Bank of America

Before 1993, the Bank of America that exists today was known as NationsBank. In 1998, NationsBank merged with San Francisco-based BankAmerica and assumed the Bank of America name. Bank of America is the largest commercial bank in the United States. Bank of America (July 19, 2006) reported second quarter 2006 net income of $5.48 billion, surpassing that of Citigroup for the first time.

In 2005, Bank of America acquired a 9% stake in China Construction Bank for $3 billion. Bank of America currently has offices in Hong Kong, Shanghai, and Guangzhou and is looking to greatly expand its Chinese business as a result of this deal. Bank of America has also invested in opening new branches in India, particularly Mumbai. Bank of America operated under the name BankBoston in many other Latin American countries, including Brazil. In 2006, Bank of America sold all BankBoston's operations to Brazilian bank Banco Itau, in exchange for Itau shares. The BankBoston name and trademarks were not part of the transaction and, as part of the sale agreement, cannot be used by Bank of America. That, in practical terms, deemed the definite extinction of the BankBoston brand.

Bank of America's Global Corporate and Investment Banking spans the Globe with divisions in United States, Europe and Asia. The U.S. headquarters are located in New York, European headquarters are based in London and Asia's headquarters are split between Singapore & Hong Kong.

Bank of America Announces Third Quarter Earnings and Capital Raising Initiatives

Earns $1.18 Billion, or $0.15 Per Share

CHARLOTTE, N.C., Oct. 6 /PRNewswire-FirstCall/ -- Bank of America Corporation today reported third quarter 2008 net income of $1.18 billion, or $0.15 per share, down from $3.70 billion, or $0.82 per share, a year earlier.

The company also announced two initiatives to raise capital, targeting an 8 percent Tier 1 capital ratio. The company intends to sell common stock with a target of raising $10 billion. In addition, the Board of Directors has declared a quarterly dividend on common stock of $0.32 to be paid on December 26, 2008 to shareholders of record on December 5, 2008. Assuming the current number of issued and outstanding shares, the reduction from $0.64 paid in recent quarters would add more than $1.4 billion to capital each quarter.

"These are the most difficult times for financial institutions that I have experienced in my 39 years in banking," said Kenneth D. Lewis, chairman and chief executive officer. "We believe it is prudent to raise capital to very substantial levels in this uncertain environment. Both economic and financial market conditions have changed significantly in the last two months. We were willing to operate at capital levels over the short-term that were good, but not at our targeted levels, given projections two months ago. We now believe it is important to be at or near our 8 percent Tier 1 capital ratio target given the recessionary conditions and outlook for still weaker economic performance which we expect to drive higher credit losses and depress earnings. We believe that achieving higher capital levels today will position our company to provide credit to those consumers and businesses that are attracted to our strength and stability.

"We know many investors in our stock are quite disappointed with a dividend reduction," Lewis continued. "It is not a decision we made lightly. However, we cannot pay out what we have not earned. Our goal is to resume dividend increases from the new level as soon as our earnings performance warrants.

"All that said, our company continues to be profitable, and we have been able in the last year to make a number of moves that should significantly enhance our earnings when economic and financial market conditions improve. Our diversity and scale give us strength to deal with the current issues that few competitors can match. I have never been more optimistic about the long-term prospects of Bank of America."

Lower earnings in the third quarter compared with a year earlier were driven by a significant increase in provision expense, as credit costs continued to rise, partially offset by advances in various income categories largely as a result of the acquisition of Countrywide Financial Corporation on July 1, 2008 and LaSalle Bank. Countrywide results were not included in prior period results.

Bank of America is clearly benefiting from consumer and business flight to safety, as shown by year-over-year increases in loans and especially deposits. While consumer credit costs continued to increase in line with economic conditions, the company continued to increase the number of customer accounts and make progress in such categories as investment banking.

Third Quarter Selected Business Developments

-- Retail deposits increased $56 billion to $586 billion from June 30 to September 30, 2008, including the addition of $35 billion from Countrywide, extending Bank of America's lead as the largest retail depository institution in the United States. Excluding the impact of Countrywide, Bank of America gained $21 billion in retail deposits during the quarter as consumers moved money to safety. That gain was almost three times the industry average. Service charges increased $84 million from the second quarter, but debit card revenue declined slightly as consumers pulled back on spending.

-- Reflecting deteriorating economic conditions, the consumer credit card business experienced a decrease in purchase volumes, slowing repayments and increased delinquencies during the quarter. Credit card held net charge offs increased to $1.24 billion, representing a net charge off rate of 6.14 percent. Credit card managed net credit losses rose to $3.00 billion, representing a loss rate of 6.40 percent.

-- Investment banking income was up 22 percent from the previous year to $474 million. Revenue in Capital Markets and Advisory Services was adversely impacted by $952 million in CDO-related charges, $327 million in leveraged loan and commercial mortgage related writedowns and $190 million in losses on a commitment to buy back auction-rate securities from clients.

-- Equity investment income results were negatively impacted by writedowns totaling $320 million on the preferred stock of Fannie Mae and Freddie Mac.

-- Global Wealth and Investment Management revenue was affected by $630 million in support for cash funds and $123 million in losses on a commitment to buy back auction-rate securities from clients.