Bank of America Reports Fourth-quarter 2014 Net Income of $3.1 Billion, or $0.25 per Diluted Share
Results Include a Total of
Full-year 2014 Net Income of
Continued Business Momentum
-
Originated
$15 Billion in Residential Mortgage Loans and Home Equity Loans in Q4-14, Helping Approximately 41,000 Home Owners Purchase a Home or Refinance a Mortgage - Issued 1.2 Million New Credit Cards in Q4-14, With 67 Percent Going to Existing Relationship Customers
-
Delivered Record Asset Management Fees in Global Wealth and
Investment Management of
$2.1 Billion ; Pretax Margin of 25 Percent in Q4-14 -
Global Banking Increased Loans by
$3.1 Billion , or 1.2 Percent, From Q4-13 to$273 Billion -
Reduced Noninterest Expense to
$14.2 Billion in Q4-14, Lowest Quarterly Expense Level Since Merrill Lynch Merger -
Excluding Litigation, Noninterest Expense Down
$1.2 Billion From Q4-13 to$13.8 Billion (C) -
Legacy Assets and Servicing Expenses, Excluding Litigation, Down
$0.7 Billion , or 38 Percent From Q4-13 to$1.1 Billion (D) -
Credit Quality Continued to Improve With Net Charge-offs Down
$0.7 Billion , or 44 Percent, From Q4-13 to$0.9 Billion ; Net Charge-off Ratio of 0.40 Percent Is Lowest in a Decade
- Estimated Common Equity Tier 1 Ratio Under Basel 3 (Standardized Approach, Fully Phased-in) 10.0 Percent in Q4-14; Advanced Approaches 9.6 Percent in Q4-14(E)
-
Estimated Supplementary Leverage Ratios Above 2018 Required
Minimums,
With Bank Holding Company at 5.9Percent and Primary Bank at 7.0 Percent(F) -
Record Global Excess Liquidity Sources of
$439 Billion , up$63 Billion from Q4-13; Time-to-required Funding at 39 Months -
Tangible Book Value per Share Increased 5 Percent From Q4-13 to
$14.43 per Share(G) -
Book Value per Share Increased 3 Percent From Q4-13 to
$21.32 per Share
Results for the most recent quarter include three adjustments that, in
aggregate, reduced revenue in the fourth quarter of 2014 by
Noninterest expense declined from
2014 Calendar Year Net Income
For the full year, net income was
Noninterest expense was
"In 2014, we continued to invest in our businesses while reducing
expenses and resolving our most significant litigation matters," said
Chief Executive Officer
"We continued our focus on optimizing the balance sheet this quarter,
building capital and managing expenses in a challenging interest rate
and geopolitical environment," said Chief Financial Officer
Selected Financial Highlights
Three Months Ended | Year Ended | |||||||||||||||
(Dollars in millions, except per share data) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
||||||||||||
Net interest income, FTE basis1 | $ | 9,865 | $ | 10,999 | $ | 40,821 | $ | 43,124 | ||||||||
Noninterest income | 9,090 | 10,702 | 44,295 | 46,677 | ||||||||||||
Total revenue, net of interest expense, FTE basis | 18,955 | 21,701 | 85,116 | 89,801 | ||||||||||||
Total revenue, net of interest expense, FTE basis, excluding DVA/FVA2 | 19,581 | 22,319 | 85,356 | 90,959 | ||||||||||||
Provision for credit losses | 219 | 336 | 2,275 | 3,556 | ||||||||||||
Noninterest expense3 | 14,196 | 17,307 | 75,117 | 69,214 | ||||||||||||
Net income | $ | 3,050 | $ | 3,439 | $ | 4,833 | $ | 11,431 | ||||||||
Diluted earnings per common share | $ | 0.25 | $ | 0.29 | $ | 0.36 | $ | 0.90 |
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial
measure. For reconciliation to GAAP financial measures, refer to pages
22-24 of this press release. Net interest income on a GAAP basis was
2 Represents a non-GAAP financial measure. Net DVA/FVA losses were
3 Includes litigation expense of
Net interest income, on an FTE basis(B), was
Noninterest income decreased 15 percent from the year-ago quarter to
The provision for credit losses declined
Noninterest expense was
Legacy Assets and Servicing (LAS), the business unit that is responsible
for servicing residential mortgage and home equity loans, continued to
make solid progress in its efforts to reduce expenses. Noninterest
expense, excluding litigation, declined to
The effective tax rate for the fourth quarter of 2014 was 29.2 percent, compared to 10.6 percent in the year-ago quarter. The increase in the effective tax rate from the fourth quarter of 2013 was driven by the absence in the current quarter of certain discrete tax benefits from the year-ago quarter.
Business Segment Results
The company reports results through five business segments: Consumer and Business Banking (CBB), Consumer Real Estate Services (CRES), Global Wealth and Investment Management (GWIM), Global Banking, and Global Markets, with the remaining operations recorded in All Other.
Consumer and Business Banking (CBB)
Three Months Ended | Year Ended | |||||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
||||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 7,541 | $ | 7,496 | $ | 29,862 | $ | 29,864 | ||||||||||
Provision for credit losses | 670 | 427 | 2,633 | 3,107 | ||||||||||||||
Noninterest expense | 4,015 | 4,001 | 15,911 | 16,260 | ||||||||||||||
Net income | $ | 1,758 | $ | 1,992 | $ | 7,096 | $ | 6,647 | ||||||||||
Return on average allocated capital1 | 24 | % | 26 | % | 24 | % | 22 | % | ||||||||||
Average loans | $ | 161,267 | $ | 163,157 | $ | 161,109 | $ | 164,574 | ||||||||||
Average deposits | 550,399 | 528,733 | 543,441 | 518,904 | ||||||||||||||
At period-end | ||||||||||||||||||
Brokerage assets | $ | 113,763 | $ | 96,048 |
1 Return on average allocated capital is a non-GAAP financial measure. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
Business Highlights
-
Average deposit balances increased
$21.7 billion , or 4 percent, from the year-ago quarter to$550.4 billion . -
Client brokerage assets increased
$17.7 billion , or 18 percent, from the year-ago quarter to$113.8 billion , driven primarily by new client accounts, strong account flows as well as market valuations. - Credit card issuance remained strong. The company issued 1.2 million new credit cards in the fourth quarter of 2014, up 19 percent from the 1.0 million cards issued in the year-ago quarter. Approximately 67 percent of these cards went to existing relationship customers during the fourth quarter of 2014.
- The number of mobile banking customers increased 15 percent from the year-ago quarter to 16.5 million users, and 12 percent of deposit transactions by customers were done through mobile, compared to 9 percent in the year-ago quarter. Since the introduction of Apple Pay™ in October, nearly 800,000 customers have enrolled in the service, adding approximately 1.1 million cards.
- Preferred Rewards continues to expand, resulting in broader and deeper client relationships. Through the end of 2014, approximately 1.2 million clients have enrolled in the program.
Financial Overview
Consumer and Business Banking reported net income of
Noninterest expense was
Consumer Real Estate Services (CRES)
Three Months Ended | Year Ended | ||||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
|||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 1,174 | $ | 1,712 | $ | 4,848 | $ | 7,715 | |||||||||
Provision for credit losses | (131 | ) | (474 | ) | 160 | (156 | ) | ||||||||||
Noninterest expense1 | 1,945 | 3,752 | 23,226 | 15,815 | |||||||||||||
Net loss | $ | (397 | ) | $ | (1,035 | ) | $ | (13,395 | ) | $ | (5,031 | ) | |||||
Average loans and leases | 87,978 | 89,687 | 88,277 | 90,278 | |||||||||||||
At period-end | |||||||||||||||||
Loans and leases | $ | 87,972 | $ | 89,753 |
1 Includes litigation expense of
Business Highlights
-
The company originated
$11.6 billion in first-lien residential mortgage loans and$3.4 billion in home equity lines during the fourth quarter of 2014, compared to$11.7 billion and$3.2 billion in the prior quarter. - The number of 60+ days delinquent first mortgage loans serviced by Legacy Assets and Servicing (LAS) declined by 136,000 loans, or 42 percent, from the fourth quarter of 2013 to 189,000 loans.
-
Noninterest expense in LAS, excluding litigation, declined to
$1.1 billion in the fourth quarter of 2014 from$1.8 billion in the year-ago quarter(D).
Financial Overview
Consumer Real Estate Services reported a net loss of
Revenue declined
The benefit in the provision for credit losses decreased
Noninterest expense decreased
Global Wealth and Investment Management (GWIM)
Three Months Ended | Year Ended | |||||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
||||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 4,602 | $ | 4,479 | $ | 18,404 | $ | 17,790 | ||||||||||
Provision for credit losses | 14 | 26 | 14 | 56 | ||||||||||||||
Noninterest expense | 3,440 | 3,262 | 13,647 | 13,033 | ||||||||||||||
Net income | $ | 706 | $ | 778 | $ | 2,974 | $ | 2,977 | ||||||||||
Return on average allocated capital1 | 23 | % | 31 | % | 25 | % | 30 | % | ||||||||||
Average loans and leases | $ | 123,544 | $ | 115,546 | $ | 119,775 | $ | 111,023 | ||||||||||
Average deposits | 238,835 | 240,395 | 240,242 | 242,161 | ||||||||||||||
At period-end (dollars in billions) | ||||||||||||||||||
Assets under management | $ | 902.9 | $ | 821.4 | ||||||||||||||
Total client balances2 | 2,498.0 | 2,366.4 |
1 Return on average allocated capital is a non-GAAP financial measure. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
2 Total client balances are defined as assets under management, assets in custody, client brokerage assets, client deposits and loans (including margin receivables).
Business Highlights
-
Client balances increased 6 percent from the year-ago quarter to
$2.5 trillion , driven by higher market levels and net inflows. -
Fourth-quarter 2014 long-term assets under management (AUM) flows of
$9.4 billion were the 22nd consecutive quarter of positive flows. Full-year long-term AUM flows were a record$49.8 billion . -
The company reported record asset management fees of
$2.1 billion , up 16 percent from the year-ago quarter. - The number of wealth advisors increased by 714 advisors from the year-ago quarter to 17,231, and full-year attrition levels were at historical lows since the Merrill Lynch merger.
-
Average loan balances increased 7 percent from the year-ago quarter to
$123.5 billion from$115.5 billion .
Financial Overview
Global Wealth and Investment Management reported net income of
Noninterest expense increased 5 percent to
Return on average allocated capital was 23 percent in the fourth quarter of 2014, down from 31 percent in the year-ago quarter, driven by increased allocated capital and, to a lesser extent, lower net income.
Global Banking
Three Months Ended | Year Ended | |||||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
||||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 4,057 | $ | 4,303 | $ | 16,598 | $ | 16,479 | ||||||||||
Provision for credit losses | (29 | ) | 441 | 336 | 1,075 | |||||||||||||
Noninterest expense | 1,849 | 1,943 | 7,681 | 7,551 | ||||||||||||||
Net income | $ | 1,433 | $ | 1,255 | $ | 5,435 | $ | 4,973 | ||||||||||
Return on average allocated capital1 | 18 | % | 22 | % | 18 | % | 22 | % | ||||||||||
Average loans and leases | $ | 270,760 | $ | 268,864 | $ | 270,164 | $ | 257,249 | ||||||||||
Average deposits | 264,027 | 259,193 | 261,312 | 236,765 |
1 Return on average allocated capital is a non-GAAP financial measure. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
Business Highlights
-
Bank of America Merrill Lynch was ranked No. 2 in global net investment banking fees in the fourth quarter of 2014 with firmwide investment banking fees of$1.5 billion , excluding self-led deals(I). -
Bank of America Merrill Lynch ranked among the top three financial institutions globally in high-yield corporate debt, leveraged loans, asset-backed securities, investment grade corporate debt, syndicated loans, announced mergers and acquisitions, equity capital markets and debt capital markets during the fourth quarter of 2014(I). -
Average loan and lease balances increased
$3.7 billion , or 1.4 percent, from the prior quarter to$270.8 billion with growth mainly driven by the commercial and industrial portfolios.
Financial Overview
Global Banking reported net income of
The provision for credit losses decreased
The return on average allocated capital was 18 percent in the fourth quarter of 2014, down from 22 percent in the year-ago quarter, as growth in earnings was more than offset by increased capital allocations.
Global Markets
Three Months Ended | Year Ended | ||||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
|||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 2,370 | $ | 3,198 | $ | 16,119 | $ | 15,390 | |||||||||
Total revenue, net of interest expense, FTE basis, excluding net DVA/FVA1 | 2,996 | 3,816 | 16,359 | 16,548 | |||||||||||||
Provision for credit losses | 27 | 104 | 110 | 140 | |||||||||||||
Noninterest expense | 2,499 | 3,274 | 11,771 | 11,996 | |||||||||||||
Net income (loss) | $ | (72 | ) | $ | (47 | ) | $ | 2,719 | $ | 1,153 | |||||||
Return on average allocated capital2 | n/m | n/m | 8 | % | 4 | % | |||||||||||
Total average assets | $ | 611,714 | $ | 603,012 | $ | 607,538 | $ | 632,681 |
1 Represents a non-GAAP financial measure. Net DVA/FVA losses were
2 Return on average allocated capital is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
Business Highlights
-
Equities sales and trading revenue, excluding net DVA/FVA, was up
modestly from the fourth quarter of 2013 to
$911 million despite a challenging market environment(L). -
Bank of America Merrill Lynch was named No. 1Global Research firm in 2014 byInstitutional Investor magazine for the fourth year in a row.
Financial Overview
Global Markets reported a net loss of
Revenue decreased
Noninterest expense of
All Other1
Three Months Ended | Year Ended | ||||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
|||||||||||||
Total revenue, net of interest expense, FTE basis2 | $ | (789 | ) | $ | 513 | $ | (715 | ) | $ | 2,563 | |||||||
Provision for credit losses | (332 | ) | (188 | ) | (978 | ) | (666 | ) | |||||||||
Noninterest expense | 448 | 1,075 | 2,881 | 4,559 | |||||||||||||
Net income (loss) | $ | (378 | ) | $ | 496 | $ | 4 | $ | 712 | ||||||||
Total average loans | 183,090 | 226,027 | 202,512 | 235,460 |
1 All Other consists of ALM activities, equity investments, the international consumer card business, liquidating businesses and other. ALM activities encompass the whole-loan residential mortgage portfolio and investment securities, interest rate and foreign currency risk management activities including the residual net interest income allocation, the impact of certain allocation methodologies and accounting hedge ineffectiveness.
2 Revenue includes equity investment income of
All Other reported a net loss of
Net interest income declined
Noninterest income declined
The benefit in the provision for credit losses increased
Noninterest expense declined primarily as a result of lower litigation expense and infrastructure support costs compared with the year-ago quarter.
Credit Quality
Three Months Ended | Year Ended | ||||||||||||||
(Dollars in millions) |
December 31 2014 |
December 31 2013 |
December 31 2014 |
December 31 2013 |
|||||||||||
Provision for credit losses | $ | 219 | $ | 336 | $ | 2,275 | $ | 3,556 | |||||||
Net charge-offs1 | 879 | 1,582 | 4,383 | 7,897 | |||||||||||
Net charge-off ratio1, 2 | 0.40 | % | 0.68 | % | 0.49 | % | 0.87 | % | |||||||
Net charge-off ratio, excluding the PCI loan portfolio2 | 0.41 | 0.70 | 0.50 | 0.90 | |||||||||||
Net charge-off ratio, including PCI write-offs2 | 0.40 | 1.00 | 0.58 | 1.13 | |||||||||||
December 31 2014 |
December 31 2013 |
||||||||||||||
Nonperforming loans, leases and foreclosed properties | $ | 12,629 | $ | 17,772 | |||||||||||
Nonperforming loans, leases and foreclosed properties ratio3 | 1.45 | % | 1.93 | % | |||||||||||
Allowance for loan and lease losses | $ | 14,419 | $ | 17,428 | |||||||||||
Allowance for loan and lease losses ratio4 | 1.65 | % | 1.90 | % |
1 Excludes write-offs of purchased credit-impaired (PCI) loans of
2 Net charge-off ratios are calculated as net charge-offs divided by average outstanding loans and leases during the period; quarterly results are annualized.
3 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.
4 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 in the fourth quarter of 2014, with
net charge-offs declining across most major portfolios when compared to
the year-ago quarter. The number of 30+ days performing delinquent
loans, excluding fully-insured loans, declined across all consumer
portfolios from the year-ago quarter, remaining at record-low levels in
the U.S. credit card portfolio. Additionally, reservable criticized
balances and nonperforming loans, leases and foreclosed properties also
continued to decline, down 10 percent and 29 percent, respectively, from
the year-ago period.
Net charge-offs were
The allowance for loan and lease losses to annualized net charge-off coverage ratio was 4.14 times in the fourth quarter of 2014, compared to 2.78 times in the fourth quarter of 2013. The allowance to annualized net charge-off coverage ratio, excluding PCI, was 3.66 times in the fourth quarter of 2014 and 2.38 times in the fourth quarter of 2013.
Nonperforming loans, leases and foreclosed properties were
Capital and Liquidity Management1,2,3
(Dollars in billions) |
At December 31 2014 |
At September 30 2014 |
||||||||||||
Basel 3 Transition (under standardized approach) | ||||||||||||||
Common equity tier 1 capital - Basel 3 | $ | 155.4 | $ | 152.4 | ||||||||||
Risk-weighted assets | 1,261.5 | 1,271.7 | ||||||||||||
Common equity tier 1 capital ratio - Basel 3 | 12.3 | % | 12.0 | % | ||||||||||
Basel 3 Fully Phased-in (under standardized approach)3 | ||||||||||||||
Common equity tier 1 capital - Basel 3 | $ | 141.3 | $ | 135.1 | ||||||||||
Risk-weighted assets | 1,415.4 | 1,418.2 | ||||||||||||
Common equity tier 1 capital ratio - Basel 3 | 10.0 | % | 9.5 | % | ||||||||||
(Dollars in millions, except per share information) |
At December 31 2014 |
At September 30 2014 |
At December 31 2013 |
|||||||||||
Tangible common equity ratio4 | 7.47 | % | 7.22 | % | 7.20 | % | ||||||||
Total shareholders’ equity | $ | 243,471 | $ | 238,681 | $ | 232,685 | ||||||||
Common equity ratio | 10.65 | 10.40 | 10.43 | |||||||||||
Tangible book value per share4 | $ | 14.43 | $ | 14.09 | $ | 13.79 | ||||||||
Book value per share | 21.32 | 20.99 | 20.71 |
1 Regulatory capital ratios are preliminary.
2 On
3 Basel 3 common equity tier 1 capital and risk-weighted assets on
a fully phased-in basis are non-GAAP financial measures. For
reconciliations to GAAP financial measures, refer to page 18 of this
press release. The company's fully phased-in
4 Tangible common equity ratio and tangible book value per share are non-GAAP financial measures. For reconciliations to GAAP financial measures, refer to pages 22-24 of this press release.
The common equity tier 1 capital ratio under the
While the
The estimated common equity tier 1 capital ratio under the
The estimated common equity tier 1 capital ratio under the
At December 31, 2014, the estimated supplementary leverage ratio (SLR)(F)
for the
At December 31, 2014, Global Excess Liquidity Sources totaled
Period-end common shares issued and outstanding were 10.52 billion and 10.59 billion at December 31, 2014 and 2013.
Tangible book value per share of common stock(G) was
------------------------------
End Notes
This press release uses non-GAAP financial measures. The company believes these non-GAAP financial measures provide additional clarity in assessing its results. Other companies may define or calculate these measures differently.
(A) In the fourth quarter of 2014,
(B) Fully taxable-equivalent (FTE) basis is a non-GAAP financial
measure. For reconciliation to GAAP financial measures, refer to pages
22-24 of this press release. Net interest income on a GAAP basis was
(C) Noninterest expense, excluding litigation, is a non-GAAP
financial measure. Noninterest expense including litigation was
(D) Legacy Assets and Servicing (LAS) noninterest expense,
excluding litigation, is a non-GAAP financial measure. LAS noninterest
expense was
(E)
(F) The supplementary leverage ratio is based on estimates from our
current understanding of recently finalized rules issued by banking
regulators on
(G) Tangible book value per share of common stock is a non-GAAP
financial measure. Other companies may define or calculate this measure
differently. Book value per share was
(H) Revenue, net of interest expense, on an FTE basis, excluding
net DVA and equity investment gains; and noninterest income excluding
the impact of the adoption of FVA in the current period and net DVA and
equity investment gains, are non-GAAP financial measures. Total revenue,
net of interest expense, on an FTE basis was
(I) Rankings per Dealogic as of
(J) Global Markets revenue excluding net DVA/FVA and recoveries on
certain legacy FICC positions in the fourth quarter of 2013 are non-GAAP
financial measures. Net DVA/FVA losses were
(K) FICC sales and trading revenue, excluding net DVA/FVA is a
non-GAAP financial measure. Net DVA/FVA losses included in FICC revenue
were
(L) Equity sales and trading revenue, excluding net DVA/FVA is a
non-GAAP financial measure. Equities net DVA/FVA losses were
Note: Chief Executive Officer
A replay will be available via webcast through the
Forward-looking Statements
You should not place undue reliance on any forward-looking statement and
should consider the following uncertainties and risks, as well as the
risks and uncertainties more fully discussed under Item 1A. Risk Factors
of
Forward-looking statements speak only as of the date they are made, and
For more
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||||||
Selected Financial Data | ||||||||||||||||||||||||
(Dollars in millions, except per share data; shares in thousands) | ||||||||||||||||||||||||
Summary Income Statement |
Year Ended December 31 |
Fourth |
Third Quarter 2014 |
Fourth Quarter 2013 |
||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Net interest income | $ | 39,952 | $ | 42,265 | $ | 9,635 | $ | 10,219 | $ | 10,786 | ||||||||||||||
Noninterest income | 44,295 | 46,677 | 9,090 | 10,990 | 10,702 | |||||||||||||||||||
Total revenue, net of interest expense | 84,247 | 88,942 | 18,725 | 21,209 | 21,488 | |||||||||||||||||||
Provision for credit losses | 2,275 | 3,556 | 219 | 636 | 336 | |||||||||||||||||||
Noninterest expense | 75,117 | 69,214 | 14,196 | 20,142 | 17,307 | |||||||||||||||||||
Income before income taxes | 6,855 | 16,172 | 4,310 | 431 | 3,845 | |||||||||||||||||||
Income tax expense | 2,022 | 4,741 | 1,260 | 663 | 406 | |||||||||||||||||||
Net income (loss) | $ | 4,833 | $ | 11,431 | $ | 3,050 | $ | (232 | ) | $ | 3,439 | |||||||||||||
Preferred stock dividends | 1,044 | 1,349 | 312 | 238 | 256 | |||||||||||||||||||
Net income (loss) applicable to common shareholders | $ | 3,789 | $ | 10,082 | $ | 2,738 | $ | (470 | ) | $ | 3,183 | |||||||||||||
Common shares issued | 25,866 | 45,288 | 648 | 69 | 624 | |||||||||||||||||||
Average common shares issued and outstanding | 10,527,818 | 10,731,165 | 10,516,334 | 10,515,790 | 10,633,030 | |||||||||||||||||||
Average diluted common shares issued and outstanding (1) | 10,584,535 | 11,491,418 | 11,273,773 | 10,515,790 | 11,404,438 | |||||||||||||||||||
Summary Average Balance Sheet |
||||||||||||||||||||||||
Total debt securities | $ | 351,702 | $ | 337,953 | $ | 371,014 | $ | 359,653 | $ | 325,119 | ||||||||||||||
Total loans and leases | 903,901 | 918,641 | 884,733 | 899,241 | 929,777 | |||||||||||||||||||
Total earning assets | 1,814,930 | 1,819,548 | 1,802,121 | 1,813,482 | 1,798,697 | |||||||||||||||||||
Total assets | 2,145,590 | 2,163,513 | 2,137,551 | 2,136,109 | 2,134,875 | |||||||||||||||||||
Total deposits | 1,124,207 | 1,089,735 | 1,122,514 | 1,127,488 | 1,112,674 | |||||||||||||||||||
Common shareholders’ equity | 223,066 | 218,468 | 224,473 | 222,368 | 220,088 | |||||||||||||||||||
Total shareholders’ equity | 238,476 | 233,947 | 243,448 | 238,034 | 233,415 | |||||||||||||||||||
Performance Ratios |
||||||||||||||||||||||||
Return on average assets | 0.23 | % | 0.53 | % | 0.57 | % | n/m | 0.64 | % | |||||||||||||||
Return on average tangible common shareholders’ equity (2) | 2.52 | 6.97 | 7.15 | n/m | 8.61 | |||||||||||||||||||
Per common share information |
||||||||||||||||||||||||
Earnings (loss) | $ | 0.36 | $ | 0.94 | $ | 0.26 | $ | (0.04 | ) | $ | 0.30 | |||||||||||||
Diluted earnings (loss) (1) | 0.36 | 0.90 | 0.25 | (0.04 | ) | 0.29 | ||||||||||||||||||
Dividends paid | 0.12 | 0.04 | 0.05 | 0.05 | 0.01 | |||||||||||||||||||
Book value | 21.32 | 20.71 | 21.32 | 20.99 | 20.71 | |||||||||||||||||||
Tangible book value (2) | 14.43 | 13.79 | 14.43 | 14.09 | 13.79 | |||||||||||||||||||
December 31 2014 |
September 30 2014 |
December 31 2013 |
||||||||||||||||||||||
Summary Period-End Balance Sheet |
||||||||||||||||||||||||
Total debt securities | $ | 380,461 | $ | 368,124 | $ | 323,945 | ||||||||||||||||||
Total loans and leases | 881,391 | 891,315 | 928,233 | |||||||||||||||||||||
Total earning assets | 1,768,431 | 1,783,051 | 1,763,149 | |||||||||||||||||||||
Total assets | 2,104,534 | 2,123,613 | 2,102,273 | |||||||||||||||||||||
Total deposits | 1,118,936 | 1,111,981 | 1,119,271 | |||||||||||||||||||||
Common shareholders’ equity | 224,162 | 220,768 | 219,333 | |||||||||||||||||||||
Total shareholders’ equity | 243,471 | 238,681 | 232,685 | |||||||||||||||||||||
Common shares issued and outstanding | 10,516,542 | 10,515,894 | 10,591,808 | |||||||||||||||||||||
Credit Quality |
Year Ended December 31 |
Fourth Quarter 2014 |
Third Quarter 2014 |
Fourth Quarter 2013 |
||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Total net charge-offs | $ | 4,383 | $ | 7,897 | $ | 879 | $ | 1,043 | $ | 1,582 | ||||||||||||||
Net charge-offs as a percentage of average loans and leases outstanding (3) | 0.49 | % | 0.87 | % | 0.40 | % | 0.46 | % | 0.68 | % | ||||||||||||||
Provision for credit losses | $ | 2,275 | $ | 3,556 | $ | 219 | $ | 636 | $ | 336 | ||||||||||||||
December 31 2014 |
September 30 2014 |
December 31 2013 |
||||||||||||||||||||||
Total nonperforming loans, leases and foreclosed properties (4) | $ | 12,629 | $ | 14,232 | $ | 17,772 | ||||||||||||||||||
Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties (3) | 1.45 | % | 1.61 | % | 1.93 | % | ||||||||||||||||||
Allowance for loan and lease losses | $ | 14,419 | $ | 15,106 | $ | 17,428 | ||||||||||||||||||
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (3) | 1.65 | % | 1.71 | % | 1.90 | % | ||||||||||||||||||
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||||||
Selected Financial Data (continued) | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Basel 3 Transition | Basel 1 | |||||||||||||||||||||||
Capital Management |
December 31 2014 |
September 30 2014 |
December 31 2013 |
|||||||||||||||||||||
Risk-based capital metrics (5, 6): | ||||||||||||||||||||||||
Common equity tier 1 capital | $ | 155,363 | $ | 152,444 | n/a | |||||||||||||||||||
Tier 1 common capital | n/a | n/a | $ | 141,522 | ||||||||||||||||||||
Common equity tier 1 capital ratio | 12.3 | % | 12.0 | % | n/a | |||||||||||||||||||
Tier 1 common capital ratio (7) | n/a | n/a | 10.9 | % | ||||||||||||||||||||
Tier 1 leverage ratio | 8.2 | 7.9 | 7.7 | |||||||||||||||||||||
Tangible equity ratio (8) | 8.42 | 8.10 | 7.86 | |||||||||||||||||||||
Tangible common equity ratio (8) | 7.47 | 7.22 | 7.20 | |||||||||||||||||||||
Regulatory Capital Reconciliations (5, 6) |
December 31 2014 |
September 30 2014 |
||||||||||||||||||||||
Regulatory capital – Basel 3 transition to fully phased-in | ||||||||||||||||||||||||
Common equity tier 1 capital (transition) | $ | 155,363 | $ | 152,444 | ||||||||||||||||||||
Adjustments and deductions recognized in Tier 1 capital during transition | (8,111 | ) | (10,191 | ) | ||||||||||||||||||||
Other adjustments and deductions phased in during transition | (5,978 | ) | (7,147 | ) | ||||||||||||||||||||
Common equity tier 1 capital (fully phased-in) | $ | 141,274 | $ | 135,106 | ||||||||||||||||||||
December 31 2014 |
September 30 2014 |
|||||||||||||||||||||||
Risk-weighted assets – As reported to Basel 3 (fully phased-in) | ||||||||||||||||||||||||
As reported risk-weighted assets | $ | 1,261,522 | $ | 1,271,723 | ||||||||||||||||||||
Changes in risk-weighted assets from reported to fully phased-in | 153,889 | 146,516 | ||||||||||||||||||||||
Basel 3 Standardized approach risk-weighted assets (fully phased-in) | 1,415,411 | 1,418,239 | ||||||||||||||||||||||
Changes in risk-weighted assets for advanced models | 50,222 | (8,375 | ) | |||||||||||||||||||||
Basel 3 Advanced approaches risk-weighted assets (fully phased-in) | $ | 1,465,633 | $ | 1,409,864 | ||||||||||||||||||||
Regulatory capital ratios | ||||||||||||||||||||||||
Basel 3 Standardized approach common equity tier 1 (transition) | 12.3 | % | 12.0 | % | ||||||||||||||||||||
Basel 3 Standardized approach common equity tier 1 (fully phased-in) | 10.0 | 9.5 | ||||||||||||||||||||||
Basel 3 Advanced approaches common equity tier 1 (fully phased-in) | 9.6 | 9.6 |
(1)The diluted earnings (loss) per common share excludes the effect of any equity instruments that are antidilutive to earnings per share. There were no potential common shares that were dilutive in the third quarter of 2014 because of the net loss applicable to common shareholders.
(2)Return on average tangible common shareholders' equity and tangible book value per share of common stock are non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate non-GAAP financial measures differently. See Reconciliations to GAAP Financial Measures on pages 22-24.
(3)Ratios do not include loans accounted for under the fair value option during the period. Charge-off ratios are annualized for the quarterly presentation.
(4)Balances do not include past due consumer credit
card, consumer loans secured by real estate where repayments are insured
by the
(5)Regulatory capital ratios are preliminary.
(6)On
(7)Tier 1 common capital ratio equals Tier 1 capital excluding preferred stock, trust preferred securities, hybrid securities and minority interest divided by risk-weighted assets.
(8)Tangible equity ratio equals period-end tangible shareholders' equity divided by period-end tangible assets. Tangible common equity ratio equals period-end tangible common shareholders' equity divided by period-end tangible assets. Tangible shareholders' equity and tangible assets are non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate non-GAAP financial measures differently. See Reconciliations to GAAP Financial Measures on pages 22-24.
n/a = not applicable
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to current period presentation.
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||||||
Quarterly Results by Business Segment | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Fourth Quarter 2014 | ||||||||||||||||||||||||
Consumer & Banking |
Consumer
Real Estate Services |
GWIM |
Global
Banking |
Global
Markets |
All
Other |
|||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,541 | $ | 1,174 | $ | 4,602 | $ | 4,057 | $ | 2,370 | $ | (789 | ) | |||||||||||
Provision for credit losses | 670 | (131 | ) | 14 | (29 | ) | 27 | (332 | ) | |||||||||||||||
Noninterest expense | 4,015 | 1,945 | 3,440 | 1,849 | 2,499 | 448 | ||||||||||||||||||
Net income (loss) | 1,758 | (397 | ) | 706 | 1,433 | (72 | ) | (378 | ) | |||||||||||||||
Return on average allocated capital (2) | 24 | % | n/m | 23 | % | 18 | % | n/m | n/m | |||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 161,267 | $ | 87,978 | $ | 123,544 | $ | 270,760 | $ | 58,094 | $ | 183,090 | ||||||||||||
Total deposits | 550,399 | n/m | 238,835 | 264,027 | n/m | 21,481 | ||||||||||||||||||
Allocated capital (2) | 29,500 | 23,000 | 12,000 | 31,000 | 34,000 | n/m | ||||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 163,416 | $ | 87,972 | $ | 125,431 | $ | 272,572 | $ | 59,388 | $ | 172,612 | ||||||||||||
Total deposits | 556,568 | n/m | 245,391 | 251,344 | n/m | 18,898 | ||||||||||||||||||
Third Quarter 2014 | ||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
GWIM |
Global
Banking |
Global
Markets |
All
Other |
|||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,512 | $ | 1,092 | $ | 4,666 | $ | 4,093 | $ | 4,142 | $ | (71 | ) | |||||||||||
Provision for credit losses | 617 | 286 | (15 | ) | (32 | ) | 45 | (265 | ) | |||||||||||||||
Noninterest expense | 3,972 | 7,271 | 3,403 | 1,905 | 3,335 | 256 | ||||||||||||||||||
Net income (loss) | 1,861 | (5,182 | ) | 813 | 1,413 | 373 | 490 | |||||||||||||||||
Return on average allocated capital (2) | 25 | % | n/m | 27 | % | 18 | % | 4 | % | n/m | ||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 160,879 | $ | 87,971 | $ | 121,002 | $ | 267,047 | $ | 62,939 | $ | 199,403 | ||||||||||||
Total deposits | 545,116 | n/m | 239,352 | 265,721 | n/m | 29,268 | ||||||||||||||||||
Allocated capital (2) | 29,500 | 23,000 | 12,000 | 31,000 | $ | 34,000 | n/m | |||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 161,345 | $ | 87,962 | $ | 122,395 | $ | 268,612 | $ | 62,645 | $ | 188,356 | ||||||||||||
Total deposits | 546,791 | n/m | 238,710 | 255,177 | n/m | 25,109 | ||||||||||||||||||
Fourth Quarter 2013 | ||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
GWIM |
Global
Banking |
Global
Markets |
All
Other |
|||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,496 | $ | 1,712 | $ | 4,479 | $ | 4,303 | $ | 3,198 | $ | 513 | ||||||||||||
Provision for credit losses | 427 | (474 | ) | 26 | 441 | 104 | (188 | ) | ||||||||||||||||
Noninterest expense | 4,001 | 3,752 | 3,262 | 1,943 | 3,274 | 1,075 | ||||||||||||||||||
Net income (loss) | 1,992 | (1,035 | ) | 778 | 1,255 | (47 | ) | 496 | ||||||||||||||||
Return on average allocated capital (2) | 26 | % | n/m | 31 | % | 22 | % | n/m | n/m | |||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 163,157 | $ | 89,687 | $ | 115,546 | $ | 268,864 | $ | 66,496 | $ | 226,027 | ||||||||||||
Total deposits | 528,733 | n/m | 240,395 | 259,193 | n/m | 34,306 | ||||||||||||||||||
Allocated capital (2) | 30,000 | 24,000 | 10,000 | 23,000 | 30,000 | n/m | ||||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 165,094 | $ | 89,753 | $ | 115,846 | $ | 269,469 | $ | 67,381 | $ | 220,690 | ||||||||||||
Total deposits | 531,608 | n/m | 244,901 | 265,171 | n/m | 27,912 |
(1)Fully taxable-equivalent 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.
(2)Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital. Allocated capital and the related return are non-GAAP financial measures. The Corporation believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the segments. Other companies may define or calculate these measures differently. (See Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP Financial Measures on pages 22-24.)
n/m = not meaningful
Certain prior period amounts have been reclassified among the segments to conform to current period presentation.
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||||||
Annual Results by Business Segment | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||||
Consumer &
Business Banking |
Consumer
Real Estate Services |
GWIM |
Global
Banking |
Global
Markets |
All
Other |
|||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 29,862 | $ | 4,848 | $ | 18,404 | $ | 16,598 | $ | 16,119 | $ | (715 | ) | |||||||||||
Provision for credit losses | 2,633 | 160 | 14 | 336 | 110 | (978 | ) | |||||||||||||||||
Noninterest expense | 15,911 | 23,226 | 13,647 | 7,681 | 11,771 | 2,881 | ||||||||||||||||||
Net income (loss) | 7,096 | (13,395 | ) | 2,974 | 5,435 | 2,719 | 4 | |||||||||||||||||
Return on average allocated capital (2) | 24 | % | n/m | 25 | % | 18 | % | 8 | % | n/m | ||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 161,109 | $ | 88,277 | $ | 119,775 | $ | 270,164 | $ | 62,064 | $ | 202,512 | ||||||||||||
Total deposits | 543,441 | n/m | 240,242 | 261,312 | n/m | 30,255 | ||||||||||||||||||
Allocated capital (2) | 29,500 | 23,000 | 12,000 | 31,000 | 34,000 | n/m | ||||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 163,416 | $ | 87,972 | $ | 125,431 | $ | 272,572 | $ | 59,388 | $ | 172,612 | ||||||||||||
Total deposits | 556,568 | n/m | 245,391 | 251,344 | n/m | 18,898 | ||||||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||||
Consumer &
Business Banking |
Consumer
Real Estate Services |
GWIM |
Global
Banking |
Global
Markets |
All
Other |
|||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 29,864 | $ | 7,715 | $ | 17,790 | $ | 16,479 | $ | 15,390 | $ | 2,563 | ||||||||||||
Provision for credit losses | 3,107 | (156 | ) | 56 | 1,075 | 140 | (666 | ) | ||||||||||||||||
Noninterest expense | 16,260 | 15,815 | 13,033 | 7,551 | 11,996 | 4,559 | ||||||||||||||||||
Net income (loss) | 6,647 | (5,031 | ) | 2,977 | 4,973 | 1,153 | 712 | |||||||||||||||||
Return on average allocated capital (2) | 22 | % | n/m | 30 | % | 22 | % | 4 | % | n/m | ||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 164,574 | $ | 90,278 | $ | 111,023 | $ | 257,249 | $ | 60,057 | $ | 235,460 | ||||||||||||
Total deposits | 518,904 | n/m | 242,161 | 236,765 | n/m | 34,919 | ||||||||||||||||||
Allocated capital (2) | 30,000 | 24,000 | 10,000 | 23,000 | 30,000 | n/m | ||||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 165,094 | $ | 89,753 | $ | 115,846 | $ | 269,469 | $ | 67,381 | $ | 220,690 | ||||||||||||
Total deposits | 531,608 | n/m | 244,901 | 265,171 | n/m | 27,912 |
(1)Fully taxable-equivalent 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.
(2)Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital. Allocated capital and the related return are non-GAAP financial measures. The Corporation believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the segments. Other companies may define or calculate these measures differently. (See Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP Financial Measures on pages 22-24.)
n/m = not meaningful
Certain prior period amounts have been reclassified among the segments to conform to current period presentation.
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||
Supplemental Financial Data | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Fully taxable-equivalent (FTE) basis data (1) |
Year Ended December 31 |
Fourth Quarter 2014 |
Third Quarter 2014 |
Fourth Quarter 2013 |
||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Net interest income | $ | 40,821 | $ | 43,124 | $ | 9,865 | $ | 10,444 | $ | 10,999 | ||||||||||
Total revenue, net of interest expense | 85,116 | 89,801 | 18,955 | 21,434 | 21,701 | |||||||||||||||
Net interest yield (2) | 2.25 | % | 2.37 | % | 2.18 | % | 2.29 | % | 2.44 | % | ||||||||||
Efficiency ratio | 88.25 | 77.07 | 74.90 | 93.97 | 79.75 | |||||||||||||||
Other Data |
December 31 2014 |
September 30 2014 |
December 31 2013 |
|||||||||||||||||
Number of banking centers - U.S. | 4,855 | 4,947 | 5,151 | |||||||||||||||||
Number of branded ATMs - U.S. | 15,838 | 15,675 | 16,259 | |||||||||||||||||
Ending full-time equivalent employees | 223,715 | 229,538 | 242,117 |
(1)FTE basis is a non-GAAP financial 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 Reconciliations to GAAP Financial Measures on pages 22-24.
(2)Beginning in 2014, interest-bearing deposits placed with the Federal Reserve and certain non-U.S. central banks are included in earning assets. Prior period yields have been reclassified to conform to current period presentation.
Certain prior period amounts have been reclassified to conform to
current period presentation.
Bank of America Corporation and Subsidiaries |
Reconciliations to GAAP Financial Measures |
(Dollars in millions) |
The Corporation evaluates its business based on a fully taxable-equivalent basis, a non-GAAP financial measure. The Corporation believes managing the business with net interest income on a fully taxable-equivalent basis provides a more accurate picture of the interest margin for comparative purposes. Total revenue, net of interest expense, includes net interest income on a fully taxable-equivalent basis and noninterest income. The Corporation views related ratios and analyses (i.e., efficiency ratios and net interest yield) on a fully taxable-equivalent basis. To derive the fully taxable-equivalent basis, net interest income is adjusted to reflect tax-exempt income on an equivalent before-tax basis with a corresponding increase in income tax expense. For purposes of this calculation, the Corporation uses the federal statutory tax rate of 35 percent. This measure ensures comparability of net interest income arising from taxable and tax-exempt sources. The efficiency ratio measures the costs expended to generate a dollar of revenue, and net interest yield measures the basis points the Corporation earns over the cost of funds.
The Corporation also evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents an adjusted shareholders' equity or common shareholders' equity amount which has been reduced by goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities. Return on average tangible common shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average common shareholders' equity. The tangible common equity ratio represents adjusted ending common shareholders' equity divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities. Return on average tangible shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average total shareholders' equity. The tangible equity ratio represents adjusted ending shareholders' equity divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities. Tangible book value per common share represents adjusted ending common shareholders' equity divided by ending common shares outstanding. These measures are used to evaluate the Corporation's use of equity. In addition, profitability, relationship and investment models all use return on average tangible shareholders' equity as key measures to support our overall growth goals.
In addition, the Corporation evaluates its business segment results based on measures that utilize average allocated capital. The Corporation allocates capital to its business segments using a methodology that considers the effect of regulatory capital requirements in addition to internal risk-based capital models. The Corporation's internal risk-based capital models use a risk-adjusted methodology incorporating each segment's credit, market, interest rate, business and operational risk components. Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital. Allocated capital and the related return both represent non-GAAP financial measures. Allocated capital is reviewed periodically and refinements are made based on multiple considerations that include, but are not limited to, business segment exposures and risk profile, regulatory constraints and strategic plans. As part of this process, in the first quarter of 2014, the Corporation adjusted the amount of capital being allocated to its business segments. This change resulted in a reduction of the unallocated capital, which is reflected in All Other, and an aggregate increase to the amount of capital being allocated to the business segments. Prior periods were not restated.
See the tables below and on pages 23-24 for reconciliations of these non-GAAP financial measures to financial measures defined by GAAP for the years ended December 31, 2014 and 2013, and the three months ended December 31, 2014, September 30, 2014 and December 31, 2013. The Corporation believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate supplemental financial data differently.
Year Ended December 31 |
Fourth Quarter 2014 |
Third Quarter 2014 |
Fourth Quarter 2013 |
||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis |
|||||||||||||||||||||||||
Net interest income | $ | 39,952 | $ | 42,265 | $ | 9,635 | $ | 10,219 | $ | 10,786 | |||||||||||||||
Fully taxable-equivalent adjustment | 869 | 859 | 230 | 225 | 213 | ||||||||||||||||||||
Net interest income on a fully taxable-equivalent basis | $ | 40,821 | $ | 43,124 | $ | 9,865 | $ | 10,444 | $ | 10,999 | |||||||||||||||
Reconciliation of total revenue, net of interest expense to total revenue, net of interest expense on a fully taxable-equivalent basis |
|||||||||||||||||||||||||
Total revenue, net of interest expense | $ | 84,247 | $ | 88,942 | $ | 18,725 | $ | 21,209 | $ | 21,488 | |||||||||||||||
Fully taxable-equivalent adjustment | 869 | 859 | 230 | 225 | 213 | ||||||||||||||||||||
Total revenue, net of interest expense on a fully taxable-equivalent basis | $ | 85,116 | $ | 89,801 | $ | 18,955 | $ | 21,434 | $ | 21,701 | |||||||||||||||
Reconciliation of income tax expense to income tax expense on a fully taxable-equivalent basis |
|||||||||||||||||||||||||
Income tax expense | $ | 2,022 | $ | 4,741 | $ | 1,260 | $ | 663 | $ | 406 | |||||||||||||||
Fully taxable-equivalent adjustment | 869 | 859 | 230 | 225 | 213 | ||||||||||||||||||||
Income tax expense on a fully taxable-equivalent basis | $ | 2,891 | $ | 5,600 | $ | 1,490 | $ | 888 | $ | 619 | |||||||||||||||
Reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity |
|||||||||||||||||||||||||
Common shareholders’ equity | $ | 223,066 | $ | 218,468 | $ | 224,473 | $ | 222,368 | $ | 220,088 | |||||||||||||||
Goodwill | (69,809 | ) | (69,910 | ) | (69,782 | ) | (69,792 | ) | (69,864 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (5,109 | ) | (6,132 | ) | (4,747 | ) | (4,992 | ) | (5,725 | ) | |||||||||||||||
Related deferred tax liabilities | 2,090 | 2,328 | 2,019 | 2,077 | 2,231 | ||||||||||||||||||||
Tangible common shareholders’ equity | $ | 150,238 | $ | 144,754 | $ | 151,963 | $ | 149,661 | $ | 146,730 | |||||||||||||||
Reconciliation of average shareholders’ equity to average tangible shareholders’ equity |
|||||||||||||||||||||||||
Shareholders’ equity | $ | 238,476 | $ | 233,947 | $ | 243,448 | $ | 238,034 | $ | 233,415 | |||||||||||||||
Goodwill | (69,809 | ) | (69,910 | ) | (69,782 | ) | (69,792 | ) | (69,864 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (5,109 | ) | (6,132 | ) | (4,747 | ) | (4,992 | ) | (5,725 | ) | |||||||||||||||
Related deferred tax liabilities | 2,090 | 2,328 | 2,019 | 2,077 | 2,231 | ||||||||||||||||||||
Tangible shareholders’ equity | $ | 165,648 | $ | 160,233 | $ | 170,938 | $ | 165,327 | $ | 160,057 |
Certain prior period amounts have been reclassified to conform to current period presentation.
Bank of America Corporation and Subsidiaries | |||||||||||||||||||||||||
Reconciliations to GAAP Financial Measures (continued) | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Year Ended December 31 |
Fourth Quarter 2014 |
Third Quarter 2014 |
Fourth Quarter 2013 |
||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Reconciliation of period-end common shareholders’ equity to period-end tangible common shareholders’ equity |
|||||||||||||||||||||||||
Common shareholders’ equity | $ | 224,162 | $ | 219,333 | $ | 224,162 | $ | 220,768 | $ | 219,333 | |||||||||||||||
Goodwill | (69,777 | ) | (69,844 | ) | (69,777 | ) | (69,784 | ) | (69,844 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (4,612 | ) | (5,574 | ) | (4,612 | ) | (4,849 | ) | (5,574 | ) | |||||||||||||||
Related deferred tax liabilities | 1,960 | 2,166 | 1,960 | 2,019 | 2,166 | ||||||||||||||||||||
Tangible common shareholders’ equity | $ | 151,733 | $ | 146,081 | $ | 151,733 | $ | 148,154 | $ | 146,081 | |||||||||||||||
Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity |
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Shareholders’ equity | $ | 243,471 | $ | 232,685 | $ | 243,471 | $ | 238,681 | $ | 232,685 | |||||||||||||||
Goodwill | (69,777 | ) | (69,844 | ) | (69,777 | ) | (69,784 | ) | (69,844 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (4,612 | ) | (5,574 | ) | (4,612 | ) | (4,849 | ) | (5,574 | ) | |||||||||||||||
Related deferred tax liabilities | 1,960 | 2,166 | 1,960 | 2,019 | 2,166 | ||||||||||||||||||||
Tangible shareholders’ equity | $ | 171,042 | $ | 159,433 | $ | 171,042 | $ | 166,067 | $ | 159,433 | |||||||||||||||
Reconciliation of period-end assets to period-end tangible assets |
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Assets | $ | 2,104,534 | $ | 2,102,273 | $ | 2,104,534 | $ | 2,123,613 | $ | 2,102,273 | |||||||||||||||
Goodwill | (69,777 | ) | (69,844 | ) | (69,777 | ) | (69,784 | ) | (69,844 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (4,612 | ) | (5,574 | ) | (4,612 | ) | (4,849 | ) | (5,574 | ) | |||||||||||||||
Related deferred tax liabilities | 1,960 | 2,166 | 1,960 | 2,019 | 2,166 | ||||||||||||||||||||
Tangible assets | $ | 2,032,105 | $ | 2,029,021 | $ | 2,032,105 | $ | 2,050,999 | $ | 2,029,021 | |||||||||||||||
Book value per share of common stock |
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Common shareholders’ equity | $ | 224,162 | $ | 219,333 | $ | 224,162 | $ | 220,768 | $ | 219,333 | |||||||||||||||
Ending common shares issued and outstanding | 10,516,542 | 10,591,808 | 10,516,542 | 10,515,894 | 10,591,808 | ||||||||||||||||||||
Book value per share of common stock | $ | 21.32 | $ | 20.71 | $ | 21.32 | $ | 20.99 | $ | 20.71 | |||||||||||||||
Tangible book value per share of common stock |
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Tangible common shareholders’ equity | $ | 151,733 | $ | 146,081 | $ | 151,733 | $ | 148,154 | $ | 146,081 | |||||||||||||||
Ending common shares issued and outstanding | 10,516,542 | 10,591,808 | 10,516,542 | 10,515,894 | 10,591,808 | ||||||||||||||||||||
Tangible book value per share of common stock | $ | 14.43 | $ | 13.79 | $ | 14.43 | $ | 14.09 | $ | 13.79 |
Certain prior period amounts have been reclassified to conform to current period presentation.
Bank of America Corporation and Subsidiaries | |||||||||||||||||||||||||
Reconciliations to GAAP Financial Measures (continued) | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Year Ended December 31 |
Fourth Quarter 2014 |
Third Quarter 2014 |
Fourth Quarter 2013 |
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2014 | 2013 | ||||||||||||||||||||||||
Reconciliation of return on average allocated capital (1) |
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Consumer & Business Banking |
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Reported net income | $ | 7,096 | $ | 6,647 | $ | 1,758 | $ | 1,861 | $ | 1,992 | |||||||||||||||
Adjustment related to intangibles (2) | 4 | 7 | 1 | 1 | 1 | ||||||||||||||||||||
Adjusted net income | $ | 7,100 | $ | 6,654 | $ | 1,759 | $ | 1,862 | $ | 1,993 | |||||||||||||||
Average allocated equity (3) | $ | 61,449 | $ | 62,037 | $ | 61,423 | $ | 61,441 | $ | 61,998 | |||||||||||||||
Adjustment related to goodwill and a percentage of intangibles | (31,949 | ) | (32,037 | ) | (31,923 | ) | (31,941 | ) | (31,998 | ) | |||||||||||||||
Average allocated capital | $ | 29,500 | $ | 30,000 | $ | 29,500 | $ | 29,500 | $ | 30,000 | |||||||||||||||
Global Wealth & Investment Management |
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Reported net income | $ | 2,974 | $ | 2,977 | $ | 706 | $ | 813 | $ | 778 | |||||||||||||||
Adjustment related to intangibles (2) | 13 | 16 | 4 | 3 | 4 | ||||||||||||||||||||
Adjusted net income | $ | 2,987 | $ | 2,993 | $ | 710 | $ | 816 | $ | 782 | |||||||||||||||
Average allocated equity (3) | $ | 22,214 | $ | 20,292 | $ | 22,186 | $ | 22,204 | $ | 20,265 | |||||||||||||||
Adjustment related to goodwill and a percentage of intangibles | (10,214 | ) | (10,292 | ) | (10,186 | ) | (10,204 | ) | (10,265 | ) | |||||||||||||||
Average allocated capital | $ | 12,000 | $ | 10,000 | $ | 12,000 | $ | 12,000 | $ | 10,000 | |||||||||||||||
Global Banking |
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Reported net income | $ | 5,435 | $ | 4,973 | $ | 1,433 | $ | 1,413 | $ | 1,255 | |||||||||||||||
Adjustment related to intangibles (2) | 2 | 3 | — | 1 | 1 | ||||||||||||||||||||
Adjusted net income | $ | 5,437 | $ | 4,976 | $ | 1,433 | $ | 1,414 | $ | 1,256 | |||||||||||||||
Average allocated equity (3) | $ | 53,404 | $ | 45,412 | $ | 53,400 | $ | 53,402 | $ | 45,410 | |||||||||||||||
Adjustment related to goodwill and a percentage of intangibles | (22,404 | ) | (22,412 | ) | (22,400 | ) | (22,402 | ) | (22,410 | ) | |||||||||||||||
Average allocated capital | $ | 31,000 | $ | 23,000 | $ | 31,000 | $ | 31,000 | $ | 23,000 | |||||||||||||||
Global Markets |
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Reported net income (loss) | $ | 2,719 | $ | 1,153 | $ | (72 | ) | $ | 373 | $ | (47 | ) | |||||||||||||
Adjustment related to intangibles (2) | 9 | 9 | 3 | 2 | 3 | ||||||||||||||||||||
Adjusted net income (loss) | $ | 2,728 | $ | 1,162 | $ | (69 | ) | $ | 375 | $ | (44 | ) | |||||||||||||
Average allocated equity (3) | $ | 39,374 | $ | 35,370 | $ | 39,369 | $ | 39,374 | $ | 35,381 | |||||||||||||||
Adjustment related to goodwill and a percentage of intangibles | (5,374 | ) | (5,370 | ) | (5,369 | ) | (5,374 | ) | (5,381 | ) | |||||||||||||||
Average allocated capital | $ | 34,000 | $ | 30,000 | $ | 34,000 | $ | 34,000 | $ | 30,000 |
(1) There are no adjustments to reported net income (loss) or average allocated equity for Consumer Real Estate Services.
(2)Represents cost of funds, earnings credits and certain expenses related to intangibles.
(3)Average allocated equity is comprised of average allocated capital plus capital for the portion of goodwill and intangibles specifically assigned to the business segment.
Certain prior period amounts have been reclassified to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
Source:
Investors May Contact:
Lee McEntire, Bank of America, 1.980.388.6780
Jonathan
Blum, Bank of America (Fixed Income), 1.212.449.3112
Reporters May Contact:
Jerry Dubrowski, Bank of America,
1.980.388.2840
jerome.f.dubrowski@bankofamerica.com