Summary
Bank of America Corporation (BAC) reported its third quarter 2012 financial results, showing a net income of $340 million, or $0.00 per diluted share. This marks a significant decrease from the $6.2 billion net income reported in the same period last year. The decline is largely attributed to lower total revenue, driven by a $7.5 billion decrease in noninterest income primarily due to negative fair value adjustments on structured liabilities compared to positive adjustments in the prior year, and debit valuation adjustment (DVA) losses on derivatives. Despite the lower net income, the company highlighted improvements in asset quality, with a decrease in the allowance for loan and lease losses as a percentage of total loans and leases, and a reduction in net charge-offs. The company also continued its cost-saving initiatives through "Project New BAC," expecting significant annualized savings by the end of 2013. Operationally, Bank of America announced an agreement to settle a major class action lawsuit for $2.4 billion, which will be covered by existing litigation reserves. The company also provided an update on its capital and liquidity positions, indicating plans to redeem $5.1 billion of trust preferred securities, which is expected to generate pre-tax net interest income savings. Management remains focused on streamlining operations and managing expenses to navigate the ongoing economic uncertainties, particularly in Europe, and the "fiscal cliff" concerns in the U.S.
Financial Highlights
35 data points| Revenue | $20.43B |
| Interest Expense | $4.04B |
| Net Income | $340.00M |
| Shares Outstanding (Basic) | 10.78B |
| Shares Outstanding (Diluted) | 10.78B |
Key Highlights
- 1Net income for the third quarter of 2012 was $340 million, a significant decrease from $6.23 billion in Q3 2011.
- 2Diluted EPS was $0.00 for Q3 2012, compared to $0.56 in Q3 2011.
- 3Total revenue, net of interest expense, decreased by $8.0 billion to $20.7 billion in Q3 2012 compared to Q3 2011.
- 4Provision for credit losses decreased significantly to $1.8 billion in Q3 2012 from $3.4 billion in Q3 2011, reflecting improved portfolio trends.
- 5The Merrill Lynch Class Action Settlement agreement was announced for $2.4 billion, to be funded by existing litigation reserves.
- 6Bank of America announced plans to redeem $5.1 billion of trust preferred securities, expecting pre-tax net interest income savings.
- 7Tier 1 common capital ratio improved to 11.41% at September 30, 2012, up from 9.86% at December 31, 2011.