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) — Q3 2014 Earnings Presentation
28 slides from Bank Of America's earnings presentation, Oct 15, 2014
Slide 1: Bank of America 3Q14 Financial Results
Bank of America 3Q14 Financial Results October 15, 2014
Slide 2: 3Q14 Results
3Q14 Results 2 ____________________ 1 FTE basis. Represents a non-GAAP financial measure; see note A on slide 25. 2 The diluted earnings (loss) per common share excludes the effect of any equity instruments that are antidilutive to earnings per share. There were no potential common shares that were
Slide 3: Balance Sheet Highlights
____________________ 1 Represents a non-GAAP financial measure. For important presentation information, see slide 27. 2 3Q13 included a $1.1B charge as a result of a change in the U.K. corporate tax rate; excluding this charge, return on average assets, return on average common shareholders’ equity
Slide 4: Basel 3 Capital and Supplementary Leverage Ratio
Basel 3 Transition (under Standardized approach) 2 • Common equity tier 1 capital (CET1) ratio was stable at 12.0% in 3Q14 Basel 3 Fully Phased-in 4 • CET1 capital declined $1.6B from 2Q14, driven by a decrease in accumulated other comprehensive income and earnings net of dividends • Under the fully
Slide 5: Funding and Liquidity
Funding and Liquidity 5 Global Excess Liquidity Sources ($B) 2 • Long-term debt decreased $7B from 2Q14 – Long-term debt yields declined 10bps from 2Q14, driven primarily by lower new issuance spreads – Issued $8B of parent long-term debt in 3Q14, including $3B of Tier 2 subordinated debt – Expect t
Slide 6: Net Interest Income
Net Interest Income 6 • Reported net interest income (NII) 1 of $10.4B, up $0.2B from 2Q14 on less negative market-related adjustments and normalized NII improvements; the net interest yield improved 7bps to 2.29% • Excluding market-related adjustments, NII 1 of $10.5B increased modestly from 2Q14,
Slide 7: Expense Highlights
13.1 13.1 12.8 2.2 1.4 1.3 1.1 4.0 5.6 $16.4 $18.5 $19.7 $0 $5 $10 $15 $20 $25 3Q13 2Q14 3Q14 All Other LAS (excl. litigation) Litigation Expense Highlights ____________________ Note: Amounts may not total due to rounding. 1 Represents a non-GAAP financial measure; see note C on slide 25. 2 Represen
Slide 8: Asset Quality Trends Continued to Improve
$19.4 $17.4 $16.6 $15.8 $15.1 2.90x 2.78x 2.95x 3.67x 3.65x 0x 1x 2x 3x 4x 5x 6x 7x $0 $5 $10 $15 $20 $25 3Q13 4Q13 1Q14 2Q14 3Q14 T h o u s a n d s Allowance for loans and leases Allowance/annualized net charge-offs $1.7 $1.6 $1.4 $1.1 $1.0 0.73% 0.68% 0.62% 0.48% 0.46% -1% 1% 2% 3% $0 $1 $2 3Q13 4
Slide 9: Consumer & Business Banking (CBB)
Consumer & Business Banking (CBB) 9 ____________________ 1 FTE basis. 2 Represents a non-GAAP financial measure. For important presentation information, see slide 27. 3 Total U.S. consumer credit card includes portfolios in CBB and GWIM. In both 3Q14 and 2Q14, $3.2B of the U.S. consumer credit card
Slide 10: Consumer Real Estate Services (CRES)
Consumer Real Estate Services (CRES) 1 10 • 3Q14 net loss of $5.2B increased from 2Q14, driven by the impact of the DoJ settlement • Servicing income was down $142MM from 2Q14 due mainly to less favorable MSR net hedge results due to changes in assumptions related to servicing costs • Total producti
Slide 11: Global Wealth & Investment Management (GWIM)
1,144 1,181 1,190 1,229 1,209 780 821 842 879 888 242 245 244 237 239 117 119 120 123 126 $2,283 $2,366 $2,396 $2,468 $2,462 $500 $1,000 $1,500 $2,000 $2,500 3Q13 4Q13 1Q14 2Q14 3Q14 Other client balances Assets under management Client deposits Loans and leases Global Wealth & Investment Management
Slide 12: Global Banking
Global Banking 12 ____________________ 1 FTE basis. 2 Represents a non-GAAP financial measure. For important presentation information, see slide 27. 3 Ranking per Dealogic as of October 1, 2014. • [ Bullets to come ] • Net income of $1.4B, up 24% from 3Q13, driven by improved provision expense and,
Slide 13: Global Markets
Global Markets 13 • [ Bullets to come ] ____________________ 1 FTE basis. 2 Represents a non-GAAP financial measure; see note G on slide 25. 3 In addition to sales and trading revenue, Global Markets shares with Global Banking in certain deal economics from investment banking and loan origination ac
Slide 14: All Other
• Net income of $0.5B declined from 3Q13 due primarily to lower equity investment income, partially offset by lower noninterest expense and certain discrete tax benefits • Revenue was impacted by the following selected items: • Provision benefit flat to 2Q14 and declined vs. 3Q13 – Reserve release o
Slide 15: Key Takeaways
Key Takeaways 15 • Business performance showed good progress – 4 of 5 businesses improved earnings compared to the year-ago period – Reduced delinquent servicing and mortgage fulfillment costs • Lowered non-litigation costs to drive improved efficiency • Asset quality continued to improve; net charg
Slide 16: Appendix
Appendix
Slide 17: Results by Business Segment
____________________ 1 FTE basis. FTE basis for the total Corporation and pre-tax, pre-provision earnings are non-GAAP financial measures. Results by Business Segment $ in millions Total Corporation CBB CRES GWIM Global Banking Global Markets All Other Net interest income 1 $10,444 $4,952 $719 $1,46
Slide 18: YTD Business Segment Results
$4.6 $2.2 $3.7 $2.7 ($4.1) $5.3 $2.3 $4.0 $2.9 ($13.0) Consumer & Business Banking Global Wealth & Investment Management Global Banking Global Markets (excl. net DVA and U.K. tax change) Consumer Real Estate Services 3Q13 YTD 3Q14 YTD 3Q14 YTD ROAAC 1 25.4% 17.3% 11.6% 24.2% YTD Business Segment Res
Slide 19: YTD Business Segment PPNR
$10.1 $3.5 $6.6 $4.0 ($6.2) $10.4 $3.6 $6.7 $4.5 ($17.6) Consumer & Business Banking Global Wealth & Investment Management Global Banking Global Markets (excl. net DVA) Consumer Real Estate Services 3Q13 YTD 3Q14 YTD n/m YTD Business Segment PPNR Total Pre-tax, Pre-provision Earnings (Loss) by Busin
Slide 20: Business Metrics Reflect Progress: Consumer Metrics
Business Metrics Reflect Progress Consumer Metrics 20 Avg. Consumer and Business Banking Deposits ($B) and Rate Paid (bps) Mobile Banking Active Accounts (units in MM) 1 Banking Centers 5,540 5,243 4,947 3,000 4,000 5,000 6,000 3Q12 3Q13 3Q14 $75.9 $89.5 $108.5 $0 $20 $40 $60 $80 $100 $120 3Q12 3Q13
Slide 21: Business Metrics Reflect Progress: Banking and Markets Metrics
Business Metrics Reflect Progress Banking and Markets Metrics 21 ____________________ Note: Amounts may not total due to rounding. 1 FTE basis. For important presentation information, see slide 27. 2 Represents a non-GAAP financial measure; see note G on slide 25. 3 VaR model uses historical simulat
Slide 22: Representations and Warranties Exposure
Representations and Warranties Exposure 1 22 ____________________ 1 Exposures identified above relate only to repurchase claims associated with purported representations and warranties breaches. They do not include any exposures associated with related litigation matters; separate foreclosure costs
Slide 23: Home Loans Asset Quality Key Indicators
____________________ 1 Excludes FVO loans. 2 Excludes write-offs of PCI loans of $196MM and $70MM related to residential mortgage and $50MM and $90MM related to home equity for 3Q14 and 2Q14. Net charge-off ratios including the PCI write-offs for residential mortgage were 0.42% and 0.06%, and for ho
Slide 24: Regulatory Capital: Basel 3 Transition to Fully Phased-in
____________________ 1 Regulatory capital ratios are preliminary. 2 On January 1, 2014, the Basel 3 rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting CET1 capital and Tier 1 capital. $ in millions Regulatory Capital – Basel
Slide 25: Notes on Non-GAAP Financial Measures
Notes 25 Notes on non-GAAP financial measures For reconciliations to GAAP financial measures, see the accompanying reconciliations in the earnings press release and other earnings-related information. A On a GAAP basis, net interest income (NII); total revenue, net of interest expense; pre-tax, pre-
Slide 26: Forward-Looking Statements
Forward-Looking Statements 26 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 his
Slide 27: Important Presentation Information
• The information contained herein is preliminary and based on Company data available at the time of the earnings presentation. It speaks only as of the particular date or dates included in the accompanying slides. Bank of America does not undertake an obligation to, and disclaims any duty to, updat
Slide 28: Bank of America
Bankof America