Summary
Bank of America Corporation (BAC) reported a net income of $1.48 billion for the first quarter of 2013, a significant increase from $653 million in the same period last year, resulting in diluted earnings per share of $0.10 compared to $0.03. Total revenue, net of interest expense, rose to $23.4 billion from $22.5 billion year-over-year. The company highlighted a decrease in its provision for credit losses, primarily due to improvements in the home loans portfolio. Noninterest expense saw an increase, largely driven by higher litigation expenses related to the MBIA settlement, though offset by cost savings from Project New BAC initiatives. Capital ratios remained strong, with Tier 1 common capital at 10.49% under Basel 1 – 2013 Rules, and the Federal Reserve did not object to the company's 2013 capital plan, which included stock repurchases and preferred stock redemptions. Significant developments during the quarter included the MBIA Settlement for $1.565 billion in cash and other considerations to resolve litigation and claims. Additionally, an agreement in principle was reached to settle Countrywide RMBS Class Action lawsuits for $500 million. The company also disclosed agreements to sell mortgage servicing rights on approximately $327 billion of loans. These settlements and events have been accounted for, with charges related to the MBIA settlement impacting first-quarter results. Overall, the report indicates a strengthening economy contributing to improved credit quality across portfolios, alongside ongoing efforts to manage expenses and resolve legacy legal and operational issues. Investors should note the impact of litigation settlements and the ongoing cost-saving initiatives on profitability.
Financial Highlights
35 data points| Revenue | $23.20B |
| Interest Expense | $3.44B |
| Net Income | $1.48B |
| EPS (Basic) | $0.10 |
| EPS (Diluted) | $0.10 |
| Shares Outstanding (Basic) | 10.80B |
| Shares Outstanding (Diluted) | 11.15B |
Key Highlights
- 1Net income increased to $1.48 billion ($0.10/share) in Q1 2013 from $653 million ($0.03/share) in Q1 2012.
- 2Total revenue, net of interest expense, increased to $23.4 billion from $22.5 billion year-over-year.
- 3Provision for credit losses decreased significantly to $1.7 billion from $2.4 billion, driven by improvements in home loans and credit card portfolios.
- 4Noninterest expense increased by $359 million, primarily due to $1.3 billion in litigation expense related to the MBIA settlement, partially offset by cost savings from Project New BAC.
- 5The MBIA Settlement was entered into for $1.565 billion cash and $95 million in notes, resolving all outstanding litigation and claims.
- 6An agreement in principle was reached to settle Countrywide RMBS Class Action lawsuits for $500 million.
- 7Bank of America's Tier 1 common capital ratio was 10.49% under Basel 1 – 2013 Rules, and the capital plan received no objection from the Federal Reserve.