Highest Quarterly Revenue in Company History Second-Best Quarter in Investment Banking
CHARLOTTE, N.C., July 21 /PRNewswire-FirstCall/ -- Bank of America
Corporation today reported second-quarter 2008 net income of $3.41 billion,
down from a record $5.76 billion a year earlier. Diluted earnings per share
decreased 44 percent to $0.72 from $1.28 in the same period in 2007. Net
revenue rose to a record $20.32 billion. Earnings available to common
shareholders totaled $3.22 billion.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b )
Net income in the period rose from $1.21 billion, or $0.23 per share, in
the first quarter of 2008. Second-quarter net income included pretax merger
and restructuring costs of $212 million.
"We are pleased with these solid results in a difficult financial
environment," said Kenneth D. Lewis, chairman and chief executive officer.
"Outside of real estate-related products, our operating results were quite
good virtually across all business segments. This performance demonstrates not
only the advantages of our company's diversity and scale, but also the ability
of our associates to differentiate Bank of America in the eyes of customers
and clients."
Second Quarter 2008 Business Highlights (vs. a year earlier)
-- Record quarterly net revenue of $20.32 billion was driven by an
expanded net interest yield, loan growth and higher income from service
charges, mortgage banking and investment and brokerage services. These results
also reflect the addition of LaSalle Bank.
-- Investment banking income in Capital Markets and Advisory Services, a
unit in Global Corporate and Investment Banking, was $765 million, the second-
highest result ever.
-- Total retail sales increased 4 percent to 13 million products, helped
by strong growth in deposits, debit and online banking. Net new checking
accounts were 674,000 in the period.
-- Total average retail deposits increased more than $56 billion, or 12
percent, with approximately half coming from organic growth and the balance
from the acquisition of LaSalle and U.S. Trust. Debit card purchase volume
increased 15 percent.
-- Bank of America surpassed one million active Mobile Banking customers
in the quarter. The service allows customers to check balances, pay bills,
transfer funds, view posted and pending transactions and locate banking
centers and ATMs, accompanied by maps and directions.
-- Business Lending and Treasury Services, both within Global Corporate
and Investment Banking, had organic loan and deposit growth of 16 percent and
7 percent, respectively, as client demand for these services rose as a result
of recent market disruption.
-- Service level improvements resulted in customer delight (9 or 10 on a
10-point scale) reaching a record 72 percent in the banking centers. Peak day
wait times fell 12 percent from the previous quarter resulting in an all-time
high in customer delight on this issue.
-- Total assets under management (AUM) in Global Wealth and Investment
Management increased to more than $589 billion, including the impact of the
U.S. Trust and LaSalle acquisitions and the sale of Marsico Capital Management
in the second half of 2007.
-- Bank of America's integration of U.S. Trust was successfully completed
in the quarter.
Second Quarter 2008 Financial Summary
Revenue and Expense
Revenue net of interest expense on a fully taxable-equivalent basis rose 3
percent to a record $20.63 billion from $20.02 billion a year earlier and was
$3.33 billion higher than the first quarter of 2008.
Net interest income on a fully taxable-equivalent basis rose 25 percent to
$10.94 billion from $8.78 billion in the second quarter of 2007 driven by
improved margins in the current rate environment combined with loan growth and
the acquisition of LaSalle. The net interest yield improved 33 basis points to
2.92 percent.
Noninterest income declined 14 percent to $9.69 billion from $11.24
billion a year earlier. Service charges, mortgage banking income and
investment and brokerage services income increased. These increases were
offset by writedowns of $1.22 billion related to market disruptions, which
compared with $2.81 billion in writedowns during the first quarter, as well as
lower equity investment income.
Noninterest expense rose 4 percent to $9.56 billion from a year earlier
mainly because of the addition of LaSalle and U.S. Trust partially offset by
lower personnel costs. Pretax merger and restructuring charges related to
acquisitions were $212 million compared with $75 million a year earlier. The
efficiency ratio was 47.08 percent.
Credit Quality
Credit quality continued to weaken, particularly in markets that
experienced the most significant home price declines. The slowing economy
resulted in credit deterioration concentrated in the domestic consumer, small
business and homebuilder portfolios. Both net charge-offs and nonperforming
assets continued to increase.
Provision expense rose $4.02 billion from a year ago to $5.83 billion,
reflecting net charge-offs of $3.62 billion and additions to the allowance for
loan and lease losses of $2.21 billion. The additions were mainly in consumer
and commercial portfolios directly tied to housing, including home equity,
residential mortgage and homebuilders. The company has added $7.29 billion to
the reserve through increased provision over the past 12 months. Amounts shown
below for the quarter ended or as of June 30, 2007 do not include LaSalle.
-- Provision for credit losses was $5.83 billion, down from $6.01 billion
in the first quarter but up from $1.81 billion in the second quarter of 2007.
-- Net charge-offs were $3.62 billion, or 1.67 percent of total average
loans and leases compared with $2.72 billion, or 1.25 percent, in the first
quarter and $1.50 billion, or 0.81 percent, in the second quarter of 2007.
-- Total managed net losses were $5.27 billion, or 2.15 percent, of total
average managed loans and leases compared with $4.14 billion, or 1.69 percent,
in the first quarter and $2.77 billion, or 1.31 percent, in the second quarter
of 2007.
-- Nonperforming assets were $9.75 billion or 1.13 percent of total loans,
leases and foreclosed properties, compared with $7.83 billion, or 0.90
percent, at March 31 and $2.39 billion, or 0.32 percent, at June 30, 2007.
-- The allowance for loan and lease losses was $17.13 billion, or 1.98
percent of loans and leases measured at historical cost compared with $14.89
billion, or 1.71 percent, at March 31, 2008 and $9.06 billion, or 1.20
percent, at June 30, 2007.
Capital Management
Total shareholders' equity was $162.69 billion at June 30. Period-end
assets were $1.72 trillion. The Tier 1 capital ratio was 8.25 percent, up from
7.51 percent at March 31, 2008 after the company raised about $7 billion in
capital through the issuance of preferred stock. The Tier 1 ratio was 8.52
percent a year earlier.
Bank of America paid a cash dividend of $0.64 per share in the quarter.
The company also issued about 137,000 common shares mostly related to employee
stock options and ownership plans and did not repurchase any shares. Period-
end common shares issued and outstanding were 4.45 billion for the first and
second quarters of 2008 and 4.44 billion in the year ago quarter.
Countrywide Financial Acquisition
(Results are not part of Bank of America second-quarter results)
Countrywide Financial Corporation, which was acquired on July 1, will make
Bank of America the leader in providing home financing to American consumers.
Countrywide had a second-quarter net loss of $2.33 billion, including just
under $4 billion in credit-related losses. Because purchase accounting records
certain assets and liabilities at fair value, which includes an estimate of
future credit costs, for those items recorded at fair value such costs would
not generally run through future income statements.
The transaction immediately adds to Bank of America profit. It is now
expected to be accretive in 2008. When the acquisition was announced in
January, Bank of America estimated Countrywide's addition would be neutral
toward per-share earnings this year.
The estimated cost savings have been significantly increased from the
after-tax $670 million projected in January. Management will provide details
on adjustments being made under purchase accounting, the new cost savings
targets and other financial issues on a teleconference later today. (See
details below).
Bank of America is continuing the trend begun by Countrywide earlier this
year to expand loan modification and workout resources to address foreclosure
issues. Through June, Countrywide has worked out 119,000 loans, nearly twice
the number of its completed foreclosures. Bank of America estimates it will
restructure about $40 billion in home loans during the next two years,
enabling more than 265,000 families to stay in their homes.
The combined mortgage business will continue to offer conforming loans
underwritten to standard guidelines of government-sponsored enterprises,
including FHA and VA loans and other loans designed for low-and moderate-
income borrowers. Countrywide has discontinued originating subprime and
certain other nontraditional home loans, including option-ARMs, and will
generally use Bank of America's product suite, which has performed much better
in the current credit environment.
2008 Second Quarter Business Segment Results
Global Consumer and Small Business Banking(1)
(Dollars in millions) Q2 2008 Q2 2007
Total managed revenue, net of
interest expense(2) $13,092 $11,821
Provision for credit losses(3) 6,545 3,094
Noninterest expense 5,293 4,910
Net income 812 2,422
Efficiency ratio(2) 40.43 % 41.54 %
Return on average equity 4.89 15.76
Managed loans(4) $368,136 $317,247
Deposits(4)341,339 326,622
At 06/30/08 At 06/30/07
Period ending deposits$339,098 $326,878
(1) 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
Net income fell 66 percent from a year ago, as credit costs rose.
Managed net revenue rose 11 percent. Net interest income increased 13
percent to $8.02 billion driven by growth in average loans and deposits and
margin improvement. Noninterest income rose 8 percent to $5.08 billion on
higher mortgage banking income and service charges.
The provision for credit losses increased by $3.45 billion to $6.55
billion compared with a year earlier. Net losses rose $2.06 billion to $4.72
billion, reflecting the impact of housing market deterioration and weakened
economic conditions on consumer real estate, small business and other domestic
consumer portfolios. Loan loss reserve additions for home equity and
deterioration and seasoning of the consumer portfolios also contributed to
higher credit costs.
-- Deposits net income fell 22 percent to $1.07 billion. Net revenue
decreased 4 percent to $4.23 billion as spread compression impacting certain
products more than offset deposit growth. The decline in net interest income
was partially offset by growth in service charges and debit card income.
Noninterest expense increased $250 million largely due to the acquisition of
LaSalle.
-- Card Services net income fell 55 percent to $402 million as credit
costs rose by $1.21 billion. Managed net revenue increased 8 percent to $6.85
billion on net interest income growth of 17 percent driven by 14 percent
average loan and lease growth, partially offset by a decrease in card income.
-- Consumer Real Estate net income swung to a loss of $982 million
compared with net income of $115 million a year earlier as higher net revenue
was more than offset by higher credit costs. Net revenue rose 41 percent to
$1.20 billion as average loans and leases increased 19 percent and mortgage
banking income climbed 38 percent. Provision expense rose to $2.20 billion
from $127 million a year earlier.
Global Corporate and Investment Banking
(Dollars in millions) Q2 2008 Q2 2007
Total revenue, net of interest
expense(1) $5,960 $5,943
Provision for credit losses 363 42
Noninterest expense 2,8013,227
Net income1,7461,692
Efficiency ratio(1) 46.99 % 54.31 %
Return on average equity 11.5716.15
Loans and leases(2)$334,680 $253,895
Trading-related assets(2) 337,059 377,171
Deposits(2) 234,605 220,180
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
Net income rose 3 percent on lower noninterest expense partially offset by
higher credit costs.
Net revenue rose slightly on a 47 percent increase in net interest income,
offset by a 36 percent decline in noninterest income due mainly to writedowns
related to market disruptions of $1.22 billion compared with $2.81 billion in
the first quarter. Near-record investment banking income partially offset
these writedowns. CDO-related writedowns were $645 million in the quarter,
down significantly from $1.47 billion in the first quarter of 2008. Leveraged-
loan writedowns were $64 million, lower than the $439 million in the first
quarter.
The provision for credit losses increased $321 million to $363 million as
deterioration in the housing market drove higher commercial real estate net
charge-offs, mainly in homebuilders, and led to reserve additions. A modest
increase in commercial domestic net charge-offs from lower levels a year
earlier and increased net charge-offs in dealer-related retail portfolios due
to deterioration and seasoning also contributed to the increased provision.
-- Business Lending net income increased 12 percent to $651 million
despite the impact of higher credit costs. Net revenue increased 36 percent to
$2.03 billion driven by organic and merger-related average loan growth of
nearly $77 billion.
-- Capital Markets and Advisory Services net income was $449 million
compared with $627 million a year earlier. Net revenue declined to $1.95
billion from $2.73 billion a year earlier as favorable sales and trading
results in credit and liquid products were more than offset by CDO-related
writedowns.
-- Treasury Services net income increased 6 percent to $608 million. Net
revenue increased 5 percent to $1.87 billion as favorable pricing and
increased volume drove deposits and service charges higher.
Global Wealth and Investment Management
(Dollars in millions) Q2 2008 Q2 2007
Total revenue, net of interest
expense(1) $2,279$1,889
Provision for credit losses119 (13)
Noninterest expense 1,241 993
Net income 573 576
Efficiency ratio(1) 54.44 % 52.57 %
Return on average equity 19.58 26.35
Loans(2) $87,572 $67,964
Deposits(2)157,113 118,254
(in billions) At 06/30/08 At 06/30/07
Assets under management $589.4$566.2
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
Net income was largely flat at $573 million.
Net revenue increased 21 percent from the addition of U.S. Trust and
LaSalle, organic loan and deposit growth and an improving interest rate
environment. The increase was partially offset by support to certain cash
funds of $36 million, which declined from $220 million in the first quarter of
2008.
Provision for credit losses increased to $119 million compared with a
benefit of $13 million a year ago as deterioration in the home equity
portfolio from housing market weakness continued.
-- U.S. Trust, Bank of America Private Wealth Management net income rose
25 percent to $152 million. Net revenue rose 43 percent to $706 million driven
by the addition of U.S. Trust and LaSalle.
-- Columbia Management net income declined 48 percent to $39 million from
a year ago driven mainly by losses related to support for certain cash funds.
-- Premier Banking and Investments net income fell 43 percent to $189
million as credit costs increased by $114 million reflecting higher home
equity loan losses. Net revenue decreased 9 percent to $865 million on lower
net interest income as spread compression, driven by deposit mix and
competitive deposit pricing, more than offset deposit growth.
All Other(1)
(Dollars in millions)Q2 2008 Q2 2007
Total revenue net of interest
expense(2)$(700)$367
Provision for credit losses(3) (1,197) (1,313)
Merger and restructuring
charges212 75
All other noninterest expense17 (50)
Net income 2791,071
Loans and leases(4) $88,251 $101,093
(1) All Other consists primarily of equity investments, the residual
impact of the allowance for credit losses and 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 Global Consumer and Small Business Banking 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 net income of $279 million compared with $1.07 billion as
equity investment income fell because of the absence of the gain recognized a
year earlier from the sale of private equity funds to Conversus Capital,
higher credit costs in the residential mortgage portfolio and higher merger
and restructuring charges related to LaSalle and U.S. Trust. This was
partially offset by a gain on the sale of debt securities.
Note: Chief Executive Officer Kenneth D. Lewis and Chief Financial
Officer Joe L. Price will discuss second quarter 2008 results in a conference
call at 9:30 a.m. EDT today. The presentation and supporting materials can be
accessed on the Bank of America Investor Relations Web site at
http://investor.bankofamerica.com. For a listen-only connection to the
conference call, dial 800.895.1085 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, more than 18,500 ATMs and award-winning online banking with
more than 25 million active users. 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 150 countries and has relationships with 99 percent of
the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500. 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.
This press release contains forward-looking statements, including
statements about the financial conditions, results of operations and earnings
outlook of Bank of America Corporation. The forward-looking statements involve
certain risks and uncertainties. Factors that may cause actual results or
earnings to differ materially from such forward-looking statements include,
among others, the following: 1) projected business increases following process
changes and other investments are lower than expected; 2) competitive pressure
among financial services companies increases significantly; 3) general
economic conditions are less favorable than expected; 4) political conditions
including the threat of future terrorist activity and related actions by the
United States abroad may adversely affect the company's businesses and
economic conditions as a whole; 5) changes in the interest rate environment
and market liquidity reduce interest margins, impact funding sources and
effect the ability to originate and distribute financial products in the
primary and secondary markets; 6) changes in foreign exchange rates increases
exposure; 7) changes in market rates and prices may adversely impact the value
of financial products; 8) legislation or regulatory environments, requirements
or changes adversely affect the businesses in which the company is engaged; 9)
changes in accounting standards, rules or interpretations, 10) litigation
liabilities, including costs, expenses, settlements and judgments, may
adversely affect the company or its businesses; 11) mergers and acquisitions
and their integration into the company; and 12) decisions to downsize, sell or
close units or otherwise change the business mix of any of the company.
Accordingly, readers are cautioned not to place undue reliance on forward-
looking statements, which speak only as of the date on which they are made.
Bank of America does not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the date the
forward-looking statements are made. For further information regarding Bank
of America Corporation, please read the Bank of America reports filed with the
SEC and available at www.sec.gov.
www.bankofamerica.com
Bank of America Corporation and Subsidiaries
Selected Financial Data
(Dollars in millions, except per share data; shares in thousands)
Three Months Ended Six Months Ended
Summary Income StatementJune 30June 30
2008 2007 2008 2007
Net interest income $10,621 $8,389 $20,612 $16,659
Total noninterest income 9,694 11,23616,706 21,181
Total revenue, net of interest expense 20,315 19,62537,318 37,840
Provision for credit losses 5,830 1,81011,8403,045
Noninterest expense, before merger and
restructuring charges9,352 9,08018,377 18,126
Merger and restructuring charges212 75 382 186
Income before income taxes4,921 8,660 6,719 16,483
Income tax expense1,511 2,899 2,0995,467
Net income $3,410 $5,761$4,620 $11,016
Earnings per common share $0.73 $1.29 $0.96$2.47
Diluted earnings per common share 0.721.28 0.95 2.44
Three Months Ended Six Months Ended
Summary Average Balance SheetJune 30 June 30
2008 2007 2008 2007
Total loans and leases $878,639 $740,199 $877,150 $727,193
Debt securities 235,369177,834227,373182,142
Total earning assets 1,500,234 1,358,199 1,505,265 1,340,172
Total assets 1,754,613 1,561,649 1,759,770 1,541,644
Total deposits 786,002697,035786,813691,898
Shareholders' equity 161,428133,551158,078133,569
Common shareholders' equity 140,243130,700140,849130,718
Three Months EndedSix Months Ended
Performance Ratios June 30 June 30
20082007 2008 2007
Return on average assets0.78 % 1.48 % 0.53 %1.44 %
Return on average common
shareholders' equity 9.25 17.55 6.06 16.86
Three Months Ended Six Months Ended
Credit QualityJune 30 June 30
2008 2007 2008 2007
Total net charge-offs $3,619 $1,495 $6,334$2,922
Annualized net charge-offs as a
% of average loans and leases
outstanding (1)1.67 % 0.81 % 1.46 %0.81 %
Provision for credit losses $5,830 $1,810$11,840$3,045
Total consumer credit card
managed net losses2,751 2,099 5,123 4,052
Total consumer credit card
managed net losses as a % of
average managed credit card
receivables5.96 % 5.02 % 5.58 %4.88 %
June 30
20082007
Total nonperforming assets (2)$9,749 $2,392
Nonperforming assets as a % of
total loans, leases and
foreclosed properties (1, 2) 1.13 % 0.32 %
Allowance for loan and lease
losses $17,130 $9,060
Allowance for loan and lease
losses as a % of total loans
and leases measured at
historical cost (1)1.98 % 1.20 %
Capital Management June 30
20082007
Risk-based capital ratios:
Tier 1 8.25 %*8.52 %
Total 12.60 *12.11
Tier 1 leverage ratio 6.09 * 6.33
Period-end common shares
issued and outstanding4,452,947 4,436,936
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Shares issued137 11,316 15,062 40,235
Shares repurchased -(13,450) -(61,450)
Average common shares issued
and outstanding 4,435,719 4,419,246 4,431,870 4,426,046
Average diluted common shares
issued and outstanding4,457,193 4,476,799 4,460,633 4,487,224
Dividends paid per common
share $0.64 $0.56 $1.28 $1.12
Summary Ending Balance Sheet June 30
20082007
Total loans and leases $870,464$758,635
Total debt securities249,859 173,327
Total earning assets 1,458,796 1,328,402
Total assets 1,716,875 1,534,359
Total deposits 784,764 699,409
Total shareholders' equity 162,691 135,751
Common shareholders' equity 138,540 132,900
Book value per share of common
stock$31.11 $29.95
* Preliminary data
(1) Ratios do not include loans measured at fair value in accordance with
SFAS 159 at and for the three and six months ended June 30, 2008 and
2007.
(2) Balances and ratios do not include nonperforming available-for-sale
debt securities (at fair value) of $676 million and $27 million at
June 30, 2008 and 2007. Including nonperforming available-for-sale
debt securities (at fair value), nonperforming assets as a percentage
of total assets would have been 0.61 percent and 0.16 percent at
June 30, 2008 and 2007.
Certain prior period amounts have been reclassified to conform to current
period presentation.
Bank of America Corporation and Subsidiaries
Business Segment Results
(Dollars in millions)
Global Consumer and SmallThree Months Ended Six Months Ended
Business Banking (1) June 30 June 30
2008200720082007
Total revenue, net of
interest expense (2) $13,092 $11,821 $26,398 $23,152
Provision for credit
losses (3) 6,545 3,094 13,000 5,505
Noninterest expense 5,293 4,910 10,426 9,593
Net income 812 2,422 1,904 5,089
Efficiency ratio (2) 40.43 % 41.54 % 39.50 % 41.43 %
Return on average equity 4.89 15.765.77 16.67
Average - total loans and
leases$368,136$317,247$365,581$312,701
Average - total deposits341,339 326,622 342,387 326,550
Deposits
Total revenue, net of
interest expense (2)$4,231 $4,402 $8,320 $8,641
Net income1,065 1,366 2,059 2,681
Card Services (1)
Total revenue, net of
interest expense (2) 6,848 6,336 14,181 12,385
Net income 402 888 1,072 1,983
Consumer Real Estate
Total revenue, net of
interest expense (2) 1,199 851 2,506 1,684
Net income (loss) (982)115 (1,755)321
Global Corporate and Three Months EndedSix Months Ended
Investment BankingJune 30 June 30
20082007 20082007
Total revenue, net of
interest expense (2)$5,960 $5,943 $9,119 $11,386
Provision for credit
losses 363 42 886 157
Noninterest expense 2,801 3,227 5,265 6,205
Net income1,746 1,692 1,853 3,166
Efficiency ratio (2) 46.99 % 54.31 % 57.74 % 54.50 %
Return on average equity 11.57 16.156.23 15.28
Average - total loans and
leases$334,680$253,895$329,714$250,913
Average - total deposits234,605 220,180 235,202 214,402
Business Lending
Total revenue, net of
interest expense (2)$2,027 $1,487 $3,663 $2,822
Net income 651 581 975 1,038
Capital Markets and
Advisory Services
Total revenue, net of
interest expense (2) 1,950 2,732 1,331 5,156
Net income (loss) 449 627(653) 1,151
Treasury Services
Total revenue, net of
interest expense (2) 1,865 1,784 3,991 3,492
Net income 608 571 1,488 1,099
Global Wealth and InvestmentThree Months EndedSix Months Ended
Management June 30 June 30
2008 2007 2008 2007
Total revenue, net of interest
expense (2)$2,279 $1,889$4,201 $3,670
Provision for credit losses119(13) 362 9
Noninterest expense 1,241993 2,556 1,967
Net income 573576 802 1,067
Efficiency ratio (2) 54.44 %52.57 % 60.84 %53.59 %
Return on average equity 19.58 26.35 13.82 24.51
Average - total loans and
leases$87,572$67,964 $86,607$66,907
Average - total deposits 157,113118,254 152,807116,614
U.S. Trust (4)
Total revenue, net of interest
expense (2) $706 $492$1,381 $953
Net income 152122 258206
Columbia Management
Total revenue, net of interest
expense (2) 365360 544681
Net income (loss) 39 75 (40) 129
Premier Banking and
Investments
Total revenue, net of interest
expense (2) 865948 1,706 1,861
Net income 189333 291647
Three Months Ended Six Months Ended
All Other (1)June 30 June 30
20082007 2008 2007
Total revenue, net of interest
expense (2) $(700)$367$(1,784) $356
Provision for credit losses (5) (1,197) (1,313)(2,408) (2,626)
Noninterest expense 229 25512 547
Net income 2791,071 61 1,694
Average - total loans and leases 88,251 101,093 95,248 96,672
Average - total deposits 52,945 31,979 56,417 34,332
(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.
Bank of America Corporation and Subsidiaries
Supplemental Financial Data
(Dollars in millions)
Fully taxable-equivalent
basis data Three Months EndedSix Months Ended
June 30 June 30
2008 2007 2008 2007
Net interest income $10,937$8,784$21,228$17,383
Total revenue, net of interest
expense 20,63120,020 37,934 38,564
Net interest yield 2.92 %2.59 % 2.83 % 2.60 %
Efficiency ratio 46.35 45.73 49.45 47.48
Other DataJune 30
20082007
Full-time equivalent
employees 206,587195,675
Number of banking centers -
domestic 6,131 5,749
Number of branded ATMs -
domestic18,531 17,183
Certain prior period amounts have been reclassified to conform to current
period 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
Six Months Ended June 30, 2008
Managed SecuritizationHeld
Basis (1) Impact (2) Basis
Net interest income (3) $15,699 $(4,195)$11,504
Noninterest income:
Card income5,2851,261 6,546
Service charges3,309- 3,309
Mortgage banking income1,065- 1,065
All other income 1,040 (126)914
Total noninterest income 10,6991,135 11,834
Total revenue, net of
interest expense 26,398 (3,060) 23,338
Provision for credit losses 13,000 (3,060) 9,940
Noninterest expense 10,426- 10,426
Income before income taxes 2,972- 2,972
Income tax expense (3) 1,068- 1,068
Net income$1,904 $- $1,904
Average - total loans and leases $365,581$(106,307) $259,274
Six Months Ended June 30, 2007
Managed SecuritizationHeld
Basis (1)Impact (2) Basis
Net interest income (3) $14,113 $(3,871)$10,242
Noninterest income:
Card income4,9771,632 6,609
Service charges2,865- 2,865
Mortgage banking income 599- 599
All other income 598 (151)447
Total noninterest income 9,0391,481 10,520
Total revenue, net of
interest expense 23,152 (2,390) 20,762
Provision for credit losses5,505 (2,390) 3,115
Noninterest expense9,593- 9,593
Income before income taxes 8,054- 8,054
Income tax expense (3) 2,965- 2,965
Net income$5,089 $- $5,089
Average - total loans and leases $312,701$(101,841) $210,860
All Other
Six Months Ended June 30, 2008
Reported Securitization As
Basis (4)Offset (2)Adjusted
Net interest income (3) $(4,017) $4,195$178
Noninterest income:
Card income 1,259 (1,261) (2)
Equity investment income978 - 978
Gains on sales of debt securities 351 - 351
All other income (loss)(355)126(229)
Total noninterest income 2,233 (1,135) 1,098
Total revenue, net of
interest expense(1,784) 3,060 1,276
Provision for credit losses (2,408) 3,060 652
Merger and restructuring charges382 - 382
All other noninterest expense 130 - 130
Income before income taxes 112 - 112
Income tax expense (3) 51 - 51
Net income $61 $- $61
Average - total loans and leases $95,248$106,307$201,555
Six Months Ended June 30, 2007
Reported Securitization As
Basis (4)Offset (2)Adjusted
Net interest income (3) $(3,618) $3,871$253
Noninterest income:
Card income 1,397 (1,632) (235)
Equity investment income 2,615 - 2,615
Gains on sales of debt securities63 - 63
All other income (loss)(101)151 50
Total noninterest income 3,974 (1,481) 2,493
Total revenue, net of
interest expense 356 2,390 2,746
Provision for credit losses (2,626) 2,390(236)
Merger and restructuring charges186 - 186
All other noninterest expense 361 - 361
Income before income taxes2,435 - 2,435
Income tax expense (3) 741 - 741
Net income $1,694 $- $1,694
Average - total loans and leases $96,672$101,841$198,513
(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
(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.
SOURCE Bank of America Corporation
