Bank of America is gearing up to issue VISA smart cards. This week BofA signed a licensing deal with ACI Worldwide for its ‘MONAD’ multi-application smart card management system. BofA says this morning it will use ‘MONAD’ to build the necessary infrastructure to manage multi-application smart cards. ‘MONAD’ enables financial institutions to manage the complete life cycle of smart cards and smart card applications including full enrollment, application management, card issuing, personalization, post-issuance of multi-application smart cards and security.
Bank of America announced Monday that its first 15 talking ATMs, of the 1,600 the bank will put in California, are now operating. The first cities to receive the machines are: San Francisco, San Diego, Los Angeles, Sacramento, Westminster, Berkeley, Oakland, Woodland Hills and West Covina. Bank of America, in conjunction with the California Council of the Blind and several blind individuals, announced its decision in March to install talking ATMs at each ATM location throughout its national ATM network. Over the next three years, more than 2,500 talking ATMs will be installed in California and Florida.
Vicinity Corp., a leading provider of Internet-based marketing infrastructure services, will provide its Telephone Business Finder services to Bank of America to help direct customers to the bank’s more than 4,500 banking center and 14,000 ATM locations by simply picking up the telephone.
Vicinity’s Interactive Voice Response application will automatically provide Bank of America customers with the nearest Bank location — no additional dialing and no Internet access required. The service is expected to be available by late April 2000.
In addition to accessing the nearest location, Bank of America customers will be able to search for alternate locations by entering a zip code or phone number.
“Providing an easy way to locate the nearest Bank of America ATM or banking center is one step in our continuing effort to enhance our customers’ telephone experience with us,” said Colin Wong, vice president, Telephone Channel Strategies & Development, Bank of America.
“We are proud to be providing the largest bank in the United States with our Telephone Business Finder service,” said Emerick Woods, president and chief executive officer of Vicinity Corp. “Vicinity makes sure that all of our clients can reach their customers — ‘wired’ or not — with the most comprehensive marketing solutions.”
About Vicinity Corp.
Vicinity Corp. is a leading provider of Internet-based marketing infrastructure services for brand-name Global 2000 companies. The company’s clicks-and-mortar solutions, available in 14 countries and in 10 languages, enable its more than 300 clients to direct consumers searching for a specific product or service to the nearest brick-and-mortar store that carries that product or service.
Vicinity’s customers include FedEx, Ford, GM, Hewlett-Packard, Hilton Hotels Corp., Marriott, McDonald’s, NEC, Pizza Hut, Starbucks, Starwood Hotels, Taco Bell, Toyota, Levi Strauss & Co. and UPS. Its suite of private-label and co-branded content and services — available via the Internet, cellular phones, WAP phones, wireless devices and landline telephones — includes Business Finder(SM), Telephone Business Finder(SM), Wireless Business Finder(SM), BrandFinder(SM), SiteMaker(SM), MailMaker(SM), MapBlast!(R) Mapping Services, and Business Directory.
Publicly traded on Nasdaq under the symbol VCNT, Vicinity’s investors include CMGI (Nasdaq:CMGI). Vicinity’s strategic alliances include Inktomi (NASDAQ:INKT), Palm Computing (NASDAQ:PALM) and it is a member of the Phone.com (NASDAQ:PHCM) Alliance Program. Vicinity was established in 1995, is headquartered in Palo Alto, Calif., and has an office in Lebanon, NH. Vicinity(R) is a registered trademark of Vicinity Corp.
Bank of America announced this morning that its number of online banking customers has exceeded two million. BofA says it is signing up more than 100,000 new online customers a month. Approximately 125,000 new customers signed up for online banking in January, the highest number in one month to date. In addition to more than two million retail customers, BofA has more than 1,650 commercial and corporate clients doing business online. The bank offers online checking, savings, CDs, IRAs, mortgages, credit cards, debit cards, and auto loans.
Bank of America launched a new national advertising campaign that is aimed at communicating the Bank of America brand promise: to make banking work in ways it never has before.
The campaign, which appears nationally on television, radio and in print, emphasizes the bank’s customer-centered approach, reflecting the commitment of Bank of America associates to fully understand their customers’ financial status and to help them find the most suitable solutions to their financial needs.
According to Barbara Desoer, director of Marketing for Bank of America, the advertising campaign is part of an integrated marketing program that not only represents a major investment in the Bank of America brand, but also leverages the bank’s new strategy.
“During the past 20 years, our strategic focus was on building out our national presence through mergers and acquisitions,” said Desoer. “Today, our franchise is built,” she said. “Our mission now is to realize our full potential. As our advertising illustrates, we will begin to achieve this goal by building customer/client relationships.”
The Bank of America advertising campaign focuses on the recognition that customers have different financial needs and opportunities and approach the bank in many ways, such as at banking centers and online, and in varying roles, such as investors, small business owners and commercial clients. “With this campaign, the bank will demonstrate that the company aims to set a new standard in banking — raising the bar for people’s expectations for the bank,” said Desoer.
“In short, we’re telling customers that they don’t have to accept ill- fitting solutions with which they have to ‘make do,'” she said. “We want to make sure they are aligned with the right services, using the bank products or investments that are most advantageous to them.”
The advertising campaign, which was created by Bozell Temerlin McClain, Dallas and New York, uses several straightforward, humorous vignettes to spotlight that Bank of America takes the time to understand all the important nuances of a customer’s financial situation in order to provide just the right financial solution.
The campaign’s underlying strategy is to dispel the common notion that banks generally offer their customers products that are in the institution’s own best interest rather than the customer’s best interest. Bank of America associates, however, seek to understand the full range of a customer’s financial situation to be able to recommend the most appropriate financial products and services, often including solutions the customer had not thought about.
The campaign, which includes television, radio and print advertising in major business and news publications such as The Wall Street Journal, Smart Money, Money and Fortune, will continue through the end of May. Several radio and print ads in selected markets will focus exclusively on small-business customers and clients, and will appear in Newsweek, Time, and The Wall Street Journal regional editions, as well as local business journals.
Some ads will specifically target African-American, Asian and Hispanic market segments. The ads for the Asian and Hispanic markets will be in their native languages, including Vietnamese, Korean, Chinese and Spanish.
Bank of America, with $633 billion in assets, is the largest bank in the United States. It has full-service operations in 21 states and the District of Columbia and provides financial products and services to 30 million households and two million businesses, as well as providing international corporate financial services for business transactions in 190 countries. The company’s stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges, and certain shares are listed on the Tokyo Stock Exchange.
Bank of America confirmed this morning it was the winning bidder in the online auction for the domain name: [www.Loans.com]. BofA paid $3 million for the rights to the World Wide Web address on Jan 28. The domain name was owned by Marcello Siero. The promotion and sale of the name were handled by GreatDomains.com of Universal City, CA. BofA says it will use the domain name to market loans and lending services to millions of new customers over the Internet. The bank currently has $370 billion in outstanding loans and more than two million online customers.
Bank of America reported this morning that yields on its credit card portfolio continued to lead the bank’s consumer lending. For 4Q/99, BofA’s card portfolio produced a yield of 11.32% compared to 8.18% for consumer finance; 8.12% for home equity loans; and 7.26% for residential mortgages. However over the course of 1999, BofA’s card yield for all twelve months has slipped from 12.64% to 11.59%. Chargeoffs also inched up during the fourth quarter but remain below year-ago levels. For 4Q/99, BofA card chargeoffs were 5.57% compared to 5.29% for 3Q/99 but below 4Q/98’s figure of 5.83%. Non-interest card revenue declined for 4Q/99, from $496 million for the third quarter to $487 million for the fourth quarter. Average managed bankcard receivables for 4Q/99 were $19.4 billion compared to $20.5 billion for 4Q/98. For more current and historical details on Bank of America’s credit card portfolio visit CardData ([www.carddata.com]).
Bank of America announced Wednesday a new head for its Merchant Services Division. Lorraine Stimmel, currently head of Corporate Diversity and Work/Life, will assume the position immediately. Stimmel replaces Sharif Bayyari, who chose to leave Bank of America to pursue personal endeavors effective yesterday, Jan 5. Stimmel has more than 26 years experience with Bank of America, serving in consumer banking, operations, technology and personnel divisions. She will report to Jim Hulihan, head of Commercial Card Products and Services.
Bank of America launched purchasing and corporate travel and entertainment cards in Canada and Brazil on Monday. In Canada, the Canadian dollar-denominated VISA purchasing and corporate card programs will be issued by Bank of America Canada. All primary services related to the cards, such as sales, accounting, card issuance, payment processing, settlement and statement generation, will be provided locally. All other services, including account management, will continue to be provided through existing Bank of America commercial card service units in the United States. Bank of America has also formed a partnership with Banco Bradesco in Brazil to offer Brazilian real-denominated cards to clients. Banco Bradesco will issue Brazilian real-denominated VISA purchasing and corporate cards, providing long-term currency and business solutions for companies operating in Brazil on behalf of Bank of America. Additional international partnerships are in development for next year in the United Kingdom, France and other markets worldwide.
When Santa Monica, CA’s ban on ATM surcharges for non-customers went into effect yesterday, Bank of America and Wells Fargo pulled the plug on access for non-customers. Both banks indicated they will take the same action if the ATM fee ban passed last week by San Franciscans also goes into effect. The decision to re-program ATMs in Santa Monica affected 33 machines. A similar move by both banks in San Francisco could affect nearly 500 ATMs. Yesterday’s retaliatory move by BofA and Wells drew major media attention with most newspapers this morning running front page stories detailing consumer frustration.
Bank of America Corporation reported record third quarter earnings of $2.15 billion, or $1.25 per share ($1.23 diluted).
Results far surpassed the $374 million, or $.21 per share ($.21 diluted), earnings of a year earlier that were impacted by global financial turbulence. Excluding a $725 million pre-tax merger-related charge, operating earnings a year ago were $893 million, or $.51 per share ($.50 diluted).
Diluted operating earnings per share were up 7 percent from the second quarter of this year.
The company’s return on equity rose to 18.40 percent in the third quarter, and the return on assets increased to 1.40 percent.
Cash operating earnings – which exclude the amortization of intangibles and merger-related charges – were $2.37 billion, or $1.38 per share ($1.35 diluted). The return on tangible equity was 29.48 percent. A year earlier, cash operating earnings were $1.12 billion, or $.64 per share ($.63 diluted).
“Bank of America made solid progress during the third quarter,” said Hugh L. McColl Jr., chairman and chief executive officer. “Our merger transition continues to go smoothly and remains on schedule. We are successfully building out our investment banking platform and delivering those services to our huge middle market customer base. And we are refocusing a number of our businesses to achieve greater value for customers and higher profitability for shareholders. We are accomplishing all of these initiatives while increasing earnings and improving returns.”
For the first nine months of 1999, operating earnings were up 25 percent to $6.13 billion, or $3.53 per share ($ 3.45 diluted) compared to $4.89 billion, or $2.81 per share ($2.73 diluted) a year earlier. Net income was 49 percent higher at $5.98 billion, or $3.45 per share ($3.37 diluted), compared to $4.00 billion, or $2.30 per share ($2.24 diluted), a year earlier.
Third Quarter Earnings Highlights (compared to a year ago)
* Revenue rose 21 percent, as noninterest income increased 55 percent and fully-taxable equivalent net interest income was up 3 percent.
* Average managed consumer loans increased by 17 percent.
* Fee-based income recorded strong improvement in almost all areas and rose to 45 percent of revenue.
* The efficiency ratio improved to 54 percent.
* Net charge-offs declined to .51 percent of loans.
Net Interest Income
Fully taxable-equivalent net interest income of $4.60 billion was 3 percent higher than a year earlier due to solid loan growth, somewhat offset by the impact of securitizations, loan sales and the funding cost of share repurchases. The net interest yield on earning assets was 3.46 percent compared to 3.60 percent a year earlier.
Noninterest income increased 55 percent to $3.73 billion due to widespread gains across the spectrum of Bank of America’s fee-based businesses. The primary gains were recorded in credit card, trading, investment banking, mortgage banking and service charge income. Fee income rose to 45 percent of revenue.
Securities gains were $44 million compared to $280 million in the third quarter of 1998.
Noninterest expense declined 1 percent to $4.53 billion, reflecting cost savings resulting from recent mergers offset by increased revenue-based incentives, accelerated spending on merger transition projects and continued expansion of the investment banking business. The efficiency ratio improved to 54 percent.
The provision for credit losses in the third quarter was $450 million, compared to $1.4 billion a year earlier. Net charge-offs were $460 million, well below $902 million a year ago which included a $372 million charge-off related to the D.E. Shaw relationship. Net charge-offs represented .51 percent of loans and leases in the latest period.
Nonperforming assets were $3.04 billion, or .84 percent of loans, leases and foreclosed properties on September 30, 1999, compared to $2.58 billion, or .73 percent a year earlier. The allowance for credit losses totaled $7.08 billion on September 30, 1999, equal to 252 percent of nonperforming loans and 1.96 percent of loans and leases. The allowance was $7.21 billion, or 315 percent of nonperforming loans and 2.05 percent of loans and leases, a year earlier.
Shareholders’ equity stood at $45.9 billion at September 30, 1999. The Tier 1 capital ratio was 7.71 percent. The company’s market capitalization was $95 billion. On June 23, the company authorized the repurchase of up to 130 million common shares over 24 months, with an expectation to complete the program within 18 months. Through September 30, the company had purchased 43 million shares.
Business Segment Results
Consumer Banking, which serves individuals and small businesses, earned $1.10 billion, while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $216 million. Together, they represented 61 percent of the company’s operating income. Global Corporate and Investment Banking, which serves large corporate customers, earned $530 million, representing 25 percent of the company’s earnings. Principal Investing and Asset Management, which encompasses the private bank, trust, investment management, mutual funds, retail brokerage and principal investing, earned $244 million, representing 11 percent.
Bank of America, with $621 billion in assets, is the largest bank in the United States. The company serves more than 30 million households and 2 million businesses across the country, offering customers the largest and most convenient delivery network from offices and ATMs to telephone and internet access. It also provides comprehensive international corporate financial services for clients doing business around the world. The company creates financial relationships featuring a wide array of financial services, from traditional banking products to investments and capital raising within the securities markets. Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange. Further investor information can be found at For more 3Q/99 data for Bank of America visit CardData ([www.carddata.com])
Total System Services announced last night a ten-year agreement with Bank of America to continue processing its credit card portfolio until 2009. The new agreement extends the existing agreement by two years and includes the card portfolios of Bank of America and NationsBank which merged in 1998. TSYS says BofA was its first client to convert to ‘TS2’. The company expects its continued processing of the Bank of America portfolio to produce a net profit margin consistent with its historical net profit margins. TSYS processes more than 196.7 million accounts for an estimated 275.3 million cardholders worldwide.