EX-99.1 2 bac-6302014ex991.htm THE PRESS RELEASE BAC-6.30.2014 Ex. 99.1
July 16, 2014
Investors May Contact:
Lee McEntire, Bank of America, 1.980.388.6780
Jonathan Blum, Bank of America (Fixed Income), 1.212.449.3112
Reporters May Contact:
Jerry Dubrowski, Bank of America, 1.980.388.2840
jerome.f.dubrowski@bankofamerica.com


Bank of America Reports Second-quarter 2014 Net Income of $2.3 Billion, or $0.19 per Diluted Share, on Revenue of $22.0 Billion(A)

Results Include Litigation Expense of $4.0 Billion (Pretax) or Approximately $0.22 per Share (After Tax)

Company Reaches Settlement With AIG to Resolve Residential Mortgage-backed Securities Claims for $650 Million
Business Metrics Reflect Progress on Customer-focused Strategy
Total Period-end Deposit Balances up $54 Billion, or 5 Percent, From Q2-13 to a Record $1.13 Trillion
Funding of $13.7 Billion in Residential Home Loans and Home Equity Loans in Q2-14 Helped Nearly 43,000 Homeowners Purchase a Home or Refinance a Mortgage
More Than 1.1 Million New Credit Cards Issued in Q2-14, With 65 Percent Going to Existing Customers
Global Wealth and Investment Management Reports Record Revenue of $4.6 Billion and Record Total Client Balances of $2.47 Trillion
Global Banking Average Loan Balances up 6 Percent From Q2-13 to $271 Billion
Bank of America Merrill Lynch Maintained a Leadership Position in Investment Banking with Total Firmwide Fees of $1.6 Billion and Record Equity Issuance Fees in Q2-14, Excluding Self-led Deals
FICC Sales and Trading Revenue, Excluding Net DVA, up 5 Percent From Q2-13(B) 
Noninterest Expense, Excluding Litigation, Down 6 Percent From Q2-13 to $14.6 Billion(C) 
Credit Quality Continued to Improve With Net Charge-offs Down 49 Percent From Q2-13 to $1.1 Billion; Net Charge-off Ratio of 0.48 Percent Is Lowest in a Decade
Capital and Liquidity Measures Remain Strong
Estimated Common Equity Tier 1 Ratio Under Basel 3 (Standardized Approach, Fully Phased-in) Increased to 9.5 Percent in Q2-14; Advanced Approaches Increased to 9.9 Percent in Q2-14(D) 
Estimated Supplementary Leverage Ratios Above 2018 Required Minimums(E) 
Long-term Debt Down $5 Billion From Year-ago Quarter
Record Global Excess Liquidity Sources of $431 Billion, up $89 Billion From Q2-13; Time-to-required Funding at 38 Months
Tangible Book Value per Share Increased 7 Percent From Q2-13 to $14.24 per Share(F) 



Page 2

CHARLOTTE — Bank of America Corporation today reported net income of $2.3 billion, or $0.19 per diluted share, for the second quarter of 2014, compared to net income of $4.0 billion, or $0.32 per diluted share, in the year-ago period. Revenue, net of interest expense, on an FTE basis(A) declined 4 percent from the second quarter of 2013 to $22.0 billion.

"The economy continues to strengthen, and our customers and clients are doing more business with us," said Chief Executive Officer Brian Moynihan. "Among other positive indicators, consumers are spending more, brokerage assets are up by double digits and our corporate clients are increasingly turning to us to help finance business expansion and merger activity. We are well positioned for further progress."

"During the quarter, our Basel 3 capital ratios improved and credit losses remained near historical lows," said Chief Financial Officer Bruce Thompson. "In addition, we did a good job managing expenses. Although litigation expenses were higher than the year-ago quarter, total noninterest expense, excluding litigation, declined 6 percent from the second quarter of 2013."(C)

Selected Financial Highlights
 
Three Months Ended
(Dollars in millions, except per share data)
June 30
2014
 
March 31
2014
 
June 30
2013
Net interest income, FTE basis1
$
10,226

 
$
10,286

 
$
10,771

Noninterest income
11,734

 
12,481

 
12,178

Total revenue, net of interest expense, FTE basis1
21,960

 
22,767

 
22,949

Provision for credit losses
411

 
1,009

 
1,211

Noninterest expense2
18,541

 
22,238

 
16,018

Net income (loss)
$
2,291

 
$
(276
)
 
$
4,012

Diluted earnings (loss) per common share
$
0.19

 
$
(0.05
)
 
$
0.32

1 
Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliations to GAAP financial measures, refer to pages 22-24 of this press release. Net interest income on a GAAP basis was $10.0 billion, $10.1 billion and $10.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. Total revenue, net of interest expense, on a GAAP basis was $21.7 billion, $22.6 billion and $22.7 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
2 
Noninterest expense includes litigation expense of $4.0 billion, $6.0 billion and $0.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.

Net interest income, on an FTE basis, declined 5 percent from the year-ago quarter to $10.2 billion(A). The decline was driven by lower yields on debt securities due to a $528 million change in market-related premium amortization expense. Excluding these market-related adjustments, net interest income was relatively stable at $10.4 billion for both periods and the net interest margin was 2.26 percent in the second quarter of 2014, compared to 2.28 percent in the second quarter of 2013(A).

Noninterest income was down 4 percent from the year-ago quarter, driven primarily by year-over-year declines in mortgage banking income and equity investment income. The provision for credit losses declined 66 percent from the second quarter of 2013 to $411 million, driven by improved credit quality. Net charge-offs declined 49 percent from the second quarter of 2013 to $1.1 billion, with the net charge-off ratio falling to 0.48 percent in the second quarter of 2014 from 0.94 percent in the year-ago quarter. During the second



Page 3

quarter of 2014, the reserve release was $662 million, compared to a reserve release of $900 million in the second quarter of 2013.

Noninterest expense was $18.5 billion, compared to $16.0 billion in the year-ago quarter, driven by higher mortgage-related litigation expense, partially offset by reduced personnel expense. Substantially all litigation expense incurred in the second quarter of 2014 related to previously disclosed legacy mortgage-related matters. Excluding litigation expense, noninterest expense declined 6 percent from the year-ago quarter to $14.6 billion, reflecting continued progress by the company to realize cost savings in its Legacy Assets and Servicing business as well as Project New BAC(C).

The effective tax rate of 18.0 percent for the second quarter of 2014 was driven by the impact of recurring tax preference benefits on the lower level of pretax income. The effective tax rate for the second quarter of 2013 of 27.0 percent was primarily driven by recurring tax preference benefits and an increase in tax benefits from the 2012 non-U.S. restructurings.

At June 30, 2014, the company had 233,201 full-time employees, down 9 percent from the year-ago quarter and 2 percent below the first quarter of 2014.

AIG Settlement
On July 15, 2014, Bank of America executed a definitive settlement agreement with AIG to resolve all outstanding residential mortgage-backed securities (RMBS) litigation between the parties. Under the terms of the settlement, AIG will file notices of dismissal in its securities lawsuits against Bank of America and its affiliates pending in California and New York federal courts. Also, AIG has agreed to withdraw its objection to the Bank of New York Mellon private-label securities settlement (Article 77 Proceeding).
The AIG settlement amount of $650 million was covered by litigation reserves as of June 30, 2014. Bank of America has now resolved approximately 95 percent of the unpaid principal balance of all RMBS as to which RMBS securities litigation has been filed or threatened for all Bank of America-related entities.
In addition, the parties agreed to settle three actions brought by Bank of America seeking to collect mortgage insurance proceeds due from AIG’s United Guaranty mortgage insurance subsidiaries on legacy Bank of America originated and serviced loans. 
Business Segment Results
The company reports results through five business segments: Consumer and Business Banking (CBB), Consumer Real Estate Services (CRES), Global Wealth and Investment Management (GWIM), Global Banking, and Global Markets, with the remaining operations recorded in All Other.



Page 4

Consumer and Business Banking (CBB)
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Total revenue, net of interest expense, FTE basis
$
7,373

 
$
7,438

 
$
7,434

Provision for credit losses
534

 
812

 
967

Noninterest expense
4,000

 
3,963

 
4,184

Net income
$
1,788

 
$
1,666

 
$
1,391

Return on average allocated capital1
24.3
%
 
22.9
%
 
18.6
%
Average loans
$
160,240

 
$
162,061

 
$
163,593

Average deposits
543,566

 
534,557

 
522,244

At period-end
 
 
 
 
 
Brokerage assets
$
105,926

 
$
100,206

 
$
84,182

1 
Return on average allocated capital is a non-GAAP financial measure. The company believes the use of this non-GAAP financial measure provides additional clarity in assessing the results of the segments. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.

Business Highlights

Average deposit balances increased $21.3 billion, or 4 percent, from the year-ago quarter to $543.6 billion. The increase was primarily driven by growth in liquid products in the current low-rate environment.

Client brokerage assets increased $21.7 billion, or 26 percent, from the year-ago quarter to $105.9 billion, driven by increased market valuation and account flows.

Credit card issuance remained strong with the company issuing 1.1 million new credit cards in the second quarter of 2014, up 18 percent from the year-ago quarter. Approximately 65 percent of these cards went to existing customers.

The number of mobile banking customers increased 17 percent from the year-ago quarter to 15.5 million users, with 10 percent of customer deposit transactions using mobile devices.

Return on average allocated capital was 24.3 percent in the second quarter of 2014, compared to 18.6 percent in the second quarter of 2013.




Page 5

Financial Overview
 
Consumer and Business Banking reported net income of $1.8 billion, up $397 million, or 29 percent, from the year-ago quarter, reflecting lower provision for credit losses and continued progress on the company's strategy of deepening relationships and reducing costs by optimizing the delivery network. Revenue was relatively stable compared to the year-ago quarter as higher service charge income was offset by lower net interest income and slightly lower card income.

The provision for credit losses decreased $433 million from the year-ago quarter to $534 million, reflecting continued improvement in credit quality. Noninterest expense decreased 4 percent, or $184 million, from the year-ago quarter to $4.0 billion, driven by lower operating, litigation and personnel expenses. Network optimization continued with the reduction of another 72 banking centers through sales and closures during the second quarter of 2014.

Consumer Real Estate Services (CRES)
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Total revenue, net of interest expense, FTE basis
$
1,390

 
$
1,192

 
$
2,115

Provision for credit losses
(20
)
 
25

 
291

Noninterest expense1
5,902

 
8,129

 
3,383

Net loss
$
(2,802
)
 
$
(5,027
)
 
$
(930
)
Average loans and leases
88,257

 
88,914

 
90,114

At period-end
 
 
 
 
 
Loans and leases
$
88,156

 
$
88,355

 
$
89,257

1 Noninterest expense includes litigation expense of $3.8 billion, $5.8 billion and $219 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013.

Business Highlights

Bank of America funded $13.7 billion in residential home loans and home equity loans during the second quarter of 2014, helping nearly 43,000 homeowners either refinance an existing mortgage or purchase a home. This included more than 5,500 first-time homebuyer mortgages and more than 13,800 mortgages to low- and moderate-income borrowers.

The number of 60+ days delinquent first mortgage loans serviced by Legacy Assets and Servicing (LAS) declined 5 percent during the second quarter of 2014 to 263,000 loans from 277,000 loans at the end of the first quarter of 2014, and declined 47 percent from 492,000 loans at the end of the second quarter of 2013.

Noninterest expense in LAS, excluding litigation, declined to $1.4 billion in the second quarter of 2014 from $1.6 billion in the first quarter of 2014 and $2.3 billion in the year-ago quarter as the company continued to focus on reducing the number of delinquent mortgage loans in its portfolio(G).




Page 6

Financial Overview
 
Consumer Real Estate Services reported a net loss of $2.8 billion for the second quarter of 2014, compared to a net loss of $930 million for the same period in 2013, driven largely by a $3.6 billion increase in litigation expense. Revenue declined $725 million from the second quarter of 2013 to $1.4 billion, driven primarily by lower core production revenue due to fewer loan originations as well as lower servicing income, primarily due to a smaller servicing portfolio.

CRES first-mortgage originations declined 59 percent in the second quarter of 2014 compared to the same period in 2013, reflecting a decline in overall market demand for refinance mortgages. Core production revenue decreased $542 million from the year-ago quarter to $318 million due primarily to lower volume and a reduction in revenues from sales of loans that had returned to performing status.

The provision for credit losses decreased $311 million from the year-ago quarter to a provision benefit of $20 million due to the continued improvement in portfolio trends.

Noninterest expense increased $2.5 billion from the year-ago quarter to $5.9 billion, due to a $3.6 billion increase in litigation expense, partially offset by lower LAS default-related staffing and other default-related servicing expenses, and lower Home Loans expenses as refinance demand slowed.

Global Wealth and Investment Management (GWIM)
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Total revenue, net of interest expense, FTE basis
$
4,589

 
$
4,547

 
$
4,499

Provision for credit losses
(8
)
 
23

 
(15
)
Noninterest expense
3,447

 
3,359

 
3,270

Net income
$
724

 
$
729

 
$
759

Return on average allocated capital1
24.3
%
 
24.7
%
 
30.6
%
Average loans and leases
$
118,512

 
$
115,945

 
$
109,589

Average deposits
240,042

 
242,792

 
235,344

At period-end (dollars in billions)
 
 
 
 
 
Assets under management
$
878.7

 
$
841.8

 
$
743.6

Total client balances2
2,468.2

 
2,395.8

 
2,215.1

1 
Return on average allocated capital is a non-GAAP financial measure. The company believes the use of this non-GAAP financial measure provides additional clarity in assessing the results of the segments. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.
2 
Total client balances are defined as assets under management, client brokerage assets, assets in custody, client deposits and loans (including margin receivables).

Business Highlights
 
Client balances increased 11 percent from the year-ago quarter to a record $2.47 trillion, driven by higher market levels and net inflows. Second-quarter 2014 long-term assets under management (AUM) flows of $11.9 billion were the 20th consecutive quarter of positive flows.



Page 7

Asset management fees grew to a record $1.95 billion, up 15 percent from the year-ago quarter.

Average loan balances increased 8 percent from the year-ago quarter to $118.5 billion.

Pretax margin was 25.1 percent in the second quarter of 2014, compared to the record year-ago margin of 27.6 percent, marking the sixth straight quarter over 25 percent.

Financial Overview
 
Global Wealth and Investment Management reported net income of $724 million, compared to $759 million in the second quarter of 2013. Revenue increased 2 percent from the year-ago quarter to a record $4.6 billion, driven by higher noninterest income related to improved market valuation and long-term AUM flows.

Credit quality remained strong in the second quarter with the provision for credit losses relatively stable compared to the year-ago quarter. Noninterest expense increased 5 percent to $3.4 billion, driven in part by higher revenue-related incentive compensation and other volume-related expenses and additional investments in technology and other areas to support business growth.

Return on average allocated capital was 24.3 percent in the second quarter of 2014, down from 30.6 percent in the year-ago quarter, as relatively stable earnings were more than offset by increased capital allocations.

Client balances rose 11 percent from the year-ago quarter to $2.47 trillion, driven largely by higher market levels, long-term AUM flows of $49.0 billion and period-end client loan growth of $8.5 billion. Assets under management rose $135.1 billion, or 18 percent, from the second quarter of 2013 to $878.7 billion, driven by increased market valuation and long-term AUM flows. Average deposit balances increased $4.7 billion from the second quarter of 2013 to $240.0 billion.




Page 8

Global Banking
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Total revenue, net of interest expense, FTE basis
$
4,179

 
$
4,269

 
$
4,138

Provision for credit losses
132

 
265

 
163

Noninterest expense
1,899

 
2,028

 
1,849

Net income
$
1,353

 
$
1,236

 
$
1,297

Return on average allocated capital1
17.5
%
 
16.2
%
 
22.6
%
Average loans and leases
$
271,417

 
$
271,475

 
$
255,674

Average deposits
258,937

 
256,433

 
226,912

1 
Return on average allocated capital is a non-GAAP financial measure. The company believes the use of this non-GAAP financial measure provides additional clarity in assessing the results of the segments. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.

Business Highlights 

Bank of America Merrill Lynch (BAML) was ranked No. 2 in global net investment banking fees in the second quarter of 2014 with firmwide investment banking fees of $1.6 billion, excluding self-led deals(H). Global Banking achieved record equity underwriting fees, excluding self-led deals.

BAML ranked among the top three financial institutions globally in leveraged loans, convertible debt, asset-backed securities, common stock underwriting, investment grade corporate debt and syndicated loans during the second quarter of 2014(H).

BAML was recently awarded two of Euromoney magazine’s most prestigious accolades: Best Global Investment Bank and Best Global Transaction Services House, marking the first time Euromoney awarded one firm both awards in the same year.

Average loan and lease balances increased $15.7 billion, or 6 percent, from the year-ago quarter, to $271.4 billion, with growth in the commercial and industrial loan portfolio and the commercial real estate and leasing portfolios.
 
Average deposits increased $32.0 billion, or 14 percent, from the year-ago quarter to $258.9 billion primarily due to increased client liquidity and international growth.

Financial Overview
 
Global Banking reported net income of $1.4 billion in the second quarter of 2014, compared to $1.3 billion in the year-ago quarter as a decline in the provision for credit losses was partially offset by higher noninterest expense. Revenue of $4.2 billion was relatively stable compared to the second quarter of 2013.

Global Corporate Banking revenue increased to $1.6 billion in the second quarter of 2014, up $29 million from the year-ago quarter, and Global Commercial Banking revenue decreased $59 million to $1.7 billion. Included in these results are Business Lending revenue of $1.8 billion, down $80 million from the year-ago quarter, and Global Transaction



Page 9

Services revenue of $1.5 billion, up $50 million from the year-ago period. Global Banking investment banking fees, excluding self-led deals, increased $33 million versus the year-ago quarter.

The provision for credit losses decreased $31 million from the year-ago quarter to $132 million. Noninterest expense increased $50 million, or 3 percent, from the year-ago quarter to $1.9 billion, primarily from higher litigation expense.

Return on average allocated capital was 17.5 percent in the second quarter of 2014, down from 22.6 percent in the year-ago quarter, as modest earnings improvement was more than offset by increased capital allocations.

Global Markets1 
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Total revenue, net of interest expense, FTE basis
$
4,583

 
$
5,012

 
$
4,194

Provision for credit losses
19

 
19

 
(16
)
Noninterest expense
2,862

 
3,077

 
2,770

Net income
$
1,101

 
$
1,308

 
$
962

Return on average allocated capital2
13.0
%
 
15.6
%
 
12.9
%
Total average assets
$
617,103

 
$
601,439

 
$
656,109

1 
During 2014, the management of structured liabilities and the associated DVA were moved into Global Markets from All Other to better align the performance risk of these instruments. As such, net DVA represents the combined total of net DVA on derivatives and structured liabilities. Prior periods have been reclassified to conform to current period presentation. Net DVA gains were $69 million, $112 million and $49 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
2 
Return on average allocated capital is a non-GAAP financial measure. The company believes the use of this non-GAAP financial measure provides additional clarity in assessing the results of the segments. Other companies may define or calculate this measure differently. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release.

Business Highlights

Fixed Income, Currency and Commodities (FICC) sales and trading revenue, excluding net DVA(B), increased 5 percent from the second quarter of 2013 to $2.4 billion.

Return on average allocated capital was 13.0 percent in the second quarter of 2014, compared to 12.9 percent in the second quarter of 2013, reflecting increased net income which was largely offset by an increase in allocated capital compared to the year-ago quarter.

Financial Overview

Global Markets reported net income of $1.1 billion in the second quarter of 2014, up 14 percent from the year-ago quarter. Revenue increased $389 million, or 9 percent, from the year-ago quarter to $4.6 billion, reflecting higher equity investment gains (not included in sales and trading) and increased investment banking fees.

Total sales and trading revenue was comparable to the year-ago quarter at $3.5 billion. Excluding net DVA, sales and trading revenue was $3.4 billion in both periods(I). FICC sales



Page 10

and trading revenue, excluding net DVA(B), was $2.4 billion in the second quarter of 2014, an increase of $117 million, or 5 percent, from the year-ago quarter, reflecting improved performance in mortgage and municipal products, partially offset by declines in foreign exchange and commodities. Equities sales and trading revenue, excluding net DVA(J), was $1.0 billion, a decrease of $162 million, or 14 percent, from the year-ago quarter as low volatility depressed secondary market volumes and reduced client activity. In addition to sales and trading, there was an equity investment gain of $240 million in the second quarter of 2014.

Noninterest expense was $2.9 billion compared to $2.8 billion in the year-ago quarter.

All Other1 
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Total revenue, net of interest expense, FTE basis2, 3
$
(154
)
 
$
309

 
$
569

Provision for credit losses
(246
)
 
(135
)
 
(179
)
Noninterest expense4
431

 
1,682

 
562

Net income (loss)
$
127

 
$
(188
)
 
$
533

Total average loans
210,575

 
217,391

 
238,910

1 
All Other consists of ALM activities, equity investments, the international consumer card business, liquidating businesses and other. ALM activities encompass the whole-loan residential mortgage portfolio and investment securities, interest rate and foreign currency risk management activities including the residual net interest income allocation, the impact of certain allocation methodologies and accounting hedge ineffectiveness.
2 
Revenue includes equity investment income of $56 million, $674 million and $576 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively, and gains on sales of debt securities of $382 million, $357 million and $452 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
3 
During 2014, the management of structured liabilities and the associated DVA were moved into Global Markets from All Other to better align the performance risk of these instruments. Prior periods have been reclassified to conform to current period presentation.
4 
The three months ended March 31, 2014 included $717 million of expense related to annual retirement-eligible incentive compensation.

All Other reported net income of $127 million in the second quarter of 2014, compared to net income of $533 million for the same period a year ago. The decline was primarily driven by lower equity investment income and the negative quarterly impact of market-related net interest income adjustments compared to the year-ago quarter. This was partially offset by an improvement in the provision for credit losses driven primarily by recoveries on bulk sales of nonperforming loans, and lower noninterest expense.




Page 11

Credit Quality
 
Three Months Ended
(Dollars in millions)
June 30
2014
 
March 31
2014
 
June 30
2013
Provision for credit losses
$
411

 
$
1,009

 
$
1,211

Net charge-offs1
1,073

 
1,388

 
2,111

Net charge-off ratio1, 2
0.48
%
 
0.62
%
 
0.94
%
Net charge-off ratio, excluding the PCI loan portfolio2
0.49

 
0.64

 
0.97

Net charge-off ratio, including PCI write-offs2
0.55

 
0.79

 
1.07

At period-end
 
 
 
 
 
Nonperforming loans, leases and foreclosed properties
$
15,300

 
$
17,732

 
$
21,280

Nonperforming loans, leases and foreclosed properties ratio3
1.70
%
 
1.96
%
 
2.33
%
Allowance for loan and lease losses
$
15,811

 
$
16,618

 
$
21,235

Allowance for loan and lease losses ratio4
1.75
%
 
1.84
%
 
2.33
%
1 
Excludes write-offs of PCI loans of $160 million, $391 million and $313 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
2 
Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans and leases during the period; quarterly results are annualized.
3 
Nonperforming loans, leases and foreclosed properties ratios are calculated as nonperforming loans, leases and foreclosed properties divided by outstanding loans, leases and foreclosed properties at the end of the period.
4 
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 accounted for under the fair value option.

Credit quality continued to improve in the second quarter of 2014. Compared with the second quarter a year ago, net charge-offs declined across all major portfolios and the provision for credit losses decreased. The number of 30+ days performing delinquent loans, excluding fully-insured loans, declined across all consumer portfolios from the year-ago quarter, reaching record low levels in the U.S. credit card portfolio. Additionally, reservable criticized balances and nonperforming loans, leases and foreclosed properties continued to decline, down 17 percent and 28 percent respectively, from the year-ago period.

Net charge-offs were $1.1 billion in the second quarter of 2014, down from $1.4 billion in the first quarter of 2014 and $2.1 billion in the second quarter of 2013. The second quarter of 2014 included $185 million of recoveries associated with the $2.1 billion bulk sale of nonperforming loans.

The provision for credit losses declined to $411 million in the second quarter of 2014 from $1.2 billion in the second quarter of 2013, driven by lower levels of delinquencies across the consumer lending portfolio, as well as improvement in the consumer real estate portfolios, primarily due to increased home prices. During the second quarter of 2014, the reserve release was $662 million compared to a reserve release of $900 million in the second quarter of 2013.




Page 12

The allowance for loan and lease losses to annualized net charge-off coverage ratio was 3.67 times in the second quarter of 2014, compared with 2.95 times in the first quarter of 2014 and 2.51 times in the second quarter of 2013. The increase was due to the improvement in net charge-offs discussed above. The allowance to annualized net charge-off coverage ratio, excluding the purchased credit-impaired (PCI) portfolio, was 3.25 times, 2.58 times and 2.04 times for the same periods, respectively.

Nonperforming loans, leases and foreclosed properties were $15.3 billion at June 30, 2014, a decrease from $17.7 billion at March 31, 2014 and $21.3 billion at June 30, 2013.

Capital and Liquidity Management1,2,3 
(Dollars in billions)
At June 30
2014
 
At March 31
2014
Basel 3 Transition (under standardized approach)
 
 
 
Common equity tier 1 capital - Basel 3
$
153.6

 
$
150.9

Risk-weighted assets
1,282.7

 
1,282.1

Common equity tier 1 capital ratio - Basel 3
12.0
%
 
11.8
%
Basel 3 Fully Phased-in (under standardized approach)3
 
 
 
Common equity tier 1 capital - Basel 3
$
137.2

 
130.1

Risk-weighted assets
1,437.0

 
1,447.4

Common equity tier 1 capital ratio - Basel 3
9.5
%
 
9.0
%
(Dollars in millions, except per share information)
At June 30
2014
 
At March 31
2014
 
At June 30
2013
Tangible common equity ratio4
7.14
%
 
7.00
%
 
6.98
%
Total shareholders’ equity
$
237,411

 
$
231,888

 
$
231,032

Common equity ratio
10.25
%
 
10.17
%
 
10.21
%
Tangible book value per share4
$
14.24

 
$
13.81

 
$
13.32

Book value per share
21.16

 
20.75

 
20.18

1 
Regulatory capital ratios are preliminary.
2 
On January 1, 2014, the Basel 3 rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity tier 1 capital and tier 1 capital.
3 
Basel 3 common equity tier 1 capital and risk-weighted assets on a fully phased-in basis are non-GAAP financial measures. For reconciliations to GAAP financial measures, refer to page 18 of this press release. The company's fully phased-in Basel 3 estimates are based on its current understanding of the Standardized and Advanced approaches under the Basel 3 rules, assuming all relevant regulatory model approvals, except for the potential reduction to risk-weighted assets resulting from removal of the Comprehensive Risk Measure surcharge. The Basel 3 rules require approval by banking regulators of certain models used as part of risk-weighted asset calculations. If these models are not approved, the company's capital ratio would likely be adversely impacted, which in some cases could be significant.
4 
Tangible common equity ratio and tangible book value per share are non-GAAP financial measures. For reconciliations to GAAP financial measures, refer to pages 22-24 of this press release.

The common equity tier 1 capital ratio under the Basel 3 Standardized approach for measuring risk-weighted assets was 12.0 percent at June 30, 2014, up from 11.8 percent at March 31, 2014.

While the Basel 3 fully phased-in Standardized and fully phased-in Advanced approaches do not go into effect until 2018, the company is providing the following estimates for comparative purposes.




Page 13

The estimated common equity tier 1 capital ratio under the Basel 3 Standardized approach on a fully phased-in basis was 9.5 percent at June 30, 2014, up from 9.0 percent at March 31, 2014 (D).

The estimated common equity tier 1 capital ratio under the Basel 3 Advanced approaches on a fully phased-in basis increased to 9.9 percent from 9.6 percent at March 31, 2014(D).

In connection with the final U.S. rule and Notice of Proposed Rulemaking (NPR) issued on April 8 and effective in 2018(E), the company's estimated supplementary leverage ratios were above the 5 percent supplementary leverage ratio minimum for bank holding companies, and both of the company's primary bank subsidiaries were above the 6 percent supplementary leverage ratio minimum for primary bank subsidiaries.

At June 30, 2014, the company's Global Excess Liquidity Sources totaled $431 billion, compared to $427 billion at March 31, 2014 and $342 billion at June 30, 2013. Time-to-required funding was 38 months at June 30, 2014, compared to 35 months at March 31, 2014 and 32 months at June 30, 2013.

Period-end common shares issued and outstanding were 10.52 billion at June 30, 2014, 10.53 billion at March 31, 2014 and 10.74 billion at June 30, 2013. During the second quarter of 2014, approximately 14 million common shares were repurchased for approximately $233 million at an average price of $16.16 per share.

Tangible book value per share(F) was $14.24 at June 30, 2014, compared to $13.81 at March 31, 2014 and $13.32 at June 30, 2013. Book value per share was $21.16 at June 30, 2014, compared to $20.75 at March 31, 2014 and $20.18 at June 30, 2013.
------------------------------
End Notes

(A)
Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 22-24 of this press release. Net interest income on a GAAP basis was $10.0 billion, $10.1 billion and $10.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. Net interest income on an FTE basis excluding market-related adjustments represents a non-GAAP financial measure. Market-related adjustments of premium amortization expense and hedge ineffectiveness were ($0.2) billion, ($0.3) billion, and $0.4 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. Total revenue, net of interest expense, on a GAAP basis was $21.7 billion, $22.6 billion and $22.7 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.

(B)
FICC sales and trading revenue, excluding net DVA is a non-GAAP financial measure. Net DVA included in FICC revenue was gains (losses) of $56 million, $80 million and $(37) million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.

(C)
Noninterest expense excluding litigation is a non-GAAP financial measure. Noninterest expense including litigation was $18.5 billion, $22.2 billion and $16.0 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. Noninterest expense excluding litigation was $14.6 billion, $16.2 billion and $15.5 billion or the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. Litigation expense was $4.0 billion, $6.0 billion and $0.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.

(D)
Basel 3 common equity tier 1 capital and risk-weighted assets on a fully phased-in basis are non-GAAP financial measures. For reconciliation to GAAP financial measures, refer to page 18 of this press release. The company's fully phased-in Basel 3 estimates are based on its current understanding of the Standardized and Advanced approaches under the Basel 3 rules, assuming all relevant regulatory model approvals, except for the potential reduction to risk-weighted assets resulting from removal of the Comprehensive Risk Measure surcharge. These estimates will evolve over time as the company’s businesses change and as a result of further rulemaking or clarification by U.S. regulatory agencies. The Basel 3 rules require approval by banking regulators of certain models used as part of risk-weighted asset calculations. If these models are not approved, the company's capital ratio would likely be adversely impacted, which in some cases could be significant. The company continues to evaluate the potential impact of proposed rules and anticipates it will be in compliance with any final rules by the proposed effective dates.

(E)
The supplementary leverage ratio includes the estimated increase to the supplementary leverage exposure in accordance with the U.S. Notice of Proposed Rulemaking approved on April 8, 2014. The supplementary leverage ratio is measured using the quarter-end



Page 14

tier 1 capital calculated under Basel 3 on a fully phased-in basis, divided by the simple average of the sum of on-balance sheet assets and certain off-balance sheet exposures, including, among other items, derivatives and securities financing transactions, at the end of each month in the quarter.

(F)
Tangible book value per share of common stock is a non-GAAP financial measure. Other companies may define or calculate this measure differently. Book value per share was $21.16 at June 30, 2014, compared to $20.75 at March 31, 2014 and $20.18 at June 30, 2013. For more information, refer to pages 22-24 of this press release.

(G)
Legacy Assets and Servicing (LAS) noninterest expense, excluding litigation, is a non-GAAP financial measure. LAS noninterest expense was $5.2 billion, $7.4 billion and $2.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. LAS litigation expense was $3.8 billion, $5.8 billion and $0.2 billion in the three months ended June 30, 2014, March 31, 2014 and June 30, 2013.

(H)
Rankings per Dealogic as of July 1, 2014.

(I)
Sales and trading revenue excluding the impact of net DVA is a non-GAAP financial measure. Net DVA gains were $69 million, $112 million and $49 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. In the first quarter of 2014, the management of structured liabilities and the associated DVA were moved into Global Markets from All Other to better align the performance risk of these instruments. As such, net DVA represents the combined total of net DVA on derivatives and structured liabilities. Prior periods have been reclassified to conform to current period presentation.

(J)
Equity sales and trading revenue, excluding net DVA is a non-GAAP financial measure. Equities net DVA gains were $13 million, $32 million and $86 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.


Note: Chief Executive Officer Brian Moynihan and Chief Financial Officer Bruce Thompson will discuss second-quarter 2014 results in a conference call at 8:30 a.m. ET today.
The presentation and supporting materials can be accessed on the Bank of America Investor Relations website at http://investor.bankofamerica.com. For a listen-only connection to the conference call, dial 1.877.200.4456 (U.S.) or 1.785.424.1732 (international), and the conference ID is: 79795. Please dial in 10 minutes prior to the start of the call.
A replay will be available via webcast through the Bank of America Investor Relations website. A replay will also be available beginning at noon on July 16 through midnight, July 24 by telephone at 800.753.8546 (U.S.) or 1.402.220.0685 (international).

Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small businesses, 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 49 million consumer and small business relationships with approximately 5,000 retail banking offices and approximately 16,000 ATMs and award-winning online banking with 30 million active users and more than 15 million mobile 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 approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.




Page 15

Forward-looking Statements
Bank of America and its management may make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as anticipates, targets, expects, “hopes,” estimates, intends, plans, goals, believes, “continue” and other similar expressions or future or conditional verbs such as will, “may,” “might,” should, would and could. The forward-looking statements made represent Bank of America's current expectations, plans or forecasts of its future results and revenues, and future business and economic conditions more generally, and other 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 the following uncertainties and risks, as well as the risks and uncertainties more fully discussed under Item 1A. Risk Factors of Bank of America's 2013 Annual Report on Form 10-K, and in any of Bank of America's subsequent Securities and Exchange Commission filings: the potential negative impacts of the Company’s prior adjustment to its regulatory capital ratios, including without limitation the results of the Federal Reserve's review of the resubmitted Comprehensive Capital Analysis and Review, or the revised capital actions that have been resubmitted to the Federal Reserve, the Company's ability to resolve representations and warranties repurchase claims made by monolines and private-label and other investors, including as a result of any adverse court rulings, and the chance that the Company could face related servicing, securities, fraud, indemnity or other claims from one or more counterparties, including monolines or private-label and other investors; the possibility that final court approval of negotiated settlements is not obtained; the possibility that the court decision with respect to the BNY Mellon Settlement is overturned on appeal in whole or in part; potential claims, damages, penalties and fines resulting from pending or future litigation and regulatory proceedings, including proceedings instituted by the U.S. Department of Justice, state Attorneys General and other members of the RMBS Working Group of the Financial Fraud Enforcement Task Force concerning mortgage-related matters; the possibility that the European Commission will impose remedial measures in relation to its investigation of the Company's competitive practices; the possible outcome of LIBOR, other reference rate and foreign exchange inquiries and investigations; the possibility that future representations and warranties losses may occur in excess of the Company's recorded liability and estimated range of possible loss for its representations and warranties exposures; the possibility that the Company may not collect mortgage insurance claims; the possibility that future claims, damages, penalties and fines may occur in excess of the Companys recorded liability and estimated range of possible losses for litigation exposures; uncertainties about the financial stability and growth rates of non-U.S. jurisdictions, the risk that those jurisdictions may face difficulties servicing their sovereign debt, and related stresses on financial markets, currencies and trade, and the Company's exposures to such risks, including direct, indirect and operational; uncertainties related to the timing and pace of Federal Reserve tapering of quantitative easing, and the impact on global interest rates, currency exchange rates, and economic conditions in a number of countries; the possibility of future inquiries or investigations regarding pending or completed foreclosure activities; the possibility that unexpected foreclosure delays could impact the rate of decline of default-



Page 16

related servicing costs; uncertainty regarding timing and the potential impact of regulatory capital and liquidity requirements (including Basel 3); the negative impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the Company's businesses and earnings, including as a result of additional regulatory interpretation and rulemaking and the success of the Company's actions to mitigate such impacts; the potential impact of implementing and conforming to the Volcker Rule; the potential impact of future derivative regulations; adverse changes to the Company's credit ratings from the major credit rating agencies; estimates of the fair value of certain of the Company's assets and liabilities; reputational damage that may result from negative publicity, fines and penalties from regulatory violations and judicial proceedings; the Company's ability to fully realize the anticipated cost savings in Legacy Assets and Servicing and the anticipated cost savings and other benefits from Project New BAC, including in accordance with currently anticipated timeframes; a failure in or breach of the Companys operational or security systems or infrastructure, or those of third parties with which we do business, including as a result of cyber attacks; the impact on the Company's business, financial condition and results of operations of a potential higher interest rate environment; and other similar matters.

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.

BofA Global Capital Management Group, LLC (BofA Global Capital Management) is an asset management division of Bank of America Corporation. BofA Global Capital Management entities furnish investment management services and products for institutional and individual investors. 

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 Merrill Lynch, Pierce, Fenner & Smith Incorporated, which are 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 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 other non-bank affiliates.

For more Bank of America news, visit the Bank of America newsroom at http://newsroom.bankofamerica.com.

www.bankofamerica.com



Page 17

Bank of America Corporation and Subsidiaries
 
 
 
 
Selected Financial Data
 
 
(Dollars in millions, except per share data; shares in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary Income Statement
Six Months Ended
June 30
 
Second
Quarter
2014
 
First
Quarter
2014
 
Second
Quarter
2013
 
2014
 
2013
 
 
 
Net interest income
$
20,098

 
$
21,213

 
$
10,013

 
$
10,085

 
$
10,549

Noninterest income
24,215

 
24,711

 
11,734

 
12,481

 
12,178

Total revenue, net of interest expense
44,313

 
45,924

 
21,747

 
22,566

 
22,727

Provision for credit losses
1,420

 
2,924

 
411

 
1,009

 
1,211

Noninterest expense
40,779

 
35,518

 
18,541

 
22,238

 
16,018

Income (loss) before income taxes
2,114

 
7,482

 
2,795

 
(681
)
 
5,498

Income tax expense (benefit)
99

 
1,987

 
504

 
(405
)
 
1,486

Net income (loss)
$
2,015

 
$
5,495

 
$
2,291

 
$
(276
)
 
$
4,012

Preferred stock dividends
494

 
814

 
256

 
238

 
441

Net income (loss) applicable to common shareholders
$
1,521

 
$
4,681

 
$
2,035

 
$
(514
)
 
$
3,571

 
 
 
 
 
 
 
 
 
 
Common shares issued
25,149

 
44,480

 
224

 
24,925

 
364

Average common shares issued and outstanding
10,539,769

 
10,787,357

 
10,519,359

 
10,560,518

 
10,775,867

Average diluted common shares issued and outstanding (1)
10,599,641

 
11,549,693

 
11,265,123

 
10,560,518

 
11,524,510

 
 
 
 
 
 
 
 
 
 
Summary Average Balance Sheet
 
 
 
 
 
 
 
 
 
Total loans and leases
$
916,012

 
$
910,269

 
$
912,580

 
$
919,482

 
$
914,234

Total debt securities
337,845

 
349,794

 
345,889

 
329,711

 
343,260

Total earning assets
1,822,177

 
1,845,651

 
1,840,850

 
1,803,298

 
1,833,541

Total assets
2,154,494

 
2,198,443

 
2,169,555

 
2,139,266

 
2,184,610

Total deposits
1,123,399

 
1,077,631

 
1,128,563

 
1,118,178

 
1,079,956

Common shareholders' equity
222,705

 
218,509

 
222,215

 
223,201

 
218,790

Total shareholders' equity
236,173

 
236,024

 
235,797

 
236,553

 
235,063

 
 
 
 
 
 
 
 
 
 
Performance Ratios
 
 
 
 
 
 
 
 
 
Return on average assets
0.19
%
 
0.50
%
 
0.42
%
 
n/m

 
0.74
%
Return on average tangible common shareholders' equity (2)
2.05

 
6.53

 
5.47

 
n/m

 
9.88

 
 
 
 
 
 
 
 
 
 
Per common share information
 
 
 
 
 
 
 
 
 
Earnings (loss)
$
0.14

 
$
0.43

 
$
0.19

 
$
(0.05
)
 
$
0.33

Diluted earnings (loss) (1)
0.14

 
0.42

 
0.19

 
(0.05
)
 
0.32

Dividends paid
0.02

 
0.02

 
0.01

 
0.01

 
0.01

Book value
21.16

 
20.18

 
21.16

 
20.75

 
20.18

Tangible book value (2)
14.24

 
13.32

 
14.24

 
13.81

 
13.32

 
 
 
 
 
 
 
 
 
 

 
 
 
 
June 30
2014
 
March 31
2014
 
June 30
2013
Summary Period-End Balance Sheet
 
 
 
 
 
 
 
 
Total loans and leases
 
 
 
 
$
911,899

 
$
916,217

 
$
921,570

Total debt securities
 
 
 
 
352,883

 
340,696

 
336,403

Total earning assets
 
 
 
 
1,830,546

 
1,812,832

 
1,779,883

Total assets
 
 
 
 
2,170,557

 
2,149,851

 
2,123,320

Total deposits
 
 
 
 
1,134,329

 
1,133,650

 
1,080,783

Common shareholders' equity
 
 
 
 
222,565

 
218,536

 
216,791

Total shareholders' equity
 
 
 
 
237,411

 
231,888

 
231,032

Period-end common shares issued and outstanding
 
 
 
 
10,515,825

 
10,530,045

 
10,743,098

 
 
 
 
 
 
 
 
 
 
Credit Quality
Six Months Ended
June 30
 
Second
Quarter
2014
 
First
Quarter
2014
 
Second
Quarter
2013
  
2014
 
2013
 
 
Total net charge-offs
$
2,461

 
$
4,628

 
$
1,073

 
$
1,388

 
$
2,111

Net charge-offs as a percentage of average loans and leases outstanding (3)
0.55
%
 
1.04
%
 
0.48
%
 
0.62
%
 
0.94
%
Provision for credit losses
$
1,420

 
$
2,924

 
$
411

 
$
1,009

 
$
1,211

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
June 30
2014
 
March 31
2014
 
June 30
2013
  
 
 
 
 
 
Total nonperforming loans, leases and foreclosed properties (4)
 
 
 
 
$
15,300

 
$
17,732

 
$
21,280

Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties (3)
 
 
 
 
1.70
%
 
1.96
%
 
2.33
%
Allowance for loan and lease losses
 
 
 
 
$
15,811

 
$
16,618

 
$
21,235

Allowance for loan and lease losses as a percentage of total loans and leases outstanding (3)
 
 
 
 
1.75
%
 
1.84
%
 
2.33
%
 
 
 
 
 
 
 
 
 
 
For footnotes see page 18.
 
 
 
 
 
 
 
 
 

More
This information is preliminary and based on company data available at the time of the presentation.


Page 18

Bank of America Corporation and Subsidiaries
 
 
Selected Financial Data (continued)
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basel 3 Transition
 
Basel 1
Capital Management
 
 
 
 
June 30
2014
 
March 31
2014
 
June 30
2013
 
 
 
 
 
Risk-based capital metrics (5, 6):
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
 
 
 
 
$
153,582

 
$
150,922

 
n/a

Tier 1 common capital
 
 
 
 
n/a

 
n/a

 
$
136,546

Common equity tier 1 capital ratio
 
 
 
 
12.0
%
 
11.8
%
 
n/a

Tier 1 common capital ratio (7)
 
 
 
 
n/a

 
n/a

 
10.6
%
Tier 1 leverage ratio
 
 
 
 
7.7

 
7.4

 
7.4

 
 
 
 
 
 
 
 
 
 
Tangible equity ratio (8)
 
 
 
 
7.85

 
7.65

 
7.67

Tangible common equity ratio (8)
 
 
 
 
7.14

 
7.00

 
6.98

 
 
 
 
 
 
 
 
 
 
Regulatory Capital Reconciliations (5, 6)
 
 
 
 
June 30
2014
 
March 31
2014
 
 
Regulatory capital – Basel 3 transition to fully phased-in
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital (transition)
 
 
 
 
$
153,582

 
$
150,922

 
 
Adjustments and deductions recognized in Tier 1 capital during transition
 
 
 
 
(10,547
)
 
(11,302
)
 
 
Other adjustments and deductions phased in during transition
 
 
 
 
(5,852
)
 
(9,474
)
 
 
Common equity tier 1 capital (fully phased-in)
 
 
 
 
$
137,183

 
$
130,146

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30
2014
 
March 31
2014
 
 
Risk-weighted assets – As reported to Basel 3 (fully phased-in)
 
 
 
 
 
 
 
 
 
As reported risk-weighted assets
 
 
 
 
$
1,282,720

 
$
1,282,117

 
 
Change in risk-weighted assets from reported to fully phased-in
 
 
 
 
154,240

 
165,332

 
 
Basel 3 Standardized approach risk-weighted assets (fully phased-in)
 
 
 
 
1,436,960

 
1,447,449

 
 
Change in risk-weighted assets for advanced models
 
 
 
 
(49,464
)
 
(86,234
)
 
 
Basel 3 Advanced approaches risk-weighted assets (fully phased-in)
 
 
 
 
$
1,387,496

 
$
1,361,215

 
 
 
 
 
 
 
 
 
 
 
 
Regulatory capital ratios
 
 
 
 
 
 
 
 
 
Basel 3 Standardized approach common equity tier 1 (transition)
 
 
 
 
12.0
%
 
11.8
%
 
 
Basel 3 Standardized approach common equity tier 1 (fully phased-in)
 
 
 
 
9.5

 
9.0

 
 
Basel 3 Advanced approaches common equity tier 1 (fully phased-in)
 
 
 
 
9.9

 
9.6

 
 
 
 
 
 
 
 
 
 
 
 
(1) 
The diluted earnings (loss) per common share excludes the effect of any equity instruments that are antidilutive to earnings per share. There were no potential common shares that were dilutive in the first quarter of 2014 because of the net loss.
(2) 
Return on average tangible shareholders' equity and tangible book value per share of common stock are non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate non-GAAP financial measures differently. See Reconciliations to GAAP Financial Measures on pages 22-24.
(3) 
Ratios do not include loans accounted for under the fair value option during the period. Charge-off ratios are annualized for the quarterly presentation.
(4) 
Balances do not include past due consumer credit card, consumer loans secured by real estate where repayments are insured by the Federal Housing Administration and individually insured long-term stand-by agreements (fully-insured home loans), and in general, other consumer and commercial loans not secured by real estate; purchased credit-impaired loans even though the customer may be contractually past due; nonperforming loans held-for-sale; nonperforming loans accounted for under the fair value option; and nonaccruing troubled debt restructured loans removed from the purchased credit-impaired portfolio prior to January 1, 2010.
(5) 
Regulatory capital ratios are preliminary.
(6) 
On January 1, 2014, the Basel 3 rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity tier 1 capital and Tier 1 capital. We reported under Basel 1 (which included the Market Risk Final Rules) at June 30, 2013. Basel 3 common equity tier 1 capital and risk-weighted assets on a fully phased-in basis are non-GAAP financial measures. For reconciliations to GAAP financial measures, see above. The company's fully phased-in Basel 3 estimates are based on its current understanding of the Standardized and Advanced approaches under the Basel 3 rules, assuming all relevant regulatory model approvals, except for the potential reduction to risk-weighted assets resulting from removal of the Comprehensive Risk Measure surcharge. The Basel 3 rules require approval by banking regulators of certain models used as part of risk-weighted asset calculations. If these models are not approved, the company's capital ratio would likely be adversely impacted, which in some cases could be significant.
(7) 
Tier 1 common capital ratio equals Tier 1 capital excluding preferred stock, trust preferred securities, hybrid securities and minority interest divided by risk-weighted assets.
(8) 
Tangible equity ratio equals period-end tangible shareholders' equity divided by period-end tangible assets. Tangible common equity ratio equals period-end tangible common shareholders' equity divided by period-end tangible assets. Tangible shareholders' equity and tangible assets are non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate non-GAAP financial measures differently. See Reconciliations to GAAP Financial Measures on pages 22-24.

n/a = not applicable
n/m = not meaningful


Certain prior period amounts have been reclassified to conform to current period presentation.

More
This information is preliminary and based on company data available at the time of the presentation.


Page 19

Bank of America Corporation and Subsidiaries
Quarterly Results by Business Segment
(Dollars in millions)
 
 
Second Quarter 2014
 
 
Consumer & Business Banking
 
Consumer
Real Estate
Services
 
GWIM    
 
Global
Banking
 
Global
Markets
 
All
Other
Total revenue, net of interest expense (FTE basis) (1)
 
$
7,373

 
$
1,390

 
$
4,589

 
$
4,179

 
$
4,583

 
$
(154
)
Provision for credit losses
 
534

 
(20
)
 
(8
)
 
132

 
19

 
(246
)
Noninterest expense
 
4,000

 
5,902

 
3,447

 
1,899

 
2,862

 
431

Net income (loss)
 
1,788

 
(2,802
)
 
724

 
1,353

 
1,101

 
127

Return on average allocated capital (2)
 
24.33
%
 
n/m

 
24.33
%
 
17.51
%
 
13.01
%
 
n/m

Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
160,240

 
$
88,257

 
$
118,512

 
$
271,417

 
$
63,579

 
$
210,575

Total deposits
 
543,566

 
n/m

 
240,042

 
258,937

 
n/m

 
35,851

Allocated capital (2)
 
29,500

 
23,000

 
12,000

 
31,000

 
34,000

 
n/m

Period end
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
161,142

 
$
88,156

 
$
120,187

 
$
270,683

 
$
66,260

 
$
205,471

Total deposits
 
545,530

 
n/m

 
237,046

 
270,268

 
n/m

 
31,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2014
 
 
Consumer & Business Banking
 
Consumer
Real Estate
Services
 
GWIM
 
Global
Banking
 
Global
Markets
 
All
Other
Total revenue, net of interest expense (FTE basis) (1)
 
$
7,438

 
$
1,192

 
$
4,547

 
$
4,269

 
$
5,012

 
$
309

Provision for credit losses
 
812

 
25

 
23

 
265

 
19

 
(135
)
Noninterest expense
 
3,963

 
8,129

 
3,359

 
2,028

 
3,077

 
1,682

Net income (loss)
 
1,666

 
(5,027
)
 
729

 
1,236

 
1,308

 
(188
)
Return on average allocated capital (2)
 
22.92
%
 
n/m

 
24.74
%
 
16.18
%
 
15.64
%
 
n/m

Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
162,061

 
$
88,914

 
$
115,945

 
$
271,475

 
$
63,696

 
$
217,391

Total deposits
 
534,557

 
n/m

 
242,792

 
256,433

 
n/m

 
34,381

Allocated capital (2)
 
29,500

 
23,000

 
12,000

 
31,000

 
34,000

 
n/m

Period end
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
160,127

 
$
88,355

 
$
116,482

 
$
273,239

 
$
64,598

 
$
213,416

Total deposits
 
552,211

 
n/m

 
244,051

 
257,502

 
n/m

 
32,818

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter 2013
 
 
Consumer & Business Banking
 
Consumer
Real Estate
Services
 
GWIM
 
Global
Banking
 
Global
Markets
 
All
Other
Total revenue, net of interest expense (FTE basis) (1)
 
$
7,434

 
$
2,115

 
$
4,499

 
$
4,138

 
$
4,194

 
$
569

Provision for credit losses
 
967

 
291

 
(15
)
 
163

 
(16
)
 
(179
)
Noninterest expense
 
4,184

 
3,383

 
3,270

 
1,849

 
2,770

 
562

Net income (loss)
 
1,391

 
(930
)
 
759

 
1,297

 
962

 
533

Return on average allocated capital (2)
 
18.62
%
 
n/m

 
30.59
%
 
22.62
%
 
12.89
%
 
n/m

Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
163,593

 
$
90,114

 
$
109,589

 
$
255,674

 
$
56,354

 
$
238,910

Total deposits
 
522,244

 
n/m

 
235,344

 
226,912

 
n/m

 
34,017

Allocated capital (2)
 
30,000

 
24,000

 
10,000

 
23,000

 
30,000

 
n/m

Period end
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
164,851

 
$
89,257

 
$
111,785

 
$
258,503

 
$
63,127

 
$
234,047

Total deposits
 
525,085

 
n/m

 
235,012

 
228,934

 
n/m

 
34,858

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 
Fully taxable-equivalent 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.
(2) Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital. Allocated capital and the related return are non-GAAP financial measures. The Corporation believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the segments. Other companies may define or calculate these measures differently. (See Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP Financial Measures on pages 22-24.)

n/m = not meaningful


Certain prior period amounts have been reclassified among the segments to conform to current period presentation.

More
This information is preliminary and based on company data available at the time of the presentation.


Page 20

Bank of America Corporation and Subsidiaries
Year-to-Date Results by Business Segment
(Dollars in millions)
 
 
Six Months Ended June 30, 2014
 
 
Consumer & Business Banking
 
Consumer
Real Estate
Services
 
GWIM    
 
Global
Banking
 
Global
Markets
 
All
Other
Total revenue, net of interest expense (FTE basis) (1)
 
$
14,811

 
$
2,582

 
$
9,136

 
$
8,448

 
$
9,595

 
$
155

Provision for credit losses
 
1,346

 
5

 
15

 
397

 
38

 
(381
)
Noninterest expense
 
7,963

 
14,031

 
6,806

 
3,927

 
5,939

 
2,113

Net income (loss)
 
3,454

 
(7,829
)
 
1,453

 
2,589

 
2,409

 
(61
)
Return on average allocated capital (2)
 
23.63
%
 
n/m

 
24.53
%
 
16.85
%
 
14.32
%
 
n/m

Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
161,145

 
$
88,584

 
$
117,235

 
$
271,446

 
$
63,637

 
$
213,965

Total deposits
 
539,087

 
n/m

 
241,409

 
257,692

 
n/m

 
35,119

Allocated capital (2)
 
29,500

 
23,000

 
12,000

 
31,000

 
34,000

 
n/m

Period end
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
161,142

 
$
88,156

 
$
120,187

 
$
270,683

 
$
66,260

 
$
205,471

Total deposits
 
545,530

 
n/m

 
237,046

 
270,268

 
n/m

 
31,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2013
 
 
Consumer & Business Banking
 
Consumer
Real Estate
Services
 
GWIM
 
Global
Banking
 
Global
Markets
 
All
Other
Total revenue, net of interest expense (FTE basis) (1)
 
$
14,846

 
$
4,427

 
$
8,920

 
$
8,168

 
$
8,973

 
$
1,023

Provision for credit losses
 
1,919

 
626

 
7

 
312

 
(11
)
 
71

Noninterest expense
 
8,349

 
8,788

 
6,523

 
3,685

 
5,843

 
2,330

Net income (loss)
 
2,833

 
(3,086
)
 
1,479

 
2,581

 
2,074

 
(386
)
Return on average allocated capital (2)
 
19.08
%
 
n/m

 
30.00
%
 
22.64
%
 
13.97
%
 
n/m

Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
164,713

 
$
91,531

 
$
107,845

 
$
249,903

 
$
54,529

 
$
241,748

Total deposits
 
512,424

 
n/m

 
244,329

 
224,132

 
n/m

 
34,883

Allocated capital (2)
 
30,000

 
24,000

 
10,000

 
23,000

 
30,000

 
n/m

Period end
 
 
 
 
 
 
 
 
 
 
 
 
Total loans and leases
 
$
164,851

 
$
89,257

 
$
111,785

 
$
258,503

 
$
63,127

 
$
234,047

Total deposits
 
525,085

 
n/m

 
235,012

 
228,934

 
n/m

 
34,858

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 
Fully taxable-equivalent 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.
(2) Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated capital. Allocated capital and the related return are non-GAAP financial measures. The Corporation believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the segments. Other companies may define or calculate these measures differently. (See Exhibit A: Non-GAAP Reconciliations - Reconciliations to GAAP Financial Measures on pages 22-24.)

n/m = not meaningful


Certain prior period amounts have been reclassified among the segments to conform to current period presentation.




More
This information is preliminary and based on company data available at the time of the presentation.


Page 21

Bank of America Corporation and Subsidiaries
Supplemental Financial Data
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fully taxable-equivalent (FTE) basis data (1)
Six Months Ended
June 30
 
 
Second
Quarter
2014
 
First
Quarter
2014
 
Second
Quarter
2013
 
2014
 
2013
 
 
 
Net interest income
$
20,512

 
$
21,646

 
 
$
10,226

 
$
10,286

 
$
10,771

Total revenue, net of interest expense
44,727

 
46,357

 
 
21,960

 
22,767

 
22,949

Net interest yield (2)
2.26
%
 
2.36
%
 
 
2.22
%
 
2.29
%
 
2.35
%
Efficiency ratio
91.17

 
76.62

 
 
84.43

 
97.68

 
69.80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Data
 
 
 
 
 
June 30
2014
 
March 31
2014
 
June 30
2013
Number of banking centers - U.S.
 
 
 
 
 
5,023

 
5,095

 
5,328

Number of branded ATMs - U.S.
 
 
 
 
 
15,976

 
16,214

 
16,354

Ending full-time equivalent employees
 
 
 
 
 
233,201

 
238,560

 
257,158

 
 
 
 
 
 
 
 
 
 
 
(1) 
FTE basis is a non-GAAP financial measure. 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. See Reconciliations to GAAP Financial Measures on pages 22-24.
(2)