Filing pursuant to Rule 425 under the
Securities Act of 1933, as amended, and
Deemed filed under Rule 14a-12 under the
Securities Exchange Act of 1934, as amended
Filer: FleetBoston Financial Corporation
Subject Company: FleetBoston Financial Corporation
Commission File Number: 1-6366
ON NOVEMBER 20, 2003, FLEETBOSTON FINANCIAL CORPORATION, A RHODE ISLAND
CORPORATION, MAILED THE FOLLOWING QUARTERLY SHAREHOLDER UPDATE TO ITS
SHAREHOLDERS:
As you've no doubt heard through the press, FleetBoston Financial and Bank of
America Corporation announced on October 27 a definitive agreement to merge,
which will create the nation's premier financial services company. The merger,
to be accomplished through a stock-for-stock transaction, will establish a new
Bank of America that will serve approximately 33 million consumer relationships
and 2.5 million business clients throughout the Northeast, Southeast, Midwest,
Southwest and West regions of the United States. More information on the
proposed merger will be forthcoming over the next few months.
FLEETBOSTON: THIRD-QUARTER EARNINGS
FleetBoston continued to build momentum with another solid earnings performance
in the third quarter. Net income for the third quarter totaled $675 million, or
$.64 per share, compared with net income of $579 million, or $.55 per share, in
the third quarter of last year. For the first nine months of 2003, net income
was $1.9 billion, or $1.76 per share, compared with $928 million, or $.87 per
share for the first nine months of 2002.
The strong growth in earnings was driven by a number of factors, including
higher revenues, significantly improved credit quality, improved performance in
several business lines, and expense control. The quarter was also marked by
ongoing progress in gaining added customer business and continued sequential
earnings growth in each of the Corporation's domestic personal and commercial
business segments.
The Corporation's risk-reduction efforts resulted in the fifth consecutive
quarterly decline in nonperforming assets. These problem assets declined by an
additional 10%, or $263 million, in the third quarter to $2.3 billion and are
down by 38% in the past year.
EARNINGS HIGHLIGHTS:
o Total revenues rose by 3% from the prior year and 6% from the second
quarter and were led by growth in noninterest income including higher
levels of investment services revenues, banking fees and commissions, and
improved results in our Principal Investing and Argentine units.
o Total credit costs continued to decline and were $265 million in the
current quarter, compared with $315 million in the second quarter and $370
million in the third quarter of last
year. Net loan chargeoffs were $321 million this quarter, $488 million in
the second quarter and $486 million in the prior-year quarter. Loan loss
reserves stood at $3.1 billion, or 2.5% of total loans.
o Total assets at September 30, 2003 were $196 billion, compared with $187
billion at September 30, 2002. The increase from a year ago is primarily
due to higher levels of consumer loans and securities, partially offset by
declines in domestic commercial loans and Latin American exposures
reflecting the execution of previously announced risk-reduction strategies.
o Stockholders' equity amounted to $17.6 billion at September 30, 2003, which
represents a common equity-to-assets ratio of 8.8%.
Over the past year and a half, we have worked diligently toward implementing the
strategy we announced at our 2002 Annual Meeting. During this time, we have had
much success -- success that is evidenced through improved earnings, a much
stronger risk profile, meeting or exceeding our employee satisfaction goals, and
attaining customer favorability levels that many competitors would be hard
pressed to match. We are proud of the momentum that has been built and we remain
confident that as we move to the next step in our Corporation's evolution, we
will only continue to increase the value of your investment.
Chad Gifford Gene McQuade
Chairman and CEO President and COO
FLEETBOSTON FINANCIAL
SELECTED FINANCIAL HIGHLIGHTS
DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
THREE MONTHS ENDED SEPTEMBER 30, 2003 2002
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INCOME STATEMENT DATA
Net income (loss) $ 675 $ 579
Continuing operations 675 597
Discontinued operations - (18)
Total revenue 2,934 2,857
Noninterest expense 1,611 1,593
Provision for credit losses 265 352
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PER COMMON SHARE
Market value (period-end) $ 30.15 $ 20.33
Cash dividends declared .35 .35
Book value (period-end) 16.46 15.84
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AT SEPTEMBER 30
Assets $ 196,398 $ 87,188
Securities 30,844 28,503
Loans and leases 126,344 17,053
Reserve for credit losses (3,128) (3,727)
Deposits 132,515 21,481
Total stockholders' equity 17,594 16,866
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RATIOS
Return on assets 1.39 % 1.23 %
Return on equity 15.53 13.80
Net interest margin 3.68 3.86
Efficiency ratio 54.9 55.8
Total equity/assets (period-end) 8.96 9.01
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Diluted 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
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2003 .54 .59 .64 1.76
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2002 .70 (.37) .55 .24 1.12
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2001 .12 .48 .70 (.49) .83
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FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from
estimates. These risks and uncertainties include, among other things, (1)
changes in general political and economic conditions, either domestically or
internationally; (2) continued economic, political and social uncertainties in
Latin America; (3) developments concerning credit quality, including the
resultant effect on the level of the Corporation's provision for credit losses,
nonperforming assets, net charge-offs and reserve for credit losses; (4)
continued weakness in domestic commercial loan demand, and the impact of that
weakness on the Corporation's lending activities; (5) changes in customer
borrowing, repayment, investment and deposit practices; (6) interest rate and
currency fluctuations, equity and bond market fluctuations and inflation; (7)
changes in the mix of interest rates and maturities of our interest earning
assets and interest bearing liabilities; (8) developments concerning the global
capital markets and the resultant impact on our principal investing and other
capital markets-related businesses and our asset management and brokerage
businesses, as well as the availability and terms of funding necessary to meet
our liquidity needs; (9) changes in competitive product and pricing pressures
within the Corporation's markets; (10) legislative or regulatory developments,
including changes in laws or regulations concerning taxes, banking, securities,
capital requirements and risk-based capital guidelines, reserve methodologies,
deposit insurance and other aspects of the financial services industry; (11)
changes in accounting rules, policies, practices and procedures; (12) legal and
regulatory proceedings and related matters with respect to the financial
services industry, including those directly involving the Corporation and its
subsidiaries; (13) the effectiveness of instruments and strategies used to hedge
or otherwise manage the Corporation's exposure to various types of market and
credit risk; (14) the effects of terrorist activities or other hostilities,
including geopolitical stresses in the Middle East and other areas; (15)
developments concerning the integration of our business and operations, and
related systems conversions, with those of Bank of America, including delays and
resultant additional merger-related costs or unanticipated adverse results
relating to our or Bank of America's existing businesses; (16) the timing of
realization of anticipated cost savings resulting from the merger with Bank of
America, or the achievement of anticipated cost savings in their entirety; and
(17) the impact of decisions to downsize, sell or close units or otherwise
change the business mix of the combined FleetBoston/Bank of America entity.
Other risks and additional information, including risks and information relating
to the proposed merger with Bank of America, can be found in the Corporation's
reports filed with the SEC and available at www.sec.gov. Forward-looking
statements speak only as of the date on which they were made or such earlier
date as may be indicated in connection with such statements,
and FleetBoston undertakes no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which any such statement is
made to reflect the occurrence of unanticipated events.
ADDITIONAL INFORMATION ABOUT THE PROPOSED MERGER
FleetBoston, together with Bank of America, will file a Joint Proxy
Statement/Prospectus and other documents regarding the proposed merger of
FleetBoston and Bank of America with the SEC. FleetBoston will mail the Joint
Proxy Statement/Prospectus to its shareholders. These documents will contain
important information about the proposed merger, and shareholders are urged to
read these documents when they become available.
Copies of all documents filed with the SEC regarding the proposed merger can be
obtained free of charge at the SEC's website (www.sec.gov). These documents may
also be obtained free of charge from (1) Bank of America's website
(www.bankofamerica.com) under the tab "About Bank of America" and then under the
heading "SEC Documents" and (2) FleetBoston's website (www.fleet.com) under the
tab "About Fleet" and then under the heading "Investor Relations" and then under
the item "SEC Documents".
PARTICIPANTS IN THE PROPOSED MERGER
Bank of America and FleetBoston and their respective directors and executive
officers may be deemed participants in the solicitation of proxies from
stockholders in connection with the proposed merger of FleetBoston and Bank of
America. Information about the directors and executive officers of Bank of
America and FleetBoston and information about other persons who may be deemed
participants in the proposed merger will be included in the Joint Proxy
Statement/Prospectus. Information about Bank of America's executive officers and
directors can be found in Bank of America's definitive proxy statement filed
with the SEC on March 27, 2003, and information about FleetBoston's executive
officers and directors can be found in FleetBoston's definitive proxy statement
filed with the SEC on March 17, 2003. Free copies of these documents can be
obtained from Bank of America and FleetBoston using the contact information
above.