Summary
Bank of America Corporation (BAC) reported a net income of $6.2 billion for the third quarter of 2011, a significant turnaround from the $7.3 billion net loss in the same period of 2010. This improvement was largely driven by a substantial reduction in the provision for credit losses and a decrease in noninterest expense, which included large goodwill impairment charges in the prior year. Total revenue for the quarter increased by 6.3% year-over-year to $28.7 billion, benefiting from positive fair value adjustments on structured liabilities and a gain from the sale of a portion of its investment in China Construction Bank. However, the company faced challenges including continued macroeconomic uncertainty, the European financial crisis, and a downgrade in its credit rating by Moody's. BAC is also navigating significant legal and regulatory matters, particularly those related to mortgage representations and warranties, which continue to contribute to provisions and litigation expenses.
Financial Highlights
34 data points| Revenue | $28.45B |
| Interest Expense | $5.36B |
| Net Income | $6.23B |
| EPS (Basic) | $0.58 |
| EPS (Diluted) | $0.56 |
| Shares Outstanding (Basic) | 10.12B |
| Shares Outstanding (Diluted) | 10.46B |
Key Highlights
- 1Net income for the third quarter of 2011 was $6.2 billion, compared to a net loss of $7.3 billion in the third quarter of 2010.
- 2Total revenue, net of interest expense (FTE basis), increased by 6.3% to $28.7 billion, driven by higher noninterest income, particularly from fair value adjustments on structured liabilities and gains on equity investments.
- 3Provision for credit losses decreased significantly by 37% to $3.4 billion, reflecting improved credit quality across most portfolios.
- 4Noninterest expense decreased by 35% to $17.6 billion, largely due to the absence of a significant goodwill impairment charge recorded in the prior year.
- 5The company is in the process of restructuring 'Project New BAC' aimed at streamlining operations and reducing expenses by $5 billion annually by 2014.
- 6Moody's downgraded BAC's long-term senior unsecured debt rating to Baa1 from A2 in September 2011, citing concerns about systemic support and regulatory reforms.
- 7Significant legal and regulatory matters persist, notably the BNY Mellon Settlement related to representations and warranties, which is awaiting final court approval and faces objections from various parties.