to
pre dict. Actual outcome s and results may diffe r mate rially from those
e xpre sse d in, or implie d by, our forward-loo king state me nts. Words such
as “e xpe cts,” “anticipate s,” “be lie ve s,” “e stimate s” and othe r similar
e xpre ssions or future or conditional ve rbs such as “will,” “should,”
“would” and “could” are inte nde d to ide ntify such forward-looking state -
me nts. Re ade rs of the Annual Re port of Bank of Ame ric a Corporation
and its subsidiarie s (the Corpo ration) should not re ly sole ly on the for-
ward-looking state me nts and should c onside r all unce rtaintie s and
risks throughout this re port. The state me nts are re pre se ntative only as
of the date the y are made , and the Corporation unde rtake s no obliga-
tion to update any forward-looking state me nt.
Possible e ve nts o r factors that could c ause re sults or pe rformance
to diffe r mate rially from tho se e xpre sse d in our forward-looking state -
me nts inc lude the following: change s in ge ne ral e conomic conditions
and e conomic co nditions in the ge ographic regions and industrie s in
which the Corporation ope rate s which may affe ct, among othe r things,
the le ve l of nonpe rforming asse ts, charge -offs and provision e xpe nse ;
change s in the inte rest rate e nvironme nt which may re duce inte re st
margins and impact funding source s; change s in fore ign e xchange
rate s; adve rse move me nts and volatility in de bt and e quity capital mar-
ke ts; change s in marke t rate s and price s which may adve rse ly impact
the value of financial products including se curitie s, loans, de posits, de bt
and de rivative financial instrume nts and othe r similar financial instru-
me nts; political conditions and re late d actions by the Unite d State s mil-
itary abroad which may adve rse ly affe ct the Corporation’s busine sse s
and e conomic co nditions as a whole ; liabilities re sulting from litigation
and re gulatory inve stigations, inc luding costs, e xpe nse s, se ttle me nts
and judgments; c hange s in dome stic or fo re ign tax laws, rule s and reg-
ulations as we ll as Inte rnal Re ve nue Se rvice (IRS) or othe r gove rnme ntal
age ncie s’ inte rpre tations the re of; various mone tary and fiscal po licie s
and re gulations, including tho se de te rmine d by the Board of Gove rnors
of the Fe de ral Re se rve Syste m (FRB), the Office of the Comptroller of
Curre ncy, the Fe de ral De posit Insurance Corporatio n and state re gulators;
compe tition with othe r local, regional and inte rnational banks, thrifts,
cre dit unions and othe r nonbank financial institutions; ability to grow core
busine sse s; ability to deve lop and introduce ne w banking-re late d prod-
ucts, se rvice s and e nhance me nts and gain marke t ac ce ptance of such
products; me rge rs and acquisitions and the ir inte gration into the
Corporation; de c isions to downsize , se ll or close units or othe rwise change
the busine ss mix of the Corporation; and manage me nt’s ability to manage
the se and othe r risks.
The Corporation, headquartered in Charlotte, North Carolina, operates
in 21 states and the District of Columbia and has offices located in 30
countries. The Corporation provides a diversified range of banking and
certain nonbanking financial services and products both domestically
and internationally through four business segments: Consume r and
Comme rcial Banking, Asse t Manage me nt, Global Corporate and
Inve stme nt Banking and Equity Inve stme nts. At December 31, 2003, the
Corporation had $736 billion in assets and approximately 133,500 full-
time equivalent employees. Notes to the consolidated financial state-
ments referred to in Management’s Discussion and Analysis of Results
of Operations and Financial Condition are incorporated by reference
into Management’s Discussion and Analysis of Results of Operations
and Financial Condition.
Performance Overview
We achieved record earnings in 2003. Net income totaled $10.8 billion,
or $7.13 per diluted common share, 17 percent and 21 percent
increases, respectively, from $9.2 billion, or $5.91 per diluted common
share in 2002. The return on average common shareholders’ equity
was 22 percent in 2003 compared to 19 percent in 2002. These
earnings provided sufficient cash flow to allow us to return approxi-
mately $10.0 billion in capital to shareholders in the form of dividends
and share repurchases, net of employee stock options exercised.
In 2003, we saw double digit growth in net income for all three
of our major businesses (Consume r and Comme rcial Banking, Asse t
Manage me nt and Global Co rporate and Inve stme nt Banking) and con-
tinued to experience strong core business fundamentals in the areas
of customer satisfaction and product/market performance.
Customer satisfaction continued to increase, resulting in better
retention and increased opportunities to deepen relationships with
our customers. Highly satisfied customers, those who rate us a 9 or
10 on a 10-point scale, increased eight percent from 2002 levels.
This equates to an increase of 1.1 million customers being highly sat-
isfied with their banking experience.
We added 1.24 million net new checking accounts in 2003,
exceeding the full-year goal of one million and more than doubling
last year’s total net new checking account growth of 528,000.
Our active online banking customers reached 7.2 million, a 52
percent increase from 2002 levels. Forty-four percent of consumer
households that hold checking accounts use online banking. Active
bill pay customers increased 84 percent to 3.2 million in 2003.
Active bill pay users paid $47.3 billion of bills in 2003 compared to
$26.2 billion in 2002.
First mortgage originations increased $43.1 billion to $131.1
billion in 2003, resulting from elevated refinancing levels and broader
market coverage from our continued deployment of LoanSolutions
®
,
which was first rolled out in the second quarter of 2002. Total mort-
gages funded through LoanSolutions
®
totaled $36.3 billion and $7.3
billion in 2003 and 2002, respectively.
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
Bank of America Corporation and Subsidiaries
BANK OF AMERICA 2003 25