Strong Pretax, Pre-provision Income of $16 Billion Another Good
Quarter in Capital Markets and Home Loans Enhanced Capital
Strength, Tier 1 Capital Ratio at 11.93 Percent Extends More Than
$211 Billion in Credit in the Second Quarter Adds $4.7 Billion to
Credit Loss Reserves CHARLOTTE, N.C., July 17 /PRNewswire/ -- Bank
of America Corporation today reported second-quarter 2009 net
income of $3.2 billion. After deducting preferred dividends of $805
million, including $713 million paid to the U.S. government,
diluted earnings per share were $0.33. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b ) Those
results compared with net income of $3.4 billion, or diluted
earnings per share of $0.72 during the year-ago period. For the
first half of 2009, Bank of America earned $7.5 billion, or $0.75
per share. Results were driven by continued strong revenue
performance in the wholesale capital markets businesses as well as
in home loans, complemented by the previously announced gains on
the sale of China Construction Bank (CCB) shares and the sale of
the company's merchant processing business to a joint venture.
These positives were somewhat offset by continuing high credit
costs, including additions to the reserve for loan and lease
losses, as well as significant negative credit valuation
adjustments on certain liabilities including the Merrill Lynch
structured notes and the impact of a special Federal Deposit
Insurance Corp. (FDIC) assessment. Bank of America finished the
second quarter with its strongest capital position in recent
memory, with a Tier 1 Capital ratio of 11.93 percent as well as a
leading liquidity position among global banks. "Having positive net
income in an extremely challenging environment speaks to the
diversity and strength of our business model as well as the
extraordinary effort put forth by all of our associates," said
Kenneth D. Lewis, chief executive officer and president. "Our goals
during this difficult time have been to enhance the strength of our
balance sheet and capital position and to continue to improve our
earning power while dealing with the credit issues facing our
industry due to the recession. "Difficult challenges lie ahead from
continued weakness in the global economy, rising unemployment and
deteriorating credit quality that will affect our performance for
the rest of the year and into 2010," Lewis said. "However, we are
convinced that Bank of America will weather the storm and emerge as
an acknowledged leader in financial services in the United States
and around the world." "Most importantly, we continue to serve our
customers and clients around the world every day, helping them with
their accounts, meeting their financial needs and adding new
business," Lewis added. Second Quarter 2009 Business Highlights --
Bank of America increased its Tier 1 common capital by nearly $40
billion through multiple actions during the quarter that included
issuing shares of common stock, exchanging certain non-government
preferred stock for common stock, and asset sales. -- Bank of
America Merrill Lynch ranked No. 1 in high-yield debt and leveraged
loans based on volume, and the firm was No. 2 and No. 3,
respectively, in U.S. and global investment banking fees for the
first half of 2009, according to second quarter league tables. --
Sales and trading revenue, excluding credit valuation adjustments
on derivative liabilities and market disruption charges, rose to a
record $6.7 billion. -- During the quarter, Bank of America
announced the sale of its merchant processing business to a joint
venture, which included First Data Corp. The transaction is
expected to deliver next-generation payments solutions to
merchants. -- Bank of America funded $110.6 billion in first
mortgages, helping nearly 500,000 people either purchase a home or
refinance their existing mortgage, including $24.3 billion in
mortgages made to 154,000 low- and moderate-income borrowers.
Approximately 29 percent of first mortgages were for purchases. --
Credit extended during the quarter, including commercial renewals
of $55 billion, was more than $211 billion, compared with $183
billion in the first quarter. New credit included $111 billion in
mortgages, $78 billion in commercial non-real estate, approximately
$9 billion in commercial real estate, $4 billion in domestic and
small business card, $4 billion in home equity products and more
than $5 billion in other consumer credit.(1) -- During the second
quarter, Small Business Banking extended more than $580 million in
new credit comprised of credit cards, loans and lines of credit to
more than 35,000 customers. -- To help homeowners avoid
foreclosure, Bank of America has provided rate relief or agreed to
modifications with approximately 150,000 customers for the first
six months of 2009, compared with more than 230,000 for all of 2008
for Bank of America and Countrywide. In addition, approximately
80,000 Bank of America customers are already in a trial period
modification or were in the process of responding to an offer under
the Making Home Affordable program through mid-July. -- Average
retail deposits in the quarter increased $136.3 billion, or 26
percent, from a year earlier, including $104.3 billion in balances
from Merrill Lynch and Countrywide. Excluding Countrywide and
Merrill Lynch, Bank of America grew retail deposits $32.0 billion,
or 6 percent, from the year-ago quarter. (1) Preliminary data as of
July 17, 2009 Transition Update The Merrill Lynch integration is on
track and meeting expected goals. The company in 2009 expects to
achieve in excess of 40 percent of the previously announced goal of
approximately $7 billion in cost savings, ahead of the original
goal of 25 percent for the year. Since June 1, approximately 6,500
affluent banking-only clients in Bank of America have been referred
to Merrill Lynch financial advisors. Of that group, approximately
1,400 now have added an investment relationship with the company.
Merrill Lynch financial advisors referred more than 1,100 clients
to the commercial bank of Bank of America. The Countrywide
transition and related cost savings are on track. The new Bank of
America Home Loans and Insurance brand was introduced to consumers
during the quarter as part of the transition. Second Quarter 2009
Financial Summary Revenue and Expense Revenue net of interest
expense on a fully taxable-equivalent basis rose 60 percent to
$33.1 billion compared with $20.7 billion a year ago. Net interest
income on a fully taxable-equivalent basis rose 9 percent to $11.9
billion from $10.9 billion in the second quarter of 2008 due to an
improved rate environment and the addition of Countrywide and
Merrill Lynch. These improvements were partially offset by a shift
in loan mix and the sale of securities. Net interest yield narrowed
28 basis points to 2.64 percent due to the addition of lower
yielding assets from Countrywide and Merrill Lynch, sales of
securities, and a shift in loan mix, partially offset by the
favorable rate environment. Noninterest income rose to $21.1
billion from $9.8 billion a year earlier. Higher mortgage banking
income, trading account profits and investment and brokerage
services income reflected the addition of Merrill Lynch and
Countrywide. Additionally, the increase was driven by a $5.3
billion pretax gain on the sale of CCB shares. Bank of America
continues to own approximately 11 percent of the common shares of
CCB. Noninterest income in the period also included a $3.8 billion
pretax gain from the completed sale of the merchant processing
business to a joint venture. These increases were partially offset
by $3.6 billion in losses related to mark-to-market adjustments
including the Merrill Lynch structured notes as a result of
narrowing credit spreads during the quarter. Card income declined
due to higher credit losses on securitized credit card loans and
lower fee income. Noninterest expense increased to $17.0 billion
from $9.7 billion a year earlier. This reflects higher personnel
and general operating expenses, driven in part by the Merrill Lynch
and Countrywide acquisitions and the FDIC special assessment.
Pretax merger and restructuring charges rose to $829 million from
$212 million a year earlier. The efficiency ratio on a fully
taxable-equivalent basis was 51.44 percent compared with 46.60
percent a year earlier. Pretax, pre-provision income on a
fully-taxable equivalent basis was $16.1 billion compared with
$11.1 billion a year earlier. Credit Quality Credit quality
deteriorated further as the economic environment weakened.
Consumers remained under significant stress as unemployment and
underemployment increased and individuals spent longer periods
without work. These conditions led to higher losses in almost all
consumer portfolios compared with the prior quarter. Declining home
values and reduced spending by consumers and businesses negatively
impacted the commercial portfolios resulting in broad-based
increases in criticized and nonperforming loans. Commercial loan
losses rose from the prior quarter as commercial domestic and small
business portfolios were impacted in sectors dependent on
discretionary consumer spending. Losses in the commercial real
estate portfolio also increased. The provision for credit losses
was $13.4 billion, flat with the first quarter. Credit losses were
higher than the prior quarter and reserves, which were increased by
$4.7 billion, were added across most consumer portfolios and the
commercial portfolio reflecting the impact of the weak economy.
Nonperforming assets were $31.0 billion compared with $25.6 billion
at March 31, 2009, reflecting the continued deterioration in
economic conditions. The 2009 coverage ratios and amounts shown in
the following table include Merrill Lynch. Credit Quality (Dollars
in millions) Q2 2009 Q1 2009 Q2 2008 --------------------- -------
------- ------- Provision for credit losses $13,375 $13,380 $5,830
Net Charge-offs 8,701 6,942 3,619 Net Charge-off ratios(1) 3.64%
2.85% 1.67% Total managed net losses $11,684 $9,124 $5,262 Total
managed net loss ratio(1) 4.42% 3.40% 2.16% At 6/30/09 At 3/31/09
At 6/30/08 ---------- ---------- ---------- Nonperforming assets
$30,982 $25,632 $9,749 Nonperforming assets ratio(2) 3.31% 2.64%
1.13% Allowance for loan and lease losses $33,785 $29,048 $17,130
Allowance for loan and lease losses ratio(3) 3.61% 3.00% 1.98% (1)
Net charge-off/loss ratios are calculated as annualized held net
charge-offs or managed net losses divided by average outstanding
held or managed loans and leases during the period. (2)
Nonperforming assets ratios are calculated as nonperforming assets
divided by outstanding loans, leases and foreclosed properties at
the end of the period. (3) Allowance for loan and lease losses
ratios are calculated as allowance for loan and leases losses
divided by loans and leases outstanding at the end of the period.
Note: Ratios do not include loans measured at fair value in
accordance with SFAS 159. Capital Management Total shareholders'
equity was $255.2 billion at June 30. Period-end assets were $2.3
trillion. The Tier 1 Capital ratio was 11.93 percent, up from 10.09
percent at March 31, 2009 and from 8.25 percent a year ago. The
Tier 1 Common ratio was 6.90 percent, compared with 4.49 percent at
March 31, 2009 and 4.78 percent at June 30, 2008. The Tangible
Common Equity ratio was 4.67 percent, up from 3.13 percent at March
31, 2009 and 3.24 percent a year earlier. Tangible book value per
share of common stock was $11.66, compared with $10.88 at March 31,
2009 and $11.87 a year earlier. During the quarter the bank
increased its Tier 1 common capital by nearly $40 billion, easily
exceeding the $33.9 billion Supervisory Capital Assessment Program
(SCAP) buffer set by the Federal Reserve in May. Actions
contributing toward that goal during the quarter included: issuing
shares of common stock; exchanging certain non-government preferred
stock for common stock; the sale of a portion of shares in CCB; and
the sale of the company's merchant processing business to a joint
venture. During the quarter, Bank of America issued 1.25 billion,
or $13.5 billion, of common shares. Bank of America exchanged the
equivalent of $14.8 billion of non-government preferred shares for
approximately 1 billion shares of common stock through private
exchanges and a tender offer. A cash dividend of $0.01 per common
share was paid. The company recorded $1.4 billion in preferred
dividends, partially offset by $576 million related to the exchange
of preferred stock in the calculation of net income available to
common shareholders. Period-end common shares issued and
outstanding were 8.65 billion for the second quarter of 2009, 6.40
billion for the first quarter of 2009 and 4.45 billion for the
year-ago quarter. Second Quarter 2009 Business Segment Results
Deposits (Dollars in millions) Q2 2009 Q2 2008 --------------------
------- ------- Total revenue, net of interest expense(1) $3,495
$4,400 Provision for credit losses 96 89 Noninterest expense 2,649
2,324 Net income 505 1,238 Efficiency ratio(1) 75.80% 52.82% Return
on average equity 8.58 20.30 Deposits(2) $417,114 $337,253 At
6/30/09 At 6/30/08 ---------- ---------- Period-ending deposits
$423,192 $336,136 (1) Fully taxable-equivalent basis (2) Balances
averaged for period Deposits net income fell 59 percent from a year
ago on lower revenue and higher noninterest expense. Revenue
declined as a result of lower residual net interest income
allocation related to asset and liability management activities and
spread compression due to declining interest rates. Noninterest
expense rose mainly from the FDIC special assessment. Average
customer deposits rose 24 percent, or $79.9 billion, from a year
earlier on strong organic growth, the transfer of client deposits
from Global Wealth and Investment Management and the acquisition of
Countrywide. Global Card Services (Dollars in millions) Q2 2009 Q2
2008 -------------------- ------- ------- Total managed revenue,
net of interest expense(1),(2) $7,337 $7,500 Provision for credit
losses(3) 7,741 4,259 Noninterest expense 1,976 2,375 Net income
(loss) (1,618) 582 Efficiency ratio(2) 26.93% 31.67% Return on
average equity n/m 6.01 Managed loans(4) $220,365 $238,918 At
6/30/09 At 6/30/08 ---------- ---------- Period-ending loans
$215,904 $240,617 (1) Managed basis. Managed basis assumes that
credit card loans that have been securitized were not sold and
presents earnings on these loans in a manner similar to the way
loans that have not been sold (i.e., held loans) are presented. For
more information and detailed reconciliation, please refer to the
data pages supplied with this press release. (2) Fully
taxable-equivalent basis (3) Represents provision for credit losses
on held loans combined with realized credit losses associated with
the securitized credit card loan portfolio (4) Balances averaged
for period n/m = not meaningful Global Card Services swung to a net
loss of $1.6 billion as credit costs rose in the weakening
economies in the U.S., Europe and Canada. Managed net revenue
declined 2 percent to $7.3 billion mainly due to lower fee income
partially offset by higher net interest income, as lower funding
costs outpaced the decline in average managed loans. Provision
expense increased to $7.7 billion from a year earlier as the
consumer card and consumer lending portfolios deteriorated due to
the economic conditions and a rising level of bankruptcies. Also
contributing were reserve additions related to maturing
securitizations. Noninterest expense fell 17 percent on lower
operating and marketing costs. Home Loans and Insurance (Dollars in
millions) Q2 2009 Q2 2008 -------------------- ------- -------
Total revenue, net of interest expense(1) $4,461 $1,261 Provision
for credit losses 2,726 2,034 Noninterest expense 2,829 732 Net
income (loss) (725) (948) Efficiency ratio(1) 63.41% 58.02% Return
on average equity n/m n/m Loans(2) $131,509 $91,199 At 6/30/09 At
6/30/08 ---------- ---------- Period-ending loans $131,120 $92,064
(1) Fully taxable-equivalent basis (2) Balances averaged for period
n/m = not meaningful The net loss in Home Loans and Insurance
narrowed as higher revenue was mostly offset by increased credit
costs and noninterest expense. Net revenue rose mainly due to the
acquisition of Countrywide and higher mortgage banking income as
lower interest rates spurred an increase in refinance activity. The
provision for credit losses increased to $2.7 billion driven by
economic weakness and falling home prices. Noninterest expense
increased to $2.8 billion mostly due to the acquisition of
Countrywide. Global Banking (Dollars in millions) Q2 2009 Q2 2008
-------------------- ------- ------- Total revenue, net of interest
expense(1) $8,658 $4,455 Provision for credit losses 2,584 400
Noninterest expense 2,232 1,747 Net income 2,487 1,433 Efficiency
ratio(1) 25.78% 39.24% Return on average equity 16.50 11.85 Loans
and leases(2) $323,217 $315,282 Deposits(2) 199,879 169,738 (1)
Fully taxable-equivalent basis (2) Balances averaged for period
Global Banking net income rose to $2.5 billion, benefitting from a
$3.8 billion pretax gain generated by the sale of the company's
merchant processing business to a joint venture, the addition of
Merrill Lynch and strong deposit growth. Higher revenue was
partially offset by the challenging credit environment and the FDIC
special assessment. The provision for credit losses increased to
$2.6 billion, driven by loan loss reserve increases and higher
losses within the commercial domestic portfolio, which were across
a broad range of borrowers and industries. Also contributing to the
increase were higher losses and reserve additions in the commercial
real estate portfolio for deterioration across various property
types. -- Corporate Banking and Investment Banking revenue rose 28
percent to $2.0 billion as a result of the Merrill Lynch
acquisition, strong fee growth from debt and equity capital
markets, higher deposits and a change in deposit mix. These
increases were more than offset by higher credit costs and the FDIC
special assessment. -- Commercial Banking revenue, excluding the
$3.8 billion pretax gain associated with the sale of the merchant
processing business to a joint venture, was $2.9 billion as credit
and deposit net interest margins improved, offset by lower residual
net interest income. Net income was negatively impacted by higher
credit costs and the FDIC special assessment. -- Note: Total
investment banking income, including self-led deals, in the quarter
of $1.7 billion is shared primarily between Global Banking and
Global Markets based on an internal fee-sharing arrangement between
the two segments. Debt and Equity issuance income led to an
increase from the year-ago quarter, while advisory fees increased
83 percent, reflecting the larger investment banking platform from
the Merrill Lynch acquisition. Global Markets (Dollars in millions)
Q2 2009 Q2 2008 -------------------- ------- ------- Total revenue,
net of interest expense(1) $4,452 $1,378 Provision for credit
losses (1) (38) Noninterest expense 2,559 951 Net income 1,377 298
Efficiency ratio(1) 57.46% 69.04% Return on average equity 17.81
9.90 Trading-related assets(2) $503,688 $332,748 (1) Fully
taxable-equivalent basis (2) Balances averaged for period Global
Markets net income increased $1.1 billion. The increase was driven
by the addition of Merrill Lynch and lower market disruption
related charges of $900 million - a portion of the $1.3 billion
total for the company. Net revenue was strong during the period,
excluding the credit valuation adjustment on derivative liabilities
and market disruption charges, surpassing record first-quarter 2009
revenue. Noninterest expense was higher as a result of the addition
of Merrill Lynch. -- Fixed Income, Currency and Commodities revenue
of $3.2 billion was driven by a more than fourfold increase in
sales and trading revenue and by investment banking revenue that
nearly doubled. Sales and trading was positively impacted by the
addition of Merrill Lynch and an increase in liquidity in certain
credit markets. Investment banking fees were positively impacted
from the combination of the legacy Merrill Lynch and Bank of
America debt issuance capabilities and the opening up of credit
issuance markets. -- Equities revenue of $1.3 billion was driven by
the addition of Merrill Lynch and the ability to take advantage of
the increase in equity flows during the quarter, which resulted in
higher commission revenue and a fivefold increase in equity
issuance revenue, partially offset by lower market volatility.
Global Wealth and Investment Management (Dollars in millions) Q2
2009 Q2 2008 -------------------- ------- ------- Total revenue,
net of interest expense(1) $4,196 $2,295 Provision for credit
losses 238 119 Noninterest expense 3,304 1,244 Net income 441 581
Efficiency ratio(1) 78.74% 54.21% Return on average equity 9.45
19.84 Loans(2) $101,748 $87,574 Deposits(2) 214,111 157,113 (in
billions) At 6/30/09 At 6/30/08 ------------ ---------- ----------
Assets under management $705.2 $589.4 Total client assets(3)
$1,824.3 $867.4 (1) Fully taxable-equivalent basis (2) Balances
averaged for period (3) Client assets are defined as assets under
management, client brokerage assets and other assets in custody
Global Wealth and Investment Management net income fell 24 percent
due to lower residual net interest income, lower equity market
levels, higher credit costs and the transfer of certain client
balances to the Deposits and the Home Loans and Insurance segments,
partially offset by the addition of Merrill Lynch. Net revenue
increased to $4.2 billion as investment and brokerage service
income rose and net interest income increased 12 percent due to the
addition of Merrill Lynch. -- Merrill Lynch Global Wealth
Management net income declined 15 percent to $283 million from a
year earlier as the addition of Merrill Lynch was more than offset
by the impact of the significant transfer of client balances during
the quarter to the Deposits and the Home Loans and Insurance
segments and lower net interest income. Net revenue increased to
$3.0 billion from $1.1 billion a year ago as investment and
brokerage income rose mainly from the addition of Merrill Lynch. --
U.S. Trust, Bank of America Private Wealth Management net income
fell 65 percent to $67 million as net revenue declined and credit
costs rose. Net revenue fell 13 percent to $674 million driven by
reduced residual net interest income and the effect of lower equity
market levels. -- Columbia Management net income nearly doubled to
$72 million from a year earlier on lower support for certain cash
funds and reduced expenses. The increase was partially offset by
lower investment and brokerage revenue which was mainly impacted by
lower equity market levels. All Other (1),(2) (Dollars in millions)
Q2 2009 Q2 2008 -------------------- ------- ------- Total revenue,
net of interest expense(3) $487 $(563) Provision for credit losses
(9) (1,033) Noninterest expense 1,471 286 Net income 757 226 Loans
and leases(4) $159,142 $117,504 (1) All Other consists primarily of
equity investments, the residential mortgage portfolio associated
with asset and liability management (ALM) activities, the residual
impact of the cost allocation process, merger and restructuring
charges, intersegment eliminations, fair value adjustments related
to certain Merrill Lynch structured notes and the results of
certain consumer finance, investment management and commercial
lending businesses that are being liquidated. All Other also
includes the offsetting securitization impact to present Global
Card Services on a managed basis. For more information and detailed
reconciliation, please refer to the data pages supplied with this
press release. (2) Effective January 1, 2009, All Other includes
the results of First Republic Bank, which was acquired as part of
the Merrill Lynch acquisition. (3) Fully taxable-equivalent basis
(4) Balances averaged for period All Other net income increased to
$757 million. Higher equity investment income related to the gain
on the sale of CCB shares and increased gains on the sale of debt
securities were partially offset by fair value adjustments related
to certain Merrill Lynch structured notes and
other-than-temporary-impairment charges related to non-agency
collateralized mortgage obligations. The provision for credit
losses rose primarily due to continued deterioration in the
residential mortgage portfolio. Noninterest expense increased
mostly on merger and restructuring charges related to the Merrill
Lynch acquisition. Note: Chief Executive Officer and President
Kenneth D. Lewis and Chief Financial Officer Joe L. Price will
discuss second quarter 2009 results in a conference call at 9:30
a.m. EDT today. The presentation and supporting materials can be
accessed on the Bank of America Investor Relations Web site 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: 79795. Bank of America Bank
of America is one of the world's largest financial institutions,
serving individual consumers, small- and 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 53 million consumer and small
business relationships with more than 6,100 retail banking offices,
nearly 18,500 ATMs and award-winning online banking with 29 million
active 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 more than 4 million small business
owners through a suite of innovative, easy-to-use online products
and services. The company serves clients in more than 150
countries. Bank of America Corporation stock (NYSE:BAC) is a
component of the Dow Jones Industrial Average and is listed on the
New York Stock Exchange. Forward-Looking Statements Bank 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 are not
historical facts, but instead represent Bank of America's current
expectations, plans or forecasts of its future earnings,
integration of acquisitions and related cost savings, mortgage
originations and market share, credit losses, credit reserves and
charge-offs, consumer credit card net loss ratios, mortgage
delinquencies, core net interest income margin and other similar
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 all of the
following uncertainties and risks, as well as those more fully
discussed under Item 1A. "Risk Factors" of Bank of America's 2008
Annual Report on Form 10-K and in any of Bank of America's
subsequent SEC filings: negative economic conditions that adversely
affect the general economy, housing prices, the job market,
consumer confidence and spending habits; the level and volatility
of the capital markets, interest rates, currency values and other
market indices; changes in consumer, investor and counterparty
confidence in, and the related impact on, financial markets and
institutions; Bank of America's credit ratings and the credit
ratings of its securitizations; estimates of fair value of certain
Bank of America assets and liabilities; legislative and regulatory
actions in the United States and internationally; the impact of
litigation and regulatory investigations, including costs,
expenses, settlements and judgments; various monetary and fiscal
policies and regulations of the U.S. and non-U.S. governments;
changes in accounting standards, rules and interpretations and the
impact on Bank of America's financial statements; increased
globalization of the financial services industry and competition
with other U.S. and international financial institutions; Bank of
America's ability to attract new employees and retain and motivate
existing employees; mergers and acquisitions and their integration
into Bank of America; Bank of America's reputation; and decisions
to downsize, sell or close units or otherwise change the business
mix of Bank of America. 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. Columbia Management Group, LLC
("Columbia Management") is the primary investment management
division of Bank of America Corporation. Columbia Management
entities furnish investment management services and products for
institutional and individual investors. Columbia Funds and
Excelsior Funds are distributed by Columbia Management
Distributors, Inc., member FINRA and SIPC. Columbia Management
Distributors, Inc. is part of Columbia Management and an affiliate
of Bank of America Corporation. Investors should carefully consider
the investment objectives, risks, charges and expenses of any
Columbia Fund or Excelsior Fund before investing. Contact your
Columbia Management representative for a prospectus, which contains
this and other important information about the fund. Read it
carefully before investing. 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 Banc of America Securities LLC, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, which are both 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 or thrift
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
our other non-bank, non-thrift affiliates.
http://www.bankofamerica.com/ Bank of America Corporation and
Subsidiaries Selected Financial Data -----------------------
(Dollars in millions, except per share data; shares in thousands)
Summary Income Three Months Ended Six Months Ended Statement June
30 June 30 -------------- ------------------- -----------------
2009 2008 2009 2008 ---- ---- ---- ---- Net interest income $11,630
$10,621 $24,127 $20,612 Total noninterest income 21,144 9,789
44,405 16,869 ------ ----- ------ ------ Total revenue, net of
interest expense 32,774 20,410 68,532 37,481 Provision for credit
losses 13,375 5,830 26,755 11,840 Noninterest expense, before
merger and restructuring charges 16,191 9,447 32,428 18,540 Merger
and restructuring charges 829 212 1,594 382 --- --- ----- ---
Income before income taxes 2,379 4,921 7,755 6,719 Income tax
expense (benefit) (845) 1,511 284 2,099 ---- ----- --- ----- Net
income $3,224 $3,410 $7,471 $4,620 ====== ====== ====== ======
Preferred stock dividends 805 186 2,238 376 --- --- ----- --- Net
income available to common shareholders $2,419 $3,224 $5,233 $4,244
====== ====== ====== ====== Earnings per common share $0.33 $0.72
$0.75 $0.95 Diluted earnings per common share 0.33 0.72 0.75 0.95
Summary Average Three Months Ended Six Months Ended Balance Sheet
June 30 June 30 --------------- -------------------
----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Total
loans and leases $966,105 $878,639 $980,035 $877,150 Debt
securities 255,159 235,369 270,618 227,373 Total earning assets
1,811,981 1,500,234 1,861,954 1,505,265 Total assets 2,420,317
1,754,613 2,469,452 1,759,770 Total deposits 974,892 786,002
969,516 786,813 Shareholders' equity 242,867 161,428 235,855
158,078 Common shareholders' equity 173,497 140,243 167,153 140,849
Three Months Ended Six Months Ended Performance Ratios June 30 June
30 ------------------- ------------------- ----------------- 2009
2008 2009 2008 ---- ---- ---- ---- Return on average assets 0.53%
0.78% 0.61% 0.53% Return on average common shareholders' equity
5.59 9.25 6.31 6.06 Three Months Ended Six Months Ended Credit
Quality June 30 June 30 -------------- -------------------
----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Total net
charge-offs $8,701 $3,619 $15,643 $6,334 Annualized net charge-
offs as a % of average loans and leases outstanding (1) 3.64% 1.67%
3.24% 1.46% Provision for credit losses $13,375 $5,830 $26,755
$11,840 Total consumer credit card managed net losses 5,047 2,751
8,841 5,123 Total consumer credit card managed net losses as a % of
average managed credit card receivables 11.73% 5.96% 10.16% 5.58%
June 30 --------------- 2009 2008 ---- ---- Total nonperforming
assets $30,982 $9,749 Nonperforming assets as a % of total loans,
leases and foreclosed properties (1) 3.31% 1.13% Allowance for loan
and lease losses $33,785 $17,130 Allowance for loan and lease
losses as a % of total loans and leases outstanding (1) 3.61% 1.98%
Capital Management June 30 ------------------ --------------- 2009
2008 ---- ---- Risk-based capital ratios: Tier 1 11.93% 8.25% Tier
1 common 6.90 4.78 Total 15.99 12.60 Tangible equity ratio (2) 7.39
4.72 Tangible common equity ratio (3) 4.67 3.24 Period-end common
shares issued and outstanding 8,651,459 4,452,947 Three Months
Ended Six Months Ended June 30 June 30 -------------------
----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Shares
issued (4) 2,250,509 137 3,634,024 15,062 Average common shares
issued and outstanding 7,241,515 4,435,719 6,808,262 4,431,870
Average diluted common shares issued and outstanding 7,269,518
4,444,098 6,836,972 4,445,428 Dividends paid per common share $0.01
$0.64 $0.02 $1.28 June 30 Summary End of Period ---------------
Balance Sheet 2009 2008 --------------------- ---- ---- Total loans
and leases $942,248 $870,464 Total debt securities 267,238 249,859
Total earning assets 1,721,618 1,458,796 Total assets 2,254,394
1,716,875 Total deposits 970,742 784,764 Total shareholders' equity
255,152 162,691 Common shareholders' equity 196,492 138,540 Book
value per share of common stock $22.71 $31.11
---------------------------------------------------------- (1)
Ratios do not include loans measured at fair value in accordance
with SFAS 159 at and for the three and six months ended June 30,
2009 and 2008. (2) Tangible equity ratio equals shareholders'
equity less goodwill and intangible assets (excluding mortgage
servicing rights), net of related deferred tax liabilities divided
by total assets less goodwill and intangible assets (excluding
mortgage servicing rights), net of related deferred tax
liabilities. (3) Tangible common equity ratio equals common
shareholders' equity less goodwill and intangible assets (excluding
mortgage servicing rights), net of related deferred tax liabilities
divided by total assets less goodwill and intangible assets
(excluding mortgage servicing rights), net of related deferred tax
liabilities. (4) 2009 amounts include approximately 1.375 billion
shares issued in the Merrill Lynch acquisition. Certain prior
period amounts have been reclassified to conform to current period
presentation. Information for periods beginning July 1, 2008
include the Countrywide acquisition. Information for the period
beginning January 1, 2009 includes the Merrill Lynch acquisition.
Prior periods have not been restated. This information is
preliminary and based on company data available at the time of the
presentation. Bank of America Corporation and Subsidiaries Business
Segment Results ------------------------ (Dollars in millions) For
the three months ended June 30 Global Card Home Loans Deposits
Services (1, 2) & Insurance -------------- ---------------
------------- 2009 2008 2009 2008 2009 2008 ---- ---- ---- ----
---- ---- Total revenue, net of interest expense (3) $3,495 $4,400
$7,337 $7,500 $4,461 $1,261 Provision for credit losses 96 89 7,741
4,259 2,726 2,034 Noninterest expense 2,649 2,324 1,976 2,375 2,829
732 Net income (loss) 505 1,238 (1,618) 582 (725) (948) Efficiency
ratio (3) 75.80% 52.82% 26.93% 31.67% 63.41% 58.02% Return on
average equity 8.58 20.30 n/m 6.01 n/m n/m Average - total loans
and leases n/m n/m $220,365 $238,918 $131,509 $91,199 Average -
total deposits $417,114 $337,253 n/m n/m n/m n/m Global Wealth
& Investment Global Banking Global Markets Management
-------------- --------------- -------------- 2009 2008 2009 2008
2009 2008 ---- ---- ---- ---- ---- ---- Total revenue, net of
interest expense (3) $8,658 $4,455 $4,452 $1,378 $4,196 $2,295
Provision for credit losses 2,584 400 (1) (38) 238 119 Noninterest
expense 2,232 1,747 2,559 951 3,304 1,244 Net income 2,487 1,433
1,377 298 441 581 Efficiency ratio (3) 25.78% 39.24% 57.46% 69.04%
78.74% 54.21% Return on average equity 16.50 11.85 17.81 9.90 9.45
19.84 Average - total loans and leases $323,217 $315,282 n/m n/m
$101,748 $87,574 Average - total deposits 199,879 169,738 n/m n/m
214,111 157,113 All Other (1, 4) ---------------- 2009 2008 ----
---- Total revenue, net of interest expense (3) $487 $(563)
Provision for credit losses (9) (1,033) Noninterest expense 1,471
286 Net income 757 226 Average - total loans and leases $159,142
$117,504 Average - total deposits 108,079 96,998
-------------------------------------------------- (1) Global Card
Services is presented on a managed basis with a corresponding
offset recorded in All Other. (2) Provision for credit losses
represents provision for credit losses on held loans combined with
realized credit losses associated with the securitized loan
portfolio. (3) Fully taxable-equivalent (FTE) basis. 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. (4)
Provision for credit losses represents provision for credit losses
in All Other combined with the Global Card Services securitization
offset. n/m = not meaningful Certain prior period amounts have been
reclassified to conform to current period presentation. Information
for periods beginning July 1, 2008 include the Countrywide
acquisition. Information for the period beginning January 1, 2009
includes the Merrill Lynch acquisition. Prior periods have not been
restated. This information is preliminary and based on company data
available at the time of the presentation. Bank of America
Corporation and Subsidiaries Business Segment Results
------------------------ (Dollars in millions) For the six months
ended June 30 Global Card Home Loans & Deposits Services (1, 2)
Insurance -------------- -------------- ------------- 2009 2008
2009 2008 2009 2008 ---- ---- ---- ---- ---- ---- Total revenue,
net of interest expense (3) $6,907 $8,488 $14,846 $15,430 $9,684
$2,584 Provision for credit losses 187 195 16,182 8,711 6,098 3,846
Noninterest expense 5,008 4,516 4,053 4,572 5,479 1,470 Net income
(loss) 1,106 2,363 (3,494) 1,401 (1,223) (1,721) Efficiency ratio
(3) 72.50% 53.21% 27.30% 29.63% 56.58% 56.91% Return on average
equity 9.47 19.31 n/m 7.28 n/m n/m Average - total loans and leases
n/m n/m $224,391 $236,738 $129,110 $89,218 Average - total deposits
$397,454 $338,358 n/m n/m n/m n/m Global Wealth & Investment
Global Banking Global Markets Management --------------
-------------- -------------- 2009 2008 2009 2008 2009 2008 ----
---- ---- ---- ---- ---- Total revenue, net of interest expense (3)
$13,298 $8,354 $11,351 $537 $8,559 $4,237 Provision for credit
losses 4,432 926 50 (39) 492 362 Noninterest expense 4,747 3,494
5,615 1,680 6,594 2,555 Net income (loss) 2,659 2,456 3,812 (691)
951 825 Efficiency ratio (3) 35.70% 41.82% 49.46% n/m 77.04% 60.31%
Return on average equity 9.17 10.27 26.38 n/m 10.70 14.21 Average -
total loans and leases $327,074 $310,603 n/m n/m $106,117 $86,609
Average - total deposits 197,981 165,232 n/m n/m 231,853 152,808
All Other (1, 4) ---------------- 2009 2008 ---- ---- Total
revenue, net of interest expense (3) $4,521 $(1,533) Provision for
credit losses (686) (2,161) Noninterest expense 2,526 635 Net
income (loss) 3,660 (13) Average - total loans and leases $163,770
$125,695 Average - total deposits 108,757 105,109
---------------------------------------------------- (1) Global
Card Services is presented on a managed basis with a corresponding
offset recorded in All Other. (2) Provision for credit losses
represents provision for credit losses on held loans combined with
realized credit losses associated with the securitized loan
portfolio. (3) Fully taxable-equivalent (FTE) basis. 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. (4)
Provision for credit losses represents provision for credit losses
in All Other combined with the Global Card Services securitization
offset. n/m = not meaningful Certain prior period amounts have been
reclassified to conform to current period presentation. Information
for periods beginning July 1, 2008 include the Countrywide
acquisition. Information for the period beginning January 1, 2009
includes the Merrill Lynch acquisition. Prior periods have not been
restated. This information is preliminary and based on company data
available at the time of the presentation. Bank of America
Corporation and Subsidiaries Supplemental Financial Data
--------------------------- (Dollars in millions) Fully taxable-
Three Months Six Months equivalent basis data Ended June 30 Ended
June 30 ---------------------- ---------------- ----------------
2009 2008 2009 2008 ---- ---- ---- ---- Net interest income $11,942
$10,937 $24,761 $21,228 Total revenue, net of interest expense
33,086 20,726 69,166 38,097 Net interest yield 2.64% 2.92% 2.67%
2.83% Efficiency ratio 51.44 46.60 49.19 49.67 June 30
------------- Other Data 2009 2008 ---------- ---- ---- Full-time
equivalent employees 282,408 206,587 Number of banking centers -
domestic 6,109 6,131 Number of branded ATMs - domestic 18,426
18,531 Certain prior period amounts have been reclassified to
conform to current period presentation. Bank of America Corporation
and Subsidiaries Reconciliation - Managed to GAAP
--------------------------------- (Dollars in millions) The
Corporation reports Global Card Services on a managed basis.
Reporting on a managed basis is consistent with the way that
management evaluates the results of Global Card Services. Managed
basis assumes that securitized loans were not sold and presents
earnings on these loans in a manner similar to the way loans that
have not been sold (i.e., held loans) are presented. Loan
securitization is an alternative funding process that is used by
the Corporation to diversify funding sources. Loan securitization
removes loans from the Consolidated Balance Sheet through the sale
of loans to an off-balance sheet qualified special purpose entity
which is excluded from the Corporation's Consolidated Financial
Statements in accordance with accounting principles generally
accepted in the United States (GAAP). The performance of the
managed portfolio is important in understanding Global Card
Services' results as it demonstrates the results of the entire
portfolio serviced by the business. Securitized loans continue to
be serviced by the business and are subject to the same
underwriting standards and ongoing monitoring as held loans. In
addition, retained excess servicing income is exposed to similar
credit risk and repricing of interest rates as held loans. Global
Card Services' managed income statement line items differ from a
held basis reported as follows: - Managed net interest income
includes Global Card Services' net interest income on held loans
and interest income on the securitized loans less the internal
funds transfer pricing allocation related to securitized loans. -
Managed noninterest income includes Global Card Services'
noninterest income on a held basis less the reclassification of
certain components of card income (e.g., excess servicing income)
to record managed net interest income and provision for credit
losses. Noninterest income, both on a held and managed basis, also
includes the impact of adjustments to the interest-only strip that
are recorded in card income as management continues to manage this
impact within Global Card Services. - Provision for credit losses
represents the provision for credit losses on held loans combined
with realized credit losses associated with the securitized loan
portfolio. Global Card Services Six Months Ended Six Months Ended
June 30, 2009 June 30, 2008 ------------------ ------------------
Securit- Securit- Managed ization Held Managed ization Held Basis
(1) Impact (2) Basis Basis (1) Impact (2) Basis ----------
---------- ----- --------- ---------- ----- Net interest income (3)
$10,308 $(4,749) $5,559 $9,331 $(4,195) $5,136 Noninterest income:
Card income 4,279 (348) 3,931 5,275 1,261 6,536 All other income
259 (67) 192 824 (125) 699 --- --- --- --- ---- --- Total
noninterest income 4,538 (415) 4,123 6,099 1,136 7,235 ----- ----
----- ----- ----- ----- Total revenue, net of interest expense
14,846 (5,164) 9,682 15,430 (3,059) 12,371 Provision for credit
losses 16,182 (5,164) 11,018 8,711 (3,059) 5,652 Noninterest
expense 4,053 - 4,053 4,572 - 4,572 ----- --- ----- ----- --- -----
Income (loss) before income taxes (5,389) - (5,389) 2,147 - 2,147
Income tax expense (benefit) (3) (1,895) - (1,895) 746 - 746 ------
--- ------ --- --- --- Net income (loss) $(3,494) $- $(3,494)
$1,401 $- $1,401 ======= === ======= ====== === ====== Average -
total loans and leases $224,391 $(102,357) $122,034 $236,738
$(106,306) $130,432 All Other Six Months Ended Six Months Ended
June 30, 2009 June 30, 2008 ------------------ -----------------
Securit- Securit- Reported ization As Reported ization As Basis (4)
Offset (2) Adjusted Basis (4) Offset (2) Adjusted ---------
---------- -------- --------- ---------- -------- Net interest
income(3) $(3,477) $4,749 $1,272 $(3,771) $4,195 $424 Noninterest
income: Card income (loss) 256 348 604 1,259 (1,261) (2) Equity
investment income 7,305 - 7,305 977 - 977 Gains on sales of debt
securities 2,143 - 2,143 351 - 351 All other income (loss) (1,706)
67 (1,639) (349) 125 (224) ------ --- ------ ---- --- ---- Total
noninterest income 7,998 415 8,413 2,238 (1,136) 1,102 ----- ---
----- ----- ------ ----- Total revenue, net of interest expense
4,521 5,164 9,685 (1,533) 3,059 1,526 Provision for credit losses
(686) 5,164 4,478 (2,161) 3,059 898 Merger and restructuring
charges 1,594 - 1,594 382 - 382 All other noninterest expense 932 -
932 253 - 253 --- --- --- --- --- --- Income (loss) before income
taxes 2,681 - 2,681 (7) - (7) Income tax expense (3) (979) - (979)
6 - 6 ---- --- ---- --- --- --- Net income (loss) $3,660 $- $3,660
$(13) $- $(13) ====== === ====== ==== === ==== Average - total
loans and leases $163,770 $102,357 $266,127 $125,695 $106,306
$232,001 --------------------------------------------- (1)
Provision for credit losses represents provision for credit losses
on held loans combined with realized credit losses associated with
the securitized loan portfolio. (2) The securitization
impact/offset on net interest income is on a funds transfer pricing
methodology consistent with the way funding costs are allocated to
the businesses. (3) FTE basis (4) Provision for credit losses
represents provision for credit losses in All Other combined with
the Global Card Services securitization offset. Certain prior
period amounts have been reclassified among the segments to conform
to the current period presentation. Information for periods
beginning July 1, 2008 include the Countrywide acquisition.
Information for the period beginning January 1, 2009 includes the
Merrill Lynch acquisition. Prior periods have not been restated.
This information is preliminary and based on company data available
at the time of the presentation.
http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-bDATASOURCE:
Bank of America CONTACT: Investors: Kevin Stitt, Bank of America,
+1-704-386-5667, Lee McEntire, Bank of America, +1-704-388-6780,
Grace Yoon, Bank of America, +1-212-449-7323; or Reporters: Scott
Silvestri, Bank of America, +1-980-388-9921, Web Site:
http://www.bankofamerica.com/
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