Bank of America Announces Third-Quarter Net Loss of US$1.0 Billion (1)

CHARLOTTE, North Carolina, October 16 /PRNewswire/ --

    
    - Approximately US$2.6 Billion in Writedowns From Improvement in Company
      Credit Spreads
    - Terminating Government Guarantee Term Sheet Costs US$402 Million
    - Merrill Lynch Platform Continues to Boost Results
    - Extends US$183.7 Billion in Credit in the Third Quarter
    - Tier 1 Capital Ratio Rises to 12.46 Percent; Tier 1 Common Ratio Rises
      to 7.25 Percent
    - Adds US$2.1 Billion to Reserve for Credit Losses

Bank of America Corporation (NYSE: BAC) today reported a third-quarter 2009 net loss of US$1.0 billion. After deducting preferred dividends of US$1.2 billion, including US$893 million related to dividends paid to the U.S. government, the diluted loss per share was US$0.26.

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Those results compared with net income of US$1.2 billion, or diluted earnings per share of US$0.15, during the year-ago period.

Through the first nine months of the year, the company had net income of US$6.5 billion, or US$0.39 per share after preferred dividends, compared with US$5.8 billion, or US$1.09 per share a year earlier.

Results were negatively impacted by continued weakness in the U.S. and global economies and stress on the consumer, which continues to result in high credit costs. Earnings in the quarter were affected by US$2.6 billion in pretax mark-to-market and credit valuation adjustments on certain liabilities, including the Merrill Lynch structured notes, and a US$402 million pretax charge to pay the U.S. government to terminate its asset guarantee term sheet. Despite the loss in the period, the company strengthened its reserves, capital position and liquidity through efficient balance sheet and capital management.

"The company's core performance was impacted by a number of non-core items," said Chief Executive Officer and President Kenneth D. Lewis. "The market's improved view of Bank of America's credit cost the company due to non-cash marks on liabilities.

"Excluding those items, our revenue continued to hold up well," Lewis said. "Obviously, credit costs remain high, and that is our major financial challenge going forward. However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card customers."

    
    Third-Quarter 2009 Business Highlights
    - Average retail deposits in the quarter increased US$93.0 billion, or 16
      percent, from a year earlier, including the net impact of US$72.1
      billion in balances from Merrill Lynch and Countrywide. Excluding
      Countrywide and Merrill Lynch, retail deposits grew US$20.9 billion, or
      4 percent, from the year-ago quarter.
    - Global Wealth and Investment Management was ranked No. 1 among U.S.
      wealth managers with more than 25 percent of the nation's top 100
      financial advisors, according to two surveys conducted by Barron's. The
      number of households with assets greater than US$250,000 increased 4
      percent compared with the second quarter including the impact of the
      market.
    - Bank of America received Federal Deposit Insurance Corp. (FDIC)
      approval to exit the debt guarantee program under the FDIC's Temporary
      Liquidity Guarantee Program (TLGP). Additionally, the company will opt
      out of the six-month extension of the Transaction Account Guarantee
      Program (TAGP) that guaranteed full insurance coverage from the FDIC
      on non-interest-bearing transactional accounts greater than US$250,000.
    - Bank of America completed the conversion of Countrywide's deposit
      systems. The integration of Merrill Lynch remained on track with cost
      savings expected to surpass original estimates for the first year.
    - For the nine months ended September 30, Bank of America Merrill Lynch
      ranked No. 1 in high-yield corporate debt, leveraged loans and
      mortgage-backed assets based on volume, both globally and in the U.S.,
      No. 3 and No. 2 in global and U.S. investment banking fees,
      respectively, and No. 2 in global and U.S. asset-backed securities and
      syndicated loans based on volume, according to Dealogic third-quarter
      league tables.
    - During the quarter, Bank of America signed an agreement to sell the
      long-term asset management business of Columbia Management to
      Ameriprise Financial for approximately US$1 billion, subject to certain
      adjustments. The transaction is expected to close in spring 2010.
    - Bank of America funded US$95.7 billion in first mortgages, helping
      nearly 450,000 people either purchase a home or refinance their
      existing mortgage. This funding included US$23.3 billion in mortgages
      made to 154,000 low- and moderate-income borrowers. Approximately 39
      percent of first mortgages were for purchases.
    - To help homeowners avoid foreclosure, Bank of America has provided rate
      relief or agreed to modifications with approximately 215,000 customers
      during the first nine months of 2009. In addition, approximately 98,000
      Bank of America customers are already in a trial period modification
      under the government's Making Home Affordable program at September 30.
    - Bank of America extended US$183.7 billion in credit during the quarter,
      including commercial renewals of US$50.9 billion, according to
      preliminary data. New credit included US$95.7 billion in first
      mortgages, US$65.5 billion in commercial non-real estate, approximately
      US$8.3 billion in commercial real estate, US$4.5 billion in domestic
      and small business card, US$2.7 billion in home equity products and
      nearly US$7.0 billion in other consumer credit.
    - During the third quarter, Small Business Banking extended more than
      US$471 million in new credit consisting of credit cards, loans and
      lines of credit to more than 29,000 customers.
    - Bank of America continued to respond to consumer needs during the
      quarter. The company announced an easy-to-understand BankAmericard(R)
      Basic(TM) Visa(R) credit card that features one basic rate for all
      types of transactions. The company also announced changes to checking
      account options and services that will help customers limit overdraft
      fees.

Third-Quarter 2009 Financial Summary

Revenue and Expense

Revenue net of interest expense on a fully taxable-equivalent basis rose 32 percent to US$26.4 billion from US$19.9 billion a year ago.

Net interest income on a fully taxable-equivalent basis was US$11.8 Billion compared with US$11.9 billion in the third quarter of 2008. The decline was a result of securities sales and lower loan levels. The decrease was partially offset by a favorable rate environment, the addition of Merrill Lynch and higher deposit levels. The net interest yield narrowed 32 basis points to 2.61 percent mainly due to the previously mentioned factors and also was impacted by lower-yielding assets related to the Merrill Lynch acquisition.

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