2003 Annual Report: Chief Financial Officer's Letter (Page 1 of 3)

Bank of America in 2003 passed a milepost only a handful of companies in the world have reached, earning more than $10 billion in a year.

Earnings of $10.8 billion were up 17% from 2002. Earnings per share (diluted) of $7.13 represented a 21% increase over 2002.

All the company's major business lines recorded double-digit increases in earnings.

Revenue on a fully taxable-equivalent basis grew 10%, as the company's initiatives to improve the customer experience brought in more business. The company took advantage of the low-interest-rate environment to originate a record $131 billion in first mortgages, a 49% increase from 2002. We had double-digit growth in card and mortgage banking income and significant improvement in investment banking income.

Non-interest expense rose 9%, driven by higher benefit costs, revenue-related incentive compensation and other factors. The efficiency ratio improved to 52%.

Net securities gains increased to $941 million from $630 million, as the company repositioned its assets and liabilities in response to interest rate movements.

Credit quality improved significantly, resulting in a 23% decline in the provision for loan losses. Net charge-offs were down 16%. Commercial and large corporate net losses fell. The consumer portfolio continued its steady performance. Nonperforming assets at year end were down 43% from 12 months earlier.

Profitability continued to improve. Return on equity rose to 22%, from 19% a year earlier. Shareholder value added, which measures our level of profit above the cost of capital, grew 49% to $5.62 billion.