10-KPeriod: FY2009

BANK OF AMERICA CORP /DE/ Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation reported net income of $6.3 billion for the fiscal year ended December 31, 2009, a significant increase from $4.0 billion in 2008. This improvement was largely driven by the inclusion of Merrill Lynch, acquired in January 2009, and the full-year impact of the Countrywide acquisition, which bolstered revenue and expanded the company's service offerings. Despite the revenue growth and the repayment of $45 billion in TARP preferred stock to the U.S. Treasury, the company incurred a net loss applicable to common shareholders of $2.2 billion ($0.29 per diluted share) in 2009, a decline from a net income of $2.6 billion ($0.54 per diluted share) in 2008. This loss was primarily due to a substantial increase in the provision for credit losses, which rose to $48.6 billion from $26.8 billion in 2008, reflecting the ongoing economic downturn and its impact on both consumer and commercial portfolios. The company's capital ratios remained strong, with Tier 1 common capital at 7.81% and total capital at 14.66% at year-end 2009, indicating a solid capital position despite increased credit costs.

Financial Highlights

36 data points
Beta

Revenue

$119.64B

Net Income

$6.28B

5.2% Net Margin

EPS (Diluted)

$-0.29

Total Assets

$2.33T

Cash & Equivalents

$121.34B

Free Cash Flow

$129.73B

Financial Statements
Beta
Revenue$119.64B
Interest Expense$30.81B
Net Income$6.28B
EPS (Basic)$-0.29
EPS (Diluted)$-0.29
Shares Outstanding (Basic)7.73B
Shares Outstanding (Diluted)7.73B

Key Highlights

  • 1Net income for 2009 was $6.3 billion, an increase from $4.0 billion in 2008, primarily due to the acquisitions of Merrill Lynch and Countrywide.
  • 2The company repaid the U.S. Treasury's $45 billion TARP investment in December 2009.
  • 3Provision for credit losses significantly increased to $48.6 billion in 2009 from $26.8 billion in 2008, reflecting adverse economic conditions impacting loan portfolios.
  • 4Total assets grew to $2.2 trillion at year-end 2009 from $1.8 trillion in 2008, largely due to the Merrill Lynch acquisition.
  • 5Noninterest income more than doubled to $72.5 billion from $27.4 billion in 2008, driven by improved trading account profits, equity investment income (including gains from CCB and BlackRock), and increased investment banking and mortgage banking income.
  • 6Tier 1 common capital ratio increased to 7.81% from 4.80% in 2008, and Total capital ratio increased to 14.66% from 13.00% in 2008.
  • 7The company experienced a net loss applicable to common shareholders of $2.2 billion ($0.29 per diluted share) in 2009, compared to net income of $2.6 billion ($0.54 per diluted share) in 2008.

Frequently Asked Questions

Bank of America reported a net income of $6.3 billion for 2009, up from $4.0 billion in 2008. However, after accounting for preferred stock dividends and the impact of TARP repayment, the net loss applicable to common shareholders was $2.2 billion, or $(0.29) per diluted share, a decrease from a net income of $2.6 billion or $0.54 per diluted share in 2008. The significant increase in revenue was primarily driven by the Merrill Lynch acquisition and the full-year impact of the Countrywide acquisition, while the higher provision for credit losses negatively impacted profitability.

The acquisition of Merrill Lynch, completed in January 2009, significantly expanded the company's wealth management and investment banking capabilities, contributing substantially to the increase in total revenue and assets. The full-year impact of the Countrywide acquisition, completed in July 2008, also boosted revenue, particularly in mortgage origination and servicing. However, these acquisitions also contributed to the rise in merger and restructuring charges and increased the company's exposure to credit risk.

Bank of America's capital position remained strong in 2009. The Tier 1 common capital ratio improved to 7.81% from 4.80% in 2008, and the Total capital ratio increased to 14.66% from 13.00%. These improvements reflect strategic transactions including common stock issuances and preferred stock exchanges, as well as the repayment of the $45 billion TARP preferred stock investment in December 2009.

The company experienced a significant increase in its provision for credit losses in 2009, rising to $48.6 billion from $26.8 billion in 2008. This was driven by continued economic weakness and deterioration in housing markets, leading to higher net charge-offs and increased nonperforming loans across both consumer and commercial portfolios. While some stabilization was noted in the latter half of 2009, management acknowledges that the depth and duration of the economic downturn's impact on credit quality remain uncertain into 2010.