01—Abstract
Summary
Summary of the 10-K filed February 28, 2013. Cited figures are marked; the original filing is the authoritative source.
Bank of America Corporation (BAC) filed its 10-K for the period ending December 30, 2012, highlighting a year of improved profitability compared to 2011.
The company reported a net income of $4.2 billiona, a significant increase from $1.4 billion in the prior year, driven by a reduction in noninterest expense and a lower provision for credit losses. These improvements were partially offset by a decrease in revenue, mainly due to lower net interest income and noninterest income, impacted by factors such as the Durbin Amendment's effect on card income and negative fair value adjustments on structured liabilities. The company's balance sheet saw an increase in total assets to $2.2 trillion, supported by growth in deposits and a reduction in long-term debt.
Capital ratios remained robust, with Tier 1 common capital at 11.06%b. Despite ongoing risks associated with the general economic and market conditions, particularly in the U.S. housing market and European sovereign debt, Bank of America demonstrated progress in its recovery efforts, including significant settlements related to mortgage repurchase claims.
02—Key points
Key Highlights
- Net income increased to $4.2 billion in 2012 from $1.4 billion in 2011, showing a substantial improvement in profitability.
- Total assets grew to $2.2 trillion at year-end 2012, supported by a rise in deposits.
- Noninterest expense decreased significantly due to the absence of goodwill impairment charges and lower litigation expenses, although personnel expenses also saw a slight decrease.
- The provision for credit losses declined by $5.2 billion to $8.2 billion, reflecting improved portfolio trends and increasing home prices.
- Bank of America resolved significant representations and warranties claims with Fannie Mae through a settlement agreement, resolving substantial outstanding and potential repurchase claims.
- The company continues to streamline its operations through Project New BAC, with expected annualized cost savings of over $5 billion by the end of 2013 from Phase 1.
- Tier 1 common capital ratio improved to 11.06% from 9.86% in the prior year, demonstrating strengthened capital position.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 28, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $83.33B$93.45B | −10.8% |
| Interest Expense | $16.74B$21.62B | −22.6% |
| Net Income | $4.19B$1.45B | +189.6% |
| EPS (Basic) | $0.26$0.01 | +2500.0% |
| EPS (Diluted) | $0.25$0.01 | +2400.0% |
| Shares Outstanding (Basic) | 10.75B10.14B | +5.9% |
| Shares Outstanding (Diluted) | 10.84B10.25B | +5.7% |
05—Questions
Frequently Asked Questions
What was Bank of America's net income in 2012?
Bank of America reported a net income of $4.2 billion in 2012, a significant increase from $1.4 billion in 2011.
How did the company's asset base change in 2012?
Total assets increased by $80.9 billion, or 4%, to $2.2 trillion at December 31, 2012, primarily driven by growth in deposits and increases in trading account assets.
What major legal or settlement issues did Bank of America address in 2012?
Bank of America entered into a significant settlement with Fannie Mae to resolve substantially all outstanding and potential repurchase claims related to residential mortgage loans sold to Fannie Mae between 2000 and 2008. They also resolved mortgage servicing issues through an Independent Foreclosure Review Acceleration Agreement.
How is the company managing costs?
Bank of America is implementing Project New BAC, an enterprise-wide initiative to simplify workflows and processes. Phase 1 is expected to yield over $5 billion in annualized cost savings by the end of 2013, with Phase 2 aiming for an additional $3 billion by mid-2015.
06—Continue