Bank of America Announces Third-Quarter Net Loss of US$1.0 Billion (3)

    
    Global Card Services
    (Dollars in millions)                 Q3 2009             Q3 2008
    --------------------                  -------             -------
    Total managed revenue, net
     of interest expense(1),(2)           $7,327               $7,753
    Provision for credit losses(3)         6,975                5,602
    Noninterest expense                    1,968                2,405
    Net income (loss)                     (1,036)                (167)
    Efficiency ratio (2)                   26.87%               31.03%
    Managed loans(4)                    $213,340             $239,951

                                       At 9/30/09          At 9/30/08
                                       ----------          ----------
    Period-ending loans                 $207,727             $235,998

     (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

The net loss in Global Card Services widened to US$1.0 billion as credit costs continued to rise amid weak economies in the U.S., Europe and Canada. Managed net revenue declined 5 percent to US$7.3 billion mainly due to lower fee income. The decline was partially offset by higher net interest income, as lower funding costs outpaced the decline in average managed loans.

The provision for credit losses increased to US$7.0 billion from a year earlier due to higher net losses driven by economic conditions and higher bankruptcies. The increase in losses was partially offset by reductions in the reserves as a result of improving delinquencies. This compares with reserve additions in the year-ago quarter.

Noninterest expense fell 18 percent on lower operating and marketing costs.

    
    Home Loans and Insurance
    (Dollars in millions)                 Q3 2009              Q3 2008
    --------------------                  -------              -------
    Total revenue, net of
     interest expense(1)                   $3,411               $3,474
    Provision for credit losses             2,897                  818
    Noninterest expense                     3,041                2,741
    Net income (loss)                      (1,632)                 (54)
    Efficiency ratio(1)                     89.19%               78.90%
    Return on average equity                  n/m                  n/m
    Loans(2)                             $132,599             $122,034

                                         At 9/30/09          At 9/30/08
                                         ----------          ----------
    Period-ending loans                  $134,255             $122,975

     (1)  Fully taxable-equivalent basis
     (2)  Balances averaged for period
     n/m = not meaningful

The net loss in Home Loans and Insurance widened to US$1.6 billion as credit costs continued to increase. Net revenue decreased 2 percent as higher income from loan production was more than offset by lower servicing revenue driven by unfavorable mortgage servicing rights hedge performance.

The provision for credit losses increased to US$2.9 billion driven by continued economic weakness and lower home prices. Reserves were increased due to further deterioration in the Countrywide purchased impaired portfolio.

Noninterest expense rose to US$3.0 billion mostly due to increased compensation costs and other expenses related to higher production volume and higher delinquencies.

    
    Global Banking
    (Dollars in millions)                 Q3 2009              Q3 2008
    --------------------                  -------              -------
    Total revenue, net of
     interest expense(1)                   $4,670               $4,284
    Provision for credit losses             2,340                  802
    Noninterest expense                     2,258                1,849
    Net income                                 40                1,024
    Efficiency ratio(1)                     48.35%               43.15%
    Return on average equity                 0.26                 8.06
    Loans and leases(2)                  $308,764             $320,813
    Deposits(2)                           214,286              177,668

     (1)  Fully taxable-equivalent basis
     (2)  Balances averaged for period

Global Banking net income fell to US$40 million. Strong deposit growth and the impact of the Merrill Lynch acquisition were more than offset by higher credit and FDIC insurance costs.

The provision for credit losses increased to US$2.3 billion as net charge-offs continued to rise within the commercial real estate and domestic portfolios. Also contributing were reserve additions in the commercial real estate portfolio. These increases reflect deterioration across a broad range of industries and property types.

    
    - Commercial Banking revenue was flat at US$2.9 billion
      reflecting strong deposit growth and credit spread improvement on loan
      yields offset 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 FDIC insurance
      costs.
    - Corporate Banking and Investment Banking revenue rose 24 percent or
      US$345 million driven by the acquisition of Merrill Lynch and strong
      deposit growth. The increase was partially offset by the costs of
      credit hedging and lower residual net interest income. Net income was
      negatively impacted by higher credit costs, operating expenses
      associated with the Merrill Lynch acquisition and FDIC insurance costs.

Note: Total investment banking income in the quarter of US$1.3 billion was shared primarily between Global Banking and Global Markets based on an internal fee-sharing arrangement among the two segments. Debt and equity issuance fees primarily led to an increase from the year-ago quarter while advisory fees increased 71 percent, reflecting the larger investment banking platform from the Merrill Lynch acquisition.

    
    Global Markets
    (Dollars in millions)                 Q3 2009              Q3 2008
    --------------------                  -------              -------
    Total revenue, net of
     interest expense(1)                   $5,827                $161
    Provision for credit losses                98                 (24)
    Noninterest expense                     2,328               1,120
    Net income                              2,190                (588)
    Efficiency ratio(1)                     39.96%                n/m
    Return on average equity                19.87                 n/m
    Total assets(2)                      $633,909            $430,539
     (1)  Fully taxable-equivalent basis
     (2)  Balances averaged for period
    n/m = not meaningful

Global Markets net income increased US$2.8 billion driven by the addition of Merrill Lynch and a more favorable trading environment. Revenue was strong in the period, partially offset by US$714 million in credit valuation adjustments on derivative liabilities. Market disruption charges had a reduced impact 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.

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