Bank Of America Corporation · NYSE:BAC
Bank Of America — Bank of America Corp /De/ (Bac, Bac-Pb, Bac-Pe, Bac-Pk, Bac-Pl, Bac-Pm, Bac-Pn, Bac-Po, Bac-Pp, Bml-Pg, Bml-Ph, Bml-Pj, Bml-Pl) — Q1 2012 Earnings Presentation
36 slides from Bank Of America's earnings presentation, Apr 19, 2012
Slide 1: Bank of America 1Q12 Financial Results
Bank of America 1Q12 Financial Results April 19, 2012
Slide 2: Forward-looking statements
Bank of America and its management may make certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forw
Slide 3: Important Presentation Format Information
• This information is preliminary and based on company data available at the time of the presentation • Certain prior period amounts have been reclassified to conform to current period presentation • Certain financial measures contained herein represent non-GAAP financial measures. For more informat
Slide 4: Key Takeaways for 1Q12 Results
Key Takeaways for 1Q12 Results • Reported earnings of $653MM or $0.03 per diluted share • Results include negative valuation adjustments of $4.8B pre-tax, or $0.28 per share, resulting from the narrowing of the company's credit spreads • Capital and liquidity continued to increase and are at record
Slide 5: Summary Income Statement and Selected Items
Summary Income Statement and Selected Items Selected Items in 1Q12 Results ($B) 3 5 1Q12 Summary Income Statement ($B except EPS) ____________________ 1 Fully taxable-equivalent (FTE) basis. Represents a non-GAAP financial measure. 2 On a GAAP basis, total revenue, net of interest expense, and incom
Slide 6: Tier 1 Common Equity Ratio Improved 92bps in 1Q12
Tier 1 Common Equity Ratio Improved 92bps in 1Q12 • Tier 1 common equity ratio increased 92bps from 4Q11 to 10.78% driven by capital actions in the quarter, continued reduction of risk-weighted assets and net income earned – In 1Q12 employees were paid a portion of 2011 incentive compensation in sto
Slide 7: Funding and Liquidity
Funding and Liquidity • Global Excess Liquidity Sources grew $28B vs. 4Q11 to a record $406B ‒ Parent company liquidity strong at $129B, up $4B while parent company LTD was reduced $5B ‒ Time to required funding increased to 31 months ‒ Well prepared to address $34B of parent company maturities in 2
Slide 8: Balance Sheet Strengthened
____________________ 1 Represents a non-GAAP financial measure. 2 For reconciliation to GAAP financial measures, see the accompanying reconciliations in the earnings press release and other earnings-related information. 3 Excluding recoveries related to the bulk sale of previously charged-off U.K. c
Slide 9: Net Interest Income
9 ____________________ 1 FTE basis. Represents a non-GAAP financial measure. On a GAAP basis, net interest income was $10.8B, $10.7B, $10.5B, $11.2B and $12.2B for 1Q12, 4Q11, 3Q11, 2Q11 and 1Q11, respectively. For reconciliation to GAAP financial measures, see the accompanying reconciliations in th
Slide 10: Business Segment Reporting Changes
Business Segment Reporting Changes 10 • Realigned certain segments to reflect changes in how we manage our business to better serve our customers • Consumer & Business Banking (CBB) ‒ Combined the former Deposits and Card Services segments, as well as Business Banking (formerly included in Global Co
Slide 11: Consumer & Business Banking
11 • Net income of $1.5B increased $211MM from 4Q11 due to lower provision and FDIC expense partially offset by lower revenue • Noninterest income declined seasonally driven by holiday spend in 4Q11 • Additional seasonal impacts: – Average loans declined $5.6B from 4Q11 – Average deposits increased
Slide 12: Consumer Real Estate Services
12 ____________________ 1 FTE basis. 2 Effective January 1, 2012, servicing activities previously recorded in Home Loans were moved to Legacy Assets & Servicing, and results of MSR activities, including net hedge results, and goodwill were moved from Other to Legacy Assets & Servicing. • 1Q12 net lo
Slide 13: Legacy Assets & Servicing (within CRES)
13 Legacy Assets & Servicing (within CRES) 1 ____________________ 1 Effective January 1, 2012, servicing activities previously recorded in Home Loans were moved to Legacy Assets & Servicing, and results of MSR activities, including net hedge results, and goodwill were moved from Other to Legacy Asse
Slide 14: Global Wealth & Investment Management
14 • Net income of $547MM increased $288MM from 4Q11 on higher revenue, lower credit costs and lower expenses • Pre-tax margin in 1Q12 was 19.8% • Revenue increased 4.6% driven by higher investment & brokerage income resulting from higher transactional activity and market levels, along with higher n
Slide 15: Global Banking
15 • Net income of $1.6B improved $253MM from 4Q11 • Revenue increased $448MM from 4Q11 – Corporation-wide investment banking fees increased $204MM from 4Q11 as increases in debt and equity underwriting fees were partially offset by slowdown in M&A activity 3 – Global Banking investment banking fees
Slide 16: Investment Banking Fees
Investment Banking Fees $ in millions 1Q12 4Q11 1Q11 Products Advisory $204 ($69) ($116) Debt 777 188 (68) Equity 305 38 (143) Gross IB fees (incl. self-led) 1,286 157 (327) Self-led (69) 47 (34) Net Corporation-wide fees (excl. self-led) $1,217 $204 ($361) Regions U.S./Canada $956 $35 ($236) Intern
Slide 17: Global Markets
17 • 1Q12 net income of $798MM improved $1.6B from 4Q11 – Results include DVA losses of $1.4B in 1Q12, $474MM in 4Q11 and $357MM in 1Q11 • Revenue, excluding DVA, increased $3.3B from 4Q11 and was in line with 1Q11 driven by improved sales and trading results • Excluding DVA, sales and trading incre
Slide 18: Sales and Trading Revenue
1Q12 4Q11 1Q11 Sales and trading revenue (excluding DVA) Fixed income, currency and commodities $4,131 $2,827 $432 Equity income 1,054 405 (233) Total sales and trading revenue (excluding DVA) $5,185 $3,232 $199 Sales and trading revenue Fixed income, currency and commodities $2,844 $2,035 ($546) Eq
Slide 19: All Other
• Net loss of $2.6B declined $4.0B from 4Q11 driven by the $3.3B negative valuation adjustment on structured liabilities and lower equity gains • Revenue was impacted by the following selected items: • Noninterest expense increased from 4Q11 primarily due to the annual retirement-eligible compensati
Slide 20: Noninterest Expense by Segment
$ in millions 1Q11 2Q11 3Q11 4Q11 1Q12 Y/Y Δ CBB $4,561 $4,375 $4,342 $4,426 $4,246 (6.9%) Continue to lower cost to serve by optimizing delivery channels Home Loans 1,479 1,332 1,099 749 877 (40.7%) Dramatically lowering costs as production levels change with business transformation combined with t
Slide 21: Credit Quality
• Net charge-offs increased $149MM in 1Q12 compared to 4Q11 – 4Q11 benefitted from a sale of previously charged-off U.K. credit card loans ($289MM) – In 1Q12 we experienced continued improvement in card losses resulting from a decrease in U.S. credit card bankruptcies and seasonal trends • 30+ days
Slide 22: Consumer Nonperforming Loans, Leases and Foreclosed Properties
22 Residential Mortgage NPAs ($MM) Home Equity NPAs ($MM) Consumer Nonperforming Loans, Leases and Foreclosed Properties (NPAs) $4,790 $4,607 $4,584 $4,613 $4,649 $13,703 $13,364 $13,092 $12,783 $11,728 $18,493 $17,971 $17,676 $17,396 $16,377 $0 $5,000 $10,000 $15,000 $20,000 $25,000 1Q11 2Q11 3Q11
Slide 23: Residential Mortgage and Home Equity 30+ Days Performing Delinquencies
23 ____________________ 1 Excludes FHA-insured loans and other loans individually insured under long-term standby agreements. 2 Excludes PCI loans. 3 During 1Q12, the bank regulatory agencies jointly issued interagency supervisory guidance on nonaccrual policies for junior-lien consumer real estate
Slide 24: Commercial Credit Quality
• Net charge-offs decreased $147MM in 1Q12 compared to 4Q11 – Decrease primarily driven by improving appraisal values and improved borrower credit profiles in Commercial Real Estate and lower gross charge-offs across the rest of the portfolio • Nonperforming loans, leases and foreclosed properties d
Slide 25: Appendix
Appendix
Slide 26: 1Q12 Results by Business Segment
____________________ 1 FTE basis. FTE basis for the Total Corporation and pre-tax, pre-provision are non-GAAP financial measures. 2 For reconciliations to GAAP financial measures, see the accompanying reconciliations in the earnings press release and other earnings-related information. 26 1Q12 Resul
Slide 27: CBB Financial Results
27 ____________________ 1 FTE basis. 2 Economic capital represents allocated equity less goodwill and a percentage of intangible assets. Represents a non-GAAP financial measure. For reconciliation to GAAP financial measures, see the accompanying reconciliations in the earnings press release and othe
Slide 28: CRES Financial Results
28 ____________________ 1 Effective January 1, 2012, servicing activities previously recorded in Home Loans were moved to Legacy Assets & Servicing, and results of MSR activities, including net hedge results, and goodwill were moved from Other to Legacy Assets & Servicing. 2 FTE basis. 3 Economic ca
Slide 29: Representations and Warranties Information
Representations and Warranties Information
Slide 30: Unresolved Repurchase Claims
1Q11 2Q11 3Q11 4Q11 1Q12 GSEs $5,350 $5,081 $4,721 $6,258 $8,103 Monolines 4,979 3,052 3,058 3,082 3,136 Private 1,567 1,782 2,229 3,267 4,855 Total $11,896 $9,915 $10,008 $12,607 $16,094 • Total representations and warranties provision was $282MM in 1Q12, which included the impact of higher estimat
Slide 31: Representations and Warranties Reserves and Range of Possible Loss
• Does not include litigation reserves established • Estimated Range of Possible Loss (RPL) above accruals up to $5B for non-GSE exposures at March 31, 2012 • Exposures identified above relate to repurchase claims associated with purported representations and warranties breaches in RMBS transactions
Slide 32: Additional Asset Quality Information
Additional Asset Quality Information
Slide 33: Consumer Delinquency Trends
33 ____________________ 1 Includes FHA-insured loans and loans individually insured under long-term standby agreements. 2 Excludes PCI loans. FHA and Other Fully-insured Consumer Real Estate Loans ($MM) • During 1Q12, our 30+ days performing delinquency trends continued to improve – Total consumer 3
Slide 34: Home Loans Asset Quality Key Indicators
34 ____________________ 1 Excludes FVO loans. 2 Loan-to-value (LTV) calculations apply to the residential mortgage portfolio. Combined loan-to-value (CLTV) calculations apply to the home equity portfolio. 3 As of 1Q12, home equity FICO metrics are based on FICO 08. Previous periods were reported usi
Slide 35: Home Equity
35 Home Equity • Of the $85.8B second-lien positions approximately 40%, or $34.7B, have CLTVs>100% – Does not mean entire second-lien position is a loss in the event of default – Assuming proceeds of 85% of the collateral value, we estimate collateral value of $8.8B available for second-liens – Of t
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