Bank of America Reports Third-Quarter 2013 Net Income of $2.5 Billion, or $0.20 per Diluted Share, on Revenue of $21.7 Billion(A)
Supplemental Third Quarter 2013 Financial Information
Effects of Previously Announced Items
- Pretax Gain of
$0.8 Billion on Sale of Remaining China Construction Bank Shares Partially Offset by$0.4 Billion in Negative Valuation Adjustments, Resulting in$0.02 Benefit to EPS - Charge Related to Reduction in
U.K. Tax Rate of$1.1 Billion , or$0.10 EPS
Continued Business Momentum
- Total Consolidated Deposit Balances up 4 Percent From Q3-12 to a Record
$1.1 Trillion - Funded
$24 Billion in Residential Home Loans and Home Equity Loans in Q3-13 - More Than 1 Million New Credit Cards Issued in Q3-13
- Global Wealth and Investment Management Reports Record Asset Management Fees of
$1.7 Billion ; Pretax Margin of 25.5 Percent - Commercial Loan Balances up 19 Percent From Q3-12 to
$395 Billion Bank of America Merrill Lynch Maintained No . 2 Ranking in Global Investment Banking Fees and Was Ranked No. 1 in theAmericas in Q3-13B- Expense Reduction Initiatives Remain on Track
- Credit Quality Continued to Improve With Net Charge-offs Down 59 Percent From Q3-12C
Capital and Liquidity Remain Strong
Basel 1 Tier 1Common Capital of$143 Billion , Ratio of 11.08 Percent, up From 10.83 Percent in Prior Quarter- Estimated
Basel 3 Tier 1 Common Capital Ratio of 9.94 Percent, up From 9.60 Percent in Prior QuarterD - Estimated Bank Holding Company Supplementary Ratio Improved to Above Proposed 5 Percent MinimumE
- Long-term Debt Down
$31 Billion From Year-ago Quarter, Driven by Maturities and Liability Management Actions - Parent Company Liquidity Remained Strong With Time-to-required Funding at 35 Months
Relative to the year-ago quarter, the results for the third quarter of 2013 were driven by reduced negative credit valuation adjustments on the company's credit spreads and increases in equity investment income, net interest income and investment and brokerage income. The company also benefited from improved credit quality and lower expenses. These factors were partially offset by lower mortgage banking income and the negative impact from remeasuring certain deferred tax assets due to the
"This quarter, we saw good loan growth, improved credit quality and record deposit balances. Our customers and clients continue to do more business with us," said Chief Executive Officer
"We continued to make good progress on our expense initiatives, and we further strengthened our capital and leverage ratios," said Chief Financial Officer
Selected Financial Highlights |
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Three Months Ended | ||||||||||||
(Dollars in millions, except per share data) | September 30 2013 |
June 30 2013 |
September 30 2012 | |||||||||
Net interest income, FTE basis1 | $ | 10,479 | $ | 10,771 | $ | 10,167 | ||||||
Noninterest income | 11,264 | 12,178 | 10,490 | |||||||||
Total revenue, net of interest expense, FTE basis | 21,743 | 22,949 | 20,657 | |||||||||
Total revenue, net of interest expense, FTE basis, excluding DVA and FVO2 | 22,187 | 22,900 | 22,529 | |||||||||
Provision for credit losses | 296 | 1,211 | 1,774 | |||||||||
Noninterest expense | 16,389 | 16,018 | 17,544 | |||||||||
Net income | $ | 2,497 | $ | 4,012 | $ | 340 | ||||||
Diluted earnings per common share | $ | 0.20 | $ | 0.32 | $ | 0.00 |
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliations to GAAP financial measures, refer to pages 22-24 of this press release. Net interest income on a GAAP basis was
2 Total revenue, net of interest expense, on an FTE basis excluding debit valuation adjustments (DVA) and fair value option (FVO) adjustments is a non-GAAP financial measure. DVA gains (losses) were
Revenue, net of interest expense, on an FTE basisA rose
Net interest income, on an FTE basis, totaled
Noninterest income increased
The provision for credit losses was
Noninterest expense was
Income tax expense for the third quarter of 2013 was
At September 30, 2013, the company had 247,943 full-time employees, down from 257,158 at June 30, 2013, 272,594 at September 30, 2012 and from a peak of approximately 290,500 at
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.
Unless otherwise noted, business segment revenue, on an FTE basis, is net of interest expense.
Consumer and Business Banking (CBB)1 |
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Three Months Ended | |||||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||
Total revenue, net of interest expense, FTE basis | $ | 7,524 | $ | 7,434 | $ | 7,261 | |||||||
Provision for credit losses | 761 | 967 | 1,006 | ||||||||||
Noninterest expense | 3,980 | 4,178 | 4,111 | ||||||||||
Net income | $ | 1,779 | $ | 1,395 | $ | 1,351 | |||||||
Return on average allocated capital2, 3 | 23.55 | % | 18.68 | % | — | ||||||||
Return on average economic capital2, 3 | — | — | 22.20 | % | |||||||||
Average loans | $ | 165,707 | $ | 163,593 | $ | 169,092 | |||||||
Average deposits | 522,023 | 522,259 | 478,142 | ||||||||||
At period-end | |||||||||||||
Brokerage assets | $ | 89,517 | $ | 84,182 | $ | 75,852 |
1 During the second quarter of 2013, the results of consumer
2 Effective
3 Return on average allocated capital and return on average economic capital are non-GAAP financial measures. The company 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. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
Business Highlights
- Average deposit balances of
$522.0 billion increased$43.9 billion , or 9 percent, from the same period a year ago. The increase was driven by growth in liquid products in the current low-rate environment and a$17.4 billion average impact of deposit transfers primarily from GWIM. The average rate paid on deposits in the third quarter of 2013 declined 9 basis points from the year-ago quarter to 10 basis points due to pricing discipline and a shift in the mix of deposits. - The number of mobile banking customers increased 26 percent from the year-ago quarter to 14.0 million.
- U.S. Consumer Credit Card retail spending per average active account increased 10.2 percent from the third quarter of 2012.
- The U.S. Consumer Credit Card net credit loss rate for the third quarter of 2013 was 3.47 percent, the lowest since the first quarter of 2006.
Merrill Edge brokerage assets increased 18 percent from the same period a year ago to$89.5 billion due to market growth and positive account flows.- Small business loan originations and commitments rose 31 percent from the year-ago quarter to
$2.9 billion . - The company's specialized sales force of financial solutions advisors, mortgage loan officers and small business bankers increased to more than 6,900 specialists in the third quarter of 2013, up 18 percent from the same period a year ago, reflecting the company's continued commitment to deliver a "one company" experience to broaden and deepen customer relationships.
Financial Overview
Consumer and Business Banking reported net income of
Revenue of
Provision for credit losses decreased
Consumer Real Estate Services (CRES) |
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Three Months Ended | |||||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||
Total revenue, net of interest expense, FTE basis | $ | 1,577 | $ | 2,115 | $ | 3,083 | |||||||
Provision for credit losses | (308 | ) | 291 | 263 | |||||||||
Noninterest expense | 3,419 | 3,394 | 4,180 | ||||||||||
Net loss | $ | (1,000 | ) | $ | (937 | ) | $ | (857 | ) | ||||
Average loans and leases | 88,406 | 90,114 | 102,472 | ||||||||||
At period-end | |||||||||||||
Loans and leases | $ | 87,586 | $ | 89,257 | $ | 98,642 |
Business Highlights
Bank of America funded$24.4 billion in residential home loans and home equity loans during the third quarter of 2013, helping nearly 97,000 homeowners either refinance an existing mortgage or purchase a home through our retail channels. This included more than 5,300 first-time homebuyer mortgages and more than 32,000 mortgages to low- and moderate-income borrowers.- Approximately 78 percent of funded first mortgages were refinances and 22 percent were for home purchases.
- The number of 60+ days delinquent first mortgage loans serviced by LAS declined 19 percent during the third quarter of 2013 to 398,000 loans from 492,000 loans at the end of the second quarter of 2013, and declined 57 percent from 936,000 loans at the end of the third quarter of 2012.
Financial Overview
Consumer Real Estate Services reported a net loss of
The provision for credit losses decreased
Global Wealth and Investment Management (GWIM) |
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Three Months Ended | |||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||
Total revenue, net of interest expense, FTE basis | $ | 4,390 | $ | 4,499 | $ | 4,083 | |||||
Provision for credit losses | 23 | (15 | ) | 61 | |||||||
Noninterest expense | 3,248 | 3,272 | 3,115 | ||||||||
Net income | $ | 719 | $ | 758 | $ | 571 | |||||
Return on average allocated capital1, 2 | 28.68 | % | 30.57 | % | — | ||||||
Return on average economic capital1, 2 | — | — | 29.22 | % | |||||||
Average loans and leases | $ | 112,752 | $ | 109,589 | $ | 101,016 | |||||
Average deposits | 239,663 | 235,344 | 241,411 | ||||||||
At period-end (dollars in billions) | |||||||||||
Assets under management | $ | 779.6 | $ | 743.6 | $ | 692.9 | |||||
Total client balances3 | 2,283.4 | 2,215.1 | 2,128.2 |
1 Effective
2 Return on average allocated capital and return on average economic capital are non-GAAP financial measures. The company 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. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
3 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 increased to 25.5 percent from 22.2 percent in the year-ago quarter.
- Asset management fees grew to
$1.7 billion , up 13 percent from the year-ago quarter. - Client balances increased to a record
$2.28 trillion , driven by higher market levels and net inflows. Period-end loan balances increased to a record$114.2 billion , up 12 percent from the year-ago quarter. - Long-term assets under management (AUM) flows nearly doubled from the year-ago quarter to
$10.3 billion , marking the 17th consecutive quarter of positive flows.
Financial Overview
Global Wealth and Investment Management net income rose 26 percent from the third quarter of 2012 to
Revenue increased 8 percent from the year-ago quarter to
The provision for credit losses decreased
Client balances rose 7 percent from the year-ago quarter to
Global Banking1 |
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Three Months Ended | |||||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||
Total revenue, net of interest expense, FTE basis | $ | 4,009 | $ | 4,138 | $ | 3,786 | |||||||
Provision for credit losses | 322 | 163 | 23 | ||||||||||
Noninterest expense | 1,928 | 1,856 | 1,936 | ||||||||||
Net income | $ | 1,134 | $ | 1,292 | $ | 1,151 | |||||||
Return on average allocated capital2, 3 | 19.57 | % | 22.55 | % | — | ||||||||
Return on average economic capital2, 3 | — | — | 23.33 | % | |||||||||
Average loans and leases | $ | 260,085 | $ | 255,674 | $ | 221,185 | |||||||
Average deposits | 239,839 | 227,668 | 227,421 |
1 During the second quarter of 2013, the results of consumer
2 Effective
3 Return on average allocated capital and return on average economic capital are non-GAAP financial measures. The company 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. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
Business Highlights
Bank of America Merrill Lynch (BAML) named Most Innovative Investment Bank of the Year for 2013 byThe Banker magazine .- Firmwide investment banking fees of
$1.3 billion , excluding self-led deals, was relatively unchanged from the year-ago quarter. BAML maintained its No. 2 ranking in global net investment banking fees with a 7.7 percent market share and was No. 1 inAmericas with 11.0 percent market share in the third quarter of 2013B. BAML was also ranked among the top three financial institutions in announced mergers and acquisitions, high-yield corporate debt, leveraged loans, investment-grade corporate debt, asset-backed securities and syndicated loans during the third quarterB. - Average loan and lease balances increased
$4.4 billion , or 2 percent, to$260.1 billion from the second quarter of 2013 with growth primarily in the commercial and industrial portfolio and the commercial real estate portfolio. Period-end loan balances increased$8.7 billion , or 3 percent, to$267.2 billion from the second quarter of 2013, reflecting continued loan growth momentum.
- Average deposits rose
$12.4 billion , or 5 percent, from the year-ago quarter to$239.8 billion .
Financial Overview
Global Banking reported net income of
Global Corporate Banking revenue increased to
Global Markets |
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Three Months Ended | |||||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||
Total revenue, net of interest expense, FTE basis | $ | 3,376 | $ | 4,189 | $ | 3,278 | |||||||
Total revenue, net of interest expense, FTE basis, excluding DVA1 | 3,667 | 4,151 | 3,860 | ||||||||||
Provision for credit losses | 47 | (16 | ) | 31 | |||||||||
Noninterest expense | 2,884 | 2,771 | 2,575 | ||||||||||
Net income (loss) | $ | (778 | ) | $ | 958 | $ | (276 | ) | |||||
Net income (loss), excluding DVA and U.K. tax1 | 531 | 934 | 872 | ||||||||||
Return on average allocated capital, excluding DVA and U.K. tax2, 3, 4 | 7.05 | % | 12.52 | % | — | ||||||||
Return on average economic capital, excluding DVA and U.K. tax2, 3, 4 | — | — | 25.92 | % | |||||||||
Total average assets | $ | 602,632 | $ | 656,258 | $ | 602,095 |
1 Total revenue, net of interest expense, on an FTE basis excluding DVA and net income excluding DVA and
2 Effective
3 Return on average allocated capital and return on average economic capital, excluding DVA and
4 Return on average allocated capital and return on average economic capital are non-GAAP financial measures. The company 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. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
Business Highlights
- Equities sales and trading revenue, excluding DVAG, rose 36 percent from the third quarter of 2012 due to continued gains in market share and increased market volumes.
- International revenue, excluding DVAF, increased to 39 percent of Global Markets revenue compared to 36 percent in the year-ago quarter.
Financial Overview
Global Markets reported a net loss of
Global Markets revenue increased
Fixed Income, Currency and Commodities sales and trading revenue, excluding DVAG, was
Equities sales and trading revenue, excluding DVAG, was
Noninterest expense increased
All Other1 |
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Three Months Ended | |||||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||
Total revenue, net of interest expense, FTE basis2 | $ | 867 | $ | 574 | $ | (834 | ) | ||||||
Provision for credit losses | (549 | ) | (179 | ) | 390 | ||||||||
Noninterest expense | 930 | 547 | 1,627 | ||||||||||
Net income (loss) | $ | 643 | $ | 546 | $ | (1,600 | ) | ||||||
Total average loans | 232,538 | 238,910 | 256,130 |
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, gains/losses on structured liabilities, and the impact of certain allocation methodologies and accounting hedge ineffectiveness. Equity Investments include Global Principal Investments (GPI), strategic and certain other investments. Other includes certain residential mortgage loans that are managed by Legacy Assets and Servicing within CRES.
2 Revenue includes equity investment income of
All Other reported net income of
The provision for credit losses decreased
Credit Quality |
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Three Months Ended | |||||||||||||
(Dollars in millions) | September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||
Provision for credit losses | $ | 296 | $ | 1,211 | $ | 1,774 | |||||||
Net charge-offs1 | 1,687 | 2,111 | 4,122 | ||||||||||
Net charge-off ratio1, 2 | 0.73 | % | 0.94 | % | 1.86 | % | |||||||
Net charge-off ratio, excluding the PCI loan portfolio2 | 0.75 | 0.97 | 1.93 | ||||||||||
Net charge-off ratio, including PCI write-offs2 | 0.92 | 1.07 | 2.63 | ||||||||||
At period-end | |||||||||||||
Nonperforming loans, leases and foreclosed properties | $ | 20,028 | $ | 21,280 | $ | 24,925 | |||||||
Nonperforming loans, leases and foreclosed properties ratio3 | 2.17 | % | 2.33 | % | 2.81 | % | |||||||
Allowance for loan and lease losses | $ | 19,432 | $ | 21,235 | $ | 26,233 | |||||||
Allowance for loan and lease losses ratio4 | 2.10 | % | 2.33 | % | 2.96 | % |
1 Excludes write-offs of 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 third quarter of 2013, with net charge-offs declining across nearly all major portfolios and the provision for credit losses decreasing from the second quarter of 2013 as well as the year-ago quarter. Net charge-offs were
The provision for credit losses was
The number of 30+ days delinquent loans, excluding fully-insured loans, declined across all consumer portfolios, again reaching record low levels in the U.S. Consumer Credit Card portfolio. Additionally, reservable criticized balances and nonperforming loans, leases and foreclosed properties also continued to decline, down 19 percent and 20 percent from the year-ago period.
The allowance for loan and lease losses to annualized net charge-off coverage ratio was 2.90 times in the third quarter of 2013, compared with 2.51 times in the second quarter of 2013 and 1.60 times in the third quarter of 2012. The increase was due to the improvement in net charge-offs discussed above. The allowance to annualized net charge-off coverage ratio, excluding PCI, was 2.42 times, 2.04 times and 1.17 times for the same periods, respectively.
Nonperforming loans, leases and foreclosed properties were
Capital and Liquidity Management |
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(Dollars in millions, except per share information) | At September 30 2013 |
At June 30 2013 |
At September 30 2012 | |||||||||
Total shareholders’ equity | $ | 232,282 | $ | 231,032 | $ | 238,606 | ||||||
Tier 1 common capital | 142,825 | 139,519 | 136,406 | |||||||||
Tier 1 common capital ratio including Market Risk Final Rule2 | 11.08 | % | 10.83 | % | n/a | |||||||
Tangible common equity ratio1 | 7.08 | 6.98 | 6.95 | |||||||||
Common equity ratio | 10.30 | 10.21 | 10.15 | |||||||||
Tangible book value per share1 | $ | 13.62 | $ | 13.32 | $ | 13.48 | ||||||
Book value per share | 20.50 | 20.18 | 20.40 |
1 Tangible common equity ratio and tangible book value per share are non-GAAP financial measures. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
2 As of
n/a = not applicable
The Tier 1 common capital ratio, including the Market Risk Final Rule, was 11.08 percent at September 30, 2013, up from 10.83 percent at June 30, 2013.
As of September 30, 2013, the company's Tier 1 common capital ratio on a
The increase in the estimated
Based on the pending proposed U.S. supplementary leverage ratio requirements, the company expects the supplementary leverage ratio for
At September 30, 2013, the company's Global Excess Liquidity Sources totaled
During the third quarter of 2013, a cash dividend of
Period-end common shares issued and outstanding were 10.68 billion at
Tangible book value per shareH was
------------------------------
A 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. Total revenue, net of interest expense, on a GAAP basis, was
B Rankings per Dealogic as of
C The three months ended September 30, 2012 includes
D
E The supplementary leverage ratio is calculated in accordance with July 2013-proposed U.S.
F Revenue, sales and trading revenue, international revenue and net income (loss) excluding the impact of DVA or the
G Fixed Income, Currency and Commodities (FICC) sales and trading revenue, excluding DVA, and Equity sales and trading revenue, excluding DVA, are non-GAAP financial measures. FICC DVA gains (losses) were
H 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 22-24 of this press release.
Note: Chief Executive Officer
A replay will be available via webcast through the
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 |
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Selected Financial Data | |||||||||||||||||||||||
(Dollars in millions, except per share data; shares in thousands) | |||||||||||||||||||||||
Summary Income Statement |
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | |||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Net interest income | $ | 31,479 | $ | 30,332 | $ | 10,266 | $ | 10,549 | $ | 9,938 | |||||||||||||
Noninterest income |
35,975 | 34,342 | 11,264 | 12,178 | 10,490 | ||||||||||||||||||
Total revenue, net of interest expense | 67,454 | 64,674 | 21,530 | 22,727 | 20,428 | ||||||||||||||||||
Provision for credit losses | 3,220 | 5,965 | 296 | 1,211 | 1,774 | ||||||||||||||||||
Noninterest expense | 51,907 | 53,733 | 16,389 | 16,018 | 17,544 | ||||||||||||||||||
Income before income taxes | 12,327 | 4,976 | 4,845 | 5,498 | 1,110 | ||||||||||||||||||
Income tax expense | 4,335 | 1,520 | 2,348 | 1,486 | 770 | ||||||||||||||||||
Net income | $ | 7,992 | $ | 3,456 | $ | 2,497 | $ | 4,012 | $ | 340 | |||||||||||||
Preferred stock dividends | 1,093 | 1,063 | 279 | 441 | 373 | ||||||||||||||||||
Net income (loss) applicable to common shareholders | $ | 6,899 | $ | 2,393 | $ | 2,218 | $ | 3,571 | $ | (33 | ) | ||||||||||||
Earnings per common share | $ | 0.64 | $ | 0.22 | $ | 0.21 | $ | 0.33 | $ | 0.00 | |||||||||||||
Diluted earnings per common share | 0.62 | 0.22 | 0.20 | 0.32 | 0.00 | ||||||||||||||||||
Summary Average Balance Sheet |
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | |||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Total loans and leases | $ | 914,888 | $ | 900,650 | $ | 923,978 | $ | 914,234 | $ | 888,859 | |||||||||||||
Debt securities | 342,278 | 351,348 | 327,493 | 343,260 | 355,302 | ||||||||||||||||||
Total earning assets | 1,759,939 | 1,763,600 | 1,710,685 | 1,769,336 | 1,750,275 | ||||||||||||||||||
Total assets | 2,173,164 | 2,184,974 | 2,123,430 | 2,184,610 | 2,173,312 | ||||||||||||||||||
Total deposits | 1,082,005 | 1,037,610 | 1,090,611 | 1,079,956 | 1,049,697 | ||||||||||||||||||
Common shareholders' equity | 217,922 | 216,073 | 216,766 | 218,790 | 217,273 | ||||||||||||||||||
Total shareholders' equity | 234,126 | 234,726 | 230,392 | 235,063 | 236,039 | ||||||||||||||||||
Performance Ratios |
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | |||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Return on average assets | 0.49 | % | 0.21 | % | 0.47 | % | 0.74 | % | 0.06 | % | |||||||||||||
Return on average tangible shareholders' equity (1) | 6.67 | 2.89 | 6.32 | 9.98 | 0.84 | ||||||||||||||||||
Credit Quality |
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | |||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Total net charge-offs | $ | 6,315 | $ | 11,804 | $ | 1,687 | $ | 2,111 | $ | 4,122 | |||||||||||||
Net charge-offs as a % of average loans and leases outstanding (2) | 0.93 | % | 1.77 | % | 0.73 | % | 0.94 | % | 1.86 | % | |||||||||||||
Provision for credit losses | $ | 3,220 | $ | 5,965 | $ | 296 | $ | 1,211 | $ | 1,774 | |||||||||||||
September 30 2013 |
June 30 2013 |
September 30 2012 | |||||||||||||||||||||
Total nonperforming loans, leases and foreclosed properties (3) | $ | 20,028 | $ | 21,280 | $ | 24,925 | |||||||||||||||||
Nonperforming loans, leases and foreclosed properties as a % of total loans, leases and foreclosed properties (2) | 2.17 | % | 2.33 | % | 2.81 | % | |||||||||||||||||
Allowance for loan and lease losses | $ | 19,432 | $ | 21,235 | $ | 26,233 | |||||||||||||||||
Allowance for loan and lease losses as a % of total loans and leases outstanding (2) | 2.10 | % | 2.33 | % | 2.96 | % | |||||||||||||||||
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Bank of America Corporation and Subsidiaries | |||||||||||||||||||||||
Selected Financial Data (continued) | |||||||||||||||||||||||
(Dollars in millions, except per share data; shares in thousands) | |||||||||||||||||||||||
Capital Management |
September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||||||||||||
Risk-based capital (4, 5): | |||||||||||||||||||||||
Tier 1 common capital | $ | 142,825 | $ | 139,519 | $ | 136,406 | |||||||||||||||||
Tier 1 common capital ratio (6) | 11.08 | % | 10.83 | % | 11.41 | % | |||||||||||||||||
Tier 1 leverage ratio | 7.79 | 7.49 | 7.84 | ||||||||||||||||||||
Tangible equity ratio (7) | 7.73 | 7.67 | 7.85 | ||||||||||||||||||||
Tangible common equity ratio (7) | 7.08 | 6.98 | 6.95 | ||||||||||||||||||||
Period-end common shares issued and outstanding | 10,683,282 | 10,743,098 | 10,777,267 | ||||||||||||||||||||
Basel 1 to Basel 3 (fully phased-in) Reconciliation (5, 8) |
September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||||||||||||
Regulatory capital – Basel 1 to Basel 3 (fully phased-in) | |||||||||||||||||||||||
Basel 1 Tier 1 capital | $ | 159,008 | $ | 156,689 | $ | 163,063 | |||||||||||||||||
Deduction of qualifying preferred stock and trust preferred securities | (16,183 | ) | (17,170 | ) | (26,657 | ) | |||||||||||||||||
Basel 1 Tier 1 common capital | 142,825 | 139,519 | 136,406 | ||||||||||||||||||||
Deduction of defined benefit pension assets | (935 | ) | (787 | ) | (1,709 | ) | |||||||||||||||||
Change in deferred tax assets and threshold deductions (deferred tax asset temporary differences, MSRs and significant investments) | (4,758 | ) | (6,761 | ) | (1,102 | ) | |||||||||||||||||
Change in all other deductions, net | (5,319 | ) | (6,125 | ) | 1,040 | ||||||||||||||||||
Basel 3 (fully phased-in) Tier 1 common capital | $ | 131,813 | $ | 125,846 | $ | 134,635 | |||||||||||||||||
Risk-weighted assets – Basel 1 to Basel 3 (fully phased-in) | |||||||||||||||||||||||
Basel 1 risk-weighted assets | $ | 1,289,444 | $ | 1,288,159 | $ | 1,195,722 | |||||||||||||||||
Net change in credit and other risk-weighted assets | 37,140 | 22,276 | 216,244 | ||||||||||||||||||||
Increase due to Market Risk Final Rule | — | — | 88,881 | ||||||||||||||||||||
Basel 3 (fully phased-in) risk-weighted assets | $ | 1,326,584 | $ | 1,310,435 | $ | 1,500,847 | |||||||||||||||||
Tier 1 common capital ratios | |||||||||||||||||||||||
Basel 1 | 11.08 | % | 10.83 | % | 11.41 | % | |||||||||||||||||
Basel 3 (fully phased-in) | 9.94 | 9.60 | 8.97 | ||||||||||||||||||||
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | ||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||
Common shares issued | 44,664 | 241,329 | 184 | 364 | 398 | ||||||||||||||||||
Average common shares issued and outstanding | 10,764,216 | 10,735,461 | 10,718,918 | 10,775,867 | 10,776,173 | ||||||||||||||||||
Average diluted common shares issued and outstanding | 11,523,649 | 10,826,503 | 11,482,226 | 11,524,510 | 10,776,173 | ||||||||||||||||||
Dividends paid per common share | $ | 0.03 | $ | 0.03 | $ | 0.01 | $ | 0.01 | $ | 0.01 | |||||||||||||
Summary Period-End Balance Sheet |
September 30 2013 |
June 30 2013 |
September 30 2012 | ||||||||||||||||||||
Total loans and leases | $ | 934,392 | $ | 921,570 | $ | 893,035 | |||||||||||||||||
Total debt securities | 320,998 | 336,403 | 361,949 | ||||||||||||||||||||
Total earning assets | 1,712,648 | 1,719,866 | 1,756,257 | ||||||||||||||||||||
Total assets | 2,126,653 | 2,123,320 | 2,166,162 | ||||||||||||||||||||
Total deposits | 1,110,118 | 1,080,783 | 1,063,307 | ||||||||||||||||||||
Total shareholders' equity | 232,282 | 231,032 | 238,606 | ||||||||||||||||||||
Common shareholders' equity | 218,967 | 216,791 | 219,838 | ||||||||||||||||||||
Book value per share of common stock | $ | 20.50 | $ | 20.18 | $ | 20.40 | |||||||||||||||||
Tangible book value per share of common stock (1) | 13.62 | 13.32 | 13.48 | ||||||||||||||||||||
(1) 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 22-24. | |||||||||||||||||||||||
(2) Ratios do not include loans accounted for under the fair value option during the period. Charge-off ratios are annualized for the quarterly presentation. | |||||||||||||||||||||||
(3) Balances do not include past due consumer credit card, consumer loans secured by real estate where repayments are insured by the Federal Housing Administration and individually insured long-term stand-by agreements (fully- insured home loans), and in general, other consumer and commercial loans not secured by real estate; purchased credit-impaired loans even though the customer may be contractually past due; nonperforming loans held-for-sale; nonperforming loans accounted for under the fair value option; and nonaccruing troubled debt restructured loans removed from the purchased credit-impaired portfolio prior to January 1, 2010. | |||||||||||||||||||||||
(4) Regulatory capital ratios are preliminary until filed with the Federal Reserve on Form Y-9C. | |||||||||||||||||||||||
(5) Basel 1 includes the Market Risk Final Rule at September 30, 2013 and June 30, 2013. Basel 1 did not include the Market Risk Final Rule at September 30, 2012. | |||||||||||||||||||||||
(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 22-24. | |||||||||||||||||||||||
(8) Basel 3 (fully phased-in) estimates are based on the Advanced Approach under the final Basel 3 rules issued on July 2, 2013. | |||||||||||||||||||||||
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) | ||||||||||||||||||||||||
Third Quarter 2013 | ||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,524 | $ | 1,577 | $ | 4,009 | $ | 3,376 | $ | 4,390 | $ | 867 | ||||||||||||
Provision for credit losses | 761 | (308 | ) | 322 | 47 | 23 | (549 | ) | ||||||||||||||||
Noninterest expense | 3,980 | 3,419 | 1,928 | 2,884 | 3,248 | 930 | ||||||||||||||||||
Net income (loss) | 1,779 | (1,000 | ) | 1,134 | (778 | ) | 719 | 643 | ||||||||||||||||
Return on average allocated capital (2, 3) | 23.55 | % | n/m | 19.57 | % | n/m | 28.68 | % | n/m | |||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 165,707 | $ | 88,406 | $ | 260,085 | n/m | $ | 112,752 | $ | 232,538 | |||||||||||||
Total deposits | 522,023 | n/m | 239,839 | n/m | 239,663 | 35,126 | ||||||||||||||||||
Allocated capital (2, 3) | 30,000 | 24,000 | 23,000 | $ | 30,000 | 10,000 | n/m | |||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 167,254 | $ | 87,586 | $ | 267,165 | n/m | $ | 114,175 | $ | 229,550 | |||||||||||||
Total deposits | 526,876 | n/m | 263,121 | n/m | 241,553 | 30,705 | ||||||||||||||||||
Second Quarter 2013 | ||||||||||||||||||||||||
Consumer & Business Banking |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 7,434 | $ | 2,115 | $ | 4,138 | $ | 4,189 | $ | 4,499 | $ | 574 | ||||||||||||
Provision for credit losses | 967 | 291 | 163 | (16 | ) | (15 | ) | (179 | ) | |||||||||||||||
Noninterest expense | 4,178 | 3,394 | 1,856 | 2,771 | 3,272 | 547 | ||||||||||||||||||
Net income (loss) | 1,395 | (937 | ) | 1,292 | 958 | 758 | 546 | |||||||||||||||||
Return on average allocated capital (2, 3) | 18.68 | % | n/m | 22.55 | % | 12.84 | % | 30.57 | % | n/m | ||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 163,593 | $ | 90,114 | $ | 255,674 | n/m | $ | 109,589 | $ | 238,910 | |||||||||||||
Total deposits | 522,259 | n/m | 227,668 | n/m | 235,344 | 33,774 | ||||||||||||||||||
Allocated capital (2, 3) | 30,000 | 24,000 | 23,000 | $ | 30,000 | 10,000 | n/m | |||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 164,851 | $ | 89,257 | $ | 258,502 | n/m | $ | 111,785 | $ | 234,047 | |||||||||||||
Total deposits | 525,099 | n/m | 229,586 | n/m | 235,012 | 34,597 | ||||||||||||||||||
Third 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) | $ | 7,261 | $ | 3,083 | $ | 3,786 | $ | 3,278 | $ | 4,083 | $ | (834 | ) | |||||||||||
Provision for credit losses | 1,006 | 263 | 23 | 31 | 61 | 390 | ||||||||||||||||||
Noninterest expense | 4,111 | 4,180 | 1,936 | 2,575 | 3,115 | 1,627 | ||||||||||||||||||
Net income (loss) | 1,351 | (857 | ) | 1,151 | (276 | ) | 571 | (1,600 | ) | |||||||||||||||
Return on average economic capital (2, 3) | 22.20 | % | n/m | 23.33 | % | n/m | 29.22 | % | n/m | |||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 169,092 | $ | 102,472 | $ | 221,185 | n/m | $ | 101,016 | $ | 256,130 | |||||||||||||
Total deposits | 478,142 | n/m | 227,421 | n/m | 241,411 | 39,266 | ||||||||||||||||||
Economic capital (2, 3) | 24,271 | 13,335 | 19,639 | $ | 13,414 | 7,840 | n/m | |||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 168,296 | $ | 98,642 | $ | 226,152 | n/m | $ | 102,390 | $ | 252,592 | |||||||||||||
Total deposits | 484,623 | n/m | 234,912 | n/m | 243,518 | 37,555 | ||||||||||||||||||
(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) Effective January 1, 2013, the Corporation revised, on a prospective basis, its methodology for allocating capital to the business segments. In connection with the change in methodology, the Corporation updated the applicable terminology in the above table to allocated capital from economic capital as reported in prior periods. For more information, see Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP Financial Measures on pages 22-24. | ||||||||||||||||||||||||
(3) Return on average allocated capital and return on average economic capital are calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital or average economic capital, as applicable. Allocated capital, economic capital and the related returns 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 | ||||||||||||||||||||||||
Year-to-Date Results by Business Segment | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||||||||||||||
Consumer & Business |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 22,370 | $ | 6,004 | $ | 12,177 | $ | 12,434 | $ | 13,310 | $ | 1,805 | ||||||||||||
Provision for credit losses | 2,680 | 318 | 634 | 36 | 30 | (478 | ) | |||||||||||||||||
Noninterest expense | 12,315 | 12,219 | 5,626 | 8,729 | 9,773 | 3,245 | ||||||||||||||||||
Net income (loss) | 4,621 | (4,094 | ) | 3,707 | 1,348 | 2,197 | 213 | |||||||||||||||||
Return on average allocated capital (2, 3) | 20.62 | % | n/m | 21.56 | % | 6.04 | % | 29.54 | % | n/m | ||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 165,048 | $ | 90,478 | $ | 253,334 | n/m | $ | 109,499 | $ | 238,623 | |||||||||||||
Total deposits | 515,668 | n/m | 229,941 | n/m | 242,757 | 34,814 | ||||||||||||||||||
Allocated capital (2, 3) | 30,000 | 24,000 | 23,000 | $ | 30,000 | 10,000 | n/m | |||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 167,254 | $ | 87,586 | $ | 267,165 | n/m | $ | 114,175 | $ | 229,550 | |||||||||||||
Total deposits | 526,876 | n/m | 263,121 | n/m | 241,553 | 30,705 | ||||||||||||||||||
Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||
Consumer & Business |
Consumer
Real Estate Services |
Global
Banking |
Global
Markets |
GWIM | All
Other | |||||||||||||||||||
Total revenue, net of interest expense (FTE basis) (1) | $ | 22,389 | $ | 8,276 | $ | 11,722 | $ | 11,264 | $ | 12,324 | $ | (631 | ) | |||||||||||
Provision for credit losses | 3,069 | 957 | (404 | ) | 17 | 154 | 2,172 | |||||||||||||||||
Noninterest expense | 12,821 | 11,583 | 5,865 | 8,668 | 9,524 | 5,272 | ||||||||||||||||||
Net income (loss) | 4,101 | (2,735 | ) | 3,952 | 1,048 | 1,669 | (4,579 | ) | ||||||||||||||||
Return on average economic capital (2, 3) | 23.00 | % | n/m | 27.27 | % | 10.29 | % | 31.75 | % | n/m | ||||||||||||||
Balance Sheet |
||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Total loans and leases | $ | 174,989 | $ | 105,848 | $ | 221,629 | n/m | $ | 99,338 | $ | 263,310 | |||||||||||||
Total deposits | 472,190 | n/m | 217,602 | n/m | 239,942 | 45,151 | ||||||||||||||||||
Economic capital (2, 3) | 23,880 | 14,079 | 19,376 | $ | 13,703 | 7,093 | n/m | |||||||||||||||||
Period end | ||||||||||||||||||||||||
Total loans and leases | $ | 168,296 | $ | 98,642 | $ | 226,152 | n/m | $ | 102,390 | $ | 252,592 | |||||||||||||
Total deposits | 484,623 | n/m | 234,912 | n/m | 243,518 | 37,555 | ||||||||||||||||||
(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) Effective January 1, 2013, the Corporation revised, on a prospective basis, its methodology for allocating capital to the business segments. In connection with the change in methodology, the Corporation updated the applicable terminology in the above table to allocated capital from economic capital as reported in prior periods. For more information, see Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP Financial Measures on pages 22-24. | ||||||||||||||||||||||||
(3) Return on average allocated capital and return on average economic capital are calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital or average economic capital, as applicable. Allocated capital, economic capital and the related returns 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) |
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
Net interest income | $ | 32,125 | $ | 31,002 | $ | 10,479 | $ | 10,771 | $ | 10,167 | ||||||||||||||
Total revenue, net of interest expense | 68,100 | 65,344 | 21,743 | 22,949 | 20,657 | |||||||||||||||||||
Net interest yield (2) | 2.44 | % | 2.35 | % | 2.44 | % | 2.44 | % | 2.32 | % | ||||||||||||||
Efficiency ratio | 76.22 | 82.23 | 75.38 | 69.80 | 84.93 | |||||||||||||||||||
Other Data |
September 30 2013 |
June 30 2013 |
September 30 2012 | |||||||||||||||||||||
Number of banking centers - U.S. | 5,243 | 5,328 | 5,540 | |||||||||||||||||||||
Number of branded ATMs - U.S. | 16,201 | 16,354 | 16,253 | |||||||||||||||||||||
Ending full-time equivalent employees | 247,943 | 257,158 | 272,594 | |||||||||||||||||||||
(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) Calculation includes fees earned on overnight deposits placed with the Federal Reserve and, beginning in the third quarter of 2012, fees earned on deposits, primarily overnight, placed with certain non-U.S. central banks of $123 million and $147 million for the nine months ended September 30, 2013 and 2012; $50 million and $40 million for the third and second quarters of 2013; and $48 million for the third quarter of 2012, respectively. | ||||||||||||||||||||||||
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. Return on average tangible shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average 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. The tangible equity ratio represents total 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 (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. | |||||||||||||||||||||
Effective January 1, 2013, on a prospective basis, the Corporation adjusted the amount of capital being allocated to its business segments. The adjustment reflects a refinement to the prior-year methodology (economic capital) which focused solely on internal risk-based economic capital models. The refined methodology (allocated capital) now also considers the effect of regulatory capital requirements in addition to internal risk-based economic 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. The capital allocated to the Corporation's business segments is currently referred to as allocated capital and, prior to January 1, 2013, was referred to as economic capital, both of which represent non-GAAP financial measures. Allocated capital in the Corporation's business segments is subject to change over time. | |||||||||||||||||||||
See the tables below and on pages 23-24 for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP for the nine months ended September 30, 2013 and 2012, and the three months ended September 30, 2013, June 30, 2013 and September 30, 2012. 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. | |||||||||||||||||||||
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | ||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis |
|||||||||||||||||||||
Net interest income | $ | 31,479 | $ | 30,332 | $ | 10,266 | $ | 10,549 | $ | 9,938 | |||||||||||
Fully taxable-equivalent adjustment | 646 | 670 | 213 | 222 | 229 | ||||||||||||||||
Net interest income on a fully taxable-equivalent basis | $ | 32,125 | $ | 31,002 | $ | 10,479 | $ | 10,771 | $ | 10,167 | |||||||||||
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 | $ | 67,454 | $ | 64,674 | $ | 21,530 | $ | 22,727 | $ | 20,428 | |||||||||||
Fully taxable-equivalent adjustment | 646 | 670 | 213 | 222 | 229 | ||||||||||||||||
Total revenue, net of interest expense on a fully taxable-equivalent basis | $ | 68,100 | $ | 65,344 | $ | 21,743 | $ | 22,949 | $ | 20,657 | |||||||||||
Reconciliation of income tax expense to income tax expense on a fully taxable-equivalent basis |
|||||||||||||||||||||
Income tax expense | $ | 4,335 | $ | 1,520 | $ | 2,348 | $ | 1,486 | $ | 770 | |||||||||||
Fully taxable-equivalent adjustment | 646 | 670 | 213 | 222 | 229 | ||||||||||||||||
Income tax expense on a fully taxable-equivalent basis | $ | 4,981 | $ | 2,190 | $ | 2,561 | $ | 1,708 | $ | 999 | |||||||||||
Reconciliation of average common shareholders' equity to average tangible common shareholders' equity |
|||||||||||||||||||||
Common shareholders' equity | $ | 217,922 | $ | 216,073 | $ | 216,766 | $ | 218,790 | $ | 217,273 | |||||||||||
Goodwill | (69,926 | ) | (69,973 | ) | (69,903 | ) | (69,930 | ) | (69,976 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (6,269 | ) | (7,531 | ) | (5,993 | ) | (6,270 | ) | (7,194 | ) | |||||||||||
Related deferred tax liabilities | 2,360 | 2,627 | 2,296 | 2,360 | 2,556 | ||||||||||||||||
Tangible common shareholders' equity | $ | 144,087 | $ | 141,196 | $ | 143,166 | $ | 144,950 | $ | 142,659 | |||||||||||
Reconciliation of average shareholders' equity to average tangible shareholders' equity |
|||||||||||||||||||||
Shareholders' equity | $ | 234,126 | $ | 234,726 | $ | 230,392 | $ | 235,063 | $ | 236,039 | |||||||||||
Goodwill | (69,926 | ) | (69,973 | ) | (69,903 | ) | (69,930 | ) | (69,976 | ) | |||||||||||
Intangible assets (excluding mortgage servicing rights) | (6,269 | ) | (7,531 | ) | (5,993 | ) | (6,270 | ) | (7,194 | ) | |||||||||||
Related deferred tax liabilities | 2,360 | 2,627 | 2,296 | 2,360 | 2,556 | ||||||||||||||||
Tangible shareholders' equity | $ | 160,291 | $ | 159,849 | $ | 156,792 | $ | 161,223 | $ | 161,425 | |||||||||||
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) | |||||||||||||||||||||||||
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | ||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity |
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Common shareholders' equity | $ | 218,967 | $ | 219,838 | $ | 218,967 | $ | 216,791 | $ | 219,838 | |||||||||||||||
Goodwill | (69,891 | ) | (69,976 | ) | (69,891 | ) | (69,930 | ) | (69,976 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (5,843 | ) | (7,030 | ) | (5,843 | ) | (6,104 | ) | (7,030 | ) | |||||||||||||||
Related deferred tax liabilities | 2,231 | 2,494 | 2,231 | 2,297 | 2,494 | ||||||||||||||||||||
Tangible common shareholders' equity | $ | 145,464 | $ | 145,326 | $ | 145,464 | $ | 143,054 | $ | 145,326 | |||||||||||||||
Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity |
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Shareholders' equity | $ | 232,282 | $ | 238,606 | $ | 232,282 | $ | 231,032 | $ | 238,606 | |||||||||||||||
Goodwill | (69,891 | ) | (69,976 | ) | (69,891 | ) | (69,930 | ) | (69,976 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (5,843 | ) | (7,030 | ) | (5,843 | ) | (6,104 | ) | (7,030 | ) | |||||||||||||||
Related deferred tax liabilities | 2,231 | 2,494 | 2,231 | 2,297 | 2,494 | ||||||||||||||||||||
Tangible shareholders' equity | $ | 158,779 | $ | 164,094 | $ | 158,779 | $ | 157,295 | $ | 164,094 | |||||||||||||||
Reconciliation of period-end assets to period-end tangible assets |
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Assets | $ | 2,126,653 | $ | 2,166,162 | $ | 2,126,653 | $ | 2,123,320 | $ | 2,166,162 | |||||||||||||||
Goodwill | (69,891 | ) | (69,976 | ) | (69,891 | ) | (69,930 | ) | (69,976 | ) | |||||||||||||||
Intangible assets (excluding mortgage servicing rights) | (5,843 | ) | (7,030 | ) | (5,843 | ) | (6,104 | ) | (7,030 | ) | |||||||||||||||
Related deferred tax liabilities | 2,231 | 2,494 | 2,231 | 2,297 | 2,494 | ||||||||||||||||||||
Tangible assets | $ | 2,053,150 | $ | 2,091,650 | $ | 2,053,150 | $ | 2,049,583 | $ | 2,091,650 | |||||||||||||||
Book value per share of common stock |
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Common shareholders' equity | $ | 218,967 | $ | 219,838 | $ | 218,967 | $ | 216,791 | $ | 219,838 | |||||||||||||||
Ending common shares issued and outstanding | 10,683,282 | 10,777,267 | 10,683,282 | 10,743,098 | 10,777,267 | ||||||||||||||||||||
Book value per share of common stock | $ | 20.50 | $ | 20.40 | $ | 20.50 | $ | 20.18 | $ | 20.40 | |||||||||||||||
Tangible book value per share of common stock |
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Tangible common shareholders' equity | $ | 145,464 | $ | 145,326 | $ | 145,464 | $ | 143,054 | $ | 145,326 | |||||||||||||||
Ending common shares issued and outstanding | 10,683,282 | 10,777,267 | 10,683,282 | 10,743,098 | 10,777,267 | ||||||||||||||||||||
Tangible book value per share of common stock | $ | 13.62 | $ | 13.48 | $ | 13.62 | $ | 13.32 | $ | 13.48 | |||||||||||||||
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) | |||||||||||||||||||||
Nine Months Ended September 30 |
Third Quarter 2013 |
Second Quarter 2013 |
Third Quarter 2012 | ||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Reconciliation of return on average allocated capital/economic capital (1) |
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Consumer & Business Banking |
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Reported net income | $ | 4,621 | $ | 4,101 | $ | 1,779 | $ | 1,395 | $ | 1,351 | |||||||||||
Adjustment related to intangibles (2) | 6 | 10 | 2 | 2 | 3 | ||||||||||||||||
Adjusted net income | $ | 4,627 | $ | 4,111 | $ | 1,781 | $ | 1,397 | $ | 1,354 | |||||||||||
Average allocated equity (3) | $ | 62,058 | $ | 56,059 | $ | 62,032 | $ | 62,058 | $ | 56,413 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (32,058 | ) | (32,179 | ) | (32,032 | ) | (32,058 | ) | (32,142 | ) | |||||||||||
Average allocated capital/economic capital | $ | 30,000 | $ | 23,880 | $ | 30,000 | $ | 30,000 | $ | 24,271 | |||||||||||
Global Banking |
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Reported net income | $ | 3,707 | $ | 3,952 | $ | 1,134 | $ | 1,292 | $ | 1,151 | |||||||||||
Adjustment related to intangibles (2) | 2 | 3 | 1 | — | 1 | ||||||||||||||||
Adjusted net income | $ | 3,709 | $ | 3,955 | $ | 1,135 | $ | 1,292 | $ | 1,152 | |||||||||||
Average allocated equity (3) | $ | 45,412 | $ | 41,807 | $ | 45,413 | $ | 45,416 | $ | 42,066 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (22,412 | ) | (22,431 | ) | (22,413 | ) | (22,416 | ) | (22,427 | ) | |||||||||||
Average allocated capital/economic capital | $ | 23,000 | $ | 19,376 | $ | 23,000 | $ | 23,000 | $ | 19,639 | |||||||||||
Global Markets |
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Reported net income (loss) | $ | 1,348 | $ | 1,048 | $ | (778 | ) | $ | 958 | $ | (276 | ) | |||||||||
Adjustment related to intangibles (2) | 6 | 7 | 2 | 2 | 2 | ||||||||||||||||
Adjusted net income (loss) | $ | 1,354 | $ | 1,055 | $ | (776 | ) | $ | 960 | $ | (274 | ) | |||||||||
Average allocated equity (3) | $ | 35,371 | $ | 19,069 | $ | 35,369 | $ | 35,372 | $ | 18,796 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (5,371 | ) | (5,366 | ) | (5,369 | ) | (5,372 | ) | (5,382 | ) | |||||||||||
Average allocated capital/economic capital | $ | 30,000 | $ | 13,703 | $ | 30,000 | $ | 30,000 | $ | 13,414 | |||||||||||
Global Wealth & Investment Management |
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Reported net income | $ | 2,197 | $ | 1,669 | $ | 719 | $ | 758 | $ | 571 | |||||||||||
Adjustment related to intangibles (2) | 13 | 18 | 4 | 5 | 6 | ||||||||||||||||
Adjusted net income | $ | 2,210 | $ | 1,687 | $ | 723 | $ | 763 | $ | 577 | |||||||||||
Average allocated equity (3) | $ | 20,302 | $ | 17,473 | $ | 20,283 | $ | 20,300 | $ | 18,199 | |||||||||||
Adjustment related to goodwill and a percentage of intangibles | (10,302 | ) | (10,380 | ) | (10,283 | ) | (10,300 | ) | (10,359 | ) | |||||||||||
Average allocated capital/economic capital | $ | 10,000 | $ | 7,093 | $ | 10,000 | $ | 10,000 | $ | 7,840 | |||||||||||
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(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 (or economic capital prior to 2013) 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. | |||||||||||||||||||||
|
Source:
Investors May Contact:
Anne Walker, Bank of America, 1.646.855.3644
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