CHARLOTTE, N.C., Jan. 20 /PRNewswire-Asia/ --
- Net Loss of $194 Million in Fourth Quarter
- One-Time $4 Billion TARP Repayment Cost Impacts Income
Applicable to Common Shareholders
- Strong Annual Sales and Trading Results
- Extends $177 Billion in Credit in the Fourth Quarter and
$756 Billion in 2009
Bank of America Corporation today reported full-year 2009 net income of $6.3 billion, compared with net income of $4.0 billion in 2008. Including preferred stock dividends and the negative impact from the repayment of the U.S. government's $45 billion preferred stock investment in the company under the Troubled Asset Relief Program (TARP), income applicable to common shareholders was a net loss of $2.2 billion, or $0.29 per diluted share.
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Those results compared with 2008 net income applicable to common shareholders of $2.6 billion, or $0.54 per diluted share.
In the fourth quarter of 2009, the company's net loss narrowed to $194 million from a loss of $1.8 billion a year earlier. Including dividends on preferred stock and the one-time $4.0 billion negative impact associated with repaying TARP, income applicable to common shareholders in the period was a net loss of $5.2 billion, or $0.60 per diluted share, compared with a net loss of $2.4 billion, or $0.48 per diluted share, in the year-ago quarter.
Results in the fourth quarter reflected continued elevated credit costs, although lower than in the third quarter of 2009. While net interest income declined from the year-ago quarter as a result of lower asset liability management portfolio levels and reduced loan demand, noninterest income was up sharply due to an improvement in trading and significantly higher income from investment and brokerage services, equity investments and investment banking.
"While it's disappointing to report a loss for the fourth quarter, there were a number of important accomplishments worth noting," said Chief Executive Officer and President Brian T. Moynihan. "First, we repaid the American taxpayer, with interest, for the TARP investment. Second, we have taken steps to strengthen our balance sheet through successful securities offerings. And third, all of our non-credit businesses recorded positive contributions to our results.
"As we look at 2010, we are encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer businesses. That said, economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth."
Full-Year and Fourth-Quarter 2009 Business Highlights
- During the quarter, Bank of America funded $86.6 billion in first
mortgages, helping more than 400,000 people either purchase homes
or refinance their existing mortgages. This funding included $22.9
billion in mortgages made to 151,000 low- and moderate-income borrowers.
Approximately 42 percent of first mortgages were for home purchases.
- In 2009, Bank of America has provided home ownership retention
opportunities to approximately 460,000 customers. This includes
260,000 loan modifications with total unpaid principal balances of
approximately $55 billion and approximately 200,000 customers who were
in trial-period modifications under the government's Making Home
Affordable program at December 31.
- Bank of America Home Loans expanded its home retention staff
to more than 15,000 to help customers experiencing difficulty with their
home loans. This represents more than double the size of the team since
Bank of America acquired Countrywide.
- In 2009, Bank of America extended $756 billion in credit, including
commercial renewals of $208 billion, according to preliminary data.
New credit included $378 billion in first mortgages, $282 billion in
commercial non-real estate, $39 billion in commercial real estate,
$18 billion in domestic consumer and small business card, $13
billion in home equity products and nearly $26 billion in other
consumer credit.
- In 2009, Small Business Lending extended more than $14 billion in
credit comprised of $12 billion in Business Banking and $2 billion
to more than 146,000 Small Business Banking businesses. Bank of America
recently announced an initiative to increase lending to small- and
medium-sized businesses in 2010 by at least $5 billion from 2009
levels.
- Average retail deposits during the quarter increased $89.9 billion,
or 15 percent, from a year earlier. Excluding the initial impact of the
Merrill Lynch acquisition and the expected decline in higher-yielding
Countrywide deposits, average retail deposits experienced strong organic
growth of $29.1 billion as momentum in the affluent and mass affluent
customer base continued.
- Bank of America introduced the Clarity Commitment(TM) for home
mortgages, home refinancing and credit cards. The Clarity Commitment
is a simple, easy-to-read and understand, one-page summary for customers
that includes important information on payments, interest rates and
fees. Bank of America began presenting these improved materials to more
than 40 million of its customers in 2009.
- The integration of Merrill Lynch remained on track with cost
savings surpassing original estimates for the first year.
- Bank of America Merrill Lynch ranked No. 2 in global and U.S.
investment banking fees, according to Dealogic 2009 league tables.
- In Global Wealth and Investment Management, the financial
advisor network of more than 15,000 was up slightly from the third
quarter as the retention rate stood at the highest level in recent years
and the company increased hiring, training and development of new
advisors.
- Bank of America agreed to sell the long-term asset management
business of Columbia Management to Ameriprise Financial, Inc. The
company also agreed to sell First Republic Bank to a number of
investors, including investment funds managed by Colony Capital, LLC
and General Atlantic LLC, led by First Republic's existing management.
Both sales are expected to close in the second quarter of 2010.
- Bank of America repaid the $45 billion of the U.S. taxpayers'
preferred stock investment in the company as part of TARP. Repayment
followed the successful completion of a securities offering. In
2009, Bank of America raised a total of $57 billion in additional Tier
1 common capital through various measures, further strengthening its
liquidity and capital position.
Fourth-Quarter 2009 Financial Summary
Revenue and Expense
Revenue net of interest expense on a fully taxable-equivalent basis rose 59 percent to $25.4 billion from $16.0 billion a year ago, reflecting in part the addition of Merrill Lynch.
Net interest income on a fully taxable-equivalent basis declined 11 percent to $11.9 billion, compared with $13.4 billion a year earlier. The decrease was a result of lower asset liability management portfolio levels, reduced loan levels and the unfavorable impact of higher nonperforming loans. This was partially offset by the addition of Merrill Lynch. The net interest yield narrowed 69 basis points to 2.62 percent.
Noninterest income rose to $13.5 billion from $2.6 billion a year earlier. Higher trading account profits, investment and brokerage services fees and investment banking income reflected the addition of Merrill Lynch and significantly lower market disruption losses. The current quarter also included a $1.1 billion gain on the company's investment in BlackRock as a result of its purchase of Barclay's asset management business. These increases were partially offset by $1.6 billion in losses mostly related to mark-to-market adjustments on the Merrill Lynch structured notes, as the company's credit spreads improved during the quarter. Card income declined $1.3 billion mainly due to higher credit losses on securitized credit card loans and lower fee income.
Noninterest expense increased to $16.4 billion from $10.9 billion a year earlier. Personnel costs and other general operating expenses rose, driven in part by the Merrill Lynch acquisition. Pretax merger and restructuring charges rose to $533 million from $306 million a year earlier.
The efficiency ratio on a fully taxable-equivalent basis was 64.47 percent, compared with 68.51 percent a year earlier.
Pretax, pre-provision income on a fully taxable-equivalent basis was $9.0 billion compared with $5.0 billion a year earlier. The company had a tax benefit of $1.2 billion in the quarter compared with a benefit of $2.0 billion the same period last year.
Credit Quality
Credit quality showed signs of improvement in most portfolios compared with the prior quarter, although credit costs remained high as global economic conditions remained challenging. Rising unemployment and underemployment kept consumers under stress and individuals spent longer periods without work. Losses, however, declined in most consumer portfolios from the prior quarter.
The impact of the weak economy on the commercial portfolios moderated somewhat with criticized loans decreasing and the growth of nonperforming loans slowing. Losses in the homebuilder portfolio dropped from the prior quarter and losses in the commercial domestic portfolio declined across a broad range of borrowers and industries.
Net charge-offs were $1.2 billion lower than the prior quarter, driven by improvements across most consumer portfolios. Net charge-offs declined from the previous quarter for the first time in nearly four years. Nonperforming assets were $35.7 billion, compared with $33.8 billion at September 30, 2009, reflecting a slower rate of increase than in recent quarters.
The provision for credit losses was $10.1 billion, $1.6 billion lower than the third quarter and $1.6 billion higher than the same period a year earlier. The $1.7 billion addition to the reserve for credit losses was lower than the third quarter, driven by lower additions on the purchased impaired consumer portfolios obtained through acquisitions and improved delinquencies in certain consumer and small business portfolios. These decreases were partially offset by additions to increase reserve coverage on the consumer credit card portfolio. The 2008 coverage ratios and amounts shown in the following table do not include Merrill Lynch, which was acquired on January 1, 2009.
(Dollars in millions) Q4 2009 Q3 2009 Q4 2008
--------------------- ------- ------- -------
Provision for credit losses $10,110 $11,705 $8,535
Net charge-offs 8,421 9,624 5,541
Net charge-off ratio(1) 3.71% 4.13% 2.36%
Total managed net losses $11,347 $12,932 $7,398
Total managed net loss ratio(1) 4.54% 5.03% 2.84%
At 12/31/09 At 9/30/09 At 12/31/08
----------- ---------- -----------
Nonperforming assets $35,747 $33,825 $18,212
Nonperforming assets ratio(2) 3.98% 3.72% 1.96%
Allowance for loan and lease
losses $37,200 $35,832 $23,071
Allowance for loan and lease
losses ratio(3) 4.16% 3.95% 2.49%
(1) Net charge-off/loss ratios are calculated as annualized held net charge-offs or managed net losses divided by average outstanding held or managed loans and leases during the period.
(2) Nonperforming assets ratios are calculated as nonperforming assets divided by outstanding loans, leases and foreclosed properties at the end of the period.
(3) Allowance for loan and lease losses ratios are calculated as allowance for loan and lease losses divided by loans and leases outstanding at the end of the period.
Note: Ratios do not include loans measured under the fair value option.
Capital Management
At 12/31/09 At 09/30/09 At 12/31/08
----------- ----------- -----------
Total shareholders' equity $231,444 $257,683 $177,052
(in millions)
Tier 1 common ratio 7.81% 7.25% 4.80%
Tier 1 capital ratio 10.40 12.46 9.15
Total capital ratio 14.66 16.69 13.00
Tangible common equity ratio(1) 5.57 4.82 2.93
Tangible book value per share $11.94 $12.00 $10.11
(1) Tangible common equity and tangible book value per share are non-GAAP measures. Other companies may define or calculate the tangible common equity ratio and tangible book value per share differently. For reconciliation to GAAP measures, please refer to page 22 of this press release.
Capital ratios were impacted from the prior quarter primarily due to the issuance of equity and repayment of TARP.
During the quarter, a cash dividend of $0.01 per common share was paid and the company reported $5.0 billion in preferred dividends. Period-end common shares issued and outstanding were 8.65 billion for the fourth and third quarters of 2009 and 5.02 billion for the fourth quarter of 2008.
During the fourth quarter, Bank of America sold 1.286 billion common equivalent securities, generating gross proceeds of $19.3 billion. The offering was priced at $15.00 per depository share and its proceeds, along with existing corporate funds, were used to repurchase all the preferred stock issued to the U.S. Department of the Treasury to repay the TARP investment.
Full-Year 2009 Financial Summary
Revenue and Expense
Revenue net of interest expense on a fully taxable-equivalent basis rose 63 percent to $120.9 billion from $74.0 billion a year ago, reflecting in part the addition of Countrywide and Merrill Lynch.
Net interest income on a fully taxable-equivalent basis was $48.4 billion, compared with $46.6 billion for 2008. The increase was a result of increased deposit levels, a favorable rate environment, the acquisitions of Merrill Lynch and Countrywide, offset in part by asset liability management portfolio levels, lower consumer loan balances and an increase in nonperforming loans. The net interest yield narrowed 33 basis points to 2.65 percent.
Noninterest income rose to $72.5 billion from $27.4 billion a year earlier. Higher trading account profits, equity investment income, investment and brokerage services fees and investment banking income reflected the addition of Merrill Lynch and significantly lower market disruption losses. These increases, as well as the increase in mortgage banking income related to the Countrywide acquisition and gains on the sale of debt securities, were partially offset by $4.9 billion in net losses mostly related to mark-to-market adjustments on the Merrill Lynch structured notes, as the company's credit spreads improved, and approximately $800 million in net credit valuation adjustments on derivative liabilities. Card income declined $5.0 billion mainly from higher credit losses on securitized credit card loans and lower fee income.
Noninterest expense increased to $66.7 billion from $41.5 billion a year earlier. Personnel costs and other general operating expenses rose due to the full-year impact of Countrywide and the addition of Merrill Lynch. Pretax merger and restructuring charges rose to $2.7 billion from $935 million a year earlier.
The efficiency ratio on a fully taxable-equivalent basis was 55.16 percent compared with 56.14 percent a year earlier.
Pretax, pre-provision income on a fully taxable-equivalent basis was $54.2 billion compared with $32.4 billion a year earlier. For the year, the company recognized a tax benefit of $1.9 billion, compared with a tax expense of $420 million in 2008. The decrease in tax expense was due to certain tax benefits, as well as a shift in the geographic mix of the company's earnings driven by the addition of Merrill Lynch.
Credit Quality
Weakness in global economies drove higher credit costs in 2009. The provision for credit losses was $48.6 billion, $21.7 billion higher than 2008, reflecting higher net charge-offs and additions to reserves. Higher reserve additions resulted from further deterioration on the purchased impaired consumer portfolios obtained through acquisitions, broad-based deterioration in the core commercial portfolio and the impact of deterioration in the housing markets on the residential mortgage portfolio.
Net charge-offs were $17.5 billion higher than the prior year across all portfolios. Nonperforming assets were $35.7 billion, compared with $18.2 billion at December 31, 2008. The 2008 ratios and amounts shown in the following table do not include Merrill Lynch, which was acquired on January 1, 2009.
Credit Quality
(Dollars in millions) 2009 2008
--------------------- ---- ----
Provision for credit losses $48,570 $26,825
Net charge-offs 33,688 16,231
Net charge-off ratio(1) 3.58% 1.79%
Total managed net losses $45,087 $22,901
Total managed net loss ratio(1) 4.33% 2.27%
(1) Net charge-off/loss ratios are calculated as held net charge-offs or managed net losses divided by average outstanding held or managed loans and leases during the period.
Note: Ratios do not include loans measured under the fair value option.
Capital Management
Bank of America increased its Tier 1 common capital by $57 billion through multiple capital actions taken during 2009 that included issuing shares of common stock, issuing common equivalent securities, exchanging certain non-government preferred stock for common stock and asset sales.
Tangible common equity benefited from the positive impact of market movement on available-for-sale securities.
During the year, cash dividends of $0.04 per common share were paid and the company reported $8.5 billion in preferred dividends including the cost associated with TARP repayment.
2009 Business Segment Results
Deposits
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total revenue, net of interest
expense(1) $14,008 $17,840
Provision for credit losses 380 399
Noninterest expense 9,693 8,783
Net income 2,506 5,512
Efficiency ratio(1) 69.19% 49.23%
Return on average equity 10.55 22.55
Deposits(2) $406,833 $357,608
At 12/31/09 At 12/31/08
----------- -----------
Period-ending deposits $419,583 $375,763
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
Deposits net income fell 55 percent from a year ago as revenue declined and noninterest expense rose. Revenue declined mainly due to lower residual net interest income impacted by the corporation's asset liability management activities and spread compression as interest rates declined. Noninterest expense increased as a result of higher Federal Deposit Insurance Corp. (FDIC) insurance and special assessment costs.
Average customer deposits rose 14 percent, or $49.2 billion, from a year ago due to strong organic growth and the transfer of certain client deposits from Global Wealth and Investment Management. Organic growth was driven by the continuing need of customers to manage their liquidity as illustrated by growth in higher spread deposits from new money, as well as movement from certificates of deposit to other products. The increase was partially offset by the expected decline in higher-yielding Countrywide deposits.
Fourth-quarter net income fell 62 percent to $595 million compared with the same period last year due to a decline in revenue and an increase in noninterest expense. These period-over-period changes were driven by the same factors as described in the full year discussion above. The decline in revenue included the impact of implementing new initiatives aimed at assisting customers who are economically stressed by reducing the amount of their banking fees. Overdraft fees declined $160 million as a result of these initiatives.
Global Card Services
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total managed revenue, net of interest
expense(1,2) $29,342 $31,220
Provision for credit losses(3) 30,081 20,164
Noninterest expense 7,961 9,160
Net income (loss) (5,555) 1,234
Efficiency ratio(2) 27.13% 29.34%
Return on average equity n/m 3.15
Managed loans(4) $216,654 $236,714
At 12/31/09 At 12/31/08
----------- -----------
Period-ending loans $201,230 $233,040
(1) Managed basis. Managed basis assumes that credit card 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 credit card loan portfolio
(4) Balances averaged for period
n/m = not meaningful
Global Card Services reported a net loss of $5.6 billion as credit costs continued to rise, reflecting weak economies in the U.S., Europe and Canada. Managed net revenue declined 6 percent to $29.3 billion mainly due to lower fee income and the absence of one-time gains that positively impacted 2008 results. The decline was partially offset by higher net interest income, as lower funding costs outpaced the decline in average managed loans. The revenue decline also was partially driven by enrolling customers who are experiencing financial stress in various card modification programs.
Provision expense increased to $30.1 billion from a year earlier as economic conditions led to higher losses in the consumer card and consumer lending portfolios, including a higher level of bankruptcies. Reserve additions related to maturing securitizations and increased coverage on the consumer credit card portfolio also contributed to the increase. These increases were partially offset by reserve reductions in consumer lending and lower reserve additions for the small business portfolio resulting from improved delinquencies.
Noninterest expense declined 13 percent on lower operating and marketing costs.
The fourth-quarter net loss of $1.0 billion was due to higher credit costs and lower managed revenues driven by the impact of the weak economy. Net revenue fell 11 percent compared with a year ago as net interest and fee income declined, partially offset by lower operating and marketing costs. Additionally, in the fourth quarter, the company helped more than 200,000 customers by reducing their rates and providing them more affordable payment terms.
Home Loans and Insurance
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total revenue, net of interest
expense(1) $16,902 $9,310
Provision for credit losses 11,244 6,287
Noninterest expense 11,683 6,962
Net income (loss) (3,838) (2,482)
Efficiency ratio(1) 69.12% 74.78%
Return on average equity n/m n/m
Loans(2) $130,519 $105,724
At 12/31/09 At 12/31/08
----------- -----------
Period-ending loans $131,302 $122,947
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
n/m = not meaningful
The net loss in Home Loans and Insurance widened to $3.8 billion as higher credit costs continued to negatively impact results. Net revenue increased 82 percent primarily driven by the full-year benefit of Countrywide and higher loan production income from increased refinance activity.
The provision for credit losses rose to $11.2 billion, driven by continued economic weakness and lower home prices. Reserves were increased mainly due to further deterioration in the purchased impaired portfolio.
Noninterest expense rose to $11.7 billion mostly due to the full-year impact of Countrywide as well as increased compensation costs and other expenses related to higher production volume and higher delinquencies. Part of the increase in expenses was a result of more than doubling the staff and other costs in the home retention group.
The fourth-quarter net loss increased 40 percent to $993 million compared with the year-ago quarter. Net revenue rose mostly on higher income from loan production. The increase was partially offset by lower servicing revenue driven by unfavorable mortgage servicing rights results. Higher production volume and delinquencies led to increased expenses. Provision for credit losses increased due to the same factors as described in the full-year discussion above.
Global Banking
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total revenue, net of interest
expense(1) $23,035 $16,796
Provision for credit losses 8,835 3,130
Noninterest expense 9,539 6,684
Net income 2,969 4,472
Efficiency ratio(1) 41.41% 39.80%
Return on average equity 4.93 8.84
Loans and leases(2) $315,002 $318,325
Deposits(2) 211,261 177,528
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
Global Banking net income declined to $3.0 billion. Strong deposit growth and the impact of the Merrill Lynch acquisition were more than offset by increased credit costs and higher FDIC insurance and special assessment costs.
The provision for credit losses rose to $8.8 billion driven by higher net charge-offs and additions to reserves in the commercial real estate and commercial domestic portfolios. These increases reflect deterioration across a broad range of industries, property types and borrowers.
- Commercial Banking revenue increased to $15.2 billion, reflecting
strong deposit growth, credit spread improvement on loan yields and the
gain related to the sale of the merchant processing business to a joint
venture during the second quarter. This was offset in part by lower
residual net interest income, narrower spreads on deposits and reduced
loan balances. Net income was negatively impacted by a significant
increase in credit costs and higher FDIC insurance and special
assessment costs.
- Corporate Banking and Investment Banking revenue rose 44 percent, or
$2.4 billion, driven by strong investment banking revenues due to the
expanded Bank of America Merrill Lynch platform and strong deposit
growth. The increase was partially offset by the costs of credit
hedging and lower residual net interest income. Net income was further
impacted by higher credit costs, operating expenses associated with the
Merrill Lynch acquisition and higher FDIC insurance and special
assessment costs.
Fourth-quarter net income declined 74 percent to $264 million compared with a year earlier due to higher credit, FDIC insurance and compensation costs. Provision for credit losses rose due to higher net charge-offs and reserve additions within the commercial real estate portfolio. Net revenue increased due to the impact of the Merrill Lynch acquisition.
Note: 2009 investment banking income of $5.6 billion was shared primarily between Global Banking and Global Markets based on an internal fee-sharing arrangement between the two segments. This represents a more than twofold increase from a year earlier, reflecting the company's larger investment banking platform.
Global Markets
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total revenue, net of interest
expense(1) $20,626 $(3,831)
Provision for credit losses 400 (50)
Noninterest expense 10,042 3,906
Net income (loss) 7,177 (4,916)
Efficiency ratio(1) 48.68% n/m
Return on average equity 23.33% n/m
Total assets(2) $656,621 $427,734
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
n/m = not meaningful
Global Markets net income increased $12.1 billion driven by the addition of Merrill Lynch and a more favorable trading environment. Revenue increased to $20.6 billion due to improved market conditions and the reduced impact of market disruption charges compared with the prior year. Noninterest expense increased due to the Merrill Lynch acquisition. The increase was partially offset by a change in compensation that delivers a greater portion of incentive pay over time.
- Fixed Income, Currency and Commodities revenue of $14.9 billion was
primarily driven by sales and trading revenues of $12.7 billion. Credit
products benefited from improved market liquidity and tighter credit
spreads. Investment banking fees were positively impacted by new
issuance capabilities.
- Equities revenue of $5.7 billion, including sales and trading revenue
of $4.9 billion, was driven by the addition of Merrill Lynch and an
increase in customer flow due to positive market sentiment and gains
from risk positioning.
Fourth-quarter net income increased $4.8 billion compared with a net loss of $3.7 billion in the same period last year. Net revenue increased due to a more favorable trading environment from the prior year, including significantly lower market disruption charges and the addition of Merrill Lynch.
Global Wealth and Investment Management
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total revenue, net of interest $18,123 $7,809
Expense(1)
Provision for credit losses 1,061 664
Noninterest expense 13,077 4,910
Net income 2,539 1,428
Efficiency ratio(1) 72.16% 62.87%
Return on average equity 13.44 12.20
Loans(2) $103,398 $87,593
Deposits(2) 225,980 160,702
(in billions) At 12/31/09 At 12/31/08
------------- ----------- -----------
Assets under management $749.8 $523.1
Total net client assets(3) $2,172.9 $917.6
(1) Fully taxable-equivalent basis
(2) Balances averaged for period
(3) Client assets are defined as assets under management, client brokerage assets, other assets in custody and client deposits
Global Wealth and Investment Management net income rose to $2.5 billion driven by the addition of Merrill Lynch, partially offset by lower residual net interest income and higher credit costs.
Net revenue more than doubled to $18.1 billion on higher investment and brokerage service income from the addition of Merrill Lynch, a $1.1 billion gain related to the BlackRock equity investment and the lower level of support for certain cash funds.
The provision for credit losses increased $397 million to $1.1 billion driven by higher net charge-offs in the consumer real estate portfolio, as well as higher net charge-offs and reserve increases in the commercial portfolios.
- Merrill Lynch Global Wealth Management net income increased
22 percent to $1.5 billion from a year earlier as the impact of lower
residual net interest income, the migration of deposits and loan
balances to the Deposits and Home Loans and Insurance businesses and
higher credit costs were more than offset by the addition of Merrill
Lynch.
- U.S. Trust, Bank of America Private Wealth Management net income
declined to $174 million as net revenue fell and credit costs
increased significantly, including the impact of a single large
commercial charge-off in the third quarter. Net revenue declined 11
percent to $2.7 billion driven by a lower residual net interest income
allocation and the effect of lower valuations in equity markets on asset
management fee income.
- Columbia Management net loss narrowed to $7 million compared with a
net loss of $469 million a year earlier, driven by a $917 million
reduction in support provided to certain cash funds, partially offset by
the impact of lower valuations in the equity markets, as well as net
outflows in the cash complex. As a result of actions taken during the
year, Columbia's money market funds no longer have exposure to
structured investment vehicles or other troubled assets and all capital
support agreements have been terminated.
Fourth-quarter net income increased $816 million to $1.3 billion, compared with the same period last year as revenue increased to $5.5 billion. The increase in revenue was driven primarily by the Merrill Lynch acquisition and the gain related to the BlackRock equity interest.
All Other
(Dollars in millions) 2009 2008
--------------------- ---- ----
Total revenue, net of interest
expense(1) $(1,092) $(5,168)
Provision for credit losses(2) (3,431) (3,769)
Noninterest expense 4,718 1,124
Net income (loss) 478 (1,240)
Loans and leases(3) $155,561 $135,789
(1) Fully taxable-equivalent basis
(2) Numbers in parentheses represent a provision benefit
(3) Balances averaged for period
All Other reported net income of $478 million. Higher equity investment income and increased gains on the sale of debt securities were offset by $4.9 billion mark-to-market losses mainly related to certain Merrill Lynch structured notes as credit spreads improved. Results were also impacted by other-than-temporary impairment charges related to non-agency collateralized mortgage obligations. Excluding the securitization impact to show Global Card Services on a managed basis, the provision for credit losses increased compared with the same period last year due to higher losses in the residential mortgage portfolio. Noninterest expense increased due to merger and restructuring charges related to the Merrill Lynch acquisition and a pretax charge to pay the U.S. government to terminate its asset guarantee term sheet.
All Other consists primarily of equity investments, the residential mortgage portfolio associated with asset and liability management (ALM) activities, the residual impact of the cost allocation process, merger and restructuring charges, intersegment eliminations, fair-value adjustments related to certain Merrill Lynch structured notes 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 Card Services on a managed basis. For more information and detailed reconciliation, please refer to the data pages supplied with this press release. Effective January 1, 2009, All Other includes the results of First Republic Bank, which was acquired as part of the Merrill Lynch acquisition.
Note: Chief Executive Officer and President Brian T. Moynihan and Chief Financial Officer Joe L. Price will discuss 2009 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 1.888.245.1801 (U.S.) or 1.785.424.1732 (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 approximately 59 million consumer and small business relationships with 6,000 retail banking offices, more than 18,000 ATMs and award-winning online banking with nearly 30 million active users. 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 150 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 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 are not historical facts, but instead represent Bank of America's current expectations, plans or forecasts of its integration of the Merrill Lynch and Countrywide acquisitions and related cost savings, future results and revenues, credit losses, credit reserves and charge-offs, nonperforming asset levels, level of preferred dividends, service charges, the closing of the First Republic Bank and Columbia Management sales, effective tax rate, noninterest expense, impact of changes in fair value of Merrill Lynch structured notes, impact of SFAS 166 and 167 on capital and reserves, mortgage production and other similar matters. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often 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 all of the following uncertainties and risks, as well as those more fully discussed under Item 1A. "Risk Factors" of Bank of America's 2008 Annual Report on Form 10-K, third quarter 2009 Quarterly Report on Form 10-Q, and in any of Bank of America's subsequent SEC filings: negative economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits; Bank of America's modification policies and related results; the level and volatility of the capital markets, interest rates, currency values and other market indices; changes in consumer, investor and counterparty confidence in, and the related impact on, financial markets and institutions; Bank of America's credit ratings and the credit ratings of its securitizations; estimates of fair value of certain Bank of America assets and liabilities; legislative and regulatory actions in the United States (including the impact of Regulation E, the Card Act of 2009 and related regulations) and internationally; the impact of litigation and regulatory investigations, including costs, expenses, settlements and judgments; various monetary and fiscal policies and regulations of the U.S. and non-U.S. governments; changes in accounting standards, rules and interpretations (including SFAS 166 and 167) and the impact on Bank of America's financial statements; increased globalization of the financial services industry and competition with other U.S. and international financial institutions; Bank of America's ability to attract new employees and retain and motivate existing employees; mergers and acquisitions and their integration into Bank of America; Bank of America's reputation; and decisions to downsize, sell or close units or otherwise change the business mix of Bank of America. 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.
Columbia Management Group, LLC ("Columbia Management") is the primary investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and products for institutional and individual investors. Columbia Funds and Excelsior Funds are distributed by Columbia Management Distributors, Inc., member FINRA and SIPC. Columbia Management Distributors, Inc. is part of Columbia Management and an affiliate of Bank of America Corporation.
Investors should carefully consider the investment objectives, risks, charges and expenses of any Columbia Fund or Excelsior Fund before investing. Contact your Columbia Management representative for a prospectus, which contains this and other important information about the fund. Read it carefully before investing.
Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, financial advisory, and other investment banking activities are performed by investment banking affiliates of Bank of America Corporation ("Investment Banking Affiliates"), including Banc of America Securities LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, which are both registered broker-dealers and members of FINRA and SIPC. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. Bank of America Corporation's broker-dealers are not banks and are separate legal entities from their bank affiliates. The obligations of the broker-dealers are not obligations of their bank or thrift affiliates (unless explicitly stated otherwise), and these bank affiliates are not responsible for securities sold, offered or recommended by the broker-dealers. The foregoing also applies to our other non-bank, non-thrift affiliates.
http://www.bankofamerica.com
Bank of America Corporation and Subsidiaries
Selected Financial Data
(Dollars in millions, except per share data; shares in thousands)
Summary Income
Statement Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
---- ---- ---- ----
Net interest income $11,559 $13,106 $47,109 $45,360
Noninterest income 13,517 2,574 72,534 27,422
Total revenue, net
of interest expense 25,076 15,680 119,643 72,782
Provision for credit
losses 10,110 8,535 48,570 26,825
Noninterest expense,
before merger and
restructuring charges 15,852 10,641 63,992 40,594
Merger and
restructuring charges 533 306 2,721 935
Income (loss) before
income taxes (1,419) (3,802) 4,360 4,428
Income tax expense
(benefit) (1,225) (2,013) (1,916) 420
Net income (loss) $(194) $(1,789) $6,276 $4,008
Preferred stock
dividends and
accretion (1) 5,002 603 8,480 1,452
Net income (loss)
applicable to
common
shareholders $(5,196) $(2,392) $(2,204) $2,556
Earnings (loss) per
common share $(0.60) $(0.48) $(0.29) $0.54
Diluted earnings (loss)
per common share (0.60) (0.48) (0.29) 0.54
Summary Average
Balance Sheet Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
---- ---- ---- ----
Total loans and
leases $905,913 $941,563 $948,805 $910,878
Debt securities 279,231 280,942 271,048 250,551
Total earning assets 1,807,898 1,616,673 1,830,193 1,562,729
Total assets 2,421,531 1,948,854 2,437,517 1,843,979
Total deposits 995,160 892,141 980,966 831,144
Shareholders' equity 250,599 176,566 244,645 164,831
Common shareholders'
equity 197,123 142,535 182,288 141,638
Performance Ratios Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
Return on average
assets n/m n/m 0.26% 0.22%
Return on average
common shareholders'
equity n/m n/m n/m 1.80
Credit Quality Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
---- ---- ---- ----
Total net charge-offs $8,421 $5,541 $33,688 $16,231
Annualized net
charge-offs as a % of
average loans and
leases outstanding (2) 3.71% 2.36% 3.58% 1.79%
Provision for credit
losses $10,110 $8,535 $48,570 $26,825
Total consumer credit
card managed net
losses 4,867 3,263 19,185 11,382
Total consumer credit
card managed net
losses as a % of
average managed credit
card receivables 11.88% 7.16% 11.25% 6.18%
December 31
2009 2008
---- ----
Total nonperforming
assets $35,747 $18,212
Nonperforming assets
as a % of total loans,
leases and foreclosed
properties (2) 3.98% 1.96%
Allowance for loan and
lease losses $37,200 $23,071
Allowance for loan and
lease losses as a % of
total loans and leases
outstanding (2) 4.16% 2.49%
Capital Management December 31
2009 2008
---- ----
Risk-based capital
ratios:
Tier 1 common equity 7.81% 4.80%
Tier 1 capital 10.40 9.15
Total capital 14.66 13.00
Tier 1 leverage ratio 6.91 6.44
Tangible equity ratio (3) 6.42 5.11
Tangible common equity
ratio (4) 5.57 2.93
Period-end common
shares issued and
outstanding 8,650,244 5,017,436
Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
---- ---- ---- ----
Shares issued (5) n/a 455,381 3,632,808 579,551
Average common shares
issued and
outstanding 8,634,565 4,957,049 7,728,570 4,592,085
Average diluted
common shares issued
and outstanding 8,634,565 4,957,049 7,728,570 4,596,428
Dividends paid per
common share $0.01 $0.32 $0.04 $2.24
Summary End of Period
Balance Sheet
December 31
2009 2008
---- ----
Total loans and
leases $900,128 $931,446
Total debt
securities 311,441 277,589
Total earning
assets 1,726,489 1,536,198
Total assets 2,223,299 1,817,943
Total deposits 991,611 882,997
Total shareholders'
equity 231,444 177,052
Common shareholders'
equity 194,236 139,351
Book value per share
of common stock (6) $21.48 $27.77
Tangible book value
per share of common
stock (6) 11.94 10.11
(1) Includes $4.0 billion of accelerated accretion from redemption of preferred stock issued to the U.S. Treasury in the fourth quarter of 2009.
(2) Ratios do not include loans measured at fair value under the fair value option at and for the three months and year ended December 31, 2009 and 2008.
(3) Tangible equity ratio represents shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities.
(4) Tangible common equity ratio represents common shareholders' equity plus Common Equivalent Securities less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities.
(5) 2009 amounts include approximately 1.375 billion shares issued in the Merrill Lynch acquisition.
(6) Book value per share of common stock includes the impact of the conversion of common equivalent shares to common shares. Tangible book value per share of common stock represents ending common shareholders' equity plus Common Equivalent Securities less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by ending common shares outstanding plus the number of common shares issued upon conversion of Common Equivalent Securities.
n/m = not meaningful
n/a = not applicable
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods beginning July 1, 2008 include the Countrywide acquisition. Information for the period beginning January 1, 2009 includes the Merrill Lynch 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)
For the three months ended December 31
Global Card Home Loans
Deposits Services (1, 2) & Insurance
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Total revenue, net
of interest
expense (3) $3,448 $4,657 $7,161 $8,018 $3,793 $3,253
Provision for
credit losses 91 107 6,924 5,851 2,249 1,623
Noninterest expense 2,374 2,215 1,936 2,179 3,165 2,752
Net income (loss) 595 1,563 (1,028) (9) (993) (707)
Efficiency ratio (3) 68.86% 47.58% 27.05% 27.18% 83.43% 84.58%
Return on average
equity 9.79 25.39 n/m n/m n/m n/m
Average - total
loans and leases n/m n/m $204,748 $233,427 $132,326 $122,065
Average - total
deposits $416,464 $377,987 n/m n/m n/m n/m
Global Wealth &
Investment
Global Banking Global Markets Management
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Total revenue,
net of interest
expense (3) $4,932 $4,059 $3,443 $(4,555) $5,508 $1,991
Provision for
credit losses 2,063 1,402 252 13 54 152
Noninterest expense 2,409 1,179 2,078 1,105 3,330 1,069
Net income (loss) 264 1,032 1,184 (3,653) 1,331 515
Efficiency
ratio (3) 48.83% 29.05% 60.33% n/m 60.45% 53.70%
Return on average
equity 1.73 7.65 14.45 n/m 26.76 17.40
Average - total
loans and leases $297,488 $331,115 n/m n/m $100,264 $88,876
Average - total
deposits 228,995 199,465 n/m n/m 223,056 172,435
All Other (1, 4)
2009 2008
---- ----
Total revenue,
net of interest
expense (3) $(2,872) $(1,443)
Provision for
credit losses (1,523) (613)
Noninterest
expense 1,093 448
Net loss (1,547) (530)
Average - total
loans and leases $146,185 $145,241
Average - total
deposits 91,775 110,471
(1) Global Card Services is presented on a managed basis with a corresponding offset recorded in All Other.
(2) Provision for credit losses represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(3) 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.
(4) Provision for credit losses represents provision for credit losses in All Other combined with the Global Card Services securitization offset.
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods beginning July 1, 2008 include the Countrywide acquisition. Information for the period beginning January 1, 2009 includes the Merrill Lynch 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)
For the year ended December 31
Global Card Home Loans
Deposits Services (1, 2) & Insurance
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Total revenue, net
of interest
expense (3) $14,008 $17,840 $29,342 $31,220 $16,902 $9,310
Provision for
credit losses 380 399 30,081 20,164 11,244 6,287
Noninterest expense 9,693 8,783 7,961 9,160 11,683 6,962
Net income (loss) 2,506 5,512 (5,555) 1,234 (3,838) (2,482)
Efficiency ratio (3) 69.19% 49.23% 27.13% 29.34% 69.12% 74.78%
Return on average
equity 10.55 22.55 n/m 3.15 n/m n/m
Average - total
loans and leases n/m n/m $216,654 $236,714 $130,519 $105,724
Average - total
deposits $406,833 $357,608 n/m n/m n/m n/m
Global Wealth &
Investment
Global Banking Global Markets Management
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Total revenue, net
of interest
expense (3) $23,035 $16,796 $20,626 $(3,831) $18,123 $7,809
Provision for
credit losses 8,835 3,130 400 (50) 1,061 664
Noninterest expense 9,539 6,684 10,042 3,906 13,077 4,910
Net income (loss) 2,969 4,472 7,177 (4,916) 2,539 1,428
Efficiency
ratio (3) 41.41% 39.80% 48.68% n/m 72.16% 62.87%
Return on average
equity 4.93 8.84 23.33 n/m 13.44 12.20
Average - total
loans and leases $315,002 $318,325 n/m n/m $103,398 $87,593
Average - total
deposits 211,261 177,528 n/m n/m 225,980 160,702
All Other (1, 4)
2009 2008
---- ----
Total revenue, net
of interest
expense (3) $(1,092) $(5,168)
Provision for
credit losses (3,431) (3,769)
Noninterest expense 4,718 1,124
Net income (loss) 478 (1,240)
Average - total
loans and leases $155,561 $135,789
Average - total
deposits 103,122 105,725
(1) Global Card Services is presented on a managed basis with a corresponding offset recorded in All Other.
(2) Provision for credit losses represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(3) 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.
(4) Provision for credit losses represents provision for credit losses in All Other combined with the Global Card Services securitization offset.
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods beginning July 1, 2008 include the Countrywide acquisition. Information for the period beginning January 1, 2009 includes the Merrill Lynch 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
basis data Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
---- ---- ---- ----
Net interest income $11,896 $13,406 $48,410 $46,554
Total revenue, net of
interest expense 25,413 15,980 120,944 73,976
Net interest yield 2.62% 3.31% 2.65% 2.98%
Efficiency ratio 64.47 68.51 55.16 56.14
Other Data December 31
2009 2008
---- ----
Full-time equivalent
employees 283,717 240,202
Number of banking
centers - domestic 6,011 6,139
Number of branded
ATMs - domestic 18,262 18,685
Reconciliation to GAAP financial measures
The Corporation evaluates its business based upon ratios that utilize tangible equity which is a non-GAAP measure. The tangible equity ratio represents shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities. The tangible common equity ratio represents common shareholders' equity plus Common Equivalent Securities less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities. Tangible book value per share of common stock represents ending common shareholders' equity plus Common Equivalent Securities less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by ending common shares outstanding plus the number of common shares issued upon conversion of Common Equivalent Securities. These measures are used to evaluate the Corporation's use of equity (i.e., capital). We believe the use of these non-GAAP measures provides additional clarity in assessing the results of the Corporation.
Other companies may define or calculate supplemental financial data differently. See the tables below for corresponding reconciliations to GAAP financial measures at December 31, 2009, September 30, 2009 and December 31, 2008.
December 31 September 30 December 31
2009 2009 2008
Reconciliation of period end
shareholders' equity to period
end tangible shareholders' equity
Shareholders' equity $231,444 $257,683 $177,052
Goodwill (86,314) (86,009) (81,934)
Intangible assets (excluding MSRs) (12,026) (12,715) (8,535)
Related deferred tax liabilities 3,498 3,714 1,854
Tangible shareholders' equity $136,602 $162,673 $88,437
Reconciliation of period end
common shareholders' equity to
period end tangible common
shareholders' equity
Common shareholders' equity $194,236 $198,843 $139,351
Common Equivalent Securities 19,244 - -
Goodwill (86,314) (86,009) (81,934)
Intangible assets (excluding MSRs) (12,026) (12,715) (8,535)
Related deferred tax liabilities 3,498 3,714 1,854
Tangible common shareholders'
equity $118,638 $103,833 $50,736
Reconciliation of period end
assets to period end tangible
assets
Assets $2,223,299 $2,251,043 $1,817,943
Goodwill (86,314) (86,009) (81,934)
Intangible assets (excluding MSRs) (12,026) (12,715) (8,535)
Related deferred tax liabilities 3,498 3,714 1,854
Tangible assets $2,128,457 $2,156,033 $1,729,328
Reconciliation of ending common
shares outstanding to ending
tangible common shares
outstanding
Common shares outstanding 8,650,244 8,650,314 5,017,436
Conversion of common
equivalent shares 1,286,000 - -
Tangible common shares
outstanding 9,936,244 8,650,314 5,017,436
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 Card Services' results on a managed basis which is consistent with the way that management evaluates the results of Global Card Services. 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 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 Card Services' managed income statement line items differ from a held basis reported as follows:
-- Managed net interest income includes Global Card Services' 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 Card Services'
noninterest income on a held basis less the reclassification of
certain components of card income (e.g., excess servicing income)
to record securitized 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 Card
Services.
-- 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 Card Services
Year Ended December 31, Year Ended December 31,
2009 2008
Securiti- Securiti-
Managed zation Held Managed zation Held
Basis (1) Impact(2) Basis Basis(1) Impact(2) Basis
------- -------- ------- ------- -------- -------
Net interest
income (3) $20,264 $(9,250) $11,014 $19,589 $(8,701) $10,888
Noninterest
income:
Card income 8,555 (2,034) 6,521 10,033 2,250 12,283
All other
income 523 (115) 408 1,598 (219) 1,379
Total
noninterest
income 9,078 (2,149) 6,929 11,631 2,031 13,662
Total revenue,
net of
interest
expense 29,342 (11,399) 17,943 31,220 (6,670) 24,550
Provision for
credit losses 30,081 (11,399) 18,682 20,164 (6,670) 13,494
Noninterest
expense 7,961 - 7,961 9,160 - 9,160
Income (loss)
before income
taxes (8,700) - (8,700) 1,896 - 1,896
Income tax
expense
(benefit) (3) (3,145) - (3,145) 662 - 662
Net income
(loss) $(5,555) $- $(5,555) $1,234 $- $1,234
Average - total
loans and
leases $216,654 $(98,453) $118,201 $236,714 $(104,401) $132,313
All Other
Year Ended December 31, Year Ended December 31,
2009 2008
Securiti- Securiti-
Reported zation As Reported zation As
Basis Offset Adjusted Basis Offset Adjusted
(4) (2) (4) (2)
Net interest
income
(loss) (3) $(6,922) $9,250 $2,328 $(8,019) $8,701 $682
Noninterest
income:
Card income
(loss) (895) 2,034 1,139 2,164 (2,250) (86)
Equity
investment
income 9,020 - 9,020 265 - 265
Gains on sales
of debt
securities 4,440 - 4,440 1,133 - 1,133
All other
income (loss) (6,735) 115 (6,620) (711) 219 (492)
Total
noninterest
income 5,830 2,149 7,979 2,851 (2,031) 820
Total revenue,
net of
interest
expense (1,092) 11,399 10,307 (5,168) 6,670 1,502
Provision for
credit losses (3,431) 11,399 7,968 (3,769) 6,670 2,901
Merger and
restructuring
charges 2,721 - 2,721 935 - 935
All other
noninterest
expense 1,997 - 1,997 189 - 189
Loss before
income
taxes (2,379) - (2,379) (2,523) - (2,523)
Income tax
benefit (3) (2,857) - (2,857) (1,283) - (1,283)
Net income
(loss) $478 $- $478 $(1,240) $- $(1,240)
Average - total
loans and
leases $155,561 $98,453 $254,014 $135,789 $104,401 $240,190
(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 Card Services 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 include the Countrywide acquisition. Information for the period beginning January 1, 2009 includes the Merrill Lynch acquisition. Prior periods have not been restated.
This information is preliminary and based on company data available at the time of the presentation.
