Bank of America Annual Report 2001

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FY2001 Annual Report · Bank of America

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Bank of America Corporation 2001 annual report >

Year Ended December 31

2001

2000

$ 34,981
8,042
3,087
5.04
4.95
2.28
1.24%
16.53
55.47

1,595

6,792
4.26
4.18

5.59
5.49
1.37%

18.34
52.96

TOTAL REVENUE*
(Dollars in millions)

Equity
Investments
$32

Asset
Management
$2,474

$9,231

$21,372

Consumer and
Commercial
Banking

Global Corporate
and Investment
Banking

NET INCOME*
(Dollars in millions)

Equity
Investments
$(94)

Asset
Management
$521

$1,879

$4,842

Consumer and
Commercial
Banking

Global Corporate
and Investment
Banking

*Excludes Corporate Other

$ 33,253
7,863
3,081
4.77
4.72
2.06
1.17%

16.70
54.38

1,646

7,517
4.56
4.52

5.30
5.24
1.30%

18.54
51.78

$ 642,191
392,193
364,244
47,628
47,556
29.47
45.88
1,614

Financial Highlights

(Dollars in millions, except per share information)

For the Year – Operating Results(1)

Revenue(2)
Net income
Shareholder value added
Earnings per common share
Diluted earnings per common share
Dividends paid per common share
Return on average assets
Return on average common shareholders’ equity
Efficiency ratio
Average common shares

issued and outstanding (in millions)

For the Year – Reported Results

Net income
Earnings per common share
Diluted earnings per common share

For the Year – Cash Basis Financial Data(1) (3)

Earnings per common share
Diluted earnings per common share
Return on average assets
Return on average common shareholders’ equity
Efficiency ratio

At Year End

Total assets
Total loans and leases
Total deposits
Total shareholders’ equity
Common shareholders’ equity
Book value per common share
Market price per share of common stock
Common shares issued and outstanding (in millions)

$ 621,764
329,153
373,495
48,520
48,455
31.07
62.95
1,559

(1) Excludes the following: after-tax business exit charges of $1.3 billion for 2001 and

after-tax restructuring charges of $346 million for 2000.

(2) Includes net interest income on a taxable-equivalent basis and noninterest income.
(3) Cash basis calculations exclude goodwill and other intangible amortization expense.

Contents

11.. Chairman’s Letter to Shareholders

1144.. Serving Consumers

1188.. Serving Small Businesses

2200.. Serving the Commercial Markets

2244.. Wealth and Investment Management Services

2288.. Serving Large Corporations and Institutional Markets

3322.. Financial Review

IInnssiiddee bbaacckk ccoovveerr:: Corporate Information

Chairman’s Letter to Shareholders

In 2001, your company achieved solid financial results
despite a weak economic environment and took major
steps to accelerate internal growth, improve business
execution and focus activities ever more tightly on the
needs of our customers.

REVENUE
(Taxable Equivalent Basis)

> Associates accelerated work to attract, retain and
deepen customer relationships and to improve customer and
client service throughout the company.
> We launched a company-wide Six Sigma
quality and productivity program and continued
to reinvest savings in high-growth opportunities.
> We installed a new business planning
process and a new approach to risk management
that we believe will bring consistency and pre-
dictability to our earnings.
> We hired teammates from different indus-
tries who brought new skills to our company.
> We adopted shareholder value added (SVA)
as a measurement tool to bring more financial
discipline to our business decisions.
> We continued to invest aggressively in
efforts to build the Bank of America brand.

$18.0

$32.5

1999

$33.3

2000

$18.1

(Dollars in billions)

NONINTEREST EXPENSE
(Operating Basis)

$35.0

originations and increased market share in every major
category of capital-raising transactions. Turmoil in the
markets dampened results in the Asset Management Group,
which held revenues steady, but saw earnings fall 11.5%
to $521 million due to increased investments in the busi-
ness. Equity Investments recorded a loss of $94 million.
While our core businesses performed well, we made a
strategic decision in the third quarter to exit the
subprime real estate and auto leasing busi-
nesses, both of which tended to produce volatile
earnings and did not fit our objectives for prof-
itability. We took a $1.3 billion after-tax charge
to cover the costs of exiting these businesses.
Credit costs continued to be our greatest
drag on earnings. Net charge-offs, excluding
charge-offs related to the exit of the subprime
lending business, totaled $3.6 billion, or .99%
of loans and leases, compared to $2.4 billion,
or .61%, the year before. Deteriorating credit
quality was largely limited to the corporate
sector in the first half of 2001, but spread to
the consumer sector as the recession deepened.
We expect credit costs to remain high in 2002.
The bottom line for shareholders, of course,

$19.4

2001

In short, we are combining our heritage of

ingenuity with an emerging culture based on
focus and discipline, consistent execution and
sustained intensity to serve customers better
while at the same time producing strong growth in total
shareholder returns.

1999

Building Momentum. Our associates’ hard work in
2001 paid off, as revenue increased 5% to $35 billion,
leading to an operating earnings increase of 2% to $8
billion, both impressive figures taking into account rising
credit costs and the faltering economy. The lion’s share of
earnings growth came from Consumer and Commercial
Banking, which posted earnings of $4.8 billion, up 6.4%
from 2000, driven mostly by gains in net interest income,
service charges, card services and mortgage banking.

Global Corporate and Investment Banking earnings rose
6.8% to $1.9 billion, reflecting an increase in fixed-income

2000

2001

(Dollars in billions)

is our stock price, and in 2001, we stood head
and shoulders above the rest of the class. In a
year in which the average stock price in our

peer group declined 5%, your company’s stock increased
in value 37%.

Two reasons for heightened investor confidence have
been our disciplined approach to balance sheet management
and our commitment to returning capital to shareholders.

Throughout the company, we used relationship-banking
and pricing incentives to boost deposits. At the same time,
we reduced low-returning corporate loans on our balance
sheet. The result is a loan-to-deposit ratio that today is lower
than 1:1, which reduces inherent interest rate risk and
enhances our ability to control funding costs in the future.
We also continued to return capital to shareholders in 2001,
nearly exhausting the stock repurchase program of 100

In a year in which the average stock price in our peer

group declined 5%, your company’s stock increased in value 37%.

million shares that was approved by the board in 2000. At
its December 11, 2001 meeting, the board approved further
repurchases of up to 130 million shares over the next 18-24
months. The board in October also approved a 7% increase
in the quarterly dividend per common share to $.60, or
$2.40 annually, representing a 3.8% dividend yield based on
our stock price at the end of the year.

As we look forward to building on our
momentum in 2002, we are aware of the great
uncertainty in our economy. No one knows
when the economy will bounce back from the
current recession, but we believe we have posi-
tioned your company well for the future. Our
capital strength and business diversity give us
great confidence, and we’re gaining strength
and speed even as we fight the current eco-
nomic headwinds.

As an expression of this confidence, we
recently committed to long-term financial goals
of more than 10% annual earnings-per-share
(EPS) growth, 20% return on equity (ROE) and
double-digit increases in SVA every year.

The Right Moves. In last year’s report, I

wrote that we were investing in our company’s
growth engines and re-engineering business
processes to improve our service to customers.
In 2001, we undertook additional initiatives to
drive the organization forward.

One of the most dramatic changes we’re making is in
the way we are organized. In the past, we organized our
activities largely by geography and by line of business,
meaning by product or service. Today, taking a cue from our
success with corporate clients, we’re changing reporting
structures, compensation and incentive plans, and business
processes throughout the company to reflect the customer’s
view. For example, associate teams are not focused simply
on products like mortgages or cards – or on a specific region
or city – but on expanding relationships in a customer group,
such as “Consumer,” “Small Business” or “Premier,” and on
providing customers in these groups consistent, high-quality

service regardless of where they live, where they happen to
be when they contact us or what product or service they are
inquiring about.

This new way of looking at our business is changing
the way associates interact with customers, design business
processes and think of their roles in the organization. Instead
of finding a product or a geographic label at the center of
our operations, we are more often finding the
customer at the center, and our customers are
beginning to feel the difference.

OPERATING EARNINGS
PER COMMON SHARE
(Diluted)

$4.95

We’re making two other important changes

$4.68

$4.72

1999

2000
(Dollars)

2001

OPERATING NET INCOME

$8.24

$8.04

$7.86

1999

2000
(Dollars in billions)

2001

in the way we run the company.

To accelerate our process improvements,

we are implementing the Six Sigma quality and
productivity techniques that have proven effective
in manufacturing and other industries but have
not been widely adopted in financial services.
Six Sigma provides our associates powerful tools
to analyze business processes, identify problems,
increase efficiency and reduce error rates. A
significant additional benefit is our ability to
constantly reinvest cost savings in new revenue-
growth opportunities.

We also have implemented an integrated
business planning process that brings together
four key elements of corporate planning: strate-
gic planning, financial planning, risk planning

and associate planning. Each of these processes is now
designed to take into account the outcomes of the others.
By integrating our planning, we believe the work we do
across the company will contribute more effectively to the
bottom line.

We believe our new risk planning process, in particular,

will dramatically improve the consistency of our earnings.
In short, our goal is to make risk management a core strength
of this company. We are now taking a more holistic view of
risk than ever before by incorporating analyses of credit,
market and operational risk into all strategic, financial and
associate plans.

Instead of finding a product or a geographic label at the center of

our operations, we are more often finding the customer at the center,

and our customers are beginning to feel the difference.

Executive recruiting has been another priority, resulting

17.7%

in a number of key hires in business-critical positions.
While some of these new teammates came from financial
services firms, many came from companies in other indus-
tries, such as manufacturing, shipping and consumer products.
These executives joined our already strong management
team, making us even stronger. They have brought skills
and knowledge to our organization that are
helping us improve revenue growth, business
processes, customer satisfaction and associate
retention. We will continue to recruit top talent
aggressively from all industries where execu-
tives have the skills, knowledge and experience
to take our performance to a higher level.
If fielding the right team gets us in the
game, motivating our players is the way to win.
We are taking several steps to more closely
align associate and shareholder interests.
These steps include shifting the emphasis for
bonus awards toward relationship-building and
away from pure sales goals; shifting 2002
stock option awards from an emphasis on time-
based vesting to vesting based on stock price
appreciation; and giving senior executives a pro-
gressively increasing percentage of their annual
incentive payment in restricted stock.

$1.85

1999

Like measurement tools for associates, the

stock price performance, and will help us do a better job of
managing the company for the benefit of our owners.

Finally, a word about the Bank of America brand. We
believe strongly that a world-class company must have a
world-class brand, and we have continued to invest in the
advertising programs and sponsorships that build awareness
of our brand across the nation. Perhaps more important, we
understand that the real strength of our brand will
be determined over time by the consistency and
quality of the experiences our customers have
when they do business with us. It is excellence in
this regard to which we have all committed, and
through which we all will help build a strong
Bank of America brand for the future.

16.5%

RETURN ON AVERAGE
COMMON EQUITY
(Operating Basis)

16.7%

2000

2001

(Numbers in percent)

DIVIDENDS

$2.06

2000
(Dollars per share)

$2.28

2001

Our Opportunity and Responsibility.
Throughout this report, you will read about
how we are working hard to grow customer
relationships as a key strategy in our efforts to
grow our company.

Of course, we know that we are not the
only large banking company pursuing a growth
strategy based on expanding relationships. The
strategy alone is no great secret and by itself
will not differentiate us. What we’re focused on
is execution and the impact our work is having
on our progress toward becoming one of the
world’s most admired companies. This is the

ways we measure corporate performance also impact our
priorities and our decisions. For many years, like many
companies, we have looked to the typical financial measure-
ments to gauge our progress and our success – measures like
revenue and earnings growth, earnings per share and return
on equity. These measures are widely used for good reason,
and we will continue to use them just as we always have.
That said, we also are incorporating shareholder value

added, or SVA, into our decision making, both at the corpo-
rate level and throughout the business lines. SVA measures
returns over and above our cost of capital. Simply put, we
believe that SVA as a performance measure and a decision-
making tool has an extremely high, direct correlation to

goal I set for our associates last year when I became chair-
man, and it is a goal that all of us are pursuing with vigor
and intensity.

I have said many times this year that the opportunity we
have before us is the business opportunity of a lifetime – to
take an organization that possesses the right businesses, the
right strategy and the right people and turn it into one of
the greatest companies in the world. In fact, achieving
this goal is more than an opportunity. Given who we are,
the position we occupy in the market and the name we do
business under – Bank of America – I believe that achieving
our goal is a responsibility.

It is a responsibility not only to our shareholders, but

also to our customers, who look to us to help them manage
their financial lives and achieve their dreams; to our asso-
ciates, who have chosen to employ their skills and talents
here and who deserve every opportunity to reach their
personal and professional potential; and to our communities,
which are deeply invested in this enterprise, and upon which
the future prosperity of our company rests.

Fulfilling our responsibility to the communities we
serve, of course, has always been a fundamental part of the
way we do business. So I am pleased to report that we
continue to hit our annual goals in our 10-year, $350 bil-
lion community development lending commitment. The
investments represented by this commitment are working to
rebuild low- and moderate-income neighborhoods in cities
across our great nation, from Baltimore to San Diego and
from Miami to Seattle.

I also am pleased that the Bank of America Foundation,

long one of the most generous corporate foundations in
the country, has adopted new guidelines for its programs
that will focus resources in the coming years on a single
issue: helping children succeed in life. In pursuit of this
goal, the Foundation will support programs in early child-
hood development, economic and financial education, and
teacher development. The Foundation will be joined by
every business group in our company as we pull together to
prepare America’s youth to lead us toward a better future.
As we work to prepare our future leaders, we also this
year paid tribute to the man who led our company to where
it is today. Hugh L. McColl, Jr. retired as chairman and CEO
at our Annual Meeting of Shareholders last April. In 18 years
as our leader, Mr. McColl transformed our company from a
small, southeastern commercial bank to one of the largest
and most comprehensive financial services companies in
the world. Our job today is to take our company to a place
on the world stage that reflects Mr. McColl’s vision – and
we thank him for the opportunity.

This spring we also celebrate the career of Bill Vandiver,

a 35-year associate who provided leadership in many of
our businesses over the years, most recently serving as

Corporate Risk Management executive. Bill will retire on
March 31, and will be missed by all of us who had the
honor to work with him.

Finally, I would like to thank our board of directors for
the guidance and support they have given me in my first
year as your chairman and CEO. In particular, I’d like to
welcome John R. Belk of Belk, Inc. in Charlotte, Steven
McMillan of Sara Lee Corporation in Chicago and Patricia
Mitchell of PBS in Alexandria, VA, all of whom joined the
board last April at our annual meeting, as well as Peter
Ueberroth of The Contrarian Group, Inc. in Newport Beach,
CA, who joined our board in June.

One of the great challenges we all will face in the
coming years is the new world in which we are living since
the September 11 attacks on our country. Like all Americans,
we worked hard on September 11 and afterward to protect
and care for our teammates and fellow citizens. Tragically,
not all of our teammates escaped the attacks unharmed.
Liam Colhoun, Susan Conlon and Robert (Bobby) Hughes
worked on our Global Securities Operations team in the
World Trade Center and were lost in the attacks. All three
were last seen either in the World Trade Center or in the
immediate vicinity attempting to help others escape. These
teammates and friends lived and died with honor, courage
and valor, as true American heroes. Their actions live on as
an inspiration for all of us.

In closing, I would like to thank all those who have

supported our country in this time of great national need.
We will remember our heroes, and we all will work harder
than ever to build a company – and a country – that honors
their memory and their great sacrifice.

Kenneth D. Lewis
Chairman and Chief Executive Officer

February 11, 2002

convenient

Embracing ingenuity to be convenient > As customers seek more convenient ways to manage their finances, Bank of
America continuously refines the channels through which we deliver our products and services. Our nationwide banking-
center and ATM network, the first to span coast to coast, is now the largest in the U.S. Our telephone banking capabilities
are unmatched. As the first major bank to provide online access for customers and clients, our online banking is now used
regularly by more people than any other bank Web site. We’re also rapidly expanding teams of personal bankers and
investment advisors. All of this work enables our customers to reach us in a variety of ways. Even off-duty firefighters and
others whose work keeps them away from home can pay bills, monitor their investment portfolios, conduct transactions
and apply for loans and credit cards – online.

Embracing ingenuity to be innovative > Bank of America has always been an industry innovator, whether it was
pioneering the first branch banking system, or being the first to issue a nationally accepted credit card, automate its
transaction processing and tap the capital markets for professional sports leagues. Today we are leading the way once
again, analyzing our businesses from the customer’s viewpoint, applying creative thought and utilizing techniques
developed for other industries to deliver the experience that customers tell us they want. Above, “Straight-Through
Processing” for business clients enables a corporate treasurer to initiate financial transactions online and have them
fulfilled completely automatically. This systems integration makes processing faster, cheaper and more accurate than
traditional methods and frees the treasurer to spend more time on essential responsibilities.

innovative

responsive

Embracing ingenuity to be responsive > Sometimes we have to go out of our way to meet a customer’s needs.
Recently, a little teamwork and creative thinking among Bank of America associates in three states enabled a long-haul
truck driver to say goodbye to life on the road and start a small business from his home. Loan papers needed to be signed
while the trucker was driving across the country, so our bankers prepared the paperwork, tracked his route, then
arranged to meet him at a truck stop where the transaction was completed. Whether it’s going the extra mile to meet the
specific needs of a business, or listening to the collective voice of our customers through market research, Bank of
America excels at determining what its customers want and finding ingenious ways to deliver.

Embracing ingenuity to be thoughtful > Maintaining a diverse staff of experts who know our customers and clients
and their businesses, understand their needs and develop solutions to meet those needs across the full spectrum of
our business is a competitive advantage for Bank of America. We apply similar thought leadership to all of our endeavors.
For example, we are focusing our charitable giving on helping children succeed by fostering early childhood development,
financial and economic education, and teacher development. We are working with experts to create environmentally sound
economic development programs. And we have designed an innovative, flexible mortgage product that helps teachers
lower the cost of home ownership so they can live in the communities in which they work.

thoughtful

Serving Consumers >

> Opportunities

Bank of America is growing by attracting, retaining

and deepening more relationships with customers.

> 27 million consumer customer relationships

We aspire to meet the highest standards of

> 3 billion customer interactions per year,

116 interactions per second

> Leading market share in 26 of the 30

fastest growing markets

> Strategies

Attract, retain and deepen customer relationships:

> Grow the number of households we serve

> Build relationship net income

> Increase market share of deposits and investments

> Capture multicultural growth

> Improve customer satisfaction

> Help customers find the right service levels

> Recent Achievements

> Increased levels of “highly satisfied”

customers by 6%

> 837,000 customers chose more appropriate

service levels

> Grew revenue and net income

customer satisfaction – earning customer loyalty

to add shareholder value.

Despite a difficult economy in 2001, an intense customer-
focused approach, combined with disciplined planning,
prioritizing and execution, enabled us to attract new customers,
retain more existing customers and deepen our relationships
with them. Managing for relationship profit rather than for
individual product sales gives the company significant
momentum in 2002.

As the nation’s largest consumer banking company, Bank
of America holds vast opportunities for customers and share-
holders. We moved boldly to put our strengths to work as we
reorganized our company to focus on the customer, replacing
our old product- and geography-based management structure.
By executing our evolving strategy and embracing our

brand philosophy of ingenuity, we will capitalize as never
before on our leadership position in America’s growth mar-
kets, our vast distribution network, our range of products and
services and our 27 million customer relationships. All of this
positions the Consumer segment as our largest net-income
growth opportunity.

Market Opportunity. Our Consumer Banking franchise
spans the fastest-growing areas of the U.S. These areas are
projected to experience a much higher household growth rate
than the rest of the country – 6.7% growth compared to 3.9%
for non-Bank of America markets over the next five years. In
short, we believe we are doing business where it is going to
count in the 21st century.

We lead the market in 26 of the 30 largest and fastest-
growing metro areas in the U.S. and we hold strong positions
in three of the nation’s most economically attractive states:
California, Texas and Florida. Importantly, we are poised to

We have a tremendous franchise and customer base. Our job now is to grow net

income by deepening relationships through our entire range of products and services.

Doing so represents the largest net-income growth opportunity in the corporation.

capture the significant growth of multicultural demographics
concentrated in these areas.

Our delivery network is perhaps our greatest strategic

That requires us to listen carefully to our customers,
finding out as much as we can about their needs and learning
what it takes not just to satisfy their requirements, but to
delight them, so that they give us top ratings on
customer satisfaction surveys.

STEADY GROWTH IN
ONLINE BANKING

advantage today. It provides superior convenience
for our customers and greater opportunities to
deepen customer relationships.

Through 13,113 ATMs, 4,251 banking centers
and 2.9 million active online users, our customers
touch Bank of America more than 3 billion times
a year, creating 116 opportunities a second to
deepen relationships.

In 2001, despite a very challenging economic

environment, these customer contacts enabled
us to increase total loans and leases for the con-
sumer segment 14% over the previous year, while
deposits rose 1.7%. For the same period, total
revenue for Consumer Banking increased 7.2%.
Consumer Strategy. Three words describe

our strategy: Attract. Retain. Deepen. We are contin-
uing to attract new customers, retaining more of
those whose business we have earned and deepen-
ing our relationships as customers pass milestones
in their lives that create new financial needs.

50%

40%

30%

Customers will be more highly satisfied with
us, and therefore more likely to retain and deepen
their relationships, if they have a good initial experience with
the bank, if they use more of our products and services earlier
and if they move to the right service level faster.

Dec
1999

Dec
2000

Source: Model Banking Center Gallup Results

Dec
1998

Dec
1999

Dec
2000

Dec
2001

(Number of active consumer
users in millions)

CUSTOMERS WHO
SAY THEY ARE
“HIGHLY SATISFIED”

49%

42%

43%

Research shows that “highly satisfied” cus-
tomers are more likely to stay with us longer, more
likely to buy more products and services from us,
more likely to recommend us to their friends and
colleagues – more likely, in other words, to enable
us to increase both market share and profitability.
Attract. Ours is already one of America’s
most powerful financial services brands, promising
overwhelming convenience across location, chan-
nel, transacting capability, products and services.
But in today’s increasingly competitive environ-
ment, these advantages can’t be taken for granted.
Our customers have more than 16 million

checking accounts, and checking products attract
more new customers than any other product.
The ability of checking products to draw new
customers makes these accounts a valuable
engine of relationship growth for several reasons.
The first is customer interaction. Opening a new
checking account involves spending time with cus-
tomers and creates the opportunity to turn a person walking in
the door into a multi-product customer from the start. Second,
because these customers rely on us for continuous service,

Dec
2001

NO CUSTOMER WANTS a complicated banking
experience. That is why many of our quality and
productivity activities focus on making it easier
to do business with Bank of America.

Our recent efforts to reduce the number
of toll-free phone numbers are a good example
of our focus on “ease of doing business.” When
Bank of America inventoried its toll-free tele-
phone numbers, it found 3,915 separate numbers

Getting Customers
the Right
Phone Number

for customers to call. Eliminating extra numbers
is an obvious way to simplify the customer’s
experience with us. Through this effort, 2,155

toll-free numbers were being disconnected at
year’s end.

reaches

When Bank of America

its
24-month goal of having just one toll-free
number per customer language, the volume of
misdirected calls due to customers dialing the
wrong call center or business unit will be reduced
by 59%. Annual cost savings are estimated at
$5.8 million.

We’ve developed new tools to enable associates to get the right services to

customers at the right time. Higher satisfaction rates will be the key measure of

our success in serving consumers and growing revenue.

Improving
Electronic Payment
Options

CUSTOMERS ARE BENEFITING from fast and convenient electronic
payments for credit cards, mortgages and loans. In 2001, more than
one half-million existing Bank of America customers who were making
payments by mail decided to take advantage of electronic payments.
Expanding electronic payment options for our customers is a
key to our strategy of increasing customer satisfaction in ways that
improve shareholder return. Satisfaction with payment processing
improves 19% among customers who pay electronically, and problems
with payments drop significantly. Here’s the bonus: The Bank of
America cost per payment transaction drops at least 69% when
customers pay electronically.

Each month, customers make more than 3.5 million electronic
payments to Bank of America. In 2001, we improved transaction
speed and accuracy and made available the electronic payment
option to more customers through more banking channels.

there exists an ongoing opportunity to deepen relationships.
And we’re making progress. After several years of post-merger
declines, in 2001 we began to grow our base of checking
accounts. In turn, we have more opportunities to anticipate
and meet additional customer needs.

To increase awareness of the power and ingenuity of our
franchise and bring customers in the door, we’re using brand
advertising and targeted marketing programs. We’ve also
invested significantly and successfully in product campaigns to
attract customers in areas like credit card and online banking.

In 2001, the company added 3 million credit card accounts
and 1.1 million net new active online banking customers. We
plan to continue to retain and expand these relationships.

Furthermore, population demographics are changing rap-
idly and our franchise is geographically positioned to capture
multicultural growth. We are a leader in states with the largest
multicultural markets: California, Texas and Florida.

Most of the growth in these markets will come from three
groups – Hispanic, Asian and African American. Currently, 37%
of the population in our footprint is comprised of these three
groups, which are expected to account for 80% of the total popu-
lation growth in our footprint in the next 10 years. Together they
represent purchasing power estimated at $1 trillion a year. In
California, for example, almost 40% of households are Hispanic
and close to 38% of Hispanic households have mortgages.
However, while two-thirds of California Hispanic households with
banking relationships have their relationships with Bank of
America, fewer than 3% have mortgages with us. Increasing that
percentage just one point translates to 110,000 more mortgages.
To capture this growth, we are building a best-in-class
multicultural marketing strategy and focusing resources on
building brand awareness in these rapidly growing segments.
Retain. Key to customer satisfaction and retention is
providing a positive customer experience and outstanding
service. We are beginning to dramatically improve our service
and fulfillment processes across all delivery channels. In Atlanta,
banking center prototypes allow us to pilot creative new ways
to enhance the customer experience. They have become a vital
source of service innovation. The prototype banking centers
feature the latest in banking technology, providing a one-stop
shop where customers can find advice and solutions to help
meet their financial needs.

We’ve seized the opportunity to refine our customer
research to better understand and respond to our customers,
and use the information to make process improvements.
We’re also getting better at using customer information to
run predictive models, allowing us to reach out and retain
customers who might consider leaving.

It’s all part of our effort to improve sales and service.
For example, customers will benefit from a reduction in the
amount of time it takes to process card claims. Our cycle time
is already an industry benchmark, but we intend to keep improv-
ing it. We have already produced some wins for our customers.
Satisfaction scores among highly satisfied Consumer Banking
customers improved from 43% in 2000 to 49% in 2001.

Deepen. Our customers interact with us 3 billion times
each year. Each of those interactions gives us opportunities
to know the customer better and to leverage that knowledge
to serve the customer.

We are using new tools to anticipate
customer behavior based on past patterns of
purchasing and usage, allowing us to match
customers’ needs with products and services
while still respecting their privacy. As we learn
more about meaningful events in our customers’
lives, we can drive sales and continue to deepen
their relationships with our company.

Helping our customers find the right service

level – Prime, Plus or Premier – and delivery
channels affords us a tremendous opportunity to
deepen existing relationships.

And when customers choose to move from

CUSTOMERS ARE CHOOSING
HIGHER SERVICE LEVELS

Premier

81,000

Plus

756,000

Prime

Service Level Movement in 2001

DEEPENING RELATIONSHIPS
INCREASES SVA

$770

$980

First Mortgage
Card
Insurance
Checking
Home Equity
Line of Credit

$1,650

$1,970

$2,110

the Prime to Plus service level, for example, they
become three times more profitable and are 10%
more likely to stay with our company. For cus-
tomers moving from Plus to Premier, profitability
increases three-fold again. It is important to note
that the majority of our customers will remain
Prime customers because that is the most appro-
priate service level for them. Deepening relation-
ships doesn't just include promoting additional
products; it includes doing more for our customers, which
leads more customers to choose higher service levels. In
2001, 837,000 customers chose a higher service level.

There is ample evidence that deepening relationships
works for both our customers and shareholders. In 2001,
credit card interactions generated 677,000 new checking
accounts. And when a credit card-only customer adds a
checking account, it helps increase shareholder value added
(SVA). Similar dynamics occur with other products and serv-
ices, such as consumer real estate loans.

< Serving Consumers

Mortgage, insurance and other consumer real estate

products are critical to our goal of increasing SVA because
they provide excellent opportunities to introduce customers

to a fuller range of products.

To drive both mortgage and relationship
growth, we redefined our mortgage distribution
model and placed it under local market manage-
ment. Now each consumer market manager has
full accountability for growing share of market.
We are continuing to refine sales and delivery
processes to increase customer satisfaction,
deepen relationships and lower costs.

Selling insurance underwritten by others is
another way to deepen relationships. Customers
need insurance when buying homes, planning
for retirement or starting small businesses. Our
access to 27 million customers during those key
windows of opportunity gives us a significant
competitive advantage.

It’s all about relationships. Going forward
we will leverage our strengths and ingenuity in a
focused and integrated fashion to grow SVA.

We are translating an intense customer focus
into improved customer processes and enhanced
customer satisfaction. Through innovative process
improvements, enhanced quality and productivity

and our integrated planning process, we have become more
disciplined in planning, in measuring, in managing risk and in
prioritizing among our greatest opportunities.

We have demonstrated that we can execute consistently
and with speed to drive results. And, despite the downturn
in the economy, we expect to sustain this momentum in
2002. We will continue to attract, retain and deepen cus-
tomer relationships. As we do, we should see increases in
SVA. We expect the result to be ever more powerful, funda-
mental and sustainable impacts on our bottom line.

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Serving Small Businesses >

> Opportunities

> Strategies

> Recent Achievements

> Market leader in key growth states

> Almost 2 million existing clients

> 5,000 points of access, a significant

advantage in distribution and
convenience

> Identify potential clients and offer
them compelling value packages
and service

> Significantly increased use of online
banking by small-business clients

> Named top SBA lender in nine states

> Improve “highly satisfied” client

and 12 key markets

scores

> Grow “share of wallet” from

existing clients

> Contributed almost $1 billion to the

company’s earnings in 2001

Small Business is a big opportunity for Bank of

America. As a national leader in Small Business

Banking, with the largest market share in the

fastest-growing states, we have major oppor-

tunities in 2002 to build on our foundation, using dis-

tribution, products and people. Continued growth

will come from helping our clients grow.

We have built a billion-dollar business in our Small
Business segment, with outstanding market penetration,
unparalleled transacting convenience and substantial
revenue and shareholder value added (SVA).

One of the keys to this success, and an important competi-

tive advantage, is our unmatched reach and convenience. We
have more than 5,000 contact points, including 4,251 banking
centers, more than 800 client managers and sales associates,
and almost 200 Merchant Card and Treasury Management sales
officers for Small Business, plus business lending centers and
call centers. In short, we can provide the easy, flexible access
to financial services that small businesses demand.

Bank of America has the deepest small-business pene-
tration of any single banking institution, across nearly every
market in our franchise. Half our client base is in the key
growth states of California and Florida, where we have the

leading market share, and Texas, where we are second. We
are also No. 1 in the Northwest, and No. 2 in the Southwest,
Midwest, Mid-Atlantic and Mid-South. Recently the U.S. Small
Business Administration (SBA) named us the top lender in
nine states and 12 key markets.

We have just under 2 million relationships with small-
business clients, which we define as businesses with annual
sales of less than $10 million. Nearly $85 billion in deposit,
credit and investment balances led to approximately $900 million
in net income and $585 million in SVA in 2001.

Our clients have convenient access and a comprehensive
and growing product mix and are served by highly motivated,
innovative people. By adding these competitive strengths to
our solid existing base, we see significant growth opportunity
for 2002 in the small-business segment.

Our strategy to realize those growth opportunities in
2002 involves a disciplined, integrated approach to attract-
ing, retaining and deepening client relationships. And we’ll
measure our success by focusing on customer satisfaction,
on associate satisfaction and on SVA.

Attracting new clients is a very important part of our
strategy. While we enjoy the leading share of the small-busi-
ness market in our franchise, our clients still represent just
one small business of every seven. Given the number of small
businesses in our franchise – more than 14 million – the
scope of this market is enormous, and represents a truly
extraordinary opportunity to grow this business segment.

We offer clients significant advantages: convenient access, a comprehensive product

mix and highly motivated people. Add those competitive strengths to our solid existing

base, and we see significant opportunity for 2002 in the Small Business segment.

THE ONLINE ADVANTAGE

Online
Online with BillPay

Percentage Gain from
Online vs. Non-Online Customers

*Measured in account attrition reduction

There is also opportunity for significant growth among

those small businesses we already count as clients, by
broadening and deepening our relationships with them.
Providing world-class value packages and service, on top of
all the advantages we can already offer the small business
client, will enable us to grow our share of their business.

Finally, we see the opportunity – and the necessity – to

improve client satisfaction. Our focus will be earning satisfac-
tion scores of 9 and 10 on a 10-point scale, which defines the
category of “highly satisfied.” Highly satisfied clients are more
loyal and more willing to give us more of their
business in those deeper, broader relationships.
Customer satisfaction scores will be key bench-
marks for gauging our success as a company.
Executing our Small Business strategy
for 2002, we will address each of these opportu-
nities for growth in the segment, with initiatives
that directly address our determination to attract,
retain and deepen client relationships.

Customer
loyalty*

Deposit
balances

Loan
balances

To identify and attract valuable new clients,
we’re expanding our product lines and developing
value packages, as well as more robust information tools and
processes. As with the Consumer Banking segment, we are
placing special emphasis on marketing to multicultural clients
which are so important in our key growth states. Helping them
grow will help us grow, and will make an important contribution
toward the overall Bank of America commitment to diversity.
Enhancing our customer knowledge systems will also
enable us to better understand the needs and opportunities
of our existing clients, so we can better provide the products
and services that are right for them – like online banking, card
services, treasury management and insurance. At the same
time, we will be integrating our sales processes and imple-
menting a disciplined relationship-management model to
provide a more consistent, high level of service to our clients.
To further enhance our clients’ experience, we are imple-
menting new small-business training programs for banking center
associates, so they can provide better, more comprehensive

service. And we are motivating our associates by directly
connecting their rewards, incentives and recognition to their
contributions in helping us achieve our key strategic objec-
tives: attracting new customers, retaining existing
customers, and building stronger, deeper relationships with
all our customers. We’re confident that these steps will be
important parts of our effort to raise client satisfaction
toward world-class levels.

As a further, vital step, we are undertaking intensive efforts

to improve our core processes, which we define as those
processes that directly touch our customers.
Deposit servicing, payment processing and bank-
ing center processes are all areas that our clients
have told us affect their satisfaction. Our intention
is to bring these processes to world class, using
engineering methods that have proven effective in
other businesses. Improving our processes will also
add to shareholder value by enhancing productivity
and thereby reducing expenses.

We are also taking steps to improve our

online banking services for small businesses,

which are already among the best and most innovative in the
industry. We have more than 200,000 active users of online
services among our small-business clients, and we have seen
significant effects. Our online clients are more profitable.
They have higher loan and deposit balances. They are much
more likely to add products and services, and much less likely
to leave the bank. They make fewer calls to call centers for
assistance, making them less costly to serve. When we look
at small-business clients who pay their bills online, those
effects are heightened (see graph, this page). As our clients
access a growing array of Web-enabled financial products
and services, our costs to serve them will decline, and cus-
tomer satisfaction will grow.

In sum, we are confident that integrating sales processes
and focusing on customer satisfaction, associate satisfaction
and SVA will help us build deeper, more profitable relation-
ships – across the bank and in the Small Business segment.

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Serving the Commercial Markets >

> Opportunities

The Bank of America Commercial segment is focused on

delivering innovative solutions through three primary

> Ability to expand our Treasury Management

businesses: Commercial Banking, Real Estate Banking

advisory capabilities

> Ability to leverage our client base to build

investment banking business

> Ability to grow personal and institutional

and Business Credit. Our competitive advantage is our

ability to serve our clients’ evolving needs through

a broad range of products and services, delivered by

investment services and asset management

dedicated financial experts.

> Strategies

> Acquire new relationships

> Expand existing relationships

> Improve quality of service

> Reduce volatility of earnings

> Recent Achievements

> Increased investment banking income by
a compounded annual growth rate of 16%
since 1999

> Achieved consistent, incremental year-over-

year growth in fee income

> Improved margins through increased

pricing discipline

The Commercial segment provides total financial solutions
for clients ranging from entrepreneurs, multinational compa-
nies, real estate developers and home builders, to municipali-
ties and not-for-profits.

We leverage the power of our company to provide comprehen-
sive solutions for our clients, from working capital requirements to
long- and short-term debt and access to capital markets. We also
draw upon the expertise of our Premier and Private bankers to
provide personal wealth management services.

We serve more than 30% of all middle-market companies
operating within and immediately surrounding our 21-state
and District of Columbia franchise footprint. That gives us a
tremendous base for expanding existing relationships and
acquiring new clients. In addition, we estimate that more than
half of the companies we serve operate in more than one
state, giving the coast-to-coast Bank of America franchise a
strong competitive advantage.

In 2001, we combined three historically distinct busi-

nesses – Commercial Banking, Real Estate Banking and
Business Credit – to form the Commercial segment. This
allows us to build on the unique successes of each of the
businesses and create powerful, comprehensive solutions to
help our clients and their companies succeed.

In 2001, the Commercial segment generated $4.1 billion in

revenue and realized $1.1 billion in net income. Loans totaled
$69 billion and deposits totaled $24 billion.

We have earned top market rankings in investment banking,

treasury management, syndication, secured and unsecured credit, and

leasing, as well as in the sheer number of banking relationships.

Commercial Banking serves middle-market companies
and institutions with annual revenues of $10 to $500 million.
We offer a wide range of financial products and services,
including treasury and trade services, credit and
leasing, capital markets and investment banking,
as well as personal and institutional investments
and asset management. We are proud to serve as
lead bank or primary financial provider for 67% of
our clients, which attests to our growing reputa-
tion for our advisory and consultative services.
Real Estate Banking is the No. 1 provider
of financial services to professional developers,
home builders and commercial real estate firms,
with a No. 1 or 2 share of the business in every
market we serve. By delivering the full resources
of Bank of America and leveraging our many
years of experience in real estate banking, we
are able to tailor innovative, customized finan-
cial solutions for our real estate clients. We con-
tinue to focus on broadening our relationships
with our real estate clients through sales of
treasury management, investment banking and
other financial solutions.

Business Credit is our primary asset-based

lending business that specializes in providing
secured, leveraged credit facilities to mid- and
large-size companies. We are one of the nation’s largest
bank-owned asset-based lenders, with offices located

MARKET LEADERSHIP

Dedication to the middle
market has earned Bank of
America top bank status in:
> Number of banking
relationships

> Investment banking
> Treasury management
> Syndication
> Secured and unsecured

credit
> Leasing

PRIMARY COMMERCIAL
SEGMENT BUSINESSES

Total 2001 Segment Revenues:
$4.1 billion

$0.3

$0.6

$3.2

Commercial Banking
Real Estate Banking
Business Credit

(Dollars in billions)

throughout the U.S. and Canada and in London. This is a
growth business that enables us to tailor financing solutions
to our clients’ specific needs by converting their assets into
immediate working capital. We differentiate our-
selves from other asset-based lenders with the
vast array of products and services available only
from Bank of America.

As a result of our dedication to the commer-
cial market, we have earned top market rankings
in investment banking, treasury management,
syndication, secured and unsecured credit, and
leasing, as well as in the sheer number of bank-
ing relationships.

Bank of America is committed to leveraging
the strength, experience and product breadth of
our company to generate world-class performance
and growth in the Commercial segment. To accom-
plish this, we are executing four growth strategies:
Acquiring new relationships and growing

market share. Our goal during the next five years
is to increase our market share in Commercial
Banking and Business Credit. We’re developing
targeted client acquisition criteria and focusing
on industries in which we have built specialty
practices and expertise, including health care,
education, not-for-profits and the beverage

industry. We’re also continuing to invest in developing and
delivering innovative products and solutions, such as

WHEN FLORIDA EAST COAST INDUSTRIES,
INC. (FECI), a company with transportation,
telecommunications and real estate sub-
sidiaries, wanted to fund a capital expenditure
program, it asked Bank of America to recom-
mend an optimal capital structure.

Our Real Estate Banking Group identified
untapped liquidity in FECI’s unleveraged real
estate portfolio, then partnered with Banc of

Partnering Across
Business Lines to
Offer Solutions

America Securities, which arranged a competi-
tive bidding process and, ultimately, a $160 mil-
lion financing with a large institutional investor.

Earlier in 2001, our Middle Market Investment
Banking Group led and arranged a $375 million
operating facility for FECI.

Said Richard Smith, CFO of FECI, “Bank of
America is a valued financial partner and has
provided various financing solutions for our
company. The bank offers a broad range of serv-
ices that respond to all of our varied advisory
and capital-raising needs.”

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We are reducing the volatility of earnings through disciplined risk management

and diversification of our revenues, with a focus on fee-based income.

Developing
Lead Bank
Relationships

OUR LEAD BANK RELATIONSHIP with MedCath Corporation demon-
strates our ability to develop trusted, long-term relationships and to
deliver value through our industry expertise and the total resources
of Bank of America.

Based in Charlotte, N.C., MedCath owns a growing number of
heart hospitals and provides cardiovascular care services in diagnostic
and therapeutic centers. Until 2001, our relationship with MedCath
included revolving lines of credit, syndications, deposits, investments,
treasury management and personal wealth management.

Last year, we helped MedCath devise a new capital structure that
involved new public equity and senior debt to strengthen the balance
sheet and fund future growth. In July, based on our expertise in equity and
capital markets, particularly in the health care industry, we earned the
right to take MedCath public and close on a $220 million senior debt facil-
ity to refinance and fund three existing and four new hospitals. We served
as joint bookrunner on both deals and helped our client position itself to
become the leading cardiovascular care service provider in the nation.

enhancements to our treasury services that will differentiate
us from our competitors.

Expanding existing relationships – earning our clients’

trust and becoming their lead bank, or primary financial
provider. Our leading market share provides tremendous
opportunity to expand client relationships and acquire primary
bank status. Toward that end, we are implementing disciplined
client selection, client segmentation and cross-sell processes.
We are focused on creating solutions and adding value for
our clients through treasury management, investment bank-
ing and investment services. Finally, we are refining the way
we measure the value of our client relationships, with
emphasis on shareholder valued added (SVA).

Improving the quality of our service is critical to
expanding existing relationships and acquiring new clients.
Our goal is to provide clients with a world-class banking

experience through easy access and efficient, error-free service.
We are using Six Sigma quality and productivity tools to evalu-
ate our processes from start to finish. In 2001, for example, we
moved our client information data to a consistent system that
gives us an enterprise-wide view of our clients’ relationships.
This helps us identify opportunities for providing creative solu-
tions and ideas. We believe these breakthrough improvements
will significantly increase client satisfaction. And we know from
market research that a strong correlation exists between highly
satisfied clients and increases in both market penetration and
lead bank penetration, which can translate into a healthy boost
to the bottom line.

Reducing volatility of earnings through disciplined risk

management and diversification of our revenues. Achieving
our SVA growth goals is dependent upon our ability to aggres-
sively manage risk and reduce the volatility of our earnings.
As a result, we are making some hard but necessary choices
about which clients we will do business with in the future. For
example, we have chosen to decrease our credit exposure in
certain industries that are particularly vulnerable in economic
downturns. We will continue to do business with key players
in those industries, but only with those clients who meet our
new credit standards. Along with a disciplined client selection
process, we have instituted relationship pricing practices that
reward our clients for doing more business with us.

At the same time, we are taking steps to diversify our

revenue mix. Although credit income remains important, we
are increasing our focus on earning revenue from sales of
fee-based products and from deposits and investments. Fee-
based products such as treasury management and investment
banking generate higher SVA in the long term because profit
margins are higher and total capital allocation is significantly
lower than that assigned to credit products.

We already have made substantial headway in
increasing our non-credit revenue. We expect continued growth
in fee-based income between now and 2006; in fact, we see
fee-based revenue as the Commercial segment’s greatest

< Serving the Commercial Markets

opportunity for growth. Our 2001 sales performance in this
area was significant, which has given us tremendous
momentum going into 2002.

The payments are then processed through the U.S. Automated
Clearing House network.

In addition to treasury management growth, we also

In 2001, for example, we generated double-
digit growth in fees from treasury management-
related products and services. We envision
continued growth in our treasury business over
the next five years, given our product expertise
and strong treasury sales culture.

According to an independent survey of large

and middle-market U.S. corporations, Bank of
America is recognized as the No. 1 provider of
treasury management services. Additionally, we
have been recognized as a leader for strategic
treasury management advice.

Our strategy for growth in 2002 includes
expanding our treasury management advisory
capabilities and investing in technology for new
product development. Both are critical to achiev-
ing our goals of acquiring new and expanding
existing relationships.

Central to our client advisory role is our work-

$200

$100

$400

$300

$200

INVESTMENT BANKING
INCOME

$400

$386

$331

$300

$289

1999

2000
(Dollars in millions)

2001

TREASURY MANAGEMENT
SERVICE CHARGES

$398

2000
(Dollars in millions)

$100

ing capital management approach, in which we
analyze a client’s return on sales, assets, invested
capital and equity. This approach allows us to uncover
opportunities and delivery solutions, drawing from
our comprehensive U.S. and international payments, receipts,
treasury and global trade capabilities. Services are delivered
based on clients’ preferences, including paper, electronic and
Web-based solutions.

1999

Due to the demand for Web-based products and services,
we continue to invest in this delivery channel for current and
next-generation treasury management services. For example,
we’ve recently added an electronic payment system to Bank
of America Direct™, our Web-based transaction and informa-
tion network. It allows clients to create and send payment
files to the bank for direct deposit of payroll, pre-authorized
debits, corporate payments and federal and state tax payments.

foresee continued growth in investment banking
activities. Merger and acquisition advisory serv-
ices, as well as debt and equity capital raising,
both public and private, have become increas-
ingly important products and services for many
commercial and real estate companies. With the
breadth and reach of our Commercial franchise,
the opportunity to expand our investment bank-
ing business is tremendous.

We continue to gain market recognition

for our investment banking expertise. One of the
best indicators is our investment banking revenue,
which has grown at a compounded annual rate of
16% since 1999. We successfully completed more
than 190 investment banking deals in 2001.

$332

$344

We believe our strategies put us in a strong

position to meet ambitious long-term revenue and
net-income growth goals. Achieving these goals,
coupled with our reduced dependency on the
balance sheet and improved asset quality, should
drive us toward our long-term goal of double-digit
improvement in both return on equity and SVA.
We have a strong foundation for growth in

2001

the future. Our sales success in the past and throughout
2001 provides momentum for aggressive growth.

We are focused on leveraging the power and potential of

the Bank of America franchise and our team of financial and
investment banking experts to continue expanding our busi-
ness and creating value for our clients and our shareholders.
We believe we have the right people, products and
processes to provide our clients with a world-class banking
experience and to grow their businesses, as well as our own,
to their full potential.

Wealth and Investment Management Services >

> Opportunities

> Access to millions of investors in the fastest-

growing areas of the U.S. and a customer base
that includes 2.3 million affluent households

> A growing network of investment professionals
offering services through locations nationwide

> A full suite of scalable, highly competitive
wealth-management capabilities, including
investment management, financial planning,
trust and estate planning and securities services

> Strategies

> In every relationship, strive to earn the role of

trusted advisor to our clients

> Continue to expand our force of investment

professionals

> Become the employer of choice for the best
talent in the wealth management industry

> Bring best-in-class products and provide

world-class service to our clients

> Recent Achievements

> Grew total client assets 8% to more than

$460 billion in a difficult year

> 87% of eligible equity and fixed-income fund

assets exceeded the Lipper three-year median
return, and 63% are in the top quartile

> Grew our team of investment professionals

> Deepened our asset allocation and planning

expertise

The Bank of America Asset Management Group is a

powerful contender in the investment and wealth

management industry. We provide individuals, small

businesses and commercial, corporate and institu-

tional clients across the United States and abroad

with new and better ways to manage their financial

lives. Our role as part of Bank of America allows us to

offer clients special advantages of convenience and

access that no competitor can match.

Our private bankers and investment professionals put the
emphasis on creating deep, long-lasting relationships with
clients, and becoming their trusted advisors. We are among the
leaders in many categories, and we are swiftly moving up the
ranks in many more. In 2001 we gained considerable momen-
tum, and with continued investment in the future of our busi-
ness and an intense focus on creating consistent profitability
for our shareholders, we expect that momentum to increase.

Total client assets grew by 8% in 2001, to more than

$460 billion, in a year when many competitors experienced
setbacks. Our Private Bank continues as the nation’s largest,
measured by number of clients; Nations Funds became the
10th largest mutual fund family. Given the economic headwinds
faced by the markets in 2001, these are significant achieve-
ments. In addition, we enhanced our ability to serve our
clients by strengthening our distribution capabilities, devising
new investment solutions and expanding our product offerings.
The opportunity facing the Bank of America Asset
Management Group is sizeable indeed. The demographics
for the affluent and high-net-worth client segments alone are
compelling. U.S. households hold between $16 and $21 trillion
of investable assets, most of it in the affluent and high-net-
worth segments. These client groups are growing rapidly,

The combination of the leading national network of banking centers and

a growing force of professionals offering a full range of investment, securities

and financial planning services gives us a unique growth opportunity.

with the numbers of households rising 6-7% annually. In
addition, the baby boom generation is due to inherit $7.5 tril-
lion of wealth in the next ten to 20 years, in the largest gener-
ational wealth transfer in history.

These clients are seeking advice, compre-
hensive solutions and world-class products. We
are exceptionally well-positioned to compete
for this business. We occupy leading market
positions in the fastest-growing U.S. markets,
including the most attractive high-growth areas in
which affluent and high-net-worth clients are con-
centrated, such as California, Florida and Texas.
Many of these clients already do business with
Bank of America. Our opportunity is to continue
to expand our relationships with these clients by
becoming a trusted advisor and by providing supe-
rior products and the expertise our clients expect.
The Bank of America customer base is a rich

offer our clients the convenience and stability of a compre-
hensive financial relationship.

CONTINUED GROWTH IN
CLIENT ASSETS

Assets in Custody
Brokerage Assets
Assets Under Management

$500

$400

$388

$300

$200

235

$434

123

249

$426

48
100

278

$100

1998

1999

2000

(Dollars in billions)

$460

47
99

We believe we have the most attractive opportunity in
the industry. Our strong national presence gives
our investment professionals the opportunity to
serve clients in the fastest-growing areas of the
country. Our professionals are focused on provid-
ing clients thoughtful, objective advice on how to
reach their long-term financial goals. And Bank
of America delivers an impressive array of world-
class solutions to help clients achieve these goals.
The combination of the leading national network
of banking centers and a growing force of profes-
sionals offering a full range of investment, securi-
ties and financial planning services gives us a
unique growth opportunity.

314

2001

$90

$120

resource for referrals and client relationships.
For example, we have the opportunity to increase
our Private Bank client list by a factor of four,
simply by focusing on the qualified potential cus-
tomers within our own franchise. Recent client
focus groups have underscored that customers
are confused by the sheer number of investment
choices available to them. Clients want one trusted
advisor to handle all of their needs and to help make their
lives less complicated. Unlike many competitors, we can

$60

$30

$45

NATIONS FUNDS
MONEY MARKET GROWTH

$123

$83

$59

Access and convenience are increasingly
important. Our clients have full access to the pow-
erful distribution capability of our banking centers,
ATMs and telephone banking network, which are
unmatched in the industry. For our clients, this
means better service and unparalleled conven-
ience – something our competitors, especially the
stand-alone investment firms, cannot provide.

1999

2000

2001
1998
Assets Under Management
(Dollars in billions)

Along with the rest of our company, the Asset
Management Group is committed to using Six Sigma
to increase efficiency and client satisfaction. Several projects
under way are focused on improving practices for identifying

THE SOUTH CAROLINA OFFICE OF STATE
TREASURER recently selected Bank of
America and certain of its affiliates to manage
and distribute FUTUREScholar, a college sav-
ings program that will help individuals and
families make tax-advantaged investments in
higher education.

FUTUREScholar is a 529 college invest-
ment plan named for the section of the federal

New Investment
Account Helps
Families Pay for
College

investors
tax code that generally allows
to accumulate assets for college expenses free
of federal income taxes.

Those plans are fast becoming a preferred
way to save for college. Nationally, about
$8 billion is invested in college investment
programs. That figure is expected to grow to
more than $100 billion by 2005. Investments
and earnings can be used to pay for a wide
range of college expenses – tuition, room and
board, books and supplies – at any accredited
institution in the U.S.

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We want to earn the right to become our clients’ trusted

financial advisor, growing and managing relationships over the years and

and generations for more and more clients.

Fee-based Products
Give Clients Access to
World-class Money
Management

OUR MULTI-MANAGER CONSULTANT FEE-BASED PRODUCTS
allow us to offer something our clients find especially valuable: access
to more than one of the top money managers, and a fixed fee for a
bundle of services, including buying and selling stocks and bonds. Our
fee-based products are particularly attractive because we have our
own process for identifying the money managers and hedge fund
managers: ten analysts who identify, through qualitative and quantita-
tive screens, the money management firms and hedge funds in a
process that is transparent to the intermediary and to the investor.

For Private Bank clients, these products are part of our Strategic
Investment Portfolio. Broker-dealers will have access to fee-based
products through our Selects program, which offers a highly selective,
carefully monitored number of specialized managers.

The Banc of America Capital Management Multi-Strategy Hedge
Fund, our fund-of-funds account, offers high-net-worth clients the
opportunity to diversify their investments while gaining access to
some of the most talented money managers in the world – all through
a single investment. The multi-manager hedge fund is designed to
enable discerning investors to access the hedge fund universe with a
bias toward risk management.

Customizable and balanced, these multi-manager fee-based
products form an important part of our approach to providing the
right products and solutions for our clients.

client needs and matching clients with the right products and
services throughout Asset Management and the rest of the bank.

Advice is critical to our strategy of providing compre-
hensive financial services to Bank of America clients. We want
to earn the right to become our clients’ trusted financial advi-
sor, growing and managing relationships over the years and
generations for more and more clients.

We’re adding substantially to the numbers of licensed
professionals among our associates. Since 1999, the number
of Series 6 licensed associates has grown to 3,100 from 1,200
and Series 7 has increased to nearly 1,300 from 1,000. Our

goal is to grow the Series 7 team to approximately 3,000 over
the next three or four years. Equally important is our plan to
grow our relationship manager sales force in the Private Bank.
The more professionals we add to our team, the better able
we are to serve our clients’ varied wealth management needs.
We are also working to enhance the ability of our bankers
and investment professionals to serve our clients more effec-
tively. Enhanced training and professional development oppor-
tunities will create a more seamless experience for our clients.
Our compensation programs are more effectively aligned
with our long-term strategy to encourage the development of
comprehensive long-lasting client relationships. The result:
our associates are exceptionally well equipped to serve the
needs of our clients and to deliver superior service and advice.
Offering a fuller suite of products and services allows
us to address a broad range of client needs. In 2001 we added
to our already robust product offerings in several significant
areas. Fee-based products, sophisticated investment instru-
ments that give clients access to several leading money man-
agers, are now being offered for Private Bank clients through
the Strategic Investment Portfolio. Investors can gain access
to alternative investments through the Banc of America Capital
Management Multi-Strategy Hedge Fund (see box at left).
We think these products will be particularly attractive to the
discerning investor who wants access to more than one world-
class money manager at relatively low cost. Another highlight
of our expanded product offerings is the increasingly popular
529 college investment plan (see page 25). These popular plans
allow investors to accumulate assets for college expenses free
of federal income taxes.

Each of the three core groups within Asset Management –
Private Bank, Capital Management and the Individual Investor
Group, must work together to provide clients with the best in
wealth and investment management products and services.
The Private Bank at Bank of America is a potent force
in the world of wealth management. It focuses on building
and preserving the wealth of individuals and families by pro-
viding clients with investment, fiduciary and comprehensive

< Wealth and Investment Management Services

banking and credit expertise. The Private Bank has nearly
$150 billion of client assets and is an industry leader in provid-
ing innovative financial solutions for high-net-worth clients.
While Bank of America offers deposits, investments
and credit products to all customer segments, the
Private Bank focuses on serving the needs of our
most affluent clients. These clients’ needs are
different from those of other client groups, and
their overwhelming concern is not only with
wealth creation, but also with issues of legacy.
In three core areas of client needs – trust,

credit and banking – we are global leaders, with
mature and profitable operations. With 44,000
trust relationships and 79,000 accounts, we’re
one of the nation’s largest corporate fiduciaries
for individuals. Our $24 billion private client
loan book serves more than 18,000 relationships
across every major industrial sector – and is
broadly diversified. Our online bill pay, account
aggregation services and integrated credit prod-
ucts are all best-in-class. The Private Bank also
offers a comprehensive investment program,
fulfilled by Banc of America Capital Management
and other distinguished providers.

Cash
Equity

Banc of America Capital Management is a
leading asset management organization serving the
investment needs of high-net-worth individuals,
institutional clients and retail customers. We create investment
products and solutions that are distributed through the Private
Bank and Banc of America Investment Services, Inc. and exter-
nal brokerage firms; offer institutional separate accounts and
fee-based programs; and provide advice to our clients through
asset allocation expertise and software.

In addition, we work through leading brokerage firms and
financial advisors to provide products to customers ranging
from retail clients to Fortune 100 companies with complex
investment needs. We offer institutions and individuals a full
range of investment styles through our proprietary investment

SCOPE OF THE PRIVATE BANK

> We’re the nation’s

largest private bank,
measured by number
of clients

> We’re the largest

provider of trust services
to individuals

> We have a relationship
with one out of every 25
very affluent households
in the U.S.

BANC OF AMERICA
CAPITAL MANAGEMENT ASSET
DIVERSIFICATION

$314 Billion of Assets
Under Management

49%

management services and relationships with key subadvisors.
Many clients know us through our Nations Funds family and
the mutual funds offered by Marsico Capital Management,

which became a wholly owned subsidiary of Bank
of America in 2001. Since the start of our relation-
ship, Marsico’s assets under management have
grown to $12 billion.

Performance is the foundation of success
in asset management, and our portfolios turned
in highly competitive results in 2001. Fully 87%
of eligible equity and fixed-income fund assets
exceeded the Lipper three-year median return,
and 63% are in the top quartile.

14%

The Individual Investor Group brings
together the Asset Management Group’s services
for individual investors. Providing investment,
securities and financial planning services to
more than one million affluent and high-net-
worth individuals, the Individual Investor Group
is comprised of Private Client Services, which
focuses on high-net-worth individuals, and Banc
of America Investment Services, Inc., which
includes both the full-service network of invest-
ment professionals and an extensive online
investor service. Through its securities subsid-
iaries, Bank of America offers investment and
financial advisory services across 21 states and
Washington, D.C. During 2001, we were one of the country’s
leading providers of investments to individuals. Client assets
in the Individual Investor Group held steady at approximately
$100 billion despite adverse market conditions.

34%

Fixed Income
Other

Our business has significant scale, the opportunity to

work with a growing number of affluent and high-net-worth
clients and a range of quality products and services tailored
to fit their needs. Bank of America is well positioned to capi-
talize on its competitive advantages in wealth and investment
management services.

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Serving Large Corporations and Institutional Markets >

> Opportunities

> Take advantage of unmatched client reach –
76% of Fortune Global 500, 94% of U.S. 500

> Serve clients’ growing need to access bank

capital

> Build fee-based investment banking business

> Expand sales and trading to build under-

writing business and meet investors’ needs

> Strategies

> Focus on strategic issuer clients in

key sectors

> Increase fee-based business by targeting

resources to key client needs

> Build market share with investors to

increase commission revenue

> Reduce credit risk to improve capital

efficiency and lower volatility

> Recent Achievements

> Increased market share of investment

banking fees in targeted industry sectors

> Grew revenue per strategic client by 54%

> Significantly diversified revenue streams
earned from corporate banking clients

> Reduced corporate loan balances by
more than 30% since mid-2000

Global Corporate and Investment Banking (GCIB) at

Bank of America has forged a business with annual

revenues in excess of $9 billion. In 2001, a tough

environment by any measure, earnings grew 7%,

shareholder value added (SVA) nearly doubled and

Banc of America Securities increased its market share

of lead-managed underwriting mandates in every

major category of capital-raising transaction.

GCIB is a full-service corporate and investment bank that
provides creative, value-added capital-raising solutions,
advisory services, derivatives capabilities, equity and debt
sales and trading, as well as traditional bank deposit and loan
products, cash management and payments services. We believe
that our integrated bank model, combining both corporate and
investment banking services, is the right model for the future.
Profound marketplace changes are favoring this model,

evidenced by the fact that since 1998 U.S. and European
integrated banks have gained market share in equity and
debt origination as well as sales and trading at the expense
of stand-alone investment banks. Similarly, integrated banks
are increasing their ROE while ROE is declining for stand-
alone firms. These trends are driven by clients’ critical and
growing need to access bank capital and by the enhanced
ability of integrated banks to fully service advisory and
capital-raising needs.

Our model also results in a diverse revenue stream,
contributing to more stable earnings. For example, when
equity and mergers and acquisitions experience a cyclical
downturn, as was the case in 2001, use of debt and credit
instruments expands.

Our unsurpassed reach among corporate clients fuels our

strong market position. Our clients include 76% of the Fortune
Global 500 and 94% of the Domestic 500. This client access,

Our extensive product array combined with superior financial strength

enables us to create innovative financial solutions for corporate clients who are

increasingly seeking providers with multi-faceted capabilities.

combined with our array of high-margin, high-return products
and services, supported by our corporate financial strength,
gives us enormous advantages in the marketplace, where we
use the brand name Banc of America Securities.

contains several elements. First, we are building substantial
expertise around eight key industry groups that generate signifi-
cant fees and possess strong long-term growth potential. We are

We are focusing our resources on industry
sectors where we can establish leading positions,
substantially increase fee generation, grow our
market-making and commission revenues and
improve the efficiency of our capital. We expect
to broaden and deepen our targeted client rela-
tionships to include our full array of advisory,
capital-raising, risk-management and treasury-
services capabilities.

Building on our strong momentum from 2000,

we aggressively pursued our growth strategy in
2001. In just three years we have achieved higher
league table rankings and a larger share of lead-
managed deals and total investment banking
fees. We estimate that in 2001 Banc of America
Securities’ share of total U.S. issuer fees grew
to 5.9% versus 4.7% in 2000 and 3.9% in 1999,
evidence of our successful execution. Today,
according to an independent research company,
we are the sixth-ranked U.S. investment bank in
terms of lead relationships among all large U.S.
corporate clients.

GCIB FINANCIAL PERFORMANCE

2000
2001

$8.2

$9.2

$1.9

$1.8

$0.6

$0.3

Revenue

Net Income
(Dollars in billions)

SVA

GCIB REVENUE 2001

$9.2

$1.5

capital raising and advisory fees

$1.2

equity sales and trading

$2.3

debt sales and trading

$2.6

credit products

$1.6

global treasury services

(Dollars in billions)

leveraging relationships in these sectors to win
investment banking mandates and build leading
market positions. Since 1999, we have had an over-
all increase in the market share of estimated invest-
ment banking fees in our targeted industry sectors.
Second, we have created teams within each

industry group that encompass both corporate
and investment banking expertise. Each team
works across product areas, from traditional
bank and loan products to sophisticated capital
raising, advisory and derivatives capabilities, to
deliver a seamless experience for clients and
deepen each relationship. This has resulted in
significantly more diversified revenue streams
earned from our corporate banking client base.
Third, while we have broad client reach, we
are focusing on strategic clients within our key
sectors to expand fee generation and profit
potential. Today there are nearly 400 such clients
who share our commitment to a relationship
that is mutually beneficial. Our broad range of
market-leading capabilities combined with our
in-depth knowledge of each client’s needs provides

We are executing specific strategies related to both
our issuer and investor clients. Our strategy for issuer clients

ample ways to serve such a relationship. Today, more than
one-third of these clients regard us as their lead investment

IN E XECUTING our originate-to-distribute
strategy, portfolio managers, with authority
over loan underwriting decisions, bring an
investor perspective to discussions to ensure
that loans are attractive for both our portfolio
and the broader market.

While continuing to meet the borrowing
needs of our targeted issuer clients, we have sig-
nificantly reduced corporate loan balances

Portfolio
Management Will
Drive SVA Growth

since mid-2000. We closely examine returns from
each client, seeking to retain and solidify only
relationships that are mutually beneficial. We
also limit concentrated exposure across clients,

industries and geographies, selling loans when
necessary to maintain a maximum threshold. We
have aggressively attacked our problem loan
portfolio through both collections and sales.

Deploying our credit capital resources to our
most profitable relationships while maintaining
lower loan asset levels will lead to higher returns
on credit capital and less risk exposure, driving
growth in shareholder value added.

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Developing strong expertise in select sectors, focusing on key strategic

clients and building deeper, multi-product relationships will drive revenue growth and

secure a market-leading position in global corporate and investment banking.

Creative Financing
Solutions Deepen
Relationships

BANC OF AMERICA SECURITIES (BAS) DELIVERED for Adelphia
Communications, a key client, by raising more than $4.5 billion in
financing in 2001 across common equity, convertibles, high-yield and
bank debt. The $1.5 billion concurrent equity/convertible component
was the third-largest cable equity financing ever done.

BAS was bookrunner on simultaneous equity follow-on and
convertible subordinated notes offerings, as well as providing bridge
financing and advising on a multibillion-dollar merger and acqui-
sition assignment. In a difficult environment, strong distribution
efforts in the U.S. and Europe resulted in both offerings being signif-
icantly expanded beyond their original capital-raising targets. This
important transaction involved several different product groups
working together to provide solid advice and timely execution, and
serves as an excellent example of our strategy in action.

bank compared with 12% in 1999, and revenue per strategic
client has grown 54%.

We are also dramatically changing the way we estab-
lish and manage relationships with our investor clients. The
sales organization is moving from a product focus to a client
focus, with sales teams being restructured to address the
needs of the client across the entire equities and debt spec-
trum. We are aligning measurements and incentives to sup-
port and reward this client-centric approach. We are also
upgrading our capabilities to enhance our secondary trading
and better align our research capabilities to support the sales
teams. This focus on clients and the totality of their needs will
further deepen relationships, leading to significantly increased
volumes and associated revenues.

Strategies related to our products focus on increasing
the size of our M&A, capital-raising and risk-management
business while maintaining our strong leadership in treasury
services and syndicated finance.

In debt capital markets, consistent with our industry
sector strategy, we have aligned our expertise with each team
to provide market-leading ideas and experience that result in
the best execution available. All of our products enjoy leading
market shares. We rank No. 1 in the U.S. in private placements,
No. 2 in syndicated finance, No. 4 in high-grade, No. 5 in
high-yield, No. 6 in asset-backed and No. 7 in mortgage-backed
securities. For the past three years, investment banking fees
from debt capital products have grown at a compound annual
rate exceeding 10%.

Global Risk Management provides both corporate
clients and investors with sales, trading and research for
interest rate, commodity and credit derivatives and foreign-
exchange products. These are scale businesses where we are
a market leader because of our diverse client base, leading
technology, risk-management skills and intellectual capital
combined with strong credit ratings and capital base. We
rank first in both interest-rate derivatives and global foreign
exchange with U.S. corporate clients, and Treasury and Risk
Management magazine recently named us the best deriva-
tives dealer across all product categories.

These products not only serve our large corporate and

institutional investor market, we also have a unique oppor-
tunity to serve middle-market and high-net-worth clients.
Working with the Commercial Banking and Private Bank teams,
we estimate we could significantly increase the number of
clients who use these products.

As a market leader, managing our risk is a key priority. Our

excellent foundation in risk techniques and strong technology
platform continue to be enhanced by placing risk-taking within
the individual business units. Our product approval and ongo-
ing review processes cover all aspects of risk taken by each
business, and we continue to introduce advanced analytics and
technologies and apply severe stress-testing measurements.
Our equities business, with both a cash and derivatives

platform, has made substantial progress over the past two
years. According to Equidesk, we have moved from 12th to
ninth in lead-managed equity in the U.S. since 1999. We are

< Serving Large Corporations and Institutional Markets

a top ten firm in both listed and over-the-counter (OTC)
trading. We maintain a market in more than 1,400 listed
and 600 OTC securities.

We continue to deepen the analyst expertise in
our focused sectors. Our 66 equity research ana-
lysts cover 773 companies in eight key industries
in the U.S. and 30 research analysts cover 126
companies in Europe. Nine are ranked analysts by
Institutional Investor while four were named as
up-and-coming stars.

We believe we are the largest equity-deriv-
atives dealer in the U.S. and we know that our
strategic clients rank us highly on equity deriva-
tives quality. This business, focused on equity
risk management, convertibles origination and
distribution and proprietary derivatives trading,
serves the needs of corporate, institutional and
high-net-worth households. We have significant
opportunities to leverage the large number of
high-net-worth households served through our
Private Bank to provide portfolio protection to
clients whose net worth may be narrowly con-
centrated in a few stocks.

Global Treasury Services and syndicated

In syndicated finance we have held a leading market

share for several years. We have consistently been ranked
No. 2 in dollar volume and No. 1 by a wide margin in number
of transactions, standings clearly driven by the
breadth of our client base. This leadership is key
to generating investment banking fees as syndi-
cated finance is consistently at the core of multiple
product delivery. We are aggressively executing
an originate-to-distribute strategy in our lending
business, retaining only about 10% of the syndicated
loans we originate. We are managing our credit
exposure to reserve capital for more profitable
clients. Since August 2000, GCIB loan balances
have declined more than 30% and we have also
significantly reduced unfunded commitments.

2001

40%

14%

Underpinning all these strategies, we are
executing an infrastructure strategy. Quality and
productivity tools are being utilized to drive for
an efficient, error-free operating platform and one
of the industry’s lowest cost structures.

Investments in technology are being made

in our e-commerce platforms and selected areas
that support our business objectives and enhance
client service.

The depth and breadth of our intellectual
capital continue to grow. We have a large and

GROWTH IN MAJOR
INVESTMENT
BANKING RELATIONSHIPS

Lead Investment Bank
Important Investment Bank

11%

31%

22%

1999

2000
U.S. Market Position

REDUCING CAPITAL

$99

$67

Dec 2001
Aug 2000
Total Loans Outstanding
(Dollars in billions)

finance are also highly profitable core businesses.
We rank first in treasury services, dominating the
U.S. market with significant volumes and client penetration
and cited by the highest percentage of large U.S. corpora-
tions as their most important treasury-relationship bank.
This business includes funds collection and concentration,
disbursements, investments, information reporting and
forecasting on a global basis. Very much a business of scale,
we serve approximately 10,000 clients through our global
network of branches. The payments and cash management
services are also key products for the middle-market business.
With e-commerce an increasingly important capability in this
business, Bank of America Direct, our e-commerce platform, is
an industry leader.

growing integrated team of quality corporate and investment
bankers, analysts, traders and sales professionals – a team we
believe has the talent to address our client needs and harness
the strength of all of our products, services and expertise.

Our momentum has continued to build over the past few
years and our integrated model has served us well in uncer-
tain climates. Evidence of our success can be seen in a wide
variety of measures, yet we know that our potential for further
growth is tremendous. We are confident that we have the right
business model and strategies for the next year and beyond.

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financial review

Contents

Management’s Discussion and Analysis of Results of Operations and Financial Condition

Report 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

Executive Officers and Board of Directors

Management’s Discussion and Analysis
of Results of Operations and Financial Condition

This Annual Report contains certain forward-looking statements that are subject to risks and uncertainties and include information about possible or
assumed future results of operations. Many possible events or factors could affect the future financial results and performance of Bank of America Corporation
(the Corporation). This could cause results or performance to differ materially from those expressed in our forward-looking statements. Words such as
“expects”, “anticipates”, “believes”, “estimates”, variations of such words and other similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements.
Readers of the Corporation’s Annual Report should not rely solely on the forward-looking statements and should consider all uncertainties and risks
discussed throughout this report. These statements are representative only on the date hereof, and the Corporation undertakes no obligation to update any
forward-looking statements made.

The possible events or factors include the following: the Corporation’s loan growth is dependent on general economic conditions as well as various
discretionary factors such as decisions to securitize, sell, or purchase certain loans or loan portfolios; syndications or participations of loans; retention of resi-
dential mortgage loans; and the management of borrower, industry, product and geographic concentrations and the mix of the loan portfolio. The level of
nonperforming assets, charge-offs and provision expense can be affected by local, regional and international economic and market conditions, including
the concentrations of borrowers, industries, products and geographic locations, the mix of the loan portfolio and management’s judgments regarding the
collectibility of loans. Liquidity requirements may change as a result of fluctuations in assets and liabilities and off-balance sheet exposures, which will
impact the capital and debt financing needs of the Corporation and the mix of funding sources. Decisions to purchase, hold or sell securities are also depend-
ent on liquidity requirements and market volatility, as well as on- and off-balance sheet positions. Factors that may impact interest rate risk include local,
regional and international economic conditions, levels, mix, maturities, yields or rates of assets and liabilities, utilization and effectiveness of interest
rate contracts and the wholesale and retail funding sources of the Corporation. The Corporation is also exposed to the potential of losses arising from
adverse changes in market rates and prices which can adversely impact the value of financial products, including securities, loans, deposits, debt and
derivative financial instruments, such as futures, forwards, swaps, options and other financial instruments with similar characteristics. The Corporation is
also exposed to potential litigation liabilities, including costs, expenses, settlements and judgments, that may adversely affect the Corporation.

In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by

the Federal Reserve Board, the Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation, state regulators and the Office of Thrift
Supervision, whose policies and regulations could affect the Corporation’s results. Other factors that may cause actual results to differ from the forward-
looking statements include the following: projected business increases following process changes and productivity and investment initiatives are lower
than expected or do not pay for severance or other related costs as quickly as anticipated; competition with other local, regional and international banks,
thrifts, credit unions and other nonbank financial institutions, such as investment banking firms, investment advisory firms, brokerage firms, investment
companies and insurance companies, as well as other entities which offer financial services, located both within and outside the United States and through
alternative delivery channels such as the Internet; interest rate, market and monetary fluctuations; inflation; market volatility; general economic conditions and
economic conditions in the geographic regions and industries in which the Corporation operates; introduction and acceptance of new banking-related
products, services and enhancements; fee pricing strategies, mergers and acquisitions and their integration into the Corporation; and management’s
ability to manage these and other risks.

Overview
The Corporation is a Delaware corporation, a bank holding company and a financial holding company, and is headquartered in Charlotte, North Carolina.
The Corporation operates in 21 states and the District of Columbia and has offices located in 34 countries. The Corporation provides a diversified
range of banking and certain nonbanking 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. A customer-centered
strategic focus is changing the way the Corporation is managing its business. In addition to existing financial reporting, the Corporation has begun
preparing customer segment-based financial operating information. At December 31, 2001, the Corporation had $622 billion in assets and approximately
143,000 full-time equivalent employees. Refer to Table One and Table Twenty-Five for annual and quarterly selected financial data, respectively.

Key performance highlights for 2001 compared to 2000:
> Net income totaled $6.8 billion, or $4.18 per common share (diluted), compared to $7.5 billion, or $4.52 per common share (diluted). The return

on average common shareholders’ equity was 13.96 percent.

> Operating earnings, which excluded charges related to the Corporation’s strategic decision to exit certain consumer finance businesses in 2001
and related to restructuring in 2000, totaled $8.0 billion, or $4.95 per common share (diluted), compared to $7.9 billion, or $4.72 per common
share (diluted). Excluding exit charges, the return on average common shareholders’ equity was 16.53 percent in 2001. Shareholder value added
(SVA), excluding exit and restructuring charges, remained essentially unchanged at $3.1 billion.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

> Total revenue includes net interest income on a taxable-equivalent basis and noninterest income. Total revenue was $35.0 billion, an increase

of $1.7 billion.

> Net interest income increased $2.0 billion to $20.6 billion. The increase was primarily due to the effects of changes in interest rates on the
Corporation’s asset and liability positions and investment portfolio repositioning, an increased trading-related contribution, higher deposit
and equity levels and a favorable shift in loan mix. These factors were partially offset by the impact of the money market deposit pricing
initiative and a decrease in auto lease financing contributions. Average managed loans and leases were $378.7 billion, a $1.2 billion decrease,
primarily due to an eight percent decrease in commercial loans and leases, partially offset by an eight percent increase in consumer loans
and leases. Average customer-based deposits grew to $306.9 billion, a $14.9 billion increase. The net interest yield was 3.68 percent,
a 48 basis point increase. The increase in the net interest yield was primarily due to the effect of changes in interest rates and investment
portfolio repositioning.

> Noninterest income was $14.3 billion, a $234 million decrease. Consumer and Commercial Banking experienced a $321 million, or nine percent,
increase in service charges driven by higher business volumes. A $192 million, or nine percent, increase in card income was primarily due to
both new account growth in both credit and debit card and increased purchase volume on existing accounts. Revenue in the mortgage banking
business increased 48 percent primarily reflecting higher origination activity, increased gains from higher loan sales to the secondary market
and the favorable mark-to-market adjustments on certain mortgage banking assets and related derivative instruments, partially offset by
increased prepayments on mortgage loans as a result of the declining interest rate environment. Income from investment and brokerage
services increased $45 million in the Asset Management segment largely due to new asset management business and the completed acquisition
of Marsico Capital Management LLC (Marsico), partially offset by lower broker activity due to decreased trade volume. The noninterest income
component of trading-related revenue within Global Corporate and Investment Banking increased $77 million, as increased revenues from
trading-related activities in interest rate, fixed income and commodities contracts more than offset a decrease in equities and equity derivatives
trading. Investment banking income increased $67 million, as strong growth in fixed income origination was partially offset by weaker demand
for syndications, equity underwriting and advisory services. Equity Investments had equity investment gains of $230 million, reflecting a
sharp decline of $763 million.

> On August 15, 2001, the Corporation announced that it was exiting its auto leasing and subprime real estate lending businesses. As a result of

exiting these consumer finance businesses, the Corporation recorded pre-tax charges of $1.7 billion ($1.3 billion after-tax), consisting of provision
for credit losses of $395 million and business exit costs, the noninterest expense component, of $1.3 billion.

> Including the exit charge, the provision for credit losses was $4.3 billion. Excluding the exit charge, the provision for credit losses was $3.9 billion,
an increase of $1.4 billion from 2000. Excluding exit-related charge-offs of $635 million, net charge-offs were $3.6 billion, or 0.99 percent of average
loans and leases, an increase of 38 basis points from 2000. This increase in net charge-offs of $1.2 billion from 2000 was primarily due to credit
quality deterioration in the commercial – domestic portfolio and an increase in bankcard charge-offs. As a matter of corporate practice, we do not
discuss specific client relationships; however, due to the publicity and interest surrounding Enron Corporation, the Corporation is making an
exception. Net charge-offs in 2001 included $210 million related to Enron Corporation. Excluding exit-related charges, the Corporation recorded
additional provision expense in excess of charge-offs of $283 million due to deterioration in credit quality and the overall uncertainty in the economy.

> Nonperforming assets were $4.9 billion, or 1.49 percent of loans, leases and foreclosed properties at December 31, 2001, a $549 million decrease
from December 31, 2000. The decrease was primarily a result of the transfer of $1.2 billion of nonperforming subprime real estate loans to loans
held for sale as well as nonperforming loan sales, partially offset by increases in the commercial – domestic loan portfolio that resulted from credit
deterioration as companies were affected by the weakening economic environment. The allowance for credit losses totaled $6.9 billion or 2.09
percent of total loans and leases at December 31, 2001, a 35 basis point increase from 1.74 percent of total loans and leases at December 31, 2000.

> Noninterest expense excluding business exit costs in 2001 and restructuring charges in 2000 was $19.4 billion, a $1.3 billion increase, primarily
driven by higher personnel, litigation, professional fees, data processing and marketing expenses. Higher personnel expense was driven by a
$150 million severance charge in the fourth quarter of 2001 related to ongoing efficiency improvement programs, higher revenue-related incentive
compensation and increased salaries expense. Higher professional fees reflected the increase in initiatives related to the Corporation’s strategy to
improve customer satisfaction, the launch of a company-wide Six Sigma quality and productivity program and implementation of a new integrated
business planning process. The Corporation recorded $334 million in litigation expense in the fourth quarter of 2001 related to small settlements
and an addition to the legal reserve to cover increased exposure to existing litigation. Subsequent to December 31, 2001, the Corporation announced
that it had reached an agreement in principle to settle various shareholder lawsuits for payments totaling $490 million. The proposed settlement
will be paid from existing litigation reserves and insurance and will not have an impact on the Corporation’s financial results. For additional information
on litigation, see Note Twelve of the consolidated financial statements.

> A tax benefit of $418 million, generated as a result of the Corporation’s realignment of certain problem loan management activities into a wholly-
owned subsidiary, Banc of America Strategic Solutions, Inc. (SSI), resulted in a 17 percent effective tax rate for the fourth quarter of 2001. The
assets and liabilities of SSI are fully consolidated with those of the Corporation.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 1 Five-Year Summary of Selected Financial Data
(Dollars in millions, except per share information)

2 0 0 1

2 0 0 0

1 9 9 9

1 9 9 8

1 9 9 7

As Reported
Income statement
Net interest income
Noninterest income
Total revenue
Provision for credit losses
Gains on sales of securities
Business exit costs
Merger and restructuring charges
Other noninterest expense
Income before income taxes
Income tax expense
Net income

Performance ratios
Return on average assets
Return on average common shareholders’ equity
Total equity to total assets (at year end)
Total average equity to total average assets
Dividend payout ratio

Per common share data
Earnings
Diluted earnings
Cash dividends paid
Book value
Cash basis financial data(1)
Earnings
Earnings per common share
Diluted earnings per common share
Return on average assets
Return on average common shareholders’ equity
Operating Basis(2)
Income statement
Net interest income
Net interest income (taxable-equivalent basis)
Noninterest income
Total revenue
Total revenue (taxable-equivalent basis)
Provision for credit losses
Gains on sales of securities
Other noninterest expense
Income before income taxes
Income tax expense
Net income
Average diluted common shares issued and outstanding (in thousands)

Performance ratios
Return on average assets
Return on average common shareholders’ equity
Efficiency ratio
Net interest yield
Dividend payout ratio
Shareholder value added

Per common share data
Earnings
Diluted earnings
Cash basis financial data(1)
Earnings
Earnings per common share
Diluted earnings per common share
Return on average assets
Return on average common shareholders’ equity
Efficiency ratio

Average balance sheet
Total loans and leases
Total assets
Total deposits
Long-term debt
Trust preferred securities
Common shareholders’ equity
Total shareholders’ equity
Risk-based capital ratios (at year end)(3)
Tier 1 capital
Total capital
Leverage ratio

20,290
14,348
34,638
4,287
475
1,305
–
19,404
10,117
3,325
6,792

1.05%

13.96
7.80
7.49
53.44

4.26
4.18
2.28
31.07

7,670
4.81
4.72
1.18%
15.77

20,290
20,633
14,348
34,638
34,981
3,892
475
19,404
11,817
3,775
8,042
1,625,654

1.24%
16.53
55.47
3.68
45.13
3,087

5.04
4.95

8,920
5.59
5.49
1.37%

18.34
52.96

18,349
14,582
32,931
2,535
25
–
550
18,083
11,788
4,271
7,517

18,127
14,179
32,306
1,820
240
–
525
17,986
12,215
4,333
7,882

1.12%

1.28%

15.96
7.42
7.02
45.02

4.56
4.52
2.06
29.47

8,381
5.09
5.03
1.25%

17.80

18,349
18,671
14,582
32,931
33,253
2,535
25
18,083
12,338
4,475
7,863
1,664,929

1.17%

16.70
54.38
3.20
43.04
3,081

4.77
4.72

8,727
5.30
5.24
1.30%

18.54
51.78

16.93
7.02
7.55
40.54

4.56
4.48
1.85
26.44

8,770
5.08
4.98
1.42%

18.85

18,127
18,342
14,179
32,306
32,521
1,820
240
17,986
12,740
4,500
8,240
1,760,058

1.34%

17.70
55.30
3.45
38.77
3,544

4.77
4.68

9,128
5.28
5.19
1.48%

19.62
52.57

18,298
12,189
30,487
2,920
1,017
–
1,795
18,741
8,048
2,883
5,165

0.88%
11.56
7.44
7.67
50.18

2.97
2.90
1.59
26.60

6,067
3.49
3.41
1.04%

13.64

18,298
18,461
12,189
30,487
30,650
2,920
1,017
18,741
9,843
3,353
6,490
1,775,760

1.11%

14.54
61.15
3.69
39.90
2,056

3.73
3.64

7,392
4.25
4.15
1.26%

16.62
58.20

18,432
11,756
30,188
1,904
271
–
374
17,625
10,556
4,014
6,542

1.20%

15.26
7.81
8.02
32.09

3.71
3.61
1.37
25.49

7,397
4.20
4.09
1.36%

17.55

18,432
18,589
11,756
30,188
30,345
1,904
271
17,625
10,930
4,124
6,806
1,782,172

1.25%

15.88
58.08
4.00
30.83
2,603

3.86
3.76

7,661
4.36
4.24
1.41%

18.18
55.27

$ 365,447
649,547
362,653
64,638
4,984
48,609
48,678

$ 392,622
671,573
353,294
65,338
4,955
47,057
47,132

$ 362,783
616,838
341,748
52,619
4,955
46,527
46,601

$ 347,840
584,487
345,485
45,098
4,871
44,467
44,829

$ 343,151
543,796
336,883
41,984
4,353
42,151
43,610

8.30%
12.67
6.56

7.50%
11.04
6.12

7.35%
10.88
6.26

7.06%
10.94
6.22

6.50%
10.89
5.57

Market price per share of common stock
Closing
High
Low
(1) Cash basis calculations exclude goodwill and other intangible amortization expense.
(2) Operating basis excludes provision for credit losses of $395 million and noninterest expense of $1,305 million related to the exit of certain consumer finance businesses in 2001 and merger and

62.95
65.54
45.00

60.13
88.44
44.00

50.19
76.38
47.63

45.88
61.00
36.31

60.81
71.69
48.00

restructuring charges in 2000, 1999, 1998 and 1997.

(3) Ratios for 1997 have not been restated to reflect the impact of the BankAmerica and Barnett mergers.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Summary of Significant Accounting Policies
The Corporation’s accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial
condition. Many of the Corporation’s accounting policies require significant judgment regarding valuation of assets and liabilities and/or significant
interpretation of the specific accounting guidance. The Corporation’s significant accounting policies are discussed in detail in Note One of the con-
solidated financial statements. The following is a summary of the more judgmental and complex accounting policies of the Corporation.

Many of the Corporation’s assets and liabilities are recorded using various valuation techniques that require significant judgment as to recoverability.
The collectablity of loans is reflected through the Corporation’s estimate of the allowance for credit losses. The Corporation performs periodic and
systematic detailed reviews of its lending portfolio to assess overall collectibility. In addition, certain assets and liabilities are reflected at their
estimated fair value in the consolidated financial statements. Such amounts are based on either quoted market prices or estimated values derived by
the Corporation utilizing dealer quotes, market comparisons or internally generated modelling techniques. The Corporation’s internal models generally
involve present value of cash flow techniques. The various valuation techniques are discussed in greater detail elsewhere in management’s discussion
and analysis and the notes to the consolidated financial statements.

There are other complex accounting standards that require the Corporation to employ significant judgment in interpreting and applying certain
of the principles prescribed by those standards. These judgments include, but are not limited to, the determination of whether a financial instrument or
other contract meets the definition of a derivative in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133), and the applicable hedge deferral criteria, the accounting for the transfer of financial assets and
extinguishments of liabilities in accordance with Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities” (SFAS 140), and the determination of when certain special purpose vehicles should be consolidated
in the Corporation’s balance sheet and statement of income. For a more complete discussion of these policies, see Notes One, Five and Eight of the
consolidated financial statements.

The remainder of management’s discussion and analysis of the Corporation’s results of operations and financial position should be read in

conjunction with the consolidated financial statements and related notes presented on pages 78 through 119.

Business Segment Operations
The Corporation provides a diversified range of banking and nonbanking financial services and products through its various subsidiaries. The Corporation
manages its operations through four business segments: Consumer and Commercial Banking, Asset Management, Global Corporate and Investment
Banking and Equity Investments. Certain operating segments have been aggregated into a single business segment. In the first quarter of 2001, the
thirty-year mortgage portfolio was moved from Consumer and Commercial Banking to the Corporate Other segment. In the third quarter of 2001, certain
consumer finance businesses being liquidated were transferred from Consumer and Commercial Banking to Corporate Other. A customer-centered
strategic focus is changing the way the Corporation is managing its business. In addition to existing financial reporting, the Corporation has begun
preparing customer segment-based financial operating information.

The business segments summarized in Table Two are primarily managed with a focus on various performance measures including total revenue,
net income, shareholder value added (SVA), return on average equity and efficiency. Some of these performance measures are also presented on a
cash basis which excludes the impact of goodwill and other intangible amortization expense. Total revenue includes net interest income on a taxable-
equivalent basis and noninterest income. The net interest income of the business segments reflects the results of a funds transfer pricing process
which matches assets and liabilities with similar interest rate sensitivity and maturity characteristics and reflects the allocation of net interest income
related to the Corporation’s overall asset and liability management activities on a proportionate basis. SVA is a performance measure that is aligned
with the Corporation’s growth strategy orientation and strengthens the Corporation’s focus on generating long-term growth and shareholder value. SVA
is defined as cash basis operating earnings less a charge for the use of capital. The capital charge is calculated by multiplying 12 percent (management’s
estimate of the shareholder’s minimum required rate of return on capital invested) by average total common shareholders’ equity (at the Corporation
level) and by average allocated equity (at the business segment level). Equity is allocated to each business segment based on an assessment of its
inherent risk.

See Note Nineteen of the consolidated financial statements for additional business segment information, reconciliations to consolidated amounts
and information on Corporate Other. Additional information on noninterest income can be found in the “Noninterest Income” section beginning on
page 46. Certain prior period amounts have been reclassified between segments and their components (presented after Table Two) to conform to
the current period presentation.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 2 Business Segment Summary

(Dollars in millions)

Net interest income(2)
Noninterest income(3)

Total revenue

Provision for credit losses
Net income
Cash basis earnings
Shareholder value added
Net interest yield
Return on average equity
Cash basis return on equity
Efficiency ratio
Cash basis efficiency ratio
Average:

Total loans and leases
Total deposits
Total assets

Year end:

Total loans and leases
Total deposits
Total assets

For the Year Ended December 31

Consumer and
Commercial Banking(1)
2000

2001

Asset Management(1)
2000

2001

Global Corporate and
Investment Banking(1)
2000

2001

Equity Investments(1)
2000

2001

$ 13,364
8,008

$ 12,620
7,356

741
1,733

666
1,801

4,592
4,639

3,725
4,444

(151)
183

(139)
1,007

21,372
1,802
4,842
5,479
3,165
5.06%
25.1
28.4
54.7
51.7

19,976
1,111
4,551
5,200
2,830

4.93%
23.0
26.3
56.7
53.5

2,474
121
521
578
312
2.91%
23.6
26.1
62.2
59.9

2,467
47
589
619
421
2.80%
35.7
37.5
59.3
58.0

9,231
1,275
1,879
2,022
644
2.40%
16.4
17.6
55.9
54.3

8,169
751
1,759
1,897
336
1.97%
13.5
14.6
59.1
57.4

32
8
(94)
(84)
(363)
n/m
(4.0)%
(3.6)
n/m
n/m

868
4
461
472
241
n/m
24.0%
24.6
12.9
11.7

$ 181,900
266,049
290,388

$ 185,429
280,965
304,874

$ 173,870
256,805
282,014

$ 179,014
264,196
287,013

$ 24,381
11,897
26,767

$ 24,692
12,208
26,810

$ 22,729
11,338
24,724

$ 24,273
12,337
27,140

$ 80,739
66,983
230,755

$ 66,556
66,532
194,146

$ 94,391
68,364
227,417

$ 93,510
68,138
206,820

476
13
6,509

433
–
6,230

436
14
5,453

497
35
6,691

n/m = not meaningful
(1) There were no material intersegment revenues among the segments.
(2) Net interest income is presented on a taxable-equivalent basis.
(3) Noninterest income included the $83 million SFAS 133 transition adjustment net loss which was included in trading account profits in 2001. The components of the transition adjustment by
segment were a gain of $4 million for Consumer and Commercial Banking, a gain of $19 million for Global Corporate and Investment Banking and a loss of $106 million for Corporate Other
(not included in the table above).

Consumer and Commercial Banking
Consumer and Commercial Banking provides a wide array of products and services to individuals, small businesses and middle market companies through
multiple delivery channels.

The results for 2001 reflect the Corporation’s continued focus on card services as a growth area. End of period managed consumer card outstandings
increased 19 percent from 2000, primarily driven by the leveraging of the Corporation’s franchise to open new accounts with existing customers, the
results of card marketing programs and efforts aimed at increasing customer satisfaction. In 2001, merchant processing volume increased 12 percent,
and total card services purchase volume increased 12 percent, primarily driven by an 18 percent increase in debit card purchase volume. The increase
in debit card purchase volume was a result of increased customer penetration and activation rates, partially offset by a drop in purchase volume growth
rates following the events of September 11, 2001.

In the second quarter of 2001, the Corporation’s commercial real estate banking business was moved from Global Corporate and Investment
Banking to Consumer and Commercial Banking. The credit and client management process and customer base of the business are better aligned with
those of Consumer and Commercial Banking.

Consumer and Commercial Banking
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$13,364
8,008

21,372
1,802
5,479
3,165

2000

$12,620
7,356

19,976
1,111
5,200
2,830

51.7%

53.5%

> Total revenue increased $1.4 billion, or seven percent, in 2001 compared to 2000.

> Net interest income increased $744 million, or six percent, due to a favorable shift in loan mix, overall loan and deposit growth and the

Corporation’s overall asset and liability management. This increase was partially offset by the impact of the money market deposit pricing
initiative as the Corporation offered more competitive money market savings rates.

> Noninterest income increased $652 million, or nine percent, driven by nine percent increases in card income and service charges and strong

mortgage banking revenue.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

> Cash basis earnings in 2001 rose $279 million, or five percent, due to the increases in net interest income and noninterest income discussed

above, partially offset by an increase in the provision for credit losses and a three percent increase in noninterest expense.

> The provision for credit losses increased $691 million, or 62 percent, reflecting higher charge-offs in the commercial and bankcard loan portfolios.
> Shareholder value added increased $335 million over the prior year as a result of the increase in cash basis earnings and lower capital as a result

of reductions in commercial loan levels.

The major components of Consumer and Commercial Banking are Banking Regions, Consumer Products and Commercial Banking.

Banking Regions
Banking Regions serves consumer households in 21 states and the District of Columbia and overseas through its network of 4,251 banking centers,
13,113 ATMs, telephone and Internet channels on www.bankofamerica.com. Banking Regions provides a wide array 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 and personal auto loans. Banking Regions also includes small business banking providing treasury management, credit services,
community investment, check card, e-commerce and brokerage services to nearly two million small business relationships across the franchise.

Banking Regions
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$ 8,561
3,866

12,427
281
3,108
1,767
58.5%

2000

$ 8,587
3,547

12,134
268
3,056
1,693

58.1%

> Total revenue in 2001 increased $293 million, or two percent, as an increase in noninterest income was partially offset by a slight decrease in net

interest income.

> Loan growth, primarily in residential mortgages and home equity lending, and deposit growth had a positive effect on net interest income

but were offset by the impact of the money market deposit pricing initiative.

> Noninterest income increased $319 million, or nine percent, primarily due to an increase in consumer service charges of $170 million, or

seven percent, resulting from higher business volumes, and a $117 million, or 23 percent, increase in debit card income, driven by a higher
number of active debit cards from increased penetration and activation rates and an increase in purchase volume.

> Cash basis earnings increased $52 million, or two percent, in 2001, primarily attributable to the increase in revenue discussed above offset by a

three percent increase in noninterest expense.

Consumer Products
Consumer Products provides specialized services such as the origination and servicing of residential mortgage loans, issuance and servicing of credit
cards, direct banking via telephone and Internet, lending and investing to develop low- and moderate-income communities, student lending and certain
insurance services. Consumer Products also provides retail finance and floorplan programs to marine, RV and auto dealerships.

Consumer Products
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$ 2,211
3,109

5,320
915
1,447
1,012
40.1%

2000

$ 1,382
2,822

4,204
527
1,077
649
47.7%

> Total revenue in 2001 increased $1.1 billion, or 27 percent, due to increases in both net interest income and noninterest income.

> Net interest income increased $829 million, or 60 percent, primarily due to an increase in bankcard receivables from portfolio growth and

maturity of credit card securitizations as well as lower funding costs.

> Noninterest income increased $287 million, or 10 percent, primarily due to strong mortgage banking revenue and increased credit card income.
Mortgage banking revenue increased $246 million, or 48 percent, due to higher origination activity and increased gains from higher loan sales
to the secondary market. Mortgage banking revenue also included the favorable net mark-to-market adjustments, included in trading account

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

profits, on certain mortgage banking assets and the related derivative instruments. These increases were partially offset by increased
prepayments on mortgage loans as a result of the declining interest rate environment. Credit card income grew $75 million, or four percent,
due to new consumer card account growth and an increase in purchase volume, partially offset by a decline in servicing income from maturity
of credit card securitizations.

> The $370 million, or 34 percent, increase in cash basis earnings in 2001 was due to the increases in net interest income and noninterest income
discussed above. These increases were partially offset by an increase in the provision for credit losses and higher expenses. Expense growth was
primarily driven by card marketing and mortgage production volume activities.

> The provision for credit losses increased 74 percent to $915 million primarily due to higher net charge-offs in the bankcard loan portfolio. The
increase in bankcard charge-offs was driven by portfolio growth, an increase in personal bankruptcy filings and a weaker economic environment.

Commercial Banking
Commercial Banking provides commercial lending and treasury management services to middle market companies with annual revenue between
$10 million and $500 million. These services are available through relationship manager teams as well as through alternative channels such as the
telephone via the commercial service center and the Internet by accessing Bank of America Direct.

Commercial Banking
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$2,592
1,033

3,625
606
924
386
45.6%

2000

$ 2,651
987

3,638
316
1,067
488
44.7%

> Noninterest income increased five percent and was offset by a two percent decline in net interest income. Total revenue in 2001 remained flat at

$3.6 billion.

> The $46 million increase in noninterest income was primarily attributable to higher corporate service charges as customers opted to pay
service charges rather than carry excess deposit balances in the lower rate environment, offset by the liquidation of certain commercial
finance businesses.

> Net interest income declined $59 million, primarily due to a reduction in commercial loans and the liquidation of certain commercial

finance businesses.

> The $143 million, or 13 percent, decline in cash basis earnings was primarily driven by an increase in the provision for credit losses, partially offset

by a tax benefit of $53 million in the fourth quarter of 2001 related to the funding of SSI.

> The provision for credit losses increased $290 million to $606 million as a result of credit deterioration in the commercial loan portfolio.
> Shareholder value added decreased $102 million as the decline in cash basis earnings was partially offset by lower capital as a result of reductions

in commercial loan levels.

Asset Management
Asset Management includes the Private Bank, Banc of America Capital Management and the Individual Investor Group. The Private Bank’s goal is to
assist individuals and families in building and preserving their wealth by providing investment, fiduciary and comprehensive credit expertise to high-
net-worth clients. Banc of America Capital Management is an asset-gathering and asset management organization serving the needs of institutional
clients, high-net-worth individuals and retail customers. Banc of America Capital Management manages money and distribution channels, manufactures
investment products, offers institutional separate accounts and wrap programs, and provides advice to clients through asset allocation expertise and
software. The Individual Investor Group, which is comprised of Private Client Services and Banc of America Investment Services, Inc., provides investment,
securities and financial planning services to affluent and high-net-worth individuals. Private Client Services focuses on high-net-worth individuals.
Banc of America Investment Services, Inc. includes both the full-service network of investment professionals and an extensive on-line investor service.
One of the Corporation’s strategies is to focus on and grow the asset management business. Recent initiatives include new investment platforms
that broaden the Corporation’s capabilities to maximize market opportunity for its clients. The Corporation continues to enhance the financial planning
tools used to assist clients with their financial goals.

Effective January 2, 2001, the Corporation acquired the remaining 50 percent of Marsico for a total investment of $1.1 billion. The Corporation

acquired the first 50 percent in 1999. Marsico is a Denver-based investment management firm specializing in large capitalization growth stocks.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Client assets at December 31, 2001 and 2000 were:

Client Assets
(Dollars in billions)

Assets under management
Client brokerage assets
Assets in custody

Total client assets

2001

$ 314.2
99.4
46.9

$460.5

2000

$278.1
99.5
48.5

$426.1

Assets under management typically generate fees based on a percentage of their value. Assets of the Nations Funds family of mutual funds
reached $148 billion at December 31, 2001, primarily driven by an increase in money market funds in the declining equity market environment.
Growth in assets under management of $36 billion, or 13 percent, was primarily driven by the growth in money market funds as well as the addition
of the remaining Marsico Funds. Client brokerage assets, a source of commission revenue, were flat at approximately $100 billion compared to the
prior year. Assets in custody, which generate custodial fees, declined slightly.

Asset Management
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$ 741
1,733

2,474
121
578
312
59.9%

2000

$ 666
1,801

2,467
47
619
421
58.0%

> Total revenue remained flat at $2.5 billion in 2001, as the increase in net interest income was offset by a decline in noninterest income.

> Net interest income increased $75 million, or 11 percent, due to the Corporation’s overall asset and liability management and growth in

the commercial and residential mortgage loan portfolios.

> Noninterest income decreased $68 million, or four percent, as a decline in other income was partially offset by an increase in investment and
brokerage services income. The increase in investment and brokerage services income was due to new asset management business and the
completed acquisition of Marsico, partially offset by lower broker activity due to decreased trade volume.

> Cash basis earnings decreased $41 million, or seven percent, in 2001, primarily due to a $74 million increase in provision expense largely related

to one loan that was charged off in the second quarter of 2001 and increased noninterest expense.

> Noninterest expense increased $78 million, or five percent, reflecting investments in new private banking offices, the acquisition of Marsico,

and personnel supporting revenue growth initiatives, partially offset by one-time business divestiture expenditures in 2000.

> Shareholder value added declined $109 million due to the decline in cash basis earnings and the increased capital associated with the acquisition

of Marsico.

Global Corporate and Investment Banking
Global Corporate and Investment Banking provides a broad array of financial services such as investment banking, capital markets, trade finance,
treasury management, lending, leasing and financial advisory services to domestic and international corporations, financial institutions and government
entities. Clients are supported through offices in 34 countries in four distinct geographic regions: U.S. and Canada; Asia; Europe, Middle East and
Africa; and Latin America. Products and services provided include loan origination, merger and acquisition advisory, debt and equity underwriting
and trading, cash management, derivatives, foreign exchange, leasing, leveraged finance, project finance, structured finance and trade services.

Global Corporate and Investment Banking
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$4,592
4,639

9,231
1,275
2,022
644
54.3%

2000

$3,725
4,444

8,169
751
1,897
336
57.4%

> In 2001, total revenue increased $1.1 billion, or 13 percent, primarily due to $620 million, or 22 percent, growth in trading-related revenue.

> Net interest income increased $867 million, or 23 percent, as a result of higher trading-related activities and the Corporation’s overall asset

and liability management, partially offset by lower commercial loan levels.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

> Noninterest income increased $195 million, or four percent, as increases in investment and brokerage services, corporate service charges,

trading account profits and investment banking income were partially offset by a decline in other income.

> Cash basis earnings increased $125 million, or seven percent, in 2001 as revenue growth was partially offset by higher credit-related costs and

noninterest expense.

> The provision for credit losses increased $524 million to $1.3 billion due to credit quality deterioration in the commercial – domestic loan

portfolio of Global Credit Products.

> A $331 million, or seven percent, increase in noninterest expense was primarily due to higher market-related incentives and other expenses

in line with revenue growth.

> Shareholder value added increased $308 million as a result of the increase in cash basis earnings as well as lower capital due to reductions in

loan levels.

Global Corporate and Investment Banking offers clients a comprehensive range of global capabilities through three components: Global

Investment Banking, Global Credit Products and Global Treasury Services.

Global Investment Banking
Global Investment Banking includes the Corporation’s investment banking activities and risk management products. Through a separate subsidiary,
Banc of America Securities LLC, 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. Banc of America Securities LLC also provides correspondent
clearing services for other securities broker/dealers and prime-brokerage services. Debt and equity securities research, loan syndications, mergers
and acquisitions advisory services and private placements are also provided through Banc of America Securities LLC.

In addition, Global Investment Banking provides risk management solutions for our global customer base using interest rate, equity, credit and

commodity derivatives, foreign exchange, fixed income and mortgage-related products. In support of these activities, the businesses will take positions
in these products and capitalize on market-making activities. The Global Investment Banking business also takes an active role in the trading of fixed
income securities in all of the regions in which Global Corporate and Investment Banking transacts business and is a primary dealer in the U.S. as
well as in several international locations.

Global Investment Banking
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$ 1,693
3,153

4,846
26
932
512
69.9%

2000

$ 1,125
3,007

4,132
43
778
374
72.6%

> Total revenue grew $714 million, or 17 percent, in 2001 primarily due to higher trading-related revenue.

> Net interest income grew $568 million, or 51 percent, as a result of higher trading-related activities.
> Higher investment and brokerage services income and investment banking income more than offset a decrease in other income, resulting in
noninterest income growth of five percent. Investment banking income increased $67 million as strong fixed income originations were partially
offset by weaker demand in syndications, equity underwriting and advisory services.

> Cash basis earnings increased $154 million, or 20 percent, in 2001, as revenue growth was partially offset by an increase in noninterest expense.
> The $390 million, or 13 percent, increase in noninterest expense was primarily due to higher market-related incentives and other expenses in

line with revenue growth.

Global Credit Products
Global Credit Products provides credit and lending services and includes the corporate industry-focused portfolio, leasing and project finance.

Global Credit Products
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$ 2,181
664

2,845
1,265
766
(127)
20.6%

2000

$1,993
678

2,671
764
887
(208)
23.5%

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

> Total revenue increased $174 million, or seven percent, in 2001 compared to 2000.

> Net interest income increased $188 million, or nine percent, compared to the prior year as lower funding costs offset the impact of lower

commercial loan levels.

> Noninterest income declined $14 million, or two percent, primarily due to declines in the leasing portfolio, partially offset by an increase in

trading account profits.

> Cash basis earnings declined $121 million, or 14 percent, primarily due to an increase in the provision for credit losses, partially offset by the

increase in revenue and a tax benefit of $93 million in the fourth quarter of 2001 related to the funding of SSI.

> The provision for credit losses increased $501 million, or 66 percent, driven by credit quality deterioration in the commercial – domestic loan

portfolio. Net charge-offs included $210 million in charge-offs related to Enron Corporation.

> Shareholder value added increased $81 million as the decline in cash basis earnings was offset by lower capital, reflecting the continued efforts

to reduce corporate loan levels and exit less profitable relationships.

Global Treasury Services
Global Treasury Services provides the technology, strategies and integrated solutions to help financial institutions, government agencies and public
and private companies manage their operations and cash flows on a local, regional, national and global level.

Global Treasury Services
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

2001

$ 718
822

1,540
(16)
324
259
67.4%

2000

$ 607
759

1,366
(56)
232
170
77.6%

> Revenue increased $174 million, or 13 percent, with increases in both net interest income and noninterest income in 2001.

> Net interest income increased $111 million, or 18 percent, primarily due to deposit growth and lower funding costs.
> Noninterest income increased $63 million, or eight percent, due to an increase in corporate service charges as customers chose to pay

service charges rather than maintain excess deposit balances in the lower rate environment.
> Cash basis earnings increased $92 million, or 40 percent, in 2001 driven primarily by the growth in revenue.

Equity Investments
Equity Investments includes Principal Investing, which is comprised of a diversified portfolio of investments in companies at all stages of the business
cycle, from start up to buyout. Investments are made on both a direct and indirect basis in the U.S. and overseas. Direct investing activity focuses on
playing an active role in the strategic and financial direction of the portfolio company as well as providing broad business experience and access
to the Corporation’s global resources. Indirect investments represent passive limited partnership stakes in funds managed by experienced third
party private equity investors who act as general partners. Equity Investments also includes the Corporation’s strategic technology and alliances
investment portfolio.

Equity Investments
(Dollars in millions)

Net interest income
Noninterest income

Total revenue

Provision for credit losses
Cash basis earnings
Shareholder value added
Cash basis efficiency ratio

n/m = not meaningful

2001

$ (151)
183

32
8
(84)
(363)
n/m

2000

$ (139)
1,007

868
4
472
241
11.7%

> In 2001, both revenue and cash basis earnings decreased substantially primarily due to lower equity investment gains.

> Equity investment gains decreased $763 million to $230 million, with $50 million in Principal Investing and $180 million in the strategic

investments portfolio. Principal Investing recorded cash gains of $425 million, offset by impairment charges of $335 million, of which
$245 million occurred in the fourth quarter of 2001, and fair value adjustment losses of $40 million. Equity investment gains in the strategic
investments portfolio included $140 million in the first quarter of 2001 related to the sale of an interest in the Star Systems ATM network.

> Net interest income consists primarily of the funding cost associated with the carrying value of investments.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

> Shareholder value added declined $604 million reflecting the decline in cash basis earnings and an increase in capital driven by an increase in

the level of equity investments and unused commitments.

Results of Operations
Net Interest Income
An analysis of the Corporation’s net interest income on a taxable-equivalent basis and average balance sheet for the last three years and most recent
five quarters is presented in Tables Four and Twenty-Six, respectively. The changes in net interest income from year to year are analyzed in Table Five.
As reported, net interest income on a taxable-equivalent basis increased $2.0 billion to $20.6 billion in 2001 compared to 2000. Management
also reviews “core net interest income,” which adjusts reported net interest income for the impact of trading-related activities, securitizations, asset
sales and divestitures, excluding balance sheet portfolios used to manage interest rate risk. For purposes of internal analysis, management combines
trading-related net interest income with trading account profits, as discussed in the “Noninterest Income” section on page 46, as trading strategies
are typically evaluated based on total revenue. Noninterest income, rather than net interest income, is recorded for assets that have been securitized
as the Corporation takes on the role of servicer and records servicing income, and gains and losses on securitizations, where appropriate.

Table Three below provides a reconciliation of net interest income on a taxable-equivalent basis presented in Table Four to core net interest income

for the year ended December 31:

Table 3 Net Interest Income
(Dollars in millions)

Net interest income
As reported(1)
Less: Trading-related net interest income
Add: Impact of securitizations, asset sales and divestitures

Core net interest income

Average earning assets
As reported
Less: Trading-related earning assets
Add: Earning assets securitized, sold and divested

Core average earning assets

Net interest yield on earning assets(1,2)
As reported
Add: Impact of trading-related activities

Impact of securitizations, asset sales and divestitures

Core net interest yield on earning assets

(1) Net interest income is presented on a taxable-equivalent basis.
(2) bp denotes basis points; 100 bp equals 1%.

2001

2000

Change

$ 20,633
(1,566)
65

$ 19,132

$ 560,316
(125,263)
3,616

$ 438,669

3.68%
0.69
(0.01)

4.36%

$ 18,671
(1,023)
7

$ 17,655

$583,467
(113,551)
641

$470,557

3.20%
0.55
–

3.75%

10.5%

8.4%

(4.0)%

(6.8)%

48bp
14
(1)

61bp

Core net interest income on a taxable-equivalent basis was $19.1 billion in 2001 compared to $17.7 billion in 2000, an increase of $1.5 billion. The
increase in core net interest income was driven by changes in interest rates and the effect of portfolio repositioning, higher levels of core funding and
a favorable change in managed loan mix, partially offset by the impact of the money market deposit pricing initiative and the decrease in auto lease
financing contributions. The higher levels of core funding reflected a $14.9 billion increase in average customer-based deposits and a $1.5 billion
increase in average shareholders’ equity.

Core average earning assets were $438.7 billion in 2001, a decrease of $31.9 billion, compared to $470.6 billion in 2000, primarily reflecting
reduced securities levels and average managed commercial loan balances partially offset by growth in average managed consumer loan levels. Falling
interest rates in 2001 allowed the Corporation to shed lower yielding assets and reposition its balance sheet to take advantage of a steepened yield
curve. Average managed consumer loans increased eight percent led by growth in residential mortgages, bankcard receivables and home equity
lines. Average managed commercial loans decreased eight percent, reflecting continuing efforts to reduce corporate loan levels and exit less profitable
relationships. Loan growth is dependent on economic conditions and the management of borrower, industry, product and geographic concentrations.
The core net interest yield increased 61 basis points to 4.36 percent in 2001 compared to 3.75 percent in 2000, mainly due to the effects of changes

in interest rates and portfolio repositioning, higher levels of core funding and a favorable change in managed loan mix.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 4 Average Balances and Interest Rates – Taxable-Equivalent Basis

(Dollars in millions)

Earning assets
Time deposits placed and other short-term investments
Federal funds sold and securities purchased under agreements to resell
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
Bankcard
Foreign consumer
Total consumer

Total loans and leases

Other earning assets

Total earning assets(3)

Cash and cash equivalents
Other assets, less allowance for credit losses

Total assets

Interest-bearing liabilities
Domestic interest-bearing deposits:

Savings
NOW and money market deposit accounts
Consumer CDs and IRAs
Negotiable CDs, public funds and other time deposits

Total domestic interest-bearing deposits

Foreign interest-bearing deposits(4):
Banks located in foreign countries
Governments and official institutions
Time, savings and other

Total foreign interest-bearing deposits

Total interest-bearing deposits

Federal funds purchased, securities sold under agreements

to repurchase and other short-term borrowings

Trading account liabilities
Long-term debt(5)

Total interest-bearing liabilities(6)

Noninterest-bearing sources:

Noninterest-bearing deposits
Other liabilities
Shareholders’ equity

Total liabilities and shareholders’ equity

Net interest spread
Impact of noninterest-bearing sources

Net interest income/yield on earning assets

Average
Balance

6,723
35,202
66,418
60,372

133,569
26,492
24,607
348

185,016

81,472
22,013
39,528
18,555
16,641
2,222
180,431

365,447

26,154

560,316

22,542
66,689

$649,547

$ 20,208
114,657
74,458
5,848

215,171

23,397
3,615
22,940

49,952

265,123

92,476
29,995
69,622

457,216

97,529
46,124
48,678

$649,547

2001

Interest
Income/
Expense

318
1,414
3,653
3,761

9,879
1,567
1,700
20

13,166

5,920
1,625
3,025
1,683
1,879
127
14,259

27,425

2,065

38,636

213
2,498
3,853
290

6,854

1,053
152
827

2,032

8,886

4,167
1,155
3,795

18,003

$ 20,633

Yield/
Rate

4.73%
4.02
5.50
6.23

7.40
5.90
6.91
6.08

7.12

7.27
7.38
7.65
9.07
11.29
5.80
7.90

7.50

7.90

6.90

1.05
2.18
5.17
4.96

3.19

4.49
4.21
3.62

4.07

3.35

4.51
3.85
5.45

3.94

2.96
.72

3.68%

(1) The average balance and yield on securities are based on the average of historical amortized cost balances.
(2) Nonperforming loans are included in the respective average loan balances. Income on such nonperforming loans is recognized on a cash basis.
(3) Interest income includes taxable-equivalent basis adjustments of $343, $322 and $215 in 2001, 2000 and 1999, respectively. Interest income also includes the impact of risk management

interest rate contracts, which increased (decreased) interest income on the underlying assets $978, $(48) and $306 in 2001, 2000 and 1999, respectively. These amounts were substantially
offset by corresponding decreases or increases in the income earned on the underlying assets. For further information on interest rate contracts, see “Asset and Liability Management Activities”
beginning on page 67.

(4) Primarily consists of time deposits in denominations of $100,000 or more.
(5) Long-term debt includes trust preferred securities.
(6) Interest expense includes the impact of risk management interest rate contracts, which (increased) decreased interest expense on the underlying liabilities $63, $(36) and $116 in 2001, 2000,
and 1999, respectively. These amounts were substantially offset by corresponding decreases or increases in the interest paid on the underlying liabilities. For further information on interest
rate contracts, see “Asset and Liability Management Activities” beginning on page 67.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Average
Balance

4,863
42,021
48,938
84,211

148,168
29,316
25,878
304

203,666

91,091
19,492
41,476
24,395
10,279
2,223
188,956

392,622

10,812

583,467

24,766
63,340

$ 671,573

$ 23,452
99,927
77,409
7,626

208,414

18,788
8,922
26,024

53,734

262,148

131,492
23,843
70,293

487,776

91,146
45,519
47,132

$ 671,573

2000

Interest
Income/
Expense

336
2,354
2,751
5,111

12,025
2,114
2,299
27

16,465

6,754
1,748
3,446
2,160
1,241
195
15,544

32,009

926

43,487

314
2,941
4,205
481

7,941

1,130
513
1,423

3,066

11,007

7,957
892
4,960

24,816

$ 18,671

Yield/
Rate

6.91%
5.60
5.62
6.07

8.12
7.21
8.88
8.87

8.08

7.41
8.97
8.31
8.85
12.07
8.77
8.23

8.15

8.57

7.45

1.34
2.94
5.43
6.31

3.81

6.01
5.75
5.47

5.71

4.20

6.05
3.74
7.06

5.09

2.36
.84

3.20%

Average
Balance

5,268
32,252
39,206
80,127

138,339
29,374
25,533
294

193,540

78,948
16,152
42,274
18,752
9,778
3,339
169,243

362,783

11,875

531,511

25,766
59,561

$ 616,838

$ 23,655
98,649
74,010
6,646

202,960

16,301
7,884
25,949

50,134

253,094

116,150
15,458
57,574

442,276

88,654
39,307
46,601

$ 616,838

1999

Interest
Income/
Expense

295
1,666
2,102
4,811

10,112
1,897
2,115
25

14,149

5,667
1,268
3,469
1,670
1,134
316
13,524

27,673

881

37,428

300
2,374
3,534
361

6,569

802
400
1,231

2,433

9,002

5,826
658
3,600

19,086

$ 18,342

Yield/
Rate

5.59%
5.17
5.36
6.00

7.31
6.46
8.28
8.76

7.31

7.18
7.85
8.21
8.91
11.59
9.45
7.99

7.63

7.41

7.04

1.27
2.41
4.78
5.44

3.24

4.92
5.08
4.74

4.85

3.56

5.02
4.26
6.25

4.32

2.72
.73

3.45%

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

From 2000 to 2001

From 1999 to 2000

Due to Change in(1)

Net

Due to Change in(1)

Volume

Rate

Change

Volume

Rate

$ (147)
(557)
(80)
96

(18)
(940)
902
(1,350)

$ (23)
506
521
242

Table 5 Analysis of Changes in Net Interest Income – Taxable-Equivalent Basis

(Dollars in millions)

Increase (decrease) in interest income

Time deposits placed and other short-term investments
Federal funds sold and securities purchased under agreements 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
Bankcard
Foreign consumer

Total consumer

Total loans and leases

Other earning assets

Total interest income

Increase (decrease) in interest expense

Domestic interest-bearing deposits:

Savings
NOW and money market deposit accounts
Consumer CDs and IRAs
Negotiable CDs, public funds and other time deposits

Total domestic interest-bearing deposits

Foreign interest-bearing deposits:

Banks located in foreign countries
Governments and official institutions
Time, savings and other

Total foreign interest-bearing deposits

Total interest-bearing deposits

Federal funds purchased, securities sold under agreements

to repurchase and other short-term borrowings

Trading account liabilities
Long-term debt

Total interest expense

Net increase in net interest income

129
(383)
982
(1,446)

(1,179)
(204)
(114)
4

(717)
227
(161)
(518)
768
–

(967)
(343)
(485)
(11)

(117)
(350)
(260)
41
(130)
(68)

1,315

(176)

(43)
430
(162)
(112)

276
(305)
(168)

(58)
(873)
(190)
(79)

(353)
(56)
(428)

(2,362)
230
(45)

(1,428)
33
(1,120)

(2,146)
(547)
(599)
(7)

(3,299)

(834)
(123)
(421)
(477)
638
(68)

(1,285)

(4,584)

1,139

(4,851)

(101)
(443)
(352)
(191)

(1,087)

(77)
(361)
(596)

(1,034)

(2,121)

(3,790)
263
(1,165)

(6,813)

$ 1,962

64
182
128
58

1,194
220
156
–

214
218
41
(14)
50
(15)

719
(3)
28
2

873
262
(64)
504
57
(106)

(80)

125

(2)
34
166
54

122
53
3

775
358
793

16
533
505
66

206
60
189

1,356
(124)
567

Net

Change

41
688
649
300

1,913
217
184
2

2,316

1,087
480
(23)
490
107
(121)

2,020

4,336

6,059

14
567
671
120

1,372

328
113
192

633

2,005

2,131
234
1,360

5,730

329

(1) The changes for each category of interest income and expense are divided between the portion of change attributable to the variance in volume or rate for that category. The change in

rate/volume variance has been allocated to the rate variance.

Noninterest Income
As presented in Table Six, noninterest income decreased $234 million to $14.3 billion in 2001 from the comparable 2000 period. The decrease in
noninterest income reflects the increases in service charges, card income, investment and brokerage services, mortgage banking income and investment
banking income being offset by a sharp decline in equity investment gains as well as declines in other income and trading account profits.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 6 Noninterest Income

(Dollars in millions)

Consumer service 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
Card income
Trading account profits(1)
Other income

Total

2 0 0 1

2 0 0 0

Amount

Percent

Increase/(Decrease)

$ 2,866
2,078

$ 2,654
1,889

4,944

1,546
566

2,112

593
1,579
291
2,421
1,842
566

4,543

1,466
463

1,929

512
1,512
1,054
2,229
1,923
880

$ 212
189

401

80
103

183

81
67
(763)
192
(81)
(314)

8.0%
10.0

8.8

5.5
22.2

9.5

15.8
4.4
(72.4)
8.6
(4.2)
(35.7)

$14,348

$14,582

$(234)

(1.6)%

(1) Trading account profits in 2001 included the $83 million SFAS 133 transition adjustment net loss. The components of the transition adjustment by segment were a gain of $4 million for

Consumer and Commercial Banking, a gain of $19 million for Global Corporate and Investment Banking and a loss of $106 million for Corporate Other.

The following section discusses the noninterest income results of the Corporation’s four business segments. For additional business segment information,
see “Business Segment Operations” beginning on page 36.

Consumer and Commercial Banking
> Noninterest income for Consumer and Commercial Banking increased $652 million to $8.0 billion in 2001 from the comparable 2000 period,

driven by increased service charges, higher card income and strong mortgage banking revenue.

> Service charges include deposit account service charges, non-deposit service charges and fees and bankers’ acceptances and letters of credit
fees. Service charges increased $321 million to $3.8 billion in 2001 due to an increase in both consumer and corporate service charges.
Consumer service charges increased $204 million primarily due to higher business volumes. Corporate service charges increased $117 million
as corporate customers chose to pay higher fees rather than maintain excess deposit balances in the lower rate environment.

> Card income includes interchange income, credit and debit card fees and merchant discount fees. Card income increased $192 million to

$2.4 billion primarily due to new account growth in both credit and debit card and increased purchase volume on existing accounts. Growth
in income for the core portfolio is being generated through traditional marketing channels, expanding relationships with existing customers
and leveraging the banking center network. Card income includes activity from the securitized portfolio of $193 million and $209 million in
2001 and 2000, respectively. This amount represents residual income which consists of revenues from the securitized credit card portfolio
offset by charge-offs and interest expense paid to the bondholders.

> Mortgage banking revenue increased $246 million to $758 million in 2001 and was comprised of mortgage banking income of $593 million
and trading account profits of $165 million. The amount recorded in trading account profits represents the net mark-to-market adjustments
on certain mortgage banking assets and the related derivative instruments. The increase in mortgage banking revenue in 2001 primarily
reflected higher origination activity, increased gains on loan sales to the secondary market and favorable net mark-to-market adjustments
included in trading account profits. These increases were partially offset by increased prepayments on mortgage loans as a result of the
declining interest rate environment. The average managed portfolio of mortgage loans serviced increased $6.1 billion to $334.8 billion in
2001 compared to the same period in 2000. Total production of first mortgage loans originated through the Corporation increased $30.6 billion
to $82.4 billion in 2001, reflecting a significant increase in refinancings as a result of declining interest rates. First mortgage loan origination
volume was composed of approximately $49.6 billion of retail loans and $32.8 billion of correspondent and wholesale loans in 2001. Retail
first mortgage origination volume increased to 60 percent of total volume in 2001 from 42 percent in 2000. The Corporation made a strategic
decision to exit the correspondent loan origination channel during the second quarter of 2001. The Corporation’s decision to exit the
correspondent business was based upon its overall strategy to focus on businesses with greater potential to deepen and expand customer
relationships and with higher potential returns.

Asset Management
> Noninterest income for Asset Management decreased $68 million to $1.7 billion in 2001 compared to the same period in 2000. The decrease

was primarily attributable to a decline in other income, partially offset by increased income from investment and brokerage services.

> Income from investment and brokerage services includes personal and institutional asset management fees and brokerage income. Income
from investment and brokerage services increased $45 million to $1.6 billion in 2001 compared to the same period in 2000. This increase
was largely due to new asset management business and the completed acquisition of Marsico being offset by lower broker activity due to
decreased trade volume.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Global Corporate and Investment Banking
> Noninterest income for Global Corporate and Investment Banking increased $195 million to $4.6 billion in 2001 compared to the same period in
2000. The increase was primarily due to increases in investment and brokerage services, corporate service charges, trading account profits and
investment banking income, partially offset by a decline in other income.

> Corporate service charges increased $72 million to $1.1 billion in 2001, primarily driven by corporate customers opting to pay service charges

rather than maintain excess deposit balances in the lower rate environment.

> Trading account profits, as reported in the Consolidated Statement of Income, does not include the net interest income recognized on interest-
earning and interest-bearing trading positions or the related funding charge or benefit. Trading account profits as well as trading-related
net interest income (“trading-related revenue”) are presented in the following table as they are both considered in evaluating the overall
profitability of the Corporation’s trading positions.

Trading-related revenue increased $620 million to $3.4 billion in 2001, due to a $543 million increase in the net interest margin and a
$77 million increase in trading account profits. Increases in the fixed income, interest rate and commodities contract categories were partially
offset by a decrease in equities and equity derivatives contracts. Fixed income showed the largest increase, up $483 million, or 129 percent,
primarily attributable to an increase in market liquidity which resulted from a lower interest rate environment, as well as tightening of
credit spreads. Revenue from interest rate contracts increased $198 million to $893 million reflecting a more volatile rate environment as
well as an increase in customer flow as customers sought to lock in lower rates. Commodities contracts increased $102 million to $172 million,
attributable to market volatility and increased customer flow. Foreign exchange revenue increased $5 million to $541 million. Income from
equities and equity derivatives contracts decreased $168 million to $920 million, due to a slowdown in customer activity in the market.
Trading account profits in 2001 included a $19 million transition adjustment gain resulting from the adoption of SFAS 133.

Trading-related Revenue in Global Corporate and Investment Banking
(Dollars in millions)

2001

Trading account profits
Net interest income

Total trading-related revenue

Trading-related revenue by product
Foreign exchange contracts
Interest rate contracts
Fixed income
Equities and equity derivatives
Commodities

Total trading-related revenue

$ 1,818
1,566

$ 3,384

$ 541
893
858
920
172

$ 3,384

2000

$ 1,741
1,023

$2,764

$ 536
695
375
1,088
70

$2,764

> Investment banking income increased $67 million to $1.6 billion in 2001. Increases in securities underwriting and other investment banking
income were offset by declines in syndications and advisory fees. Securities underwriting fees increased $177 million to $797 million from
strong growth in high grade and high yield origination which was offset by lower equity underwriting. Syndication fees decreased $119 million
to $402 million in 2001 as a result of fewer deals in the marketplace. A sluggish market for advisory services drove a decline in fees of
$22 million to $276 million in 2001. Investment banking income by major activity follows:

Investment Banking Income
(Dollars in millions)

Securities underwriting
Syndications
Advisory services
Other

Total

2001

$ 797
402
276
104

$1,579

2000

$ 620
521
298
73

$1,512

Equity Investments
> Noninterest income for Equity Investments decreased $824 million to $183 million in 2001 compared to the same period in 2000. This decrease

resulted from a sharp decline in equity investment gains driven by weaker equity markets.

> Equity investment gains decreased $763 million to $230 million, with $50 million in Principal Investing and $180 million in the strategic
investments portfolio. Principal Investing recorded cash gains of $425 million, offset by impairment charges of $335 million, of which
$245 million occurred in the fourth quarter of 2001, and fair value adjustment losses of $40 million. Equity investment gains in the strategic
investments portfolio included a gain of $140 million in the first quarter of 2001 related to the sale of an interest in the Star Systems
ATM network.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Provision for Credit Losses
The provision for credit losses totaled $3.9 billion for the year ended December 31, 2001 compared to $2.5 billion in 2000, excluding the impact of
charges related to the exit of the subprime real estate lending business. The increase in the provision for credit losses from last year was primarily
due to an increase in net charge-offs, which included $210 million in charge-offs in the fourth quarter of 2001 related to Enron Corporation. Additional
provision expense was also recorded in 2001 to increase the allowance for credit losses due to deterioration in credit quality and the overall uncertainty
in the economy. Excluding the impact of subprime real estate exit-related charges, the provision for credit losses for 2001 was $283 million in excess
of net charge-offs. Total net charge-offs, excluding the impact of exit-related charges, were $3.6 billion for the year ended December 31, 2001 compared
to $2.4 billion in 2000. This increase was due to higher charge-offs in the commercial – domestic portfolio due to a deterioration in credit quality
stemming from the weak economic environment. Bankcard charge-offs also increased due to growth in the portfolio, an increase in personal bankruptcy
filings and a weaker economic environment.

An exit-related provision for credit losses of $395 million, combined with an existing allowance for credit losses of $240 million, was used to

write down the subprime real estate loan portfolio to estimated market value in the third quarter of 2001. This resulted in charge-offs of $635 million
in the consumer finance loan portfolio. Including the exit impact, the provision for credit losses totaled $4.3 billion and total net charge-offs were
$4.2 billion for the year ended December 31, 2001.

For additional information on the allowance for credit losses, certain credit quality ratios and credit quality information on specific loan

categories, see the “Credit Risk Management and Credit Portfolio Review” section beginning on page 54.

Noninterest Expense
As presented in Table Seven, the Corporation’s noninterest expense increased $2.1 billion to $20.7 billion in 2001. This increase in noninterest
expense was driven by business exit costs, higher other general operating expense, personnel, professional fees, data processing and marketing,
reflecting investments in growth businesses such as e-commerce, Asset Management and card and payment businesses.

Table 7 Noninterest Expense

(Dollars in millions)

Personnel
Occupancy
Equipment
Marketing
Professional fees
Amortization of intangibles
Data processing
Telecommunications
Other general operating
General administrative and other
Business exit costs
Restructuring charges

Total

2001

2000

Increase/(Decrease)

Amount

Percent(1)

Amount

Percent(1)

Amount

Percent

$ 9,829
1,774
1,115
682
564
878
776
484
2,687
615
1,305
–

$20,709

28.1%
5.1
3.2
1.9
1.6
2.5
2.2
1.4
7.7
1.8
3.7
–

59.2%

$ 9,400
1,682
1,173
621
452
864
667
527
2,114
583
–
550

$18,633

28.2%
5.0
3.5
1.9
1.4
2.6
2.0
1.6
6.4
1.8
–
1.7

56.0%

$ 429
92
(58)
61
112
14
109
(43)
573
32
1,305
(550)

$2,076

4.6%
5.5
(4.9)
9.8
24.8
1.6
16.3
(8.2)
27.1
5.5
n/m
n/m

11.1%

(1) Percent of net interest income on a taxable-equivalent basis and noninterest income.

> Personnel expense increased $429 million to $9.8 billion in 2001, primarily due to a severance charge of $150 million in the fourth quarter of
2001 related to ongoing efficiency improvement programs, higher revenue-related incentive compensation and increased salaries expense.
The Corporation had approximately 143,000 full-time equivalent employees at both December 31, 2001 and 2000.

> Marketing expense increased $61 million to $682 million for 2001, primarily due to the Corporation’s national brand-building campaign and higher

card marketing in Consumer and Commercial Banking.

> Professional fees increased $112 million to $564 million for 2001, primarily reflecting higher consulting and other professional fees due to an
increase in initiatives related to the Corporation’s strategy to improve customer satisfaction, the launch of a company-wide Six Sigma quality and
productivity program and implementation of a new integrated business planning process.

> Data processing expense increased $109 million to $776 million for 2001, primarily due to higher outsourced processing expense as a result of the

outsourcing of personnel services and higher item processing and check clearing expenses.

> Other general operating expense increased $573 million to $2.7 billion in 2001, reflecting $334 million in litigation expenses in the fourth quarter
of 2001 related to small settlements and an addition to the legal reserve to cover increased exposure to existing litigation, foreclosed properties
expense in Corporate Other and other miscellaneous expenses throughout the Corporation.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

> On August 15, 2001, the Corporation announced that it was exiting its auto leasing and subprime real estate lending businesses. As a result of
this strategic decision, the Corporation recorded pre-tax business exit costs in the third quarter of 2001 of $1.3 billion in noninterest expense.
Business exit costs consisted of goodwill write-offs of $685 million, auto lease residual charges of $400 million, real estate servicing asset
charges of $145 million and other transaction costs of $75 million.

> As part of its productivity and investment initiatives announced on July 28, 2000, the Corporation recorded a pre-tax charge of $550 million in the
third quarter of 2000. Of the $550 million restructuring charge, approximately $475 million was used to cover severance and related costs and
approximately $75 million was used for other costs related to process change and channel consolidation. At December 31, 2001, the reserve had
been substantially utilized.

Income Taxes

The Corporation’s income tax expense for 2001 was $3.3 billion for an effective tax rate of 32.9 percent and for 2000 was $4.3 billion for an
effective tax rate of 36.2 percent. The decrease in the effective tax rate for 2001 was due primarily to a fourth quarter tax benefit of $418 million. The
tax benefit, which resulted in a 17 percent effective tax rate for the fourth quarter of 2001, was generated as a result of the Corporation’s realignment
of certain problem loan management activities into a wholly-owned subsidiary. This tax benefit was partially offset by the portion of goodwill write-off
included in business exit costs recorded during 2001 that is not deductible for federal or state income tax purposes. Note Seventeen of the consolidated
financial statements includes a reconciliation of expected federal income tax expense computed using the federal statutory rate of 35 percent to actual
income tax expense.

Balance Sheet Review
The Corporation utilizes an integrated approach in managing its balance sheet. The following summary discusses various aspects of both on- and
off-balance sheet positions as of December 31, 2001 and 2000 and for the years then ended.

Cash and Cash Equivalents
At December 31, 2001, cash and cash equivalents were $26.8 billion, a decrease of $676 million from December 31, 2000. During 2001, net cash used
in operating activities was $12.8 billion, net cash provided by investing activities was $37.6 billion and net cash used in financing activities was
$25.3 billion. For further information on cash flows, see the Consolidated Statement of Cash Flows of the consolidated financial statements.

Securities
The securities portfolio serves a primary role in the Corporation’s balance sheet management activities. The decision to purchase or sell securities is
based upon the current assessment of economic and financial conditions, including the interest rate environment, liquidity requirements and on- and
off-balance sheet positions.

The average securities portfolio in 2001 decreased $23.8 billion to $60.4 billion due to significant reductions in the portfolio in early 2001. As a

percentage of total uses of funds, the average securities portfolio decreased by four percent to nine percent in 2001.

The securities portfolio at December 31, 2001 consisted of available-for-sale securities totaling $84.5 billion compared to $64.7 billion at

December 31, 2000. The increase in available-for-sale securities was concentrated in the mortgage-backed securities portfolio and was primarily a
result of loans securitized during the year and subsequently held in the portfolio. The reduction in the U.S. Treasury securities and agency debentures
in the available-for-sale portfolio was driven by portfolio repositioning during the year. The estimated average duration of the available-for-sale securities
portfolio was 3.34 years at December 31, 2001 compared to 4.13 years at December 31, 2000.

The valuation allowance for available-for-sale and marketable equity securities is included in shareholders’ equity. At December 31, 2001, the
valuation allowance consisted of net unrealized losses of $480 million, net of related income taxes of $311 million. At December 31, 2000, the valuation
allowance reflected net unrealized losses of $560 million, net of related income taxes of $330 million.

Held-to-maturity securities totaled $1.0 billion at December 31, 2001 compared to $1.2 billion at December 31, 2000. At December 31, 2001 and

2000, the market value of the Corporation’s held-to-maturity securities reflected pre-tax net unrealized losses of $40 million and $54 million, respectively.
Gains on sales of securities were $475 million in 2001 compared to $25 million in 2000. The majority of the gains were realized in the fourth

quarter of 2001 as the Corporation reduced its risk of slower prepayments in the securities portfolio through sales of mortgage-backed securities in
anticipation of rising interest rates. See Note Three of the consolidated financial statements for further details on securities.

Loans and Leases
As presented in Table Four, average loans and leases, the Corporation’s primary use of funds, decreased $27.2 billion to $365.4 billion in 2001. This
decline was primarily due to a decrease in consumer finance loans as the Corporation exited the subprime real estate lending business and a decline
in commercial loans as the Corporation continued efforts to reduce corporate loan levels and exit less profitable relationships. The Corporation also
reviews loans on a managed basis, which adjusts for securitizations, sales and divestitures. Average managed loans and leases decreased $1.2 billion
to $378.7 billion in 2001. This decrease was primarily due to lower average managed commercial loan levels, partially offset by growth in average
managed consumer loans. See Note Eight of the consolidated financial statements for additional information on managed loans.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Average managed commercial loans decreased $15.3 billion to $187.2 billion in 2001. The commercial – domestic portfolio decreased $12.2 billion

to $135.8 billion, reflecting aggressive paydowns precipitated by falling interest rates and continuing efforts to exit less profitable relationships. The
commercial – foreign portfolio declined $2.4 billion to $26.5 billion primarily due to paydowns on customer balances.

Average managed consumer loans increased eight percent in 2001, reflecting increases throughout the consumer loan portfolios. Average managed
residential mortgages increased $4.6 billion to $84.0 billion due to strong growth in branch-originated products. Average managed bankcard loans
increased $4.4 billion to $24.6 billion due to an increase in new business volume and slower balance paydowns. Average managed home equity lines
increased $2.5 billion to $22.0 billion, due to the impact of new marketing programs implemented in mid 2000. Average managed consumer finance
loans increased $2.3 billion to $18.6 billion, and average managed direct/indirect consumer loans increased $308 million to $40.1 billion.

A significant source of liquidity for the Corporation is the repayments and maturities of loans. Table Eight presents the contractual maturity
distribution and interest sensitivity of selected loan categories at December 31, 2001, and indicates that approximately 44 percent of the selected
loans had maturities of one year or less. The securitization and sale of certain loans and the use of loans as collateral in asset-backed financing
arrangements are also sources of liquidity.

Table 8 Selected Loan Maturity Data(1)

(Dollars in millions)

Commercial – domestic
Commercial real estate – domestic
Construction real estate – domestic
Foreign(2)

Total selected loans

Percent of total
Cumulative percent of total
Sensitivity of loans to changes in interest rates for loans due

after one year:

Fixed interest rates
Floating or adjustable interest rates

Total

(1) Loan maturities are based on the remaining maturities under contractual terms.
(2) Loan maturities include consumer and commercial foreign loans.

December 31, 2001

Due in
1 year
or less

$42,536
2,888
5,748
16,389

$ 67,561

Due after
1 year
through
5 years

$47,058
5,905
3,963
3,538

$60,464

Due after
5 years

$ 21,382
3,374
393
1,408

$26,557

Total

$ 110,976
12,167
10,104
21,335

$154,582

43.7%
43.7

39.1%
82.8

17.2%

100.0

100.0%

$ 8,821
51,643

$60,464

$ 12,648
13,909

$26,557

$ 21,469
65,552

$ 87,021

Deposits
Table Four provides information on the average amounts of deposits and the rates paid by deposit category. Through the Corporation’s diverse retail
banking network, deposits remain a primary source of funds for the Corporation. Average deposits increased $9.4 billion to $362.7 billion in 2001 due to
a $6.8 billion increase in average domestic interest-bearing deposits and a $6.4 billion increase in average total noninterest-bearing deposits, partially
offset by a $3.8 billion decrease in average foreign interest-bearing deposits. Average core deposits, which exclude negotiable CDs, public funds, other
domestic time deposits, and foreign interest-bearing deposits, increased $14.9 billion to $306.9 billion in 2001. The increase in average core deposits
was primarily driven by an increase in money market savings accounts and noninterest-bearing deposits, partially offset by a decline in CDs and savings
accounts. The increase in money market savings accounts was driven by the Corporation’s deposit pricing initiative to offer more competitive money
market savings rates. As a percentage of total sources of funds, average core deposits increased by four percent to 47 percent in 2001. At
December 31, 2001, core deposits exceeded loans and leases. See Note Nine of the consolidated financial statements for further details on deposits.

Short-Term Borrowings
The Corporation uses short-term borrowings as a funding source and in its management of interest rate risk. Table Nine presents the categories of
short-term borrowings.

During 2001, total average short-term borrowings decreased $39.0 billion to $92.5 billion from $131.5 billion in 2000. This decline was primarily

due to decreases in repurchase agreements, short-term notes payable and commercial paper driven by lower funding needs.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 9 Short-Term Borrowings

(Dollars in millions)

Amount

Rate

Amount

Rate

Amount

Rate

2001

2000

1999

Federal funds purchased
At December 31
Average during year
Maximum month-end balance during year
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 year
Maximum month-end balance during year

$ 5,487
6,267
8,718

42,240
54,826
70,674

1,558
4,156
7,410

20,659
27,227
39,391

1.45%
3.99
–

$ 4,612
4,506
7,149

5.92%
6.44
–

$ 4,806
5,835
8,311

3.04%
5.03
–

1.25
4.01
–

1.99
4.91
–

2.13
5.56
–

44,799
79,217
90,062

6,955
9,645
10,762

35,243
38,124
45,271

6.26
5.93
–

6.54
6.41
–

5.97
6.18
–

69,755
73,242
83,046

7,331
7,610
8,379

40,340
29,463
40,340

4.12
4.89
–

5.83
5.17
–

5.18
5.30
–

Long-Term Debt and Trust Preferred Securities
Long-term debt decreased $5.0 billion to $62.5 billion at December 31, 2001, from $67.5 billion at December 31, 2000. The overall decline in long-term
debt reflected a decline in average assets, but was partially offset by additional issuances to maintain liquidity, repay maturing debt and fund share
repurchases. During 2001, the Corporation issued, domestically and internationally, $14.9 billion in long-term senior and subordinated debt, an
$8.6 billion decrease from $23.5 billion during 2000. The Corporation issued $575 million of trust preferred securities in 2001. There were no trust
preferred securities issued in 2000. See Notes Ten and Eleven of the consolidated financial statements for further details on long-term debt and
trust preferred securities, respectively.

Subsequent to December 31, 2001, the Corporation issued $1.7 billion of long-term senior and subordinated debt, with maturities ranging from

2007 to 2027.

Bank of America Corporation, as successor to NationsBank Corporation, announced the redemption of its 7.84 percent Trust Originated
Preferred Securities issued by NB Capital Trust I and its 7.75 percent Trust Originated Preferred Securities issued by BankAmerica Capital I. The
redemption date is March 15, 2002 with a redemption price of $25 per security plus accrued and unpaid distributions, if any, up to but excluding
the redemption date of March 15, 2002.

Subsequent to December 31, 2001, BAC Capital Trust II, a wholly-owned grantor trust of Bank of America Corporation, issued $900 million in

capital securities. The annual dividend rate is 7 percent and is paid quarterly on February 1, May 1, August 1 and November 1 of each year, commencing
May 1, 2002.

The debt ratings of the Corporation and Bank of America, N.A at December 31, 2001 are reflected in the following table:

Moody’s Investors Service
Standard & Poor’s Corporation
Fitch, Inc.

Bank of America Corporation

Bank of America, N.A.

Commercial
Paper

P-1
A-1
F-1+

Senior
Debt

Aa2
A+
AA-

Subordinated
Debt

Aa3
A
A+

Short-Term

Long-Term

P-1
A-1+
F-1+

Aa1
AA-
AA

Debt and Lease Obligations
The Corporation has contractual obligations to make future payments on debt and lease agreements. Long-term debt, capital leases and trust preferred
securities are reflected on the balance sheet, whereas, operating lease obligations for office space and equipment are not recorded on the balance
sheet. These types of obligations are more fully discussed in Notes Ten and Eleven of the consolidated financial statements. Total debt and lease obliga-
tions at December 31, 2001 included:

(Dollars in millions)

Debt and lease obligations
Long-term debt and capital leases(1)
Trust preferred securities(1)
Operating lease obligations

Total debt and lease obligations

(1) Includes principal payments only.

Due in
1 year
or less

$ 11,592
–
1,174

$12,766

Due after
1 year
through
3 years

$ 18,781
–
1,994

$20,775

Due after
3 years
through
5 years

$14,875
–
1,413

$16,288

Due after
5 years

$ 17,248
5,530
2,528

$25,306

Total

$62,496
5,530
7,109

$ 75,135

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Credit Extension Commitments
Many of the Corporation’s lending relationships, including those with commercial and consumer customers, contain both funded and unfunded elements.
The unfunded component of these commitments is not recorded on the Corporation’s balance sheet. These commitments are more fully discussed
in Note Twelve of the consolidated financial statements. The table below summarizes the total unfunded credit extension, or off-balance sheet,
commitment amounts by expiration date.

(Dollars in millions)

Credit extension commitments
Credit card commitments
Other loan commitments(1)
Standby letters of credit and financial guarantees
Commercial letters of credit

Total credit extension commitments

Expires in
1 year
or less

$ 73,644
97,570
28,268
3,243

$202,725

Expires after
1 year
through
3 years

–
50,891
8,790
518

Expires after
3 years
through
5 years

–
37,359
829
49

Expires after
5 years

–
35,709
2,487
147

$ 60,199

$ 38,237

$ 38,343

Total

$ 73,644
221,529
40,374
3,957

$339,504

(1) Other loan commitments include equity commitments of approximately $2.7 billion primarily related to obligations to fund existing venture capital equity investments.

Off-Balance Sheet Financing Entity Commitments
In the normal course of business, the Corporation also supports its customers’ financing needs through facilitating their access to the commercial
paper markets. These markets provide an attractive, lower cost financing alternative for the Corporation’s customers. These customers sell assets,
such as high-grade trade or other receivables or leases, to a commercial paper financing entity, which in turn issues high-grade short-term commercial
paper that is collateralized by such assets. The Corporation facilitates these transactions and bills and collects fees from the financing entity for the
services it provides including administration, trust services and marketing the commercial paper. In addition, the Corporation receives fees for
providing liquidity and standby letters of credit or similar loss protection commitments to the financing entities. The Corporation manages its credit
risk on these commitments by subjecting them to normal underwriting and risk management processes. At December 31, 2001 and 2000, the
Corporation had off-balance sheet liquidity commitments and standby letters of credit and other financial guarantees to these financing entities of
$36.1 billion and $27.6 billion, respectively. Substantially all of these liquidity commitments and standby letters of credit and other financial guarantees
mature within one year. These amounts are included in total credit extension commitments in the table above. Net revenues earned from fees associated
with these financing entities were approximately $256 million and $212 million in 2001 and 2000, respectively.

In addition, to preserve its own liquidity and control its capital position, the Corporation from time to time will seek alternative funding sources.
To accomplish this, the Corporation will sell or fund assets using an off-balance sheet financing entity, which in turn, issues collateralized commercial paper
or structured notes to third-party market participants. The Corporation may provide liquidity and standby letters of credit or similar loss protection
commitments to the financing entity, or it may enter into a derivative with the entity whereby the Corporation assumes certain market risk. Similar to
that discussed above, the Corporation receives fees for the services it provides to the financing entity, and it manages any market risk on commitments or
derivatives through normal underwriting and risk management processes. Derivative activity related to these financing entities is included in Note Five of
the consolidated financial statements. At December 31, 2001 and 2000, the Corporation had off-balance sheet liquidity commitments and standby letters of
credit and other financial guarantees to these financing entities of $4.3 billion and $3.2 billion, respectively. Substantially all of these liquidity commitments
and standby letters of credit and other financial guarantees mature within one year. These amounts are included in total credit extension commitments in
the table above. Net revenues earned from fees associated with these financing entities were $49 million and $51 million in 2001 and 2000, respectively.
Because the Corporation provides liquidity and credit support to these financing entities, the Corporation’s credit ratings and changes thereto will
affect the borrowing cost and liquidity of these entities. In addition, significant changes in counterparty asset valuation and credit standing may also affect
the liquidity of the commercial paper issuance. Further, disruption in the commercial paper markets may result in the Corporation having to fund under
these commitments and letters of credit discussed above. These risks, along with all other credit and liquidity risks, are managed by the Corporation within
its policies and practices. See Note One of the consolidated financial statements for an additional discussion of off-balance sheet financing entities.

Capital Resources and Capital Management
Shareholders’ equity at December 31, 2001 was $48.5 billion compared to $47.6 billion at December 31, 2000, an increase of $892 million. The increase
was primarily due to $3.2 billion of net earnings (net income less dividends), $1.1 billion of net gains on derivatives and $1.1 billion in common stock
issued under employee plans, partially offset by the repurchase of common stock for approximately $4.7 billion. The Tier 1 Capital Ratio rose 80 basis
points from December 31, 2000 to 8.30 percent. At December 31, 2001, the Corporation was classified as well-capitalized.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

which reduced shareholders’ equity by $4.7 billion and increased earnings per share by approximately $0.08 for the year ended December 31, 2001.
Management anticipates it will continue to repurchase shares at least equal to shares issued under its various stock option plans. See Note Thirteen
of the consolidated financial statements for additional disclosures related to the repurchase program.

On October 24, 2001, the Board approved a $0.04 per share, or seven percent, increase in the quarterly common dividend. This increase brings

the common dividend to $0.60 per share for the fourth quarter of 2001 and $2.28 per share for the year ended December 31, 2001.

The regulatory capital ratios of the Corporation and Bank of America, N.A., along with a description of the components of risk-based capital,

capital adequacy requirements and prompt corrective action provisions, are included in Note Fourteen of the consolidated financial statements.

Risk Management Overview
The Corporation’s goal in managing risk is to produce appropriate risk-adjusted returns, reduce the wide volatility in earnings and increase shareholder
value. The Corporation believes it has a governance structure and risk management approach in place in order to reach that goal. Processes are designed
to align the Corporation’s measures for business success with the measures for return, growth and risk. Further, these processes enable the Corporation
to better communicate with its associates the corporate appetite for risk, manage sources of earnings’ volatility and manage appropriate capital levels.

The Corporation manages risk by adherence to the following key principles:
> Emphasize that individual decision-making and accountability are the cornerstone.
> Include risk assessments in all business units.
> Appropriate limits, policies, procedures and measures are in place.
> Independently test, verify and evaluate controls.
> Identify and minimize the sources of earnings’ volatility.
> Use SVA as a key financial measure to evaluate businesses and to direct capital.
Each of these key principles contributes to a more risk/return focused culture. Importantly, the Corporation believes SVA leads to better risk/return
decisioning and to a lower risk profile. Reinforcing the cost of capital among the Corporation’s business segments creates critical assessments of the
Corporation’s uses of capital. The cost of capital for each business is based on an assessment of its specific credit, market and operational risk.

The goal of the governance structure is to enable management to actively balance risk and return.
> The Chief Financial Officer has oversight responsibility for the soundness of the Corporation’s capitalization and earnings.
> The Chief Risk Officer has enterprise-wide oversight of market, credit and operational risks.
> The business unit leaders have responsibility for meeting corporate performance objectives within the boundaries of their allocated risk position.
The Corporation manages day-to-day risk-taking through three senior executive committees. The Risk and Capital Committee determines the
corporate objectives for each performance measure, allocates capital, sets aggregate risk levels and plans the use of capital. It also coordinates two
committees responsible for market and credit risk. The Asset and Liability Committee reviews aggregate balance sheet exposures, including trading
positions, recommends balance sheet capital allocations and recommends changes in the market risk profile. The Credit Risk Committee reviews
business asset quality, portfolio management results and industry concentrations and limits.

The Board of Directors addresses risk in three ways. The Finance Committee oversees both market and credit risk through reports from the Asset

and Liability Committee and the Credit Risk Committee. The Asset Quality Committee of the Board also reviews credit risk, and the Audit Committee
of the Board reviews the scope and coverage of the external audit and internal audit activities.

Senior management and the Board of Directors oversight builds on the cornerstone of the Corporation’s corporate governance: individual

decision-making and accountability. The Corporation’s corporate governance is designed so that individuals at all levels are delegated appropriate
authority, take appropriate action and are accountable for actions taken. Wherever practical, decision-making authority is delegated as close to the
customer as possible.

The following sections, Credit Risk Management and Credit Portfolio Review, Market Risk Management and Liquidity Risk Management, provide

specific information on the Corporation’s processes and current risk assessment in each area as of December 31, 2001 and 2000.

Credit Risk Management and Credit Portfolio Review
In conducting business activities, the Corporation is exposed to the risk that borrowers or counterparties may default on their obligations to the
Corporation. This exposure exists in both on- and off-balance sheet relationships. Credit risk arises through the extension of loans and leases, certain
securities, off-balance sheet letters of credit and financial guarantees, unfunded loan commitments and through counterparty exposure on trading
and capital markets transactions. To manage both on- and off-balance sheet credit risk, the Risk Management group, which reports to the Chief Risk
Officer, establishes policies and procedures and communicates, implements and monitors the application of these throughout the Corporation.

The Corporation uses statistical techniques and modeling to estimate both expected losses and unexpected losses for each segment of the port-

folio. The expected loss drives the periodic credit cost charged to earnings for management reporting purposes, and the unexpected loss estimate
drives the capital allocation to each business unit. Both the expected loss and unexpected loss are incorporated into each business unit's SVA meas-
urement. As a result, the overall credit risk profile of each business unit is an important factor in assessing its performance.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

The Corporation’s overall objective in managing credit risk is to minimize the adverse impact of any single event or set of occurrences. To achieve

this objective, the Risk Management group works with lending officers, trading personnel and various other line personnel in areas that conduct
activities involving credit risk to maintain a credit risk profile that is diverse in terms of product type, industry concentration, geographic distribution
and borrower or counterparty concentration.

The Corporation manages credit exposure to individual borrowers and counterparties on an aggregate basis including loans and leases, securities,

letters of credit, bankers’ acceptances, derivatives and unfunded commitments. The creditworthiness of individual borrowers or counterparties is
determined by experienced personnel, and limits are established for the total credit exposure to any one borrower or counterparty. Credit limits are
subject to varying levels of approval by senior line personnel and credit risk management.

The approving credit officer assigns borrowers or counterparties an initial risk rating which is based primarily on an analysis of each borrower’s

financial capacity in conjunction with industry and economic trends. Risk ratings are subject to review and validation by the independent credit review
group. Approvals are made based upon the perceived level of inherent credit risk specific to the transaction and the counterparty and are reviewed
for appropriateness by senior line and credit risk personnel. Credits are monitored by line and credit risk management personnel for deterioration in a
borrower’s or counterparty’s financial condition which would impact the ability of the borrower or counterparty to perform under the contract. Risk
ratings are adjusted as necessary, and the Corporation seeks to reduce exposure in such situations where appropriate.

The Corporation also has a goal of managing exposure to a single borrower, industry, product-type, country or other concentration through
syndications of credits, credit derivatives, participations, loan sales and securitizations. Through the Global Corporate and Investment Banking segment,
the Corporation is a major participant in the syndications market. In a syndicated facility, each participating lender funds only its portion of the syndicated
facility, therefore limiting its exposure to the borrower. The Corporation’s strategy remains one of origination for distribution. Additionally, the SVA
discipline discourages the retention of loan assets that do not generate a positive return above the cost of risk-adjusted capital.

For consumer and small business lending, credit scoring systems are utilized to determine the relative risk of new underwritings and provide
standards for extensions of credit. Consumer portfolio credit risk is monitored primarily using statistical models and reviews of actual payment experience
in an attempt to predict portfolio behavior.

In some credit situations, the Corporation obtains collateral to support credit extensions and commitments. Generally, such collateral is in the

form of real and/or personal property, cash on deposit or other liquid instruments. In certain circumstances, the Corporation obtains real property as
security for some loans that are made on the general creditworthiness of the borrower and whose proceeds were not used for real estate-related purposes.

An independent Credit Review group provides executive management, the Board of Directors and the Credit Risk Committee with an evaluation

of portfolio quality and the effectiveness of the credit management process. The group conducts ongoing reviews of credit activities and portfolios
through transactional and process reviews, re-examining on a regular basis risk assessments for credit exposures and overall compliance with policy.

Loans and Leases Portfolio Review
The Corporation’s credit exposure is focused in its loans and leases portfolio, which totaled $329.2 billion and $392.2 billion at December 31, 2001
and 2000, respectively. In addition, there are off-balance sheet commitments to fund loans, which totaled $295.2 billion and $315.2 billion at
December 31, 2001 and 2000, respectively. In an effort to minimize the adverse impact of any single event or set of occurrences, the Corporation
strives to maintain a diverse credit portfolio. Table Ten presents the loans and leases by category. Additional information on the Corporation’s industry,
real estate and foreign exposures can be found in the Concentrations of Credit Risk section beginning on page 61.

As a result of the exit of the auto leasing and subprime real estate lending businesses, the Corporation immediately ceased originations of auto leases
and subprime real estate loans. The Corporation intends to allow its auto lease portfolio to run off over its remaining term of three to four years. The
Corporation began to execute its exit strategy for the subprime real estate loan portfolio through securitizations and sales in the fourth quarter of 2001.
Additional information on the exit of these consumer finance businesses can be found in Notes Two and Six of the consolidated financial statements.

Table 10 Loans and Leases

2001

2000

December 31

1999

1998

1997

(Dollars in millions)

Amount

Percent

Amount

Percent

Amount

Percent

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
Bankcard
Foreign consumer

Total consumer

$118,205
23,039
22,271
383

163,898

78,203
22,107
37,638
5,331
19,884
2,092

165,255

35.9% $ 146,040
31,066
26,154
282

7.0
6.8
.1

37.2% $ 143,450
27,978
24,026
325

7.9
6.7
.1

38.7% $ 137,422
31,495
26,912
301

7.5
6.5
.1

38.5% $ 122,463
30,080
28,567
324

8.8
7.5
.1

49.8

23.8
6.7
11.5
1.6
6.0
.6

50.2

203,542

84,394
21,598
40,457
25,800
14,094
2,308

188,651

51.9

21.5
5.5
10.3
6.6
3.6
.6

48.1

195,779

81,860
17,273
42,161
22,326
9,019
2,244

174,883

52.8

22.1
4.7
11.4
6.0
2.4
.6

47.2

196,130

73,608
15,653
40,510
15,400
12,425
3,602

161,198

54.9

20.6
4.4
11.3
4.3
3.5
1.0

45.1

181,434

71,540
16,536
40,058
14,566
14,908
3,098

160,706

35.8%
8.8
8.3
.1

53.0

20.9
4.8
11.7
4.3
4.4
.9

47.0

Total loans and leases

$329,153

100.0% $ 392,193

100.0% $370,662

100.0% $357,328

100.0% $ 342,140

100.0%

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Commercial Portfolio
At December 31, 2001 and 2000, total commercial loans outstanding totaled $163.9 billion and $203.5 billion, respectively. Domestic commercial loans,
including commercial real estate, accounted for 86 percent and 85 percent of total commercial loans at December 31, 2001 and 2000, respectively.

Commercial – domestic loans outstanding totaled $118.2 billion and $146.0 billion at December 31, 2001 and 2000, respectively. The Corporation
had commercial – domestic loan net charge-offs of $1.9 billion for 2001, compared to $1.3 billion for 2000. Net charge-offs increased primarily due
to deterioration in credit quality stemming from the weak economic environment, the sale of distressed loans in 2001 and fourth quarter charge-offs
of $210 million related to Enron Corporation. In addition to the Enron loan charge-offs, the Corporation also wrote off $21 million in Enron securities
related to a collateralized loan obligation. Nonperforming commercial – domestic loans were $3.1 billion, or 2.64 percent of commercial – domestic
loans, at December 31, 2001, compared to $2.8 billion, or 1.90 percent, at December 31, 2000. The increase in nonperforming loans was primarily
driven by the weakening economic environment which impacted various industries and business segments, partially offset by sales of nonperforming
loans. In addition, the remaining Enron loan balance of $226 million, of which $42 million was unsecured, was classified as nonperforming subsequent
to the charge-off in the fourth quarter. Commercial – domestic loans past due 90 days or more and still accruing interest were $175 million at
December 31, 2001, compared to $141 million at December 31, 2000.

Commercial – foreign loans outstanding totaled $23.0 billion and $31.1 billion at December 31, 2001 and 2000, respectively. The Corporation had
commercial – foreign loan net charge-offs for 2001 of $208 million, compared to $86 million for 2000. Nonperforming commercial – foreign loans were
$461 million, or 2.00 percent of commercial – foreign loans, at December 31, 2001, compared to $486 million, or 1.56 percent, at December 31, 2000.
Commercial – foreign loans past due 90 days or more and still accruing interest were $6 million at December 31, 2001 compared to $37 million at
December 31, 2000. For additional information, see the International Exposure discussion beginning on page 63.

Commercial real estate – domestic loans totaled $22.3 billion and $26.2 billion at December 31, 2001 and 2000, respectively. Net charge-offs
were $39 million and $13 million for 2001 and 2000, respectively. Nonperforming commercial real estate – domestic loans were $240 million, or 1.08
percent of commercial real estate – domestic loans, at December 31, 2001, compared to $236 million, or 0.90 percent, at December 31, 2000. At
December 31, 2001, commercial real estate – domestic loans past due 90 days or more and still accruing interest were $40 million compared to
$16 million at December 31, 2000. Table Seventeen displays commercial real estate loans by geographic region and property type, including the portion
of such loans which are nonperforming and other real estate credit exposures.

Table Eighteen presents aggregate commercial loan and lease exposures by certain significant industries.

Consumer Portfolio
At December 31, 2001 and 2000, total consumer loans outstanding totaled $165.3 billion and $188.7 billion, respectively. Approximately 65 percent
and 70 percent of these loans were secured by first and second mortgages on residential real estate at December 31, 2001 and 2000, respectively.

In 1999, the Federal Financial Institutions Examination Council (FFIEC) issued the Uniform Classification and Account Management Policy (the Policy)
which provides guidance for and promotes consistency among banks on the charge-off treatment of delinquent and bankruptcy-related consumer loans.
The Corporation implemented the Policy in the fourth quarter of 2000, which resulted in accelerated charge-offs of $104 million across several product
types in the consumer loan portfolio.

Residential mortgage loans decreased to $78.2 billion at December 31, 2001 compared to $84.4 billion at December 31, 2000 as growth in retail

mortgage originations was more than offset by the impact of securitizations of $52.9 billion. Net charge-offs on residential mortgage loans were
$26 million for 2001. Nonperforming residential mortgage loans increased $5 million to $556 million at December 31, 2001.

Home equity lines increased to $22.1 billion at December 31, 2001 compared to $21.6 billion at December 31, 2000. Net charge-offs on home
equity lines were $19 million and $20 million for 2001 and 2000, respectively. Nonperforming home equity lines increased to $80 million at December 31,
2001 compared to $32 million at December 31, 2000.

Consumer finance loans outstanding totaled $5.3 billion and $25.8 billion at December 31, 2001 and 2000, respectively. Consumer finance

nonperforming loans decreased to $9 million at December 31, 2001 compared to $1.1 billion at December 31, 2000. These decreases were due to the
transfer of approximately $21.4 billion of subprime real estate loans, of which $1.2 billion was nonperforming, to loans held for sale as a result of
the exit of the subprime real estate lending business in the third quarter of 2001. The Corporation had consumer finance net charge-offs of $929 million
for 2001 compared to $266 million for 2000. The increase in net charge-offs primarily reflected exit-related charge-offs of $635 million that were used
to write down the subprime real estate loan portfolio to estimated market value in the third quarter of 2001 and a weakened economic environment.
Bankcard receivables increased to $19.9 billion at December 31, 2001 compared to $14.1 billion at December 31, 2000. This increase was due to

new account growth and increased purchase volume on existing accounts. Net charge-offs on bankcard receivables for 2001 were $672 million
compared to $338 million for 2000. Managed bankcard net charge-offs increased $230 million to $1.2 billion, while the managed net charge-off ratio
increased 10 basis points to 4.76 percent for 2001. The increase in net charge-offs was primarily a result of growth in the portfolio outstandings, an
increase in personal bankruptcy filings and a weaker economic environment. Bankcard loans past due 90 days or more and still accruing interest were
$332 million at December 31, 2001 compared to $191 million at December 31, 2000.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Other consumer loans, which include direct and indirect consumer and foreign consumer loans, were $39.7 and $42.8 billion at December 31, 2001

and 2000, respectively. Direct and indirect consumer loan net charge-offs were $349 million for 2001 compared to $324 million for 2000. Foreign
consumer loan net charge-offs were $5 million and $3 million for 2001 and 2000, respectively.

Excluding bankcard, total consumer loans past due 90 days or more and still accruing interest were $127 million at December 31, 2001, compared to

$110 million at December 31, 2000.

Nonperforming Assets

As presented in Table Eleven, nonperforming assets decreased to $4.9 billion at December 31, 2001 from $5.5 billion at December 31, 2000.

Nonperforming loans decreased to $4.5 billion at December 31, 2001 from $5.2 billion at December 31, 2000. The decrease in nonperforming loans
was primarily due to the transfer of $1.2 billion of nonperforming subprime real estate loans from the loans and leases portfolio to loans held for sale
included in other assets related to the decision to exit the subprime real estate lending business in 2001 and due to sales of nonperforming commercial
– domestic and residential mortgage loans in 2001. These decreases were partially offset by nonperforming net inflows in the commercial – domestic,
residential mortgage and home equity lines portfolios. Credit deterioration in loans continued as companies and individuals were affected by the
weakening economic environment. Foreclosed properties increased to $402 million at December 31, 2001 compared to $249 million at December 31, 2000.
This increase was driven by the exit of the subprime real estate lending business in the third quarter of 2001.

Table 11 Nonperforming Assets(1)

(Dollars in millions)

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(2)
Foreign consumer

Total consumer

Total nonperforming loans

Foreclosed properties

Total nonperforming assets

Nonperforming assets as a percentage of:

Total assets
Loans, leases and foreclosed properties

Nonperforming loans as a percentage of loans and leases

(Dollars in millions)

Income that would have been recorded in accordance with original terms
Less income actually recorded

Loss of income

Cost of carrying foreclosed properties

2001

2000

1999

1998

1997

At December 31

$ 3,123
461
240
3

3,827

556
80
27
9
7

679

4,506

402

$2,777
486
236
3

3,502

551
32
19
1,095
9

1,706

5,208

249

$ 1,163
486
191
3

1,843

529
46
19
598
7

1,199

3,042

163

$ 812
314
299
4

1,429

722
50
21
246
14

1,053

2,482

282

$ 563
155
342
2

1,062

744
52
43
210
–

1,049

2,111

309

$4,908

$5,457

$3,205

$2,764

$2,420

.79%

1.49
1.37

.85%
1.39
1.33

.51%
.86
.82

.45%
.77
.69

.42%
.71
.62

2001

2000

1999

1998

1997

$ 593
(256)

$ 337

$ 666
(237)

$ 429

$ 419
(123)

$ 296

$ 367
(130)

$ 237

$ 349
(130)

$ 219

(1) Balance does not include $1.0 billion and $124 million of loans held for sale, included in other assets at December 31, 2001 and 2000, respectively, which would have been classified as non-

performing had they been included in loans. The Corporation had approximately $48 million and $390 million of troubled debt restructured loans at December 31, 2001 and 2000, respectively,
which were accruing interest and were not included in nonperforming assets.

(2) In 2001, $1.2 billion of nonperforming loans were transferred to loans held for sale as a result of the exit of the subprime real estate lending business.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table Twelve presents the additions to and reductions in nonperforming assets in the commercial and consumer portfolios during the most recent five quarters.

Table 12 Nonperforming Assets Activity

(Dollars in millions)

Balance, beginning of period

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-offs(1)

Total commercial reductions

Total commercial net additions to (reductions in) nonperforming assets

Consumer

Additions to nonperforming assets:

New nonaccrual loans and foreclosed properties

Total consumer additions

Reductions in nonperforming assets:

Paydowns, payoffs and sales
Returns to performing status
Charge-offs(1)
Transfers (to) from assets held for sale(2,3)

Total consumer reductions

Total consumer net additions to (reductions in) nonperforming assets

Total net additions to (reductions in) nonperforming assets

Fourth
Quarter
2001

Third
Quarter
2001

Second
Quarter
2001

First
Quarter
2001

Fourth
Quarter
2000

$ 4,523

$6,195

$5,897

$5,457

$4,403

1,345
106

1,451

(300)
(82)
(784)

(1,166)

285

374

(174)
(181)
(22)
103

(274)

100

385

761
32

793

(635)
(86)
(513)

(1,234)

(441)

694

(413)
(256)
(69)
(1,187)

(1,925)

(1,231)

(1,672)

1,376
33

1,409

(732)
(19)
(525)

(1,276)

133

836

(159)
(440)
(69)
(3)

(671)

165

298

1,315
26

1,341

(398)
(126)
(467)

(991)

350

819

(135)
(483)
(101)
(10)

(729)

440

1,954
28

1,982

(288)
(73)
(774)

(1,135)

847

834

(95)
(391)
(135)
(6)

(627)

207

1,054

$5,457

Balance, end of period

$4,908

$4,523

$ 6,195

$5,897

(1) Certain loan products, including commercial bankcard, consumer bankcard and other unsecured loans, are not classified as nonperforming; therefore, the charge-offs on these

loans are not included above.

(2) Includes assets held for sale that were foreclosed and transferred to foreclosed properties.
(3) Primarily related to the exit of the subprime real estate lending business in the third quarter of 2001.

In order to respond when deterioration of a credit occurs, internal loan workout units are devoted to providing specialized expertise and full-time
management and/or collection of certain nonperforming assets as well as certain performing loans. Management believes focused collection strategies
and a proactive approach to managing overall problem assets expedites the disposition, collection and renegotiation of nonperforming and other
lower-quality assets. During 2001, the Corporation realigned its operations that manage certain distressed assets through the funding of Banc of
America Strategic Solutions, Inc. (SSI), a wholly-owned subsidiary. The purpose of this subsidiary is to provide a more effective means of problem asset
resolution and to coordinate exit strategies, including bulk sales, collateralized debt obligations and other resolutions of domestic commercial distressed
assets. The assets and liabilities transferred to SSI were consolidated with the Corporation at December 31, 2001. During 2001, the Corporation sold
approximately $2.1 billion of nonperforming and poorly performing commercial and consumer loans. Net charge-offs of approximately $400 million were
recorded related to these sales. The Corporation expects to continue to aggressively manage credit risk and to exit problem credits where practical.

The Corporation’s investment in specific loans that were considered to be impaired was $3.9 billion at both December 31, 2001 and 2000.
Commercial – domestic impaired loans increased $247 million to $3.1 billion at December 31, 2001 compared to December 31, 2000. Commercial –
foreign impaired loans decreased $20 million to $501 million. Commercial real estate – domestic impaired loans decreased $172 million to $240 million.

Loans Past Due 90 Days or More and Still Accruing Interest
Table Thirteen presents total loans past due 90 days or more and still accruing interest. At December 31, 2001, loans past due 90 days or more and
still accruing interest were $680 million compared to $495 million at December 31, 2000.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 13 Loans Past Due 90 Days or More and Still Accruing Interest

(Dollars in millions)

Commercial – domestic
Commercial – foreign
Commercial real estate – domestic

Total commercial

Residential mortgage
Direct/Indirect consumer
Consumer finance
Bankcard

Total consumer

Total

At December 31, 2001

At December 31, 2000

Amount

Percent(1)

Amount

Percent(1)

$ 175
6
40

221

14
89
24
332

459

.15%
.02
.18

.13

.02
.24
.45
1.67

.28

$ 141
37
16

194

17
89
4
191

301

.10%
.12
.06

.10

.02
.22
.02
1.36

.16

$680

.21%

$495

.13%

(1) Represents amounts past due 90 days or more and still accruing interest as a percentage of loans and leases for each loan category.

Allowance for Credit Losses
The Corporation performs periodic and systematic detailed reviews of its lending portfolios to identify inherent risks and to assess the overall
collectibility of those portfolios. The allowance on certain homogeneous loan portfolios, which generally consist of consumer loans, is based on
aggregated portfolio segment evaluations generally by loan type. Loss forecast models are utilized for these segments which consider a variety of
factors including, but not limited to historical loss experience, anticipated defaults or foreclosures based on portfolio trends, delinquencies and
credit scores, and expected loss factors by loan type. The remaining portfolios are reviewed on an individual loan basis. Loans subject to individual
reviews are analyzed and segregated by risk according to the Corporation’s internal risk rating scale. These risk classifications, in conjunction with an
analysis of historical loss experience, current economic conditions and performance trends within specific portfolio segments, and any other pertinent
information (including individual valuations on nonperforming loans in accordance with Statement of Financial Accounting Standards No. 114,
“Accounting by Creditors for Impairment of a Loan”) result in the estimation of specific allowances for credit losses. The Corporation has procedures
in place to monitor differences between estimated and actual incurred credit losses. These procedures include detailed periodic assessments by senior
management of both individual loans and credit portfolios and the models used to estimate incurred credit losses in those portfolios.

Portions of the allowance for credit losses are assigned to cover the estimated probable incurred credit losses in each loan and lease category

based on the results of the Corporation’s detail review process described above. The assigned portion continues to be weighted toward the commercial
loan portfolio, which reflected a higher level of nonperforming loans and the potential for higher individual losses. The remaining or unassigned portion
of the allowance for credit losses, determined separately from the procedures outlined above, addresses certain industry and geographic concentrations,
including global economic conditions. This procedure helps to minimize the risk related to the margin of imprecision inherent in the estimation of the
assigned allowances for credit losses. Due to the subjectivity involved in the determination of the unassigned portion of the allowance for credit losses,
the relationship of the unassigned component to the total allowance for credit losses may fluctuate from period to period. Management evaluates the
adequacy of the allowance for credit losses based on the combined total of the assigned and unassigned components.

Additions to the allowance for credit losses are made by charges to the provision for credit losses. Credit exposures deemed to be uncollectible

are charged against the allowance for credit losses. Recoveries of previously charged off amounts are credited to the allowance for credit losses.

Excluding the impact of charges related to the exit of the subprime real estate lending business, the provision for credit losses totaled $3.9 billion
for the year ended December 31, 2001 compared to $2.5 billion in 2000. The increase in the provision for credit losses from last year was primarily due to
an increase in net charge-offs, which included $210 million in charge-offs related to Enron. Additional provision expense was also recorded in 2001 to
increase the allowance for credit losses due to deterioration in credit quality and the overall uncertainty in the economy. Excluding the impact of exit-
related charges, the provision for credit losses for 2001 was $283 million in excess of net charge-offs. Total net charge-offs, excluding the impact
of exit-related charges, were $3.6 billion for the year ended December 31, 2001 compared to $2.4 billion in 2000. This increase was due to higher
charge-offs in the commercial – domestic portfolio and deterioration in credit quality stemming from the weak economic environment. Bankcard
charge-offs also increased due to growth in the portfolio, an increase in personal bankruptcy filings and a weaker economic environment.

An exit-related provision for credit losses of $395 million, combined with an existing allowance for credit losses of $240 million, was used to

The nature of the process by which the Corporation determines the appropriate allowance for credit losses requires the exercise of considerable

judgment. After review of all relevant matters affecting loan collectibility, management believes that the allowance for credit losses is appropriate
given its analysis of estimated incurred credit losses at December 31, 2001. Table Fourteen presents the activity in the allowance for credit losses for
the most recent five years.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 14 Allowance For Credit Losses
(Dollars in millions)

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)
Bankcard
Other consumer domestic
Foreign consumer

Total consumer

Total loans and leases charged off

Recoveries of loans and leases previously 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
Bankcard
Other consumer – domestic
Foreign consumer

Total consumer

Total recoveries of loans and leases previously charged off

Net charge-offs
Provision for credit losses(2)
Other, net

Balance, December 31

Loans and leases outstanding at December 31
Allowance for credit losses as a percentage of loans and leases

outstanding at December 31

Average loans and leases outstanding during the year
Net charge-offs as a percentage of average outstanding loans and

leases during the year

Allowance for credit losses as a percentage of nonperforming

loans at December 31

Ratio of the allowance for credit losses at December 31 to net charge-offs

(1) Includes $635 million related to the exit of the subprime real estate lending business in 2001.
(2) Includes $395 million related to the exit of the subprime real estate lending business in 2001.

2001

2000

1999

1998

1997

$ 6,838

6,828

7,122

6,778

6,316

(2,120)
(249)
(46)
–

(2,415)

(39)
(32)
(522)
(1,006)
(753)
(71)
(6)

(2,429)

(4,844)

171
41
7
–

219

13
13
173
77
81
23
1

381

600

(1,412)
(117)
(31)
(1)

(1,561)

(36)
(29)
(502)
(420)
(392)
(51)
(4)

(1,434)

(2,995)

125
31
18
3

177

9
9
178
154
54
13
1

418

595

(820)
(161)
(19)
(1)

(1,001)

(35)
(24)
(545)
(387)
(571)
1
(20)

(1,581)

(2,582)

109
17
25
–

151

7
12
175
158
76
–
3

431

582

(714)
(262)
(21)
–

(997)

(33)
(27)
(562)
(561)
(857)
–
(13)

(2,053)

(3,050)

97
20
21
–

138

4
10
157
178
93
–
3

445

583

(328)
(54)
(59)
–

(441)

(50)
(36)
(582)
(426)
(1,043)
(12)
(13)

(2,162)

(2,603)

226
25
59
–

310

5
9
146
155
124
–
2

441

751

(4,244)

4,287
(6)

(2,400)

2,535
(125)

(2,000)

1,820
(114)

(2,467)

2,920
(109)

(1,852)

1,904
410

6,875

6,838

6,828

7,122

6,778

$ 329,153

$ 392,193

$370,662

$357,328

$ 342,140

2.09%

1.74%

1.84%

1.99%

1.98%

$ 365,447

$392,622

$362,783

$347,840

$ 343,151

1.16%

.61%

.55%

.71%

.54%

152.58
1.62

131.30
2.85

224.48
3.41

287.01
2.89

321.03
3.66

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 15 Net Charge-offs

2001

2000

December 31

1999

1998

1997

(Dollars in millions)

Amount

Percent(1)

Amount

Percent(1)

Amount

Percent(1)

Amount

Percent(1)

Amount

Percent(1)

Commercial – domestic
Commercial – foreign
Commercial real estate – domestic
Commercial real estate – foreign

Total commercial

Residential mortgage
Home equity lines
Direct/Indirect consumer
Consumer finance(2)
Bankcard
Other consumer – domestic
Foreign consumer

Total consumer

Total net charge-offs

Managed bankcard net charge-offs

and ratios(3)

$ 1,949
208
39
–

2,196

26
19
349
929
672
48
5

2,048

$4,244

1.46%
.78
.16
–

1.19

.03
.09
.88
5.01
4.04
n/m
.22

1.14

$ 1,287
86
13
(2)

1,384

27
20
324
266
338
38
3

1,016

.87%
.29
.05
n/m

$ 711
144
(6)
1

.51%
.49
n/m
.39

$ 617
242
–
–

.47%
.78
–
–

$ 102
29
–
–

.68

.03
.10
.78
1.09
3.29
n/m
.13

.54

850

28
12
370
229
495
(1)
17

1,150

.44

.04
.07
.88
1.22
5.08
n/m
.52

.68

859

29
17
405
383
764
–
10

1,608

.45

.04
.11
1.01
2.67
6.03
–
.31

1.02

131

45
27
436
271
919
12
11

1,721

.09%
.10
–
–

.07

.06
.18
1.11
1.96
5.90
n/m
.32

1.03

1.16%

$2,400

.61%

$2,000

.55%

$2,467

.71%

$ 1,852

.54%

$ 1,174

4.76%

$ 944

4.66%

$ 1,077

5.57%

$ 1,284

6.27%

$ 1,254

6.19%

n/m = not meaningful

(1) Percentage amounts are calculated as net charge-offs divided by average outstanding loans and leases or managed loans for each loan category.
(2) Includes $635 million related to the exit of the subprime real estate lending business in 2001.
(3) Includes both on-balance sheet and securitized loans.

Table 16 Allocation of the Allowance for Credit Losses

2001

2000

December 31

1999

1998

1997

(Dollars in millions)

Amount

Percent

Amount

Percent

Amount

Percent

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
Bankcard
Foreign consumer

Total consumer

Unassigned

Total

$ 1,974
766
924
8

3,672

145
83
411
389
821
10

1,859

1,344

28.7%
11.1
13.5
.1

53.4

2.1
1.2
6.0
5.7
11.9
.1

27.0

19.6

$ 1,993
796
989
7

3,785

151
77
384
658
549
11

1,830

1,223

29.1%
11.6
14.5
.1

55.3

2.2
1.1
5.6
9.7
8.0
.2

26.8

17.9

$ 1,875
930
927
11

3,743

160
60
416
651
348
11

1,646

1,439

27.4%
13.6
13.6
.2

54.8

2.3
.9
6.1
9.5
5.1
.2

24.1

21.1

$ 1,540
1,327
925
–

3,792

137
46
527
658
501
26

1,895

1,435

21.6%
18.6
13.0
–

53.2

1.9
.6
7.5
9.2
7.0
.4

26.6

20.2

$ 1,580
1,013
847
–

3,440

181
84
608
785
790
23

2,471

867

23.4%
14.9
12.5
–

50.8

2.7
1.2
9.0
11.6
11.7
.3

36.5

12.7

$ 6,875

100.0%

$6,838

100.0%

$6,828

100.0%

$ 7,122

100.0%

$6,778

100.0%

The Corporation expects charge-offs in 2002 to meet or exceed annualized fourth quarter 2001 net charge-offs of $3.9 billion, excluding Enron charge-
offs of $210 million. An increase in consumer charge-offs, mainly bankcard, is expected to drive the increase for the year while commercial charge-offs
are also expected to remain at high levels. Provision expense is expected to track net charge-offs in 2002. Nonperforming assets are expected to rise
at least through the first half of 2002, although levels will fluctuate depending on the level of asset sales and charge-offs.

Concentrations of Credit Risk
In an effort to minimize the adverse impact of any single event or set of occurrences, the Corporation strives to maintain a diverse credit portfolio as
outlined in Tables Seventeen, Eighteen, Nineteen and Twenty.

The Corporation maintains a diverse commercial loan portfolio, representing 50 percent of total loans and leases at December 31, 2001. The largest
concentration is in commercial real estate, which represents seven percent of total loans and leases at December 31, 2001. The exposures presented
in Table Seventeen represent credit extensions for real estate-related purposes to borrowers or counterparties who are primarily in the real estate
development or investment business and for which the ultimate repayment of the credit is dependent on the sale, lease, rental or refinancing of the
real estate. The exposures included in the table do not include credit extensions which were made on the general creditworthiness of the borrower,
for which real estate was obtained as security and for which the ultimate repayment of the credit is not dependent on the sale, lease, rental or
refinancing of the real estate. Accordingly, the exposures presented do not include commercial loans secured by owner-occupied real estate, except
where the borrower is a real estate developer.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 17 Commercial Real Estate Loans, Foreclosed Properties and Other Real Estate Credit Exposure
December 31, 2001

(Dollars in millions)

By Geographic Region(3)
California
Southwest
Florida
Northwest
Geographically diversified
Midwest
Carolinas
Mid-Atlantic
Midsouth
Northeast
Other states
Non-US

Total

By Property Type
Office buildings
Apartments
Residential
Shopping centers/retail
Industrial/warehouse
Land and land development
Hotels/motels
Multiple use
Unsecured
Miscellaneous commercial
Other
Non-US

Total

Loans

Outstanding

Nonperforming

$ 5,225
3,239
2,399
2,363
1,950
1,688
1,472
1,430
1,276
750
478
384

$22,654

$ 4,567
3,797
3,157
2,754
2,011
1,501
1,186
694
433
289
1,881
384

$22,654

$ 48
24
29
14
–
21
6
23
5
51
19
3

$243

$ 14
21
28
15
23
1
27
1
–
6
104
3

$243

Foreclosed
Properties(1)

Other
Credit
Exposure(2)

$ 1
1
–
1
–
22
–
–
–
–
43
–

$68

$ –
–
–
15
15
6
14
–
–
–
18
–

$68

$ 1,064
952
509
169
381
802
342
429
367
558
199
5

$5,777

$ 667
1,551
188
1,306
246
193
277
64
454
34
792
5

$5,777

(1) Foreclosed properties include commercial real estate loans only.
(2) Other credit exposures include letters of credit and loans held for sale.
(3) Distribution based on geographic location of collateral.

Table Eighteen presents the ten largest industries included in the commercial loan and lease portfolio at December 31, 2001 and the respective balances
at December 31, 2000. Total commercial loans outstanding, excluding commercial real estate loans, comprised 43 percent and 45 percent of total loans
and leases at December 31, 2001 and 2000, respectively. No commercial industry concentration is greater than 3.1 percent of total loans and leases.

Table 18 Significant Industry Loans and Leases(1)

(Dollars in millions)

Transportation
Business services
Media
Equipment and general manufacturing
Agribusiness
Healthcare(2)
Autos
Telecommunications
Retail
Education and government
Other

Total

December 31, 2001

December 31, 2000

Outstanding

Percent of Total
Loans and Leases

Outstanding

Percent of Total
Loans and Leases

$ 10,350
7,569
6,704
6,648
6,390
5,444
5,290
4,882
4,450
4,198
79,319

$141,244

3.1%
2.3
2.0
2.0
1.9
1.7
1.6
1.5
1.4
1.3
24.1

$ 11,704
8,883
9,322
8,982
7,672
8,110
6,741
6,801
7,049
3,671
98,171

42.9%

$177,106

3.0%
2.3
2.4
2.3
2.0
2.1
1.7
1.7
1.8
0.9
25.0

45.2%

(1) Includes only non-real estate commercial loans and leases.
(2) During 2001, the Corporation revised its healthcare industry definition to include pharmaceuticals. The December 31, 2000 outstanding balance and percentage have been restated to reflect

this change.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

International Exposure
Through its credit and market risk management activities, the Corporation has been devoting particular attention to those countries that have been
negatively impacted by global economic pressure in all three regions where the Corporation has exposure: Asia, Europe and Latin America.

In connection with its efforts to maintain a diversified portfolio, the Corporation limits its exposure to any one geographic region or country and
monitors this exposure on a continuous basis. Table Nineteen sets forth selected regional foreign exposure at December 31, 2001 and is based on the
FFIEC’s instructions for periodic reporting of foreign exposure. The countries selected represent those that are considered as having higher credit and
foreign exchange risk. At December 31, 2001, the Corporation’s total exposure to these select countries was $21.9 billion, a decrease of $8.4 billion
from December 31, 2000, primarily due to reductions in exposure to Japan and to most other countries in Asia, Europe and Latin America.

During 2001, Argentina began to experience significant economic turmoil and deterioration. In response to this and as part of the Corporation’s
ongoing, normal risk management process, the Corporation has reduced its credit exposure to Argentina. At December 31, 2001, the Corporation had
$745 million of credit and other exposure in Argentina. Of this amount, $478 million represented traditional credit exposure (loans, letters of credit, etc.)
predominantly to Argentine subsidiaries of foreign multinational companies. The Argentine government has defaulted on its bonds. At December 31, 2001,
the Corporation’s credit exposure related to Argentine government bonds was approximately $60 million. The Corporation continues to assess its credit
exposure to Argentina.

Table 19 Selected Regional Foreign Exposure

Loans
and Loan
Commitments

Other
Financing(1)

Derivatives
(Net
Positive
Mark-to-
Market)

Securities/
Other
Investments

Total
Cross-
border
Exposure(2)

Gross
Local
Country
Exposure(3)

Total
Binding
Exposure
December 31,
2001

Increase/
(Decrease)
from
December 31,
2000

79
169
621
234
715
274
36
13
169
191
265
39
2

41
128
73
–
51
518
4
6
19
9
64
12
18

16
45
58
16
784
21
1
–
11
48
33
28
–

58
112
42
17
1,334
39
20
–
43
16
–
24
–

194
454
794
267
2,884
852
61
19
242
264
362
103
20

81
3,801
986
8
361
358
285
–
90
1,134
551
285
100

275
4,255
1,780
275
3,245
1,210
346
19
332
1,398
913
388
120

(45)
(309)
(429)
(120)
(3,849)
(1,010)
(176)
1
(59)
(76)
(216)
(19)
(12)

$2,807

$ 943

$ 1,061

$ 1,705

$ 6,516

$8,040

$ 14,556

$ (6,319)

–
82
43

$ 125

$ 361
710
202
113
1,038
123
160

$2,707

$5,639

–
23
16

84
312
12
8
367
9
61

–
1
17

53
147
15
12
107
7
8

–
21
186

$ 207

43
229
5
6
993
207
99

–
127
262

389

541
1,398
234
139
2,505
346
328

$ 853

$1,835

$ 349

$1,428

$ 1,582

$3,494

$ 5,491

$12,396

–
–
4

$ 204
1,076
15
–
158
–
–

$ 1,453

$9,497

–
127
266

393

745
2,474
249
139
2,663
346
328

$ 6,944

$21,893

(2)
(205)
22

$ (185)

$ (329)
210
(731)
(147)
(773)
(133)
(34)

$ (1,937)

$ (8,441)

(Dollars in millions)

Region/Country
Asia
China
Hong Kong
India
Indonesia
Japan
Korea (South)
Malaysia
Pakistan
Philippines
Singapore
Taiwan
Thailand
Other

Total

Central and Eastern Europe
Russian Federation
Turkey
Other

Total

Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
Other

Total

(1) Includes acceptances, standby letters of credit, commercial letters of credit, and formal guarantees.
(2) Cross-border exposure includes amounts payable to the Corporation by residents of countries other than the one in which the credit is booked, regardless of the currency in which the claim is

denominated, consistent with FFIEC reporting rules.

(3) Gross local country exposure includes amounts payable to the Corporation by residents of countries in which the 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.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

At December 31, 2001, the Corporation had cross border exposure in excess of one percent of total assets in the two countries detailed in Table Twenty.
The exposure in the United Kingdom and Germany reflects the Corporation’s efforts to diversify its portfolio in the industrialized countries where its
clients operate. In light of the increased risks perceived in Japan, the Corporation has reduced its exposure to less than 0.5 percent of its total assets.

Table 20 Exposure Exceeding One Percent of Total Assets(1,2)

(Dollars in millions)

United Kingdom

Germany

Japan

December 31

2001
2000

Public
Sector

$ 139
355

2,118
2,188

1,319
4,925

Banks

$ 2,807
1,962

2,571
2,249

676
599

Private
Sector

$8,889
6,167

2,251
2,062

889
883

Total
Exposure

$11,835
8,484

6,940
6,499

2,884
6,407

Exposure
as a Percentage
of Total Assets

1.90%
1.32

1.12
1.01

0.46
1.00

(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, available-
for-sale (at fair value) and held-to-maturity (at cost) securities, other interest-earning investments and other monetary assets. Amounts also include derivative-dealer assets, unused commit-
ments, standby letters of credit, commercial letters of credit and formal guarantees.

(2) Sector definitions are based on the FFIEC instructions for preparing the Country Exposure Report.

Market Risk Management
Overview
The Corporation is exposed to market risk as a consequence of the normal course of conducting its business activities. Examples of these business
activities include market making, underwriting, proprietary trading, and asset/liability management in interest rate, foreign exchange, equity, commodity
and credit markets, along with any associated derivative products. Market risk is the potential of loss arising from adverse changes in market rates,
prices and liquidity. Financial products that expose the Corporation to market risk include securities, loans, deposits, debt and derivative financial
instruments such as futures, forwards, swaps, options and other financial instruments with similar characteristics. Liquidity risk arises from the possibility
that the Corporation may not be able to satisfy current or future financial commitments or that the Corporation may be more reliant on alternative
funding sources such as long-term debt.

Trading Portfolio
The Board delegates responsibility for the day-to-day management of market risk to the Finance Committee. The Finance Committee has structured
a system of independent checks, balances and reporting in order to ensure that the Board’s disposition toward market risk is not compromised.

The objective of the Corporation’s Risk Management group (Risk Management) is to provide senior management with independent, timely
assessments of the bottom line impacts of all market risks facing the Corporation and to monitor those impacts against trading limits. Risk Management
monitors the changing aggregate position of the Corporation and projects the profit and loss levels that would result from both normal and extreme
market moves. In addition, Risk Management is responsible for ensuring that appropriate policies and procedures that conform to the Board’s risk
preferences are in place and enforced. These policies and procedures encompass the limit process, risk reporting, new product review and model review.
Trading account profits represent the net amount earned from the Corporation’s trading positions, which include trading account assets and liabilities

as well as derivative positions and mortgage banking assets. These transactions include positions to meet customer demand as well as for the
Corporation’s own trading account. Trading positions are taken in a diverse range of financial instruments and markets. The profitability of these
trading positions is largely dependent on the volume and type of transactions, the level of risk assumed, and the volatility of price and rate movements.

Histogram of Daily Market Risk-Related Revenue
Twelve Months Ended December 31, 2001

s
y
a
D

f
o

r
e
b
m
u
N

<-10

-10 to 0

0 to 10

10 to 20

20 to 30

30 to 40

40 to 50

>50

Revenue
(Dollars in millions)

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Market risk-related revenue includes trading account profits and trading-related net interest income, which encompass both proprietary

trading and customer-related activities. During 2001, the Corporation has continued its efforts to build on its client franchise and reduce the proportion
of proprietary trading revenue to total revenue. The results of these efforts can be seen in the histogram above. In 2001, the Corporation recorded
positive daily market risk-related revenue for 221 of 250 trading days. Furthermore, of the 29 days that showed negative revenue, only 11 days were
greater than $10 million.

Value at Risk
Value at Risk (VAR) is the key measure of market risk for the Corporation. VAR represents the maximum amount that the Corporation has placed at
risk of loss, with a 99 percent degree of confidence, in the course of its risk taking activities. Its purpose is to describe the amount of capital required
to absorb potential losses from adverse market movements. Given the 99 percent confidence interval captured by VAR, market risk-related revenue or
losses would be expected to exceed VAR measures approximately once every 100 trading days, or two to three times each year. The VAR model does
not measure the degree of the excess gain or loss, rather it produces a confidence level that gains or losses will be within predicted ranges. Since the
third quarter of 2000, the Corporation has been migrating its trading books to a historical simulation approach. This approach utilizes historical market
conditions over the last three years to derive estimates of trading risk and provides for the natural aggregation of trading risks across different groups.
The effects of correlation and diversification are embedded in these calculations. The completion of the migration is expected to take place during the
first half of 2002. While the transition is taking place, the square root of the sum of squares method is used to aggregate risk.

VAR modeling on trading is subject to numerous limitations. In addition, the Corporation recognizes that there are numerous assumptions and

estimates associated with modeling and actual results could differ from these assumptions and estimates. The Corporation mitigates these uncertainties
through close monitoring and by examining and updating assumptions on an ongoing basis. The continual trading risk management process considers
the impact of unanticipated risk exposure and updates assumptions to reduce loss exposure.

As the following graph shows, in 2001, actual market risk-related revenue exceeded VAR measures three days out of 250 total trading days.
During the same period, actual market risk-related losses exceeded VAR measures one day out of 250 total trading days. This occurred immediately
following the events of September 11, 2001 due to extreme market conditions.

Trading Risk and Return
Daily VAR and Market Risk-Related Revenue

-20

-40

-60

-80

)
s
n
o

i
l
l
i

m
n

s
r
a

l
l

o
D
(

VAR
(absolute value)

Daily Market
Risk-Related
Revenue

VAR

12/31/00

3/31/01

6/30/01

9/30/01

12/31/01

The following table summarizes the VAR in the Corporation’s trading portfolios for the years ended December 31, 2001 and 2000:

Table 21 Trading Activities Market Risk

(US Dollar equivalents in millions)

Interest rate
Foreign exchange
Commodities
Equities
Fixed income
Real estate/mortgage(3)
Total trading portfolio

Average

VAR(1)

$34.3
7.2
4.3
15.4
10.9
33.2
52.7

2001

High
VAR(2)

$ 47.0
12.8
10.9
25.1
17.3
55.5
69.9

Low
VAR(2)

Average

VAR(1)

$23.0
1.9
.9
8.9
3.0
8.8
35.8

$25.9
10.6
2.1
26.7
10.1
7.5
41.5

2000

High
VAR(2)

$42.2
18.5
5.2
41.5
17.4
11.3
53.0

Low
VAR(2)

$16.3
5.4
.5
5.5
3.2
2.5
25.1

(1) The average VAR for the total portfolio is less than the sum of the VARs of the individual portfolios due to risk offsets arising from the diversification of the portfolio.
(2) The high and low for the total portfolio may not equal the sum of the individual components as the highs or lows of the individual portfolios may have occurred on different trading days.
(3) The real estate/mortgage business is included in the fixed income category in the Trading-Related Revenue table in Note Four of the consolidated financial statements.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Total trading portfolio VAR increased during 2001 relative to 2000. This increase was due to increased activity in the interest rate business, particularly
in the United States, and the addition of mortgage banking assets to the VAR calculation for the real estate/mortgage portfolio in the first quarter of 2001.

Since the third quarter of 2000, the migration of trading books to a historical simulation approach has resulted in a lower VAR in equities and

foreign exchange and a higher VAR in commodities. VAR was not restated for previous quarters.

The following table summarizes the quarterly VAR in the Corporation’s trading portfolios for 2001:

Table 22 Quarterly Trading Activities Market Risk

2 0 0 1

(US Dollar

equivalents in millions)

Average

VAR(1)

High
VAR(2)

Low
VAR(2)

Average

VAR(1)

High
VAR(2)

Low
VAR(2)

Average

VAR(1)

High
VAR(2)

Low
VAR(2)

Average

VAR(1)

High
VAR(2)

Low
VAR(2)

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Interest rate
Foreign exchange
Commodities
Equities
Fixed Income
Real estate/mortgage(3)
Total trading portfolio

$ 31.9
5.2
7.8
13.9
13.9
24.7
46.0

$39.4
10.4
10.9
16.5
17.3
39.0
57.0

$24.4
1.9
5.7
11.4
8.8
15.2
35.8

$34.4
7.6
4.8
16.2
13.0
32.9
53.1

$47.0
11.2
8.2
19.1
15.8
41.5
63.3

$23.0
5.2
1.5
12.7
10.3
23.2
45.4

$38.8
8.0
2.7
18.1
10.7
41.2
61.3

$43.5
11.0
5.7
25.1
16.9
55.5
69.9

$32.6
5.5
1.3
13.5
6.6
28.6
55.2

$ 32.1
8.2
1.8
13.1
6.2
33.7
50.0

$46.2
12.8
3.8
22.5
8.0
43.4
59.6

$26.9
5.0
.9
8.9
3.0
8.8
42.4

Stress Testing
In order to determine the sensitivity of the Corporation’s capital to the impact of historically large market moves with low probability, stress scenarios
are run against the trading portfolios. This stress testing should verify that, even under extreme market moves, the Corporation will preserve its capital.
The scenarios for each product are large standard deviation movements in the relevant markets that are based on significant historical or hypothetical
events. These results are calculated daily and reported as part of the regular reporting process.

In addition, specific stress scenarios are run regularly which represent extreme hypothetical, but plausible, events that would be of concern
given the Corporation’s current portfolio. The results of these specific scenarios are presented to the Corporation’s Trading Risk Committee as part of
its regular meetings. Examples of these specific stress scenarios include calculating the effects on the overall portfolio of an extreme Federal Reserve
Board tightening or easing of interest rates, a severe credit deterioration in the U.S., and a recession in Japan and the corresponding ripple effects globally.

Non-Exchange Traded Commodity Contracts at Fair Value
The use of non-exchange traded or over the counter commodity contracts provides the Corporation with the ability to adapt to the varied requirements
of a wide customer base while efficiently mitigating its market risk. Non-exchange traded commodity contracts are stated at fair value, which is
generally based on dealer price estimates. These contracts are primarily oil and gas commodities contracts.

The table below summarizes the changes in the fair value for non-exchange traded commodity contracts for 2001:

(Dollars in millions)

Net fair value of contracts outstanding at January 1, 2001
Effects of legally enforceable master netting agreements

Gross fair value of contracts outstanding at January 1, 2001
Contracts realized or otherwise settled
Fair value of new contracts
Other changes in fair value

Gross fair value of contracts outstanding at December 31, 2001
Effects of legally enforceable master netting agreements

Asset
Positions

2,133
8,916

11,049
(8,542)
3,032
(1,586)

3,953
(2,625)

Liability
Positions

1,881
8,916

10,797
(8,544)
2,699
(1,317)

3,635
(2,625)

Net fair value of contracts outstanding at December 31, 2001

1,328

1,010

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

The Corporation controls and manages its commodity risk through the use of VAR limits. See Tables Twenty-One and Twenty-Two for further details.
The following table indicates the maturities of non-exchange traded commodity contracts at December 31, 2001:

(Dollars in millions)

Maturity less than 1 year
Maturity 1-3 years
Maturity 4-5 years
Maturity in excess of 5 years

Gross fair value of contracts
Effects of legally enforceable master netting agreements

Net fair value of contracts

Asset
Positions

3,118
304
179
352

$ 3,953
(2,625)

1,328

Liability
Positions

2,866
172
136
461

3,635
(2,625)

1,010

Asset and Liability Management Activities
Non-Trading Portfolio
The Corporation’s Asset and Liability Management (ALM) process, managed through the Asset and Liability Committee of the Finance Committee, is
used to manage interest rate risk through structuring balance sheet portfolios and identifying and linking derivative positions to specific hedged
assets and liabilities. Interest rate risk represents the only material market risk exposure to the Corporation’s non-trading financial instruments.

To effectively measure and manage interest rate risk, the Corporation uses sophisticated computer simulations that determine the impact on net
interest income of numerous interest rate scenarios, balance sheet trends and strategies. These simulations cover the following financial instruments:
short-term financial instruments, securities, loans, deposits, borrowings and ALM derivative instruments. These simulations incorporate assumptions
about balance sheet dynamics, such as loan and deposit growth and pricing, changes in funding mix and asset and liability repricing and maturity
characteristics. Simulations are run under various interest rate scenarios to determine the impact on net income and capital. From these scenarios,
interest rate risk is quantified and appropriate strategies are developed and implemented. The overall interest rate risk position and strategies are
reviewed on an ongoing basis by senior management. Additionally, duration and market value sensitivity measures are selectively utilized where they
provide added value to the overall interest rate risk management process.

The Corporation specifically reviews the impact on net interest income of parallel and non-parallel shifts in the yield curve over different time

horizons. At December 31, 2001, the Federal Funds rate was 1.75 percent and our outlook did not anticipate additional easing from the Fed, with
continued uncertainty surrounding the timing and extent of future tightenings. As a result, the interest rate risk position of the Corporation was relatively
neutral to parallel shifts upward in the yield curve as the impact on net interest income of a 100 basis point parallel shift, up over either two months
(rapid) or twelve months (gradual) would be slightly favorable, but less than one percent. While further material declines in interest rates are unlikely,
the impact on net interest income of a 100 basis point parallel shift down would be negative three percent.

Table Twenty-Three summarizes the expected maturities, unrealized gains and losses and weighted average effective yields and rates

associated with certain of the Corporation’s significant non-trading financial instruments. Cash and cash equivalents, time deposits placed and other
short-term investments, federal funds sold and purchased, resale and repurchase agreements, commercial paper, other short-term borrowings and
foreign deposits, which are similar in nature to other short-term borrowings, are excluded from Table Twenty-Three as their respective carrying values
approximate fair values. These financial instruments generally expose the Corporation to insignificant market risk as they have either no stated maturities
or an average maturity of less than 30 days and interest rates that approximate market rates. However, these financial instruments could expose the
Corporation to interest rate risk by requiring more or less reliance on alternative funding sources, such as long-term debt. Loans held for sale are also
excluded as their carrying values approximate their fair values, generally exposing the Corporation to insignificant market risk. For further information
on the fair value of financial instruments, see Note Eighteen of the consolidated financial statements. The fair values and expected maturities for ALM
derivative instruments used for balance sheet management purposes are presented in Table Twenty-Four.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 23 Non-Trading Financial Instruments
December 31, 2001

(Dollars in millions)

Assets(1)
Available-for-sale securities

Fixed rate
Book value
Weighted average effective yield
Variable rate
Book value
Weighted average effective yield

Held-to-maturity securities(2)

Fixed rate
Book value
Weighted average effective yield
Variable rate
Book value
Weighted average effective yield

Loans(2,4)

Fixed rate
Book value
Weighted average effective yield
Variable rate
Book value
Weighted average effective yield

Liabilities(1)
Total deposits(5,6)

Fixed rate
Book value
Weighted average effective rate
Variable rate
Book value
Weighted average effective rate

Long-term debt(7,8)

Fixed rate
Book value
Weighted average effective rate
Variable rate
Book value
Weighted average effective rate

Trust preferred securities(7)

Fixed rate
Book value
Weighted average effective rate
Variable rate
Book value
Weighted average effective rate

Unrealized
Total(3) Gains (Losses)

2002

2003

2004

2005

2006

After
2006

Expected Maturity

$ 74,849

(831)

982

$ 4,751

$9,950

$20,167

$ 11,432

$ 27,567

6.03%

9,601

3.12%

1,001
7.52%

48
3.98%

188

543

141

189

1,637

7,052

(40)

–

886

$ 113,521

4,573

31,775

15,186

12,416

8,686

6,688

38,770

7.33%

$ 196,906

(196)

97,227

29,241

19,065

17,062

8,847

25,464

5.27%

$229,956

(716)

70,973

12,364

13,953

13,544

13,370

105,752

1.29%

$ 105,739

1.34%

(20)

27,464

14,810

12,555

11,489

9,135

30,286

$ 34,567

(1,841)

4,613

3,507

5,089

3,185

5,292

12,881

6.86%

$ 27,899

(224)

8,971

4,430

7,018

2,487

3,836

1,157

2.35%

4,388

7.89%

1,142
2.96%

(82)

900

350

–

400

–

2,640

498

–

742

(1) Fixed and variable rate classifications are based on contractual rates and are not modified for the impact of asset and liability management contracts.
(2) Expected maturities reflect the impact of prepayment assumptions.
(3) With the exception of available-for-sale securities, the book value does not include unrealized gains (losses).
(4) Excludes leases.
(5) When measuring and managing market risk associated with domestic deposits, such as savings and demand deposits, the Corporation considers that there is value in its long-term relation-
ships with depositors. The unrealized loss on deposits in this table does not consider the value of these long-term relationships; therefore, only certificates of deposits reflect an unrealized
gain or loss.

(6) Excludes foreign time deposits.
(7) Expected maturities of long-term debt and trust preferred securities reflect the Corporation’s ability to redeem such debt prior to contractual maturities.
(8) Excludes obligations under capital leases.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Interest Rate and Foreign Exchange Contracts
Risk management 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 interest rate contracts to minimize significant unplanned fluctuations in
earnings that are caused by interest rate volatility. The Corporation’s goal is to manage interest rate sensitivity so that movements in interest rates do
not adversely affect net interest income. As a result of interest rate fluctuations, hedged fixed-rate assets and liabilities appreciate or depreciate in
market value. Gains or losses on the derivative instruments that are linked to the hedged fixed-rate assets and liabilities are expected to substantially
offset this unrealized appreciation or depreciation. Interest income on hedged variable-rate assets, primarily variable rate commercial loans, and interest
expense on hedged variable rate liabilities, primarily short-term time deposits, increases or decreases as a result of interest rate fluctuations. Gains
and losses on the derivative instruments that are linked to these hedged assets and liabilities are expected to substantially offset this variability in
earnings. See Note Five of the consolidated financial statements for additional information on the Corporation’s hedging activities.

Interest rate contracts, which are generally non-leveraged generic interest rate and basis swaps, options, futures and forwards, allow the Corporation
to effectively manage its interest rate risk position. In addition, the Corporation uses foreign currency contracts to manage the foreign exchange risk
associated with foreign-denominated assets and liabilities, as well as the Corporation’s equity investments in foreign subsidiaries. Table Twenty-Four
reflects the notional amounts, fair value, weighted average receive and pay rates, expected maturity and estimated duration of the Corporation’s ALM
derivatives at December 31, 2001 and 2000. Fair values are based on the last repricing and will change in the future primarily based on movements in
one-, three- and six-month LIBOR rates. Management believes the fair value of the ALM interest rate and foreign exchange portfolios should be viewed
in the context of the overall balance sheet, and the value of any single component of the balance sheet positions should not be viewed in isolation.

Consistent with the Corporation’s strategy of managing interest rate sensitivity, the net receive fixed interest rate swap position declined by
$5.8 billion to $43.0 billion at December 31, 2001. This reduction primarily occurred in the last half of 2001. Option products in the Corporation’s ALM
process may include from time to time option collars or spread strategies, which involve the buying and selling of options on the same underlying
security or interest rate index. These strategies may involve caps, floors and options on index futures contracts.

The amount of unamortized net realized deferred gains associated with closed ALM swaps was $966 million and $25 million at December 31, 2001

and 2000, respectively. The amount of unamortized net realized deferred gains associated with closed ALM options was $114 million and $95 million
at December 31, 2001 and 2000, respectively. The amount of unamortized net realized deferred losses associated with closed ALM futures and forward
contracts was $9 million and $15 million at December 31, 2001 and 2000, respectively. There were no unamortized net realized deferred gains or losses
associated with closed foreign exchange contracts at December 31, 2001 and 2000. Of these unamortized net realized deferred gains, $1.0 billion was
included in accumulated other comprehensive income at December 31, 2001.

Table 24 Asset and Liability Management Interest Rate and Foreign Exchange Contracts
December 31, 2001

Expected Maturity

Total

2002

2003

2004

2005

2006

After
2006

Average
Estimated
Duration

(Dollars in millions, average
estimated duration in years)

Open interest rate contracts
Total receive fixed swaps

Notional value
Weighted average receive rate

Total pay fixed swaps

Notional value
Weighted average pay rate

Basis swaps

Notional value

Total swaps

Option products

Notional amount

Futures and forward rate contracts

Notional amount

Total open interest rate contracts

Closed interest rate contracts(1)

Net interest rate contract position

Open foreign exchange contracts

Notional amount

Total ALM contracts

Fair
Value

$ 784

(322)

–

462

105

–

567

1,071

1,638

(285)

$ 1,353

$ 64,472

$ 1,510

$ 266

$10,746

$ 8,341

$9,608

$ 34,001

5.74%

7.04%

8.27%

5.31%

5.79%

5.37%

5.89%

$ 21,445

$11,422

$4,319

3.97%

2.61%

4.21%

122
6.09%

$2,664

6.77%

60
5.83%

$ 2,858

6.34%

4.68

2.26

–

$ 15,700

$ 7,000

–

$ 9,000

$ 500

$4,400

$ 1,800

$7,000

$ 6,968

465

$ 283

576

$ 1,180

$ 2,335

$ 2,129

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 24 Asset and Liability Management Interest Rate and Foreign Exchange Contracts (continued)
December 31, 2000

Expected Maturity

Total

2001

2002

2003

2004

2005

After
2005

Average
Estimated
Duration

(Dollars in millions, average
estimated duration in years)

Open interest rate contracts
Total receive fixed swaps

Notional amount
Weighted average receive rate

Total pay fixed swaps
Notional amount
Weighted average pay rate

Basis swaps

Notional amount

Total swaps

Option products

Notional amount

Futures and forward rate contracts

Notional amount

Total open interest rate contracts

Closed interest rate contracts(1)

Net interest rate contract position

Open foreign exchange contracts

Notional amount

Total ALM contracts

Fair
Value

$ 900

(529)

(7)

364

(157)

(52)

155

105

260

(199)

$62,485

$ 4,001

$ 7,011

$9,787

$12,835

$15,853

$12,998

6.39%

6.28%

6.71%

5.53%

6.45%

6.76%

6.41%

$ 13,640

$ 1,878

$ 1,064

6.72%

5.86%

6.39%

114
7.14%

20
5.85%

$ 2,584

$ 7,980

7.05%

6.82%

$ 14,739

576

$ 1,669

442

$7,700

$ 4,317

3.65

5.66

$22,477

$ 2,087

$ 868

$ 1,575

$ 7,882

$ 4,101

$ 5,964

$ 24,818

$19,068

$5,750

–

$ 9,373

$ 1,597

$ 2,091

$ 253

572

$ 2,983

$ 1,877

(1) Represents the unamortized net realized deferred gains associated with closed contracts. As a result, no notional amount is reflected for expected maturity.

The Corporation adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (SFAS 133)
on January 1, 2001. SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. The Corporation has not
significantly altered its overall interest rate risk management objective and strategy as a result of adopting SFAS 133. For further information on SFAS
133, see Note One of the consolidated financial statements.

In conducting its mortgage production activities, the Corporation is exposed to interest rate risk for the periods between the loan commitment
date and the date the loan is delivered to the secondary market. To manage this risk, the Corporation enters into various financial instruments including
forward delivery contracts, Euro dollar futures and option contracts. The notional amount of such contracts was $27.8 billion at December 31, 2001
with associated net unrealized gains of $69 million. At December 31, 2000, the notional amount of such contracts was $9.7 billion with associated net
unrealized losses of $53 million. These contracts have an average expected maturity of less than 90 days.

The Corporation manages risk associated with the impact of changes in prepayment rates on certain mortgage banking assets using various

financial instruments including purchased options and swaps. The notional amounts of such contracts at December 31, 2001 and 2000 were $65.1 billion
and $42.1 billion, respectively. The related unrealized gain was $301 million at December 31, 2001 and the unrealized gain was $424 million at
December 31, 2000. The 2001 amounts are included in the Derivative Assets table in Note Five of the consolidated financial statements.

Liquidity Risk Management
The Corporation manages liquidity risk by assessing all on- and off-balance sheet funding demands and alternatives. Funding requirements are impacted
by loan repayments and originations, liability settlements and issuances, off-balance sheet funding commitments (including commercial and consumer
loans) and the level of asset securitizations utilized by the Corporation. The Corporation also complies with various regulatory guidelines regarding
required liquidity levels and periodically monitors its liquidity position in light of the changing economic environment and customer activity. Based on
these periodic assessments, the Corporation will alter, as deemed appropriate, its assets and liabilities and off-balance sheet positions. The Corporation
currently maintains various shelf registrations with the Securities and Exchange Commission, whereby additional short-term and long-term debt may
be issued. See Note Ten of the consolidated financial statements for additional information.

The Corporation employs various liquidity modeling techniques and metrics. Throughout 2001, the Corporation’s liquidity position has improved

significantly to its best position in many years. A commonly used measure of banking liquidity is the loan to deposit ratio. The Corporation’s loan to
core deposit ratio was 99 percent and 128 percent at December 31, 2001 and 2000, respectively. The loan to core deposit ratio at December 31, 2001
was the lowest ratio since the Corporation’s merger with First Republic Bank Corporation in 1988. In addition, average short-term borrowings
decreased $39.0 billion, or 30 percent, in 2001.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 25 Selected Quarterly Financial Data

2001 Quarters

2000 Quarters

(Dollars in millions, except per share information)

Fourth

Third

Second

First

Fourth

Third

Second

First

As Reported
Income statement
Net interest income
Noninterest income
Total revenue
Provision for credit losses
Gains (losses) on sales of securities
Business exit costs
Restructuring charges
Other noninterest expense
Income before income taxes
Income tax expense
Net income

Performance ratios
Return on average assets
Return on average common

shareholders’ equity

Total equity to total assets (period-end)
Total average equity to total average assets
Dividend payout ratio

shareholders’ equity

Operating Basis(2)
Income statement
Net interest income
Net interest income (taxable-equivalent basis)
Noninterest income
Total revenue
Total revenue (taxable-equivalent basis)
Provision for credit losses
Gains (losses) on sales of securities
Other noninterest expense
Income before income taxes
Income tax expense
Net income
Average diluted common shares issued

5,417
3,398
8,815
1,401
393
–
–
5,324
2,483
426
2,057

5,204
3,429
8,633
1,251
97
1,305
–
4,606
1,568
727
841

5,030
3,741
8,771
800
(7)
–
–
4,821
3,143
1,120
2,023

4,639
3,780
8,419
835
(8)
–
–
4,654
2,922
1,052
1,870

4,664
3,328
7,992
1,210
2
–
–
4,637
2,147
762
1,385

4,563
3,675
8,238
435
11
–
550
4,410
2,854
1,025
1,829

4,617
3,514
8,131
470
6
–
–
4,413
3,254
1,191
2,063

4,505
4,065
8,570
420
6
–
–
4,623
3,533
1,293
2,240

1.25%

.52%

1.24%

1.17%

.81%

1.06%

1.23%

1.38%

16.70
7.80
7.50
45.53

1.31
1.28
.60
31.07

2,270
1.45
1.42
1.38%

18.43

5,417
5,505
3,398
8,815
8,903
1,401
393
5,324
2,483
426
2,057

6.78
7.83
7.66
106.49

.52
.51
.56
31.66

1,060
.66
.65
.65%

8.55

5,204
5,290
3,429
8,633
8,719
856
97
4,606
3,268
1,177
2,091

16.67
7.88
7.43
44.35

1.26
1.24
.56
30.75

2,246
1.40
1.38
1.37%

18.52

5,030
5,117
3,741
8,771
8,858
800
(7)
4,821
3,143
1,120
2,023

15.86
8.02
7.38
48.14

1.16
1.15
.56
30.47

2,093
1.30
1.28
1.31%

17.75

4,639
4,721
3,780
8,419
8,501
835
(8)
4,654
2,922
1,052
1,870

11.57
7.42
7.03
65.58

.85
.85
.56
29.47

1,599
.98
.98
.94%

13.36

4,664
4,758
3,328
7,992
8,086
1,210
2
4,637
2,147
762
1,385

15.25
6.98
6.97
44.83

1.11
1.10
.50
28.69

2,044
1.25
1.23
1.18%

17.01

4,563
4,642
3,675
8,238
8,317
435
11
4,410
3,404
1,229
2,175

17.63
6.75
7.00
39.94

1.25
1.23
.50
27.82

2,281
1.38
1.36
1.36%

19.49

4,617
4,695
3,514
8,131
8,209
470
6
4,413
3,254
1,191
2,063

19.59
6.90
7.07
37.16

1.34
1.33
.50
27.28

2,457
1.47
1.46
1.52%

21.49

4,505
4,576
4,065
8,570
8,641
420
6
4,623
3,533
1,293
2,240

and outstanding (in thousands)

1,602,886

1,634,063

1,632,964

1,631,099

1,638,863

1,661,031

1,676,089

1,688,318

Performance ratios
Return on average assets
Return on average common

shareholders’ equity

Efficiency ratio
Net interest yield
Dividend payout ratio
Shareholder value added

Per common share data
Earnings
Diluted earnings
Cash basis financial data(1)
Earnings
Earnings per common share
Diluted earnings per common share
Return on average assets
Return on average common

shareholders’ equity

Efficiency ratio

Average balance sheet
Total loans and leases
Total assets
Total deposits
Common shareholders’ equity
Total shareholders’ equity

Risk-based capital ratios (period-end)
Tier 1 capital
Total capital
Leverage ratio

Market price per share of common stock
Closing
High
Low

1.25%

1.29%

1.24%

1.17%

.81%

1.26%

1.23%

1.38%

16.70
59.80
3.95
45.53
793

1.31
1.28

2,270
1.45
1.42
1.38%

18.43
57.40

16.87
52.82
3.78
42.79
824

1.31
1.28

2,310
1.44
1.41
1.43%

18.64
50.32

16.67
54.44
3.61
44.35
791

1.26
1.24

2,246
1.40
1.38
1.37%

18.52
51.92

15.86
54.73
3.39
48.14
679

1.16
1.15

2,093
1.30
1.28
1.31%

17.75
52.11

11.57
57.35
3.21
65.58
164

.85
.85

1,599
.98
.98
.94%

13.36
54.70

18.15
53.01
3.10
37.68
953

1.33
1.31

2,390
1.46
1.44
1.39%

19.94
50.43

17.63
53.77
3.23
39.94
878

1.25
1.23

2,281
1.38
1.36
1.36%

19.49
51.12

19.59
53.49
3.26
37.16
1,086

1.34
1.33

2,457
1.47
1.46
1.52%

21.49
50.98

$ 333,354
651,797
368,171
48,850
48,916

$357,726
642,184
363,328
49,134
49,202

$383,500
655,557
363,348
48,640
48,709

$387,889
648,698
355,618
47,794
47,866

$399,549
677,458
357,554
47,565
47,639

$402,763
685,017
356,734
47,660
47,735

$ 391,404
672,588
353,426
47,036
47,112

$376,584
651,019
345,374
45,953
46,030

8.30%
12.67
6.56

7.95%
12.12
6.59

7.90%
12.09
6.50

7.65%
11.84
6.41

7.50%
11.04
6.12

7.32%
10.80
6.06

7.40%
11.03
6.11

7.42%
11.00
6.17

$ 62.95
64.99
52.10

58.40
65.54
50.25

60.03
62.18
48.65

54.75
55.94
45.00

45.88
54.75
36.31

52.38
57.63
43.63

43.00
61.00
42.98

52.44
55.19
42.31

(1) Cash basis calculations exclude goodwill and other intangible amortization expense.
(2) Operating basis excludes provision for credit losses of $395 million and noninterest expense of $1,305 million related to the exit of certain consumer finance businesses in

the third quarter of 2001 and restructuring charges of $550 million in the third quarter of 2000.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Table 26 Quarterly Average Balances and Interest Rates – Taxable-Equivalent Basis

Fourth Quarter 2001

(Dollars in millions)

Earning assets
Time deposits placed and other short-term investments
Federal funds sold and securities purchased under agreements to resell
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
Bankcard
Foreign consumer

Total consumer

Total loans and leases

Other earning assets

Total earning assets(3)

Cash and cash equivalents
Other assets, less allowance for credit losses

Total assets

Interest-bearing liabilities
Domestic interest-bearing deposits:

Savings
NOW and money market deposit accounts
Consumer CDs and IRAs
Negotiable CDs, public funds and other time deposits

Total domestic interest-bearing deposits

Foreign interest-bearing deposits(4):
Banks located in foreign countries
Governments and official institutions
Time, savings and other

Total foreign interest-bearing deposits

Total interest-bearing deposits

Federal funds purchased, securities sold under

agreements to repurchase and other short-term borrowings

Trading account liabilities
Long-term debt(5)

Total interest-bearing liabilities(6)

Noninterest-bearing sources:

Noninterest-bearing deposits
Other liabilities
Shareholders’ equity

Total liabilities and shareholders’ equity

Net interest spread
Impact of noninterest-bearing sources

Net interest income/yield on earning assets

Average
Balance

7,255
38,825
67,535
71,454

121,399
23,789
23,051
375

168,614

78,366
22,227
38,074
5,324
18,656
2,093

164,740

333,354

36,782

555,205

23,182
73,410

$ 651,797

$ 20,132
121,758
71,895
5,196

218,981

20,771
2,965
21,858

45,594

264,575

87,291
29,921
68,141

449,928

103,596
49,357
48,916

$ 651,797

Interest
Income/
Expense

64
253
920
1,090

2,138
278
316
4

2,736

1,385
340
752
127
498
21

3,123

5,859

707

8,893

42
426
898
44

1,410

170
20
113

303

1,713

700
268
707

3,388

Yield/
Rate

3.47%
2.60
5.43
6.10

6.99
4.63
5.45
4.49

6.44

7.05
6.07
7.83
9.55
10.58
4.02

7.54

6.99

7.67

6.37

0.83
1.39
4.96
3.39

2.56

3.22
2.74
2.06

2.63

2.57

3.18
3.55
4.15

2.99

$ 5,505

3.38
.57

3.95%

(1) The average balance and yield on securities are based on the average of historical amortized cost balances.
(2) Nonperforming loans are included in the respective average loan balances. Income on such nonperforming loans is recognized on a cash basis.
(3) Interest income includes taxable-equivalent basis adjustments of $88, $86, $87 and $82 in the fourth, third, second and first quarters of 2001 and $94 in the fourth quarter of 2000, respectively.

Interest income also includes the impact of risk management interest rate contracts, which increased (decreased) interest income on the underlying assets $473, $284, $194 and $27 in the fourth,
third, second and first quarters of 2001 and $(31) in the fourth quarter of 2000, respectively. These amounts were substantially offset by corresponding decreases or increases in the income earned
on the underlying assets. For further information on interest rate contracts, see “Asset and Liability Management Activities” beginning on page 67.

third, second and first quarters of 2001 and $(7) in the fourth quarter of 2000, respectively. These amounts were substantially offset by corresponding decreases or increases in the interest paid on
the underlying liabilities. For further information on interest rate contracts, see “Asset and Liability Management Activities” beginning on page 67.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Third Quarter 2001

Second Quarter 2001

First Quarter 2001

Fourth Quarter 2000

Interest
Income/
Expense

71
321
937
902

2,343
353
395
5

3,096

1,457
394
753
359
493
28

3,484

6,580

597

9,408

Average
Balance

5,881
36,133
68,258
58,930

129,673
25,267
24,132
366

179,438

80,526
22,115
39,481
16,358
17,632
2,176

178,288

357,726

30,180

557,108

20,753
64,323

Interest
Income/
Expense

81
405
944
909

2,585
421
459
5

3,470

1,546
424
736
608
445
35

3,794

7,264

409

10,012

Yield/
Rate

Average
Balance

4.84%
3.54
5.46
6.12

7,085
33,859
67,311
55,719

7.17
5.54
6.50
5.78

6.85

7.22
7.06
7.56
8.77
11.11
5.28

7.78

7.31

7.89

6.72

139,096
27,449
25,293
352

192,190

84,346
21,958
40,117
26,843
15,755
2,291

191,310

383,500

20,154

567,628

23,232
64,697

Yield/
Rate

Average
Balance

Interest
Income/
Expense

4.58%
4.79
5.62
6.53

6,675
31,903
62,491
55,221

7.45
6.14
7.28
6.64

7.24

7.34
7.75
7.35
9.06
11.32
6.20

7.94

7.59

8.11

7.07

144,404
29,540
25,989
300

200,233

82,710
21,744
40,461
25,947
14,464
2,330

187,656

387,889

17,248

561,427

23,020
64,251

102
435
852
860

2,813
515
530
6

3,864

1,532
467
784
589
443
43

3,858

7,722

352

10,323

Yield/
Rate

Average
Balance

6.17%
5.48
5.49
6.26

5,663
37,936
53,251
79,501

7.90
7.06
8.27
7.82

7.82

7.43
8.71
7.86
9.08
12.41
7.54

8.29

8.05

8.28

7.42

147,336
30,408
27,220
264

205,228

92,679
21,117
40,390
25,592
12,295
2,248

194,321

399,549

14,828

590,728

23,458
63,272

$642,184

$655,557

$648,698

$677,458

$ 20,076
116,638
73,465
5,085

215,264

24,097
3,533
23,847

51,477

53
588
918
57

1,616

257
35
189

481

266,741

2,097

89,042
30,913
67,267

869
285
867

453,963

4,118

96,587
42,432
49,202

$642,184

1.04
2.00
4.95
4.44

2.98

4.22
3.90
3.16

3.71

3.12

3.87
3.66
5.15

3.61

3.11
.67

$ 20,222
113,031
74,777
6,005

214,035

24,395
3,983
23,545

51,923

57
676
969
81

1,783

294
45
241

580

265,958

2,363

1,221
312
999

4,895

98,898
30,710
69,416

464,982

97,390
44,476
48,709

$655,557

1.14
2.40
5.20
5.37

3.34

4.82
4.53
4.13

4.49

3.57

4.95
4.07
5.76

4.22

$ 20,406
107,015
77,772
7,137

212,330

24,358
3,993
22,506

50,857

61
808
1,068
108

2,045

332
52
284

668

263,187

2,713

1,377
290
1,222

5,602

94,792
28,407
73,752

460,138

92,431
48,263
47,866

$648,698

1.21
3.06
5.57
6.16

3.91

5.53
5.27
5.11

5.32

4.18

5.89
4.14
6.63

4.92

$22,454
101,376
78,298
7,570

209,698

26,223
5,884
24,064

56,171

265,869

2,924

1,942
285
1,322

6,473

122,680
27,548
73,041

489,138

91,685
48,996
47,639

$677,458

$5,290

3.78%

$ 5,117

2.85
.76

3.61%

2.50
.89

3.39%

$ 4,721

2.31
.90

3.21%

$ 4,758

Interest
Income/
Expense

99
551
758
1,205

3,034
560
622
6

4,222

1,733
483
843
570
384
48

4,061

8,283

335

11,231

80
788
1,105
127

2,100

424
61
339

824

Yield/
Rate

6.96%
5.79
5.68
6.05

8.19
7.32
9.09
8.44

8.18

7.47
9.11
8.30
8.91
12.43
8.49

8.34

8.26

9.00

7.58

1.42
3.09
5.62
6.68

3.98

6.43
4.14
5.62

5.84

4.38

6.30
4.13
7.24

5.27

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

2000 Compared to 1999
The following discussion and analysis provides a comparison of the Corporation’s results of operations for the years ended December 31, 2000 and
1999. This discussion should be read in conjunction with the consolidated financial statements and related notes on pages 78 through 119.

Overview
Net income totaled $7.5 billion, or $4.52 per common share (diluted), in 2000 compared to $7.9 billion, or $4.48 per common share (diluted), in 1999.
The return on average common shareholders’ equity was 15.96 percent, a decrease of 97 basis points.

The Corporation’s operating earnings, which excluded merger and restructuring charges, totaled $7.9 billion, or $4.72 per common share (diluted),
in 2000 compared to $8.2 billion, or $4.68 per common share (diluted) in 1999. Excluding merger and restructuring charges, the return on average
common shareholders’ equity decreased 100 basis points to 16.70 percent in 2000. SVA, excluding merger and restructuring charges, decreased
$463 million to $3.1 billion in 2000.

Business Segment Operations
Consumer and Commercial Banking
Revenue remained essentially unchanged at $20.0 billion, as growth in noninterest income was offset by a decline in net interest income. Net interest
income declined $231 million, or two percent, to $12.6 billion as loan growth was offset by spread compression. Strong card income growth and higher
service charges were partially offset by lower mortgage banking income, resulting in a $196 million, or three percent, increase in noninterest income.
Cash basis earnings remained essentially flat at $5.2 billion. SVA increased $121 million, or four percent, driven by the decline in the cost of capital.

Asset Management
Revenue increased $190 million, or eight percent, driven by increases in both net interest income and noninterest income. Net interest income increased
$56 million, or nine percent, due to strong loan growth in the commercial loan portfolio. The $134 million, or eight percent, increase in noninterest
income was primarily due to increased investment and brokerage fees driven by new asset management business and market growth combined with
productivity increases in consumer brokerage, partially offset by gains in 1999 on the disposition of certain businesses. Cash basis earnings increased
$109 million, or 21 percent, primarily driven by higher revenue. SVA increased $110 million, or 35 percent, driven by the increase in cash basis earnings.

Global Corporate and Investment Banking
Revenue increased $658 million, or nine percent, driven by increases in both net interest income and noninterest income. Net interest income increased
$318 million, or nine percent, as a result of higher trading-related activities and increases in the commercial – domestic loan portfolio. The $340 million,
or eight percent, increase in noninterest income was due to continued growth in equities and equity derivatives trading, equity underwriting and advisory
services. Cash basis earnings decreased $163 million, or eight percent, as the increase in revenue was more than offset by increases in the provision
for credit losses and noninterest expense. The provision for credit losses increased $538 million due to credit quality deterioration in the commercial
– domestic loan portfolio. Noninterest expense increased $357 million, or eight percent, primarily from higher revenue-related incentive compensa-
tion and costs related to the rationalization of operations in Colombia and Venezuela. SVA declined $182 million, or 35 percent, primarily driven by the
decline in cash basis earnings.

Equity Investments
Revenue increased $174 million, or 25 percent, as the increase in noninterest income more than offset the decrease in net interest income. Net interest
income, which primarily consists of the funding cost associated with the carrying value of investments, decreased $56 million. Equity investment
gains increased $247 million to $993 million, with $832 million in Principal Investing and $161 million in the strategic investments portfolio. Cash basis
earnings increased $130 million as a result of the increase in revenue. SVA increased $71 million, as the increase in cash basis earnings was partially
offset by an increase in the cost of capital.

Net Interest Income
Net interest income on a taxable-equivalent basis increased $329 million to $18.7 billion. Managed loan growth, particularly in consumer products,
and higher levels of customer-based deposits and equity were partially offset by spread compression, the cost of share repurchases and a decrease
in auto lease financing contributions.

The net interest yield decreased 25 basis points to 3.20 percent in 2000 compared to 3.45 percent in 1999, mainly due to spread compression,

the cost of share repurchases and deterioration in auto lease residual values.

Noninterest Income
Noninterest income increased three percent to $14.6 billion in 2000 compared to $14.2 billion in 1999, primarily reflecting higher levels of trading
account profits, card income, equity investment gains, service charges, investment and brokerage services and investment banking income, partially
offset by declines in other income and mortgage banking income.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Provision for Credit Losses
The provision for credit losses was $2.5 billion in 2000 compared to $1.8 billion in 1999. The increase in the provision for credit losses was primarily due
to an increase in net charge-offs. Net charge-offs were $2.4 billion in 2000 compared to $2.0 billion in 1999. The increase was primarily driven by
deterioration of credit quality in the commercial – domestic loan portfolio and overall portfolio growth.

Noninterest Expense
Noninterest expense remained essentially unchanged at $18.6 billion in 2000 as increases due to inflation and business growth were offset by productivity
and investment initiatives.

Income Taxes
The Corporation’s income tax expense for both 2000 and 1999 was $4.3 billion. The effective tax rates for 2000 and 1999 were 36.2 percent and 35.5
percent, respectively.

Recently Issued Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141, “Business Combinations”
(SFAS 141), and Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). SFAS 141 was effective for
business combinations initiated after June 30, 2001. SFAS 141 requires that all business combinations completed after its adoption be accounted for
under the purchase method of accounting and establishes specific criteria for the recognition of intangible assets separately from goodwill. SFAS 142
became effective for the Corporation on January 1, 2002 and primarily addresses the accounting for goodwill and intangible assets subsequent to
their acquisition. SFAS 142 requires that goodwill be recorded at the reporting unit level. Reporting units are defined as an operating segment or one
level below. The Corporation has determined its reporting units and assigned goodwill to them. The Corporation has evaluated the lives of intangible
assets as required by SFAS 142 and determined that no change will be made regarding lives upon adoption. SFAS 142 prohibits the amortization of
goodwill but requires that it be tested for impairment at least annually at the reporting unit level. The impairment test will be performed in two phases.
The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount,
including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however,
if the carrying amount of a reporting unit exceeds its fair value an additional procedure must be performed. That additional procedure compares the
implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying
amount of goodwill exceeds its implied fair value. Management does not anticipate that an impairment charge will be recorded as a result of the adoption
of SFAS 142. Based on amortization expense recorded in 2001, the Corporation estimates that the elimination of goodwill amortization expense will
increase net income by approximately $600 million, or approximately $0.37 per common share (diluted).

In June 2001, the FASB also issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (SFAS 143).
SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Corporation does not expect
the adoption of this pronouncement to have a material impact on its results of operations or financial condition.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets” (SFAS 144). SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001. The standard addresses
financial accounting and reporting for the impairment or disposal of long-lived assets. The Corporation does not expect the adoption of this pronouncement
to have a material impact on its results of operations or financial condition.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Report of Management

The management of Bank of America Corporation is responsible for the preparation, integrity and objectivity of the consolidated financial statements
of the Corporation. The consolidated financial statements and notes have been prepared by the Corporation in accordance with accounting principles
generally accepted in the United States of America and, in the judgment of management, present fairly the Corporation’s financial position and results
of operations. The financial information contained elsewhere in this report is consistent with that in the consolidated financial statements. The financial
statements and other financial information in this report include amounts that are based on management’s best estimates and judgments giving due
consideration to materiality.

The Corporation maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that

transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial
statements in accordance with accounting principles generally accepted in the United States of America. Management recognizes that even a highly
effective internal control system has inherent risks, including the possibility of human error and the circumvention or overriding of controls, and that
the effectiveness of an internal control system can change with circumstances. However, management believes that the internal control system provides
reasonable assurance that errors or irregularities that could be material to the 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, 2001, management believes that the internal controls are
in place and operating effectively.

The Internal Audit Division of the Corporation reviews, evaluates, monitors and makes recommendations on both administrative and accounting

control and acts as an integral, but independent, part of the system of internal controls.

The independent accountants were engaged to perform an independent audit of the consolidated financial statements. In determining the nature
and extent of their auditing procedures, they have evaluated the Corporation’s accounting policies and procedures and the effectiveness of the related
internal control system. An independent audit provides an objective review of management’s responsibility to report operating results and financial
condition. Their report appears on page 77.

The Board of Directors discharges its responsibility for the Corporation’s consolidated financial statements through its Audit Committee. The Audit
Committee meets periodically with the independent accountants, internal auditors and management. Both the independent accountants and internal
auditors have direct access to the Audit Committee to discuss the scope and results of their work, the adequacy of internal accounting controls and the
quality of financial reporting.

Kenneth D. Lewis
Chairman of the Board and Chief Executive Officer

James H. Hance, Jr.
Vice Chairman and Chief Financial Officer

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Report of Independent Accountants

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 flows present fairly, in all material respects, the financial position of Bank of America Corporation and its subsidiaries at December 31, 2001
and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Corporation’s
management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

Charlotte, North Carolina
January 18, 2002

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Consolidated Statement of Income
Bank of America Corporation and Subsidiaries

(Dollars in millions, except per share information)

Interest income
Interest and fees on loans and leases
Interest and dividends on securities
Federal funds sold and securities purchased under agreements to resell
Trading account assets
Other interest income

Total interest income

Interest expense
Deposits
Short-term borrowings
Trading account liabilities
Long-term debt

Total interest expense

Net interest income
Noninterest income
Consumer service 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
Card income
Trading account profits(1)
Other income

Total noninterest income

Total revenue
Provision for credit losses
Gains on sales of securities
Noninterest expense
Personnel
Occupancy
Equipment
Marketing
Professional fees
Amortization of intangibles
Data processing
Telecommunications
Other general operating
General administrative and other
Business exit costs
Merger and restructuring charges

Total noninterest expense
Income before income taxes
Income tax expense
Net income
Net income available to common shareholders
Per share information
Earnings per common share
Diluted earnings per common share
Dividends per common share
Average common shares issued and outstanding (in thousands)

2001

27,166
3,706
1,414
3,623
2,384
38,293

8,886
4,167
1,155
3,795
18,003
20,290

2,866
2,078
4,944
1,546
566
2,112
593
1,579
291
2,421
1,842
566
14,348
34,638
4,287
475

9,829
1,774
1,115
682
564
878
776
484
2,687
615
1,305
–
20,709
10,117
3,325
6,792
6,787

Year Ended December 31
2000

$
$

31,818
5,006
2,354
2,725
1,262
43,165

11,007
7,957
892
4,960
24,816
18,349

2,654
1,889
4,543
1,466
463
1,929
512
1,512
1,054
2,229
1,923
880
14,582
32,931
2,535
25

9,400
1,682
1,173
621
452
864
667
527
2,114
583
–
550
18,633
11,788
4,271
7,517
7,511

1999

27,588
4,708
1,666
2,077
1,174
37,213

9,002
5,826
658
3,600
19,086
18,127

2,550
1,790
4,340
1,334
414
1,748
648
1,411
833
2,006
1,605
1,588
14,179
32,306
1,820
240

9,308
1,627
1,346
537
630
888
763
549
1,820
518
–
525
18,511
12,215
4,333
7,882
7,876

$
$

4.26
4.18
2.28
1,594,957

$
$
$

4.56
4.52
2.06
1,646,398

$
$
$

4.56
4.48
1.85
1,726,006

$
$

$
$
$

(1) Trading account profits for 2001 included the $83 million transition adjustment loss resulting from the adoption of Statement of Financial Accounting Standards No. 133, “Accounting for

Derivative Instruments and Hedging Activities,” (SFAS 133) on January 1, 2001.

See accompanying notes to consolidated financial statements.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Consolidated Balance Sheet
Bank of America Corporation and Subsidiaries

(Dollars in millions)

Assets
Cash and cash equivalents
Time deposits placed and other short-term investments
Federal funds sold and securities purchased under agreements to resell (includes $27,910

and $24,622 pledged as collateral)

Trading account assets (includes $22,550 and $21,216 pledged as collateral)
Derivative assets
Securities:

Available-for-sale (includes $37,422 and $40,674 pledged as collateral)
Held-to-maturity, at cost (market value – $1,009 and $1,133)

Total securities

Loans and leases
Allowance for credit losses

Loans and leases, net of allowance for credit losses

Premises and equipment, net
Interest receivable
Mortgage banking assets
Goodwill
Core deposits and other intangibles
Other assets

Total assets

Liabilities
Deposits in domestic offices:

Noninterest-bearing
Interest-bearing

Deposits in foreign offices:
Noninterest-bearing
Interest-bearing
Total deposits

Federal funds purchased and securities sold under agreements to repurchase
Trading account liabilities
Derivative liabilities
Commercial paper
Other short-term borrowings
Accrued expenses and other liabilities
Long-term debt
Trust preferred securities
Total liabilities

Commitments and contingencies (Notes Twelve and Fifteen)

Shareholders’ equity
Preferred stock, $0.01 par value; authorized – 100,000,000 shares; issued and

outstanding – 1,514,478 and 1,692,172 shares

Common stock, $0.01 par value; authorized – 5,000,000,000 shares; issued and

outstanding – 1,559,297,220 and 1,613,632,036 shares

Retained earnings
Accumulated other comprehensive income (loss)
Other

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes to consolidated financial statements.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

December 31

2 0 0 1

2 0 0 0

$ 26,837
5,932

28,108
47,344
22,147

84,450
1,049
85,499
329,153
(6,875)
322,278
6,414
2,800
3,886
10,854
1,294
58,371
$621,764

$ 27,513
5,448

28,055
43,041
15,534

64,651
1,187
65,838
392,193
(6,838)
385,355
6,433
4,432
3,762
11,643
1,499
43,638
$ 642,191

$112,064
220,703

$ 98,722
211,978

1,870
38,858
373,495
47,727
19,452
14,868
1,558
20,659
27,459
62,496
5,530
573,244

1,923
51,621
364,244
49,411
20,947
22,402
6,955
35,243
22,859
67,547
4,955
594,563

5,076
42,980
437
(38)
48,520
$621,764

8,613
39,815
(746)
(126)
47,628
$ 642,191

Consolidated Statement of Changes in Shareholders’ Equity
Bank of America Corporation and Subsidiaries

(Dollars in millions, shares in thousands)

Balance, December 31, 1998
Net income
Other comprehensive loss, net of tax:

Net unrealized losses on

available-for-sale and marketable
equity securities

Net unrealized losses on foreign

currency translation adjustments

Comprehensive income
Cash dividends:
Common
Preferred

Common stock issued under

employee plans

Common stock repurchased
Conversion of preferred stock
Other
Balance, December 31, 1999
Net income
Other comprehensive income, net of tax:

Net unrealized gains on

available-for-sale and marketable
equity securities

Net unrealized gains on foreign

currency translation adjustments

Comprehensive income
Cash dividends:
Common
Preferred

Common stock issued under

employee plans

Common stock repurchased
Conversion of preferred stock
Other
Balance, December 31, 2000
Net income
Other comprehensive income, net of tax:

Net unrealized gains on

available-for-sale and marketable
equity securities

Net unrealized gains on foreign

currency translation adjustments

Net gains on derivatives

Comprehensive income
Cash dividends:
Common
Preferred

Common stock issued under

employee plans

Common stock repurchased
Conversion of preferred stock
Other
Balance, December 31, 2001

Preferred
Stock

Common Stock

Amount

$83

1,724,484

$14,837

Retained
Earnings

$30,998
7,882

Accumulated
Other
Comprehensive

Income (Loss)(1)

Other

Total
Share-
holders’
Equity

Comprehensive
Income

152

$ (132) $45,938
7,882

$ 7,882

(2,773)

(37)

(3,193)
(6)

(37)

(3,193)
(6)

1,158
(4,858)

(265)

$ 35,681
7,517

321
$(2,658) $ (339) $44,432
7,517

(3,382)
(6)

1,910

(3,382)
(6)

294
(3,256)

226

5
$ 39,815
6,792

(13)

117
$ (746) $ (126) $47,628
6,792

15
1,088

(3,627)
(5)

1,121
(4,716)

(3,627)
(5)

5
$42,980

437

26
144
(38) $48,520

30,501
(78,000)
284
4
1,677,273

1,423
(4,858)
6
263
$ 11,671

(6)

$77

3,781
(67,577)
177
(22)
1,613,632

68
(3,256)
5
125
$ 8,613

(5)

$72

27,301
(81,939)
298
5
1,559,297

1,059
(4,716)
7
113
$ 5,076

(7)

$65

(37)
$ 5,072

$ 7,517

1,910

2
$ 9,429

$ 6,792

15
1,088
$ 7,975

(1) Accumulated Other Comprehensive Income (Loss) consists of the after-tax valuation allowance for available-for-sale and marketable equity securities of $(480),

$(560) and $(2,470) at December 31, 2001, 2000, and 1999, respectively; foreign currency translation adjustments of $(171), $(186) and $(188) at December 31, 2001,
2000, and 1999, respectively; and net gains on derivatives of $1,088 at December 31, 2001.

See accompanying notes to consolidated financial statements.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Consolidated Statement of Cash Flows
Bank of America Corporation and Subsidiaries

(Dollars in millions)

Operating activities
Net income
Reconciliation of net income to net cash provided by (used in)

operating activities:

Provision for credit losses
Gains on sales of securities
Business exit costs
Merger and restructuring charges
Depreciation and premises improvements amortization
Amortization of intangibles
Deferred income tax (benefit) expense
Net (increase) decrease in trading and hedging instruments
Net (increase) decrease in interest receivable
Net (increase) decrease in other assets
Net increase (decrease) in interest payable
Net increase (decrease) in accrued expenses and other liabilities
Other operating activities, net

Net cash provided by (used in) operating activities

2001

Year Ended December 31
2000

1999

6,792

$ 7,517

$ 7,882

4,287
(475)
1,305
–
854
878
(563)
(19,865)
1,632
(10,911)
(1,254)
6,323
(1,829)
(12,826)

2,535
(25)
–
550
920
864
647
2,119
(658)
(10,055)
575
1,234
(2,489)
3,734

1,820
(240)
–
525
1,029
888
2,459
7,640
(51)
2,611
332
(13,326)
(1,746)
9,823

Investing activities
Net (increase) decrease in time deposits placed and other short-term investments
Net (increase) decrease in federal funds sold and securities purchased under

(484)

(685)

1,625

agreements to resell

Proceeds from sales of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Purchases of available-for-sale securities
Proceeds from maturities of held-to-maturity securities
Proceeds from sales and securitizations of loans and leases
Other changes in loans and leases, net
Purchases and originations of mortgage banking assets
Net purchases of premises and equipment
Proceeds from sales of foreclosed properties
(Acquisition) and divestiture of business activities, net
Net cash provided by (used in) investing activities

Financing activities
Net increase (decrease) in deposits
Net increase (decrease) in federal funds purchased and securities

sold under agreements to repurchase

Net increase (decrease) in commercial paper and other short-term borrowings
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

Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at January 1

Cash and cash equivalents at December 31

Supplemental cash flow disclosures
Cash paid for interest
Cash paid for income taxes

(53)
125,824
11,722
(126,537)
145
10,781
18,201
(1,148)
(835)
353
(417)
37,552

9,857
34,671
6,396
(19,132)
380
15,751
(43,070)
(208)
(642)
260
843
4,421

(10,782)
38,587
10,003
(48,917)
575
15,717
(32,302)
(2,258)
(465)
350
(1,212)
(29,079)

9,251

17,155

(8,299)

(1,684)
(19,981)
14,853
(20,619)
1,121
(4,716)
(3,632)
62
(25,345)
(57)
(676)
27,513
$26,837

$19,257
3,121

(25,150)
(5,376)
23,451
(11,078)
294
(3,256)
(3,388)
(218)
(7,566)
(65)
524
26,989
$ 27,513

$ 24,241
2,130

7,018
16,214
17,630
(7,763)
1,158
(4,858)
(3,199)
12
17,913
55
(1,288)
28,277
$ 26,989

$ 18,754
1,595

Net loans and leases transferred to (from) loans held for sale amounted to $428 and $(247) in 2001 and 2000, respectively. There were no transfers during 1999.
Loans transferred to foreclosed properties amounted to $533, $380 and $305 in 2001, 2000 and 1999, respectively.
Loans and loans held for sale securitized and retained in the available-for-sale securities portfolio amounted to $29,985, $2,483 and $6,682 in 2001, 2000 and 1999, respectively.
There were no material noncash assets acquired or liabilities assumed in acquisitions in 2001 and 2000. The fair value of noncash assets acquired and liabilities assumed in acquisitions
during 1999 was approximately $1,557 and $74, respectively, net of cash acquired.

See accompanying notes to consolidated financial statements.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Notes to Consolidated Financial Statements
Bank of America Corporation and Subsidiaries

Bank of America Corporation (the Corporation) is a Delaware corporation, a bank holding company and a financial holding company. Through its
banking and nonbanking subsidiaries, the Corporation provides a diverse range of financial services and products throughout the U.S. and in selected
international markets. At December 31, 2001, the Corporation operated its banking activities primarily under two charters: Bank of America, N.A. and
Bank of America, N.A. (USA).

Note 1 Significant Accounting Policies

Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Corporation and its majority-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated. Results of operations of companies purchased are included from the dates of acquisition. Certain prior period
amounts have been reclassified to conform to current year classifications. Assets held in an agency or fiduciary capacity are not included in the
consolidated financial statements.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.
Significant estimates made by management are discussed in these notes as applicable.

Recently Issued Accounting Pronouncements
Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (SFAS 133) as amended by
Statement of Financial Accounting Standards No. 137, “Accounting for Derivative Instruments and Hedging Activities – Deferral of Effective Date of
Financial Accounting Standards Board Statement No. 133,” and Statement of Financial Accounting Standards No. 138, “Accounting for Certain
Derivative Instruments and Certain Hedging Activities – an amendment of FASB Statement No. 133,” was adopted by the Corporation on January 1,
2001. The impact of adopting SFAS 133 to net income was a loss of $52 million (net of related income tax benefits of $31 million), and a net transition
gain of $9 million (net of related income taxes of $5 million) included in other comprehensive income on January 1, 2001. Because the transition adjust-
ment was not material to the Corporation’s overall results, the before-tax charge to earnings was included in trading account profits in noninterest
income rather than shown separately as the cumulative effect of an accounting change. Further, the initial adoption of SFAS 133 resulted in the
Corporation recognizing on the balance sheet $577 million of derivative assets and $514 million of derivative liabilities.

In September 2000, the FASB issued Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities – a replacement of FASB Statement No. 125” (SFAS 140). SFAS 140 was effective for transfers occurring after
March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption
of SFAS 140 did not have a material impact on the Corporation’s results of operations or financial condition.

In June 2001, the FASB issued Statement of Financial Accounting Standards No. 141, “Business Combinations” (SFAS 141) and Statement of Financial
Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). SFAS 141 was effective for business combinations initiated after
June 30, 2001. SFAS 141 requires that all business combinations completed after its adoption be accounted for under the purchase method of accounting
and establishes specific criteria for the recognition of intangible assets separately from goodwill. SFAS 142 became effective for the Corporation on
January 1, 2002 and primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition. SFAS 142 requires that
goodwill be recorded at the reporting unit level. Reporting units are defined as an operating segment or one level below. The Corporation has determined
its reporting units and assigned goodwill to them. The Corporation has evaluated the lives of intangible assets as required by SFAS 142 and determined
that no change will be made regarding lives upon adoption. SFAS 142 prohibits the amortization of goodwill but requires that it be tested for impairment
at least annually at the reporting unit level. The impairment test will be performed in two phases. The first step of the goodwill impairment test, used
to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting
unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of a reporting unit exceeds
its fair value an additional procedure must be performed. That additional procedure compares the implied fair value of the reporting unit goodwill with
the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.
Management does not anticipate that an impairment charge will be recorded as a result of the adoption of SFAS 142. Based on amortization expense
recorded in 2001, the Corporation estimates that the elimination of goodwill amortization expense will increase net income by approximately
$600 million, or approximately $0.37 per common share (diluted).

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

In June 2001, the FASB also issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (SFAS 143).
SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. SFAS 143 addresses financial accounting and report-
ing for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Corporation does not
expect the adoption of this pronouncement to have a material impact on its results of operations or financial condition.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived

Assets” (SFAS 144). SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001. The standard addresses
financial accounting and reporting for the impairment or disposal of long-lived assets. The Corporation does not expect the adoption of this
pronouncement to have a material impact on its results of operations or financial condition.

Cash and Cash Equivalents
Cash on hand, cash items in the process of collection and amounts due from correspondent banks and the Federal Reserve Bank are included in cash
and cash equivalents.

Securities Purchased under Agreements to Resell and Securities Sold under Agreements to Repurchase
Securities purchased under agreements to resell and securities sold under agreements to repurchase are treated as collateralized financing transactions
and are recorded at the amounts at which the securities were acquired or sold plus accrued interest. The Corporation’s policy is to obtain the use of
securities purchased under agreements to resell. The market value of the underlying securities, which collateralize the related receivable on agreements
to resell, is monitored, including accrued interest, and additional collateral is requested when deemed appropriate.

Collateral
The Corporation has accepted collateral that it is permitted by contract or custom to sell or repledge. At December 31, 2001, the fair value of this
collateral was approximately $30.4 billion of which $21.5 billion was sold or repledged. At December 31, 2000, the fair value of this collateral was
approximately $25.1 billion of which $22.7 billion was sold or repledged. The primary source of this collateral is reverse repurchase agreements.
The Corporation pledges securities as collateral in transactions that are primarily repurchase agreements, public and trust deposits, treasury tax and
loan and other short-term borrowings. This collateral can be sold or repledged by the counterparties to the transactions.

In addition, the Corporation obtains collateral in connection with its derivative activities. Required collateral levels vary depending on the
credit risk rating and the type of counterparty. Generally, the Corporation accepts collateral in the form of cash, U.S. Treasury securities and other
marketable securities.

Trading Instruments
Financial instruments utilized in trading activities are stated at fair value. Fair value is generally based on quoted market prices. If quoted market
prices are not available, fair values are estimated based on dealer quotes, pricing models or quoted prices for instruments with similar characteristics.
Realized and unrealized gains and losses are recognized in trading account profits.

Derivatives and Hedging Activities
All derivatives are recognized on the balance sheet at fair value, taking into consideration the effects of legally enforceable 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 models or quoted prices for
instruments with similar characteristics. The Corporation designates a derivative as held for trading or hedging purposes when it enters into a derivative
contract. Derivatives designated as held for trading activities are included in the Corporation’s trading portfolio with changes in fair value reflected in
trading account profits.

The Corporation uses its derivatives designated for hedging 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 to changes in the fair value of its interest-bearing assets or liabilities that are due to
interest rate volatility. Cash flow hedges are used to minimize the variability in cash flows of interest-bearing assets or liabilities or anticipated
transactions caused by interest rate fluctuations. Changes in the fair value of derivatives designated for hedging activities that are highly effective as
hedges are recorded in earnings or other comprehensive income, depending on whether the hedging relationship satisfies the criteria for a fair value
or cash flow hedge, respectively. A highly effective hedging relationship is one in which the Corporation achieves offsetting changes in fair value or
cash flows between 80 percent and 120 percent for the risk being hedged. Hedge ineffectiveness and gains and losses on the excluded component of
a derivative in assessing hedge effectiveness are recorded in earnings. SFAS 133 retains certain concepts under Statement of Financial Accounting
Standards No. 52, “Foreign Currency Translation,” (SFAS 52) for foreign currency exchange hedging. Consistent with SFAS 52, the Corporation records
changes in the fair value of derivatives used as hedges of the net investment in foreign operations as a component of other comprehensive income.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

The Corporation occasionally purchases or issues financial instruments containing embedded derivatives. The embedded derivative is separated
from the host contract and carried at fair value if the economic characteristics of the derivative are not clearly and closely related to the economic
characteristics of the host contract. To the extent that the Corporation cannot reliably identify and measure the embedded derivative, the entire contract
is carried at fair value on the balance sheet with changes in fair value reflected in earnings.

The Corporation formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk management
objectives and strategies for undertaking various hedge transactions. Additionally, the Corporation uses regression analysis at the hedge’s inception
and quarterly thereafter to assess whether the derivative used in its hedging transaction is expected to be or has been highly effective in offsetting
changes in the fair value or cash flows of the hedged items. The Corporation discontinues hedge accounting when it is determined that a derivative is
not expected to be or has ceased to be highly effective as a hedge, and then reflects changes in fair value in earnings.

If a derivative instrument in a fair value hedge is terminated or the hedge designation removed, the difference between a hedged item’s then
carrying amount and its face amount is recognized into income over the original hedge period. Similarly, if a derivative instrument in a cash flow hedge
is terminated or the hedge designation removed, related amounts accumulated in other comprehensive income are reclassified into earnings in the
same period during which the hedged item affects income.

Securities
Debt securities are classified based on management’s intention on the date of purchase. Debt securities which management has the intent and ability
to hold to maturity are classified as held-to-maturity and reported at amortized cost. Securities that are bought and held principally for the purpose
of resale in the near term are classified as trading instruments and are stated at fair value with unrealized gains and losses included in trading
account profits. All other debt securities are classified as available-for-sale and carried at fair value with net unrealized gains and losses included in
shareholders’ equity on an after-tax basis.

Interest and dividends on securities, including amortization of premiums and accretion of discounts, are included in interest income. Realized

gains and losses from the sales of securities are determined using the specific identification method.

Marketable equity securities, which are included in other assets, are carried at fair value. Net unrealized gains and losses are included in

shareholders’ equity, net of tax; income is included in noninterest income. Venture capital investments for which there are active market quotes are
carried at estimated fair value, subject to liquidity discounts, sales restrictions or regulatory rules. Net unrealized gains and losses are recorded in non-
interest income. Venture capital investments for which there are not active market quotes are initially valued at cost. Subsequently, these investments
are adjusted to reflect changes in valuation as a result of initial public offerings or other-than-temporary declines in value.

Loans and Leases
Loans are reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated
loans and premiums or discounts on purchased loans. Loan origination fees and certain direct origination costs are deferred and recognized as
adjustments to income over the lives of the related loans. Unearned income, discounts and premiums are amortized to income using methods that
approximate the interest method.

The Corporation provides equipment financing to its customers through a variety of lease arrangements. Direct financing leases are carried at

the aggregate of lease payments receivable plus estimated residual value of the leased property, less unearned income. Leveraged leases, which are
a form of financing lease, are carried net of nonrecourse debt. Unearned income on leveraged and direct financing leases is amortized over the lease
terms by methods that approximate the interest method.

Allowance for Credit Losses
The allowance for credit losses is management’s estimate of probable incurred credit losses in the lending portfolios. Additions to the allowance for
credit losses are made by charges to the provision for credit losses. Credit exposures deemed to be uncollectible are charged against the allowance
for credit losses. Recoveries of previously charged off amounts are credited to the allowance for credit losses.

The Corporation performs periodic and systematic detailed reviews of its lending portfolios to identify inherent risks and to assess the overall

collectibility of those portfolios. The allowance on certain homogeneous loan portfolios, which generally consist of consumer loans, is based on
aggregated portfolio segment evaluations generally by loan type. Loss forecast models are utilized for these segments which consider a variety of
factors including, but not limited to, historical loss experience, anticipated defaults or foreclosures based on portfolio trends, delinquencies and
credit scores, and expected loss factors by loan type. The remaining portfolios are reviewed on an individual loan basis. Loans subject to individual
reviews are analyzed and segregated by risk according to the Corporation’s internal risk rating scale. These risk classifications, in conjunction with an
analysis of historical loss experience, current economic conditions and performance trends within specific portfolio segments, and any other
pertinent information (including individual valuations on nonperforming loans in accordance with Statement of Financial Accounting Standards
No. 114, “Accounting by Creditors for Impairment of a Loan” (SFAS 114)) result in the estimation of specific allowances for credit losses.

If necessary, an allowance for credit losses is established for individual impaired 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 of the agreement. Once a loan has been identified as individually impaired, management measures impairment in accordance with

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

SFAS 114. Individually impaired loans are measured based on the present value of payments expected to be received, observable market prices, or for
loans that are solely dependent on the collateral for repayment, the estimated fair value of the collateral. If the recorded investment in impaired loans
exceeds the measure of estimated fair value, a valuation allowance is established as a component of the allowance for credit losses.

Portions of the allowance for credit losses are assigned to cover the estimated probable incurred credit losses in each loan and lease category

based on the results of the Corporation’s detail review process described above. The assigned portion continues to be weighted toward the commercial
loan portfolio, which reflects a higher level of nonperforming loans and the potential for higher individual losses. The remaining or unassigned portion
of the allowance for credit losses, determined separately from the procedures outlined above, addresses certain industry and geographic concentrations,
including global economic conditions. This procedure helps to minimize the risk related to the margin of imprecision inherent in the estimation of the
assigned allowance for credit losses. Due to the subjectivity involved in the determination of the unassigned portion of the allowance for credit losses,
the relationship of the unassigned component to the total allowance for credit losses may fluctuate from period to period. Management evaluates the
adequacy of the allowance for credit losses based on the combined total of the assigned and unassigned components.

Nonperforming Loans
Commercial loans and leases that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection,
including loans that are individually identified as being impaired, are generally classified as nonperforming loans unless well-secured and in the
process of collection. Loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing
financial difficulties are classified as nonperforming until the loan is performing for an adequate period of time under the restructured agreement.
Interest accrued but not collected is reversed when a commercial loan is classified as nonperforming. Interest collections on commercial nonperforming
loans and leases for which the ultimate collectibility of principal is uncertain are applied as principal reductions; otherwise, such collections are
credited to income when received.

Credit card loans are charged off at 180 days past due or 60 days from notification of bankruptcy filing and are not classified as nonperforming.

Unsecured loans and deficiencies in personal property secured loans are charged off at 120 days past due and not classified as nonperforming. Real
estate secured consumer loans are classified as nonperforming at 90 days past due. The amount deemed uncollectible on real estate secured loans is
charged off at 180 days past due.

Loans Held for Sale
Loans held for sale include consumer finance, residential mortgage, commercial real estate and other loans and are carried at the lower of aggregate
cost or market value. Loans held for sale are included in other assets.

Foreclosed Properties
Assets are classified as foreclosed properties and included in other assets upon actual foreclosure or when physical possession of the collateral is
taken regardless of whether foreclosure proceedings have taken place.

Foreclosed properties are carried at the lower of the recorded amount of the loan or lease for which the property previously served as collateral, or
the fair value of the property less estimated costs to sell. Prior to foreclosure, any write-downs, if necessary, are charged to the allowance for credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on the periodic revaluation of foreclosed properties are credited or charged

to expense. Net costs of maintaining and operating foreclosed properties are expensed as incurred.

Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are recognized principally
using the straight-line method over the estimated useful lives of the assets.

Mortgage Banking Assets
In the first quarter of 2001, the Corporation amended certain of its Mortgage Selling and Servicing Contracts whereby its previously reported mortgage
servicing rights were bifurcated into two components: servicing assets and Excess Spread Certificates (the Certificates). The servicing component rep-
resents the contractually specified servicing fees net of the fair market value of the cost to service, and the Certificates represent a retained financial
interest in certain cash flows of the underlying mortgage loans. The Certificates and the new de minimis servicing asset are classified as mortgage
banking assets (MBA). 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 of the Certificates due to changes in prepayment rates by entering into derivative financial instruments
such as purchased options and interest rate swaps. The derivative instruments are carried at estimated fair value with the corresponding adjustment
reported in trading account profits. The Corporation values the Certificates using an option-adjusted spread model which requires several key compo-
nents including, but not limited to, proprietary prepayment models and term structure modeling via Monte Carlo simulation. The fair value of MBA was
$3.9 billion at December 31, 2001. Total loans serviced approximated $320.8 billion, $335.9 billion and $314.3 billion at December 31, 2001, 2000, and
1999, respectively, including loans serviced on behalf of the Corporation’s banking subsidiaries.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

The Corporation allocated the total cost of mortgage loans originated for sale or purchased between the cost of the loans, and when applicable,
the Certificates and the mortgage servicing rights (MSR) based on the relative fair values of the loans, the Certificates and the MSR. MSR acquired
separately are capitalized at cost. The Corporation capitalized $1.1 billion, $836 million and $1.6 billion of MBA during 2001, 2000 and 1999, respec-
tively. The cost of MSR was amortized in proportion to and over the estimated period that servicing revenues were recognized. Amortization was
$540 million and $566 million during 2000 and 1999, respectively. The fair value of capitalized MSR was $3.8 billion at December 31, 2000.

Mortgage banking income includes servicing fees, gains from selling originated mortgages, ancillary servicing income, mortgage production

fees, gains and losses on sales to the secondary market, and income on the Certificates.

Goodwill and Other Intangibles
Net assets of companies acquired in purchase transactions are recorded at fair value at the date of acquisition. Identified intangibles are amortized
on an accelerated or straight-line basis over the period benefited. Goodwill is amortized on a straight-line basis over a period not to exceed 25 years.
The recoverability of goodwill and other intangibles is evaluated if events or circumstances indicate a possible impairment. Such evaluation is based
on various analyses, including undiscounted cash flow projections. See “Recently Issued Accounting Pronouncements” on page 82 for information
related to changes in accounting for goodwill and other intangibles which were effective January 1, 2002.

Off-Balance Sheet Financing Entities
In the ordinary course of business, the Corporation supports its customers financing needs by facilitating these customers’ access to different funding
sources, assets and risks. In addition, the Corporation utilizes certain financing arrangements to meet its balance sheet management, funding, liquidity,
and market or credit risk management needs. These financing entities may be in the form of corporations, partnerships or limited liability companies,
or trusts and are not consolidated in the Corporation’s balance sheet. The majority of these activities are basic term or revolving securitization vehicles.
These vehicles are generally funded through term-amortizing debt structures designed to be paid off based on the underlying cash flows of the assets
securitized. Other, lesser used vehicles, are generally funded with short-term commercial paper and are similarly paid down through the cash flow or sale
of the underlying assets. Securitization activities are further discussed in more detail in the Securitizations section below and Note Eight.

These financing entities are usually contractually limited to a narrow range of activities that facilitate the transfer of or access to various types of
assets or financial instruments. In certain situations, the Corporation provides liquidity commitments and/or loss protection agreements. See Note
Twelve for further discussion.

The Corporation evaluates whether these entities should be consolidated by applying various generally accepted accounting principles and
interpretations that generally provide that a financing entity is not consolidated if both the control and risks and rewards of the assets in the financing
entity are not retained by the Corporation. In determining whether the financing entity should be consolidated, the Corporation considers whether the
entity is a qualifying special-purpose entity (QSPE) as defined in SFAS 140. For non-consolidation, SFAS 140 requires that the financing entity be
legally isolated, bankruptcy remote and beyond the control of the seller, which generally applies to securitizations. For non-securitization structures,
the Securities and Exchange Commission and the Emerging Issues Task Force also have issued guidance regarding consolidation of financing entities.
Such guidance applies to certain transactions and requires an assessment of whether sufficient risks and rewards of ownership have passed based
on assessing the voting rights, control of the entity and the existence of substantive third party equity investment.

Securitizations
The Corporation securitizes, sells and services interests in residential mortgage, consumer finance, commercial and bankcard 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
considered retained interests in the securitized assets. Gains upon sale of the assets depend, in part, on the Corporation’s allocation of the previous
carrying amount of the assets to the retained interests. Previous carrying amounts are allocated in proportion to the relative fair values of the assets
sold and interests retained.

Quoted market prices, if available, are used to obtain fair values. Generally, quoted market prices for retained interests are not available; therefore,
the Corporation estimates fair values based upon the present value of the associated expected future cash flows. This requires management to estimate
credit losses, prepayment speeds, forward yield curves, discount rates and other factors that impact the value of retained interests.

The excess cash flows expected to be received over the amortized cost of the retained interest is recognized as interest income using the effective
yield method. If the fair value of the retained interest has declined below its carrying amount and there has been an adverse change in estimated
cash flows (as defined), then such decline is determined to be other-than-temporary and the retained interest is written down to fair value with a
corresponding adjustment to earnings.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Income Taxes
There are two components of income tax expense: current and deferred. Current income tax expense approximates cash to be paid or refunded for
taxes for the applicable period. Deferred tax assets and liabilities are recognized due to differences in the bases of assets and liabilities as measured
by tax laws and their bases as reported in the financial statements. Deferred tax expense or benefit is then recognized for the change in deferred tax
liabilities or assets between periods.

Recognition of deferred tax assets is based on management’s belief that it is more likely than not that the tax benefit associated with certain
temporary differences, tax operating loss carryforwards and tax credits will be realized. A valuation allowance is recorded for the amount of the
deferred tax items for which it is more likely than not that realization will not occur.

Retirement Benefits
The Corporation has established qualified retirement plans covering substantially all full-time employees and certain part-time employees. Pension
expense under these plans is charged to current operations and consists of several components of net pension cost based on various actuarial
assumptions regarding future experience under the plans.

In addition, the Corporation and its subsidiaries have established unfunded supplemental benefit plans and supplemental executive retirement
plans for selected officers of the Corporation and its subsidiaries that provide benefits that cannot be paid from a qualified retirement plan due to
Internal Revenue Code restrictions. These plans are nonqualified under the Internal Revenue Code, and assets used to fund benefit payments are not
segregated from other assets of the Corporation; therefore, in general, a participant’s or beneficiary’s claim to benefits under these plans is as a
general creditor.

In addition, the Corporation and its subsidiaries have established several postretirement healthcare and life insurance benefit plans.

Other Comprehensive Income
The Corporation records unrealized gains and losses on available-for-sale debt securities and marketable equity securities, foreign currency translation
adjustments, related hedges of net investments in foreign operations and gains and losses on cash flow hedges in other comprehensive income in
shareholders’ equity. Gains and losses on available-for-sale securities are reclassified to net income as the gains or losses are realized upon sale of
the securities. Other-than-temporary impairment charges are reclassified to net income at the time of the charge. Translation gains or losses on foreign
currency translation adjustments are reclassified to net income upon the sale or liquidation of investments in foreign operations. Gains or losses on
derivatives are reclassified to net income as the hedged item affects earnings.

Earnings Per Common Share
Earnings per common share is computed by dividing net income available to common shareholders by the weighted average common shares issued
and outstanding. For diluted earnings per common share, net income available to common shareholders can be affected by the conversion of the
registrant’s convertible preferred stock. Where the effect of this conversion would have been dilutive, net income available to common shareholders
is adjusted by the associated preferred dividends. This adjusted net income is divided by the weighted average number of common shares issued and
outstanding for each period plus amounts representing the dilutive effect of stock options outstanding and the dilution resulting from the conversion
of the registrant’s convertible preferred stock, if applicable. The effects of convertible preferred stock and stock options are excluded from the com-
putation of diluted earnings per common share in periods in which the effect would be antidilutive. Dilutive potential common shares are calculated
using the treasury stock method.

Foreign Currency Translation
Assets, liabilities and operations of foreign branches and subsidiaries are recorded based on the functional currency of each entity. For certain of the
foreign operations, the functional currency is the local currency, in which case the assets, liabilities and operations are translated, for consolidation
purposes, at current exchange rates from the local currency to the reporting currency, the U.S. dollar. The resulting gains or losses are reported as
a component of accumulated other comprehensive income (loss) within shareholders’ equity on an after-tax basis. When the foreign entity is not a
free-standing operation or is in a hyperinflationary economy, the functional currency used to measure the financial statements of a foreign entity is
the U.S. dollar. In these instances, the resulting gains and losses are included in income.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Note 2 Exit and Restructuring Charges

Exit Charges
On August 15, 2001, the Corporation announced that it was exiting its auto leasing and subprime real estate lending businesses. As a result of this
strategic decision, the Corporation recorded pre-tax exit charges in the third quarter of 2001 of $1.7 billion ($1.3 billion after-tax) consisting of provision
for credit losses of $395 million and noninterest expense of $1.3 billion. Business exit costs within noninterest expense consisted of the write-off of
goodwill of $685 million, auto lease residual charges of $400 million, real estate servicing asset charges of $145 million and other transaction costs
of $75 million. See Note Six for additional information on the exit-related provision for credit losses.

During the fourth quarter of 2001, $17.5 billion of subprime loans were securitized and retained in the available-for-sale securities portfolio.
Approximately $1 billion of subprime real estate loans remain in loans held for sale in other assets. The run off of the auto lease portfolio is occurring
as expected. At the exit date, the auto lease portfolio was approximately 495,000 units with total residual exposure of $6.8 billion. At December 31, 2001,
approximately 401,000 units remained with a residual exposure of $5.4 billion.

Merger and Restructuring Charges
As part of its productivity and investment initiatives announced on July 28, 2000, the Corporation recorded a pre-tax charge of $550 million ($346 million
after-tax) in the third quarter of 2000. Of the $550 million restructuring charge, approximately $475 million was used to cover severance and related
costs and approximately $75 million was used for other costs related to process change and channel consolidation. At December 31, 2000 the reserve
balance was $293 million. At December 31, 2001, the restructuring reserve had been substantially utilized.

In connection with the 1998 merger of BankAmerica Corporation and Bank of America Corporation, formerly NationsBank Corporation, the
Corporation recorded pre-tax merger charges of $525 million ($358 million after-tax) in 1999 which consisted of approximately $219 million of severance,
change in control and other employee-related costs, $187 million of conversion and related costs including occupancy, equipment and customer
communication expenses, $128 million of exit and related costs and a $9 million reduction of other merger costs. At December 31, 2000, the merger
reserve balance was $32 million. The merger reserve was substantially utilized at December 31, 2001.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Note 3 Securities

The amortized cost, gross unrealized gains and losses, and fair value of available-for-sale and held-to-maturity debt securities at December 31, 2001,
2000 and 1999 were:

(Dollars in millions)

Available-for-sale securities
2001
U.S. Treasury securities and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

2000
U.S. Treasury securities and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

1999
U.S. Treasury securities and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

(Dollars in millions)

Held-to-maturity securities
2001
U.S. Treasury securities and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

2000
U.S. Treasury securities and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

1999
U.S. Treasury securities and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

$ 1,280
73,101
3,144
4,642

82,167
2,283

8
826
123
108

1,065
46

$ 1,111

$84,450

$ 520
372
108
104

1,104
9

$ 16,810
37,427
4,151
4,688

63,076
1,575

$ 1,271
73,546
3,213
4,739

82,769
2,324

$85,093

$ 17,318
37,745
4,252
4,786

64,101
1,541

$ 17
381
54
11

463
5

$468

$ 12
54
7
6

79
43

$65,642

$ 122

$ 1,113

$ 64,651

$30,085
43,673
4,607
4,985

83,350
2,135

$85,485

–
21
16
–

37
21

$1,800
1,709
256
29

3,794
102

$28,285
41,985
4,367
4,956

79,593
2,054

$ 58

$3,896

$ 81,647

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

5
5
797
26

833
216

–
–
5
1

6
9

$ 1,049

$ 15

39
66
800
27

932
255

–
–
5
–

5
11

$ 1,187

$ 16

87
106
902
26

1,121
301

–
–
–
–

–
11

–
–
54
–

54
1

–
–
69
–

69
1

–
–
157
2

159
4

Fair
Value

5
5
748
27

785
224

$ 1,009

39
66
736
27

868
265

$ 1,133

87
106
745
24

962
308

$ 1,422

$ 11

$ 163

$ 1,270

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

The expected maturity distribution and yields (computed on a taxable-equivalent basis) of the Corporation’s securities portfolio at December 31, 2001
are summarized below. Actual maturities may differ from contractual maturities or expected maturities shown below since borrowers may have the
right to prepay obligations with or without prepayment penalties.

(Dollars in millions)

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Due in 1 year
or less

Due after 1
year through
5 years

Due after 5
years through
10 years

Due after
10 years

Total

Fair value of available-for-sale securities
U.S. Treasury securities

and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

Amortized cost of available-

for-sale securities

Amortized cost of held-to-maturity securities
U.S. Treasury securities

and agency debentures
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities

Total taxable

Tax-exempt securities

Total

Fair value of held-to-maturity securities

40
274
1,104
61

1,479
46

5.36% $
6.59
2.51
6.35

496
44,668
132
2,945

5.34% $
5.93
4.91
4.86

21
26,058
212
63

3.50
7.40

48,241
65

5.86
7.88

26,354
600

5.90%
5.32
3.84
5.75

5.31
6.80

$ 723
2,101
1,696
1,573

6,093
1,572

6.20% $ 1,280
73,101
6.38
3,144
5.70
4,642
6.30

6.15
7.38

82,167
2,283

5.83%
5.73
4.42
5.38

5.66
7.24

$1,525

3.62% $48,306

5.86% $26,954

5.34%

$7,665

6.40% $84,450

5.70%

$ 1,512

$48,627

$ 27,177

$7,777

$85,093

–
1
5
–

6
21

–% $

2.36
4.96
–

4.53
9.27

5
4
18
–

27
89

4.22% $
2.37
4.87
–

4.38
10.02

8.22% $

116

8.71% $

119

–
–
11
–

11
59

–%
–
4.91
–

4.91
8.31

–
–
763
26

789
47

–% $
–
7.17
6.38

7.15
6.48

5
5
797
26

833
216

0.84%
2.37
7.08
6.38

7.01
8.71

7.78%

$ 836

7.11% $ 1,049

7.34%

$ 789

$ 1,009

The components of gains and losses on sales of securities for the years ended December 31, 2001, 2000 and 1999 were:

(Dollars in millions)

Gross gains on sales of securities
Gross losses on sales of securities

Net gains on sales of securities

2001

$1,074
599

$ 475

2000

$123
98

$ 25

1999

$289
49

$240

Excluding securities issued by the U.S. government and its agencies and corporations, there were no investments in securities from one issuer that
exceeded 10 percent of consolidated shareholders’ equity at December 31, 2001 or 2000.

The income tax expense attributable to realized net gains on securities sales was $166 million, $9 million and $84 million in 2001, 2000 and

1999, respectively.

Securities are pledged or assigned to secure borrowed funds, government and trust deposits and for other purposes. The carrying value of

pledged securities was $37.4 billion and $40.7 billion at December 31, 2001 and 2000, respectively.

At December 31, 2001, the valuation allowance for available-for-sale debt securities and marketable equity securities included in shareholders’
equity reflected unrealized net losses of $480 million, net of related income taxes of $311 million. At December 31, 2000, the valuation allowance
included in shareholders’ equity reflected unrealized net losses of $560 million, net of related income taxes of $330 million.

Note 4 Trading Activities

Trading-Related Revenue
Trading account profits represent the net amount earned from the Corporation’s trading positions, which include trading account assets and liabili-
ties as well as derivative positions and mortgage banking assets. These transactions include positions to meet customer demand as well as for
the Corporation’s own trading account. Trading positions are taken in a diverse range of financial instruments and markets. The profitability of these
trading positions is largely dependent on the volume and type of transactions, the level of risk assumed and the volatility of price and rate move-
ments. Trading account profits, as reported in the Consolidated Statement of Income, does not include the net interest income recognized on

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

interest-earning and interest-bearing trading positions or the related funding charge or benefit. Trading account profits and trading-related net
interest income (“trading-related revenue”) are presented in the table below as they are both considered in evaluating the overall profitability of the
Corporation’s trading positions. Trading-related revenue is derived from foreign exchange spot rates, forward and cross-currency contracts, fixed income
and equity securities and derivative contracts in interest rates, equities, credit and commodities. Trading account profits for the year ended
December 31, 2001 included an $83 million transition adjustment net loss recorded as a result of the implementation of SFAS 133 as discussed in
Note One of the consolidated financial statements.

(Dollars in millions)

Trading account profits – as reported
Net interest income

Total trading-related revenue

Trading-related revenue by product
Foreign exchange contracts
Interest rate contracts
Fixed income
Equities and equity derivatives
Commodities

Total trading-related revenue

2001

$1,842
1,566

$3,408

$ 541
753
1,033
916
165

$3,408

2000

$1,923
1,023

$2,946

$ 536
773
392
1,174
71

$2,946

1999

$1,605
662

$2,267

$ 549
716
460
495
47

$2,267

Trading Account Assets and Liabilities
The fair values of the components of trading account assets and liabilities at December 31, 2001 and 2000 were:

(Dollars in millions)

Trading account assets
U.S. Government & Agency securities
Foreign sovereign debt
Corporate & other debt securities
Equity securities
Mortgage-backed securities
Other

Total

Trading account liabilities
U.S. Government & Agency securities
Foreign sovereign debt
Corporate & other debt securities
Equity securities
Mortgage-backed securities
Other

Total

Fair Value

2001

2000

$15,009
6,809
11,596
2,976
3,070
7,884

$47,344

$ 4,121
3,096
1,501
6,151
12
4,571

$19,452

$ 10,545
10,432
7,841
6,363
1,713
6,147

$ 43,041

$ 10,906
1,860
2,215
5,712
37
217

$20,947

See Note Five below for additional information on derivative positions, including credit risk.

Note 5 Derivatives

The Corporation designates a derivative as held for trading or hedging purposes when it enters into a derivative contract. Derivatives utilized by the
Corporation include swaps, financial futures and forward settlement contracts and option contracts. A swap agreement is a contract between two
parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. Financial futures and forward settlement
contracts are agreements to buy or sell a quantity of a financial instrument, index, currency or commodity at a predetermined future date and rate or
price. An option contract is an agreement that conveys to the purchaser the right, but not the obligation, to buy or sell a quantity of a financial instrument,
index, currency or commodity at a predetermined rate or price during a period or at a time in the future. Option agreements can be transacted on
organized exchanges or directly between parties.

Credit Risk Associated with Derivative Activities
Credit risk associated with derivatives is measured as the net replacement cost should the counterparties with contracts in a gain position to the
Corporation completely fail to perform under the terms of those contracts and any collateral underlying the contracts proves to be of no value. In
managing derivative credit risk, both the current exposure, which is the replacement cost of contracts on the measurement date, as well as an estimate

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

of the potential change in value of contracts over their remaining lives are considered. In managing credit risk associated with its derivative activities,
the Corporation deals primarily with commercial banks, broker-dealers and corporations. To minimize credit risk, the Corporation enters into legally
enforceable master netting arrangements, which reduce risk by permitting the closeout and netting of transactions with the same counterparty upon
occurrence of certain events. In addition, the Corporation reduces credit risk by obtaining collateral where appropriate. Required collateral levels vary
depending on the credit risk rating and the type of counterparty. Generally, the Corporation accepts collateral in the form of cash, U.S. Treasury securities,
and other marketable securities. Collateral of $10.8 billion was held on derivative assets of $22.1 billion at December 31, 2001.

The Corporation also provides credit derivatives to sophisticated customers who wish to hedge existing credit exposures or take on additional

credit exposure to generate revenue. The Corporation’s credit derivative positions at December 31, 2001 and 2000 primarily consisted of credit default
swaps and total return swaps.

A portion of the derivative activity involves exchange-traded instruments. Because exchange-traded instruments conform to standard terms and
are subject to policies set by the exchange involved, including counterparty approval, margin requirements and security deposit requirements, the credit
risk is considered minimal.

The following table presents the notional or contract and credit risk amounts at December 31, 2001 and 2000 of the Corporation’s derivative asset
positions held for trading and hedging purposes. These derivative positions are primarily executed in the over-the-counter market. The credit risk
amounts presented in the following table do not consider the value of any collateral held but take into consideration the effects of legally enforceable
master netting agreements.

Derivative Assets(1)

(Dollars in millions)

Interest rate contracts
Swaps
Futures and forwards
Written options
Purchased options
Foreign exchange contracts
Swaps
Spot, futures and forwards
Written options
Purchased options
Equity contracts
Swaps
Futures and forwards
Written options
Purchased options
Commodity contracts
Swaps
Futures and forwards
Written options
Purchased options
Credit derivatives

Net replacement cost

December 31, 2001

December 31, 2000(2)

Contract/
Notional

Credit
Risk

Contract/
Notional

Credit
Risk

$5,267,608
1,663,109
678,242
704,159

$ 9,550
67
–
2,165

$3,256,992
1,227,537
664,108
601,828

$ 3,236
57
–
145

140,778
654,026
57,963
55,050

14,504
46,970
21,009
28,902

6,600
2,176
8,231
8,219
57,182

2,274
2,496
–
496

562
44
–
2,511

1,152
–
–
199
631

61,035
682,665
35,161
32,639

17,482
61,004
30,976
36,304

9,126
2,098
12,603
10,515
40,638

1,424
3,215
–
380

637
353
–
3,670

1,902
81
–
228
206

$ 22,147

$15,534

(1) Includes both long and short derivative positions.
(2) The amounts at December 31, 2000 do not reflect derivative positions that were off-balance sheet prior to the adoption of SFAS 133.

The average fair value of derivative assets for 2001 and 2000 was $19.8 billion and $17.9 billion, respectively. The average fair value of derivative
liabilities for 2001 and 2000 was $17.4 billion and $19.8 billion, respectively.

Asset and Liability Management (ALM) Activities
Risk management 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 interest rate contracts to minimize significant unplanned fluctuations in
earnings that are caused by interest rate volatility. The Corporation’s goal is to manage interest rate sensitivity so that movements in interest rates do
not adversely affect net interest income. As a result of interest rate fluctuations, hedged fixed-rate assets and liabilities appreciate or depreciate in
market value. Gains or losses on the derivative instruments that are linked to the hedged fixed-rate assets and liabilities are expected to substantially
offset this unrealized appreciation or depreciation. Interest income and interest expense on hedged variable-rate assets and liabilities, respectively,
increases or decreases as a result of interest rate fluctuations. Gains and losses on the derivative instruments that are linked to these hedged assets
and liabilities are expected to substantially offset this variability in earnings.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Interest rate contracts, which are generally non-leveraged generic interest rate and basis swaps, options and futures, allow the Corporation to
effectively manage its interest rate risk position. Generic interest rate swaps involve the exchange of fixed-rate and variable-rate interest payments
based on the contractual underlying notional amount. Basis swaps involve the exchange of interest payments based on the contractual underlying
notional amounts, where both the pay rate and the receive rate are floating rates based on different indices. Option products primarily consist of caps,
floors, swaptions and options on index futures contracts. Futures contracts used for ALM activities are primarily index futures providing for cash
payments based upon the movements of an underlying rate index.

The Corporation uses foreign currency contracts to manage the foreign exchange risk associated with certain foreign-denominated assets and
liabilities, as well as the Corporation’s equity investments in foreign subsidiaries. Foreign exchange contracts, which include spot, futures and forward
contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon
settlement date. Foreign exchange option contracts are similar to interest rate option contracts except that they are based on currencies rather than
interest rates. Exposure to loss on these contracts will increase or decrease over their respective lives as currency exchange and interest rates fluctuate.

Fair Value Hedges
The Corporation uses various types of interest 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. In 2001, the Corporation recognized in the
Consolidated Statement of Income a net loss of $6 million, which represented the ineffective portion and excluded component in assessing hedge
effectiveness of fair value hedges.

Cash Flow Hedges
The Corporation also uses various types of interest rate and foreign currency exchange rate derivative contracts to protect against changes in cash
flows of its variable rate assets and liabilities and anticipated transactions. In 2001, the Corporation recognized in the Consolidated Statement of
Income a net gain of $0.2 million, which represented the ineffective portion and excluded component in assessing hedge effectiveness of cash flow
hedges. The Corporation has determined that there are no hedging positions where it is probable that certain forecasted transactions may not occur
within the originally designated time period.

For cash flow hedges, gains and losses on derivative contracts reclassified from accumulated other comprehensive income to current period

earnings are included in the line item in the Consolidated Statement of Income in which the hedged item is recorded and in the same period the
hedged item affects earnings. Deferred net gains on derivative instruments of approximately $272 million included in accumulated other compre-
hensive income at December 31, 2001 are expected to be reclassified into earnings during the next twelve months. These net gains reclassified into
earnings are expected to increase income or reduce expense on the hedged items. The maximum term over which the Corporation is hedging its
exposure to the variability of future cash flows for all forecasted transactions (excluding interest payments on variable-rate debt) is thirty years with
an associated notional amount of $60 million. The weighted-average term over which the Corporation is hedging its exposure to this variability in
cash flows is 4.63 years.

Hedges of Net Investments in Foreign Operations
The Corporation uses forward exchange contracts, currency swaps, and nonderivative hedging instruments to hedge its net investments in foreign
operations against adverse movements in foreign currency exchange rates. In 2001, net gains of $132 million related to these derivatives and non-
derivative hedging instruments were recorded as a component of the foreign currency translation adjustment in other comprehensive income. These
net gains were largely offset by losses in the Corporation’s net investments in foreign operations. In 2001, the Corporation recognized in the Consolidated
Statement of Income a net loss of $10 million, which represented the excluded component in assessing effectiveness of hedges of net investments in
foreign operations.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Note 6 Loans and Leases

Loans and leases at December 31, 2001 and 2000 were:

(Dollars in millions)

Commercial – domestic
Commercial – foreign
Commercial real estate – domestic
Commercial real estate – foreign

Total commercial

Residential mortgage
Home equity lines
Direct/Indirect consumer
Consumer finance
Bankcard
Foreign consumer

Total consumer

Total loans and leases

2001

2000

Amount

Percent

Amount

Percent

$ 118,205
23,039
22,271
383

163,898

78,203
22,107
37,638
5,331
19,884
2,092

165,255

$ 329,153

35.9% $ 146,040
31,066
26,154
282

7.0
6.8
.1

49.8

23.8
6.7
11.5
1.6
6.0
.6

50.2

203,542

84,394
21,598
40,457
25,800
14,094
2,308

188,651

37.2%
7.9
6.7
.1

51.9

21.5
5.5
10.3
6.6
3.6
.6

48.1

100.0% $ 392,193

100.0%

As part of the strategic decision to exit the subprime real estate lending business in the third quarter of 2001, the Corporation recorded a provision
for credit losses of $395 million which, combined with an existing allowance for credit losses of $240 million, was used to write the loan portfolio down
to estimated market value. As a result, charge-offs of $635 million were recorded in the subprime real estate loan portfolio. The entire subprime real
estate loan portfolio of approximately $21.4 billion, which was included in consumer finance loans, was transferred from the loans and leases portfolio
to loans held for sale included in other assets.

The following table presents the recorded investment in specific loans that were considered individually impaired in accordance with SFAS 114 at

December 31, 2001 and 2000:

(Dollars in millions)

Commercial – domestic
Commercial – foreign
Commercial real estate – domestic
Commercial real estate – foreign

Total impaired loans

2001

$ 3,138
501
240
–

$3,879

2000

$ 2,891
521
412
2

$3,826

The average recorded investment in certain impaired loans for the years ended December 31, 2001, 2000 and 1999 was approximately $3.7 billion,
$3.0 billion and $2.0 billion, respectively. At December 31, 2001 and 2000, the recorded investment in impaired loans requiring an allowance for
credit losses was $3.1 billion and $2.1 billion, and the related allowance for credit losses was $763 million and $640 million, respectively. For the
years ended December 31, 2001, 2000 and 1999, interest income recognized on impaired loans totaled $195 million, $174 million and $84 million,
respectively, all of which was recognized on a cash basis.

At December 31, 2001 and 2000, nonperforming loans, including certain loans which were considered impaired, totaled $4.5 billion and $5.2 billion,
respectively. Included in other assets was $1.0 billion and $124 million of loans held for sale which would have been classified as nonperforming had
they been included in loans at December 31, 2001 and 2000, respectively. The decrease in nonperforming loans was primarily due to the transfer of
approximately $1.2 billion of nonperforming subprime real estate loans to loans held for sale in 2001 as a result of the decision to exit the subprime
real estate lending business. The decrease was also due to sales of nonperforming commercial – domestic and residential mortgage loans in 2001.
The net amount of interest income recorded during each year on loans that were classified as nonperforming or restructured at December 31, 2001,
2000 and 1999 was $256 million, $237 million and $123 million, respectively. If these loans had been accruing interest at their originally contracted
rates, related income would have been $593 million, $666 million and $419 million in 2001, 2000 and 1999, respectively.

Foreclosed properties amounted to $402 million and $249 million at December 31, 2001 and 2000, respectively. The cost of carrying foreclosed

properties amounted to $15 million, $12 million, and $13 million in 2001, 2000 and 1999, respectively.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Note 7 Allowance for Credit Losses

The table below summarizes the changes in the allowance for credit losses on loans and leases for 2001, 2000 and 1999:

(Dollars in millions)

Balance, January 1
Loans and leases charged off(1)
Recoveries of loans and leases previously charged off

Net charge-offs

Provision for credit losses(2)
Other, net

Balance, December 31

(1) Includes $635 million related to the exit of the subprime real estate lending business in 2001.
(2) Includes $395 million related to the exit of the subprime real estate lending business in 2001.

Note 8 Securitizations

2001

$ 6,838

(4,844)
600

(4,244)

4,287
(6)

2000

$ 6,828

(2,995)
595

(2,400)

2,535
(125)

1999

$ 7,122

(2,582)
582

(2,000)

1,820
(114)

$ 6,875

$ 6,838

$ 6,828

The Corporation securitizes, sells and services interests in consumer finance, commercial and bankcard loans and residential mortgage loans. When
the Corporation securitizes assets, it may retain a portion or all of the securities, subordinated tranches, interest only strips and, in some cases, a cash
reserve account, all of which are considered retained interests in the securitized assets. See Note One for a more detailed discussion of securitizations.
In conjunction with or shortly after closing, the Corporation securitizes the majority of its mortgage loan originations. In 2001, the Corporation

converted a total of $52.9 billion of residential first mortgages into mortgage-backed securities issued through Fannie Mae, Freddie Mac, Ginnie Mae
and Bank of America Mortgage Securities. Of the total securities issued in 2001, the Corporation retained $4.6 billion at December 31, 2001 with an
additional $5.1 billion retained of securities issued prior to 2001 for a total of $9.7 billion. At December 31, 2000, the Corporation had retained
$7.8 billion in securities. These retained interests are valued using quoted market values. The Corporation reported $637 million in income on loans
converted into securities and sold, of which $449 million was from loans originated by the Corporation and $188 million was from loans originated
by other entities on behalf of the Corporation. In addition to the retained interests in the securities, the Corporation has retained the servicing asset
and Excess Spread Certificates from securitized mortgage loans (see the Mortgage Banking Assets section of Note One) and has limited recourse
obligations on $1.8 billion of the securities issued in 2001. Of this amount, $1.5 billion has recourse limited to one year, and $318 million has recourse
of five to seven years. Mortgage servicing fee income on all loans serviced, including securitizations, was $1.1 billion in 2001.

Excess Spread Certificates of $3.9 billion at December 31, 2001 are classified as mortgage banking assets and marked to market with the unreal-
ized gains or losses recorded in trading account profits. At December 31, 2001, key economic assumptions and the sensitivities of the fair value of the
Excess Spread Certificates to immediate changes in those assumptions were analyzed. The sensitivity analysis included the impact on fair value of
modeled prepayment and interest rate changes under favorable and adverse conditions. A decrease of 10 percent and 20 percent in modeled prepay-
ments would result in an increase in value ranging from $189 million to $397 million, and an increase in modeled prepayments of 10 percent and 20
percent would result in a decrease in value ranging from $174 million to $333 million. An increase of 100 and 200 basis points in interest rates would
result in an increase in value ranging from $167 million to $348 million, and a decrease in interest rates of 100 and 200 basis points would result in a
decrease in value ranging from $154 million to $297 million. See Note One for additional disclosures related to the Excess Spread Certificates.

In December 2001, the Corporation securitized $17.5 billion of sub-prime real estate loans in two bond-insured transactions. At December 31,

2001, the Corporation retained both the AAA-rated securities in the available-for-sale portfolio and $178 million of residual interests created in these
securitizations. The Corporation sold the servicing rights on these loans.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Key economic assumptions used in measuring the fair value of certain residual interests (included in other assets) in securitizations and the

sensitivity of the current fair value of residual cash flows to changes in those assumptions are as follows:

(Dollars in millions)

Carrying amount of residual interests (at fair value)
Balance of unamortized securitized loans(3)
Weighted-average remaining life (in years)
Revolving structures – annual payment rate
Amortizing structures – annual constant prepayment rate:

Fixed rate loans
Adjustable rate loans

Impact on fair value of 100 bps favorable change
Impact on fair value of 200 bps favorable change
Impact on fair value of 100 bps adverse change
Impact on fair value of 200 bps adverse change

Expected credit losses(4)

Impact on fair value of 10% favorable change
Impact on fair value of 25% favorable change
Impact on fair value of 10% adverse change
Impact on fair value of 25% adverse change
Residual cash flows discount rate (annual rate)
Impact on fair value of 100 bps favorable change
Impact on fair value of 200 bps favorable change
Impact on fair value of 100 bps adverse change
Impact on fair value of 200 bps adverse change

Commercial – Domestic(1)

Bankcard

Consumer Finance(2)

2001

2000

2001

2000

$ 77.9
1,954
0.22
30.0%

$ 113.4
2,198
1.74
25.0%

$ 146.1
7,302
1.88
14.4%

$ 183.8
8,736
2.27
14.8%

2001

468.6
5,347
3.25

2000

717.6
7,167
3.29

–
0.1
–
(0.1)
1.5%
7.0
7.9
(7.0)
(7.9)
6.0%
0.2
0.4
(0.2)
(0.4)

0.1
0.2
(0.1)
(0.2)
0.5%
0.4
0.9
(0.4)
(0.9)
7.5%
0.4
0.7
(0.4)
(0.7)

4.4
8.8
(3.3)
(6.7)
7.8%
15.0
37.3
(15.0)
(37.3)
6.0%
0.3
0.6
(0.3)
(0.6)

8.1-24.5%
27.0%
15.2
33.0
(11.3)
(17.8)
1.2-10.0%
41.5
119.7
(34.7)
(76.9)

8.7-25.0%
32.0%
9.9
21.4
(8.1)
(14.5)
1.1-10.6%
23.6
59.4
(23.1)
(56.9)

5.6
11.8
(4.7)
(9.3)
6.1%

13.8
34.5
(13.8)
(34.5)

7.5% 15.0-30.0% 13.9-16.0%
0.4
0.7
(0.4)
(0.7)

16.1
33.0
(15.0)
(29.2)

13.9
28.7
(13.0)
(25.3)

(1) Commercial – domestic includes the Corporation’s 1997 securitization of commercial loans.
(2) Consumer finance includes subprime real estate loan and manufactured housing loan securitizations.
(3) Balances represent securitized loans that were off-balance sheet at December 31, 2001 and 2000.
(4) Annual rates of expected credit losses are presented for commercial – domestic and bankcard securitizations. Cumulative lifetime rates of expected credit

losses (incurred plus projected) are presented for the consumer finance loans.

The sensitivities in the preceding table and related to the Excess Spread Certificates are hypothetical and should be used with caution. As the
amounts indicate, changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change
in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained
interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify
or counteract the sensitivities. Additionally, the Corporation has the ability to hedge interest rate risk associated with retained residual positions. The
above sensitivities do not reflect any hedge strategies that may be undertaken to mitigate such risk.

Static pool net credit losses are considered in determining the value of retained interests. Static pool net credit losses include actual incurred
plus projected credit losses divided by the original balance of each securitization pool. No consumer finance securitizations were transacted in 2000.
Expected static pool net credit losses at December 31, 2001 and 2000 were:

December 31, 2001
December 31, 2000

Year of Consumer Finance Loan Securitization

2 0 0 1

6.86%

1999

4.93%
4.12

1998

5.06%
4.47

1997

3.68%
3.78

1996

3.27%
3.34

1995

4.15%
3.75

1994

1.60%
1.96

1993

1.18%

For revolving securitizations, the table below summarizes certain cash flows received from securitization trusts in 2001 and 2000:

(Dollars in millions)

Proceeds from collections reinvested in revolving securitizations
Other cash flows received on retained interests(1)

Commercial – Domestic

Bankcard

2001

2000

2001

2000

$15,789
18

$19,732
53

$19,418
605

$21,247
767

(1) Other cash flows represents amounts received on retained interests by the transferor other than servicing fees (e.g., cash flows from interest-only strips).

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

The Corporation reviews its loan and lease portfolio on a managed basis. Managed loans and leases include on-balance sheet loans and leases as
well as securitized loans originated by the Corporation for which the possibility exists that the loans will return to the Corporation at the end of the secu-
ritization. Portfolio balances, delinquency and historical loss amounts for the managed loan and lease portfolio for 2001 and 2000 were as follows:

(Dollars in millions)

Commercial – domestic
Commercial – foreign
Commercial real estate – domestic
Commercial real estate – foreign

Total commercial

Residential mortgage
Home equity lines
Direct/Indirect consumer
Consumer finance
Bankcard
Foreign consumer

Total consumer

Total managed loans and leases

Securitized loans

Total held loans and leases

(Dollars in millions)

Commercial – domestic
Commercial – foreign
Commercial real estate – domestic
Commercial real estate – foreign

Total commercial

Residential mortgage
Home equity lines
Direct/Indirect consumer
Consumer finance
Bankcard
Foreign consumer

Total consumer

Total managed loans and leases

Securitized loans

Total held loans and leases

December 31, 2001

December 31, 2000 (1)

Total Principal
Amount of
Loans and
Leases

Principal
Amount of Loans
Past Due

90 Days or More(2)

Principal
Amount of
Nonperforming
Loans

Total Principal
Amount of
Loans and
Leases

Principal
Amount of Loans
Past Due

90 Days or More(2)

Principal
Amount of
Nonperforming
Loans

$ 120,159
23,039
22,271
384

165,853

80,071
22,107
38,037
5,331
27,185
2,092

174,823

340,676

11,523

$ 329,153

175
6
40
–

221

14
–
92
24
475
–

605

3,123
461
240
3

3,827

564
80
27
9
–
7

687

$ 826

4,514

$145,990
30,285
26,154
282

202,711

72,393
21,598
39,714
5,898
22,830
2,308

164,741

$367,452

141
37
16
–

194

17
–
85
5
358
–

465

2,777
486
236
2

3,501

557
33
19
2
–
9

620

$ 659

4,121

Year Ended December 31, 2001

Year Ended December 31, 2000 (1)

Loans and
Leases Net
Losses

$ 1,949
208
39
–

2,196

26
19
409
1,066
1,174
5

2,699

$4,895

Average
Loans and
Leases
Outstanding

$147,947
28,880
25,381
304

202,512

79,440
19,492
39,743
16,219
20,222
2,223

177,339

$379,851

Net Loss

Ratio(3)

1.44%
0.79
0.16
n/m

1.17

0.03
0.09
1.02
5.75
4.76
0.23

1.41

1.29%

Loans and
Leases Net
Losses

$ 1,287
86
13
(2)

1,384

27
20
376
266
944
3

1,636

$3,020

Net Loss

Ratio(3)

0.87%
0.30
0.06
n/m

0.68

0.03
0.10
0.95
1.64
4.66
0.13

0.92

0.80%

Average
Loans and
Leases
Outstanding

$ 135,750
26,492
24,607
348

187,197

84,005
22,013
40,051
18,555
24,637
2,222

191,483

378,680

13,233

$ 365,447

n/m = not meaningful

(1) Prior periods are restated for comparison (e.g., acquisitions, divestitures, sales, securitizations and the transfer of the subprime real estate loan portfolio to

loans held for sale in the third quarter of 2001).

(2) Excluding residential mortgages, loans are performing and still accruing interest.
(3) The net loss ratio is calculated by dividing managed loans and leases net losses by average managed loans and leases outstanding for each loans and leases category.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Note 9 Deposits

At December 31, 2001, the Corporation had domestic certificates of deposit of $100 thousand or greater totaling $27.1 billion compared to $33.3 billion
at December 31, 2000. At December 31, 2001, the Corporation had $14.6 billion of domestic certificates of deposit of $100 thousand or greater maturing
within three months, $5.0 billion maturing within three to six months, $3.7 billion maturing within six to twelve months and $3.8 billion maturing
after twelve months. The Corporation had other domestic time deposits of $100 thousand or greater totaling $904 million and $866 million at
December 31, 2001 and 2000, respectively. At December 31, 2001, the Corporation had $117 million of other domestic time deposits of $100 thousand
or greater maturing within three months, $135 million maturing within three to six months, $125 million maturing within six to twelve months and
$527 million maturing after twelve months. Foreign office certificates of deposit and other time deposits of $100 thousand or greater totaled $28.0 bil-
lion and $39.4 billion at December 31, 2001 and 2000, respectively.

At December 31, 2001, the scheduled maturities for time deposits were as follows:

(Dollars in millions)

Due in 2002
Due in 2003
Due in 2004
Due in 2005
Due in 2006
Thereafter

Total

$ 101,679
5,634
1,639
2,214
1,089
585

$ 112,840

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Note 10 Short-Term Borrowings and Long-Term Debt

The contractual maturities of long-term debt at December 31, 2001 and 2000 were:

(Dollars in millions)

Parent company
Senior debt:

Due in 2001
Due in 2002
Due in 2003
Due in 2004
Due in 2005
Due in 2006
Thereafter

Subordinated debt:

Due in 2001
Due in 2002
Due in 2003
Due in 2004
Due in 2005
Due in 2006
Thereafter

Total parent company long-term debt

Bank and other subsidiaries
Senior debt:

Due in 2001
Due in 2002
Due in 2003
Due in 2004
Due in 2005
Due in 2006
Thereafter

Subordinated debt:

Due in 2001
Due in 2002
Due in 2003
Due in 2004
Due in 2005
Due in 2006
Thereafter

2001

2000

Various
Fixed-Rate Debt

Various
Floating-Rate Debt

Obligations(1)

Amount
Outstanding

–
133
499
–
150
176
71

1,029

–
2,199
1,711
650
1,085
800
3,481

9,926

10,955

–
393
520
12
10
–
99

–
3,185
2,380
6,505
2,942
3,713
3,801

22,526

–
26
323
–
35
820
9,591

10,795

33,321

–
5,656
1,763
4,018
1,650
3,494
167

–
3,318
2,879
6,505
3,092
3,889
3,872

23,555

–
2,225
2,034
650
1,120
1,620
13,072

20,721

44,276

–
6,049
2,283
4,030
1,660
3,494
266

$ 4,101
3,288
2,791
3,853
3,072
1,406
3,453

21,964

1,342
2,225
2,034
650
1,145
1,626
8,060

17,082

39,046

13,610
6,017
2,283
4,028
1,660
–
262

1,034

16,748

17,782

27,860

–
–
100
300
–
–
–

400

–
–
–
–
–
–
8

–
–
100
300
–
–
8

408

18,190

62,466

–
30

200
–
100
300
–
–
8

608

28,468

67,514

2
31

$62,496

$67,547

Total bank and other subsidiaries long-term debt

Total parent company, bank and other subsidiaries long-term debt

1,434

$12,389

16,756

$50,077

Notes payable to finance the purchase of leased vehicles
Obligations under capital leases

Total long-term debt

(1) Fixed-rate and floating-rate classifications of long-term debt include the effect of interest rate swap contracts.

The majority of the floating rates are based on three- and six-month London InterBank Offered Rates (LIBOR). At December 31, 2001, the interest rates
on floating-rate long-term debt ranged from 1.91 percent to 3.55 percent compared to 4.84 percent to 8.64 percent at December 31, 2000. These
obligations were denominated primarily in U.S. dollars. The interest rates on fixed-rate long-term debt ranged from 2.13 percent to 10.88 percent
and 5.16 percent to 12.50 percent at December 31, 2001 and 2000, respectively.

Bank of America Corporation had the authority to issue approximately $11.0 billion and $13.8 billion of additional corporate debt and other secu-

rities under its existing shelf registration statements at December 31, 2001 and 2000, respectively.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

Bank of America Corporation has a 300 billion yen-denominated (approximately U.S. $3 billion) shelf registration in Japan to be used exclusively

for primary offerings to non-United States residents. In addition, Bank of America Corporation allocated $2 billion of a joint Euro medium-term note
program to be used exclusively for secondary offerings to non-United States residents for a shelf registration statement filed in Japan. The Corporation
had $420 million outstanding under these programs at December 31, 2001. At December 31, 2000, the Corporation had no notes outstanding under
these programs.

Bank of America, N.A. maintains a domestic program to offer up to a maximum of $50.0 billion, at any one time, of bank notes with fixed or
floating rates and maturities ranging from seven days or more from date of issue. Short-term bank notes outstanding under this program totaled
$2.5 billion at December 31, 2001 compared to $14.5 billion at December 31, 2000. These short-term bank notes, along with Treasury tax and loan
notes and term federal funds purchased, are reflected in other short-term borrowings in the Consolidated Balance Sheet. Long-term debt under current
and former programs totaled $4.5 billion at December 31, 2001 compared to $17.6 billion at December 31, 2000. During 2001, Bank of America N.A.
issued $1.2 billion in senior long-term bank notes maturing in 2002 through 2007. Of the $1.2 billion issued, $377 million bears interest at fixed rates
ranging from 4.00 percent to 4.88 percent. The remaining $812 million bears interest at floating rates ranging from 8 basis points below three-month
LIBOR to 20 basis points over three-month LIBOR.

Bank of America Corporation and Bank of America, N.A. maintain a joint Euro medium-term note program to offer up to $25.0 billion of senior, or
in the case of Bank of America Corporation, subordinated notes exclusively to non-United States residents. The notes bear interest at fixed or floating
rates and may be denominated in U.S. dollars or foreign currencies. Bank of America Corporation uses foreign currency contracts to convert certain
foreign-denominated debt into U.S. dollars. Bank of America Corporation’s notes outstanding under this program totaled $6.3 billion at December 31,
2001 compared to $5.2 billion at December 31, 2000. Bank of America, N.A.’s notes outstanding under this program totaled $1.4 billion at December 31,
2001 and December 31, 2000. Of the $25.0 billion authorized at December 31, 2001, Bank of America Corporation and Bank of America, N.A. had
remaining authority to issue approximately $8.7 billion and $8.6 billion, respectively. At December 31, 2001 and 2000, $2.0 billion and $2.7 billion,
respectively, were outstanding under the former BankAmerica Corporation (BankAmerica) Euro medium-term note program. No additional debt securities
will be offered under that program.

At December 31, 2001, Bank of America Oregon, N.A. maintained approximately $6.0 billion in Federal Home Loan Bank borrowings from the
Home Loan Bank in Seattle, Washington. During 2001, Bank of America Oregon, N.A. accepted $463 million in Federal Home Loan Bank, Seattle
advances with maturities ranging from 2004 to 2031. Of the $463 million accepted, $450 million was converted from fixed rates ranging from 5.72 per-
cent to 5.89 percent to floating rates through interest rate swaps at a spread of 11 basis points below three-month LIBOR. The remaining $13 million
bears interest at fixed rates ranging from 5.44 percent to 6.44 percent.

During 2001, Bank of America Georgia, N.A. accepted $2.3 billion in advances from the Federal Home Loan Bank in Atlanta, Georgia. All of the

$2.3 billion matures in 2006 and bears interest at spreads to three-month LIBOR.

The Corporation had $1.5 billion of mortgage-backed bonds outstanding at December 31, 2001 and 2000. These bonds were collateralized by

$3.0 billion and $4.5 billion of mortgage loans and cash at December 31, 2001 and 2000, respectively.

As part of its interest rate risk management activities, the Corporation enters into interest rate contracts for certain long-term debt issuances.
At December 31, 2001 and 2000, through the use of interest rate swaps, $22.1 billion and $16.7 billion of fixed-rate debt, with rates ranging primarily
from 4.75 percent to 8.57 percent, had been effectively converted to floating rates primarily at spreads to LIBOR.

Including the effects of interest rate contracts for certain long-term debt issuances, the weighted average effective interest rates for total long-term
debt, total fixed-rate debt and total floating-rate debt (based on the rates in effect at December 31, 2001) were 3.44 percent, 7.26 percent and 2.40
percent, respectively, at December 31, 2001 and (based on the rates in effect at December 31, 2000) were 7.00 percent, 7.51 percent, and 6.84 percent,
respectively, at December 31, 2000. These obligations were denominated primarily in U.S. dollars.

As described below, certain debt obligations outstanding at December 31, 2001 may be redeemed prior to maturity at the option of Bank of

America Corporation:

(Dollars in millions)

Year Redeemable

Currently redeemable
2002
2003-2004
2005-2008

Year of Maturities

Amount Outstanding

2002-2028
2009-2023
2005-2018
2007-2028

$1,638
530
2,006
1,232

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

100

Note 11 Trust Preferred Securities

Trust preferred securities are Corporation obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely Junior Subordinated
Deferrable Interest Notes of the Corporation (the Notes).

Since October 1996, the Corporation has formed fourteen wholly-owned grantor trusts to issue trust preferred securities to the public. The grantor
trusts have invested the proceeds of such trust preferred securities in junior subordinated notes of the Corporation. Certain of the trust preferred securities
were issued at a discount. Such trust preferred securities may be redeemed prior to maturity at the option of the Corporation. The sole assets of each
of the grantor trusts are the Notes held by such grantor trusts. Each issue of the Notes has an interest rate equal to the corresponding trust preferred
securities distribution rate. The Corporation has the right to defer payment of interest on the Notes at any time or from time to time for a period not
exceeding five years provided that no extension period may extend beyond the stated maturity of the relevant Notes. During any such extension period,
distributions on the trust preferred securities will also be deferred and the Corporation’s ability to pay dividends on its common and preferred stock will
be restricted.

The trust preferred securities are subject to mandatory redemption upon repayment of the related Notes at their stated maturity dates or their
earlier redemption at a redemption price equal to their liquidation amount plus accrued distributions to the date fixed for redemption and the premium,
if any, paid by the Corporation upon concurrent repayment of the related Notes.

Periodic cash payments and payments upon liquidation or redemption with respect to trust preferred securities are guaranteed by the Corporation
to the extent of funds held by the grantor trusts (the Preferred Securities Guarantee). The Preferred Securities Guarantee, when taken together with the
Corporation’s other obligations, including its obligations under the Notes, will constitute a full and unconditional guarantee, on a subordinated basis, by
the Corporation of payments due on the trust preferred securities.

The Corporation is required by the Federal Reserve Board to maintain certain levels of capital for bank regulatory purposes. The Federal Reserve
Board has determined that certain cumulative preferred securities having the characteristics of trust preferred securities qualify as minority interest,
which is included in Tier 1 capital for bank and financial holding companies. Such Tier 1 capital treatment provides the Corporation with a more
cost-effective means of obtaining capital for bank regulatory purposes than if the Corporation were to issue preferred stock.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

101

The following table is a summary of the outstanding trust preferred securities and the Notes at December 31, 2001 and 2000:

Aggregate
Principal
Amount of
Trust Preferred
Securities
December 31,
2001

Aggregate
Principal
Amount of
Trust Preferred
Securities
December 31,
2000

Issuance
Date

Aggregate
Principal
Amount of
the Notes

Stated
Maturity of
the Notes

Per Annum
Interest
Rate of
the Notes

Interest
Payment
Dates

Redemption
Period

December 1996

$ 600

$ 619

December 2026

(Dollars in millions)

NationsBank

Capital Trust I

Capital Trust II

December 1996

Capital Trust III

February 1997

Capital Trust IV

April 1997

BankAmerica
Institutional Capital A

November 1996

Institutional Capital B

November 1996

Capital I

Capital II

Capital III

Capital IV

Barnett
Capital I

Capital II

Capital III

December 1996

January 1997

February 1998

November 1996

December 1996

January 1997

Bank of America
Capital I

December 2001

365

494

498

450

299

300

450

399

350

300

200

250

575

365

494

498

450

299

300

450

399

350

300

200

250

376

December 2026

7.84% 3/31,6/30,
9/30,12/31
6/15,12/15

7.83

516

January 2027

April 2027

3-mo. LIBOR
+55 bps
8.25

1/15,4/15,
7/15,10/15
4/15,10/15

On or after

12/31/01(1)

On or after

12/15/06(2,4)

On or after

1/15/07(2)

On or after

4/15/07(2,6)

464

December 2026

8.07

6/30,12/31

On or after

12/31/06(3,7)

309

December 2026

7.70

6/30,12/31

On or after

309

December 2026(9)

464

December 2026

7.75

8.00

3/31,6/30,
9/30,12/31
6/15,12/15

412

361

January 2027

March 2028

3-mo. LIBOR
+57 bps
7.00

1/15,4/15,
7/15,10/15
3/31,6/30,
9/30,12/31

12/31/06(3,8)

On or after

12/20/01(5)

On or after

12/15/06(3,10)

On or after

1/15/02(3)

On or after

2/24/03(3)

309

December 2026

206

December 2026

258

February 2027

8.06

7.95

6/1,12/1

On or after

12/1/06(2,11)

6/1,12/1

On or after

12/1/06(2,12)

3-mo. LIBOR
+62.5 bps

2/1,5/1,
8/1,11/1

On or after

2/1/07(2)

–

593

December 2031

7.00

3/15,6/15,
9/15,12/15

On or after

12/15/06(13)

Total

$5,530

$4,955

$5,712

(1) The Corporation has announced the redemption of these notes on March 15, 2002, with a redemption price of $25 per security plus accrued and unpaid distributions, if any, up to but excluding

the redemption date of March 15, 2002.

(2) The Corporation may redeem the Notes prior to the indicated redemption period upon the occurrence of certain events relating to tax treatment of the related trust or the Notes or relating to

capital treatment of the trust preferred securities or relating to a change in the treatment of the related trust under the Investment Company Act of 1940, as amended, at a redemption price at
least equal to the principal amount of the Notes.

(3) The Corporation may redeem the Notes prior to the indicated redemption period upon the occurrence of certain events relating to tax treatment of the related trust or the Notes or relating to

capital treatment of the trust preferred securities at a redemption price at least equal to the principal amount of the Notes.

(4) The Notes may be redeemed on or after December 15, 2006 and prior to December 15, 2007 at 103.915% of the principal amount, and thereafter at prices declining to 100% on December 15,

2016 and thereafter.

(5) The Corporation has announced the redemption of these notes on March 15, 2002, with a redemption price of $25 per security plus accrued and unpaid distributions, if any, up to but excluding

the redemption date of March 15, 2002.

(6) The Notes may be redeemed on or after April 15, 2007 and prior to April 14, 2008 at 103.85% of the principal amount, and thereafter at prices declining to 100% on April 15, 2017 and thereafter.
(7) The Notes may be redeemed on or after December 31, 2006 and prior to December 31, 2007 at 104.035% of the principal amount, and thereafter at prices declining to 100% on December 31,

2016 and thereafter.

(8) The Notes may be redeemed on or after December 31, 2006 and prior to December 31, 2007 at 103.779% of the principal amount, and thereafter at prices declining to 100% on December 31,

2016 and thereafter.

(9) At the option of the Corporation, the stated maturity may be shortened to a date not earlier than December 20, 2001 or extended to a date not later than December 31, 2045, in each case if

certain conditions are met.

(10)The Notes may be redeemed on or after December 15, 2006 and prior to December 15, 2007 at 103.969% of the principal amount, and thereafter at prices declining to 100% on December 15,

2016 and thereafter.

(11)The Notes may be redeemed on or after December 1, 2006 and prior to December 1, 2007 at 104.030% of the principal amount, and thereafter at prices declining to 100% on December 1, 2016

and thereafter.

(12)The Notes may be redeemed on or after December 1, 2006 and prior to December 1, 2007 at 103.975% of the principal amount, and thereafter at prices declining to 100% on December 1, 2016

and thereafter.

(13)The Corporation may redeem the Notes prior 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.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

102

Note 12 Commitments and Contingencies

In the normal course of business, the Corporation enters into a number of off-balance sheet commitments. These commitments expose the Corporation
to varying degrees of credit and market risk and are subject to the same credit and risk limitation reviews as those recorded on the balance sheet.

Credit Extension Commitments
The Corporation enters into commitments to extend credit, standby letters of credit (SBLC) and commercial letters of credit to meet the financing needs
of its customers. The unfunded commitments shown below have been reduced by amounts collateralized by cash and amounts participated to other
financial institutions of $2.7 billion and $2.8 billion at December 31, 2001 and 2000, respectively. The following table summarizes outstanding unfunded
commitments to extend credit at December 31, 2001 and 2000:

(Dollars in millions)

Credit card commitments
Other loan commitments
Standby letters of credit and financial guarantees
Commercial letters of credit

Total

2001

$ 73,644
221,529
40,374
3,957

$339,504

2000

$ 72,058
243,124
33,420
3,327

$351,929

Commitments to extend credit are legally binding, generally have specified rates and maturities and are for specified purposes. The Corporation
manages the credit risk on these commitments by subjecting these commitments to normal credit approval and monitoring processes. Certain
commitments have adverse change clauses which help to protect the Corporation against deterioration in the borrowers’ ability to pay. Other loan
commitments include equity commitments of approximately $2.7 billion which primarily relate to obligations to fund existing venture capital equity
investments. At December 31, 2001 and 2000, there were no unfunded commitments to any industry or foreign country greater than 10 percent of total
unfunded commitments to lend. Credit card lines are unsecured commitments, which are reviewed at least annually by management. Upon evalua-
tion of the customers’ creditworthiness, the Corporation has the right to terminate or change the terms of the credit card lines.

SBLC and financial guarantees are issued to support the debt obligations of customers. If an SBLC or financial guarantee is drawn upon, the
Corporation looks to its customer for payment. SBLCs and financial guarantees are subject to the same approval and collateral policies as other
extensions of credit.

Commercial letters of credit, issued primarily to facilitate customer trade finance activities, are collateralized by the underlying goods being

shipped by the customer and are generally short-term.

The following table summarizes the contractual maturity distribution of unfunded commitments at December 31, 2001:

(Dollars in millions)

Credit card commitments
Other loan commitments
Standby letters of credit and financial guarantees
Commercial letters of credit

Total

Expire in
1 Year
or Less

$ 73,644
97,570
28,268
3,243

$202,725

Expires After
1 Year Through
3 Years

Expires After
3 Years Through
5 Years

–
50,891
8,790
518

$60,199

–
37,359
829
49

$38,237

Expires After
5 Years

–
35,709
2,487
147

$38,343

Total

$ 73,644
221,529
40,374
3,957

$339,504

For each of these types of instruments, the Corporation’s maximum exposure to credit loss is represented by the contractual amount of these instru-
ments. Many of the commitments are collateralized and most are expected to expire without being drawn upon; therefore, the total commitment
amounts do not necessarily represent risk of loss or future cash requirements.

The Corporation has entered into operating leases for certain of its premises and equipment. Commitments under these leases approximate

$1 billion per year for each of the years 2002 through 2006 and $2.5 billion for all years thereafter.

When-Issued Securities
When-issued securities are commitments to purchase or sell securities during the time period between the announcement of a securities offering
and the issuance of those securities. Changes in market price between commitment date and issuance are reflected in trading account profits. At
December 31, 2001, the Corporation had commitments to purchase and sell when-issued securities of $45.0 billion and $39.6 billion, respectively. At
December 31, 2000, the Corporation had commitments to purchase and sell when-issued securities of $26.4 billion and $20.6 billion, respectively.

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 and proceedings, including actions brought on behalf of various classes of claimants. In certain of these actions and proceedings, claims
for substantial monetary damages are asserted against the Corporation and its subsidiaries and certain of these actions and proceedings are based on

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

103

alleged violations of consumer protection, securities, environmental, banking and other laws.

In view of the inherent difficulty of predicting the outcome of such matters, the Corporation cannot state what the eventual outcome of pending
matters will be; however, based on current knowledge, Management does not believe that liabilities arising from pending litigation, if any, will have a
material adverse effect on the consolidated financial position, operations or liquidity of the Corporation.

The Corporation and certain present and former officers and directors have been named as defendants in a number of actions filed in several
federal courts that have been consolidated for pretrial purposes before a Missouri federal court. The amended complaint in the consolidated actions
alleges, among other things, that the defendants failed to disclose material facts about BankAmerica’s losses relating to D.E. Shaw Securities Group,
L.P. (“D.E. Shaw”) and related entities until mid-October 1998, in violation of various provisions of federal and state laws. The amended complaint
also alleges that the proxy statement-prospectus of August 4, 1998 (the “Proxy Statement”), falsely stated that the merger between NationsBank
Corporation (NationsBank) and BankAmerica would be one of equals and alleges a scheme to have NationsBank gain control over the newly merged
entity. The Missouri federal court has certified classes (the “Classes”) consisting generally of persons who were stockholders of NationsBank or
BankAmerica on September 30, 1998, or were entitled to vote on the merger, or who purchased or acquired securities of the Corporation or its
predecessors between August 4, 1998 and October 13, 1998. The amended complaint substantially survived a motion to dismiss. Discovery has been
completed. A former NationsBank stockholder who opted out of the NationsBank shareholder Class has commenced an action in the Missouri federal
court (the “Opt-Out Action”) asserting claims substantially similar to the claims related to D.E. Shaw set forth in the consolidated action. Similar
class actions have been filed in California state courts. Plaintiffs in one such class action, brought on behalf of California residents who owned
BankAmerica stock, claim that the Proxy Statement falsely stated that the merger would be one of equals. Plaintiffs in that matter have recently been
included in the federal action as part of the BankAmerica shareholder Class and will not be proceeding in California state court. Other California state
court class actions (the “Other Actions”) were consolidated, but have not been certified as class actions. The Missouri federal court enjoined prosecution
of those consolidated cases as a class action. The plaintiffs who were enjoined appealed to the United States Court of Appeals for the Eighth Circuit,
which upheld the district court’s injunction. Those plaintiffs have sought review in the United States Supreme Court.

Subsequent to December 31, 2001, the Corporation announced that it had reached an agreement in principle to settle the Class actions. The pro-
posed settlement provides for payment of $333 million to the NationsBank Classes and $157 million to the BankAmerica Classes. The proposed settle-
ment is subject to a number of conditions, including judicial approval. The Corporation agreed to the proposed settlement without admitting liability.
The proposed settlement will be paid from existing litigation reserves and insurance and will not have an impact on the Corporation's financial results.
On July 30, 2001, the Securities and Exchange Commission issued a cease-and-desist order finding violations of Section 13(a) of the Securities
Exchange Act of 1934 and Rules 13a-1, 13a-11, 13a-13 and 12b-20 promulgated thereunder, with respect to BankAmerica’s accounting for, and the
disclosures relating to, the D.E. Shaw relationship. The Corporation consented to the order without admitting or denying the findings. In the Matter
of BankAmerica Corp., Exch. Act Rel. No. 44613, Acctg & Audit. Enf. Rel. No. 1249, Admin. Proc. No. 3-10541.

Terrorist Attacks of September 11, 2001
The Corporation incurred certain costs and losses associated with the terrorist attacks of September 11, 2001, such as property losses and costs to
re-establish business operations. Management believes that these costs and losses will not be material to the Corporation’s financial position or results
of operations.

Note 13 Shareholders’ Equity and Earnings Per Common Share

On December 11, 2001, the Corporation’s Board of Directors (the Board) authorized a new stock repurchase program of up to 130 million shares of the
Corporation’s common stock at an aggregate cost of up to $10.0 billion. No shares had been repurchased under the 2001 program at December 31, 2001.
On July 26, 2000, the Board authorized a stock repurchase program of up to 100 million shares of the Corporation’s common stock at an aggregate
cost of up to $7.5 billion. At December 31, 2001, the remaining buyback authority for common stock under the 2000 program totaled $2.1 billion, or
two million shares. On June 23, 1999, the Board authorized the repurchase of up to 130 million shares of the Corporation’s common stock at an aggregate
cost of up to $10.0 billion. The 1999 stock repurchase plan was completed in 2000. During 2001, the Corporation repurchased approximately 82 million
shares of its common stock in open market repurchases at an average per-share price of $57.58, which reduced shareholders’ equity by $4.7 billion.
During 2000, the Corporation repurchased approximately 68 million shares of its common stock in open market repurchases at an average per-share
price of $48.17, which reduced shareholders’ equity by $3.3 billion. Management anticipates it will continue to repurchase shares at least equal to shares
issued under its various stock option plans.

Other shareholders’ equity at December 31, 2001 consisted of premiums written on put options of $14 million and restricted stock award plan

deferred compensation of $52 million. At December 31, 2000, other shareholders’ equity consisted of premiums written on put options of $20 million,
restricted stock award plan deferred compensation of $114 million and a loan to the employee stock ownership plan (ESOP) trust of $32 million.

In September 1999, the Corporation began selling put options on its common stock to independent third parties. The put option program was

designed to partially offset the cost of share repurchases. The put options give the holders the right to sell shares of the Corporation’s common stock
to the Corporation on certain dates at specified prices. The put option contracts allow the Corporation to determine the method of settlement, and

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

104

the premiums received are reflected as a component of other shareholders’ equity. At December 31, 2001, there were two million put options out-
standing with exercise prices ranging from $61.82 per share to $61.84 per share, all of which expire in September 2002. At December 31, 2000,
there were three million put options outstanding with exercise prices ranging from $45.22 per share to $50.37 per share, which expired from January
2001 to April 2001.

As of December 31, 2001, the Corporation had 1.5 million shares issued and outstanding of ESOP Convertible Preferred Stock, Series C (ESOP
Preferred Stock). The ESOP Preferred Stock has a stated and liquidation value of $42.50 per share, provides for an annual cumulative dividend of
$3.30 per share and each share is convertible into 1.68 shares of the Corporation’s common stock. ESOP Preferred Stock in the amounts of $7 million,
$5 million and $6 million was converted into the Corporation’s common stock in 2001, 2000 and 1999, respectively.

In November 1989, Barnett incorporated ESOP provisions into its existing 401(k) employee benefit plan (Barnett ESOP). The Barnett ESOP acquired
$141 million of common stock using the proceeds of a loan from the Corporation. This loan was repaid in 2000. The terms of the loan included equal
monthly payments of principal and interest through September 2015. Interest was at 9.75 percent and prepayments of principal were allowed. The
loan was generally repaid from contributions to the plan by the Corporation and dividends on unallocated shares held by the Barnett ESOP. Shares
held by the Barnett ESOP were allocated to plan participants as the loan was repaid. At December 31, 2001 and 2000, there were no shares of unallo-
cated common stock remaining in the Barnett ESOP. During 2000 and 1999, the Barnett ESOP released and allocated common stock amounting to
$32 million and $15 million, respectively.

The Corporation issues new shares of common stock under employee compensation plans which are discussed in Note Sixteen of the consolidated
financial statements. During 2001 and 2000, approximately 27 million and 4 million shares were issued under these plans primarily due to stock option
exercises and restricted stock activity, increasing shareholders’ equity by $1.1 billion and $294 million, respectively.

Gains (losses) of $1.9 billion, $2.8 billion and $(3.9) billion were recorded in other comprehensive income in 2001, 2000 and 1999, respectively.
Reclassification adjustments to net income of $715 million, $105 million and $240 million were recorded in 2001, 2000 and 1999, respectively. The
related income tax expense (benefit) was $30 million, $800 million and $(1.4) billion in 2001, 2000 and 1999, respectively.

Earnings per common share is computed by dividing net income available to common shareholders by the weighted average common shares
issued and outstanding. For diluted earnings per common share, net income available to common shareholders can be affected by the conversion of
the registrant’s convertible preferred stock. Where the effect of this conversion would have been dilutive, net income available to common shareholders
is adjusted by the associated preferred dividends. This adjusted net income is divided by the weighted average number of common shares issued and
outstanding for each period plus amounts representing the dilutive effect of stock options outstanding and the dilution resulting from the conversion
of the registrant’s convertible preferred stock, if applicable. The effects of convertible preferred stock and stock options are excluded from the
computation of diluted earnings per common share in periods in which the effect would be antidilutive.

In 2001, 2000 and 1999, options to purchase 79 million, 102 million and 44 million shares, respectively, were outstanding but not included in the

computation of earnings per share because they were antidilutive.

The calculation of earnings per common share and diluted earnings per common share for 2001, 2000 and 1999 is presented below:

(Dollars in millions, except per share information; shares in thousands)

Earnings per common share
Net income
Preferred stock dividends

Net income available to common shareholders

Average common shares issued and outstanding

Earnings per common share

Diluted earnings per common share
Net income available to common shareholders
Preferred stock dividends

Net income available to common shareholders and assumed conversions

Average common shares issued and outstanding

Incremental shares from assumed conversions:

Convertible preferred stock
Stock options

Dilutive potential common shares

Total diluted average common shares issued and outstanding

Diluted earnings per common share

2001

6,792
(5)

6,787

1,594,957

4.26

6,787
5

6,792

2000

7,517
(6)

7,511

1999

7,882
(6)

7,876

1,646,398

1,726,006

4.56

7,511
6

7,517

4.56

7,876
6

7,882

1,594,957

1,646,398

1,726,006

2,666
28,031

30,697

1,625,654

4.18

2,926
15,605

18,531

1,664,929

4.52

3,006
31,046

34,052

1,760,058

4.48

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Note 14 Regulatory Requirements and Restrictions

The Federal Reserve Board requires 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 $4.0 billion and $4.1 billion for 2001 and 2000, respectively. Currency and
coin residing in branches and cash vaults (vault cash) are used to partially satisfy the reserve requirement. The average daily reserve balances, in excess
of vault cash, held with the Federal Reserve Bank amounted to $128 million and $3 million for 2001 and 2000, respectively.

The primary source of funds for cash distributions by the Corporation to its shareholders is dividends received from its banking subsidiaries. The
subsidiary national banks can initiate aggregate dividend payments in 2002, without prior regulatory approval, of $4.0 billion plus an additional amount
equal to their net profits for 2002, as defined by statute, up to the date of any such dividend declaration. The amount of dividends that each subsidiary
bank may declare in a calendar year without approval by the Office of the Comptroller of the Currency (OCC) is the subsidiary bank’s net profits for
that year combined with its net retained profits, as defined, for the preceding two years.

The Federal Reserve Board, the OCC, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision (collectively, the Agencies)
have issued regulatory capital guidelines for U.S. banking organizations. Failure to meet the capital requirements can initiate certain mandatory and
discretionary actions by regulators that could have a material effect on the Corporation’s financial statements. At December 31, 2001 and 2000, the
Corporation and Bank of America, N.A. were classified as well-capitalized under this regulatory framework. There have been no conditions or events
since December 31, 2001 that management believes have changed either the Corporation’s or Bank of America, N.A.’s capital classifications.

The regulatory capital guidelines measure capital in relation to the credit and market risks of both on- and off-balance sheet items using various
risk weights. Under the regulatory capital guidelines, Total Capital consists of three tiers of capital. Tier 1 Capital includes common shareholders’
equity and qualifying preferred stock, less goodwill and other adjustments. Tier 2 Capital consists of preferred stock not qualifying as Tier 1 Capital,
mandatory convertible debt, limited amounts of subordinated debt, other qualifying term debt and the allowance for credit losses up to 1.25 percent
of risk-weighted assets. Tier 3 capital includes subordinated debt that is unsecured, fully paid, has an original maturity of at least two years, is not
redeemable before maturity without prior approval by the Federal Reserve Board and includes a lock-in clause precluding payment of either interest
or principal if the payment would cause the issuing bank’s risk-based capital ratio to fall or remain below the required minimum. At December 31, 2001
and 2000, the Corporation had no subordinated debt that qualified as Tier 3 capital.

To meet minimum, adequately capitalized regulatory requirements, an institution must maintain a Tier 1 Capital ratio of four percent and a Total
Capital ratio of eight percent. A well-capitalized institution must maintain a Tier 1 Capital ratio of six percent and a Total Capital ratio of ten percent.
The risk-based capital rules have been further supplemented by a leverage ratio, defined as Tier 1 capital divided by average total assets, after certain
adjustments. The leverage ratio guidelines establish a minimum of 100 to 200 basis points above three percent. Banking organizations must maintain
a leverage capital ratio of at least five percent to be classified as well-capitalized.

The valuation allowance for available-for-sale securities and marketable equity securities included in shareholders’ equity at December 31, 2001
and 2000 and the net gains on derivatives included in shareholders’ equity at December 31, 2001 are excluded from the calculations of Tier 1 Capital,
Total Capital and leverage ratios.

On September 12, 1996, the Agencies amended their regulatory capital guidelines to incorporate a measure for market risk. In accordance with
the amended guidelines, the Corporation and any of its banking subsidiaries with significant trading activity, as defined in the amendment, must
incorporate a measure for market risk in their regulatory capital calculations effective for reporting periods after January 1, 1998. The revised guidelines
have not had a material impact on the Corporation or its subsidiaries’ regulatory capital ratios or their well-capitalized status.

The following table presents the actual capital ratios and amounts and minimum required capital amounts for the Corporation and Bank of America,

N.A. at December 31, 2001 and 2000:

(Dollars in millions)

Tier 1 Capital
Bank of America Corporation
Bank of America, N. A.
Total Capital
Bank of America Corporation
Bank of America, N. A.
Leverage
Bank of America Corporation
Bank of America, N. A.

2001

Actual

Ratio

Amount

Minimum
Required(1)

2000

Actual

Ratio

Amount

Minimum
Required(1)

8.30%
9.25

$ 41,972
42,161

$20,243
18,225

7.50%
7.72

$40,667
39,178

$ 21,687
20,308

12.67
12.55

6.56
7.59

64,118
57,192

41,972
42,161

40,487
36,450

25,604
22,233

11.04
10.81

6.12
6.59

59,826
54,871

40,667
39,178

43,374
40,616

26,587
23,771

(1) Dollar amount required to meet the Agencies’ guidelines for adequately capitalized institutions.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
Note 15 Employee Benefit Plans

Pension and Postretirement Plans
The Corporation sponsors noncontributory trusteed qualified pension plans that cover substantially all officers and employees. The plans provide
defined benefits based on an employee’s compensation, age and years of service. It is the policy of the Corporation to fund not less than the minimum
funding amount required by ERISA. Individually, BankAmerica, Barnett Banks and NationsBank each sponsored defined benefit pension plans prior to
each of the respective mergers of these banks. The BankAmerica plan was a cash balance design plan, providing participants with compensation cred-
its, based on age and period of service, applied at each pay period and a defined earnings rate on all participant account balances in the plan. The
NationsBank plan was amended to a cash balance plan effective July 1, 1998 and provided a similar crediting basis for all participants. The Barnett plan
was amended to merge into the NationsBank plan and, effective January 1, 1999, to provide the cash balance plan design feature to those participants.
The BankAmerica and NationsBank plans were merged effective December 31, 1998; however, the participants in each plan retained the cash balance
plan design followed by their predecessor plans until the plan was amended in 2000. The Corporation and the BankAmerica 401(k) retirement plans
were combined effective June 30, 2000. As part of the plan mergers, certain participants were offered a one-time opportunity to transfer certain assets
from their savings or 401(k) plans to the cash balance plan. Assets with an approximate fair value of $2.8 billion were transferred by plan participants.
The Bank of America Pension Plan (Pension Plan) allows participants to select from various earnings measures, which are based on the returns of cer-
tain funds managed by subsidiaries of the Corporation or common stock of the Corporation. The actual returns on the funds underlying the earnings
measures selected by participants determine the earnings rate on the individual participant account balances. Participants may elect to modify existing
earnings measures allocations on a daily basis. In 2001, the Corporation made a voluntary contribution to the Pension Plan of $500 million.

The Pension Plan has a balance guarantee feature, applied at the time a benefit payment is made from the plan, that protects the transferred
portion of participants’ accounts and certain credits from future market downturns. The Corporation is responsible for funding any shortfall on the
guarantee feature. At December 31, 2001, the market value of transferred assets exceeded the guaranteed amount.

In 2000, a curtailment resulted from employee terminations in connection with the Corporation’s reduction in number of associates. See Note

Two for additional information.

The Corporation sponsors a number of noncontributory, nonqualified pension plans. These plans, which are unfunded, provide defined pension

benefits to certain employees.

In addition to retirement pension benefits, full-time, salaried employees and certain part-time employees may become eligible to continue par-
ticipation as retirees in health care and/or life insurance plans sponsored by the Corporation. Based on the other provisions of the individual plans,
certain retirees may also have the cost of these benefits partially paid by the Corporation.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

107

The following table summarizes the balances, changes in fair value of plan assets and benefit obligations, and the weighted average assumptions
as of and for the years ended December 31, 2001 and 2000. Prepaid and accrued benefit costs are reflected in other assets and other liabilities,
respectively, in the Consolidated Balance Sheet. For the Pension Plan, the asset valuation method recognizes 60 percent of the market gains or losses
in the first year, with the remaining 40 percent spread equally over the next four years. For both the Pension Plan and the Postretirement Health and
Life Plans, the expected return on plan assets will be decreased to 9.50% for 2002.

(Dollars in millions)

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

Change in benefit obligation
Benefit obligation at January 1
Service cost
Interest cost
Plan participant contributions
Plan amendments
Actuarial loss (gain)
Acquisition/transfer
Effect of curtailments
Benefits paid

Benefit obligation at December 31

Funded status
Overfunded (unfunded) status at December 31
Unrecognized net actuarial loss (gain)
Unrecognized transition obligation (asset)
Unrecognized prior service cost

Prepaid (accrued) benefit cost

Weighted average assumptions at December 31
Discount rate
Expected return on plan assets
Rate of compensation increase

Qualified
Pension Plan

Nonqualified
Pension Plans

Postretirement
Health and Life Plans

2001

2000

2001

2000

2001

2000

$8,652
(154)
500
–
16
(750)

$8,264

$ 8,011
202
560
–
–
(434)
17
–
(750)

$ 7,606

$ 658
954
–
468

$2,080

$8,063
(135)
–
–
1,334
(610)

$8,652

$6,252
153
519
–
325
16
1,392
(36)
(610)

$ 8,011

$ 641
358
(2)
521

$ 1,518

–
–
98
–
–
(98)

–
–
49
–
–
(49)

–

$ 534
22
40
–
2
9
20
–
(98)

$ 529

$(529)
86
1
61

$(381)

$ 535
10
39
–
12
(13)
–
–
(49)

$ 534

$(534)
69
2
70

$(393)

$ 208
(14)
69
41
–
(110)

$ 194

$ 840
11
64
41
29
69
–
–
(110)

$ 944

$ (750)
45
355
44

$(306)

$ 202
6
63
35
–
(98)

$ 208

$ 836
11
58
35
6
(17)
–
9
(98)

$ 840

$(632)
(39)
387
19

$(265)

7.25%

10.00
4.00

7.25%
10.00
4.00

7.25%
n/a
4.00

7.25%

10.00
n/a

7.25%
10.00
n/a

Amounts recognized in the consolidated balance sheet at December 31, 2001 and 2000 are as follows:

(Dollars in millions)

Prepaid benefit cost
Accrued benefit cost
Additional minimum liability
Intangible asset
Accumulated other comprehensive income

Net amount recognized at end of year

Qualified
Pension Plan

Nonqualified
Pension Plans

Postretirement
Health and Life Plans

2001

$2,080
–
–
–
–

$2,080

2000

$ 1,518
–
–
–
–

$ 1,518

2001

–
(381)
(78)
63
15

$(381)

2000

–
(393)
(86)
56
30

$(393)

2001

–
(306)
–
–
–

$(306)

2000

–
(265)
–
–
–

$(265)

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

108

Net periodic pension benefit cost (income) for the years ended December 31, 2001, 2000 and 1999, included the following components:

(Dollars in millions)

Components of net periodic pension benefit cost (income)
Service cost
Interest cost
Expected return on plan assets
Amortization of transition obligation (asset)
Amortization of prior service cost
Recognized net actuarial loss
Recognized gain due to settlements and curtailments

Net periodic pension benefit cost (income)

Qualified Pension Plan

Nonqualified Pension Plan

2001

2000

1999

2001

2000

1999

$ 202
560
(876)
(2)
54
–
–

$ (62)

$ 153
519
(813)
(4)
38
_
(11)

$ (118)

$ 115
433
(713)
(4)
20
–
–

$(149)

$ 22
40
–
–
11
7
6

$86

$ 10
39
–
1
10
9
–

$ 69

$ 9
33
–
1
7
8
–

$ 58

For the years ended December 31, 2001, 2000 and 1999, net periodic postretirement benefit cost included the following components:

(Dollars in millions)

2001

2000

1999

Components of net periodic postretirement benefit cost (income)
Service cost
Interest cost
Expected return on plan assets
Amortization of transition obligation
Amortization of prior service cost (credit)
Recognized net actuarial loss (gain)
Recognized loss due to settlements and curtailments

Net periodic postretirement benefit cost

$ 11
65
(21)
32
4
20
–

$ 111

$ 11
58
(20)
37
(3)
(45)
20

$ 58

$ 12
58
(19)
34
–
(54)
–

$ 31

Net periodic postretirement health and life expense was determined using the “projected unit credit” actuarial method. Gains and losses for all benefits
except postretirement health care are recognized in accordance with the minimum amortization provisions of the applicable accounting standards.
For the postretirement health care plans, 50 percent of the unrecognized gain or loss at the beginning of the fiscal year (or at subsequent remeasurement)
is recognized on a level basis during the year.

Assumed health care cost trend rates affect the postretirement benefit obligation and benefit cost reported for the health care plan. The assumed
health care cost trend rates used to measure the expected cost of benefits covered by the postretirement health care plans was 8.0 percent for 2002,
reducing in steps to 4.5 percent in 2006 and later years. A one percentage point increase in assumed health care cost trend rates would have increased
the service and interest costs and the benefit obligation by $6 million and $52 million, respectively, in 2001, $9 million and $49 million, respectively,
in 2000 and $7 million and $62 million, respectively, in 1999. A one percentage point decrease in assumed health care cost trend rates would have
lowered the service and interest costs and the benefit obligation by $4 million and $45 million, respectively, in 2001, $7 million and $40 million,
respectively, in 2000 and $6 million and $56 million, respectively, in 1999.

Defined Contribution Plans
The Corporation maintains a qualified defined contribution retirement plan and certain nonqualified defined contribution retirement plans. There are
two components of the qualified defined contribution retirement plan: an ESOP and a profit-sharing plan. Prior to 2001, the ESOP component of the
qualified defined contribution retirement plan featured leveraged ESOP provisions. The profit-sharing component allows participants to modify exist-
ing investment allocations on a daily basis. See Note Thirteen for additional information on the ESOP provisions.

Effective June 30, 2000, the BankAmerica 401(k) Investment Plan was merged with and into the Bank of America 401(k) Plan (401(k) Plan). During 2000,
the Corporation offered former BankAmerica plan participants a one-time opportunity to transfer certain assets from the 401(k) Plan to the Pension Plan.
The Corporation contributed approximately $196 million, $163 million, and $191 million for 2001, 2000, and 1999, respectively, in cash and stock
which was utilized primarily to purchase the Corporation’s common stock under the terms of these plans. At December 31, 2001 and 2000, an
aggregate of 45,468,591 shares and 46,010,493 shares, respectively, of the Corporation’s common stock and 1,506,553 shares and 1,684,053 shares,
respectively, of ESOP preferred stock were held by the Corporation’s various savings and profit sharing plans.

Under the terms of the ESOP Preferred Stock provision, payments to the plan for dividends on the ESOP Preferred Stock were $5 million, $6 million,
and $3 million, for 2001, 2000, and 1999, respectively. Payments to the plan for dividends on the ESOP Common Stock were $27 million, $22 million,
and $21 million during the same periods. Interest incurred to service the debt of the ESOP Preferred Stock and ESOP Common Stock amounted to
$0.3 million, $3 million and $5 million for 2001, 2000 and 1999, respectively. As of December 31, 2001, all principal and interest associated with the
debt of the ESOP Preferred Stock and ESOP Common Stock have been repaid.

In addition, certain non-U.S. employees within the Corporation are covered under defined contribution pension plans that are separately administered

in accordance with local laws.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

109

Note 16 Stock Incentive Plans

At December 31, 2001, the Corporation had certain stock-based compensation plans which are described below. The Corporation applies the provisions
of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock option and award plans. In
accordance with Statement of Financial Accounting Standards No. 123 (SFAS 123), “Accounting for Stock Based Compensation,” the Corporation has
also elected to provide disclosures as if the Corporation had adopted the fair-value based method of measuring outstanding employee stock options
in 2001, 2000 and 1999 as indicated below:

(Dollars in millions, except per share data)

Net income
Net income available to common shareholders
Earnings per common share
Diluted earnings per common share

2001

$6,792
6,787
4.26
4.18

As reported
2000

$7,517
7,511
4.56
4.52

1999

$7,882
7,876
4.56
4.48

2001

$ 6,441
6,436
4.04
3.96

Pro forma
2000

$ 7,215
7,209
4.38
4.34

1999

$7,563
7,557
4.38
4.30

In determining the pro forma disclosures above, the fair value of options granted was estimated on the date of grant using the Black-Scholes option-
pricing model. The Black-Scholes model was developed to estimate the fair value of traded options, which have different characteristics than
employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. The
weighted average grant-date fair values of the options granted during 2001, 2000 and 1999 were based on the following assumptions:

Risk-free Interest rates

Dividend Yield

Expected Lives (Years)

Volatility

2001

2000

1999

2001

2000

1999

2001

2000

1999

2001

2000

1999

Key Employee Stock Plan
Take Ownership!

5.05%
4.89

6.74%
6.57

5.19%
4.73

4.50%
5.13

4.62%
4.62

2.91%
3.06

7
4

26.68% 25.59% 24.91%
30.27
31.62

27.67

Compensation expense under the fair-value based method is recognized over the vesting period of the related stock options. Accordingly, the pro
forma results of applying SFAS 123 in 2001, 2000 and 1999 may not be indicative of future amounts.

Key Employee Stock Plan
The Key Employee Stock Plan, as amended and restated, provides for different types of awards including stock options, restricted stock and performance
shares (or restricted stock units). Under the plan, ten-year options to purchase approximately 97.3 million shares of common stock have been granted
through December 31, 2001 to certain employees at the closing market price on the respective grant dates. Options granted under the plan generally
vest in three or four equal annual installments. At December 31, 2001, approximately 76.2 million options were outstanding under this plan. Approxi-
mately 3.8 million shares of restricted stock and restricted stock units were granted during 2001. These shares of restricted stock generally vest in
three equal annual installments beginning one year from the grant date. The Corporation incurred restricted stock expense of $182 million, $273
million and $324 million for the years ended December 31, 2001, 2000 and 1999, respectively.

Take Ownership!
The Bank of America Global Associate Stock Option Program (Take Ownership!) covers all employees below a specified executive grade 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. Options granted on the first business day of 1999, 2000 and 2001 vest 25 percent on the
first anniversary of the date of grant, 25 percent on the second anniversary of the date of grant and 50 percent on the third anniversary of the date
of grant. These options have a term of five years after the grant date. On January 2, 2001, options to purchase approximately 22.8 million shares of
common stock at $46.75 per share were granted under the plan. At December 31, 2001, approximately 62.1 million options were outstanding under this
plan. No further awards may be granted under this plan.

2002 Associates Stock Option Plan
On September 26, 2001, the Board approved the Bank of America Corporation 2002 Associates Stock Option Plan which covers all employees below a
specified executive grade level. Under the plan, eligible employees received a one-time award of a predetermined number of options entitling them to
purchase shares of the Corporation’s common stock. Approximately 54 million options were granted subsequent to December 31, 2001 at the closing
price of $61.36. The options vest as follows: 50 percent of the options become exercisable after the Corporation’s common stock closes at or above
$76.36 per share for ten consecutive trading days; the remaining 50 percent of the options become exercisable after the Corporation’s common stock
closes at or above $91.36 for ten consecutive trading days. Regardless of the stock price, all options will be fully exercisable February 1, 2006. No
option can be exercised before June 1, 2002. The options expire on the close of business January 31, 2007.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

110

Other Plans
Under the NationsBank 1996 ASOP, as amended, the Corporation granted in 1996 and 1997 to certain full- and part-time associates options to purchase
an aggregate of approximately 47 million shares of the Corporation’s common stock. All options granted under the ASOP expired on June 29, 2001. No
further awards may be granted under this plan.

Under the BankAmerica 1992 Management Stock Plan, ten-year options to purchase shares of the Corporation’s common stock were granted to
certain key employees in 1997 and 1998. Options awarded generally vest in three equal annual installments beginning one year from the grant date.
At December 31, 2001, approximately 18.4 million options were outstanding under this plan. Additionally, 2.9 million shares of restricted stock were
granted to certain key employees in 1997 and 1998. These shares generally vest in four equal annual installments beginning the second year from the
date of grant. No further awards may be granted under this plan.

Under the BankAmerica Performance Equity Program, ten-year options to purchase shares of the Corporation’s common stock were granted to
certain key employees in 1997 and 1998 in the form of market price options and premium price options. All options issued under this plan to persons
who were employees as of the Merger date vested. At December 31, 2001, approximately 11.8 million options were outstanding under this plan. No
further awards may be granted under this plan.

On October 1, 1996, BankAmerica adopted the BankAmerica Global Stock Option Program (BankAmerica Take Ownership!), which covered
substantially all associates. Options awarded under this plan vest in three equal installments beginning one year from the grant date and have a term
of five years after the grant date. At December 31, 2001, approximately 14.1 million options were outstanding under this plan. No further awards may
be granted under this plan.

Additional stock options assumed in connection with various acquisitions remain outstanding and are included in the tables below. No further

awards may be granted under these plans.

The following tables present the status of all plans at December 31, 2001, 2000 and 1999, and changes during the years then ended:

Employee Stock Options

Outstanding at January 1
Granted
Exercised
Forfeited

Outstanding at December 31

Options exercisable at December 31

Weighted-average fair value of options

granted during the year

Restricted Stock/Unit Awards

Outstanding unvested grants at January 1
Granted
Vested
Canceled

Outstanding unvested grants at December 31

2001

2000

1999

178,572,021
53,067,079
(28,198,630)
(18,890,454)

184,550,016

94,753,943

Weighted-
Average
Exercise
(Option)
Price

$54.45
50.45
40.86
56.32

55.19

57.94

$ 10.36

156,205,635
49,318,536
(5,144,778)
(21,807,372)

178,572,021

98,092,637

Weighted-
Average
Exercise
(Option)
Price

$56.03
48.44
30.68
57.73

54.45

53.56

$ 11.00

126,465,501
68,341,012
(21,872,532)
(16,728,346)

156,205,635

85,753,568

Weighted-
Average
Exercise
(Option)
Price

$ 51.01
61.30
38.45
62.59

56.03

49.97

$13.88

2001

2000

1999

Weighted-
Average
Grant
Price

$ 63.37
51.21
60.32
57.16

$58.42

7,172,546
3,844,384
(4,223,770)
(201,414)

6,591,746

Weighted-
Average
Grant
Price

$62.39
48.50
59.51
66.18

$63.37

Weighted-
Average
Grant
Price

$61.85
61.99
57.19
67.96

$62.39

3,781,154
11,413,497
(1,732,513)
(434,801)

13,027,337

13,027,337
652,724
(6,111,163)
(396,352)

7,172,546

The following table summarizes information about stock options outstanding at December 31, 2001:

Range of Exercise Prices

$10.00-$30.00
$30.01-$46.50
$46.51-$65.50
$65.51-$99.00

Total

Number
Outstanding at
December 31

10,012,213
6,892,929
144,609,175
23,035,699

184,550,016

Outstanding Options

Weighted-Average
Remaining
Contractual Life

Weighted-Average
Exercise Price

2.9 years
4.4 years
5.2 years
4.8 years

5.0 years

$23.35
36.14
54.47
79.23

$ 55.19

Options Exercisable

Number
Exercisable at
December 31

10,012,213
6,747,766
56,227,059
21,766,905

94,753,943

Weighted-Average
Exercise Price

$23.35
35.95
58.40
79.47

$57.94

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Note 17 Income Taxes

The components of income tax expense for the years ended December 31, 2001, 2000 and 1999 were as follows:

(Dollars in millions)

Current expense:

Federal
State
Foreign

Total current expense

Deferred (benefit) expense:

Federal
State
Foreign

Total deferred (benefit) expense

Total income tax expense

2001

2000

1999

$ 3,183
364
341

3,888

(554)
(10)
1

(563)

$ 3,109
161
354

3,624

526
120
1

647

$ 1,470
63
341

1,874

2,207
254
(2)

2,459

$ 3,325

$ 4,271

$4,333

The preceding table does not reflect the tax effects of unrealized gains and losses on 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 increased by $21 million in 2001, decreased by $684 million in 2000 and
increased by $1.6 billion in 1999. The Corporation’s current income tax expense approximates the amounts payable for those years. Deferred income
tax expense represents the change in the deferred tax asset or liability and is discussed further below.

A reconciliation of the expected federal income tax expense using the federal statutory tax rate of 35 percent to the actual income tax expense

for the years ended December 31, 2001, 2000 and 1999 follows:

(Dollars in millions)

Expected federal income tax expense
Increase (decrease) in taxes resulting from:

Tax-exempt income
State tax expense, net of federal benefit
Goodwill amortization(1)
Basis difference in subsidiary stock
Low income housing credits
Foreign tax differential
Other

2001

$ 3,541

2000

$ 4,126

1999

$4,275

(105)
230
366
(418)
(129)
(83)
(77)

(116)
183
202
–
(108)
(72)
56

(103)
206
207
–
(79)
(58)
(115)

Total income tax expense

$ 3,325

$ 4,271

$4,333

(1) Goodwill amortization included in business exit costs was $164 million in 2001.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

112

Significant components of the Corporation’s deferred tax (liabilities) assets at December 31, 2001 and 2000 were as follows:

(Dollars in millions)

Deferred tax liabilities:

Equipment lease financing
Intangibles
Employee retirement benefits
Investments
State taxes
Deferred gains and losses
Securities valuation
Depreciation
Other

Gross deferred tax liabilities

Deferred tax assets:

Allowance for credit losses
Employee benefits
Accrued expenses
Basis difference in subsidiary stock
Available-for-sale securities
Loan fees and expenses
Net operating loss carryforwards
Other

Gross deferred tax assets

Valuation allowance

Gross deferred tax assets, net of valuation allowance

Net deferred tax liabilities

2001

2000

$ (6,788)
(767)
(560)
(551)
(431)
(285)
(231)
(144)
(323)

(10,080)

3,085
497
430
418
311
282
149
463

5,635

(136)

5,499

$ (4,581)

$ (6,268)
(733)
(403)
(494)
(438)
(295)
(400)
(145)
(232)

(9,408)

2,751
344
341
–
330
116
130
425

4,437

(114)

4,323

$ (5,085)

The Corporation’s deferred tax assets at December 31, 2001 and 2000 included a valuation allowance of $136 million and $114 million, respectively,
primarily representing net operating loss carryforwards for which it is more likely than not that realization will not occur. The net change in the valuation
allowance for deferred tax assets resulted from net operating losses being generated by foreign subsidiaries in 2001 where realization is not expected
to occur.

At December 31, 2001 and 2000, federal income taxes had not been provided on $859 million and $762 million, respectively, of undistributed

earnings of foreign subsidiaries, earned prior to 1987 and after 1997, that have been reinvested for an indefinite period of time. If the earnings were
distributed, an additional $188 million and $163 million of tax expense, net of credits for foreign taxes paid on such earnings and for the related foreign
withholding taxes, would result in 2001 and 2000, respectively.

Note 18 Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, “Disclosures About Fair Value of Financial Instruments” (SFAS 107), requires the disclosure of
the estimated fair value of financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale. Quoted market prices, if available, are utilized as estimates of
the fair values of financial instruments. Since no quoted market prices exist for a significant part of the Corporation’s financial instruments, the fair
values of such instruments have been derived based on management’s assumptions, the estimated amount and timing of future cash flows and estimated
discount rates. The estimation methods for individual classifications of financial instruments are described more fully below. Different assumptions
could significantly affect these estimates. Accordingly, the net realizable values could be materially different from the estimates presented below. In
addition, the estimates are only indicative of the value of individual financial instruments and should not be considered an indication of the fair value
of the combined Corporation.

The provisions of SFAS 107 do not require the disclosure of the fair value of lease financing arrangements and nonfinancial instruments, including

intangible assets such as goodwill, franchise, and credit card and trust relationships.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Short-Term Financial Instruments
The carrying value of short-term financial instruments, including cash and cash equivalents, federal funds sold and purchased, resale and repurchase
agreements, commercial paper and other short-term borrowings, approximates the fair value of these instruments. These financial instruments generally
expose the Corporation to limited credit risk and have no stated maturities or have an average maturity of less than 30 days and carry interest rates
which approximate market.

Financial Instruments Traded in the Secondary Market
Held-to-maturity securities, available-for-sale securities, trading account instruments, long-term debt and trust preferred securities traded actively in
the secondary market have been valued using quoted market prices. The fair values of securities and trading account instruments are reported in Notes
Three and Four.

Derivative Financial Instruments
All derivatives are recognized on the balance sheet at fair value, taking into consideration the effects of legally enforceable 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 models or quoted prices for
instruments with similar characteristics. The fair value of the Corporation’s derivative assets and liabilities is presented in Note Five.

Loans
Fair values were estimated for groups of similar loans based upon type of loan and maturity. The fair value of loans was determined by discounting
estimated cash flows using interest rates approximating the Corporation’s current origination rates for similar loans and using credit factors. Where
quoted market prices were available, primarily for certain residential mortgage loans, such market prices were utilized as estimates for fair values.
Contractual cash flows for residential mortgage loans were adjusted for estimated prepayments using published industry data.

Substantially all of the foreign loans reprice within relatively short timeframes. Accordingly, for foreign loans, the carrying values were assumed

to approximate their fair values.

Mortgage Banking Assets
The Certificates are carried at estimated fair value which is based on an option-adjusted spread model which requires several key components including,
but not limited to, proprietary 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 approximates fair value. For deposits with no stated maturities, the carrying
amount was considered to approximate fair value and does not take into account the significant value of the cost advantage and stability of the
Corporation’s long-term relationships with depositors.

The book and fair values of certain financial instruments at December 31, 2001 and 2000 were as follows:

(Dollars in millions)

Financial assets

Loans

Financial liabilities

Deposits
Long-term debt(1)
Trust preferred securities

(1) Excludes obligations under capital leases.

2001

Book
Value

Fair
Value

2000

Book
Value

Fair
Value

$ 310,427

$314,804

$369,706

$374,313

373,495
62,466
5,530

374,231
64,531
5,612

364,244
67,516
4,955

364,547
68,595
4,792

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Note 19 Business Segment Information

The Corporation reports the results of its operations through four business segments: Consumer and Commercial Banking, Asset Management,
Global Corporate and Investment Banking and Equity Investments. Certain operating segments have been aggregated into a single business
segment. A customer-centered strategic focus is changing the way the Corporation is managing its business. In addition to existing financial reporting,
the Corporation has begun preparing customer segment-based financial operating information.

Consumer and Commercial Banking provides a diversified range of products and services to individuals and small businesses through multiple
delivery channels and commercial lending and treasury management services to middle market companies with annual revenue between $10 million
and $500 million. Asset Management offers investment, fiduciary and comprehensive credit expertise; asset management services to institutional
clients, high-net-worth individuals and retail customers; and investment, securities and financial planning services to affluent and high-net-worth
individuals. Global Corporate and Investment Banking provides capital raising solutions, advisory services, derivatives capabilities, equity and debt
sales and trading, as well as traditional bank deposit and loan products, cash management and payments services to large corporations and institutional
markets. Equity Investments includes Principal Investing which makes both direct and indirect equity investments in a wide variety of companies
at all stages of the business cycle. Equity Investments also includes the Corporation’s strategic technology and alliances investment portfolio.
Corporate Other consists primarily of the functions associated with managing the interest rate risk of the Corporation and Consumer Special Assets,
which includes certain consumer finance businesses being liquidated and certain residential mortgages originated by the mortgage group (not from
retail branch originations).

In the first quarter of 2001, the thirty-year mortgage portfolio was moved from Consumer and Commercial Banking to Corporate Other. In the third
quarter of 2001, certain consumer finance businesses being liquidated were transferred from Consumer and Commercial Banking to Corporate Other.
Effective January 2, 2001, the Corporation acquired the remaining 50 percent of Marsico Capital Management LLC (Marsico), which is part of the
Asset Management segment, for a total investment of $1.1 billion. The Corporation acquired the first 50 percent in 1999. Marsico is a Denver-based
investment management firm specializing in large capitalization growth stocks.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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The following table includes total revenue and net income for the years ended December 31, 2001, 2000 and 1999, and total assets at December 31,
2001 and 2000 for each business segment. Certain prior period amounts have been reclassified between segments to conform to the current period
presentation.

Business Segments

For the year ended December 31

(Dollars in millions)

Net interest income(2)
Noninterest income(3)

Total revenue

Provision for credit losses
Gains (losses) on sales of securities
Amortization of intangibles
Other noninterest expense

Income before income taxes

Income tax expense

Net income

Period-end total assets

For the year ended December 31

(Dollars in millions)

Net interest income(2)
Noninterest income(3)

Total revenue

Provision for credit losses
Gains (losses) on sales of securities
Amortization of intangibles
Other noninterest expense

Income before income taxes

Income tax expense

Net income

Period-end total assets

For the year ended December 31

(Dollars in millions)

Net interest income(2)
Noninterest income(3)

Total revenue

Provision for credit losses(4)
Gains (losses) on sales of securities
Amortization of intangibles
Other noninterest expense(4)

Income before income taxes

Income tax expense

Net income

Period-end total assets

Total Corporation

Consumer and
Commercial Banking(1)

2001

2000

1999

2001

2000

1999

$ 20,633
14,348

$ 18,671
14,582

$ 18,342
14,179

$ 13,364
8,008

$ 12,620
7,356

$ 12,851
7,160

34,981
4,287
475
878
19,831

10,460
3,668

33,253
2,535
25
864
17,769

12,110
4,593

32,521
1,820
240
888
17,623

12,430
4,548

21,372
1,802
3
637
11,048

7,888
3,046

19,976
1,111
–
649
10,684

7,532
2,981

$ 6,792

$621,764

$ 7,517

$642,191

$ 7,882

$ 4,842

$304,874

$ 4,551

$287,013

20,011
1,118
48
673
11,027

7,241
2,723

$ 4,518

Asset Management(1)

2001

741
1,733

2,474
121
–
57
1,482

814
293

521

2000

666
1,801

2,467
47
–
30
1,431

959
370

589

1999

610
1,667

2,277
99
–
31
1,388

759
280

479

Global Corporate and
Investment Banking(1)

2000

1999

$ 3,725
4,444

$ 3,407
4,104

8,169
751
(15)
138
4,687

2,578
819

7,511
213
9
137
4,331

2,839
916

2001

4,592
4,639

9,231
1,275
(45)
143
5,013

2,755
876

1,879

$ 1,759

$ 1,923

$ 26,810

$ 27,140

$ 194,146

$206,820

Equity Investments(1)

Corporate Other

2001

2000

1999

2001

2000

1999

(151)
183

(139)
1,007

(83)
777

2,087
(215)

$ 1,799
(26)

$ 1,557
471

32
8
–
10
174

(160)
(66)

(94)

868
4
–
11
101

752
291

461

694
25
–
11
124

534
203

331

1,872
1,081
517
31
2,114

(837)
(481)

(356)

1,773
622
40
36
866

289
132

157

$ 6,230

$ 6,691

$ 89,704

$ 114,527

2,028
365
183
36
753

1,057
426

631

(1) There were no material intersegment revenues among the segments.
(2) Net interest income is presented on a taxable-equivalent basis and includes taxable-equivalent basis adjustments of $343 million, $322 million, and $215 million in 2001,

2000 and 1999, respectively.

(3) Noninterest income included the $83 million SFAS 133 transition adjustment net loss which was recorded in trading account profits in 2001. The components of the

transition adjustment by segment were a gain of $4 million for Consumer and Commercial Banking, a gain of $19 million for Global Corporate and Investment Banking and
a loss of $106 million for Corporate Other.

(4) Corporate Other includes exit charges consisting of provision for credit losses of $395 million and noninterest expense of $1,305 million related to the exit of certain
consumer finance businesses in 2001 and merger and restructuring charges in noninterest expense of $550 million and $525 million in 2000 and 1999,respectively.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

116

Following is a reconciliation of the four business segments’ revenue and net income for the years ended December 31, 2001, 2000 and 1999 and total
assets at December 31, 2001 and 2000 to the consolidated totals:

(Dollars in millions)

Segments’ revenue
Adjustments:

Earnings associated with unassigned capital
Consumer Special Assets activity
SFAS 133 transition adjustment net loss
Gain on sale of a business
Other

Consolidated revenue

Segments’ net income
Adjustments, net of taxes:

Earnings associated with unassigned capital
Consumer Special Assets activity
SFAS 133 transition adjustment net loss
Gain on sale of a business
Provision for credit losses in excess of net charge-offs
Gains on sales of securities
Severance charge
Litigation expense
Exit charges
Merger and restructuring charges
Tax benefit associated with basis difference in subsidiary stock
Other

Consolidated net income

Segments’ total assets
Adjustments:

Available-for-sale securities
Elimination of excess earning asset allocations
Consumer Special Assets
Other, net

Consolidated total assets

2001

2000

1999

$ 33,109

$ 31,480

$ 30,493

346
1,751
(106)
–
(119)

368
1,236
–
187
(18)

357
1,792
–
–
(121)

$ 34,981

$ 33,253

$ 32,521

7,148

7,360

7,251

222
586
(68)
–
(182)
333
(96)
(214)
(1,250)
–
267
46

235
318
–
117
(86)
25
–
–
–
(346)
–
(106)

231
610
–
–
–
118
–
–
–
(358)
–
30

6,792

7,517

7,882

$532,060

$527,664

70,540
(65,908)
56,628
28,444

47,256
(52,826)
96,419
23,678

$ 621,764

$ 642,191

The adjustments presented in the table above represent consolidated income, expense and asset balances not specifically allocated to individual
business segments. In addition, reconciling items also include the effect of earnings allocations not assigned to specific business segments, as well
as the related earning asset balances.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Note 20 Bank of America Corporation (Parent Company Only)

The following tables present the Parent Company Only financial information:

(Dollars in millions)

Condensed Statement of Income
Income
Dividends from subsidiaries:

Bank subsidiaries
Other subsidiaries

Interest from subsidiaries
Other income

Expense
Interest on borrowed funds
Noninterest expense

Income before income tax benefit and equity in undistributed earnings of subsidiaries
Income tax benefit

Income before equity in undistributed earnings of subsidiaries
Equity in undistributed earnings of subsidiaries:

Bank subsidiaries
Other subsidiaries

Net income

Net income available to common shareholders

(Dollars in millions)

Condensed Balance Sheet
Assets
Cash held at bank subsidiaries
Temporary investments
Receivables from subsidiaries:

Bank subsidiaries
Other subsidiaries

Investments in subsidiaries:

Bank subsidiaries
Other subsidiaries

Other assets

Total assets

Liabilities and Shareholders’ Equity
Commercial paper and other notes payable
Accrued expenses and other liabilities
Payables to subsidiaries:

Bank subsidiaries
Other subsidiaries

Long-term debt
Shareholders’ equity

Total liabilities and shareholders’ equity

(Dollars in millions)

Condensed Statement of Cash Flows
Operating Activities
Net income
Reconciliation of net income to net cash provided by operating activities:

Equity in undistributed earnings of subsidiaries
Other operating activities

Net cash provided by operating activities

Investing Activities
Net (increase) decrease in temporary investments
Net payments from (to) subsidiaries

Net cash provided by (used in) investing activities

Financing Activities
Net increase (decrease) 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 at bank subsidiaries
Cash held at bank subsidiaries at January 1

Cash held at bank subsidiaries at December 31

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Year Ended December 31

2001

2000

1999

$ 7,700
171
2,197
987
11,055

2,626
1,155

3,781

7,274
494

7,768

10
104

114

$ 7,882
$ 7,876

$ 5,000
32
1,746
1,772
8,550

2,564
2,082

4,646

3,903
385

4,288

2,653
(149)

2,504

$ 6,792

$ 6,787

$ 6,902
18
2,756
1,053
10,729

3,359
1,238

4,597

6,132
456

6,588

583
346

929

$
$

7,517
7,511

December 31

2001

2000

$ 15,973
663

9,813
13,076

58,968
794
3,675

$102,962

1,593
3,328

297
4,948
44,276
48,520

$102,962

$ 20,233
677

13,336
7,331

52,711
2,248
4,157

$100,693

$ 6,747
2,767

83
4,422
39,046
47,628

$100,693

Year Ended December 31

2001

2000

1999

$ 6,792

$ 7,517

$ 7,882

(2,504)
1,768
6,056

(24)
(3,330)
(3,354)

(5,154)
10,762
(6,106)
1,121
(4,716)
(3,632)
763
(6,962)
(4,260)
20,233
$ 15,973

(929)
798

7,386

87
237

324

(399)
6,335
(2,993)
294
(3,256)
(3,388)
(2)

(3,409)

4,301
15,932

$20,233

(114)
(191)

7,577

(274)
9,192

8,918

1,600
5,912
(3,760)
1,158
(4,858)
(3,199)
(485)

(3,632)

12,863
3,069

$15,932

Note 21 Performance by Geographic Area

Since the Corporation’s operations are highly integrated, certain asset, liability, income and expense amounts must be allocated to arrive at total assets,
total revenue, income (loss) before income taxes and net income (loss) by geographic area. The Corporation identifies 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 judgements related
to the allocation of revenue so that revenue can be appropriately matched with the related expense or capital deployed in the region. Translation gains,
for those units in hyperinflationary economies, net of hedging, totaled $2 million in 2001 compared to translation losses of $1 million in 2000 and trans-
lation gains of $4 million in 1999. These amounts, which are reported in other noninterest income, are included in the table below:

(Dollars in millions)

Domestic(3)

Asia

Europe, Middle East and Africa

Latin America and the Caribbean

Total Foreign

Total Consolidated

Total assets(1)

Year

at December 31

for the year ended
December 31

Income (loss)
before income taxes

Net income (loss)

Total revenue(2)

2001
2000
1999

$570,184
587,287

17,231
22,093

27,674
25,799

6,675
7,012

51,580
54,904

$621,764
642,191

$32,187
30,633
30,038

921
954
1,104

1,227
995
693

303
349
471

2,451
2,298
2,268

$34,638
32,931
32,306

$9,428
10,584
11,164

411
508
535

435
533
247

(157)
163
269

689
1,204
1,051

$10,117
11,788
12,215

$6,315
6,693
7,159

276
355
367

295
363
177

(94)
106
179

477
824
723

$6,792
7,517
7,882

(1) Total assets includes long-lived assets, which are primarily located in the U.S.
(2) There were no material intercompany revenues between geographic regions for any of the periods presented.
(3) Includes the Corporation’s Canadian operations, which had total assets of $2,849 and $3,938; total revenues of $121, $118 and $100; income before
income taxes of $4, $34 and $55; and net income of $0.3, $22 and $30 at and for the years ended December 31, 2001, 2000 and 1999, respectively.

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

119

Executive Officers and Board of Directors
Bank of America Corporation and Subsidiaries

Executive Officers

Kenneth D. Lewis
Chairman, President and
Chief Executive Officer

Edward J. Brown III
President, Global Corporate and
Investment Banking

R. Eugene Taylor
President, Consumer and
Commercial Banking

James H. Hance, Jr.
Vice Chairman and Chief Financial Officer

Richard M. DeMartini
President, Asset Management

F. William Vandiver, Jr.*
Corporate Risk Management Executive

Amy Woods Brinkley
Chairman, Credit Policy and Deputy
Corporate Risk Management Executive

Barbara J. Desoer
President, Consumer Products

* Mr. Vandiver retires March 31, 2002 and will be succeeded by Ms. Brinkley, who will have the title Chief Risk Officer.

Board of Directors

John R. Belk
President – Finance,
Systems and Operations
Belk, Inc.
Charlotte, NC

Charles W. Coker
Chairman
Sonoco Products Company
Hartsville, SC

Frank Dowd, IV
Chairman and CEO
Charlotte Pipe and Foundry Company
Charlotte, NC

Kathleen F. Feldstein
President
Economics Studies, Inc.
Belmont, MA

Paul Fulton
Chairman
Bassett Furniture Industries, Inc.
Winston-Salem, NC

Donald E. Guinn
Chairman Emeritus
Pacific Telesis Group
San Francisco, CA

James H. Hance, Jr.
Vice Chairman and Chief Financial Officer
Bank of America Corporation
Charlotte, NC

O. Temple Sloan, Jr.
Chairman and CEO
General Parts Inc.
Raleigh, NC

Meredith R. Spangler
Trustee and Board Member
Charlotte, NC

Ronald Townsend
Communications Consultant
Jacksonville, FL

Peter V. Ueberroth
Managing Director
The Contrarian Group, Inc.
Newport Beach, CA

Jackie M. Ward
Outside Managing Director
Intec Telecom Systems PLC
Atlanta, GA

Virgil R. Williams
Chairman and CEO
Williams Group International, Inc.
Stone Mountain, GA

C. Ray Holman
Chairman
Mallinckrodt Inc.
St. Louis, MO

Kenneth D. Lewis
Chairman, President and CEO
Bank of America Corporation
Charlotte, NC

Walter E. Massey
President
Morehouse College
Atlanta, GA

C. Steven McMillan
Chairman, President and CEO
Sara Lee Corporation
Chicago, IL

Patricia E. Mitchell
President and CEO
Public Broadcasting Service
Alexandria, VA

B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T

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Corporate Information

Shareholders

Bank of America Corporation (the Corporation) common stock is listed on the New York Stock Exchange and the Pacific Stock Exchange under the
symbol BAC. The Corporation’s common stock is also listed on the London Stock Exchange, and certain shares are listed on the Tokyo Stock Exchange.
The stock is typically listed as BankAm in newspapers. As of February 12, 2002, there were 243,909 record holders of the Corporation’s common stock.
The Corporation’s annual meeting of shareholders will be held at 10 a.m. on Wednesday, April 24, 2002 at the North Carolina Blumenthal Performing

Arts Center, 130 North Tryon Street, Charlotte, North Carolina.

For general shareholder information, call Jane Smith, manager of shareholder relations, at 1.800.521.3984. For inquiries concerning dividend

checks, the SharesDirect dividend reinvestment plan, electronic deposit of dividends, tax information, transferring ownership, address changes or lost
or stolen stock certificates, contact Mellon Investor Services LLC, P.O. Box 3315, South Hackensack, NJ 07606-1915; call Bank of America Shareholder
Services at 1.800.642.9855 or access your shareholder information online at www.bankofamerica.com/shareholder.

Analysts, portfolio managers and other investors seeking additional information about the Corporation should contact Kevin Stitt, investor

relations executive, at 1.704.386.5667 or Lee McEntire, manager of investor communications, at 1.704.388.6780.

Visit the Investor Relations area of the Bank of America Web site for stock and dividend information, financial news releases, links to Bank of America
SEC filings and other material of interest to the Corporation’s shareholders. To reach the Investor Relations area, go to www.bankofamerica.com and
choose Investor Relations from the Inside Bank of America pull-down menu.

Annual Report on Form 10-K

The Corporation’s 2001 Annual Report on Form 10-K, when filed with the Securities and Exchange Commission, will be available on the Bank of
America Web site at www.bankofamerica.com. The Corporation also will provide a copy of the 2001 Annual Report on Form 10-K (without exhibits)
upon written request addressed to:

Bank of America Corporation
Shareholder Relations Department
NC1-007-23-02
100 North Tryon Street
Charlotte, NC 28255

Customers

For assistance with Bank of America products and services, call 1.800.900.9000 or visit the Bank of America Web site at www.bankofamerica.com.

News Media

News media representatives seeking information should visit the Newsroom area of the Bank of America Web site for news releases, speeches and
other material relating to the company, including a complete list of the company’s media relations specialists grouped by business specialty or
geography. To reach the Newsroom area, go to www.bankofamerica.com and choose Newsroom from the Inside Bank of America pull-down menu.

Design: Hane Chow, Inc., Oakland, CA
Photography: David Powers

Bank of America Corporate Center
100 North Tryon Street, 18th Floor
Charlotte, North Carolina 28255