Previously Announced Capital Actions Include
Common Stock Dividend Increase to $0.05 Per Share in Q2-14 and a
New $4 Billion Common Stock Repurchase Program
Continued Business Momentum
- Total Period-end Deposit Balances up
$38 Billion From Q1-13 to a Record $1.13 Trillion
- Funding of $10.8 Billion in Residential
Home Loans and Home Equity Loans in Q1-14 Helped More Than 36,000
Homeowners Purchase a Home or Refinance a Mortgage
- More Than 1 Million New Credit Cards
Issued in Q1-14
- Global Wealth and Investment Management
Reports Record Asset Management Fees of $1.9 Billion; Pretax Margin
of 25.6 Percent
- Global Banking Average Loan Balances up
11 Percent From Q1-13 to $271 Billion
- Bank of America Merrill Lynch
Maintained a Leadership Position in Investment Banking with Total
Firmwide Fees of $1.5 Billion in Q1-14
- Noninterest Expense, Excluding
Litigation, Down 6 Percent From Q1-13
- Credit Quality Continued to Improve
With Net Charge-offs Down 45 Percent From Q1-13
Capital and Liquidity Remain Strong
- Estimated Common Equity Tier 1 Ratio
Under Basel 3 (Standardized Approach, Fully Phased-in) Increased to
9.3 Percent in Q1-14; Advanced Approaches Remains Strong at 9.9
Percent(D)
- Estimated Supplementary Leverage Ratios
Above Required Minimums(E)
- Long-term Debt Down $25 Billion From
Year-ago Quarter, Driven by Maturities and Liability Management
Actions
- Record Global Excess Liquidity Sources
of $427 Billion, up $55 Billion From Q1-13; Time-to-required
Funding at 35 Months
Bank of America Corporation today reported a net loss of $276
million, or $0.05 per diluted share, for the first quarter of 2014,
compared to net income of $1.5 billion, or $0.10 per diluted share,
in the year-ago period.
Revenue, net of interest expense, on an FTE basis(A) declined 3
percent from the first quarter of 2013 to $22.8 billion. Excluding
the impact of net debit valuation adjustments (DVA) in both
periods, revenue was down 4 percent from the year-ago quarter to
$22.7 billion(B).
The results for the first quarter of 2014 include $6.0 billion
in litigation expense related to the previously announced
settlement with the Federal Housing Finance Agency (FHFA), and
additional reserves primarily for previously disclosed legacy
mortgage-related matters.
"The cost of resolving more of our mortgage issues hurt our
earnings this quarter,” said Chief Executive Officer Brian
Moynihan. “But the earnings power of our business and customer
strategy generated solid results and we continued to return excess
capital to our shareholders."
"During the quarter, our Basel 3 standardized capital ratios and
our liquidity improved to record levels and credit quality also
improved," said Chief Financial Officer Bruce Thompson. "In
addition, expenses in our legacy mortgage servicing business,
excluding litigation, declined by $1 billion from the year-ago
quarter."
Selected Financial Highlights
Three Months Ended (Dollars in millions, except per share
data)
March 31 2014 December 312013
March 312013 Net interest income, FTE basis1
$
10,286 $ 10,999 $ 10,875
Noninterest income
12,481 10,702 12,533
Total revenue,
net of interest expense, FTE basis 22,767 21,701 23,408
Total revenue, net of interest expense, FTE basis, excluding net
DVA2 22,655 22,318 23,553 Provision for credit
losses
1,009 336 1,713 Noninterest expense
22,238
17,307 19,500
Net income (loss) $ (276
) $ 3,439 $ 1,483 Diluted earnings (loss) per common share
$ (0.05 ) $ 0.29
$ 0.10
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial
measure. For reconciliations to GAAP financial measures, refer to
pages 21-23 of this press release. Net interest income on a GAAP
basis was $10.1 billion, $10.8 billion and $10.7 billion for the
three months ended March 31, 2014, December 31, 2013 and
March 31, 2013, respectively. Total revenue, net of interest
expense, on a GAAP basis was $22.6 billion, $21.5 billion and $23.2
billion for the three months ended March 31, 2014,
December 31, 2013 and March 31, 2013, respectively.
2 Total revenue, net of interest expense, on an FTE basis
excluding net DVA is a non-GAAP financial measure. Net DVA gains
(losses)were $112 million, $(617) million and $(145) million for
the three months ended March 31, 2014, December 31, 2013 and
March 31, 2013, respectively.
Net interest income, on an FTE basis, fell 5 percent from the
year-ago quarter to $10.3 billion(A). The decline was driven by
lower yields on debt securities due to an approximate $540 million
swing in market-related premium amortization expense. Net interest
margin, excluding market-related adjustments, was 2.36 percent in
the first quarter of 2014, compared to 2.30 percent in the first
quarter of 2013.
Noninterest income was flat compared to the year-ago quarter, as
lower mortgage banking income and lower trading account profits
were largely offset by year-over-year increases in investment and
brokerage income, equity investment income and gains on the sale of
debt securities.
The provision for credit losses declined 41 percent from the
first quarter of 2013 to $1.0 billion, driven by improved credit
quality. Net charge-offs declined 45 percent from the first quarter
of 2013 to $1.4 billion, with the net charge-off ratio falling to
0.62 percent in the first quarter of 2014 from 1.14 percent in the
year-ago quarter. During the first quarter of 2014, the reserve
release was $379 million, compared to a reserve release of $804
million in the first quarter of 2013.
Noninterest expense was $22.2 billion, compared to $19.5 billion
in the year-ago quarter, driven by higher mortgage-related
litigation expense, partially offset by reduced other expenses in
Legacy Assets and Servicing (LAS). Litigation expense, including
$3.6 billion for the FHFA settlement, was $6.0 billion in the first
quarter of 2014, compared to $2.2 billion in the first quarter of
2013. The first quarter of 2014 included $1.0 billion of expense
associated with retirement-eligible incentive compensation costs,
compared to $0.9 billion in the first quarter of 2013. Excluding
litigation and retirement-eligible incentive compensation costs
from both periods, noninterest expense declined $1.2 billion from
the year-ago quarter.
The income tax benefit for the first quarter of 2014 was $405
million on $681 million of pretax loss, compared to income tax
expense of $501 million on $2.0 billion of pretax income in the
prior-year period. At March 31, 2014, the company had 238,560
full-time employees, down 9 percent from the year-ago quarter and
1.5 percent below the fourth quarter of 2013.
Settlement With Financial Guaranty Insurance Co.
(FGIC)
Bank of America reached a settlement with FGIC, as well as
separate settlements with The Bank of New York Mellon, as trustee,
for certain second-lien residential mortgage-backed securities
(RMBS) trusts for which FGIC provided financial guarantee
insurance. The agreements resolve all outstanding litigation
between FGIC and the company, as well as outstanding and potential
claims by FGIC and the trustee related to alleged representations
and warranties breaches and other claims involving second-lien RMBS
trusts for which FGIC provided financial guarantee insurance.
Seven of the trust settlements have already been completed, and
the two remaining trust settlements are subject to additional
investor approvals in a process that is expected to be completed
within the next 45 days. Bank of America has already made payments
totaling approximately $900 million under the settlement with FGIC
and the completed trust settlements and will pay an additional $50
million if the remaining two trust settlements are completed. The
costs of the FGIC and trust settlements are covered by previously
established reserves. With this settlement, Bank of America has
resolved disputes with four monolines.
Business Segment Results
The company reports results through five business segments:
Consumer and Business Banking (CBB), Consumer Real Estate Services
(CRES), Global Wealth and Investment Management (GWIM), Global
Banking, and Global Markets, with the remaining operations recorded
in All Other.
Consumer and Business Banking (CBB)
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013
Total revenue, net of interest expense, FTE
basis $ 7,438 $ 7,498
$ 7,412 Provision for credit losses
812 427 952 Noninterest
expense
3,975 4,051 4,155
Net income $
1,658 $ 1,962 $ 1,448 Return on average allocated capital1
22.81 % 25.96 % 19.61 % Average loans
$
162,042 $ 163,152 $ 165,845 Average deposits
534,576
528,808 502,508
At period-end Brokerage assets
$ 100,206 $ 96,048
$ 82,616
1 Return on average allocated capital is a non-GAAP financial
measure. The company believes the use of this non-GAAP financial
measure provides additional clarity in assessing the results of the
segments. Other companies may define or calculate this measure
differently. For reconciliation to GAAP financial measures, refer
to pages 21-23 of this press release.
Business Highlights
- Average deposit balances increased
$32.1 billion, or 6 percent, from the year-ago quarter to $534.6
billion. The increase was driven by growth in liquid products in
the current low-rate environment and the $11.8 billion average
impact of deposit transfers primarily from GWIM.
- The number of mobile banking customers
increased 19 percent from the year-ago quarter to 15.0 million, and
more than 10 percent of deposit transactions are now being done
through mobile devices.
- Total U.S. Consumer Credit Card net
credit loss rate for the first quarter of 2014 was 3.25 percent,
and remains at historically low levels.
- Return on average allocated capital was
22.8 percent in the first quarter of 2014, compared to 19.6 percent
in the first quarter of 2013.
Financial Overview
Consumer and Business Banking reported net income of $1.7
billion, up $210 million, or 15 percent, from the year-ago quarter.
Noninterest income of $2.5 billion increased $88 million primarily
due to a portfolio divestiture gain.
The provision for credit losses decreased $140 million from the
year-ago quarter to $812 million, reflecting continued improvement
in credit quality, due in part to lower delinquencies. Noninterest
expense decreased 4 percent, or $180 million, from the year-ago
quarter to $4.0 billion primarily due to lower operating and
personnel expense.
Consumer Real Estate Services (CRES)
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013
Total revenue, net of interest expense, FTE
basis $ 1,192 $ 1,712
$ 2,312 Provision for credit losses
25 (474 ) 335
Noninterest expense1
8,129 3,788 5,405
Net loss
$ (5,027 ) $ (1,058 ) $ (2,156 ) Average loans
and leases
88,914 89,687 92,963
At period-end Loans
and leases
$ 88,355 $
89,753 $ 90,971
1 Noninterest expense includes litigation expense of $5.8
billion, $1.2 billion and $2.0 billion for the three months ended
March 31, 2014, December 31, 2013 and March 31,
2013.
Business Highlights
- Bank of America funded $10.8 billion in
residential home loans and home equity loans during the first
quarter of 2014, helping more than 36,000 homeowners either
refinance an existing mortgage or purchase a home through our
retail channels. This included more than 3,300 first-time homebuyer
mortgages and more than 12,800 mortgages to low- and
moderate-income borrowers.
- The pipeline for new mortgages
increased 23 percent at the end of the first quarter of 2014
compared to the end of the fourth quarter of 2013.
- The number of 60+ days delinquent first
mortgage loans serviced by LAS declined 15 percent during the first
quarter of 2014 to 277,000 loans from 325,000 loans at the end of
the fourth quarter of 2013, and declined 58 percent from 667,000
loans at the end of the first quarter of 2013.
- Noninterest expense in LAS, excluding
litigation, declined to $1.6 billion in the first quarter of 2014
from $2.6 billion in the year-ago quarter.
Financial Overview
Consumer Real Estate Services reported a net loss of $5.0
billion for the first quarter of 2014, compared to a net loss of
$2.2 billion for the same period in 2013, reflecting a $3.8 billion
increase in litigation expense. Revenue declined $1.1 billion from
the first quarter of 2013 to $1.2 billion, driven primarily by a
$548 million decline in servicing revenue, reflecting a smaller
servicing portfolio and a $542 million decline in core production
revenue due to lower loan originations.
CRES first-mortgage originations declined 65 percent in the
first quarter of 2014 compared to the same period in 2013,
reflecting the decline in the overall market demand for refinance
mortgages. Core production revenue decreased in the first quarter
of 2014 to $273 million from $815 million in the year-ago quarter
due to lower volume and a reduction in margins.
The provision for credit losses decreased $310 million from the
year-ago quarter to $25 million, driven primarily by continued
improvement in portfolio trends, including home prices.
Noninterest expense increased $2.7 billion from the year-ago
quarter to $8.1 billion, due to a $3.8 billion increase in
litigation expense, partially offset by lower LAS default-related
staffing and other default-related servicing expenses.
Global Wealth and Investment Management (GWIM)
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013
Total revenue, net of interest expense, FTE
basis $ 4,547 $ 4,479
$ 4,421 Provision for credit losses
23 26 22 Noninterest
expense
3,359 3,263 3,252
Net income $
729 $ 777 $ 721 Return on average allocated capital1
24.74 % 30.99 % 29.41 % Average loans and leases
$ 115,945 $ 115,546 $ 106,082 Average deposits
242,792 240,395 253,413
At period-end (dollars in
billions) Assets under management
$ 841.8 $ 821.4 $
745.3 Total client balances2
2,395.8
2,366.4 2,231.7
1 Return on average allocated capital is a non-GAAP financial
measure. The company believes the use of this non-GAAP financial
measure provides additional clarity in assessing the results of the
segments. Other companies may define or calculate this measure
differently. For reconciliation to GAAP financial measures, refer
to pages 21-23 of this press release.
2 Total client balances are defined as assets under management,
client brokerage assets, assets in custody, client deposits and
loans (including margin receivables).
Business Highlights
- Pretax margin was 25.6 percent in the
first quarter of 2014, compared to 25.9 percent in the year-ago
quarter, marking the fifth straight quarter of over 25
percent.
- Asset management fees grew to a record
$1.9 billion, up 18.4 percent from the year-ago quarter.
- Client balances increased 7 percent to
$2.40 trillion, driven by higher market levels and net inflows.
First-quarter 2014 long-term assets under management (AUM) flows of
$17.4 billion were the 19th consecutive quarter of positive
flows.
- Average loan balances increased 9
percent from the year-ago quarter to $115.9 billion.
Financial Overview
Global Wealth and Investment Management reported net income of
$729 million, up slightly from the first quarter of 2013,
reflecting continued strong revenue performance and low credit
costs.
Revenue increased 3 percent from the year-ago quarter to a
record $4.5 billion, driven by higher noninterest income related to
improved market valuation and long-term AUM flows.
The provision for credit losses was relatively flat compared to
the year-ago quarter. Noninterest expense increased 3 percent to
$3.4 billion, driven in part by higher revenue-related expenses as
well as increased volume-related expenses and additional
investments in technology to support the business.
Return on average allocated capital was 24.7 percent in the
first quarter of 2014, down from 29.4 percent in the year-ago
quarter, reflecting earnings stability coupled with increased
capital allocations.
Client balances rose 7 percent from the year-ago quarter to
$2.40 trillion, driven largely by higher market levels, long-term
AUM flows of $44.8 billion and period-end client loan growth of
$9.5 billion. Assets under management rose $96.6 billion, or 13
percent, from the first quarter of 2013 to $841.8 billion, driven
by market valuation and long-term AUM flows. Average deposit
balances decreased $10.6 billion from the first quarter of 2013 to
$242.8 billion as $2.4 billion of organic growth was offset by a
$13.0 billion migration to CBB, primarily in the first quarter of
2013.
Global Banking
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013
Total revenue, net of interest expense, FTE
basis $ 4,269 $ 4,303
$ 4,030 Provision for credit losses
265 441 149 Noninterest
expense
2,028 1,926 1,842
Net income $
1,236 $ 1,266 $ 1,281 Return on average allocated capital1
16.18 % 21.84 % 22.59 % Average loans and leases
$ 271,475 $ 268,849 $ 244,068 Average deposits
256,349 259,122
221,275
1 Return on average allocated capital is a non-GAAP financial
measure. The company believes the use of this non-GAAP financial
measure provides additional clarity in assessing the results of the
segments. Other companies may define or calculate this measure
differently. For reconciliation to GAAP financial measures, refer
to pages 21-23 of this press release.
Business Highlights
- Bank of America Merrill Lynch (BAML)
maintained a leadership position in investment banking with
firmwide investment banking fees of $1.5 billion, excluding
self-led deals.
- BAML ranked among the top three
financial institutions globally in leveraged loans,
investment-grade corporate debt, asset-backed securities, common
stock underwriting, and syndicated loans during the first quarter
of 2014(C).
- Average loan and lease balances
increased $27.4 billion, or 11 percent, from the year-ago quarter,
to $271.5 billion, with growth primarily in the commercial and
industrial loan portfolio and the commercial real estate
portfolio.
- Average deposits increased $35.1
billion, or 16 percent, from the year-ago quarter to $256.3 billion
primarily due to increased client liquidity.
Financial Overview
Global Banking reported net income of $1.2 billion in the first
quarter of 2014, down $45 million from the year-ago quarter, as an
increase in revenue was offset by higher noninterest expense and
increased provision for credit losses. Revenue of $4.3 billion was
up 6 percent from the first quarter of 2013, reflecting higher net
interest income driven by growth in loan balances.
Global Corporate Banking revenue increased to $1.6 billion in
the first quarter of 2014, up $127 million from the year-ago
quarter, and Global Commercial Banking revenue increased $80
million to $1.8 billion. Included in these results are Business
Lending revenue of $1.9 billion, up $116 million from the year-ago
quarter, and Global Treasury Services revenue of $1.5 billion, up
$91 million from the year-ago period. Global Banking investment
banking fees, excluding self-led deals, remained solid versus the
year-ago quarter.
The provision for credit losses increased $116 million from the
year-ago quarter to $265 million. The reserve increase for the
first quarter of 2014 was $282 million, compared to $81 million in
the year-ago quarter.
Noninterest expense increased $186 million, or 10 percent, from
the year-ago quarter to $2.0 billion, primarily from technology
investments in Global Treasury Services and lending platforms,
additional client-facing personnel and higher litigation
expense.
Return on average allocated capital was 16.2 percent in the
first quarter of 2014, down from 22.6 percent in the year-ago
quarter, reflecting earnings stability offset by increased capital
allocations.
Global Markets
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013
Total revenue, net of interest expense, FTE
basis $ 5,015 $ 3,210
$ 4,780
Total revenue, net of interest expense, FTE basis,
excluding net DVA1, 2 4,903 3,827 4,925 Provision
for credit losses
19 104 5 Noninterest expense
3,078
3,280 3,074
Net income (loss) $ 1,310 $ (43 )
$ 1,112
Net income (loss), excluding net DVA1
1,240 346 1,203 Return on average allocated capital3
15.65 % n/m 15.06 % Total average assets
$ 601,541 $ 603,111
$ 670,286
1 During the first quarter of 2014, the management of structured
liabilities and the associated DVA were moved into Global Markets
from All Other to better align the performance risk of these
instruments. As such, net DVA represents the combined total of net
DVA on derivatives and structured liabilities. Prior periods have
been reclassified to conform to current period presentation.
2 Total revenue, net of interest expense, on an FTE basis
excluding net DVA, and net income (loss) excluding net DVA are
non-GAAP financial measures. Net DVA gains (losses) were $112
million, $(617) million and $(145) million for the three months
ended March 31, 2014, December 31, 2013 and March 31,
2013, respectively.
3 Return on average allocated capital is a non-GAAP financial
measure. The company believes the use of this non-GAAP financial
measure provides additional clarity in assessing the results of the
segments. Other companies may define or calculate this measure
differently. For reconciliation to GAAP financial measures, refer
to pages 21-23 of this press release.
n/m = not meaningful
Business Highlights
- Sales and trading revenue, excluding
net DVA(F), remained relatively flat from the first quarter of 2013
at $4.1 billion.
- Equities sales and trading revenue,
excluding net DVA(H) was solid compared to the year-ago period. The
company continued to increase market share compared to the year-ago
quarter.
- Return on average allocated capital,
excluding net DVA(F), was 14.8 percent in the first quarter of
2014, compared to 16.3 percent in the first quarter of 2013,
reflecting stable net income combined with an increase in allocated
capital compared to the year-ago quarter.
Financial Overview
Global Markets reported net income of $1.3 billion in the first
quarter of 2014, compared to $1.1 billion in the year-ago quarter.
Excluding net DVA(F), net income was $1.2 billion in the first
quarter of 2014, an increase of 3 percent compared to the year-ago
quarter.
Global Markets revenue increased $235 million, or 5 percent,
from the year-ago quarter to $5.0 billion. Excluding net DVA(F),
revenue decreased $22 million to $4.9 billion as declines in Rates
and Currencies were partially offset by stronger performance in
Credit and Equities.
Fixed Income, Currency and Commodities sales and trading
revenue, excluding net DVA(G), was $3.0 billion in the first
quarter of 2014, a decrease of $51 million, or 2 percent, from the
year-ago quarter, as credit markets remained strong but Rates and
Currencies declined on lower market volumes and volatility. The
year-ago results included the impact of a $450 million write-down
related to the settlement of a legacy matter. Adjusting the
year-ago quarter to exclude this negative impact, FICC revenue,
excluding net DVA, declined 15 percent from the first quarter of
2013.
Equities sales and trading revenue, excluding net DVA(H), was
$1.2 billion, in line with results from the year-ago quarter. The
current quarter benefited from continued gains in market share and
higher client financing balances.
Noninterest expense of $3.1 billion was flat compared to the
year-ago quarter.
All Other1
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013
Total revenue, net of interest expense, FTE
basis2, 3 $ 306 $ 499
$ 453 Provision for credit losses
(135 ) (188
) 250 Noninterest expense
1,669 999 1,772
Net income
(loss) $ (182 ) $ 535 $ (923 ) Total
average loans
217,410 226,049
244,557
1 All Other consists of ALM activities, equity investments, the
international consumer card business, liquidating businesses and
other. ALM activities encompass the whole-loan residential mortgage
portfolio and investment securities, interest rate and foreign
currency risk management activities including the residual net
interest income allocation, the impact of certain allocation
methodologies and accounting hedge ineffectiveness.
2 Revenue includes equity investment income of $674 million,
$393 million and $520 million for the three months ended March 31,
2014, December 31, 2013 and March 31, 2013, respectively,
and gains on sales of debt securities of $357 million, $363 million
and $67 million for the three months ended March 31, 2014,
December 31, 2013 and March 31, 2013, respectively.
3 During the first quarter of 2014, the management of structured
liabilities and the associated DVA were moved into Global Markets
from All Other to better align the performance risk of these
instruments. Prior periods have been reclassified to conform to
current period presentation.
All Other reported a net loss of $182 million in the first
quarter of 2014, compared to a net loss of $923 million for the
same period a year ago. The improvement was primarily driven by a
decrease in the provision for credit losses primarily due to
continued improvement in portfolio trends including increased home
prices, higher gains on sales of debt securities, and higher equity
investment income due to a gain on the sale of the company's
remaining interest in an investment. Impacting the income tax
benefit were the resolution of certain tax matters and recurring
tax preference items compared to the year-ago.
Credit Quality
Three Months Ended (Dollars in millions)
March 31 2014 December 312013
March 312013 Provision for credit losses
$
1,009 $ 336 $ 1,713 Net
charge-offs1
1,388 1,582 2,517 Net charge-off ratio1, 2
0.62 % 0.68 % 1.14 % Net charge-off ratio, excluding
the PCI loan portfolio2
0.64 0.70 1.18 Net charge-off ratio,
including PCI write-offs2
0.79 1.00 1.52
At
period-end Nonperforming loans, leases and foreclosed
properties
$ 17,732 $ 17,772 $ 22,842 Nonperforming
loans, leases and foreclosed properties ratio3
1.96 %
1.93 % 2.53 % Allowance for loan and lease losses
$
16,618 $ 17,428 $ 22,441 Allowance for loan and lease losses
ratio4
1.84 % 1.90 %
2.49 %
1 Excludes write-offs of PCI loans of $391 million, $741 million
and $839 million for the three months ended March 31, 2014,
December 31, 2013 and March 31, 2013, respectively.
2 Net charge-off ratios are calculated as annualized 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 accounted for under the fair
value option.
Credit quality continued to improve in the first quarter of
2014, with net charge-offs declining across nearly all major
portfolios and the provision for credit losses decreasing from the
year-ago quarter. The number of 30+ days performing delinquent
loans, excluding fully-insured loans, declined across all consumer
portfolios from the year-ago quarter, again reaching record low
levels in the U.S. Credit Card portfolio. Additionally, reservable
criticized balances and nonperforming loans, leases and foreclosed
properties also continued to decline, down 15 percent and 22
percent from the year-ago period.
Net charge-offs were $1.4 billion in the first quarter of 2014,
down from $1.6 billion in the fourth quarter of 2013 and $2.5
billion in the first quarter of 2013.
The provision for credit losses was $1.0 billion, a decline of
$704 million from the first quarter of 2013. During the first
quarter of 2014, the reserve release was $379 million compared to a
reserve release of $804 million in the first quarter of 2013. The
reduction in provision was driven by portfolio improvement,
including increased home prices in consumer real estate, as well as
lower levels of delinquencies across the consumer lending
portfolio. This was partially offset by higher provision for credit
losses in the commercial portfolio as the decline in net
charge-offs was more than offset by increased reserve build.
The allowance for loan and lease losses to annualized net
charge-off coverage ratio was 2.95 times in the first quarter of
2014, compared with 2.78 times in the fourth quarter of 2013 and
2.20 times in the first quarter of 2013. The increase was due to
the improvement in net charge-offs discussed above. The allowance
to annualized net charge-off coverage ratio, excluding the
purchased credit impaired (PCI) portfolio, was 2.58 times, 2.38
times and 1.76 times for the same periods, respectively.
Nonperforming loans, leases and foreclosed properties were $17.7
billion at March 31, 2014, a decrease from $17.8 billion at
December 31, 2013 and $22.8 billion at March 31,
2013.
Capital and Liquidity Management1,2,3
(Dollars in billions)
At March 31 2014
At December 312013
Basel 3 Transition (under standardized
approach) Pro-forma Common equity tier 1 capital
- Basel 3
$ 151.6 $ 153.5 Risk-weighted assets
1,282.5 1,316.0 Common equity tier 1 capital ratio - Basel 3
11.8 % 11.7 %
Basel 3 Fully Phased-in
(under standardized approach) Pro-forma Common equity tier 1
capital - Basel 3
$ 134.2 $ 132.3 Risk-weighted
assets
1,448.1 1,462.0 Common equity tier 1 capital ratio -
Basel 3
9.3 % 9.1 % (Dollars in
millions, except per share information)
At March 31
2014 At December 312013 At March
312013 Tangible common equity ratio4
7.00 %
7.20 % 6.88 % Total shareholders’ equity
$ 231,888 $ 232,685 $ 237,293 Common equity ratio
10.17 % 10.43 % 10.05 % Tangible book value per
share4
$ 13.81 $ 13.79 $ 13.36 Book value per share
20.75 20.71
20.19
1 Regulatory capital ratios are preliminary until filed with the
Federal Reserve on Form Y-9C.
2 On January 1, 2014, the Basel 3 rules became effective,
subject to transition provisions primarily related to regulatory
deductions and adjustments impacting common equity tier 1 capital
and tier 1 capital.
3 Pro forma Q4-13 capital ratios include the estimated impact of
the Basel 3 transition provisions applicable for 2014 as if in
effect for Q4-13 and represents a non-GAAP financial measure.
4 Tangible common equity ratio and tangible book value per share
are non-GAAP financial measures. For reconciliation to GAAP
financial measures, refer to pages 21-23 of this press release.
Basel 3 became effective for the company on January 1, 2014,
subject to transition provisions primarily related to regulatory
deductions and adjustments impacting common equity tier 1 capital.
The common equity tier 1 capital ratio under the Basel 3
Standardized approach for measuring risk-weighted assets was 11.8
percent at March 31, 2014, up from a pro forma ratio of 11.7
percent at December 31, 2013.
Basel 3 Fully Phased-in Approaches
While the Basel 3 fully phased-in
Standardized and fully phased-in Advanced approaches do not go into
effect until 2018, the company is providing the following estimates
for investors for comparative purposes.
The estimated common equity tier 1 capital
ratio under the Basel 3 Standardized approach on a fully phased-in
basis was 9.3 percent at March 31, 2014, up from 9.1 percent
at December 31, 2013.
The estimated common equity tier 1 capital
ratio under the Basel 3 Advanced approaches on a fully phased-in
basis, was 9.9 percent, down from 10.0 percent at December 31,
2013, primarily driven by an increase in operational risk-weighted
assets during the period.
In connection with the final U.S. rule and Notice of Proposed
Rulemaking (NPR) issued on April 8 and effective in 2018(E), the
company's estimated supplementary leverage ratios were above the 5
percent supplementary leverage ratio minimum for the bank holding
company and the 6 percent supplementary leverage ratio minimum for
primary bank subsidiaries.
At March 31, 2014, the company's Global Excess Liquidity
Sources totaled $427 billion, compared to $376 billion at
December 31, 2013 and $372 billion at March 31, 2013.
Long-term debt was $255 billion at March 31, 2014, up from
$250 billion at December 31, 2013 and down from $280 billion
at March 31, 2013. Time-to-required funding was 35 months at
March 31, 2014, compared to 38 months at December 31,
2013 and 29 months at March 31, 2013.
Period-end common shares issued and outstanding were 10.53
billion at March 31, 2014, 10.59 billion at December 31,
2013 and 10.82 billion at March 31, 2013. During the first
quarter of 2014, approximately 87 million common shares were
repurchased for approximately $1.4 billion at an average price of
$16.63 per share.
On March 26, the company announced that it plans to increase its
quarterly common stock dividend to $0.05 per share, beginning in
the second quarter of 2014. Also, the Board of Directors authorized
a new $4.0 billion common stock repurchase program. This
authorization, which covers both common stock and warrants,
replaces the prior year’s common stock repurchase program that
expired on March 31, 2014.
Tangible book value per share(I) was $13.81 at March 31,
2014, compared to $13.79 at December 31, 2013 and $13.36 at
March 31, 2013. Book value per share was $20.75 at
March 31, 2014, compared to $20.71 at December 31, 2013
and $20.19 at March 31, 2013.
------------------------------
End Notes
A Fully taxable-equivalent (FTE) basis is a non-GAAP financial
measure. For reconciliation to GAAP financial measures, refer to
pages 22-23 of this press release. Net interest income on a GAAP
basis was $10.1 billion, $10.8 billion and $10.7 billion for the
three months ended March 31, 2014, December 31, 2013 and
March 31, 2013, respectively. Total revenue, net of interest
expense, on a GAAP basis was $22.6 billion, $21.5 billion and $23.2
billion for the three months ended March 31, 2014,
December 31, 2013 and March 31, 2013, respectively.
B Total revenue, net of interest expense, on an FTE basis
excluding net DVA is a non-GAAP financial measure. Net DVA gains
(losses) were $112 million, $(617) million and $(145) million for
the three months ended March 31, 2014, December 31, 2013 and
March 31, 2013, respectively.
C Rankings per Dealogic as of April 1, 2014.
D Basel 3 common equity tier 1 capital ratios on a fully
phased-in basis are non-GAAP financial measures. For reconciliation
to GAAP financial measures, refer to page 18 of this press release.
Fully phased-in Basel 3 estimates for March 31, 2014 were
calculated under the Standardized or Advanced approaches of the
Basel 3 rules released by the Federal Reserve, as indicated,
assuming all regulatory model approvals, except for the potential
reduction to risk-weighted assets resulting from the removal of the
Comprehensive Risk Measure surcharge.
E The supplementary leverage ratio includes the estimated
increase to the supplementary leverage exposure in accordance with
the U.S. Notice of Proposed Rulemaking approved on April 8, 2014.
For the first quarter of 2014, the supplementary leverage ratio is
measured using the quarter-end tier 1 capital calculated under
Basel 3 on a fully phased-in basis, divided by the simple average
of the sum of on-balance sheet assets and certain off-balance sheet
exposures, including, among other items, derivative and securities
financing transactions, at the end of each month in the
quarter.
F Revenue, sales and trading revenue, international revenue and
net income (loss) excluding the impact of net DVA are non-GAAP
financial measures. Net DVA gains (losses) were $112 million,
$(617) million and $(145) million for the three months ended March
31, 2014, December 31, 2013 and March 31, 2013,
respectively. During the first quarter of 2014, the management of
structured liabilities and the associated DVA were moved into
Global Markets from All Other to better align the performance risk
of these instruments. As such, net DVA represents the combined
total of net DVA on derivatives and structured liabilities. Prior
periods have been reclassified to conform to current period
presentation.
G Fixed Income, Currency and Commodities (FICC) sales and
trading revenue, excluding net DVA is a non-GAAP financial measure.
FICC net DVA gains (losses) were $80 million, $(535) million and
$(149) million for the three months ended March 31, 2014,
December 31, 2013 and March 31, 2013, respectively.
H Equity sales and trading revenue, excluding net DVA is a
non-GAAP financial measure. Equities net DVA gains (losses) were
$32 million, $(82) million and $4 million for the three months
ended March 31, 2014, December 31, 2013 and
March 31, 2013, respectively.
I Tangible book value per share of common stock is a non-GAAP
financial measure. Other companies may define or calculate this
measure differently. For reconciliation to GAAP financial measures,
refer to pages 22-23 of this press release.
Note: Chief Executive Officer Brian Moynihan and Chief Financial
Officer Bruce Thompson will discuss first-quarter 2014 results in a
conference call at 8:30 a.m. ET today. The presentation and
supporting materials can be accessed on the Bank of America
Investor Relations website at http://investor.bankofamerica.com. For a
listen-only connection to the conference call, dial 1.877.200.4456
(U.S.) or 1.785.424.1732 (international), and the conference ID is:
79795. Please dial in 10 minutes prior to the start of the
call.
A replay will be available via webcast through the Bank of
America Investor Relations website. A replay will also be available
beginning at noon on April 16 through midnight, April 24 by
telephone at 800.753.8546 (U.S.) or 1.402.220.0685
(international).
Bank of AmericaBank of America is one of the world's largest
financial institutions, serving individual consumers, small
businesses, middle-market businesses and large corporations with a
full range of banking, investing, asset management and other
financial and risk management products and services. The company
provides unmatched convenience in the United States, serving
approximately 49 million consumer and small business relationships
with approximately 5,100 retail banking offices and approximately
16,200 ATMs and award-winning online banking with 30 million active
users and more than 15 million mobile users. Bank of America is
among the world's leading wealth management companies and is a
global leader in corporate and investment banking and trading
across a broad range of asset classes, serving corporations,
governments, institutions and individuals around the world. Bank of
America offers industry-leading support to approximately 3 million
small business owners through a suite of innovative, easy-to-use
online products and services. The company serves clients through
operations in more than 40 countries. Bank of America Corporation
stock (NYSE: BAC) is listed on the New York Stock Exchange.
Forward-looking StatementsBank of America and its management may
make certain statements that constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements can be identified by the fact
that they do not relate strictly to historical or current facts.
Forward-looking statements often use words such as “anticipates,”
“targets,” “expects,” “hopes,” “estimates,” “intends,” “plans,”
“goals,” “believes,” “continue” and other similar expressions or
future or conditional verbs such as “will,” “may,” “might,”
“should,” “would” and “could.” The forward-looking statements made
represent Bank of America's current expectations, plans or
forecasts of its future results and revenues, and future business
and economic conditions more generally, and other matters. These
statements are not guarantees of future results or performance and
involve certain risks, uncertainties and assumptions that are
difficult to predict and are often beyond Bank of America's
control. Actual outcomes and results may differ materially from
those expressed in, or implied by, any of these forward-looking
statements.
You should not place undue reliance on any forward-looking
statement and should consider the following uncertainties and
risks, as well as the risks and uncertainties more fully discussed
under Item 1A. Risk Factors of Bank of America's 2013 Annual Report
on Form 10-K, and in any of Bank of America's subsequent Securities
and Exchange Commission filings: the Company's ability to resolve
representations and warranties repurchase claims made by monolines
and private-label and other investors, including as a result of any
adverse court rulings, and the chance that the Company could face
related servicing, securities, fraud, indemnity or other claims
from one or more counterparties, including monolines or
private-label and other investors; the possibility that final court
approval of negotiated settlements is not obtained; the possibility
that the court decision with respect to the BNY Mellon Settlement
is overturned on appeal in whole or in part; potential claims,
damages, penalties and fines resulting from pending or future
litigation and regulatory proceedings, including proceedings
instituted by the U.S. Department of Justice, state Attorneys
General and other members of the RMBS Working Group of the
Financial Fraud Enforcement Task Force concerning mortgage-related
matters; the possibility that the European Commission will impose
remedial measures in relation to its investigation of the Company's
competitive practices; the possible outcome of LIBOR, other
reference rate and foreign exchange inquiries and investigations;
the possibility that future representations and warranties losses
may occur in excess of the Company's recorded liability and
estimated range of possible loss for its representations and
warranties exposures; the possibility that the Company may not
collect mortgage insurance claims; the possibility that future
claims, damages, penalties and fines may occur in excess of the
Company’s recorded liability and estimated range of possible losses
for litigation exposures; uncertainties about the financial
stability and growth rates of non-U.S. jurisdictions, the risk that
those jurisdictions may face difficulties servicing their sovereign
debt, and related stresses on financial markets, currencies and
trade, and the Company's exposures to such risks, including direct,
indirect and operational; uncertainties related to the timing and
pace of Federal Reserve tapering of quantitative easing, and the
impact on global interest rates, currency exchange rates, and
economic conditions in a number of countries; the possibility of
future inquiries or investigations regarding pending or completed
foreclosure activities; the possibility that unexpected foreclosure
delays could impact the rate of decline of default-related
servicing costs; uncertainty regarding timing and the potential
impact of regulatory capital and liquidity requirements (including
Basel 3); the negative impact of the Dodd-Frank Wall Street Reform
and Consumer Protection Act on the Company's businesses and
earnings, including as a result of additional regulatory
interpretation and rulemaking and the success of the Company's
actions to mitigate such impacts; the potential impact of
implementing and conforming to the Volcker Rule; the potential
impact of future derivative regulations; adverse changes to the
Company's credit ratings from the major credit rating agencies;
estimates of the fair value of certain of the Company's assets and
liabilities; reputational damage that may result from negative
publicity, fines and penalties from regulatory violations and
judicial proceedings; the Company's ability to fully realize the
cost savings and other anticipated benefits from Project New BAC,
including in accordance with currently anticipated timeframes; a
failure in or breach of the Company’s operational or security
systems or infrastructure, or those of third parties with which we
do business, including as a result of cyber attacks; the impact on
the Company's business, financial condition and results of
operations of a potential higher interest rate environment; and
other similar matters.
Forward-looking statements speak only as of the date they are
made, and Bank of America undertakes no obligation to update any
forward-looking statement to reflect the impact of circumstances or
events that arise after the date the forward-looking statement was
made.
BofA Global Capital Management Group, LLC (BofA Global Capital
Management) is an asset management division of Bank of America
Corporation. BofA Global Capital Management entities furnish
investment management services and products for institutional and
individual investors.
Bank of America Merrill Lynch is the marketing name for the
global banking and global markets businesses of Bank of America
Corporation. Lending, derivatives and other commercial banking
activities are performed by banking affiliates of Bank of America
Corporation, including Bank of America, N.A., member FDIC.
Securities, financial advisory and other investment banking
activities are performed by investment banking affiliates of Bank
of America Corporation (Investment Banking Affiliates), including
Merrill Lynch, Pierce, Fenner & Smith Incorporated, which are
registered broker-dealers and members of FINRA and SIPC. Investment
products offered by Investment Banking Affiliates: Are Not FDIC
Insured * May Lose Value * Are Not Bank Guaranteed. Bank of America
Corporation's broker-dealers are not banks and are separate legal
entities from their bank affiliates. The obligations of the
broker-dealers are not obligations of their bank affiliates (unless
explicitly stated otherwise), and these bank affiliates are not
responsible for securities sold, offered or recommended by the
broker-dealers. The foregoing also applies to other non-bank
affiliates.
For more Bank of America news, visit the Bank of America
newsroom at http://newsroom.bankofamerica.com.
www.bankofamerica.com
Bank of America Corporation and Subsidiaries
Selected Financial Data
(Dollars in millions, except per share data; shares in thousands)
FirstQuarter 2014 FourthQuarter 2013
FirstQuarter 2013
Summary Income
Statement
Net interest income
$ 10,085 $ 10,786 $ 10,664
Noninterest income
12,481 10,702 12,533
Total revenue, net of interest expense
22,566 21,488 23,197
Provision for credit losses
1,009 336 1,713 Noninterest
expense
22,238 17,307 19,500 Income
(loss) before income taxes
(681 ) 3,845 1,984 Income
tax expense (benefit)
(405 ) 406 501
Net income (loss)
$ (276 ) $ 3,439 $
1,483 Preferred stock dividends
238 256
373 Net income (loss) applicable to common shareholders
$ (514 ) $ 3,183 $ 1,110
Common shares issued
24,925 624 44,116 Average common shares
issued and outstanding
10,560,518 10,633,030 10,798,975
Average diluted common shares issued and outstanding (1)
10,560,518 11,404,438 11,154,778
Summary Average
Balance Sheet
Total loans and leases
$ 919,482 $ 929,777 $ 906,259
Total debt securities
329,711 325,119 356,399 Total earning
assets
1,803,298 1,798,697 1,857,894 Total assets
2,139,266 2,134,875 2,212,430 Total deposits
1,118,178 1,112,674 1,075,280 Common shareholders' equity
223,201 220,088 218,225 Total shareholders' equity
236,553 233,415 236,995
Performance
Ratios
Return on average assets
n/m 0.64 % 0.27 % Return on average
tangible shareholders' equity (2)
n/m 8.53 3.69
Per common share
information
Earnings (loss)
$ (0.05 ) $ 0.30 $ 0.10
Diluted earnings (loss) (1)
(0.05 ) 0.29 0.10
Dividends paid
0.01 0.01 0.01 Book value
20.75 20.71
20.19 Tangible book value (2)
13.81 13.79 13.36
March 31 2014 December 312013 March 312013
Summary
Period-End Balance Sheet
Total loans and leases
$ 916,217 $ 928,233 $ 911,592
Total debt securities
340,696 323,945 354,709 Total earning
assets
1,812,832 1,763,149 1,831,256 Total assets
2,149,851 2,102,273 2,174,819 Total deposits
1,133,650 1,119,271 1,095,183 Common shareholders' equity
218,536 219,333 218,513 Total shareholders' equity
231,888 232,685 237,293 Period-end common shares issued and
outstanding
10,530,045 10,591,808 10,822,380
Credit
Quality
FirstQuarter 2014 FourthQuarter 2013 FirstQuarter
2013 Total net charge-offs
$ 1,388 $ 1,582 $ 2,517
Net charge-offs as a percentage of average loans and leases
outstanding (3)
0.62 % 0.68 % 1.14 % Provision for
credit losses
$ 1,009 $ 336 $ 1,713
March
31 2014 December 312013 March 312013 Total nonperforming
loans, leases and foreclosed properties (4)
$ 17,732
$ 17,772 $ 22,842 Nonperforming loans, leases and foreclosed
properties as a percentage of total loans, leases and foreclosed
properties (3)
1.96 % 1.93 % 2.53 % Allowance for
loan and lease losses
$ 16,618 $ 17,428 $ 22,441
Allowance for loan and lease losses as a percentage of total loans
and leases outstanding (3)
1.84 % 1.90 % 2.49 %
Bank of America Corporation and Subsidiaries
Selected Financial Data (continued) (Dollars
in millions)
Basel 3 Transition Basel 1
Capital
Management
March 31 2014 December 312013 March 312013
Risk-based capital metrics (5, 6): Common
equity tier 1 capital (7)
$ 151,642 n/a n/a Tier 1
common capital
n/a $ 145,235 $ 136,119 Common equity tier 1
capital ratio
11.8 % n/a n/a Tier 1 common capital
ratio (8)
n/a 11.2 % 10.5 % Tier 1 leverage ratio
7.6
7.9 7.5 Tangible equity ratio (9)
7.65 7.86 7.78
Tangible common equity ratio (9)
7.00 7.20 6.88
Regulatory
Capital Reconciliations (6, 10)
December 312013 March 312013
Regulatory capital – Basel 1 to
Basel 3 (fully phased-in) Basel 1 Tier 1 capital $
161,456 $ 158,677 Deduction of qualifying preferred stock and trust
preferred securities (16,221 ) (22,558 )
Basel 1 Tier 1 common
capital 145,235 136,119 Deduction of defined benefit pension
assets (829 ) (776 ) Deferred tax assets and threshold deductions
(deferred tax asset temporary differences, MSRs and significant
investments) (4,803 ) (4,501 ) Net unrealized losses in accumulated
OCI on AFS debt and certain marketable equity securities, and
employee benefit plans (5,668 ) (372 ) Other deductions, net (1,620
) (1,660 )
Basel 3 common equity tier 1 capital (fully
phased-in) $ 132,315 $ 128,810
March
31 2014 Regulatory capital – Basel 3 transition to
fully phased-in Common equity tier 1 capital
(transition) $ 151,642 Adjustments and deductions
recognized in Tier 1 capital during transition
(9,284
) Other adjustments and deductions phased in during
transition
(8,197 ) Common equity tier 1 capital
(fully phased-in) $ 134,161
March 31 2014 December 312013 March 312013
Risk-weighted assets – As reported to Basel 3 (fully
phased-in) As reported risk weighted assets $
1,282,492 $ 1,297,534 $ 1,298,187 Change in risk-weighted
assets from reported to fully phased-in
165,596
164,449
Basel 3 Standardized approach risk-weighted
assets (fully phased-in) 1,448,088 1,461,983 Change in
risk-weighted assets for advanced models
(86,201 )
(132,939 ) 55,454
Basel 3 Advanced approaches
risk-weighted assets (fully phased-in) $
1,361,887 $ 1,329,044 $ 1,353,641
Regulatory capital ratios Basel 1 Tier 1 common
n/a 11.2 % 10.5 % Basel 3 Standardized approach common
equity tier 1 (transition)
11.8 % n/a n/a Basel 3
Standardized approach common equity tier 1 (fully phased-in)
9.3 9.1 n/a Basel 3 Advanced approaches common equity tier 1
(fully phased-in)
9.9 10.0 9.5
(1) The diluted earnings (loss) per common share excludes the
effect of any equity instruments that are antidilutive to earnings
per share. The number of antidilutive equity instruments was higher
in the first quarter of 2014 due to the net loss.
(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 21-23.
(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 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.)
(5) Regulatory capital ratios are preliminary until filed with
the Federal Reserve on Form Y-9C.)
(6) On January 1, 2014, the Basel 3 rules became effective,
subject to transition provisions primarily related to regulatory
deductions and adjustments impacting common equity tier 1 capital
and Tier 1 capital. We reported under Basel 1 (which included the
Market Risk Final Rules) at December 31, 2013 and March 31,
2013.)
(7) On a pro-forma basis, under the transition provisions for
the Basel 3 Standardized approach (Basel 3 Standardized
transition), fourth quarter 2013 common equity tier 1 capital and
risk-weighted assets would have been $153,502 million and
$1,315,994 million.
(8) 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.)
(9) Tangible equity ratio equals period-end tangible
shareholders' equity divided by period-end tangible assets.
Tangible common equity ratio equals period-end tangible common
shareholders' equity divided by period-end tangible assets.
Tangible shareholders' equity and tangible assets are non-GAAP
financial measures. We believe the use of these non-GAAP financial
measures provides additional clarity in assessing the results of
the Corporation. Other companies may define or calculate non-GAAP
financial measures differently. See Reconciliations to GAAP
Financial Measures on pages 21-23.
(10) Based on the Basel 3 Advanced approaches, assuming all
regulatory model approvals, except for the potential reduction to
risk-weighted assets resulting from the removal of the
Comprehensive Risk Measure surcharge.)
Bank of America Corporation and Subsidiaries Quarterly
Results by Business Segment (Dollars in millions)
First Quarter 2014
Consumer &
Business
Banking
Consumer
Real Estate
Services
GWIM Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1)
$
7,438 $ 1,192 $ 4,547 $
4,269 $ 5,015 $ 306 Provision
for credit losses
812 25 23 265
19 (135 ) Noninterest expense
3,975
8,129 3,359 2,028 3,078 1,669
Net income (loss)
1,658 (5,027 ) 729
1,236 1,310 (182 ) Return on average
allocated capital (2)
22.81 % n/m 24.74
% 16.18 % 15.65 % n/m
Balance
Sheet
Average Total loans and leases
$ 162,042
$ 88,914 $ 115,945 $
271,475 $ 63,696 $ 217,410 Total
deposits
534,576 n/m 242,792 256,349
n/m 34,152 Allocated capital (2)
29,500
23,000 12,000 31,000 34,000 n/m
Period end Total loans and leases
$ 160,116
$ 88,355 $ 116,482 $
273,239 $ 64,598 $ 213,427 Total
deposits
552,256 n/m 244,051 257,437
n/m 32,403 Fourth Quarter 2013
Consumer &
Business
Banking
Consumer
Real Estate
Services
GWIM Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,498 $
1,712 $ 4,479 $ 4,303 $ 3,210 $ 499 Provision for credit losses 427
(474 ) 26 441 104 (188 ) Noninterest expense 4,051 3,788 3,263
1,926 3,280 999 Net income (loss) 1,962 (1,058 ) 777 1,266 (43 )
535 Return on average allocated capital (2) 25.96 % n/m 30.99 %
21.84 % n/m n/m
Balance
Sheet
Average Total loans and leases $ 163,152 $ 89,687 $ 115,546
$ 268,849 $ 66,494 $ 226,049 Total deposits 528,808 n/m 240,395
259,122 n/m 34,029 Allocated capital (2) 30,000 24,000 10,000
23,000 30,000 n/m
Period end Total loans and leases $
165,090 $ 89,753 $ 115,846 $ 269,469 $ 67,381 $ 220,694 Total
deposits 531,707 n/m 244,901 265,102 n/m 27,701 First
Quarter 2013
Consumer &
Business
Banking
Consumer
Real Estate
Services
GWIM Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,412 $
2,312 $ 4,421 $ 4,030 $ 4,780 $ 453 Provision for credit losses 952
335 22 149 5 250 Noninterest expense 4,155 5,405 3,252 1,842 3,074
1,772 Net income (loss) 1,448 (2,156 ) 721 1,281 1,112 (923 )
Return on average allocated capital (2) 19.61 % n/m 29.41 % 22.59 %
15.06 % n/m
Balance
Sheet
Average Total loans and leases $ 165,845 $ 92,963 $ 106,082
$ 244,068 $ 52,744 $ 244,557 Total deposits 502,508 n/m 253,413
221,275 n/m 35,550 Allocated capital (2) 30,000 24,000 10,000
23,000 30,000 n/m
Period end Total loans and leases $
163,820 $ 90,971 $ 107,048 $ 250,985 $ 57,362 $ 241,406 Total
deposits 530,581 n/m 239,853 227,379 n/m 35,758 (1) Fully
taxable-equivalent basis is a performance measure used by
management in operating the business that management believes
provides investors with a more accurate picture of the interest
margin for comparative purposes. (2) Return on average allocated
capital is calculated as net income, adjusted for cost of funds and
earnings credits and certain expenses related to intangibles,
divided by average allocated capital. Allocated capital and the
related return are non-GAAP financial measures. The Corporation
believes the use of these non-GAAP financial measures provides
additional clarity in assessing the results of the segments. Other
companies may define or calculate these measures differently. (See
Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP
Financial Measures on pages 21-23.)
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)
FirstQuarter 2014 FourthQuarter 2013 FirstQuarter
2013 Net interest income
$ 10,286 $ 10,999 $ 10,875
Total revenue, net of interest expense
22,767 21,701 23,408
Net interest yield (2)
2.29 % 2.44 % 2.36 %
Efficiency ratio
97.68 79.75 83.31
Other
Data
March 31 2014 December 312013 March 312013 Number of
banking centers - U.S.
5,095 5,151 5,389 Number of branded
ATMs - U.S.
16,214 16,259 16,311 Ending full-time equivalent
employees
238,560 242,117 262,812
(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
21-23.
(2) Beginning in the first quarter of
2014, interest-bearing deposits placed with the Federal Reserve and
certain non-U.S. central banks are included in earning assets.
Prior period yields have been reclassified to conform to current
period presentation.
Certain prior period amounts have been reclassified to conform
to current period presentation.
Bank of America Corporation and Subsidiaries
Reconciliations to GAAP Financial Measures (Dollars in
millions)
The Corporation evaluates its business based on a fully
taxable-equivalent basis, a non-GAAP financial measure. The
Corporation believes managing the business with net interest income
on a fully taxable-equivalent basis provides a more accurate
picture of the interest margin for comparative purposes. Total
revenue, net of interest expense, includes net interest income on a
fully taxable-equivalent basis and noninterest income. The
Corporation views related ratios and analyses (i.e., efficiency
ratios and net interest yield) on a fully taxable-equivalent basis.
To derive the fully taxable-equivalent basis, net interest income
is adjusted to reflect tax-exempt income on an equivalent
before-tax basis with a corresponding increase in income tax
expense. For purposes of this calculation, the Corporation uses the
federal statutory tax rate of 35 percent. This measure ensures
comparability of net interest income arising from taxable and
tax-exempt sources. The efficiency ratio measures the costs
expended to generate a dollar of revenue, and net interest yield
measures the basis points the Corporation earns over the cost of
funds.
The Corporation also evaluates its business based on the
following ratios that utilize tangible equity, a non-GAAP financial
measure. Tangible equity represents an adjusted shareholders'
equity or common shareholders' equity amount which has been reduced
by goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities. Return on average
tangible common shareholders' equity measures the Corporation's
earnings contribution as a percentage of adjusted average common
shareholders' equity. The tangible common equity ratio represents
adjusted ending common shareholders' equity divided by total assets
less goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities. Return on average
tangible shareholders' equity measures the Corporation's earnings
contribution as a percentage of adjusted average total
shareholders' equity. The tangible equity ratio represents adjusted
ending shareholders' equity divided by total assets less goodwill
and intangible assets (excluding mortgage servicing rights), net of
related deferred tax liabilities. Tangible book value per common
share represents adjusted ending common shareholders' equity
divided by ending common shares outstanding. These measures are
used to evaluate the Corporation's use of equity. In addition,
profitability, relationship and investment models all use return on
average tangible shareholders' equity as key measures to support
our overall growth goals.
In addition, the Corporation evaluates its business segment
results based on measures that utilize average allocated capital.
The Corporation allocates capital to its business segments using a
methodology that considers the effect of regulatory capital
requirements in addition to internal risk-based capital models. The
Corporation's internal risk-based capital models use a
risk-adjusted methodology incorporating each segment's credit,
market, interest rate, business and operational risk components.
Return on average allocated capital is calculated as net income,
adjusted for cost of funds and earnings credits and certain
expenses related to intangibles, divided by average allocated
capital. Allocated capital and the related return both represent
non-GAAP financial measures. Allocated capital is reviewed
periodically and refinements are made based on multiple
considerations that include, but are not limited to, business
segment exposures and risk profile, regulatory constraints and
strategic plans. As part of this process, in the first quarter of
2014, the Corporation adjusted the amount of capital being
allocated to its business segments. This change resulted in a
reduction of the unallocated capital, which is reflected in All
Other, and an aggregate increase to the amount of capital being
allocated to the business segments. Prior periods were not
restated.
See the tables below and on pages 22-23 for reconciliations of
these non-GAAP financial measures to financial measures defined by
GAAP for the three months ended March 31, 2014,
December 31, 2013 and March 31, 2013. The Corporation
believes the use of these non-GAAP financial measures provides
additional clarity in assessing the results of the Corporation.
Other companies may define or calculate supplemental financial data
differently.
FirstQuarter 2014 FourthQuarter 2013
FirstQuarter 2013
Reconciliation of
net interest income to net interest income on a fully
taxable-equivalent basis
Net interest income
$ 10,085 $ 10,786 $ 10,664
Fully taxable-equivalent adjustment
201 213
211
Net interest income on a fully taxable-equivalent
basis $ 10,286 $ 10,999 $ 10,875
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
$
22,566 $ 21,488 $ 23,197 Fully taxable-equivalent adjustment
201 213 211
Total revenue, net of
interest expense on a fully taxable-equivalent basis $
22,767 $ 21,701 $ 23,408
Reconciliation of
income tax expense (benefit) to income tax expense (benefit) on a
fully taxable-equivalent basis
Income tax expense (benefit)
$ (405 ) $
406 $ 501 Fully taxable-equivalent adjustment
201 213
211
Income tax expense (benefit) on a fully
taxable-equivalent basis $ (204 ) $ 619
$ 712
Reconciliation of
average common shareholders' equity to average tangible common
shareholders' equity
Common shareholders' equity
$ 223,201 $
220,088 $ 218,225 Goodwill
(69,842 ) (69,864 )
(69,945 ) Intangible assets (excluding mortgage servicing rights)
(5,474 ) (5,725 ) (6,549 ) Related deferred tax
liabilities
2,165 2,231 2,425
Tangible common shareholders' equity $ 150,050
$ 146,730 $ 144,156
Reconciliation of
average shareholders' equity to average tangible shareholders'
equity
Shareholders' equity
$ 236,553 $ 233,415 $
236,995 Goodwill
(69,842 ) (69,864 ) (69,945 )
Intangible assets (excluding mortgage servicing rights)
(5,474 ) (5,725 ) (6,549 ) Related deferred tax
liabilities
2,165 2,231 2,425
Tangible shareholders' equity $ 163,402
$ 160,057 $ 162,926
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)
FirstQuarter 2014 FourthQuarter 2013 FirstQuarter
2013
Reconciliation of
period-end common shareholders' equity to period-end tangible
common shareholders' equity
Common shareholders' equity
$ 218,536 $
219,333 $ 218,513 Goodwill
(69,842 ) (69,844 )
(69,930 ) Intangible assets (excluding mortgage servicing rights)
(5,337 ) (5,574 ) (6,379 ) Related deferred tax
liabilities
2,100 2,166 2,363
Tangible common shareholders' equity $ 145,457
$ 146,081 $ 144,567
Reconciliation of
period-end shareholders' equity to period-end tangible
shareholders' equity
Shareholders' equity
$ 231,888 $ 232,685 $
237,293 Goodwill
(69,842 ) (69,844 ) (69,930 )
Intangible assets (excluding mortgage servicing rights)
(5,337 ) (5,574 ) (6,379 ) Related deferred tax
liabilities
2,100 2,166 2,363
Tangible shareholders' equity $ 158,809
$ 159,433 $ 163,347
Reconciliation of
period-end assets to period-end tangible assets
Assets
$ 2,149,851 $ 2,102,273 $ 2,174,819
Goodwill
(69,842 ) (69,844 ) (69,930 ) Intangible
assets (excluding mortgage servicing rights)
(5,337 )
(5,574 ) (6,379 ) Related deferred tax liabilities
2,100
2,166 2,363
Tangible assets $
2,076,772 $ 2,029,021 $ 2,100,873
Book value per
share of common stock
Common shareholders' equity
$ 218,536 $
219,333 $ 218,513 Ending common shares issued and outstanding
10,530,045 10,591,808 10,822,380
Book value per share of
common stock $ 20.75 $ 20.71 $ 20.19
Tangible book
value per share of common stock
Tangible common shareholders' equity
$ 145,457
$ 146,081 $ 144,567 Ending common shares issued and outstanding
10,530,045 10,591,808 10,822,380
Tangible book value per
share of common stock $ 13.81 $ 13.79 $ 13.36
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)
FirstQuarter 2014 FourthQuarter 2013 FirstQuarter
2013
Reconciliation of
return on average allocated capital (1)
Consumer &
Business Banking
Reported net income
$ 1,658 $ 1,962 $ 1,448
Adjustment related to intangibles (2)
1 1 2
Adjusted net income $ 1,659 $
1,963 $ 1,450 Average allocated equity (3)
$ 61,483 $ 62,007 $ 62,084 Adjustment related to
goodwill and a percentage of intangibles
(31,983 )
(32,007 ) (32,084 )
Average allocated capital $
29,500 $ 30,000 $ 30,000
Global Wealth
& Investment Management
Reported net income
$ 729 $ 777 $ 721
Adjustment related to intangibles (2)
3 4 4
Adjusted net income $ 732 $ 781
$ 725 Average allocated equity (3)
$
22,243 $ 20,265 $ 20,323 Adjustment related to goodwill and
a percentage of intangibles
(10,243 ) (10,265 )
(10,323 )
Average allocated capital $ 12,000
$ 10,000 $ 10,000
Global
Banking
Reported net income
$ 1,236 $ 1,266 $ 1,281
Adjustment related to intangibles (2)
— — 1
Adjusted net income $ 1,236 $
1,266 $ 1,282 Average allocated equity (3)
$ 53,407 $ 45,410 $ 45,406 Adjustment related to
goodwill and a percentage of intangibles
(22,407 )
(22,410 ) (22,406 )
Average allocated capital $
31,000 $ 23,000 $ 23,000
Global
Markets
Reported net income (loss)
$ 1,310 $ (43 ) $
1,112 Adjustment related to intangibles (2)
2 2
2
Adjusted net income (loss) $
1,312 $ (41 ) $ 1,114 Average allocated
equity (3)
$ 39,377 $ 35,380 $ 35,372 Adjustment
related to goodwill and a percentage of intangibles
(5,377
) (5,380 ) (5,372 )
Average allocated capital
$ 34,000 $ 30,000 $ 30,000
(1) There are no adjustments to reported net income (loss) or
average allocated equity for Consumer Real Estate Services.
(2) Represents cost of funds, earnings credits and certain
expenses related to intangibles.
(3) Average allocated equity is comprised of average allocated
capital plus capital for the portion of goodwill and intangibles
specifically assigned to the business segment.
Certain prior period amounts have been reclassified to conform
to current period presentation.
This information is preliminary and based on
company data available at the time of the presentation.
Investors May Contact:Anne Walker, Bank of America,
1.646.855.3644Lee McEntire, Bank of America, 1.980.388.6780Jonathan
Blum, Bank of America (Fixed Income), 1.212.449.3112Reporters May
Contact:Jerry Dubrowski, Bank of America,
1.980.388.2840jerome.f.dubrowski@bankofamerica.com
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