Financial Controls: Bank of America to Announce Earnings on Tuesday, October 18 (Charts) *Financial Performance Review* BAC

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Bank of America (BAC) will report Q3 2011 financial results on Tuesday, October 18

* Update 1 on 10-9-11 *

Bank of America (BAC) Financial Performance Review

Bank of America will report Q3 2011 financial results on Tuesday, October 18, before market open. The conference call will be at 8:30 a.m. ET.

Bank of America financial performance charts for prior quarters have been posted on the Bank of America Financial Performance page and will be updated for this next quarterly report.

The Bank of America financial performance charts are:

Bank of America Performance by the Quarters

Earnings per Share

Net Revenues, Operating Income, Net Income

Operating Margin and Net Margin
Capital-to-Assets, Tier 1 Capital, Tier 1 Common Ratios
Return on Assets

Income Statement Components
Asset Mix

Operating Expense Ratio

Bank of America Future and Past Financial Performance

Earnings per Share

Yahoo Finance Analysts Estimates: $0.19 avg, low estimate $0.09, high estimate $0.28, 19 analysts

Prior Quarter: -$0.90

Prior Year: -$0.77
Bank of America Outlook: not provided

Prior Q2 2011 Financial Results

When Bank of America reports Q3 2011, the 3 months ended September, financial results on October 18, Bank of America is expected to meet or beat various Q2 2011 various prior quarterly results. These financial results are charted on the Bank of America Financial Performance page. These prior quarterly GAAP financial results were:

Net Revenues $13.24 billion

Operating Income -$12.88 billion

Net Income -$8.83 billion

Earnings per Share -$0.90

Operating Income Margin -97.27%

Net Income Margin -66.68%

Summary

Overall, Q3 2011 is expected to exceed both prior Q2 2011 and prior year Q3 2010 financial results. Literally any financial performance at all would beat either quarter. Bank of America announced Project New BAC on September 12, 2011 which continues the massive reorganization that began in January 2010. Phase I includes the reduction of approximately 30,000 jobs "over the next few years". Net expense reductions of $5 billion per year by 2014 are projected. Phase II begins in October 2011 and continues through March 2012. The analysts average earnings per share estimate of $0.19 is reasonable and better than the catastrophic losses in some of the recent quarters. Therefore, Bank of America is projected to beat QoQ and YoY on all key metrics: Earnings per Share, Net Revenues, Operating Income, Net Income, Operating Margin, and Net Margin. The detailed quarter by quarter charts are on the Bank of America Financial Performance page.

Bank of America Reports Massive Q2 Net Loss of $8.83 Billion: Financial Performance Collapses

Bank of America Summary Q2 2011 Bank of America Q2 financial performance collapsed to a new all-time record low, and possible USA banking record low, with a massive net loss of -$8.83 billion. This comes after a much improved net income of +$2.05 billion in Q1 2011, a huge Q4 net loss of -$1.24 billion in Q4 2010, and a colossal Q3 2010 net loss of -$7.30 billion. Financial position continues adequate even with the record losses due to the size of Bank of America (total assets are $2.261 trillion and stockholders' equity is $222.176 billion). Bank of America Chief Executive Officer Brian Moynihan continues the cleanup of the biggest debacle in banking history and has mastered the understatement: "Obviously, the solid performance in our underlying businesses continues to be clouded by the costs we are absorbing from our legacy mortgage issues". This is an EF5 tornado, not a cloud. In the parlance of our times: OMG BAC R U OK?

Bank of America Income Statement Q2 2011 Bank of America reported net revenues of $13.24B, a net loss of -$8.83B, and loss per share of -$0.90. The financial collapse is evident from the QoQ and YoY percentage changes. From the prior quarter Q1 2011, net revenues were dropped -51%, net income plummeted -531%, and earnings per share plunged -629%. From the prior year Q2 2010, net revenues were dropped -55%, net income plummeted -183%, and earnings per share plunged -433%, respectively. The operating and net margins collapsed according to an incredible -97.27% and -66.68%, respectively. The quarterly Provision for Credit Losses of $3.26B is another multi-year low and the net charge-off ratio continues decreasing as credit quality improves but is not material or significant to the disastrous, ongoing losses in mortgage loans and goodwill impairment.

Bank of America Balance Sheet Q2 2011 Total assets decreased slightly QoQ -0.58% to $2.261 trillion. Bank of America is now "creating a fortress balance sheet" the same as JPMorgan Chase promotes. Bank of America continues slightly higher than the total assets of $2.247 trillion reported by JPMorgan Chase for the current quarter. The capital to assets ratio (total stockholders' equity divided by total assets) decreased with this latest loss to 9.83%, which is adequate, but a 5-quarter low. The Tier 1 capital and Tier 1 common ratios decreased slightly to 11.00% and 8.23%, respectively, which is adequate, but 4-quarter lows.

Bank of America Asset Mix Q1 2011 Optimal asset deployment by Bank of America, while desirable, is more than offset by disastrous ongoing losses in mortgage banking and goodwill impairment. Higher yielding loans, net loans, continue a slight uptrend. Lower yielding cash & securities continue a slight uptrend. NonEarning assets continue a slight downtrend. A chart of the asset mix is at the bottom of this page.

Disastrous Losses Q2 2011 First, an estimated additional losses not recognized in Q2 2011 of $5 billion from "legacy mortgage issues" could be charged-off in the future. Representations and Warranties Provision, regarding the legacy mortgage issues, was an expense of $14 billion in Q2 2011 and reduced NonInterest Revenue. Goodwill impairment charges of $2.6 billion were recognized in Q2 2011 and increased NonInterest Expense, operating expenses. This impairment related to "$716 million in mortgage-related assessments and waivers costs related to foreclosure delays and other items the company does not expect to recover, litigation expense of $1.9 billion, and default-related and other loss mitigation expenses".

Bank of America Financial Performance by the Quarters (Charts)

Bank of America Earnings (Loss) per Share Chart Below is a chart of quarterly earnings per diluted share. Current Loss per Share plunged to -0.90 and has been a loss 3 of the past 4 quarters: +0.17 for Q1 2011, -0.16 for Q4 2010, and -0.77 for Q3 2010.

Bank of America Net Revenues, Operating Income (Loss), Net Income (Loss) 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 plunged to $13.24B from prior Q1 2011 of $26.9B and are a multi-year low. Current Operating Loss collapsed to -$12.88B from prior Q1 2011 of +$2.8B and is an all-time low and possibly a USA banking record. Current Net Loss plummeted to -$8.83B from prior Q1 2011 of +$2.05B and is an all-time low and possibly a USA banking record.

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 collapsed deep into negative territory at -97.27% and -66.68%, respectively, as a result of the massive losses reported. Such dismal operating and net margins are rarely, if ever, seen in banking.

Bank of America Capital to Assets, Tier 1 Capital Ratio, and Tier 1 Common Ratios (Chart)

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 very low Return on Assets in the +0.20% range for 4 quarters before the Q3 September 2010 ROA turned a negative -0.05% due to the prior record net loss. Then ROA continued downward to -0.10% and -0.15%. Then ROA literally dropped off the bottom of the chart! Current Return on Assets is an incredible -0.67%.

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 plunged to $1.99B because the mortgage banking losses were a net loss of -$13.20B within this category. Current Net Interest Income of $11.25B dipped from prior Q1 2011 of $12.18B and is a multi-year low. Current Provision for Credit Losses of $3.26B is at another multi-year low as credit quality improves. Current NonInterest Expense, operating expenses, of $22.86B rose sharply above the historical average and is well above the prior Q1 2011 $20.28B. Additional goodwill impairment of $2.6B in Q2 2011 pushed NonInterest Expense higher than 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 $2.261 trillion in total assets at June 30, 2011, so percentage points add up fast. Bank of America continues slightly higher than the total assets of $2.247 trillion reported by JPMorgan Chase for the current quarter. 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 trending upwards and have reached 39.97%. Lower yielding Cash & Securities are also trending upwards and are 42.88%. NonEarning Assets have dropped to 15.70%. While this is a positive shift in asset deployment, the ongoing disastrous charges and losses are offsetting any benefit.

Bank of America Operating Expense Ratio (Chart) Below is a chart of the operating expense ratio (NonInterest Expense divided by Total Revenues which are NonInterest Income and Interest Income). The current Operating Expense Ratio of 120.05% is off the charts and devastating. Total Revenues plunged thought the collapse of NonInterest Income (discussed above) and NonInterest Expense spiked upwards with the $2.8B goodwill impairment charge. An increasing share of each dollar of revenues is being spent on operating expenses. This ratio was already historically high and above normal banking guidelines.