Bank of America Q3 Net Income = $340 Million

Bank of America Merrill Lynch (Photo credit: Wikipedia)

October 17, 2012 07:00 AM Eastern Daylight Time 

Bank of America Reports Third-Quarter 2012 Net Income of $340 Million, or $0.00 per Share

Previously Announced Items Negatively Impact Earnings

• Valuation Adjustments for Improvement in the Company's Credit Spreads, $1.9 Billion Pretax
• Total Litigation Expense of $1.6 Billion Pretax, Including Merrill Lynch Class Action Settlement
• Charge Related to Reduction in U.K. Tax Rate of $0.8 Billion
• Previously Announced Items Totaled ($0.28) per Share

Capital and Liquidity Continue to Strengthen

• Basel 1 Tier 1 Common Capital Ratio of 11.41 Percent at September 30, 2012
• Estimated Basel 3 Tier 1 Common Capital Ratio of 8.97 Percent at September 30, 2012, up From 7.95 Percent at June 30, 2012 (Fully Phased-in Assuming U.S. Final Rules and U.S. Basel 3 NPRs)¹
• Long-term Debt Down $112 Billion From September 30, 2011, Driven by Maturities and Liability Management Actions; Time-to-required Funding Remains Strong at 35 Months

Core Business Momentum Accelerates

• Total Average Deposit Balances up $17 Billion, or 6 Percent (Annualized), From Prior Quarter
• First-lien Mortgage Production Increased 13 Percent From Prior Quarter
• Global Wealth and Investment Management Had Solid Long-term AUM Flows of $5.7 Billion, up 39 Percent From the Prior Quarter and 27 Percent From the Year-ago Quarter
• Ending Commercial Loans in Global Banking Segment Including Real Estate Loans Grew 13 Percent (Annualized) From Prior Quarter to $236 Billion
• Investment Bank Ranked No. 2 in Global Investment Banking Fees; Revenue Up 17 Percent From Prior Quarter and 42 Percent From the Year-ago Quarter

CHARLOTTE, N.C.--(BUSINESS WIRE)--Bank of America Corporation today reported net income of $340 million, or $0.00 per diluted share, for the third quarter of 2012, compared to $6.2 billion, or $0.56 per diluted share, in the third quarter of 2011.

“Our focus on strengthening the balance sheet continued this quarter”

As previously reported, the third quarter of 2012 was negatively impacted by $1.9 billion of debit valuation adjustments (DVA) and fair value option (FVO) adjustments related to the improvement in the company's credit spreads, $1.6 billion for total litigation expense, including a charge for the previously announced settlement of the Merrill Lynch class action litigation, and a charge of $0.8 billion related to the repricing of certain deferred tax assets due to a reduction in the U.K. corporate tax rate. Together, these three items totaled a negative $0.28 per share.

The year-ago quarter included $6.2 billion in positive DVA and FVO adjustments, $0.6 billion in total litigation expense and $0.8 billion related to the repricing of certain deferred tax assets due to a reduction in the U.K. corporate tax rate. Together, these three items totaled a positive $0.27 per share in the third quarter of 2011. In addition, the year-ago quarter included, among other significant items, a $3.6 billion pretax gain on the sale of a portion of the company's investment in China Construction Bank (CCB), partially offset by $2.2 billion of net losses related to equity and strategic investments other than CCB.

Relative to the year-ago quarter, the results for the third quarter of 2012 were driven by improved credit quality across most major portfolios, increased sales and trading revenue (excluding impact of DVA), higher mortgage banking income and increased investment banking income.

"We are doing more business with our customers and clients: Deposits are up; mortgage originations are up; we surpassed 11 million in mobile customers; small business lending is up 27 percent year over year; loans to our commercial clients rose for the seventh consecutive quarter; and our corporate clients made us the second-ranked global investment banking firm," said Brian Moynihan, chief executive officer. "Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues."

"Our focus on strengthening the balance sheet continued this quarter," said Chief Financial Officer Bruce Thompson. "We ended the quarter with record Tier 1 common capital ratio of 11.41 percent and an estimated Basel 3 Tier 1 common capital ratio of 8.97 percent, up from 7.95 percent as of the second quarter of 2012¹. With these gains, we have turned our attention to driving core earnings."  read more

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