Management's Discussion and Analysis
of Results of Operations and Financial Condition
Bank of America Corporation and Subsidiaries
This report contains
certain statements that are forward-looking within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
that are difficult to predict. Actual outcomes and results may differ
materially from those expressed in, or implied by, our forward-looking
statements. Words such as “expects,” “anticipates,” “believes,” “estimates” and
other similar expressions or future or conditional verbs such as “will,”
“should,” “would” and “could” are intended to identify such forward-looking
statements. Readers of the Annual Report of Bank of America Corporation and its
subsidiaries (the Corporation) should not rely solely on the forward-looking
statements and should consider all uncertainties and risks throughout this
report. The statements are representative only as of the date they are made, and
the Corporation undertakes no obligation to update any forward-looking
statement.
Possible events or factors that could cause results
or performance to differ materially from those expressed in our
forward-looking statements include the following: changes in general economic
conditions and economic conditions in the geographic regions and industries in
which the Corporation operates which may affect, among other things, the level
of nonperforming assets, charge-offs and provision expense; changes in the interest rate environment which may
reduce interest margins and impact funding sources; changes in foreign exchange
rates; adverse movements and volatility in debt and equity capital markets;
changes in market rates and prices which may adversely impact the value of
financial products including securities, loans, deposits, debt and derivative
financial instruments, and other similar financial instruments; political
conditions and related actions by the United States abroad which may
adversely affect the Corporation’s businesses and economic conditions as a
whole; liabilities resulting from litigation and regulatory investigations,
including costs, expenses, settlements and judgments; changes in domestic or
foreign tax laws, rules and regulations as well as Internal Revenue Service
(IRS) or other governmental agencies’ interpretations thereof; various monetary
and fiscal policies and regulations, including those determined by the Board of
Governors of the Federal Reserve System (FRB), the Office of the Comptroller of
Currency, the Federal Deposit Insurance Corporation and state regulators;
competition with other local, regional and international banks, thrifts, credit
unions and other nonbank financial institutions; ability to grow core
businesses; ability to develop and introduce new banking-related products,
services and enhancements, and gain market acceptance of such products; mergers
and acquisitions and their integration into the Corporation; decisions to
downsize, sell or close units or otherwise change the business mix of the
Corporation; and management’s ability to manage these and other risks.
The Corporation, headquartered in Charlotte,
North Carolina, operates in 29 states and the District of Columbia and
has offices located in 43 foreign countries. The Corporation provides a
diversified range of banking and nonbanking financial services and products
both domestically and internationally through four business segments. In order to more closely align with the scope of our
businesses, we have renamed each of our business segments. Consumer and
Small Business Banking has been renamed Global Consumer and Small
Business Banking, Commercial Banking is now called Global
Business and Financial Services, Global Corporate and Investment Banking
is now called Global Capital Markets and Investment Banking, and Wealth
and Investment Management has been renamed Global Wealth and Investment
Management.
At December 31, 2004, the Corporation had $1.1 trillion in
assets and approximately 176,000 full-time equivalent employees. Notes to
Consolidated Financial Statements 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. Certain prior
period amounts have been reclassified to conform to current period
presentation.
On April 1, 2004, we
completed our merger with FleetBoston Financial Corporation (FleetBoston) (the
Merger) after obtaining final shareholder and regulatory approvals. The Merger
was accounted for under the purchase method of accounting. Accordingly,
results for 2004 included nine months of combined company results. Results for
2003 and at December 31, 2003 excluded FleetBoston. For informational and
comparative purposes, certain tables have been expanded to include a column
entitled FleetBoston, April 1, 2004. This column represents balances acquired
from FleetBoston as of April 1, 2004, including purchase accounting adjustments.
On October 15, 2004, we acquired 100 percent of
National Processing, Inc. (NPC), for $1.4 billion in cash, creating the second
largest merchant processor in the United States.
During the second quarter of
2004, our Board of Directors (the Board) approved a 2-for-1 stock split in the
form of a common stock dividend and increased the quarterly cash dividend 12.5
percent from $0.40 to $0.45 per post-split share. The common stock dividend was
effective August 27, 2004 to common shareholders of record on August 6, 2004
and the cash dividend was effective September 24, 2004 to common shareholders
of record on September 3, 2004. All prior period common share and related per
common share information has been restated to reflect the 2-for-1 stock split.
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