ME Newswire / Business Wire
CHARLOTTE, N.C. - Tuesday, January 29th 2013
Previously Announced Selected Items Impact Pretax Earnings
Representations and Warranties, Compensatory Fees Settlements with Fannie Mae, $2.7 Billion or $0.16 EPS
Provision for Independent Foreclosure Review Acceleration Agreement, $1.1 Billion or $0.06 EPS
Total Litigation Expense, $0.9 Billion or $0.05 EPS
Negative Valuation Adjustments for Improved Credit Spreads, $0.7 Billion or $0.04 EPS
Provision for Obligations Related to Mortgage Insurance Rescissions, $0.5 Billion or $0.03 EPS
Gain on Sale of Japan Brokerage Joint Venture, $0.4 Billion or $0.02 EPS
Positive MSR Valuation Adjustment Related to Servicing Sales, $0.3 Billion or $0.02 EPS
Net Tax Benefit Primarily From Recognition of Foreign Tax Credits of Certain Non-U.S. Subsidiaries, $1.3 Billion or $0.12 EPS
Capital and Liquidity Remain Strong
Basel 1 Tier 1 Common Capital Ratio of 11.06 Percent at December 31, 2012
Estimated Basel 3 Tier 1 Common Capital Ratio of 9.25 Percent at December 31, 2012 (U.S. Basel 3 NPRs Fully Phased-in)A
Long-term Debt Down $96.7 Billion From December 31, 2011, Driven by Maturities and Liability Management Actions; Time-to-required Funding Remains Strong at 33 Months
Core Business Momentum Continues
Fourth-Quarter 2012 Net Interest Income (FTE basis)B Increased to $10.6 Billion From $10.2 Billion in Prior Quarter
Total Average Deposit Balances up $28 Billion, or 11 Percent (Annualized) From Prior Quarter
First-lien Mortgage Production Increased 6 Percent From Prior Quarter
Global Wealth and Investment Management Posts Record Quarterly Earnings
Period-end Commercial Loans and Leases in the Global Banking Segment, Including Real Estate Loans, Grew 7 Percent From Prior Quarter to $252 Billion
Investment Bank Maintained No. 2 Ranking in Global and U.S. Investment Banking Fees; Fees Up 20 Percent From Prior Quarter and 58 Percent From the Year-ago Quarter
Bank of America Corporation today reported net income of $0.7 billion, or $0.03 per diluted share, for the fourth quarter of 2012, compared to $2.0 billion, or $0.15 per diluted share in the year-ago period. Revenue, net of interest expense, on a fully taxable-equivalent (FTE)B basis was $18.9 billion.
Fourth-quarter 2012 revenue, net of interest expense, on an FTE basis, excluding $0.7 billion of debit valuation and fair value option adjustments, was $19.6 billion; excluding $3.0 billion of provisions for representations and warranties and obligations related to mortgage insurance rescissions related to settlement agreements with the Federal National Mortgage Association (Fannie Mae) revenue net of interest expense, on an FTE basis, was $22.6 billionB.
For the full year, the company reported net income of $4.2 billion, or $0.25 per diluted share, compared to $1.4 billion, or $0.01 per diluted share in 2011.
"We enter 2013 strong and well positioned for further growth,” said Chief Executive Officer Brian Moynihan. "Double-digit growth since last year in mortgage production, commercial lending, and Global Markets revenue demonstrates the power of deeper customer and client relationships as we intensify the focus on connecting all our capabilities.”
As previously announced, financial results in the fourth quarter of 2012 were negatively impacted by a provision of $2.7 billion related to the settlements with Fannie Mae with respect to representations and warranties and compensatory fees; other provision items of $2.5 billion which included a $1.1 billion provision for the Independent Foreclosure Review (IFR) acceleration agreement, total litigation expense of $0.9 billion and a $0.5 billion provision for obligations related to mortgage insurance rescissions; and $0.7 billion of negative debit valuation adjustments (DVA) and fair value option (FVO) adjustments due to improvement in the company's credit spreads. These items were partially offset by a net income tax benefit of $1.3 billion primarily due to the recognition of foreign tax credits of certain non-U.S. subsidiaries; a gain of $0.4 billion on the previously announced sale of the company's 49-percent stake in Mitsubishi UFJ Merrill Lynch PB Securities; and a positive valuation adjustment on mortgage servicing rights (MSR) of $0.3 billion related to the previously announced servicing sales.
The year-ago quarter included $1.3 billion of negative DVA and FVO adjustments, $1.8 billion of total litigation expense and a $0.6 billion goodwill impairment charge in the European consumer card business. In addition, the year-ago quarter included, among other significant items, a $2.9 billion pretax gain on the sale of a portion of the company's investment in China Construction Bank (CCB), a $1.2 billion gain on the exchange of trust preferred securities, and a $1.2 billion gain on the sale of debt securities.
Relative to the year-ago quarter, the results for the fourth quarter of 2012 were driven by improved credit quality across most major portfolios, increased sales and trading revenue (excluding the impact of DVAE), increased investment and brokerage income, higher investment banking fees, partially offset by an increase in consumer real estate losses, reflecting the Fannie Mae settlements and the provision for the IFR acceleration agreement. In addition, noninterest expense declined from the year-ago quarter, driven primarily by cost savings achieved through Project New BAC initiatives over the course of 2012.
"We addressed significant legacy issues in 2012 and our strengths are coming through," said Chief Financial Officer Bruce Thompson. "Capital and liquidity remain strong and credit continues to improve. Our primary focus this year is to grow revenue, manage expenses and drive core earnings growth."
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