Friday, April 15, 2011

Bank of America Reports Much Improved Q1 Results (Financial Charts, Review) *Net income $2B* BAC

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Bank of America reported Q1 2011 financial results on April 15, 2011
* Charts and commentary have been updated for Bank of America Q1 March 2011 financial results *

Bank of America Reports Much Improved Q1 Financial Results

Bank of America Summary Q1 2011 Bank of America Q1 financial performance was a much improved net income of $2.0 billion, after a huge Q4 net loss of $1.2 billion and a colossal Q3 net loss of $7.3 billion. Financial position improved accordingly. Overall, "higher legacy mortgage-related costs, higher litigation expenses, and lower sales and trading revenue" have hampered Bank of America for the past 4 quarters and will impede future financial performance.

Bank of America Income Statement Q1 2011 Bank of America reported net revenues of $26.9B, net income of $2.0B, and earnings per share of $0.17. From the prior quarter Q4 2010, net revenues were up 20%, net income increased +265%, and earnings per share increased +206%. From the prior year Q1 2010, net revenues were down +16%, net income increased +36%, and earnings per share increased +39%, respectively. The operating and net margins rebounded to positive +10.34% and +9.62%, respectively. The quarterly Provision for Credit Losses of $3.8B is another multi-year low and the net charge-off ratio continues decreasing as credit quality improves.

Bank of America Balance Sheet Q1 2011 Total assets increased slightly QoQ +0.42% to $2.275 trillion. The capital to assets ratio (total stockholders' equity divided by total assets) increased slightly to 10.15%, which is adequate. Tier 1 capital increased slightly to 11.32%, which is adequate. Loans decreased QoQ -0.85%. The ALL/Loans ratio (Allowance for Loan Losses divided by Gross Loans) decreased to 4.27%, which is high, should be adequate, and continues above 4% for the 6th consecutive quarter.

Bank of America Asset Mix Q1 2011 Higher yielding loans, net loans, continue in the high 30% range, near 40%. Lower yielding cash & securities continue in the low 40% range. NonEarning assets continue in the 16% range. A chart of the asset mix is at the bottom of this page.

Bank of America Financial Performance by the Quarters (Charts)

Bank of America Earnings per Share (Chart) Below is a chart of quarterly earnings per diluted share. Current earnings per share is now a positive $0.17 after 2 consecutive negative quarters.

Bank of America Net Revenues, Operating Income, Net Income (Chart) Below is a chart of quarterly net revenues, operating income, and net income. Consolidated revenues are reported net of interest expense. Current Net Revenues of $26.9B are the highest since June 2010. Current Operating Income of $2.8B is the highest since June 2010 and after 2 consecutive quarterly losses. Current Net Income of $2.0B is the highest since June 2010 and after 2 consecutive quarterly losses.

Bank of America Operating Margin and Net Margin (Chart) Below is a chart of quarterly operating margin and net margin. Both the current operating margin and net margin are positive 10.34% and 7.62%, respectively, after 2 consecutive negative quarters plus reaching all-time lows in September 2010 of -22.14% and -27.34%, respectively.

Bank of America Capital to Assets Ratio and Tier 1 Capital Ratio (Chart) Below is a chart of the capital to assets ratio and Tier 1 capital ratio. The capital to assets ratio is stockholders' equity to total assets ratio. The Tier 1 capital ratio is a financial regulatory ratio and measurement. Both continue adequate at 10.15% and 11.32%, respectively.

Bank of America Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. Bank of America had already been struggling with a low ROA in the 0.20%+ range for the past 4 quarters before the Q3 September 2010 ROA turned a negative -0.05% due to the record net loss. Now the current ROA continues downward to -0.15%. Until the disastrous Q3 and Q4 2010 net loss quarters drop off, ROA will be poor.

Bank of America Income Statement Components (Chart) Below is a chart of the major income statement components: NonInterest Income, Net Interest Income, Provision for Credit Losses, and NonInterest Expense. Current NonInterest Income has increased to $14.7B, which is historically low, but improved from December 2010. Current Net Interest Income of $12.2B is at a 5-month low, but within the  historical range. Current Provision for Credit Losses of $3.8B is at another multi-year low as credit quality improves. Current NonInterest Expense, operating expenses, is above the historical average but is now decreasing. Additional goodwill impairment and extraordinary provisions kept NonInterest Expense high in previous quarters.

Bank of America Asset Mix (Chart) Below is a chart of quarterly asset mix, the major asset categories as a percentage of total assets: Cash & Securities, Mortgages & Loans for Sale, Net Loans (Gross Loans less Allowance for Loan Losses), Mortgage Servicing Rights, and NonEarning Assets (Premises & Equipment, Goodwill, and Other Assets). Bank of America reported $2.275 trillion in total assets at March 31, 2011, so percentage points add up fast. Additional commentary regarding asset mix is at the top of this page. The current overall asset mix is little changed from previous quarters. Higher yielding loans, Net Loans, continue in the high 30% range, near 40%. Lower yielding Cash & Securities continue in the low 40% range. NonEarning Assets continue in the 16% range.

Bank of America Operating Expense Ratio (Chart) This is a positive trend of a decreasing operating expense ratio (NonInterest Expense divided by Total Revenues which are NonInterest Income and Interest Income). An decreasing share of each dollar of revenues is being spent on operating expenses. Though still a high ratio historically, the ratio peak in September 2010 at an astronomical 83.81%. Ultimately a continuation of this trend will increase profitability and already has. The current operating expense ratio has exceeded 60% and the ratio has been above 50% for 3 consecutive quarters.

Bank of America Reports First Quarter 2011 Financial Results

* Steady Progress on Customer-Focused Strategy
* Capital and Liquidity Levels Continue to Strengthen
* Credit Costs Continue to Decline, Reflecting Improved Underwriting and a Stronger Economy
* Average Deposit Balances Continue to Grow, Extending Beyond $1 Trillion
* Global Wealth and Investment Management Reports Highest Quarterly Revenue Since the Merrill Lynch Acquisition
* Investment Banking Ranked No. 2 Globally in Fees

CHARLOTTE, N.C., Apr 15, 2011 (BUSINESS WIRE) - Bank of America Corporation today reported net income of $2.0 billion, or $0.17 per diluted share, for the first quarter of 2011, compared with $3.2 billion, or $0.28 per diluted share, in the year-ago period and a net loss of $1.2 billion, or $0.16 per diluted share, in the fourth quarter of 2010.

Results for the most recent quarter were positively affected by lower credit costs, gains from equity investments, and higher asset management fees and investment banking fees. These factors were partially offset by higher legacy mortgage-related costs, higher litigation expenses, and lower sales and trading revenue from the record levels reported in the first quarter of 2010.

"Strong growth in deposit balances and positive contributions from five of our six businesses reflect the steady improvement in the broader economy," said Chief Executive Officer Brian Moynihan. "Our customer-focused strategy is working well, and we also benefited from improved credit qualityWhile still soft, the economy is healing; we see retail spending up versus the year-ago period and continued declines in bankruptcy filings and delinquency rates."

About 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 58 million consumer and small business relationships with approximately 5,800 retail banking offices and approximately 18,000 ATMs and award-winning online banking with 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 approximately 4 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 a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

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