Earnings Reports for Jan. 16

— -- Bad Loans Drive Down Earnings at Bank of America

Fourth quarter profit fell 27 percent atBank of America and the company blamed the decline on high loan losses and reduced capital markets business due to a slowingeconomy.

Quarterly profit dropped from $1.9 billion, or $1.10 a share, to$1.39 billion this year, or 85 cents a share.

Bank of America's 12-month earnings were 4 cents higher pershare, from $4.48 to $4.52, but total net earnings dropped from$7.88 billion in 1999 to $7.52 billion last year.

The company said last month that its fourth quarter wouldn't bein line with previous periods. The 1999 fourth-quarter earningsincluded a $213 million after-tax charge to cover costs associatedwith the merger of NationsBank and BankAmerica corporations.

Last year, Bank of America's net income was $7.52 billion, or$4.52 per share, compared to $7.88 billion, or $4.48 per share, in1999. Results in 2000 and 1999 included after-tax chargesassociated with growth initiatives and mergers of $346 million and$358 million, respectively.

A report released last week by New York investment banking firmSalomon Smith Barney said Bank of America has $4.244 billion incorporate loans that could default in 2001 — more than any otherbank in the country.

Bank of America is a participant in three of five of the largestsyndicated loans, including:

Owens-Illinois, a Toledo, Ohio-based packaging company, for$4.5 billion,

Finova, a financial-services company in Scottsdale, Ariz., for$4.7 billion, and

J.C. Penney, the retail chain based in Plano, Texas, for $6billion.

Bank spokesman Bob Stickler said last week Bank of America isone of the most aggressive commercial lenders in the country,meaning it will have more bad loans than more consumer-orientedbanks.

While Stickler wouldn't confirm the amount of the loans, he saidthat $4.244 billion represents 1 percent of the bank's $400 billionloan portfolio.

"As the company projected late last year, loan losses andnonperforming assets increased significantly in the fourth quarteras the economy slowed," Bank of America said in its earningsstatement. "Higher provision expense accounted for the majority ofthe decline in net income."

Net charge-offs for the year totaled $2.4 billion, compared to$2 billion in 1999. Charge-offs for the last quarter were $1.08billion.

"Nonperforming assets were $5.5 billion, or 1.39 percent ofloans, leases and foreclosed properties at Dec. 31, 2000, comparedto $3.2 billion, or .86 percent a year earlier," the statementsaid.

"The increase in nonperforming assets was centered in thecommercial domestic portfolio, where nonperforming loans were up$1.7 billion from a year earlier."BACK TO TOP

Citigroup's Profits Rise 11 Percent

Citigroup, the No. 1 U.S.financial services company, said today its fourth-quarterprofits rose 11 percent, helped by solid growth in its largeconsumer banking business.

The company, with banking, insurance and brokerageoperations in more than 100 countries, earned $3.33 billion or65 cents a share, in the quarter, compared with $3.00 billion,or 58 cents, in the year-ago quarter.

Its fourth-quarter 2000 results included $146 million incharges, mostly for a transportation loss provision for thetruck loan and leasing portfolio of Associates First CapitalCorp., which it bought last November.

Wall Street expected Citigroup to earn 65 cents a share inthe quarter, according to First Call/Thomson Financial, whichtracks analysts' estimates.

Citigroup had net earnings of $2.84 billion, or 55 cents ashare, in the most recent fourth quarter, including another$491 million in charges related to the Associates deal. In theprior-year period, Citigroup earned $3.02 billion, or 58 centsa share, including a one-time $17 million gain.

It earned a record $14.14 billion for the whole year, up 25percent from a year ago.

Citigroup's far-flung consumer finance operations profitedfrom the company's purchase of leading consumer lenderAssociates First Capital. The $31 billion deal expandedCitigroup's reach overseas, particularly in Japan, as well asits credit card and commercial finance operations.

However, a fourth-quarter stock market slump hamperedgrowth at its Salomon Smith Barney securities unit, which helpscompanies with new stock offerings and mergers. Nasdaq postedthe worst performance in its history last year, curtailingcustomers' trading activities and forcing companies to pullplanned stock offerings.

Profits at its global consumer group rose 25 percent to$1.47 billion in the fourth quarter, partly lifted by growth inits North American credit cards business and the performance ofits Travelers Life and Annuity arm. Core income from bankingand lending rose 27 percent in the fourth quarter to $761million.

Profits at its global corporate and investment bank, whichincludes Salomon Smith Barney, rose 10 percent to $1.41billion. At Salomon Smith Barney and its global relationshipbank, profits fell 13 percent to $716 million because of anindustry-wide slowdown in some investment banking andsecurities brokerage areas, as well as higheracquisition-related and compensation costs, Citigroup said.Profits from emerging markets corporate banking jumped 72percent to a record $448 million.

Profits from its money management and private bankingbusiness rose 8 percent in the fourth quarter to $163 million,while profits at Associates fell to $289 million, compared with$394 million, after $146 million in charges in the 2000quarter.

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Intel Meets Wall Street Expectations

Intel Corp.'sfourth-quarter results beat already lowered expectations, as the world's largest chip maker suffered from flaggingpersonal computer sales and forecast first quarter sales wouldfall about 15 percent from the fourth quarter level.

But strong investment gains helped Intel, which reported income for thequarter ending Dec. 30 of $2.2 billion, or 32 cents per share.Excluding acquisition-related costs, income was $2.6 billion, or 38cents per share, up from $2.4 billion, or 36 cents per share, inthe year-ago period, the company said.

Analysts were expecting comparable results this quarter of 37cents per share, according to a survey of analysts by FirstCall/Thomson Financial.

Revenue for the quarter was $8.70 billion, compared to $8.21billion in the year-ago period.

Shares of Intel finished regular trading down 75 cents to $31.38on the Nasdaq Stock Market. In after-hours trading, shares creptupward to $31.94.

"This was a year of record annual revenue and earnings; yet,slowing economic conditions impacted fourth-quarter growth and arecausing near-term uncertainty," said Craig R. Barrett, presidentand chief executive officer.

As a result, Intel officials said they expect first quarterrevenue to decline by about 15 percent from the fourth quarter,though they maintained a positive outlook.

"We're trying to invest to ensure that we can increase thedifferentiation from our competitors," Intel chief financialofficer Andy Bryant said in an interview. "But when the economyturns up, we'll have the products that consumers will want."

Intel, which serves as a bellwether of the general health of thepersonal computer industry, had joined other PC makers in Decemberin lowering its earnings forecasts, saying poor PC sales worldwidewould lead to flat growth for the fourth quarter.

"They're going to be held up by the same downside of theeconomy that PC makers are struggling with," said industry analystJack Gold of the Meta Group.

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