10-QPeriod: Q2 FY2010

BANK OF AMERICA CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) reported its Q2 2010 results with a net income of $3.12 billion, or $0.27 per diluted share. This represents a slight decrease from the previous year's $3.22 billion net income, or $0.33 per diluted share. The company experienced a decline in total revenue, net of interest expense, primarily driven by lower noninterest income, particularly from equity investments, mortgage banking, and trading profits. Despite the revenue decline, net interest income saw an increase due to improved deposit pricing and the impact of new consolidation guidance, though this was partially offset by lower loan balances. The provision for credit losses decreased significantly year-over-year, reflecting improving credit trends in some portfolios, although consumer real estate portfolios still showed stress. Noninterest expense saw a modest increase, impacted by higher personnel costs and merger-related charges. The company highlighted its strong capital position with a Tier 1 common equity ratio of 8.01%. Management also noted the anticipated significant impact of the recently passed Dodd-Frank Act on debit card interchange fees, which is expected to lead to a substantial goodwill impairment charge in the Global Card Services segment in Q3 2010. The company is actively managing its balance sheet and pursuing asset sales to strengthen its capital position.

Financial Highlights

33 data points
Beta

Revenue

$29.15B

Net Income

$3.12B

10.7% Net Margin

EPS (Diluted)

$0.27

Total Assets

$2.37T

Cash & Equivalents

$151.03B

Free Cash Flow

$15.47B

Financial Statements
Beta
Revenue$29.15B
Interest Expense$6.22B
Net Income$3.12B
EPS (Basic)$0.28
EPS (Diluted)$0.27
Shares Outstanding (Basic)9.96B
Shares Outstanding (Diluted)10.03B

Key Highlights

  • 1Net income of $3.12 billion for the quarter, a slight decrease from $3.22 billion in Q2 2009.
  • 2Diluted EPS of $0.27, down from $0.33 in Q2 2009.
  • 3Total revenue, net of interest expense, decreased to $29.15 billion from $32.77 billion in Q2 2009, driven by lower noninterest income.
  • 4Net interest income (FTE basis) increased by 11% to $13.2 billion due to improved deposit pricing and consolidation impacts.
  • 5Provision for credit losses decreased significantly to $8.1 billion from $13.4 billion in Q2 2009.
  • 6Noninterest expense increased slightly to $17.3 billion from $17.0 billion, impacted by personnel costs and merger charges.
  • 7Strong capital position maintained with a Tier 1 common equity ratio of 8.01%.

Frequently Asked Questions

Total revenue, net of interest expense, decreased to $29.15 billion for the quarter ended June 30, 2010, from $32.77 billion for the quarter ended June 30, 2009. The decline was primarily driven by lower noninterest income, including reduced equity investment income, mortgage banking income, and trading account profits.

The company anticipates a significant negative impact from the Dodd-Frank Act, particularly concerning debit card interchange fees. Management estimates an annualized revenue loss of $1.8 billion to $2.3 billion beginning in Q3 2011. Consequently, Bank of America expects to record a substantial goodwill impairment charge of $7 billion to $10 billion in the Global Card Services segment in the third quarter of 2010.

The provision for credit losses decreased substantially to $8.1 billion for the quarter ended June 30, 2010, down from $13.4 billion for the same period in 2009. This reduction reflects improved credit trends in some portfolios, lower delinquencies, and reduced bankruptcies, although consumer real estate portfolios continued to show stress.

Bank of America maintained a strong capital position. As of June 30, 2010, its Tier 1 common capital ratio was 8.01%, Tier 1 capital ratio was 10.67%, and Total capital ratio was 14.77%, all of which are considered well-capitalized by regulatory standards.