Bank of America Earns US$3.2 Billion in First Quarter
By Bank Of America, PRNEThursday, April 15, 2010
Credit Costs Decline Across Most Loan Portfolios
CHARLOTTE, April 16, 2010 - Bank of America Corporation today reported first-quarter 2010 net income
of US$3.2 billion compared with a net loss of US$194 million in the fourth
quarter and net income of US$4.2 billion a year earlier. After preferred
dividends, the company earned US$0.28 per diluted share in the first quarter,
up from a loss of US$0.60 per share in the fourth quarter and earnings of
US$0.44 per share in the first quarter of 2009.
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Two factors primarily drove results in the first quarter:
- Provision for credit losses fell by US$3.6 billion from the year-ago
period, reflecting an improvement in credit quality.
- Strong capital markets activity, including record sales and trading
driven by industry-leading corporate and investment banking positions,
helped drive results for Global Banking and Markets.
"With each day that passes, the 2010 story appears to be one of
continuing credit recovery, and our results reflect a gradually improving
economy," said Chief Executive Officer and President Brian T. Moynihan. "Our
customers - individuals, companies, and institutional investors -
increasingly see the value of our integrated capabilities. We also are seeing
ample indications that those integrated capabilities hold promise for
long-term shareholder value."
First-Quarter 2010 Business Highlights
- Bank of America Merrill Lynch ranked No. 1 in both global high-yield
debt and leveraged loans and No. 2 in overall global and U.S. net
investment banking revenues with a 7 percent market share, according to
Dealogic first-quarter 2010 league tables.
- Average retail deposits during the quarter increased US$15.2 billion,
or 2 percent, from a year earlier, paced by strong organic growth in
Merrill Lynch Global Wealth Management as momentum in the affluent
customer base continued.
- Consumer referrals and sales to Merrill Lynch Global Wealth Management
clients accelerated in the first quarter. Approximately 60,000 lending
and deposit products were sold to Merrill Lynch clients. Referrals
between Global Wealth and Investment Management and the company's
commercial and corporate businesses increased 56 percent compared with
the fourth quarter of 2009.
- During the quarter, Bank of America extended US$150 billion in credit,
according to preliminary data. Credit extensions included US$70 billion
in first mortgages, US$56 billion in commercial non-real estate, US$10
billion in commercial real estate, US$3 billion in domestic consumer
and small business card, US$2 billion in home equity products and US$9
billion in other consumer credit. Commercial credit extensions include
a significant number of credit renewals.
- Bank of America funded US$69.5 billion in first mortgages, helping more
than 320,000 people either purchase homes or refinance existing
mortgages. This funding included US$17.4 billion in mortgages made to
nearly 115,000 low- and moderate-income borrowers. Approximately 37
percent of first mortgages were for home purchases.
Initiatives to Help Customers
- Bank of America introduced several initiatives during the quarter to
help customers. The company will eliminate debit point-of-sale
transactions that would result in an overdraft if a customer does not
have enough funds in their account.
- The company introduced an earned principal forgiveness approach to
modifying certain types of mortgages that are severely underwater to
expand the company's existing aggressive homeowner retention programs.
- Bank of America was the first to extend credit card assistance programs
to small businesses.
- Since the start of 2008, Bank of America and previously Countrywide
have provided home ownership retention opportunities to customers for
approximately 819,000 home loan modification transactions. This includes
569,000 loan modifications and approximately 251,000 consumers who were
in trial-period modifications under the government's Making Home
Affordable program at March 31, 2010. During the quarter, 77,000 loan
modifications were completed with total unpaid principal balances of
US$17.8 billion, including 33,000 customers who converted from
trial-period to permanent modifications under the government's Making
Home Affordable program.
- Bank of America Home Loans expanded its default management staff by
nearly 7 percent to more than 16,000 during the quarter to help
customers experiencing difficulty with their home loans.
- Bank of America issued clarity statements on a number of consumer
products to help customers better understand the products they use.
- Bank of America helped more than 200,000 Global Card Services account
holders by reducing their interest rates and providing more affordable
payment terms during the quarter.
"We will continue to support our customers through these and other
initiatives aimed at helping restore their financial health," Moynihan said.
"We want to ensure quality relationships with our customers and earn their
trust and future business. This will benefit not just our customers, but our
company and our shareholders."
First-Quarter 2010 Financial Summary
Revenue and Expense
Revenue net of interest expense on a fully taxable-equivalent (FTE)(1)
basis declined 11 percent to US$32.3 billion from US$36.1 billion a year ago.
Revenue declines were driven by the absence of year-earlier credit-related
gains on Merrill Lynch structured notes, the sale of an equity investment and
lower mortgage banking volume and income.
Revenue was up 27 percent from the fourth quarter of 2009.
Net interest income on an FTE basis was US$14.1 billion, compared with
US$12.8 billion a year earlier. On a managed FTE basis, net interest income
declined from US$15.6 billion a year earlier as loan demand decreased and
charge-offs reduced loan balances. The increase in reported net interest
income was primarily due to the adoption of new consolidation accounting
guidance effective Jan. 1, which moved net assets of approximately US$100
billion onto the balance sheet. The change, while having no material impact
on net income, primarily affected net interest income, card income and the
provision for loan and lease losses. The net interest yield widened 23 basis
points to 2.93 percent, but average loans declined by 2 percent, reflecting
economic conditions and lower demand.
Noninterest income declined 22 percent to US$18.2 billion from US$23.3
billion a year ago. Lower mortgage banking income and decreases in both card
income and equity investment income drove the decline. Mortgage banking
income declined, driven by less favorable mortgage servicing rights hedging
results and lower production volume and margins. Card income declined due to
the recent adoption of new accounting guidance and the CARD Act, while equity
investment income was impacted by the absence of the gain a year earlier on
the sale of China Construction Bank (CCB) shares. However, noninterest income
was up 35 percent from the fourth quarter of 2009, reflecting record sales
and trading revenue in the current quarter.
Noninterest expense increased 5 percent to US$17.8 billion from US$17.0
billion a year earlier as personnel costs and other general operating
expenses rose. Pretax merger and restructuring charges declined to US$521
million from US$765 million a year earlier.
The efficiency ratio on an FTE basis was 55.05 percent, compared with
47.12 percent a year earlier.
(1) FTE basis is a non-GAAP measure. For a reconciliation to GAAP, refer
to page 20 of this press release
(All Amounts in US Dollars unless otherwise noted)
Credit Quality
(Dollars in millions) Q1 2010 Q4 2009 Q1 2009
--------------------- ------- ------- -------
Provision for credit losses $9,805 $10,110 $13,380
--------------------------- ------ ------- -------
Net charge-offs(1) 10,797 8,421 6,942
----------------- ------ ----- -----
Net charge-off ratio(1,2) 4.44% 3.71% 2.85%
------------------------ ---- ---- ----
Total managed net losses(3) - $11,347 $9,124
-------------------------- --- ------- ------
Total managed net loss
ratio(2,3) - 4.54% 3.40%
-------------------------- --- ---- ----
At 3/31/10 At 12/31/09 At 3/31/09
---------- ----------- ----------
Nonperforming loans, leases and
foreclosed properties $35,925 $35,747 $25,632
------------------------------- ------- ------- -------
Nonperforming loans, leases and
foreclosed properties ratio(4) 3.69% 3.98% 2.64%
----------------------------------- ---- ---- ----
Allowance for loan and lease
losses $46,835 $37,200 $29,048
---------------------------- ------- ------- -------
Allowance for loan and lease
losses ratio(5) 4.82% 4.16% 3.00%
-------------------------------- ---- ---- ----
(1)Current period reflects the adoption of new accounting guidance
resulting in the addition of approximately $103 billion in loans to
the balance sheet on January 1, 2010.
(2) Net charge-off/loss ratios are calculated as annualized held
net charge-offs or managed net losses divided by average
outstanding held or managed loans and leases during the period.
(3) Prior periods are shown on a managed basis, which prior to the
adoption of new accounting guidance on January 1, 2010 included
losses on securitized credit card and other loans which are reported
in net charge-offs post adoption.
(4) Nonperforming loans, leases and foreclosed properties ratios are
calculated as nonperforming loans, leases and foreclosed properties
divided by outstanding loans, leases and foreclosed properties at
the end of the period.
(5) Allowance for loan and lease losses ratios are calculated as
allowance for loan and lease losses divided by loans and leases
outstanding at the end of the period.
Note: Ratios do not include loans measured under the fair value
option.
Credit quality continued to improve during the quarter, with net losses
declining in most consumer portfolios. Credit costs, however, remain high
amid relatively weak global economic conditions.
Credit quality across most commercial portfolios showed signs of
improvement with criticized and nonperforming loans decreasing from the prior
quarter. Net charge-offs in the commercial portfolios declined across a broad
range of borrowers and industries.
Net charge-offs were $2.4 billion higher than the fourth quarter of 2009,
driven mainly by the adoption of new accounting guidance that resulted in
securitized credit card loans and other loans coming back onto the company's
balance sheet. Also contributing to the increase were charge-offs on certain
modified collateral-dependent consumer real estate loans. Excluding these
factors, net charge-offs would have been $1.3 billion lower. Net charge-offs
in the first quarter of $10.8 billion, or 4.44 percent, which reflect the new
accounting guidance, are comparable with managed net losses of $11.3 billion,
or 4.54 percent, in the prior quarter. Nonperforming loans, leases and
foreclosed properties were $35.9 billion, compared with $35.7 billion at
December 31, 2009.
The provision for credit losses was $9.8 billion, $305 million lower than
the fourth quarter of 2009 and $3.6 billion lower than the same period a year
earlier. Excluding the $10.8 billion increase to the reserve for credit
losses associated with adopting the new accounting guidance, which did not
initially impact provision, reserves were reduced $992 million during the
quarter. This compares with a $1.7 billion addition to the reserve for credit
losses in the fourth quarter and $6.4 billion a year earlier. The reduction
from the fourth quarter of 2009 was primarily due to improved delinquencies
and lower bankruptcies in consumer and small business products in Global Card
Services and the stabilization of commercial portfolios. These were partially
offset by higher reserve additions in the consumer real estate portfolios
amid continued stress in the housing market, including reserve additions for
purchased credit-impaired consumer portfolios obtained through acquisitions.
Capital and Liquidity Management
At 3/31/10 At 12/31/09 At 3/31/09
---------- ----------- ----------
Total shareholders' equity $229,823 $231,444 $239,549
-------------------------- -------- -------- --------
(in millions)
-------------
Tier 1 common ratio 7.60% 7.81% 4.49%
------------------- ---- ---- ----
Tier 1 capital ratio 10.23 10.40 10.09
-------------------- ----- ----- -----
Total capital ratio 14.47 14.66 14.03
------------------- ----- ----- -----
Tangible common equity ratio(1) 5.24 5.57 3.13
------------------------------ ---- ---- ----
Tangible book value per share $11.70 $11.94 $10.88
----------------------------- ------ ------ ------
(1)Tangible common equity and tangible book value per share are non-
GAAP measures. Other companies may define or calculate the tangible
common equity ratio and tangible book value per share differently.
For reconciliation to GAAP measures, please refer to page 20 of this
press release.
Capital ratios were negatively impacted from the fourth quarter of 2009
primarily due to the adoption of new accounting guidance on consolidation.
The company's liquidity position strengthened during the quarter as customers
continued to reduce debt. Cash and equivalents rose more than $20 billion.
The company's total global excess liquidity sources rose by approximately $50
billion to more than $260 billion. The company's time to required funding
stands at 24 months.
During the quarter, a cash dividend of $0.01 per common share was paid
and the company reported $348 million in preferred dividends. Period-end
common shares issued and outstanding were 10.03 billion for the first quarter
of 2010, 8.65 billion for the fourth quarter of 2009 and 6.40 billion for the
first quarter of 2009. The increase in outstanding shares was driven
primarily by the conversion of common equivalent shares into common stock in
the first quarter of 2010.
2010 Business Segment Results
Deposits
(Dollars in millions) Q1 2010 Q1 2009
--------------------- ------- -------
Total revenue, net of interest
expense, FTE basis $3,632 $3,372
------------------------------ ------ ------
Provision for credit losses 37 88
--------------------------- --- ---
Noninterest expense 2,505 2,323
------------------- ----- -----
Net income 683 600
---------- --- ---
Efficiency ratio, FTE basis 68.97% 68.89%
--------------------------- ----- -----
Return on average equity 11.49 10.39
------------------------ ----- -----
Average deposits $414,167 $376,287
---------------- -------- --------
At 3/31/10 At 3/31/09
---------- ----------
Period-end deposits $417,539 $390,247
------------------- -------- --------
Deposits net income rose 14 percent as the 8 percent increase in revenue
was partially offset by increased noninterest expense. Revenue increased
mainly due to growth in deposits as well as improved spreads. Noninterest
income remained relatively flat. Expenses rose as a higher percentage of the
retail distribution costs shifted to Deposits from the other consumer
businesses.
Average deposits rose 10 percent, or $37.9 billion, from a year ago due
to the transfer of $39.7 billion in certain client deposits from Global
Wealth and Investment Management and $15.2 billion of organic growth. Organic
growth was driven by the continuing need of customers to manage their
liquidity as illustrated by growth in higher spread deposits. The increase
was partially offset by the expected decline in higher-yielding Countrywide
deposits.
Global Card Services
(Dollars in millions) Q1 2010 Q1 2009
Total revenue, net of interest
expense, FTE basis(1) $6,804 $7,448
Provision for credit losses(2) 3,535 8,221
Noninterest expense 1,751 2,039
Net income (loss) 952 (1,752)
Efficiency ratio,FTE basis 25.74% 27.38%
Return on average equity 8.94 n/m
Average loans(1) $189,307 $224,013
At 3/31/10 At 3/31/09
Period-end loans(1) $181,763 $217,532
(1) Current period shown on a GAAP basis in accordance with new
accounting guidance. Prior period shown on a managed basis. Managed
basis assumed that credit card loans that were securitized were not
sold and presents earnings on these loans in a manner similar to the
way loans that have not been sold (i.e., held loans) are presented.
For more information and detailed reconciliation, refer to page 21
of this press release.
(2) Current period shown on a GAAP basis in accordance with new
accounting guidance. Prior period results shown on a managed basis
and represented provision for credit losses on held loans combined
with realized credit losses associated with the securitized credit
card loan portfolio. For more information and detailed
reconciliation, refer to page 21 of this press release.
n/m = not meaningful
Global Card Services reported net income of $952 million as credit costs
declined, reflecting continued improvement in the U.S. economy. Net revenue
declined 9 percent to $6.8 billion due to lower net interest income from the
decline in average loans and lower fee income resulting from the
implementation of the CARD Act.
Provision for credit losses decreased $4.7 billion to $3.5 billion from a
year ago as lower delinquencies and lower expected losses from the improved
economic outlook drove reserve reductions during the quarter.
Expenses decreased as a higher percentage of the retail distribution
costs shifted to Deposits from Global Card Services.
Home Loans and Insurance
(Dollars in millions) Q1 2010 Q1 2009
--------------------- ------- -------
Total revenue, net of interest
expense, FTE basis $3,624 $5,235
------------------------------ ------ ------
Provision for credit losses 3,600 3,372
--------------------------- ----- -----
Noninterest expense 3,328 2,655
------------------- ----- -----
Net income (loss) (2,071) (494)
----------------- ------ ----
Efficiency ratio, FTE basis 91.81% 50.72%
--------------------------- ----- -----
Average loans $133,745 $125,544
------------- -------- --------
At 3/31/10 At 3/31/09
---------- ----------
Period-end loans $132,428 $131,332
---------------- -------- --------
The net loss in Home Loans and Insurance widened to $2.1 billion as
higher credit costs continued to negatively impact results. Net revenue
decreased 31 percent due to lower mortgage banking income, driven by less
favorable mortgage servicing rights results and lower production volume and
margins resulting from a decrease in refinance activity.
The provision for credit losses rose to $3.6 billion, driven by higher
reserve additions amid continued stress in the housing market. Also driving
the increase was the impact of certain modified loans where carrying value is
based on the underlying collateral value and higher home equity net
charge-offs related to loans that were consolidated in the quarter as a
result of new accounting guidance. These increases were partially offset by
lower reserve additions on the Countrywide home equity purchased
credit-impaired portfolio, compared with the year-ago period.
Noninterest expense rose to $3.3 billion mostly due to expenses related
to increased litigation costs, default management staff, vendor expenses and
loss mitigation efforts.
Effective January 1, 2010, Bank of America realigned the Global Banking
and Global Markets business segments. The segments are now referred to as
Global Commercial Banking and Global Banking and Markets. Prior period
amounts have been reclassified to conform to current period presentation.
Global Commercial Banking
(Dollars in millions) Q1 2010 Q1 2009
--------------------- ------- -------
Total revenue, net of interest
expense, FTE basis $3,007 $2,683
------------------------------ ------ ------
Provision for credit losses 916 1,765
--------------------------- --- -----
Noninterest expense 954 961
------------------- --- ---
Net income (loss) 713 (30)
----------------- --- ---
Efficiency ratio, FTE basis 31.71% 35.77%
--------------------------- ----- -----
Return on average equity 6.82 n/m
------------------------ ---- ---
Average loans and leases $211,683 $235,386
------------------------ -------- --------
Average deposits 143,357 118,489
---------------- ------- -------
n/m = not meaningful
Global Commercial Banking returned to profitability, recording net income
of $713 million, driven by lower credit costs and increased revenues.
Net revenue rose as improved loan spreads on new, renewed and amended
facilities drove an increase in net interest income. The increase was
partially offset by reduced loan balances. Net revenue also benefited from
strong deposit growth, as clients remain very liquid, partially offset by
narrower spreads on deposits and lower treasury services transaction volumes
that reflect current economic conditions.
The provision for credit losses decreased to $916 million on lower credit
costs in the retail dealer-related portfolio and stabilization across most
commercial portfolios.
Average loan balances decreased $23.7 billion as loan demand remained
weak. Average deposit balances continued to grow, increasing $24.9 billion as
clients sought to increase liquidity.
Note: Global Commercial Banking clients include middle-market and
business banking companies, commercial real estate firms and governments and
are generally defined as companies with sales up to $2 billion. Lending
products and services include commercial loans and commitment facilities,
real estate lending, asset-based lending and indirect consumer loans.
Treasury solutions include treasury management, foreign exchange and
short-term investing options.
Global Banking and Markets
(Dollars in millions) Q1 2010 Q1 2009
--------------------- ------- -------
Total revenue, net of interest
expense, FTE basis $9,776 $8,981
------------------------------ ------ ------
Provision for credit losses 256 347
--------------------------- --- ---
Noninterest expense 4,386 4,724
------------------- ----- -----
Net income 3,218 2,509
---------- ----- -----
Efficiency ratio, FTE basis 44.86% 52.60%
--------------------------- ----- -----
Return on average equity 23.64 22.05
------------------------ ----- -----
Total average assets $782,415 $836,939
-------------------- -------- --------
Global Banking and Markets net income increased $709 million to $3.2
billion, driven by record performance in sales and trading. Revenue increased
by $795 million as market conditions improved and the impact of writedowns on
legacy assets decreased from a year earlier. Noninterest expense declined
$338 million due to merger efficiencies and the shift in compensation that
delivers a greater portion of incentive pay over time.
Fixed Income, Currency and Commodities revenue of $5.8 billion was
primarily driven by sales and trading revenues. Revenue rose on improved
market conditions, increased liquidity, tighter credit spreads and the
reduced impact of writedowns on legacy assets.
Equities revenue rose to $1.7 billion primarily driven by sales and
trading revenues of $1.5 billion. Higher revenue was driven by effective
market positioning and related equity derivative trading gains.
Corporate and Investment Banking revenue of $2.3 billion included
corporate banking revenue of $1.6 billion. Corporate banking revenue was flat
year over year, as higher credit related revenue was offset by lower treasury
services revenue. Investment banking revenue, which rose 18 percent to $1.2
billion, was shared between the subsegments of Global Banking and Markets.
The increase reflected the strength of the Bank of America Merrill Lynch
platform and was driven by debt and equity issuances.
Note: Global Banking and Markets includes the results of the Fixed
Income, Currency and Commodities, Equities, and Corporate and Investment
Banking businesses and the core banking products to large corporate clients
that are defined as having sales in excess of $2 billion, as well as the
results related to the Merchant Services joint venture.
Global Wealth and Investment Management
(Dollars in millions) Q1 2010 Q1 2009
Total revenue, net of interest $4,409 $4,346
expense, FTE basis
Provision for credit losses 242 254
Noninterest expense 3,374 3,322
Net income 497 479
Efficiency ratio, FTE basis 76.52% 76.45%
Return on average equity 8.83 11.10
Average loans $99,063 $110,535
Average deposits 224,514 250,913
(in billions) At 3/31/10 At 3/31/09
Assets under management $750.7 $697.3
Total net client assets(1) $2,183.2 $1,987.4
(1)Client assets are defined as assets under management, client
brokerage assets, other assets in custody and client deposits
Global Wealth and Investment Management net income rose to $497 million,
driven mainly by higher investment and brokerage activity. Net revenue
increased to $4.4 billion on the absence of support for certain cash funds
and higher investment and brokerage service income, partially offset by lower
net interest income.
Merrill Lynch Global Wealth Management net revenue declined $202 million
to $3.1 billion from a year earlier, mainly due to the impact of the
migration of certain deposits and loan balances to the Deposits and Home
Loans and Insurance businesses and lower residual net interest income. These
impacts to net interest income were partially offset by improvements in
investment and brokerage income due to higher valuations in the equity
markets and increased transactional activity.
U.S. Trust, Bank of America Private Wealth Management net revenue of $688
million was flat as higher valuations in the equity markets and increased
deposit spreads were offset by net outflows and lower residual net interest
income.
Columbia Management net revenue increased $127 million to $277 million,
driven by the absence of support provided to certain cash funds and the
impact of higher valuations in the equity markets. These were partially
offset by a reduction in revenues, driven by net outflows in the cash
complex.
Global Wealth and Investment Management also includes the results related
to the Retirement and Philanthropic Services business and the economic
ownership interest related to the company's investment in BlackRock, Inc.
All Other
All Other reported a net loss of $810 million due to lower net revenue,
which was further impacted by increases in provision for credit losses and
noninterest expense. Effective January 1, 2010, due to the recent adoption of
new consolidation accounting guidance, the securitization offsets for net
interest income, card income and the provision for credit losses are no
longer recorded as part of All Other. Results were also impacted by
other-than-temporary impairment charges primarily related to non-agency
collateralized mortgage obligations. Provision for credit losses was driven
by the impact of new accounting guidance and higher credit costs in the
discontinued real estate purchased credit-impaired portfolio, partially
offset by lower reserve builds related to the residential mortgage portfolio.
Noninterest expense increased due to higher personnel, general operating and
other expenses.
All Other consists primarily of equity investments, the residential
mortgage portfolio associated with asset and liability management (ALM)
activities, the residual impact of the cost allocation process, merger and
restructuring charges, intersegment eliminations, fair value adjustments
related to certain Merrill Lynch structured notes and the results of certain
consumer finance, investment management and commercial lending businesses
that are being liquidated. In prior periods, All Other also included the
offsetting securitization impact to present Global Card Services on a managed
basis. For more information and detailed reconciliation, please refer to the
data pages supplied with this press release. In addition, All Other includes
the results of First Republic Bank, which was acquired as part of the Merrill
Lynch acquisition.
Note: Chief Executive Officer and President Brian T. Moynihan and Interim
Chief Financial Officer Neil Cotty will discuss first-quarter 2010 results in
a conference call at 9:30 a.m. ET today. The presentation and supporting
materials can be accessed on the Bank of America Investor Relations Web site
at investor.bankofamerica.com. For a listen-only connection to the
conference call, dial 1.888.245.1801 (U.S.) or 1.785.424.1733 (international)
and the conference ID: 79795.
Bank of America
Bank of America is one of the world's largest financial institutions,
serving individual consumers, small- and middle-market businesses and large
corporations with a full range of banking, investing, asset management and
other financial and risk management products and services. The company
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Corporation's broker-dealers are not banks and are separate legal entities
from their bank affiliates. The obligations of the broker-dealers are not
obligations of their bank or thrift affiliates (unless explicitly stated
otherwise), and these bank affiliates are not responsible for securities
sold, offered or recommended by the broker-dealers. The foregoing also
applies to other non-bank, non-thrift affiliates.
www.bankofamerica.com
Investors May Contact:
Kevin Stitt, Bank of America, +1-704-386-5667
Lee McEntire, Bank of America, +1-704-388-6780
Reporters May Contact:
Scott Silvestri, Bank of America, +1-980-388-9921
scott.silvestri@bankofamerica.com
Bank of America Corporation and Subsidiaries
Selected Financial Data
-----------------------
(Dollars in millions, except per share data; shares in thousands)
Three Months Ended March
Summary Income Statement 31
------------------------ -------------------------
2010 2009
---- ----
Net interest income $13,749 $12,497
Noninterest income 18,220 23,261
------ ------
Total revenue, net of interest expense 31,969 35,758
Provision for credit losses 9,805 13,380
Noninterest expense, before merger and
restructuring charges 17,254 16,237
Merger and restructuring charges 521 765
--- ---
Income before income taxes 4,389 5,376
Income tax expense 1,207 1,129
Net income $3,182 $4,247
====== ======
Preferred stock dividends and
accretion (1) 348 1,433
Net income applicable to common
shareholders $2,834 $2,814
====== ======
Earnings per common share $0.28 $0.44
Diluted earnings per common share 0.28 0.44
Three Months Ended March
Summary Average Balance Sheet 31
----------------------------- -------------------------
2010 2009
---- ----
Total loans and leases $991,615 $994,121
Debt securities 311,136 286,249
Total earning assets 1,933,060 1,912,483
Total assets 2,509,760 2,519,134
Total deposits 981,015 964,081
Shareholders' equity 229,891 228,766
Common shareholders' equity 200,380 160,739
Three Months Ended March
Performance Ratios 31
------------------ -------------------------
2010 2009
---- ----
Return on average assets 0.51% 0.68%
Return on average common shareholders'
equity 5.73 7.10
Three Months Ended March
Credit Quality 31
-------------- -------------------------
2010 2009
---- ----
Total net charge-offs $10,797 $6,942
Annualized net charge-offs as a % of
average loans and leases outstanding
(2) 4.44% 2.85%
Provision for credit losses $9,805 $13,380
Total consumer credit card managed net
losses n/a 3,794
Total consumer credit card managed net
losses as a % of average managed
credit card receivables n/a 8.62%
March 31
-------------------------
2010 2009
---- ----
Total nonperforming loans, leases and
foreclosed properties $35,925 $25,632
Nonperforming loans, leases and
foreclosed properties as a % of total
loans, leases and foreclosed
properties (2) 3.69% 2.64%
Allowance for loan and lease losses $46,835 $29,048
Allowance for loan and lease losses as
a % of total loans and leases
outstanding (2) 4.82% 3.00%
Capital Management March 31
------------------ -------------------------
2010 2009
---- ----
Risk-based capital:
Tier 1 common equity ratio 7.60% 4.49%
Tier 1 capital ratio 10.23 10.09
Total capital ratio 14.47 14.03
Tier 1 leverage ratio 6.46 7.07
Tangible equity ratio (3) 6.05 6.42
Tangible common equity ratio (4) 5.24 3.13
Period-end common shares issued and
outstanding 10,032,001 6,400,950
Three Months Ended March
31
-------------------------
2010 2009
---- ----
Shares issued (5) 1,381,757 1,383,514
Average common shares issued and
outstanding 9,177,468 6,370,815
Average diluted common shares issued
and outstanding 10,005,254 6,393,407
Dividends paid per common share $0.01 $0.01
Summary End of Period Balance Sheet March 31
----------------------------------- -------------------------
2010 2009
---- ----
Total loans and leases $976,042 $977,008
Total debt securities 316,360 262,638
Total earning assets 1,818,432 1,714,460
Total assets 2,333,200 2,321,963
Total deposits 976,102 953,508
Total shareholders' equity 229,823 239,549
Common shareholders' equity 211,859 166,272
Book value per share of common stock
(6) $21.12 $25.98
Tangible book value per share of
common stock (6) 11.70 10.88
(1) Fourth quarter 2009 includes $4.0 billion of accelerated
accretion from redemption of preferred stock issued to the U.S.
Treasury.
(2) Ratios do not include loans measured at fair value under the fair
value option at and for the three months ended March 31, 2010 and
2009.
(3) Tangible equity ratio represents shareholders' equity less
goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities divided by total
assets less goodwill and intangible assets (excluding mortgage
servicing rights), net of related deferred tax liabilities.
(4) Tangible common equity ratio represents common shareholders'
equity plus any Common Equivalent Securities less goodwill and
intangible assets (excluding mortgage servicing rights), net of
related deferred tax liabilities divided by total assets less
goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities.
(5) 2009 amounts include approximately 1.375 billion shares issued in
the Merrill Lynch acquisition.
(6) Book value per share of common stock includes the impact of the
conversion of common equivalent shares to common shares. Tangible
book value per share of common stock represents ending common
shareholders' equity plus any Common Equivalent Securities less
goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities divided by ending
common shares outstanding plus the number of common shares issued
upon conversion of common equivalent shares.
n/m = not meaningful
n/a = not applicable
Certain prior period amounts have been reclassified to conform to
current period presentation.
Bank of America Corporation and Subsidiaries
Business Segment Results
------------------------
(Dollars in millions)
For the three months ended March 31
Global Card
Deposits Services (1, 2)
------------------- ---------------------
2010 2009 2010 2009
Total revenue, net
of interest expense
(3) $3,632 $3,372 $6,804 $7,448
Provision for credit
losses 37 88 3,535 8,221
Noninterest expense 2,505 2,323 1,751 2,039
Net income (loss) 683 600 952 (1,752)
Efficiency ratio (3) 68.97% 68.89% 25.74% 27.38%
Return on average
equity 11.49 10.39 8.94 n/m
Average -total
loans and leases n/m n/m 189307 224013
Average -total
deposits $414,167 $376,287 n/m n/m
Home Loans &
Insurance
---------------------
2010 2009
Total revenue, net of interest
expense (3) $3,624 $5,235
Provision for credit losses 3,600 3,372
Noninterest expense 3,328 2,655
Net income (loss) (2,071) (494)
Efficiency ratio (3) 91.81% 50.72%
Return on average equity n/m n/m
Average -total loans and
leases 133745 125544
Average - total deposits n/m n/m
Global Commercial Global Banking &
Banking Markets
------- -------
2010 2009 2010 2009
---- ---- ---- ----
Total revenue, net
of interest expense
(3) $3,007 $2,683 $9,776 $8,981
Provision for credit
losses 916 1,765 256 347
Noninterest expense 954 961 4,386 4,724
Net income (loss) 713 (30) 3,218 2,509
Efficiency ratio (3) 31.71% 35.77% 44.86% 52.6%
Return on average
equity 6.82 n/m 23.64 22.05
Average -total
loans and leases $211,683 $235,386 $101,185 $123,061
Average -total
deposits 143,357 118,489 104,126 104,029
Global Wealth &
Investment Management
-----------
2010 2009
---- ----
Total revenue, net of interest
expense (3) $4,409 $4,346
Provision for credit losses 242 254
Noninterest expense 3,374 3,322
Net income (loss) 497 479
Efficiency ratio (3) 76.52% 76.45%
Return on average equity 8.83 11.10
Average -total loans and
leases $99,063 $110,535
Average - total deposits 224,514 250,913
All Other (1, 4)
----------------
2010 2009
---- ----
Total revenue, net
of interest expense
(3) $1,038 $4,015
Provision for credit
losses 1,219 (667)
Noninterest expense 1,477 978
Net income (loss) (810) 2,935
Average -total
loans and leases $256,126 $174,730
Average -total
deposits 70,417 91,674
(1) Global Card Services is presented in accordance with new
accounting guidance on consolidation of VIEs and transfers of
financial assets. Prior periods are presented on a managed basis.
(2) Provision for credit losses represents provision for credit
losses on held loans combined with realized credit losses associated
with the securitized loan portfolio.
(3) Fully taxable-equivalent (FTE) basis. FTE basis is a performance
measure used by management in operating the business that management
believes provides investors with a more accurate picture of the
interest margin for comparative purposes.
(4) Provision for credit losses represents provision for credit
losses in All Other combined with the Global Card Services
securitization offset.
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to
current period presentation.
Bank of America Corporation and Subsidiaries
Supplemental Financial Data
---------------------------
(Dollars in millions)
Fully taxable-equivalent basis Three Months Ended March
data (1) 31
------------------------------ --------------------------
2010 2009
---- ----
Net interest income $14,070 $12,819
Total revenue, net of interest
expense 32,290 36,080
Net interest yield 2.93% 2.70%
Efficiency ratio 55.05 47.12
Other Data March 31
---------- -------------------------
2010 2009
---- ----
Full-time equivalent employees 283,914 286,625
Number of banking centers -
domestic 5,939 6,145
Number of branded ATMs -
domestic 18,135 18,532
(1) FTE basis is a non-GAAP measure. FTE basis is a performance
measure used by management in operating the business that management
believes provides investors with a more accurate picture of the
interest margin for comparative purposes. (See Reconciliation to
GAAP Financial Measures on page 4).
Certain prior period amounts have been reclassified to conform to
current period presentation.
Bank of America Corporation and Subsidiaries
Reconciliation to GAAP Financial Measures
(Dollars in millions, shares in thousands)
The Corporation evaluates its business based upon a FTE basis which
is a non-GAAP measure. Total revenue, net of interest expense,
includes net interest income on a FTE basis and noninterest income.
The adjustment of net interest income to a FTE basis results in a
corresponding increase in income tax expense. The Corporation also
evaluates its business based upon ratios that utilize tangible
equity which is a non-GAAP measure. The tangible equity ratio
represents shareholders' equity less goodwill and intangible assets
(excluding mortgage servicing rights), net of related deferred tax
liabilities divided by total assets less goodwill and intangible
assets (excluding mortgage servicing rights), net of related
deferred tax liabilities. The tangible common equity ratio
represents common shareholders' equity plus any Common Equivalent
Securities less goodwill and intangible assets (excluding mortgage
servicing rights), net of related deferred tax liabilities divided
by total assets less goodwill and intangible assets (excluding
mortgage servicing rights), net of related deferred tax liabilities.
Tangible book value per share of common stock represents ending
common shareholders' equity plus any Common Equivalent Securities
less goodwill and intangible assets (excluding mortgage servicing
rights), net of related ending common shareholders' equity plus any
common equivalent securities less goodwill and intangible assets
(excluding mortgage servicing rights), net of related deferred tax
liabilities divided by ending common shares outstanding plus the
number of common shares issued upon conversion of common equivalent
shares. These measures are used to evaluate the Corporation's use
of equity (i.e., capital). We believe the use of these non-GAAP
measures provides additional any Common Equivalent Securities less
goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities divided by total
assets less clarity in assessing the results of the Corporation.
Other companies may define or calculate supplemental financial data
differently. See the tables below for corresponding reconciliations
to GAAP financial measures at March 31, 2010, December 31, 2009 and
March 31, 2009. We believe the use of these non-GAAP measures
provides additional clarity in assessing the results of the
Corporation.
First Fourth First
Quarter Quarter Quarter
2010 2009 2009
---- ---- ----
Reconciliation of net interest
income to net interest income
FTE basis
------------------------------
Net interest income $13,749 $11,559 $12,497
Fully taxable-equivalent
adjustment 321 337 322
---
Net interest income fully
taxable-equivalent basis $14,070 $11,896 $12,819
======= ======= =======
Reconciliation of total revenue,
net of interest expense to total
revenue, net of interest expense
FTE basis
---------------------------------
Total revenue, net of interest
expense $31,969 $25,076 $35,758
Fully taxable-equivalent
adjustment 321 337 322
Net interest income fully
taxable-equivalent basis $32,290 $25,413 $36,080
======= ======= =======
Reconciliation of income (loss)
before income taxes to pretax,
pre-provision income FTE basis
-------------------------------
Income (loss) before income taxes $4,389 $(1,419) $5,376
Provision for credit losses 9,805 10,110 13,380
Fully taxable-equivalent
adjustment 321 337 322
Pretax, pre-provision income
fully taxable-equivalent basis $14,515 $9,028 $19,078
======= ====== =======
Reconciliation of income tax
expense (benefit) to income tax
expense (benefit) FTE basis
--------------------------------
Income tax expense (benefit) $1,207 $(1,225) $1,129
Fully taxable-equivalent
adjustment 321 337 322
Income tax expense (benefit)
fully taxable-equivalent basis $1,528 $(888) $1,451
====== ===== ======
Reconciliation of period end
common shareholders' equity to
period end tangible common
shareholders' equity
-------------------------------
Common shareholders' equity $211,859 $194,236 $166,272
Common Equivalent Securities - 19,244 -
Goodwill (86,305) (86,314) (86,910)
Intangible assets (excluding
MSRs) (11,548) (12,026) (13,703)
Related deferred tax liabilities 3,396 3,498 3,958
Tangible common shareholders'
equity $117,402 $118,638 $69,617
======== ======== =======
Reconciliation of period end
shareholders' equity to period
end tangible shareholders'
equity
-------------------------------
Shareholders' equity $229,823 $231,444 $239,549
Goodwill (86,305) (86,314) (86,910)
Intangible assets (excluding
MSRs) (11,548) (12,026) (13,703)
Related deferred tax liabilities 3,396 3,498 3,958
Tangible shareholders' equity $135,366 $136,602 $142,894
======== ======== ========
Reconciliation of period end
assets to period end tangible
assets
------------------------------
Assets $2,333,200 $2,223,299 $2,321,963
Goodwill (86,305) (86,314) (86,910)
Intangible assets (excluding
MSRs) (11,548) (12,026) (13,703)
Related deferred tax liabilities 3,396 3,498 3,958
Tangible assets $2,238,743 $2,128,457 $2,225,308
========== ========== ==========
Reconciliation of ending common
shares outstanding to ending
tangible common shares
outstanding
-------------------------------
Common shares outstanding 10,032,001 8,650,244 6,400,950
Assumed conversion of common
equivalent shares (1) - 1,286,000 -
Tangible common shares
outstanding 10,032,001 9,936,244 6,400,950
========== ========= =========
(1) On February 24, 2010, the common equivalent shares converted into
common shares.
Certain prior period amounts have been reclassified to conform to
current period presentation.
Bank of America Corporation and Subsidiaries
Reconciliation - Managed to GAAP
--------------------------------
(Dollars in millions)
The Corporation reports Global Card Services current period results in
accordance with new accounting guidance on consolidation of VIEs and
transfers of financial assets. Prior period results are presented on a
managed basis. Managed basis assumes that securitized loans were not
sold and presents earnings on these loans in a manner similar to the way
loans that have not been sold (i.e., held loans) are presented. Loan
securitization is an alternative funding process that is used by the
Corporation to diversify funding sources. In prior periods, loan
securitization removed loans from the Consolidated Balance Sheet through
the sale of loans to an off-balance sheet qualifying special purpose
entity which was excluded from the Corporation's Consolidated Financial
Statements in accordance with GAAP applicable at the time.
The performance of the managed portfolio is important in understanding
Global Card Services results as it demonstrates the results of the
entire portfolio serviced by the business. Securitized loans continue to
be serviced by the business and are subject to the same underwriting
standards and ongoing monitoring as held loans. In addition, excess
servicing income is exposed to similar credit risk and repricing of
interest rates as held loans. In prior periods, Global Card Services
managed income statement line items differed from a held basis reported
as follows:
-- Managed net interest income included Global Card Services net interest
income on held loans and interest income on the securitized loans less
the internal funds transfer pricing allocation related to securitized
loans.
-- Managed noninterest income includes Global Card Services noninterest
income on a held basis less the reclassification of certain components
of card income (e.g., excess servicing income) to record securitized
net interest income and provision for credit losses. Noninterest
income, both on a held and managed basis, also included the impact of
adjustments to the interest-only strips that were recorded in card
income as management managed this impact within Global Card Services.
-- Provision for credit losses represented the provision for managed
credit losses on held loans combined with realized credit losses
associated with the securitized loan portfolio.
Global Card Services
Three Months Ended March 31, 2009
---------------------------------
Managed Securitization Held
Basis (1) Impact (2) Basis
--------- ---------- -----
Net interest
income (3) $5,199 $(2,391) $2,808
Noninterest
income:
Card income 2,114 244 2,358
All other income 135 (35) 100
--- --- ---
Total noninterest
income 2,249 209 2,458
----- --- -----
Total revenue,
net of interest
expense 7,448 (2,182) 5,266
Provision for
credit losses 8,221 (2,182) 6,039
Noninterest
expense 2,039 - 2,039
----- --- -----
Loss before
income taxes (2,812) - (2,812)
Income tax
benefit (3) (1,060) - (1,060)
------ --- ------
Net loss $(1,752) $- $(1,752)
======= === =======
Average -total
loans and leases $224,013 $(102,672) $121,341
All Other
Three Months Ended March 31, 2009
---------------------------------
Reported Securitization As
Basis (4) Offset (2) Adjusted
--------- ---------- --------
Net interest
income (loss)
(3) $(1,866) $2,391 $525
Noninterest
income:
Card income 534 (244) 290
Equity investment
income 1,326 - 1,326
Gains on sales of
debt securities 1,471 - 1,471
All other income 2,550 35 2,585
----- --- -----
Total noninterest
income 5,881 (209) 5,672
----- ---- -----
Total revenue,
net of interest
expense 4,015 2,182 6,197
Provision for
credit losses (667) 2,182 1,515
Merger and
restructuring
charges 765 - 765
All other
noninterest
expense 213 - 213
--- --- ---
Income before
income taxes 3,704 - 3,704
Income tax
expense (3) 769 - 769
--- --- ---
Net income $2,935 $- $2,935
====== === ======
Average -total
loans and leases $174,730 $102,672 $277,402
(1) Provision for credit losses represents provision for credit
losses on held loans combined with realized credit losses associated
with the securitized loan portfolio.
(2) The securitization impact/offset on net interest income is on a
funds transfer pricing methodology consistent with the way funding
costs are allocated to the businesses.
(3) FTE basis
(4) Provision for credit losses represents provision for credit
losses in All Other combined with the Global Card Services
securitization offset.
Certain prior period amounts have been reclassified among the
segments to conform to the current period presentation.
Investors, Kevin Stitt, +1-704-386-5667, or Lee McEntire, +1-704-388-6780; Reporters, Scott Silvestri, +1-980-388-9921, scott.silvestri at bankofamerica.com, all of Bank of America
Tags: April 16, Bank of America, Charlotte, North carolina, Scandinavia, Western Europe
