Bank of America Reports Second-Quarter 2012 Net Income of $2.5 Billion or $0.19 Per Diluted Share
Supplemental Second Quarter 2012 Financial Information
Record Tier 1 Common Capital Ratio of 11.24 Percent Under Basel 1, up 46 Basis Points Since
Tier 1 Common Capital Ratio Under Basel 3 Estimated at 8.10 Percent at June 30, 20121
Long-term Debt Down
Investment Bank Ranked No. 2 in Global Net Investment Banking Fees for First-half 2012
Global Wealth and Investment Management Reported Record Asset Management Fees of
First-lien Mortgage Originations up 18 Percent From Q1-12
Consumer and Business Banking Average Deposit Balances up
Provision for Credit Losses Declined to Lowest Level Since Q1-07 as Credit Quality Continues to Improve
Phase 2 of New BAC Expected to Yield Cost Annualized Savings of
Relative to the same quarter a year ago, the results for the second quarter of 2012 reflect higher mortgage banking income, driven largely by lower provisions for representations and warranties, the absence of the goodwill impairment charge and improved credit quality across most major portfolios. In addition, the company had solid contributions from the wealth management and corporate and commercial banking businesses. This was partially offset by lower net interest income from the continued low-rate environment and lower loan levels.
"In a challenging global economy, we still see opportunities to do more with our customers and clients. Lending to commercial businesses increased for the sixth straight quarter -- with small business lending and commitments up 23 percent in a year -- and consumer credit is in the best shape in years," said
"Once again, we had strong capital generation this quarter through a combination of earnings growth and a reduction in risk-weighted assets," said Chief Financial Officer
As of
"The fact that we exceeded our previous guidance for
1 |
The Basel Tier 1 common capital ratio is based on certain assumptions with respect to the final Basel 3 rules and is expected to evolve over time, as the Basel 3 rules evolve and the Company's businesses change. For more information, see Capital and Liquidity section of this press release on page 15. | |
2 | Refer to pages 15-16 of the company's second-quarter 2011 earnings press release dated July 19, 2011 for table indicating mortgage-related items and other selected adjustments. | |
Selected Financial Highlights | |||||||||||||
Three Months Ended | |||||||||||||
(Dollars in millions except per share data) |
June 30 |
March 31 |
June 30 | ||||||||||
Net interest income, FTE basis1 | $ | 9,782 | $ | 11,053 | $ | 11,493 | |||||||
Noninterest income | 12,420 | 11,432 | 1,990 | ||||||||||
Total revenue, net of interest expense, FTE basis | 22,202 | 22,485 | 13,483 | ||||||||||
Provision for credit losses | 1,773 | 2,418 | 3,255 | ||||||||||
Noninterest expense2 | 17,048 | 19,141 | 22,856 | ||||||||||
Net income (loss) | 2,463 | 653 | (8,826 | ) | |||||||||
Diluted earnings per common share | $ | 0.19 | $ | 0.03 | $ | (0.90 | ) |
1 |
Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 of this press release. Net interest income on a GAAP basis was $9.5 billion, $10.8 billion and $11.2 billion for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011. Total revenue, net of interest expense on a GAAP basis, was $22.0 billion, $22.3 billion and $13.2 billion for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011. | |
2 | Includes a goodwill impairment charge of $2.6 billion in the second quarter of 2011. | |
Key Business Highlights
The company made significant progress in the second quarter of 2012 in line with its operating principles, including the following developments:
Be customer-driven
Bank of America extended approximately$107 billion in credit in the second quarter of 2012. This included$68.4 billion in commercial non-real estate loans,$18.0 billion in residential first mortgages,$8.2 billion in commercial real estate loans,$4.3 billion in U.S. consumer and small business card,$930 million in home equity products and$6.7 billion in other consumer credit.- The
$18.0 billion in residential first mortgages funded in the second quarter helped more than 72,000 homeowners either purchase a home or refinance an existing mortgage. This included more than 5,000 first-time homebuyer mortgages originated by retail channels, and nearly 22,000 mortgages to low- and moderate-income borrowers. Approximately 19 percent of funded first mortgages were for home purchases and 81 percent were refinances. - The company originated approximately
$4.0 billion in small business loans and commitments in the first six months of 2012, up 23 percent from the year-ago period, reflecting its continued focus on supporting small businesses. - The company raised
$125 billion in capital for clients in the second quarter of 2012, which helped clients support the economy. - Period-end loan balances in Global Wealth and Investment Management grew
$2.5 billion , or 2.4 percent, from the first quarter of 2012 to a record$105.4 billion on higher securities-based lending.
Bank of America continued to add to its team of more than 17,500Financial Advisors during the second quarter of 2012. The total number ofWealth Advisors in Global Wealth and Investment Management, including thoseFinancial Advisors in Consumer and Business Banking, rose for the 12th consecutive quarter.- The company continued to deepen relationships with customers. The number of mobile banking customers rose 34 percent from the year-ago quarter to 10.3 million customers, and the number of new U.S. consumer credit card accounts opened in the second quarter of 2012 was up 7 percent from the year-ago quarter.
- The company continued to expand relationships with corporate and commercial banking clients, with average commercial and industrial loan and lease balances up 11.5 percent from the second quarter of 2011.
Bank of America Merrill Lynch (BofA Merrill) continued to rank No. 2 globally in net investment banking fees during the first half of 2012, including self-led deals, as reported by Dealogic.
Continue to build a fortress balance sheet
- Regulatory capital ratios increased significantly, with the Tier 1 common capital ratio under
Basel 1 increasing to 11.24 percent in the second quarter of 2012, up 46 bps from the first quarter of 2012 and 301 bps higher than the second quarter of 2011. - The Tier 1 common capital ratio under
Basel 3 on a fully phased-in basis was estimated at 8.10 percent as ofJune 30, 2012 . This compares with the company's previous guidance of achieving aBasel 3 Tier 1 common capital ratio of more than 7.50 percent on a fully phased-in basis at year-end 2012.1 - The company continued to maintain strong liquidity in the second quarter of 2012 while significantly reducing long-term debt. Global Excess Liquidity Sources totaled
$378 billion at June 30, 2012, compared to$406 billion at March 31, 2012 and$402 billion at June 30, 2011. Long-term debt declined to$302 billion at June 30, 2012 from$355 billion at March 31, 2012 and$427 billion at June 30, 2011. - Time-to-required funding increased to a record 37 months at June 30, 2012, from 31 months at March 31, 2012 and 22 months at June 30, 2011.
1 |
The Basel Tier 1 common capital ratio is based on certain assumptions with respect to the final Basel 3 rules and is expected to evolve over time, as the Basel 3 rules evolve and the company's businesses change. For more information, see the Capital and Liquidity section of this press release on page 15. | |
Manage risk well
- The provision for credit losses declined 46 percent from the year-ago quarter, reflecting improved credit quality across most major consumer and commercial portfolios and the impact of underwriting changes implemented over the past several years.
- The allowance for loan and lease losses to annualized net charge-off coverage ratio was 2.08 times in the second quarter of 2012, compared with 1.97 times in the first quarter of 2012 and 1.64 times in the second quarter of 2011. Excluding purchased credit-impaired loans, the allowance to annualized net charge-off coverage ratio was 1.46 times, 1.43 times and 1.28 times for the same periods, respectively.
- The company continued to manage its sovereign and non-sovereign exposures in
Europe . Total exposure toGreece ,Italy ,Ireland ,Portugal andSpain , including net credit default protection, declined to$9.6 billion at June 30, 2012, from$9.8 billion at March 31, 2012 and$16.7 billion at June 30, 2011.
Deliver for our shareholders
- The company continued to focus on strengthening the balance sheet by increasing capital and maintaining strong liquidity and reserve levels.
- Tangible book value per share1 increased to
$13.22 at June 30, 2012, compared to$12.87 at March 31, 2012 and$12.65 at June 30, 2011. Book value per share was$20.16 atJune 30, 2012 , compared to$19.83 atMarch 31, 2012 and$20.29 atJune 30, 2011 . - During the quarter, the company retired
$5.5 billion of debt and trust-preferred securities for cash that resulted in total gains of$505 million . These actions, combined with the debt maturities in the second quarter of 2012 and additional liability management actions announced for the third quarter of 2012, are expected to benefit quarterly net interest income by approximately$300 million , of which$60 million was recognized in the second quarter of 2012.
1 | Tangible book value per share of common stock is a non-GAAP measure. Other companies may define or calculate this measure differently. For reconciliation to GAAP measures, refer to pages 24-27 of this press release. | |
Manage efficiency well
- Noninterest expense declined to
$17.0 billion in the second quarter of 2012 from$19.1 billion in the first quarter of 2012 and$22.9 billion in the second quarter of 2011 as the company continued to focus on streamlining and simplifying its businesses. - The company continued to approve and implement employee-generated ideas as part of Project New BAC. To date, more than 3,100 employee-submitted ideas have been accepted as initiatives.
Bank of America remains on track to exceed its previously announced goal of achieving 20 percent of the$5 billion in annualized targeted cost savings from Phase 1 by the end of 2012. With Phase 2 evaluations now complete, the company expects a total of$8 billion in annualized cost savings from New BAC by mid-2015.- At June 30, 2012, the company had 275,460 full-time employees, down 3,228 from the end of the prior quarter, and 12,624 less than June 30, 2011. Excluding FTE increases in Legacy Assets and Servicing to handle increasing government and private programs for housing, the number of full-time employees is down nearly 20,000 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 Banking, Global Markets, and Global Wealth and Investment Management (GWIM), with the remaining operations recorded in All Other.
Consumer and Business Banking | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 |
June 30 | ||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 7,326 | $ | 7,422 | $ | 8,681 | |||||||||
Provision for credit losses | 1,131 | 877 | 400 | ||||||||||||
Noninterest expense | 4,359 | 4,247 | 4,377 | ||||||||||||
Net income | 1,156 | 1,455 | 2,502 | ||||||||||||
Return on average equity | 8.70 | % | 11.05 | % | 19.10 | % | |||||||||
Return on average economic capital1 | 20.31 | 26.16 | 45.87 | ||||||||||||
Average loans | $ | 136,872 | $ | 141,578 | $ | 155,122 | |||||||||
Average deposits | 476,580 | 466,240 | 467,179 | ||||||||||||
At June 30 |
At March 31 |
At June 30 | |||||||||||||
Client brokerage assets | $ | 72,226 | $ | 73,422 | $ | 69,000 |
1 | Return on average economic capital is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 of this press release. | |
Business Highlights
- Successfully integrated 11.0 million customers and 18.5 million deposit accounts into one banking platform, which provides our customers with a convenient and consistent banking network across the franchise.
- The number of new U.S. credit card accounts opened in the second quarter of 2012 was up 7 percent from the year-ago quarter. During the second quarter of 2012, the number of BankAmericard Cash Rewards cards grew by 37 percent to 1.4 million.
- Average deposit balances increased 2.0 percent from the year-ago quarter, driven by growth in liquid products in a low rate environment. The rates paid on deposits declined 8 basis points in the second quarter of 2012 from the year-ago quarter due to pricing discipline and a shift in the mix of deposits.
Financial Overview
Consumer and Business Banking reported net income of
Revenue of
Noninterest income declined
Noninterest expense of
Consumer Real Estate Services | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 |
June 30 | ||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 2,521 | $ | 2,674 | $ | (11,315 | ) | ||||||||
Provision for credit losses | 186 | 507 | 1,507 | ||||||||||||
Noninterest expense1 | 3,556 | 3,905 | 8,625 | ||||||||||||
Net loss | (768 | ) | (1,145 | ) | (14,506 | ) | |||||||||
Average loans | 106,725 | 110,755 | 121,683 | ||||||||||||
At June 30 |
At March 31 |
At June 30 | |||||||||||||
Period-end loans | $ | 105,304 | $ | 109,264 | $ | 121,553 |
1 Includes a goodwill impairment charge of
Business Highlights
Bank of America funded$18.9 billion in residential home loans and home equity loans during the second quarter of 2012, compared to$16.0 billion in the first quarter of 2012 and$19.6 billion in the second quarter of 2011, excluding correspondent originations.- The mortgage portfolio serviced for investors declined to
$1.2 trillion at the end of the second quarter of 2012 from$1.3 trillion at the end of the first quarter of 2012 and$1.6 trillion at the end of the second quarter of 2011. Capitalized mortgage servicing rights (MSR) as a percent of the portfolio declined to 47 basis points at June 30, 2012 from 58 basis points atMarch 31, 2012 and 78 basis points at June 30, 2011. The MSR balance was$5.7 billion at June 30, 2012, compared with$7.6 billion at March 31, 2012 and$12.4 billion at June 30, 2011. - The number of 60+ day delinquent first mortgage loans serviced by Legacy Assets and Servicing declined to 1.06 million loans at the end of the second quarter of 2012 from 1.09 million at the end of the first quarter of 2012, and 1.28 million at the end of the second quarter of 2011.
Financial Overview
Consumer Real Estate Services reported a net loss of
While the home loan production businesses remained profitable, the continued high costs of managing delinquent and defaulted loans in the servicing portfolio combined with the costs associated with managing other legacy mortgage exposures resulted in the overall net loss for CRES for the quarter.
Revenue increased
While CRES loan fundings declined by 62 percent compared to the same period in 2011, largely due to the exit from the correspondent channel in late 2011, core production revenue increased slightly due to the higher margins on direct originations.
Representations and warranties provision was
The provision for credit losses in the second quarter of 2012 decreased
Noninterest expense, excluding the
Global Banking | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 |
June 30 | ||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 4,285 | $ | 4,450 | $ | 4,659 | |||||||||
Provision for credit losses | (113 | ) | (238 | ) | (557 | ) | |||||||||
Noninterest expense | 2,165 | 2,177 | 2,221 | ||||||||||||
Net income | 1,406 | 1,590 | 1,921 | ||||||||||||
Return on average equity | 12.31 | % | 13.98 | % | 16.37 | % | |||||||||
Return on average economic capital1 | 26.83 | 30.67 | 34.06 | ||||||||||||
Average loans and leases | $ | 267,812 | $ | 277,074 | $ | 260,144 | |||||||||
Average deposits | 239,054 | 237,531 | 235,662 |
1 | Return on average economic capital is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 of this press release. | |
Business Highlights
Bank of America Merrill Lynch (BofA Merrill) was ranked No. 2 globally in net investment banking fees, including self-led deals, for the first half of 2012 according to Dealogic. During the second quarter of 2012, based on deal volume, BofA Merrill was ranked No. 1 globally in equity capital markets and was among the top three banks in high-yield corporate debt, leveraged loans, convertible debt, common stock underwriting, investment-grade corporate debt, asset-backed securities and syndicated loans.- Average loans and leases increased
$7.7 billion , or 3 percent, and average deposits rose$3.4 billion , or 1 percent, from the year-ago quarter. - Credit quality continued to improve as nonperforming assets declined by
$2.7 billion , or 45 percent, and total reservable criticized loans declined by$12.0 billion , or 45 percent, compared to the year-ago quarter.
Financial Overview
Global Banking reported net income of
Global Corporate Banking revenue increased to
The provision for credit losses was a benefit of
Average loans and leases increased
Global Markets | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 |
June 30 | ||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 3,365 | $ | 4,193 | $ | 4,413 | |||||||||
Provision for credit losses | (14 | ) | (20 | ) | (8 | ) | |||||||||
Noninterest expense | 2,711 | 3,076 | 3,263 | ||||||||||||
Net income | 462 | 798 | 911 | ||||||||||||
Return on average equity | 10.84 | % | 17.52 | % | 15.90 | % | |||||||||
Return on average economic capital1 | 14.92 | 23.54 | 19.99 | ||||||||||||
Total average assets | $ | 581,952 | $ | 558,594 | $ | 622,915 |
1 | Return on average economic capital is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 of this press release. | |
Business Highlights
- Sales and trading revenue was
$3.2 billion in the second quarter of 2012, compared to$3.8 billion in the first quarter of 2012 and$3.7 billion in the second quarter of 2011. Sales and trading revenue, excluding DVA losses, was$3.3 billion in the second quarter of 2012, compared to$5.2 billion in the first quarter of 2012 and$3.6 billion in the second quarter of 2011.
- Risk-weighted assets in the Global Markets business declined to
$196 billion in the second quarter of 2012 from$243 billion in the second quarter of 2011 as the company continued to reduce legacy risk exposures.
Financial Overview
Global Markets revenue declined
Net income was
Fixed Income, Currency and Commodities sales and trading revenue, excluding DVA, was
Global Wealth and Investment Management | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 |
June 30 | ||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 4,317 | $ | 4,360 | $ | 4,495 | |||||||||
Provision for credit losses | 47 | 46 | 72 | ||||||||||||
Noninterest expense | 3,408 | 3,450 | 3,624 | ||||||||||||
Net income | 543 | 547 | 513 | ||||||||||||
Return on average equity | 12.15 | % | 12.78 | % | 11.71 | % | |||||||||
Return on average economic capital1 | 30.03 | 33.81 | 30.45 | ||||||||||||
Average loans | $ | 104,102 | $ | 103,036 | $ | 102,201 | |||||||||
Average deposits | 251,121 | 252,705 | 255,432 | ||||||||||||
(Dollars in billions) |
At June 30 |
At March 31 |
At June 30 | ||||||||||||
Assets under management | $ | 682.2 | $ | 693.0 | $ | 661.0 | |||||||||
Total client balances2 | 2,192.1 | 2,241.3 | 2,205.7 |
1 | Return on average economic capital is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 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
- Pretax margin for the second quarter of 2012 was 20 percent, compared with 18 percent in the year-ago quarter.
- Record asset management fees of
$1.6 billion were driven by market gains and solid long-term assets under management flows. - Period-end loan balances for Global Wealth and Investment Management grew
$2.5 billion , or 2.4 percent, from the first quarter of 2012 to a record$105.4 billion on higher securities-based lending. - The number of
Wealth Advisors grew for the 12th consecutive quarter includingFinancial Advisors within the company's Consumer and Business Banking segment.
Financial Overview
Net income for Global Wealth and Investment Management rose 6 percent from the year-ago quarter to
Noninterest expense decreased 6 percent from the year-ago quarter to
Assets under management (AUM) rose
All Other 1 | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 2012 |
June 30 2011 | ||||||||||||
Total revenue, net of interest expense, FTE basis | $ | 388 | $ | (614 | ) | $ | 2,550 | ||||||||
Provision for credit losses | 536 | 1,246 | 1,841 | ||||||||||||
Noninterest expense | 849 | 2,286 | 746 | ||||||||||||
Net loss | (336 | ) | (2,592 | ) | (167 | ) | |||||||||
Total average loans | 257,341 | 264,112 | 287,840 |
1 | All Other consists of two broad groupings, Equity Investments and Other. Equity Investments includes Global Principal Investments, Strategic and other investments. Other includes liquidating businesses, merger and restructuring charges, ALM activities such as the residential mortgage portfolio and investment securities, and activities including economic hedges, gains/losses on structured liabilities, the impact of certain allocation methodologies and accounting hedge ineffectiveness. Other also includes certain residential mortgage and discontinued real estate loans that are managed by Legacy Assets and Servicing within Consumer Real Estate Services. | |
All Other reported a net loss of
Equity investment income results reflected a loss of
The second quarter of 2012 also included
The decrease in the provision for credit losses was driven primarily by continued improvement in credit quality in the residential mortgage portfolio as well as a lower provision related to the Countrywide-purchased credit-impaired discontinued real estate and residential mortgage portfolios.
Corporate Overview
Revenue and Expense | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 2012 |
June 30 2011 | ||||||||||||
Net interest income, FTE basis1 | $ | 9,782 | $ | 11,053 | $ | 11,493 | |||||||||
Noninterest income | 12,420 | 11,432 | 1,990 | ||||||||||||
Total revenue, net of interest expense, FTE basis | 22,202 | 22,485 | 13,483 | ||||||||||||
Provision for credit losses | 1,773 | 2,418 | 3,255 | ||||||||||||
Noninterest expense2 | 17,048 | 19,141 | 22,856 | ||||||||||||
Net income | 2,463 | 653 | (8,826 | ) |
1 | Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 of this press release. Net interest income on a GAAP basis was $9.5 billion, $10.8 billion and $11.2 billion for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011. Total revenue, net of interest expense on a GAAP basis, was $22.0 billion, $22.3 billion and $13.2 billion for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011. | |
2 | Includes a goodwill impairment charge of $2.6 billion in the second quarter of 2011. | |
Revenue, net of interest expense, on an FTE basis rose
Net interest income on an FTE basis decreased 15 percent from the year-ago quarter. The net interest yield fell 29 basis points from the year-ago quarter. These decreases were primarily driven by lower consumer loan balances and yields and decreased investment securities yields, partially offset by ongoing reductions in long-term debt balances. Net interest income for the second quarter of 2012 included unfavorable market-related impacts of premium amortization of
Noninterest income increased
Noninterest expense decreased
Income tax expense for the second quarter of 2012 was
Credit Quality | |||||||||||||||
Three Months Ended | |||||||||||||||
(Dollars in millions) |
June 30 |
March 31 2012 |
June 30 2011 | ||||||||||||
Provision for credit losses | $ | 1,773 | $ | 2,418 | $ | 3,255 | |||||||||
Net charge-offs | 3,626 | 4,056 | 5,665 | ||||||||||||
Net charge-off ratio1 | 1.64 | % | 1.80 | % | 2.44 | % | |||||||||
At June 30 |
At March 31 2012 |
At June 30 2011 | |||||||||||||
Nonperforming loans, leases and foreclosed properties | $ | 25,377 | $ | 27,790 | $ | 30,058 | |||||||||
Nonperforming loans, leases and foreclosed properties ratio2 | 2.87 | % | 3.10 | % | 3.22 | % | |||||||||
Allowance for loan and lease losses | $ | 30,288 | $ | 32,211 | $ | 37,312 | |||||||||
Allowance for loan and lease losses ratio3 | 3.43 | % | 3.61 | % | 4.00 | % |
1 | Net charge-off/loss ratios are calculated as net charge-offs divided by average outstanding loans and leases during the period; quarterly results are annualized. | |
2 | 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. | |
3 | 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 second quarter of 2012, with net charge-offs declining across most major portfolios and the provision for credit losses decreasing significantly, compared to the second quarter of 2011. Additionally, 30+ day performing delinquent loans, excluding fully-insured loans, declined across most major portfolios, and reservable criticized balances also continued to decline, down 42 percent from the year-ago period.
Net charge-offs of
The provision for credit losses declined to
The allowance for loan and lease losses to annualized net charge-off coverage ratio increased in the second quarter of 2012 to 2.08 times, compared with 1.97 times in the first quarter of 2012 and 1.64 times in the second quarter of 2011. Excluding purchased credit-impaired loans, the allowance to annualized net charge-off coverage ratio was 1.46 times, 1.43 times and 1.28 times for the same periods, respectively.
Nonperforming loans, leases and foreclosed properties were
Capital and Liquidity Management | |||||||||||||||
(Dollars in millions, except per share information) |
At June 30 |
At March 31 2012 |
At June 30 2011 | ||||||||||||
Total shareholders' equity | $ | 235,975 | $ | 232,499 | $ | 222,176 | |||||||||
Tier 1 common equity | 134,082 | 131,602 | 114,684 | ||||||||||||
Tier 1 common capital ratio | 11.24 | % | 10.78 | % | 8.23 | % | |||||||||
Tier 1 capital ratio | 13.80 | 13.37 | 11.00 | ||||||||||||
Common equity ratio | 10.05 | 9.80 | 9.09 | ||||||||||||
Tangible book value per share1 | $ | 13.22 | $ | 12.87 | $ | 12.65 | |||||||||
Book value per share | 20.16 | 19.83 | 20.29 |
1 | Tangible book value per share is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 24-27 of this press release. | |
The Tier 1 common capital ratio under
In late 2010, the Basel Committee on Banking Supervision proposed
The company's estimates under
As of
At
During the second quarter of 2012, a cash dividend of
Note: Chief Executive Officer
You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those 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 |
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | |||||||||||||||
2012 | 2011 | ||||||||||||||||||
Net interest income | $ | 20,394 | $ | 23,425 | $ | 9,548 | $ | 10,846 | $ | 11,246 | |||||||||
Noninterest income | 23,852 | 16,688 | 12,420 | 11,432 | 1,990 | ||||||||||||||
Total revenue, net of interest expense | 44,246 | 40,113 | 21,968 | 22,278 | 13,236 | ||||||||||||||
Provision for credit losses | 4,191 | 7,069 | 1,773 | 2,418 | 3,255 | ||||||||||||||
Goodwill impairment | - | 2,603 | - | - | 2,603 | ||||||||||||||
Merger and restructuring charges | - | 361 | - | - | 159 | ||||||||||||||
All other noninterest expense (1) | 36,189 | 40,175 | 17,048 | 19,141 | 20,094 | ||||||||||||||
Income (loss) before income taxes | 3,866 | (10,095 | ) | 3,147 | 719 | (12,875 | ) | ||||||||||||
Income tax expense (benefit) | 750 | (3,318 | ) | 684 | 66 | (4,049 | ) | ||||||||||||
Net income (loss) | $ | 3,116 | $ | (6,777 | ) | $ | 2,463 | $ | 653 | $ | (8,826 | ) | |||||||
Preferred stock dividends | 690 | 611 | 365 | 325 | 301 | ||||||||||||||
Net income (loss) applicable to common shareholders | $ | 2,426 | $ | (7,388 | ) | $ | 2,098 | $ | 328 | $ | (9,127 | ) | |||||||
Earnings (loss) per common share | $ | 0.23 | $ | (0.73 | ) | $ | 0.19 | $ | 0.03 | $ | (0.90 | ) | |||||||
Diluted earnings (loss) per common share | 0.22 | (0.73 | ) | 0.19 | 0.03 | (0.90 | ) | ||||||||||||
Summary Average Balance Sheet |
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | |||||||||||||||
2012 | 2011 | ||||||||||||||||||
Total loans and leases | $ | 906,610 | $ | 938,738 | $ | 899,498 | $ | 913,722 | $ | 938,513 | |||||||||
Debt securities | 335,001 | 335,556 | 342,244 | 327,758 | 335,269 | ||||||||||||||
Total earning assets | 1,770,336 | 1,857,124 | 1,772,568 | 1,768,105 | 1,844,525 | ||||||||||||||
Total assets | 2,190,868 | 2,338,826 | 2,194,563 | 2,187,174 | 2,339,110 | ||||||||||||||
Total deposits | 1,031,500 | 1,029,578 | 1,032,888 | 1,030,112 | 1,035,944 | ||||||||||||||
Common shareholders' equity | 215,466 | 216,367 | 216,782 | 214,150 | 218,505 | ||||||||||||||
Total shareholders' equity | 234,062 | 232,930 | 235,558 | 232,566 | 235,067 | ||||||||||||||
Performance Ratios |
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | |||||||||||||||
2012 | 2011 | ||||||||||||||||||
Return on average assets | 0.29 | % | n/m | 0.45 | % | 0.12 | % | n/m | |||||||||||
Return on average tangible shareholders' equity (2) | 3.94 | n/m | 6.16 | 1.67 | n/m | ||||||||||||||
Credit Quality |
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | |||||||||||||||
2012 | 2011 | ||||||||||||||||||
Total net charge-offs | $ | 7,682 | $ | 11,693 | $ | 3,626 | $ | 4,056 | $ | 5,665 | |||||||||
Net charge-offs as a % of average loans and leases outstanding (3) | 1.72 | % | 2.53 | % | 1.64 | % | 1.80 | % | 2.44 | % | |||||||||
Provision for credit losses | $ | 4,191 | $ | 7,069 | $ | 1,773 | $ | 2,418 | $ | 3,255 | |||||||||
June 30 2012 |
March 31 2012 |
June 30 2011 | |||||||||||||||||
Total nonperforming loans, leases and foreclosed properties (4) | $ | 25,377 | $ | 27,790 | $ | 30,058 | |||||||||||||
Nonperforming loans, leases and foreclosed properties as a % of total loans, leases and foreclosed properties (3) | 2.87 | % | 3.10 | % | 3.22 | % | |||||||||||||
Allowance for loan and lease losses | $ | 30,288 | $ | 32,211 | $ | 37,312 | |||||||||||||
Allowance for loan and lease losses as a % of total loans and leases outstanding (3) | 3.43 | % | 3.61 | % | 4.00 | % | |||||||||||||
For footnotes see page 20. | |||||||||||||||||||
This information is preliminary and based on company data available at the time of the presentation.
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||
Selected Financial Data (continued) | ||||||||||||||||||||
(Dollars in millions, except per share data; shares in thousands) | ||||||||||||||||||||
Capital Management |
June 30 2012 |
March 31 2012 |
June 30 2011 | |||||||||||||||||
Risk-based capital (5): | ||||||||||||||||||||
Tier 1 common capital (6) | $ | 134,082 | $ | 131,602 | $ | 114,684 | ||||||||||||||
Tier 1 common capital ratio (6) | 11.24 | % | 10.78 | % | 8.23 | % | ||||||||||||||
Tier 1 leverage ratio | 7.82 | 7.79 | 6.86 | |||||||||||||||||
Tangible equity ratio (7) | 7.73 | 7.48 | 6.63 | |||||||||||||||||
Tangible common equity ratio (7) | 6.83 | 6.58 | 5.87 | |||||||||||||||||
Period-end common shares issued and outstanding | 10,776,869 | 10,775,604 | 10,133,190 | |||||||||||||||||
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | |||||||||||||||||
2012 | 2011 | |||||||||||||||||||
Common shares issued | 240,931 | 48,035 | 1,265 | 239,666 | 1,387 | |||||||||||||||
Average common shares issued and outstanding | 10,714,881 | 10,085,479 | 10,775,695 | 10,651,367 | 10,094,928 | |||||||||||||||
Average diluted common shares issued and outstanding | 11,509,945 | 10,085,479 | 11,556,011 | 10,761,917 | 10,094,928 | |||||||||||||||
Dividends paid per common share | $ | 0.02 | $ | 0.02 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||||
Summary Period-End Balance Sheet |
June 30 2012 |
March 31 2012 |
June 30 2011 | |||||||||||||||||
Total loans and leases | $ | 892,315 | $ | 902,294 | $ | 941,257 | ||||||||||||||
Total debt securities | 335,217 | 331,245 | 331,052 | |||||||||||||||||
Total earning assets | 1,737,809 | 1,744,452 | 1,772,293 | |||||||||||||||||
Total assets | 2,160,854 | 2,181,449 | 2,261,319 | |||||||||||||||||
Total deposits | 1,035,225 | 1,041,311 | 1,038,408 | |||||||||||||||||
Total shareholders' equity | 235,975 | 232,499 | 222,176 | |||||||||||||||||
Common shareholders' equity | 217,213 | 213,711 | 205,614 | |||||||||||||||||
Book value per share of common stock | $ | 20.16 | $ | 19.83 | $ | 20.29 | ||||||||||||||
Tangible book value per share of common stock (2) | 13.22 | 12.87 | 12.65 |
(1) Excludes merger and restructuring charges and goodwill impairment charges.
(2) Return on average tangible 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 24-27.
(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) Reflects preliminary data for current period risk-based capital.
(6) 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.
(7) Tangible equity ratio equals period-end tangible shareholders' equity divided by period-end tangible assets. Tangible common equity 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 24-27.
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.
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||||||||||||||
Quarterly Results by Business Segment | ||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Second Quarter 2012 | ||||||||||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,326 | $ | 2,521 | $ | 4,285 | $ | 3,365 | $ | 4,317 | $ | 388 | ||||||||||||||||||||
Provision for credit losses | 1,131 | 186 | (113 | ) | (14 | ) | 47 | 536 | ||||||||||||||||||||||||
Noninterest expense | 4,359 | 3,556 | 2,165 | 2,711 | 3,408 | 849 | ||||||||||||||||||||||||||
Net income (loss) | 1,156 | (768 | ) | 1,406 | 462 | 543 | (336 | ) | ||||||||||||||||||||||||
Return on average allocated equity | 8.70 | % | n/m | 12.31 | % | 10.84 | % | 12.15 | % | n/m | ||||||||||||||||||||||
Return on average economic capital (2) | 20.31 | n/m | 26.83 | 14.92 | 30.03 | n/m | ||||||||||||||||||||||||||
Balance Sheet |
||||||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 136,872 | $ | 106,725 | $ | 267,812 | n/m | $ | 104,102 | $ | 257,341 | |||||||||||||||||||||
Total deposits | 476,580 | n/m | 239,054 | n/m | 251,121 | 31,274 | ||||||||||||||||||||||||||
Allocated equity | 53,452 | 14,116 | 45,958 | $ | 17,132 | 17,974 | 86,926 | |||||||||||||||||||||||||
Economic capital (2) | 22,967 | 14,116 | 21,102 | 12,524 | 7,353 | n/m | ||||||||||||||||||||||||||
Period end | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 135,523 | $ | 105,304 | $ | 265,393 | n/m | $ | 105,395 | $ | 253,505 | |||||||||||||||||||||
Total deposits | 481,939 | n/m | 241,344 | n/m | 249,755 | 27,157 | ||||||||||||||||||||||||||
First Quarter 2012 | ||||||||||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,422 | $ | 2,674 | $ | 4,450 | $ | 4,193 | $ | 4,360 | $ | (614 | ) | |||||||||||||||||||
Provision for credit losses | 877 | 507 | (238 | ) | (20 | ) | 46 | 1,246 | ||||||||||||||||||||||||
Noninterest expense | 4,247 | 3,905 | 2,177 | 3,076 | 3,450 | 2,286 | ||||||||||||||||||||||||||
Net income (loss) | 1,455 | (1,145 | ) | 1,590 | 798 | 547 | (2,592 | ) | ||||||||||||||||||||||||
Return on average allocated equity | 11.05 | % | n/m | 13.98 | % | 17.52 | % | 12.78 | % | n/m | ||||||||||||||||||||||
Return on average economic capital (2) | 26.16 | n/m | 30.67 | 23.54 | 33.81 | n/m | ||||||||||||||||||||||||||
Balance Sheet |
||||||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 141,578 | $ | 110,755 | $ | 277,074 | n/m | $ | 103,036 | $ | 264,112 | |||||||||||||||||||||
Total deposits | 466,240 | n/m | 237,531 | n/m | 252,705 | 39,774 | ||||||||||||||||||||||||||
Allocated equity | 52,947 | 14,791 | 45,719 | $ | 18,317 | 17,228 | 83,564 | |||||||||||||||||||||||||
Economic capital (2) | 22,425 | 14,791 | 20,858 | 13,669 | 6,587 | n/m | ||||||||||||||||||||||||||
Period end | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 138,909 | $ | 109,264 | $ | 272,279 | n/m | $ | 102,903 | $ | 260,005 | |||||||||||||||||||||
Total deposits | 486,162 | n/m | 237,602 | n/m | 252,755 | 30,150 | ||||||||||||||||||||||||||
Second Quarter 2011 | ||||||||||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 8,681 | $ | (11,315 | ) | $ | 4,659 | $ | 4,413 | $ | 4,495 | $ | 2,550 | |||||||||||||||||||
Provision for credit losses | 400 | 1,507 | (557 | ) | (8 | ) | 72 | 1,841 | ||||||||||||||||||||||||
Noninterest expense | 4,377 | 8,625 | 2,221 | 3,263 | 3,624 | 746 | ||||||||||||||||||||||||||
Net income (loss) | 2,502 | (14,506 | ) | 1,921 | 911 | 513 | (167 | ) | ||||||||||||||||||||||||
Return on average allocated equity | 19.10 | % | n/m | 16.37 | % | 15.90 | % | 11.71 | % | n/m | ||||||||||||||||||||||
Return on average economic capital (2) | 45.87 | n/m | 34.06 | 19.99 | 30.45 | n/m | ||||||||||||||||||||||||||
Balance Sheet |
||||||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 155,122 | $ | 121,683 | $ | 260,144 | n/m | $ | 102,201 | $ | 287,840 | |||||||||||||||||||||
Total deposits | 467,179 | n/m | 235,662 | n/m | 255,432 | 48,109 | ||||||||||||||||||||||||||
Allocated equity | 52,559 | 17,139 | 47,060 | $ | 22,990 | 17,560 | 77,759 | |||||||||||||||||||||||||
Economic capital (2) | 21,903 | 14,437 | 22,632 | 18,344 | 6,854 | n/m | ||||||||||||||||||||||||||
Period end | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 153,391 | $ | 121,553 | $ | 263,065 | n/m | $ | 102,878 | $ | 287,424 | |||||||||||||||||||||
Total deposits | 465,457 | n/m | 244,025 | n/m | 255,796 | 43,768 |
(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 economic capital is calculated as net income adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average economic capital. Economic capital represents allocated equity less goodwill and a percentage of intangible assets (excluding mortgage servicing rights). Economic capital and return on average economic capital are non-GAAP financial measures. We believe 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 Reconciliations to GAAP Financial Measures on pages 24-27.
n/m = not meaningful
Certain prior period amounts have been reclassified among the segments to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
Bank of America Corporation and Subsidiaries | ||||||||||||||||||||||||
Year-to-Date Results by Business Segment | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Six Months Ended June 30, 2012 | ||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 14,748 | $ | 5,195 | $ | 8,735 | $ | 7,558 | $ | 8,677 | $ | (226 | ) | |||||||||||
Provision for credit losses | 2,008 | 693 | (351 | ) | (34 | ) | 93 | 1,782 | ||||||||||||||||
Noninterest expense | 8,606 | 7,461 | 4,342 | 5,787 | 6,858 | 3,135 | ||||||||||||||||||
Net income (loss) | 2,611 | (1,913 | ) | 2,996 | 1,260 | 1,090 | (2,928 | ) | ||||||||||||||||
Return on average allocated equity | 9.87 | % | n/m | 13.14 | % | 14.29 | % | 12.46 | % | n/m | ||||||||||||||
Return on average economic capital (2) | 23.20 | n/m | 28.74 | 19.42 | 31.81 | n/m | ||||||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 139,225 | $ | 108,740 | $ | 272,443 | n/m | $ | 103,569 | $ | 260,727 | |||||||||||||
Total deposits | 471,410 | n/m | 238,292 | n/m | 251,913 | 35,524 | ||||||||||||||||||
Allocated equity | 53,199 | 14,454 | 45,838 | $ | 17,725 | 17,601 | 85,245 | |||||||||||||||||
Economic capital (2) | 22,696 | 14,454 | 20,980 | 13,096 | 6,970 | n/m | ||||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 135,523 | $ | 105,304 | $ | 265,393 | n/m | $ | 105,395 | $ | 253,505 | |||||||||||||
Total deposits | 481,939 | n/m | 241,344 | n/m | 249,755 | 27,157 | ||||||||||||||||||
Six Months Ended June 30, 2011 | ||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 17,147 | $ | (9,252 | ) | $ | 9,360 | $ | 9,685 | $ | 8,991 | $ | 4,647 | |||||||||||
Provision for credit losses | 1,061 | 2,605 | (681 | ) | (41 | ) | 118 | 4,007 | ||||||||||||||||
Noninterest expense | 8,938 | 13,402 | 4,531 | 6,376 | 7,213 | 2,679 | ||||||||||||||||||
Net income (loss) | 4,544 | (16,906 | ) | 3,504 | 2,306 | 1,055 | (1,280 | ) | ||||||||||||||||
Return on average allocated equity | 17.25 | % | n/m | 14.75 | % | 18.85 | % | 11.98 | % | n/m | ||||||||||||||
Return on average economic capital (2) | 40.90 | n/m | 30.14 | 23.23 | 30.72 | n/m | ||||||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 158,033 | $ | 121,125 | $ | 258,508 | n/m | $ | 101,530 | $ | 288,068 | |||||||||||||
Total deposits | 462,136 | n/m | 230,744 | n/m | 257,066 | 49,110 | ||||||||||||||||||
Allocated equity | 53,126 | 17,933 | 47,891 | $ | 24,667 | 17,745 | 71,568 | |||||||||||||||||
Economic capital (2) | 22,450 | 15,211 | 23,461 | 20,069 | 7,028 | n/m | ||||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 153,391 | $ | 121,553 | $ | 263,065 | n/m | $ | 102,878 | $ | 287,424 | |||||||||||||
Total deposits | 465,457 | n/m | 244,025 | n/m | 255,796 | 43,768 |
(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 economic capital is calculated as net income adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average economic capital. Economic capital represents allocated equity less goodwill and a percentage of intangible assets (excluding mortgage servicing rights). Economic capital and return on average economic capital are non-GAAP financial measures. We believe 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 Reconciliations to GAAP Financial Measures on pages 24-27.
n/m = not meaningful
Certain prior period amounts have been reclassified among the segments to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
Bank of America Corporation and Subsidiaries | |||||||||||||||||||
Supplemental Financial Data | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Fully taxable-equivalent (FTE) basis data (1) |
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | |||||||||||||||
2012 | 2011 | ||||||||||||||||||
Net interest income | $ | 20,835 | 23,890 | $ | 9,782 | $ | 11,053 | $ | 11,493 | ||||||||||
Total revenue, net of interest expense | 44,687 | 40,578 | 22,202 | 22,485 | 13,483 | ||||||||||||||
Net interest yield (2) | 2.36 | % | 2.58 | % | 2.21 | % | 2.51 | % | 2.50 | % | |||||||||
Efficiency ratio | 80.98 | n/m | 76.79 | 85.13 | n/m | ||||||||||||||
Other Data |
June 30 2012 |
March 31 2012 |
June 30 2011 | ||||||||||||||||
Number of banking centers - U.S. | 5,594 | 5,651 | 5,742 | ||||||||||||||||
Number of branded ATMs - U.S. | 16,220 | 17,255 | 17,817 | ||||||||||||||||
Ending full-time equivalent employees | 275,460 | 278,688 | 288,084 |
(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 24-27.
(2) Calculation includes fees earned on overnight deposits placed with the Federal Reserve of
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.
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. 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 evaluates 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. Return on average tangible common shareholders' equity measures the Corporation's earnings contribution as a percentage of average common shareholders' equity 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 average shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities. The tangible common equity ratio represents ending common 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 equity ratio represents total ending 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. Tangible book value per common share represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by ending common shares outstanding. These measures are used to evaluate the Corporation's use of equity (i.e., capital). 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 return on average economic capital, a non-GAAP financial measure. Return on average economic capital for the segments is calculated as net income adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average economic capital. Economic capital represents average allocated equity less goodwill and a percentage of intangible assets. It also believes the use of this non-GAAP financial measure provides additional clarity in assessing the segments.
In certain presentations, earnings and diluted earnings per common share, the efficiency ratio, return on average assets, return on common shareholders' equity, return on average tangible common shareholders' equity and return on average tangible shareholders' equity are calculated excluding the impact of a goodwill impairment charge of
See the tables below and on pages 25-27 for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011 and the six months ended June 30, 2012 and 2011. 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.
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | ||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||
Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis |
|||||||||||||||||||||
Net interest income | $ | 20,394 | $ | 23,425 | $ | 9,548 | $ | 10,846 | $ | 11,246 | |||||||||||
Fully taxable-equivalent adjustment | 441 | 465 | 234 | 207 | 247 | ||||||||||||||||
Net interest income on a fully taxable-equivalent basis | $ | 20,835 | $ | 23,890 | $ | 9,782 | $ | 11,053 | $ | 11,493 | |||||||||||
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 | $ | 44,246 | $ | 40,113 | $ | 21,968 | $ | 22,278 | $ | 13,236 | |||||||||||
Fully taxable-equivalent adjustment | 441 | 465 | 234 | 207 | 247 | ||||||||||||||||
Total revenue, net of interest expense on a fully taxable-equivalent basis | $ | 44,687 | $ | 40,578 | $ | 22,202 | $ | 22,485 | $ | 13,483 | |||||||||||
Reconciliation of total noninterest expense to total noninterest expense, excluding goodwill impairment charge |
|||||||||||||||||||||
Total noninterest expense | $ | 36,189 | $ | 43,139 | $ | 17,048 | $ | 19,141 | $ | 22,856 | |||||||||||
Goodwill impairment charge | - | (2,603 | ) | - | - | (2,603 | ) | ||||||||||||||
Total noninterest expense, excluding goodwill impairment charge | $ | 36,189 | $ | 40,536 | $ | 17,048 | $ | 19,141 | $ | 20,253 | |||||||||||
Reconciliation of income tax expense (benefit) to income tax expense (benefit) on a fully taxable-equivalent basis |
|||||||||||||||||||||
Income tax expense (benefit) | $ | 750 | $ | (3,318 | ) | $ | 684 | $ | 66 | $ | (4,049 | ) | |||||||||
Fully taxable-equivalent adjustment | 441 | 465 | 234 | 207 | 247 | ||||||||||||||||
Income tax expense (benefit) on a fully taxable-equivalent basis | $ | 1,191 | $ | (2,853 | ) | $ | 918 | $ | 273 | $ | (3,802 | ) | |||||||||
Reconciliation of net income (loss) to net income (loss), excluding goodwill impairment charge |
|||||||||||||||||||||
Net income (loss) | $ | 3,116 | $ | (6,777 | ) | $ | 2,463 | $ | 653 | $ | (8,826 | ) | |||||||||
Goodwill impairment charge | - | 2,603 | - | - | 2,603 | ||||||||||||||||
Net income (loss), excluding goodwill impairment charge | $ | 3,116 | $ | (4,174 | ) | $ | 2,463 | $ | 653 | $ | (6,223 | ) | |||||||||
Reconciliation of net income (loss) applicable to common shareholders to net income (loss) applicable to common shareholders, excluding goodwill impairment charge |
|||||||||||||||||||||
Net income (loss) applicable to common shareholders | $ | 2,426 | $ | (7,388 | ) | $ | 2,098 | $ | 328 | $ | (9,127 | ) | |||||||||
Goodwill impairment charge | - | 2,603 | - | - | 2,603 | ||||||||||||||||
Net income (loss) applicable to common shareholders, excluding goodwill impairment charge | $ | 2,426 | $ | (4,785 | ) | $ | 2,098 | $ | 328 | $ | (6,524 | ) |
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.
Bank of America Corporation and Subsidiaries | |||||||||||||||||||||
Reconciliations to GAAP Financial Measures (continued) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | ||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||
Reconciliation of average common shareholders' equity to average tangible common shareholders' equity |
|||||||||||||||||||||
Common shareholders' equity | $ | 215,466 | $ | 216,367 | $ | 216,782 | $ | 214,150 | $ | 218,505 | |||||||||||
Goodwill | (69,971 | ) | (73,834 | ) | (69,976 | ) | (69,967 | ) | (73,748 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (7,701 | ) | (9,580 | ) | (7,533 | ) | (7,869 | ) | (9,394 | ) | |||||||||||
Related deferred tax liabilities | 2,663 | 2,983 | 2,626 | 2,700 | 2,932 | ||||||||||||||||
Tangible common shareholders' equity | $ | 140,457 | $ | 135,936 | $ | 141,899 | $ | 139,014 | $ | 138,295 | |||||||||||
Reconciliation of average shareholders' equity to average tangible shareholders' equity |
|||||||||||||||||||||
Shareholders' equity | $ | 234,062 | $ | 232,930 | $ | 235,558 | $ | 232,566 | $ | 235,067 | |||||||||||
Goodwill | (69,971 | ) | (73,834 | ) | (69,976 | ) | (69,967 | ) | (73,748 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (7,701 | ) | (9,580 | ) | (7,533 | ) | (7,869 | ) | (9,394 | ) | |||||||||||
Related deferred tax liabilities | 2,663 | 2,983 | 2,626 | 2,700 | 2,932 | ||||||||||||||||
Tangible shareholders' equity | $ | 159,053 | $ | 152,499 | $ | 160,675 | $ | 157,430 | $ | 154,857 | |||||||||||
Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity |
|||||||||||||||||||||
Common shareholders' equity | $ | 217,213 | $ | 205,614 | $ | 217,213 | $ | 213,711 | $ | 205,614 | |||||||||||
Goodwill | (69,976 | ) | (71,074 | ) | (69,976 | ) | (69,976 | ) | (71,074 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (7,335 | ) | (9,176 | ) | (7,335 | ) | (7,696 | ) | (9,176 | ) | |||||||||||
Related deferred tax liabilities | 2,559 | 2,853 | 2,559 | 2,628 | 2,853 | ||||||||||||||||
Tangible common shareholders' equity | $ | 142,461 | $ | 128,217 | $ | 142,461 | $ | 138,667 | $ | 128,217 | |||||||||||
Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity |
|||||||||||||||||||||
Shareholders' equity | $ | 235,975 | $ | 222,176 | $ | 235,975 | $ | 232,499 | $ | 222,176 | |||||||||||
Goodwill | (69,976 | ) | (71,074 | ) | (69,976 | ) | (69,976 | ) | (71,074 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (7,335 | ) | (9,176 | ) | (7,335 | ) | (7,696 | ) | (9,176 | ) | |||||||||||
Related deferred tax liabilities | 2,559 | 2,853 | 2,559 | 2,628 | 2,853 | ||||||||||||||||
Tangible shareholders' equity | $ | 161,223 | $ | 144,779 | $ | 161,223 | $ | 157,455 | $ | 144,779 | |||||||||||
Reconciliation of period-end assets to period-end tangible assets |
|||||||||||||||||||||
Assets | $ | 2,160,854 | $ | 2,261,319 | $ | 2,160,854 | $ | 2,181,449 | $ | 2,261,319 | |||||||||||
Goodwill | (69,976 | ) | (71,074 | ) | (69,976 | ) | (69,976 | ) | (71,074 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (7,335 | ) | (9,176 | ) | (7,335 | ) | (7,696 | ) | (9,176 | ) | |||||||||||
Related deferred tax liabilities | 2,559 | 2,853 | 2,559 | 2,628 | 2,853 | ||||||||||||||||
Tangible assets | $ | 2,086,102 | $ | 2,183,922 | $ | 2,086,102 | $ | 2,106,405 | $ | 2,183,922 | |||||||||||
Book value per share of common stock |
|||||||||||||||||||||
Common shareholders' equity | $ | 217,213 | $ | 205,614 | $ | 217,213 | $ | 213,711 | $ | 205,614 | |||||||||||
Ending common shares issued and outstanding | 10,776,869 | 10,133,190 | 10,776,869 | 10,775,604 | 10,133,190 | ||||||||||||||||
Book value per share of common stock | $ | 20.16 | $ | 20.29 | $ | 20.16 | $ | 19.83 | $ | 20.29 | |||||||||||
Tangible book value per share of common stock |
|||||||||||||||||||||
Tangible common shareholders' equity | $ | 142,461 | $ | 128,217 | $ | 142,461 | $ | 138,667 | $ | 128,217 | |||||||||||
Ending common shares issued and outstanding | 10,776,869 | 10,133,190 | 10,776,869 | 10,775,604 | 10,133,190 | ||||||||||||||||
Tangible book value per share of common stock | $ | 13.22 | $ | 12.65 | $ | 13.22 | $ | 12.87 | $ | 12.65 |
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.
Bank of America Corporation and Subsidiaries | |||||||||||||||||||||
Reconciliations to GAAP Financial Measures (continued) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | ||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||
Reconciliation of return on average economic capital |
|||||||||||||||||||||
Consumer & Business Banking |
|||||||||||||||||||||
Reported net income | $ | 2,611 | $ | 4,544 | $ | 1,156 | $ | 1,455 | $ | 2,502 | |||||||||||
Adjustment related to intangibles (1) | 7 | 9 | 4 | 3 | 2 | ||||||||||||||||
Adjusted net income | $ | 2,618 | $ | 4,553 | $ | 1,160 | $ | 1,458 | $ | 2,504 | |||||||||||
Average allocated equity | $ | 53,199 | $ | 53,126 | $ | 53,452 | $ | 52,947 | $ | 52,559 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (30,503 | ) | (30,676 | ) | (30,485 | ) | (30,522 | ) | (30,656 | ) | |||||||||||
Average economic capital | $ | 22,696 | $ | 22,450 | $ | 22,967 | $ | 22,425 | $ | 21,903 | |||||||||||
Consumer Real Estate Services |
|||||||||||||||||||||
Reported net loss | $ | (1,913 | ) | $ | (16,906 | ) | $ | (768 | ) | $ | (1,145 | ) | $ | (14,506 | ) | ||||||
Adjustment related to intangibles (1) | - | - | - | - | - | ||||||||||||||||
Goodwill impairment charge | - | 2,603 | - | - | 2,603 | ||||||||||||||||
Adjusted net loss | $ | (1,913 | ) | $ | (14,303 | ) | $ | (768 | ) | $ | (1,145 | ) | $ | (11,903 | ) | ||||||
Average allocated equity | $ | 14,454 | $ | 17,933 | $ | 14,116 | $ | 14,791 | $ | 17,139 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles (excluding mortgage servicing rights) | - | (2,722 | ) | - | - | (2,702 | ) | ||||||||||||||
Average economic capital | $ | 14,454 | $ | 15,211 | $ | 14,116 | $ | 14,791 | $ | 14,437 | |||||||||||
Global Banking |
|||||||||||||||||||||
Reported net income | $ | 2,996 | $ | 3,504 | $ | 1,406 | $ | 1,590 | $ | 1,921 | |||||||||||
Adjustment related to intangibles (1) | 2 | 3 | 1 | 1 | 1 | ||||||||||||||||
Adjusted net income | $ | 2,998 | $ | 3,507 | $ | 1,407 | $ | 1,591 | $ | 1,922 | |||||||||||
Average allocated equity | $ | 45,838 | $ | 47,891 | $ | 45,958 | $ | 45,719 | $ | 47,060 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (24,858 | ) | (24,430 | ) | (24,856 | ) | (24,861 | ) | (24,428 | ) | |||||||||||
Average economic capital | $ | 20,980 | $ | 23,461 | $ | 21,102 | $ | 20,858 | $ | 22,632 | |||||||||||
Global Markets |
|||||||||||||||||||||
Reported net income | $ | 1,260 | $ | 2,306 | $ | 462 | $ | 798 | $ | 911 | |||||||||||
Adjustment related to intangibles (1) | 5 | 6 | 3 | 2 | 3 | ||||||||||||||||
Adjusted net income | $ | 1,265 | $ | 2,312 | $ | 465 | $ | 800 | $ | 914 | |||||||||||
Average allocated equity | $ | 17,725 | $ | 24,667 | $ | 17,132 | $ | 18,317 | $ | 22,990 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (4,629 | ) | (4,598 | ) | (4,608 | ) | (4,648 | ) | (4,646 | ) | |||||||||||
Average economic capital | $ | 13,096 | $ | 20,069 | $ | 12,524 | $ | 13,669 | $ | 18,344 | |||||||||||
Global Wealth & Investment Management |
|||||||||||||||||||||
Reported net income | $ | 1,090 | $ | 1,055 | $ | 543 | $ | 547 | $ | 513 | |||||||||||
Adjustment related to intangibles (1) | 12 | 16 | 6 | 6 | 7 | ||||||||||||||||
Adjusted net income | $ | 1,102 | $ | 1,071 | $ | 549 | $ | 553 | $ | 520 | |||||||||||
Average allocated equity | $ | 17,601 | $ | 17,745 | $ | 17,974 | $ | 17,228 | $ | 17,560 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (10,631 | ) | (10,717 | ) | (10,621 | ) | (10,641 | ) | (10,706 | ) | |||||||||||
Average economic capital | $ | 6,970 | $ | 7,028 | $ | 7,353 | $ | 6,587 | $ | 6,854 |
For footnote see page 27.
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.
Bank of America Corporation and Subsidiaries | |||||||||||||||||||||
Reconciliations to GAAP Financial Measures (continued) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Six Months Ended June 30 |
Second Quarter 2012 |
First Quarter 2012 |
Second Quarter 2011 | ||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||
Consumer & Business Banking |
|||||||||||||||||||||
Deposits |
|||||||||||||||||||||
Reported net income | $ | 500 | $ | 795 | $ | 190 | $ | 310 | $ | 433 | |||||||||||
Adjustment related to intangibles (1) | 1 | 1 | 1 | - | - | ||||||||||||||||
Adjusted net income | $ | 501 | $ | 796 | $ | 191 | $ | 310 | $ | 433 | |||||||||||
Average allocated equity | $ | 23,588 | $ | 23,627 | $ | 23,982 | $ | 23,194 | $ | 23,612 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (17,929 | ) | (17,955 | ) | (17,926 | ) | (17,932 | ) | (17,951 | ) | |||||||||||
Average economic capital | $ | 5,659 | $ | 5,672 | $ | 6,056 | $ | 5,262 | $ | 5,661 | |||||||||||
Card Services |
|||||||||||||||||||||
Reported net income | $ | 1,967 | $ | 3,516 | $ | 929 | $ | 1,038 | $ | 1,944 | |||||||||||
Adjustment related to intangibles (1) | 6 | 8 | 3 | 3 | 2 | ||||||||||||||||
Adjusted net income | $ | 1,973 | $ | 3,524 | $ | 932 | $ | 1,041 | $ | 1,946 | |||||||||||
Average allocated equity | $ | 20,598 | $ | 21,580 | $ | 20,525 | $ | 20,671 | $ | 21,016 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (10,476 | ) | (10,624 | ) | (10,460 | ) | (10,492 | ) | (10,607 | ) | |||||||||||
Average economic capital | $ | 10,122 | $ | 10,956 | $ | 10,065 | $ | 10,179 | $ | 10,409 | |||||||||||
Business Banking |
|||||||||||||||||||||
Reported net income | $ | 144 | $ | 233 | $ | 37 | $ | 107 | $ | 125 | |||||||||||
Adjustment related to intangibles (1) | - | - | - | - | - | ||||||||||||||||
Adjusted net income | $ | 144 | $ | 233 | $ | 37 | $ | 107 | $ | 125 | |||||||||||
Average allocated equity | $ | 9,013 | $ | 7,919 | $ | 8,945 | $ | 9,082 | $ | 7,931 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (2,098 | ) | (2,097 | ) | (2,099 | ) | (2,098 | ) | (2,098 | ) | |||||||||||
Average economic capital | $ | 6,915 | $ | 5,822 | $ | 6,846 | $ | 6,984 | $ | 5,833 |
(1) Represents cost of funds, earnings credits and certain expenses related to intangibles.
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:
Kevin Stitt, Bank of America, 1.980.386.5667
Lee McEntire, Bank of America, 1.980.388.6780
Reporters May Contact:
Jerry Dubrowski, Bank of America, 1.980.388.2840
jerome.f.dubrowski@bankofamerica.com