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| Bank of America Merrill Lynch (Photo credit: Wikipedia) |
April 19, 2012 07:00 AM Eastern Daylight Time
Bank of America Reports First-Quarter 2012 Financial Results
- Net Income of $653 Million, or $0.03 Per Diluted Share
- Results Include Negative Valuation Adjustments of $4.8 Billion Pretax, or $0.28 Per Share, From the Narrowing of the Company's Credit Spreads
- Fortress Balance Sheet Strengthened; Record Tier 1 Common Equity Ratio of 10.78 Percent
- Global Excess Liquidity Sources Increased to a Record $406 Billion; Time-to-Required Funding Improved to 31 Months
- Strong Performance in Global Markets; Sales and Trading Revenue Excluding DVA Third Highest Since Merrill Lynch Acquisition
- Investment Bank Ranked No. 2 in Global Net Investment Banking Fees
- Average U.S. Commercial Loans With Corporate and Commercial Clients Increased for the Fifth
- Consecutive Quarter, Reflecting 3 Percent Growth From the Fourth Quarter of 2011
- Global Wealth and Investment Management Earns $547 Million, Second-Highest Quarterly Net Income Since Merrill Lynch Acquisition
- Provision for Credit Losses Declines to Lowest Level Since Third Quarter of 2007 as Credit Quality Continues to Improve
CHARLOTTE, N.C.--()--Bank of America Corporation today reported net income of $653 million, or $0.03 per diluted share, for the first quarter of 2012. Revenue, net of interest expense, on a fully taxable-equivalent (FTE)1 basis was $22.5 billion, including negative valuation adjustments related to changes in the company’s credit spreads of $4.8 billion pretax, or $0.28 a share.
“The narrowing of our credit spreads reflects the significant progress we’ve made to strengthen the balance sheet”
The results compare to net income of $2.0 billion, or $0.17 per diluted share, in the year-ago quarter on revenue of $27.1 billion when the company reported negative valuation adjustments of $943 million, or $0.06 per share. Excluding the valuation adjustments from both periods, revenue was down 3 percent in the first quarter of 2012 to $27.3 billion2.
“By focusing on building strong customer and client relationships, we’re doing more business and winning in the marketplace,” said Chief Executive Officer Brian Moynihan. “Our strategy is paying off: With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year.”
“The narrowing of our credit spreads reflects the significant progress we’ve made to strengthen the balance sheet,” said Chief Financial Officer Bruce Thompson. “During the quarter, we increased our Tier 1 common equity ratio by 92 basis points from the prior quarter, improved our liquidity to record levels and continued to reduce risk-weighted assets. While the improvement in our credit spreads results in a negative adjustment to earnings this quarter, it should not overshadow the positive momentum that we are seeing in our businesses.”
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 23-26 of this press release. Total revenue, net of interest expense on a GAAP basis, was $22.3 billion and $26.9 billion for the three months ended March 31, 2012 and 2011. Total revenue, net of interest expense, FTE basis excluding DVA and FVO adjustments is a non-GAAP financial measure. For a reconciliation to GAAP financial measures, refer to page 2 of this press release.
Selected Financial Highlights
| ||||||||||||||
| Three Months Ended | ||||||||||||||
| (Dollars in millions except per share data) | March 31, 2012 | December 31, 2011 | March 31, 2011 | |||||||||||
| Net interest income, FTE basis1 | $ | 11,053 | $ | 10,959 | $ | 12,397 | ||||||||
| Noninterest income | 11,432 | 14,187 | 14,698 | |||||||||||
| Total revenue, net of interest expense, FTE basis | 22,485 | 25,146 | 27,095 | |||||||||||
| Total revenue, net of interest expense, FTE basis excluding DVA and FVO valuation adjustments2 | 27,258 | 26,434 | 28,038 | |||||||||||
| Provision for credit losses | 2,418 | 2,934 | 3,814 | |||||||||||
| Noninterest expense | 19,141 | 19,522 | 20,283 | |||||||||||
| Net income | 653 | 1,991 | 2,049 | |||||||||||
| Diluted earnings per common share | $ | 0.03 | $ | 0.15 | $ | 0.17 | ||||||||
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 23-26 of this press release. Net interest income on a GAAP basis was $10.8 billion, $10.7 billion and $12.2 billion for the three months ended March 31, 2012, December 31, 2011 and March 31, 2011. Total revenue, net of interest expense on a GAAP basis, was $22.3 billion, $24.9 billion and $26.9 billion for the three months ended March 31, 2012, December 31, 2011 and March 31, 2011.
2 Total revenue, net of interest expense, FTE basis excluding DVA and FVO adjustments is a non-GAAP financial measure. DVA losses were $1.5 billion, $474 million and $357 million for the three months ended March 31, 2012, December 31, 2011 and March 31, 2011. Valuation losses related to FVO were $3.3 billion, $814 million and $586 million for the three months ended March 31, 2012, December 31, 2011 and March 31, 2011.
The following selected items affected financial results in the first quarter of 2012.
| Selected First-Quarter 2012 Items1 | |||||||
| (Dollars in billions) | |||||||
| Gains on debt and trust-preferred repurchases | $ | 1.2 | |||||
| Equity investment income | 0.8 | ||||||
| Net gains on sales of debt securities | 0.8 | ||||||
| Fair value adjustment on structured liabilities | (3.3 | ) | |||||
| Debit valuation adjustments (DVA) on trading liabilities | (1.5 | ) | |||||
| Annual retirement-eligible compensation costs | (0.9 | ) | |||||
| Litigation expense | (0.8 | ) | |||||
1 All items pretax.
