10-KPeriod: FY2010

BANK OF AMERICA CORP /DE/ Annual Report, Year Ended Dec 31, 2010

Summary

Bank of America Corporation reported a net loss of $2.2 billion for the year ended December 30, 2010, a significant decline from the $6.3 billion net income reported in 2009. This loss was heavily influenced by $12.4 billion in goodwill impairment charges, primarily impacting the Global Card Services and Home Loans & Insurance segments, largely dueIto the anticipated revenue reduction from the Dodd-Frank Act's provisions, particularly on debit card interchange fees. Excluding these charges, adjusted net income was $10.2 billion. The company experienced a decrease in total revenue, net of interest expense, to $111.4 billion from $120.9 billion in the prior year, reflecting lower mortgage banking income and equity investment gains, partly offset by higher net interest income and other income. The company's balance sheet showed a modest increase in total assets to $2.3 trillion, driven by the adoption of new consolidation guidance for variable interest entities. Deposits also saw growth, reaching $1.0 trillion. However, the company is navigating a complex regulatory landscape, with the Dodd-Frank Act and evolving Basel III capital requirements expected to significantly impact future operations and capital levels. Management is focused on maintaining capital ratios above regulatory minimums and is actively managing its risk profile.

Financial Statements
Beta
Revenue$110.22B
Interest Expense$23.97B
Net Income-$2.24B
EPS (Basic)$-0.37
EPS (Diluted)$-0.37
Shares Outstanding (Basic)9.79B
Shares Outstanding (Diluted)9.79B

Key Highlights

  • 1Reported a net loss of $2.2 billion for 2010, a significant drop from $6.3 billion net income in 2009.
  • 2Recognized $12.4 billion in goodwill impairment charges, primarily in Global Card Services ($10.4 billion) and Home Loans & Insurance ($2.0 billion), driven by anticipated impacts from the Dodd-Frank Act.
  • 3Total revenue, net of interest expense, decreased to $111.4 billion from $120.9 billion in 2009.
  • 4Provisions for credit losses decreased significantly to $28.4 billion from $48.6 billion in 2009, indicating improving portfolio trends.
  • 5Total assets increased to $2.3 trillion as of December 31, 2010, partly due to the adoption of new consolidation guidance for variable interest entities.
  • 6Tier 1 common capital ratio improved to 8.60% at year-end 2010, and the company ended the year in a "well-capitalized" regulatory status.
  • 7The company is preparing for significant regulatory changes including the implementation of the Dodd-Frank Act and Basel III capital and liquidity requirements, which are expected to impact capital requirements and business practices.

Frequently Asked Questions

Bank of America reported a net loss of $2.2 billion for the year ended December 30, 2010, compared to a net income of $6.3 billion in 2009. This result was heavily impacted by $12.4 billion in goodwill impairment charges, primarily related to the anticipated effects of the Dodd-Frank Act on debit card interchange fees.

The Dodd-Frank Act is expected to reduce debit card interchange revenue by approximately $2.0 billion annually, beginning in the third quarter of 2011. This anticipated revenue loss led Bank of America to record a $10.4 billion goodwill impairment charge in its Global Card Services segment.

As of December 31, 2010, Bank of America maintained strong capital ratios, with its Tier 1 common capital ratio at 8.60% and its Tier 1 capital ratio at 11.24%. These ratios exceed regulatory minimums, classifying the company as 'well-capitalized' by regulators.

Bank of America identified several key risks, including the material adverse impact of U.S. and international financial markets and economic conditions, liquidity risk, mortgage and housing market-related risks (such as loan repurchase obligations), credit risk, market risk, regulatory and legal risks (including the impact of the Dodd-Frank Act and proposed Basel III capital requirements), competitive environment, and operational and security system failures.