Summary
Bank of America Corporation (BAC) announced a significant settlement agreement with MBIA Inc. and its affiliates on May 6, 2013. This settlement resolves all outstanding claims between the two entities. As a subsequent event impacting the first quarter of 2013, BAC will record an additional $1.6 billion in pretax charges. This includes $1.3 billion directly related to the MBIA settlement and additional charges for other monolines. The financial impact of these charges will reduce BAC's reported first-quarter 2013 net income to $1.5 billion, or $0.10 per diluted common share, down from the previously reported $2.6 billion, or $0.20 per diluted common share. Investors should note that these adjustments will be reflected in the company's upcoming Form 10-Q filing for the period ended March 31, 2013.
Key Highlights
- 1Bank of America (BAC) enters into a comprehensive settlement agreement with MBIA Inc. and its affiliates.
- 2The settlement resolves all outstanding representations and warranties claims and other disputes between BAC and MBIA.
- 3BAC will record an additional $1.6 billion in pretax charges for the first quarter of 2013 due to the settlement.
- 4Of the total charges, $1.3 billion is directly attributable to the MBIA settlement.
- 5The settlement's financial impact will reduce reported first-quarter 2013 net income to $1.5 billion ($0.10/share) from $2.6 billion ($0.20/share).
- 6These charges are considered subsequent events related to conditions existing at the March 31, 2013 balance sheet date.
- 7The full financial impact will be detailed in BAC's upcoming Form 10-Q filing for the period ended March 31, 2013.