Bank of America Earns $4 Billion in 2008
CHARLOTTE, N.C., Jan. 16 /PRNewswire-AsiaNet/ --
Fourth-Quarter Net Loss of $1.79 Billion
Extends $115 Billion in New Credit in Fourth Quarter
$15.31 Billion Fourth-Quarter Net Loss at Merrill Lynch
U.S. Invests $20 Billion in Bank of America; Also Provides Insurance for $118
Billion in Exposure
Quarterly Dividend Reduced to $.01
Bank of America Corporation today reported full-year 2008 profit of $4.01
billion compared with net income of $14.98 billion a year earlier.
Earnings after preferred dividends and available to common shareholders
were $2.56 billion, or $0.55 per diluted share, down from $14.80 billion, or
$3.30 per share.
In the fourth quarter of 2008, the company had a net loss of $1.79 billion
compared with net income of $268 million a year earlier. The net loss
applicable to common shareholders was $2.39 billion, or $0.48 per diluted
share, down from net income of $215 million, or $0.05 per share, in the same
period in 2007. Results include Countrywide Financial, which Bank of America
purchased on July 1, but not Merrill Lynch & Co., Inc., which was acquired on
January 1, 2009.
Fourth quarter results were driven by escalating credit costs, including
additions to reserves, and significant writedowns and trading losses in the
capital markets businesses. These actions reflect the deepening economic
recession and extremely challenging financial environment, both of which
significantly intensified in the last three months of 2008.
Global Consumer and Small Business Banking and Global Wealth and
Investment Management were profitable, paced by Bank of America's successful
and expanding deposit business. Negative results in Capital Markets and
Advisory Services masked the profitability in Business Lending and Treasury
Services within Global Corporate and Investment Banking.
Bank of America ended 2008 with a Tier 1 capital ratio of 9.15 percent.
Merrill Lynch preliminary results indicate a fourth-quarter net loss of
$15.31 billion, or $9.62 per diluted share, driven by severe capital markets
dislocations. (See the Transition Update section of this news release and
supplemental earnings information provided on
In view of the continuing severe conditions in the markets and economy,
the U.S. government agreed to assist in the Merrill acquisition by making a
further investment in Bank of America of $20 billion in preferred stock
carrying an 8 percent dividend rate.
In addition, the government has agreed to provide protection against
further losses on $118 billion in selected capital markets exposure, primarily
from the former Merrill Lynch portfolio. Under the agreement, Bank of America
would cover the first $10 billion in losses and the government would cover 90
percent of any subsequent losses. Bank of America would pay a premium of 3.4
percent of those assets for this program.
On a pro forma basis, this additional capital would boost the company's
Tier 1 capital ratio to approximately 10.70 percent.
In light of continuing severe economic and financial market conditions,
the Bank of America Board of Directors has declared a first-quarter dividend
of $.01 per share payable March 27, 2009 to shareholders of record as of March
6, 2009.
Combined, these actions strengthen Bank of America and will allow the
company to continue business levels that both support the U.S. economy and
create future value for shareholders.
Bank of America extended more than $115 billion in new credit in the
fourth quarter. It is increasing staff in its mortgage unit to meet a surge in
demand that began late in December as mortgage rates fell. The company
continues to prudently extend credit to commercial and consumer borrowers
throughout its product line.
Customer Highlights
-- Of the more than $115 billion in new credit extended during the
quarter, about $49 billion was in commercial non-real estate; $45 billion was
in mortgages; nearly $8 billion was in domestic card and unsecured consumer
loans; nearly $7 billion was in commercial real estate; more than $5 billion
was in home equity products; and approximately $2 billion was in consumer
Dealer Financial Services.
-- During the fourth quarter, Small Business Banking extended nearly $1
billion in new credit to over 47,000 new customers.
-- Mortgages made to low- and moderate-income borrowers and areas totaled
$11.3 billion in the fourth quarter, serving more than 77,000 borrowers.
-- To help homeowners avoid foreclosure, Bank of America and Countrywide
modified approximately 230,000 home loans during 2008. This year the company
embarked on a loan modification program projected to modify over $100 billion
in loans to help keep up to 630,000 borrowers in their homes. The centerpiece
of the program is a proactive loan modification process to provide relief to
eligible borrowers who are seriously delinquent or are likely to become
seriously delinquent as a result of loan features, such as rate resets or
payment recasts. In some instances, innovative new approaches will be employed
to include automatic streamlined loan modifications across certain classes of
borrowers. The program utilizes an affordability equation to qualify borrowers
for loan modifications at a targeted first year mortgage debt to income ratio
of 34 percent.
-- The company established a lending initiative group: senior officers
meeting with the chief executive every week to evaluate how much Bank of
America is lending, to whom, and what more can be done while remaining prudent
and responsible. The company will report findings monthly.
Fourth Quarter 2008 Financial Summary
Revenue and Expense
Revenue net of interest expense on a fully taxable-equivalent basis rose
19 percent to $15.98 billion from $13.45 billion a year earlier.
Net interest income on a fully taxable-equivalent basis rose 37 percent to
$13.41 billion from $9.82 billion in the fourth quarter of 2007 on higher
market-based income, the favorable rate environment, loan growth and the
acquisition of Countrywide. The net interest yield improved 70 basis points to
3.31 percent.
Noninterest income declined 29 percent to $2.57 billion from $3.64 billion
a year earlier. Mortgage banking income, gains on sales of debt securities,
insurance premiums and service charges increased. The increases were more than
offset by sales and trading losses in the Capital Markets and Advisory
Services business.
Noninterest expense rose 5 percent to $10.95 billion from a year earlier
mainly because of the addition of Countrywide, which was partially offset by
lower personnel costs. Pretax merger and restructuring charges related to
acquisitions were $306 million compared with $140 million a year earlier.
Given the capital markets disruptions, the company's efficiency ratio remains
above normal levels.
Credit Quality
Credit quality deteriorated further during the quarter as the recession
worsened. Consumers continued to experience high levels of stress from
declining home prices, rising unemployment and tighter credit conditions.
These factors led to higher losses and an increase in delinquencies in all
consumer portfolios.
Declining home values, a slowdown in consumer spending and continued
turmoil in the global financial markets negatively impacted the commercial
portfolios. Commercial losses increased during the quarter driven by higher
broad-based losses in the non-real estate domestic portfolios, the homebuilder
portfolio, and several large defaults by foreign financial services borrowers.
Nonperforming assets were $18.23 billion or 1.96 percent of total loans,
leases and foreclosed properties, compared with $13.58 billion, or 1.45
percent, at September 30 and $5.95 billion, or 0.68 percent, at December 31,
2007.
Total managed net losses were $7.40 billion, or 2.84 percent, of total
average managed loans and leases compared with $6.11 billion, or 2.32 percent,
in the third quarter and $3.28 billion, or 1.34 percent, in the fourth quarter
of 2007.
Net charge-offs were $5.54 billion, or 2.36 percent of total average loans
and leases compared with $4.36 billion, or 1.84 percent, in the third quarter
and $1.99 billion, or 0.91 percent, in the fourth quarter of 2007.
The provision for credit losses was $8.54 billion, up from $6.45 billion
in the third quarter and $3.31 billion in the fourth quarter of 2007. The
company added $2.99 billion to the allowance for loan and lease losses during
the quarter. The additions were across most consumer portfolios reflecting
economic stress on consumers. Reserves were also increased on commercial
portfolios.
Capital Management
Total shareholders' equity was $177.05 billion at December 31. Period-end
assets were $1.82 trillion. The Tier 1 capital ratio was 9.15 percent, up from
7.55 percent at September 30, 2008. The Tier 1 ratio was 6.87 percent a year
earlier.
Bank of America issued 455 million common shares for $9.88 billion, $15
billion of preferred stock issued to the U.S. Department of the Treasury and
did not repurchase any shares in the period. Period-end common shares issued
and outstanding were 5.02 billion for the fourth quarter of 2008, 4.56 billion
for the third quarter of 2008 and 4.44 billion in the year-ago quarter. The
company paid a cash dividend of $0.32 per common share and recorded $472
million in preferred dividends during the quarter. An additional $131 million
of preferred dividends were deducted in the calculation of net income
applicable to common shareholders.
In January 2009, an additional $10 billion of preferred stock (part of the
original $25 billion assigned to Bank of America and Merrill Lynch) was issued
to the U.S. Department of the Treasury as part of the Troubled Asset Relief
Program (TARP). The company also issued approximately 1.4 billion shares of
common stock associated with the acquisition of Merrill Lynch.
Full-Year 2008 Financial Summary
Revenue and Expense
Revenue on a fully taxable-equivalent basis increased 8 percent to $73.98
billion from $68.58 billion a year earlier.
Net interest income on a fully taxable-equivalent basis increased to
$46.55 billion from $36.19 billion in 2007 on higher market-based income,
consumer and commercial loan growth, the favorable rate environment and the
addition of Countrywide and LaSalle. The net interest yield widened 38 basis
points to 2.98 percent reflecting the more favorable interest rate environment
and product mix.
Noninterest income fell 15 percent to $27.42 billion from $32.39 billion
in 2007. Writedowns in the wake of market disruptions of $10.47 billion
reduced results. Higher mortgage banking income, service charges and insurance
premiums along with an increase in gains on sales of debt securities partially
offset the decline.
Noninterest expense increased 11 percent to $41.53 billion from $37.52
billion a year ago mainly due to the addition of Countrywide. The increase was
partially offset by lower incentive compensation. Given the capital markets
disruptions, the company's efficiency ratio remains above normal levels.
Credit Quality
Provision expense increased $18.44 billion to $26.83 billion in 2008
because of higher net charge-offs and additions to the reserve. The majority
of the reserve additions were in the consumer and small business portfolios as
the housing markets weakened and the economy slowed. Reserves on commercial
portfolios were increased as the homebuilder and commercial domestic
portfolios within Global Corporate and Investment Banking deteriorated.
Total managed net losses were $22.90 billion during 2008, or 2.27 percent
of total average managed loans and leases, compared with $11.25 billion or
1.29 percent during the prior year. Net charge-offs totaled $16.23 billion, or
1.79 percent of average loans and leases, compared with $6.48 billion, or 0.84
percent in 2007. Portfolios directly tied to housing, including home equity,
residential mortgage and homebuilders drove a significant portion of the
increase. The weaker economy also drove higher levels of net losses across the
Card Services portfolios as well as the commercial portfolios.
Capital Management
For 2008, Bank of America recorded $10.26 billion in dividends to common
shareholders and $1.32 billion to preferred shareholders. The company also
issued approximately 580 million common shares, including 455 million during
the fourth quarter and 107 million related to the Countrywide acquisition. In
addition, Bank of America obtained nearly $35 billion in additional capital in
connection with preferred stock issuances throughout the year.
2008 Business Segment Results
Global Consumer and Small Business Banking(1)
(Dollars in millions) 2008 2007
Total managed revenue,
net of interest expense(2) $58,344 $47,855
Provision for credit
losses(3) 26,841 12,920
Noninterest expense 24,937 20,349
Net income 4,234 9,362
Efficiency ratio(2) 42.74% 42.52%
Return on average equity 5.78 14.81
Managed loans(4) $350,264 $294,030
Deposits(4) 370,961 330,661
At 12/31/08 At 12/31/07
Period ending deposits $393,165 $346,908
1 Results shown on a managed basis. Managed basis assumes that loans that
have been securitized were not sold and presents earnings on these loans in a
manner similar to the way loans that have not been sold (i.e., held loans) are
presented. For more information and detailed reconciliation, please refer to
the data pages supplied with this Press Release.
2 Fully taxable-equivalent basis
3 Represents provision for credit losses on held loans combined with
realized credit losses associated with the securitized loan portfolio
4 Balances averaged for period
Global Consumer and Small Business Banking net income declined from a year
ago as credit costs more than doubled. Expenses rose mostly on the addition of
Countrywide.
Managed net revenue rose 22 percent due to the Countrywide acquisition and
organic loan and deposit growth.
The provision for credit losses increased by $13.92 billion to $26.84
billion. Net losses increased $8.38 billion to $19.18 billion as housing
market deterioration and weak economic conditions impacted most consumer
portfolios. Loan loss reserve additions related to deterioration and increased
delinquencies contributed to higher credit costs.
-- Deposits and Student Lending net income increased by 9 percent to $6.21
billion, while net revenue increased 10 percent to $20.65 billion as net
interest income, service charges and debit card income all showed strong
growth.
-- Card Services net income fell 85 percent to $521 million as credit
costs rose. Managed net revenue grew 12 percent to $28.43 billion as higher
average loan balances increased net interest income.
-- Mortgage, Home Equity and Insurance Services reported a net loss of
$2.50 billion as home equity credit costs rose. Higher noninterest expense was
offset by increases in mortgage banking income, net interest income and
insurance premiums. Expense and revenue increases are due to the addition of
Countrywide.
Fourth-quarter net income for Global Consumer and Small Business Banking
declined 56 percent to $835 million from a year earlier. The provision for
credit losses rose 77 percent as the economy weakened, and expenses rose 28
percent due to the addition of Countrywide. Net revenue increased 26 percent
to $15.91 billion on higher net interest income, mortgage banking income and
insurance premiums related to the addition of Countrywide and organic loan and
deposit growth.
Global Corporate and Investment Banking
(Dollars in millions) 2008 2007
Total revenue, net of
interest expense(1) $13,440 $13,651
Provision for credit 658
losses 3,080
Noninterest expense 10,381 12,198
Net income (loss) (14) 510
Efficiency ratio(1) 77.24% 89.36%
Return on average equity (0.02) 1.12
Loans and leases(2) $337,352 $274,725
Trading-related assets(2) 341,544 362,195
Deposits(2) 239,097 219,891
1 Fully taxable-equivalent basis
2 Balances averaged for period
Global Corporate and Investment Banking had a net loss of $14 million on
significant writedowns, higher credit costs and lower net revenue. A 48
percent increase in net interest income and higher service charges and
investment banking income were more than offset by market disruption charges
of $10.47 billion, which were $6.45 billion a year earlier. Included in those
charges were CDO-related writedowns of $4.78 billion, down from $5.65 billion
during 2007, and leveraged loan writedowns of $1.08 billion, compared with
$196 million a year earlier.
The provision for credit losses increased $2.42 billion to $3.08 billion.
Net charge-offs rose from low 2007 levels and with the exception of
homebuilders were across a broad range of borrowers and industries. Reserves
were increased due to deterioration in the homebuilder, commercial domestic
and dealer-related portfolios.
-- Business Lending net income decreased 14 percent to $1.72 billion as
strong revenue growth and lower expenses were offset by higher credit costs.
Net revenue increased 29 percent to $7.82 billion on organic and merger-
related average loan growth of more than $62 billion.
-- Capital Markets and Advisory Services recorded a net loss of $4.95
billion compared with a net loss of $3.39 billion a year earlier. Net revenue
losses of $3.02 billion were lower compared with net revenue of $549 million a
year earlier, driven by writedowns associated with credit-related positions
including CDO-related investments and auction rate securities.
-- Treasury Services net income increased 28 percent to $2.73 billion as
net revenue grew 10 percent to $7.78 billion. Net revenue increased as
favorable pricing and increased volume drove deposits and service charges
higher. Both revenue and expenses were favorably impacted by the Visa IPO.
Global Corporate and Investment Banking reported a net loss of $2.44
billion for the quarter, compared with a net loss of $2.77 billion last year.
The net loss narrowed on lower market disruption losses, higher net interest
income due to lower short term rates, wider spreads and increased customer
balances, and investment banking income, offset by higher credit costs.
Capital Markets and Advisory Services had negative net revenue of $4.64
billion in the period.
Market disruption-related impacts of $4.61 billion in the quarter include:
-- Total CDO-related losses of $1.72 billion.
-- Writedowns of commercial mortgage-backed securities and related
transactions of $853 million.
-- Leveraged lending-related writedowns of $429 million.
-- Writedowns on auction rate securities of $353 million.
Global Wealth and Investment Management
(Dollars in millions) 2008 2007
Total revenue, net of
interest expense(1) $7,785 $7,553
Provision for credit
losses 664 14
Noninterest expense 4,904 4,480
Net income 1,416 1,960
Efficiency ratio(1) 62.99% 59.31%
Return on average equity 12.11 19.83
Loans(2) $87,591 $73,473
Deposits(2) 159,525 124,871
(in billions) At 12/31/08 At 12/31/07
Assets under management $524.0 $643.5
1 Fully taxable-equivalent basis
2 Balances averaged for period
Net income declined 28 percent to $1.42 billion as support for certain
cash funds increased and credit costs rose.
Net revenue increased 3 percent from the 2007 addition of U.S. Trust and
LaSalle and organic loan and deposit growth. The increase was offset by
support to certain cash funds, writedowns related to auction rate securities
and weaker equity markets.
The provision for credit losses increased $650 million to $664 million as
a result of additions to the reserve and higher net charge-offs reflecting
housing market deterioration and the slowing economy.
-- U.S. Trust, Bank of America Private Wealth Management net income
declined 2 percent to $460 million. Net revenue rose 14 percent to $2.65
billion due to the addition of U.S. Trust and LaSalle, partially offset by the
weaker equity markets.
-- Columbia Management reported a net loss of $459 million compared with
net income of $21 million a year ago mainly due to an additional $725 million
in support provided to certain cash funds and weaker equity markets.
-- Premier Banking and Investments net income fell 54 percent to $584
million as credit costs increased by $534 million on higher home equity loan
losses. Net revenue decreased 15 percent to $3.20 billion on lower net
interest income as spread compression driven by deposit mix and competitive
deposit pricing more than offset deposit growth.
Fourth-quarter net income for Global Wealth and Investment Management
increased 65 percent to $511 million compared with a year earlier due to
higher net revenue and lower expenses. Net revenue increased 12 percent to
$1.98 billion as higher net interest income driven by growth in loans and
deposits was partially offset by weaker equity markets. Expenses declined 2
percent on lower incentive compensation.
All Other(1)
(Dollars in millions) 2008 2007
Total revenue net of
interest expense(2) $(5,593) $(477)
Provision for credit
losses(3) (3,760) (5,207)
Merger and restructuring
charges 935 410
All other noninterest
expense 372 87
Net income (loss) (1,628) 3,150
Loans and leases(4) $135,671 $133,926
1 All Other consists primarily of equity investments, the residential
mortgage portfolio associated with asset and liability management activities,
the residual impact of the cost allocation processes, merger and restructuring
charges, intersegment eliminations, and the results of certain consumer
finance, investment management and commercial lending businesses that are
being liquidated. All Other also includes the offsetting securitization impact
to present Card Services on a managed basis. Our view of Global Consumer and
Small Business Banking operations are also shown on a managed basis. For more
information and detailed reconciliation, please refer to the data pages
supplied with this Press Release.
2 Fully taxable-equivalent basis
3 Represents the provision for credit losses in All Other combined with
the GCSBB securitization offset.
4 Balances averaged for period
All Other had a net loss of $1.63 billion for 2008 compared with net
income of $3.15 billion a year earlier. For the fourth quarter, the net loss
of $693 million compared with net income of $830 million a year earlier. The
declines are attributable to lower equity investment income, higher credit
costs and increased merger and restructuring charges, which more than offset
gains on the sales of debt securities. Results were also adversely impacted by
the absence of earnings due to the sale of certain businesses and foreign
operations during 2007. Credit costs rose, primarily in the residential
mortgage portfolio due to deterioration in the housing markets and the impacts
of a slowing economy.
Transition Update
(Merrill Lynch results are not part of Bank of America fourth-quarter or
full-year 2008 results)
Merrill Lynch was acquired on January 1, 2009 creating a premier financial
services franchise with significantly enhanced wealth management, investment
banking and international capabilities.
Merrill Lynch preliminary results indicate a fourth-quarter net loss of
$15.31 billion, or $9.62 per diluted share, driven by severe capital markets
dislocations.
Merrill Lynch's Global Wealth Management division generated $2.6 billion
in net revenue in the period as fees held up well in the declining markets.
The strongest performance came from the U.S. Advisory portion of the business.
Retention of financial advisors remains consistent with historical trends.
Significant negative fourth-quarter items for Merrill Lynch include:
-- Credit valuation adjustments related to monoline financial guarantor
exposures of $3.22 billion.
-- Goodwill impairments of $2.31 billion.
-- Leveraged loan writedowns of $1.92 billion.
-- $1.16 billion in the U.S. Bank Investment Securities Portfolio
writedowns.
-- Commercial real estate writedowns of $1.13 billion.
The LaSalle transition reached a significant milestone in the quarter with
successful systems conversions, marking the completion of the integration. In
addition, cost savings exceeded original projections.
The integration of Countrywide is on track and expected to reach targeted
cost savings, which are currently expected to be around $900 million after-tax
and are expected to be fully realized by 2011.
Note: Chief Executive Officer Kenneth D. Lewis and Chief Financial
Officer Joe L. Price will discuss fourth-quarter 2008 results in a conference
call at 7 a.m. (Eastern Time) today. The presentation and supporting materials
can be accessed on the Bank of America Investor Relations Web site at
conference call, dial 877.585.6241 (domestic) or 785.424.1732 (international)
and the conference ID: 79795.
Bank of America
Bank of America is one of the world's largest financial institutions,
serving individual consumers, small and middle market businesses and large
corporations with a full range of banking, investing, asset management and
other financial and risk-management products and services. The company
provides unmatched convenience in the United States, serving more than 59
million consumer and small business relationships with more than 6,100 retail
banking offices, nearly 18,700 ATMs and award-winning online banking with
nearly 29 million active users. Following the acquisition of Merrill Lynch on
January 1, 2009, Bank of America is among the world's leading wealth
management companies and is a global leader in corporate and investment
banking and trading across a broad range of asset classes serving
corporations, governments, institutions and individuals around the world. Bank
of America offers industry-leading support to more than 4 million small
business owners through a suite of innovative, easy-to-use online products and
services. The company serves clients in more than 40 countries. Bank of
America Corporation stock (NYSE: BAC) is a component of the Dow Jones
Industrial Average and is listed on the New York Stock Exchange.
Forward-Looking Statements
Bank of America may make forward-looking statements, including, for
example, statements about management expectations and intentions regarding our
future financial results, integration plans and cost savings, growth
opportunities, business outlook, loan and deposit growth, mortgage production,
credit losses, and other similar matters. These forward-looking statements are
not historical facts, but instead represent Bank of America's current
expectations, intentions or forecasts of future events, circumstances or
results. These statements are not guarantees of future results or performance
and involve certain risks, uncertainties and assumptions that are difficult to
predict and often are beyond Bank of America's control. Actual outcomes and
results may differ materially from those expressed in, or implied by, any of
these forward-looking statements.
You should not place undue reliance on any forward-looking statement and
should consider the following possible events or factors that could cause
results or performance to differ materially from those expressed in the
forward-looking statements: negative economic conditions; changes in interest
rates and market liquidity; changes in foreign exchange rates; adverse
movements and volatility in debt and equity capital markets; changes in market
rates and prices, which may adversely impact the value of financial products
and instruments; estimates of fair value of assets and liabilities;
legislative and regulatory actions in the United States and internationally;
liabilities resulting from litigation and regulatory investigations; changes
in domestic or foreign tax laws, rules and regulations and governmental
interpretations thereof; monetary and fiscal policies and regulations; changes
in accounting standards, rules and interpretations; increased competition; the
ability to grow Bank of America's core businesses; the ability to develop and
introduce new banking-related products, services and enhancements; mergers and
acquisitions and their integration; decisions to downsize, sell or close units
or otherwise change Bank of America's business mix; management's ability to
identify and manage these and other risks; and the other risk factors
discussed in Bank of America's Annual Report on Form 10-K for 2007, Quarterly
Report on Form 10-Q for the quarter ended September 30, 2008, and in any of
Bank of America's other subsequent SEC filings.
Forward-looking statements speak only as of the date they are made, and
Bank of America undertakes no obligation to update any forward-looking
statement to reflect the impact of circumstances or events that arise after
the date the forward-looking statement was made.
Investors May Contact:
Kevin Stitt, Bank of America, 1.704.386.5667
Lee McEntire, Bank of America, 1.704.388.6780
Grace Yoon, Bank of America, 1.212.449.7323
Reporters May Contact:
Scott Silvestri, Bank of America, 1.980.388.9921
scott.silvestri@bankofamerica.com
Bank of America Corporation and Subsidiaries
Selected Financial Data
(Dollars in millions, except per share data; shares in thousands)
Summary Income Three Months Ended
Statement December 31 Year Ended December 31
2008 2007 2008 2007
Net interest income $13,106 $9,165 $45,360 $34,441
Total noninterest
income 2,574 3,639 27,422 32,392
Total revenue, net of
interest expense 15,680 12,804 72,782 66,833
Provision for credit
losses 8,535 3,310 26,825 8,385
Noninterest expense,
before merger and
restructuring charges 10,641 10,269 40,594 37,114
Merger and
restructuring charges 306 140 935 410
Income (loss) before
income taxes (3,802) (915) 4,428 20,924
Income tax expense
(benefit) (2,013) (1,183) 420 5,942
Net income (loss) $(1,789) $268 $4,008 $14,982
Preferred stock
dividends 603 53 1,452 182
Net income (loss)
applicable to common
shareholders $(2,392) $215 $2,556 $14,800
Earnings (loss) per
common share $(0.48) $0.05 $0.56 $3.35
Diluted earnings
(loss) per common
share (1) (0.48) 0.05 0.55 3.30
Summary Average Three Months Ended
Balance Sheet December 31 Year Ended December 31
2008 2007 2008 2007
Total loans and leases $941,563 $868,119 $910,878 $776,154
Debt securities 280,942 206,873 250,551 186,466
Total earning assets 1,616,673 1,502,998 1,562,729 1,390,192
Total assets 1,948,854 1,742,467 1,843,979 1,602,073
Total deposits 892,141 781,625 831,144 717,182
Shareholders' equity 176,566 144,924 164,831 136,662
Common shareholders'
equity 142,535 141,085 141,638 133,555
Performance Ratios Three Months Ended
December 31 Year Ended December 31
2008 2007 2008 2007
Return on average
assets (0.37)% 0.06 % 0.22 % 0.94 %
Return on average
common shareholders'
equity (6.68) 0.60 1.80 11.08
Credit Quality Three Months Ended
December 31 Year Ended December 31
2008 2007 2008 2007
Total net charge-offs $5,541 $1,985 $16,231 $6,480
Annualized net charge-
offs as a % of
average loans and
leases outstanding
(2) 2.36 % 0.91 % 1.79 % 0.84 %
Provision for credit
losses $8,535 $3,310 $26,825 $8,385
Total consumer credit
card managed net
losses 3,263 2,138 11,382 8,214
Total consumer credit
card managed net
losses as a % of
average managed
credit card
receivables 7.16 % 4.75 % 6.18 % 4.79 %
December 31
2008 2007
Total nonperforming
assets $18,232 $5,948
Nonperforming assets
as a % of total
loans, leases and
foreclosed properties
(2) 1.96 % 0.68 %
Allowance for loan and
lease losses $23,071 $11,588
Allowance for loan and
lease losses as a %
of total loans and
leases (2) 2.49 % 1.33 %
Capital Management December 31
2008 2007
Risk-based capital
ratios:
Tier 1 9.15 % 6.87 %
Total 13.00 11.02
Tangible equity ratio
(3) 5.01 3.62
Tangible common equity
ratio (4) 2.83 3.35
Period-end common
shares issued and
outstanding 5,017,436 4,437,885
Three Months Ended
December 31 Year Ended December 31
2008 2007 2008 2007
Shares issued 455,381 3,730 579,551 53,464
Shares repurchased - (2,700) - (73,730)
Average common shares
issued and
outstanding 4,957,049 4,421,554 4,592,085 4,423,579
Average diluted common
shares issued and
outstanding (1) 4,957,049 4,470,108 4,612,491 4,480,254
Dividends paid per
common share $0.32 $0.64 $2.24 $2.40
Summary Ending Balance
Sheet December 31
2008 2007
Total loans and leases $931,446 $876,344
Total debt securities 277,589 214,056
Total earning assets 1,536,198 1,463,570
Total assets 1,817,943 1,715,746
Total deposits 882,997 805,177
Total shareholders'
equity 177,052 146,803
Common shareholders'
equity 139,351 142,394
Book value per share
of common stock $27.77 $32.09
(1) Due to the net loss for the three months ended December 31, 2008, the
impact of antidilutive equity instruments have been excluded from diluted
earnings per share and average diluted common shares.
(2) Ratios do not include loans measured at fair value in accordance with
SFAS 159 at and for the three months and year ended December 31, 2008 and
2007.
(3) Tangible equity ratio equals shareholders' equity less goodwill and
intangible assets divided by total assets less goodwill and intangible
assets.
(4) Tangible common equity ratio equals common shareholders' equity less
goodwill and intangible assets divided by total assets less goodwill and
intangible assets.
Certain prior period amounts have been reclassified to conform to current
period presentation.
Information for periods beginning July 1, 2008 includes the Countrywide
acquisition; prior periods have not been restated. This information is
preliminary and based on company data available at the time of the
presentation.
Bank of America Corporation and Subsidiaries
Business Segment Results
(Dollars in millions)
Global Consumer and Small Three Months Ended
Business Banking (1) December 31 Year Ended December 31
2008 2007 2008 2007
Total revenue, net of
interest expense (2) $15,911 $12,621 $58,344 $47,855
Provision for credit
losses (3) 7,584 4,287 26,841 12,920
Noninterest expense 7,145 5,572 24,937 20,349
Net income 835 1,899 4,234 9,362
Efficiency ratio (2) 44.91 % 44.15 % 42.74 % 42.52 %
Return on average equity 4.13 11.23 5.78 14.81
Average - total loans and
leases $364,114 $317,629 $350,264 $294,030
Average - total deposits 396,497 342,926 370,961 330,661
Deposits and Student
Lending
Total revenue, net of
interest expense (2) $5,364 $4,843 $20,649 $18,851
Net income 1,753 1,536 6,210 5,713
Card Services (1)
Total revenue, net of
interest expense (2) 7,316 6,590 28,433 25,315
Net income (loss) (204) 498 521 3,590
Mortgage, Home Equity and
Insurance Services
Total revenue, net of
interest expense (2) 3,231 1,188 9,262 3,689
Net income (loss) (714) (135) (2,497) 59
Global Corporate and Three Months Ended
Investment Banking December 31 Year Ended December 31
2008 2007 2008 2007
Total revenue, net of
interest expense (2) $(265) $(695) $13,440 $13,651
Provision for credit
losses 1,415 274 3,080 658
Noninterest expense 2,229 3,453 10,381 12,198
Net income (loss) (2,442) (2,771) (14) 510
Efficiency ratio (2) n/m n/m 77.24 % 89.36 %
Return on average equity (14.24)% (20.53)% (0.02) 1.12
Average - total loans and
leases $343,379 $327,622 $337,352 $274,725
Average - total deposits 249,301 235,730 239,097 219,891
Business Lending
Total revenue, net of
interest expense (2) $2,226 $1,901 $7,823 $6,085
Net income 301 608 1,722 2,000
Capital Markets and
Advisory Services
Total revenue, net of
interest expense (2) (4,639) (4,489) (3,018) 549
Net income (loss) (3,615) (3,782) (4,948) (3,385)
Treasury Services
Total revenue, net of
interest expense (2) 1,916 1,890 7,784 7,104
Net income 756 488 2,732 2,136
Global Wealth and Three Months Ended
Investment Management December 31 Year Ended December 31
2008 2007 2008 2007
Total revenue, net of
interest expense (2) $1,984 $1,768 $7,785 $7,553
Provision for credit
losses 152 34 664 14
Noninterest expense 1,068 1,297 4,904 4,480
Net income 511 310 1,416 1,960
Efficiency ratio (2) 53.77 % 73.34 % 62.99 % 59.31 %
Return on average equity 17.32 10.85 12.11 19.83
Average - total loans and
leases $88,874 $82,816 $87,591 $73,473
Average - total deposits 171,340 138,163 159,525 124,871
U.S. Trust (4)
Total revenue, net of
interest expense (2) $640 $700 $2,650 $2,320
Net income 121 124 460 470
Columbia Management
Total revenue, net of
interest expense (2) 88 20 391 1,076
Net income (loss) (64) (175) (459) 21
Premier Banking and
Investments
Total revenue, net of
interest expense (2) 776 932 3,201 3,749
Net income 201 292 584 1,267
All Other (1) Three Months Ended
December 31 Year Ended December 31
2008 2007 2008 2007
Total revenue, net of
interest expense (2) $(1,650) $(240) $(5,593) $(477)
Provision for credit
losses (5) (616) (1,285) (3,760) (5,207)
Noninterest expense 505 87 1,307 497
Net income (693) 830 (1,628) 3,150
Average - total loans and
leases 145,196 140,052 135,671 133,926
Average - total deposits 75,003 64,806 61,561 41,759
(1) Global Consumer and Small Business Banking is presented on a managed
basis, specifically Card Services, with a corresponding offset recorded in
All Other.
(2) Fully taxable-equivalent (FTE) basis. FTE basis is a performance
measure used by management in operating the business that management believes
provides investors with a more accurate picture of the interest margin for
comparative purposes.
(3) Represents provision for credit losses on held loans combined with
realized credit losses associated with the securitized loan portfolio.
(4) In July 2007, the operations of the acquired U.S. Trust Corporation
were combined with the former Private Bank to create U.S. Trust, Bank of
America Private Wealth Management. The results of the combined business were
reported for periods beginning on July 1, 2007. Prior to July 1, 2007, the
results solely reflect that of the former Private Bank.
(5) Represents provision for credit losses in All Other combined with the
Global Consumer and Small Business Banking securitization offset.
Certain prior period amounts have been reclassified to conform to current
period presentation.
Information for periods beginning July 1, 2008 includes the Countrywide
acquisition; prior periods have not been restated. This information is
preliminary and based on company data available at the time of the
presentation.
Bank of America Corporation and Subsidiaries
Supplemental Financial Data
(Dollars in millions)
Fully taxable-equivalent Three Months Ended
basis data December 31 Year Ended December 31
2008 2007 2008 2007
Net interest income $13,406 $9,815 $46,554 $36,190
Total revenue, net of interest
expense 15,980 13,454 73,976 68,582
Net interest yield 3.31 % 2.61 % 2.98 % 2.60 %
Efficiency ratio 68.51 77.36 56.14 54.71
Other Data December 31
2008 2007
Full-time equivalent employees 243,075 209,718
Number of banking centers -
domestic 6,139 6,149
Number of branded ATMs -
domestic 18,685 18,753
Certain prior period amounts have been reclassified to conform to current
period presentation.
Information for periods beginning July 1, 2008 includes the Countrywide
acquisition; prior periods have not been restated. This information is
preliminary and based on company data available at the time of the
presentation.
Bank of America Corporation and Subsidiaries
Reconciliation - Managed to GAAP
(Dollars in millions)
The Corporation reports Global Consumer and Small Business Banking's
results, specifically Card Services, on a managed basis. This basis of
presentation excludes the Corporation's securitized mortgage and home equity
portfolios for which the Corporation retains servicing. Reporting on a managed
basis is consistent with the way that management evaluates the results of
Global Consumer and Small Business Banking. Managed basis assumes that
securitized loans were not sold and presents earnings on these loans in a
manner similar to the way loans that have not been sold (i.e., held loans) are
presented. Loan securitization is an alternative funding process that is used
by the Corporation to diversify funding sources. Loan securitization removes
loans from the Consolidated Balance Sheet through the sale of loans to an off-
balance sheet qualified special purpose entity which is excluded from the
Corporation's Consolidated Financial Statements in accordance with accounting
principles generally accepted in the United States (GAAP).
The performance of the managed portfolio is important in understanding
Global Consumer and Small Business Banking's and Card Services' results as it
demonstrates the results of the entire portfolio serviced by the business.
Securitized loans continue to be serviced by the business and are subject to
the same underwriting standards and ongoing monitoring as held loans. In
addition, retained excess servicing income is exposed to similar credit risk
and repricing of interest rates as held loans. Global Consumer and Small
Business Banking's managed income statement line items differ from a held
basis reported as follows:
-- Managed net interest income includes Global Consumer and Small Business
Banking's net interest income on held loans and interest income on the
securitized loans less the internal funds transfer pricing allocation related
to securitized loans.
-- Managed noninterest income includes Global Consumer and Small Business
Banking's noninterest income on a held basis less the reclassification of
certain components of card income (e.g., excess servicing income) to record
managed net interest income and provision for credit losses. Noninterest
income, both on a held and managed basis, also includes the impact of
adjustments to the interest-only strip that are recorded in card income as
management continues to manage this impact within Global Consumer and Small
Business Banking.
-- Provision for credit losses represents the provision for credit losses
on held loans combined with realized credit losses associated with the
securitized loan portfolio.
Global Consumer and Small Business Banking
Year Ended December 31, 2008
Managed Securitization
Basis (1) Impact (2) Held Basis
Net interest income (3) $33,851 $(8,701) $25,150
Noninterest income:
Card income 10,057 2,250 12,307
Service charges 6,807 - 6,807
Mortgage banking income 4,422 - 4,422
Insurance premiums 1,968 (186) 1,782
All other income 1,239 (33) 1,206
Total noninterest income 24,493 2,031 26,524
Total revenue, net of
interest expense 58,344 (6,670) 51,674
Provision for credit losses 26,841 (6,670) 20,171
Noninterest expense 24,937 - 24,937
Income before income taxes 6,566 - 6,566
Income tax expense (3) 2,332 - 2,332
Net income $4,234 $- $4,234
Average - total loans and leases $350,264 $(104,401) $245,863
All Other
Year Ended December 31, 2008
Reported Securitization
Basis (4) Offset (2) As Adjusted
Net interest income (3) $(8,610) $8,701 $91
Noninterest income:
Card income 2,164 (2,250) (86)
Equity investment income 265 - 265
Gains on sales of debt securities 1,133 - 1,133
All other income (loss) (545) 219 (326)
Total noninterest income 3,017 (2,031) 986
Total revenue, net of
interest expense (5,593) 6,670 1,077
Provision for credit losses (3,760) 6,670 2,910
Merger and restructuring charges 935 - 935
All other noninterest expense 372 - 372
Income (loss) before income
taxes (3,140) - (3,140)
Income tax expense (benefit) (3) (1,512) - (1,512)
Net income (loss) $(1,628) $- $(1,628)
Average - total loans and leases $135,671 $104,401 $240,072
Bank of America Corporation and Subsidiaries
Reconciliation - Managed to GAAP
(Dollars in millions)
Global Consumer and Small Business Banking
Year Ended December 31, 2007
Managed Securitization
Basis (1) Impact (2) Held Basis
Net interest income (3) $28,712 $(8,027) $20,685
Noninterest income:
Card income 10,194 3,356 13,550
Service charges 6,007 - 6,007
Mortgage banking income 1,332 - 1,332
Insurance premiums 912 (250) 662
All other income 698 (38) 660
Total noninterest income 19,143 3,068 22,211
Total revenue, net of
interest expense 47,855 (4,959) 42,896
Provision for credit losses 12,920 (4,959) 7,961
Noninterest expense 20,349 - 20,349
Income before income taxes 14,586 - 14,586
Income tax expense (3) 5,224 - 5,224
Net income $9,362 $- $9,362
Average - total loans and leases $294,030 $(103,284) $190,746
All Other
Year Ended December 31, 2007
Reported Securitization
Basis (4) Offset (2) As Adjusted
Net interest income (3) $(7,645) $8,027 $382
Noninterest income:
Card income 2,817 (3,356) (539)
Equity investment income 3,745 - 3,745
Gains on sales of debt securities 180 - 180
All other income (loss) 426 288 714
Total noninterest income 7,168 (3,068) 4,100
Total revenue, net of
interest expense (477) 4,959 4,482
Provision for credit losses (5,207) 4,959 (248)
Merger and restructuring charges 410 - 410
All other noninterest expense 87 - 87
Income (loss) before income
taxes 4,233 - 4,233
Income tax expense (benefit) (3) 1,083 - 1,083
Net income (loss) $3,150 $- $3,150
Average - total loans and leases $133,926 $103,284 $237,210
(1) Provision for credit losses represents provision for credit losses on
held loans combined with realized credit losses associated with the
securitized loan portfolio.
(2) The securitization impact/offset on net interest income is on a funds
transfer pricing methodology consistent with the way funding costs are
allocated to the businesses.
(3) FTE basis
(4) Provision for credit losses represents provision for credit losses in
All Other combined with the Global Consumer and Small Business Banking
securitization offset.
Certain prior period amounts have been reclassified among the segments to
conform to the current period presentation.
Information for periods beginning July 1, 2008 includes the Countrywide
acquisition; prior periods have not been restated. This information is
preliminary and based on company data available at the time of the
presentation.
SOURCE Bank of America
CONTACT: Investors: Kevin Stitt, +1-704-386-5667, Lee McEntire,
+1-704-388-6780, Grace Yoon, +1-212-449-7323;
Media: Scott Silvestri, +1-980-388-9921,
scott.silvestri@bankofamerica.com, all of Bank of America
PRN Photo Desk, photodesk@prnewswire.com
(BAC)
NEWS 
