Bank of America Earns US$3.2 Billion in First Quarter (3)

During the quarter, a cash dividend of $0.01 per common share was paid and the company reported $348 million in preferred dividends. Period-end common shares issued and outstanding were 10.03 billion for the first quarter of 2010, 8.65 billion for the fourth quarter of 2009 and 6.40 billion for the first quarter of 2009. The increase in outstanding shares was driven primarily by the conversion of common equivalent shares into common stock in the first quarter of 2010.

2010 Business Segment Results

    
    
    Deposits
    
    
    (Dollars in millions)                        Q1 2010       Q1 2009
    ---------------------                        -------       -------
    Total revenue, net of interest
     expense, FTE basis                           $3,632        $3,372
    ------------------------------                ------        ------
    
    
    Provision for credit losses                       37            88
    ---------------------------                      ---           ---
    Noninterest expense                            2,505         2,323
    -------------------                            -----         -----
    
    
    Net income                                       683           600
    ----------                                       ---           ---
    
    
    Efficiency ratio, FTE basis                    68.97%        68.89%
    ---------------------------                    -----         -----
    Return on average equity                       11.49         10.39
    ------------------------                       -----         -----
    
    
    Average deposits                            $414,167      $376,287
    ----------------                            --------      --------
    
    
                                              At 3/31/10    At 3/31/09
                                              ----------    ----------
    Period-end deposits                         $417,539      $390,247
    -------------------                         --------      --------

Deposits net income rose 14 percent as the 8 percent increase in revenue was partially offset by increased noninterest expense. Revenue increased mainly due to growth in deposits as well as improved spreads. Noninterest income remained relatively flat. Expenses rose as a higher percentage of the retail distribution costs shifted to Deposits from the other consumer businesses.

Average deposits rose 10 percent, or $37.9 billion, from a year ago due to the transfer of $39.7 billion in certain client deposits from Global Wealth and Investment Management and $15.2 billion of organic growth. Organic growth was driven by the continuing need of customers to manage their liquidity as illustrated by growth in higher spread deposits. The increase was partially offset by the expected decline in higher-yielding Countrywide deposits.

    
    Global Card Services
    
    
    (Dollars in millions)                       Q1 2010      Q1 2009
    Total revenue, net of interest
     expense, FTE basis(1)                       $6,804       $7,448
    
    Provision for credit losses(2)                3,535        8,221
    Noninterest expense                           1,751        2,039
    
    Net income (loss)                               952       (1,752)
    
    Efficiency ratio,FTE basis                    25.74%       27.38%
    Return on average equity                       8.94          n/m
    
    Average loans(1)                           $189,307     $224,013
    
                                             At 3/31/10   At 3/31/09
    Period-end loans(1)                        $181,763     $217,532
    
    
    (1) Current period shown on a GAAP basis in accordance with new
    accounting guidance. Prior period shown on a managed basis.  Managed
    basis assumed that credit card loans that were 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, refer to page 21
    of this press release.
    (2) Current period shown on a GAAP basis in accordance with new
    accounting guidance. Prior period results shown on a managed basis
    and represented provision for credit losses on held loans combined
    with realized credit losses associated with the securitized credit
    card loan portfolio.  For more information and detailed
    reconciliation, refer to page 21 of this press release.
    n/m = not meaningful    

Global Card Services reported net income of $952 million as credit costs declined, reflecting continued improvement in the U.S. economy. Net revenue declined 9 percent to $6.8 billion due to lower net interest income from the decline in average loans and lower fee income resulting from the implementation of the CARD Act.

Provision for credit losses decreased $4.7 billion to $3.5 billion from a year ago as lower delinquencies and lower expected losses from the improved economic outlook drove reserve reductions during the quarter.

Expenses decreased as a higher percentage of the retail distribution costs shifted to Deposits from Global Card Services.

    
    Home Loans and Insurance
    
    
    (Dollars in millions)                      Q1 2010     Q1 2009
    ---------------------                      -------     -------
    Total revenue, net of interest
     expense, FTE basis                         $3,624      $5,235
    ------------------------------              ------      ------
    
    
    Provision for credit losses                  3,600       3,372
    ---------------------------                  -----       -----
    Noninterest expense                          3,328       2,655
    -------------------                          -----       -----
    
    
    Net income (loss)                           (2,071)       (494)
    -----------------                           ------        ----
    
    
    Efficiency ratio, FTE basis                  91.81%      50.72%
    ---------------------------                  -----       -----
    
    
    Average loans                             $133,745    $125,544
    -------------                             --------    --------
    
    
                                            At 3/31/10  At 3/31/09
                                            ----------  ----------
    Period-end loans                          $132,428    $131,332
    ----------------                          --------    --------

The net loss in Home Loans and Insurance widened to $2.1 billion as higher credit costs continued to negatively impact results. Net revenue decreased 31 percent due to lower mortgage banking income, driven by less favorable mortgage servicing rights results and lower production volume and margins resulting from a decrease in refinance activity.

The provision for credit losses rose to $3.6 billion, driven by higher reserve additions amid continued stress in the housing market. Also driving the increase was the impact of certain modified loans where carrying value is based on the underlying collateral value and higher home equity net charge-offs related to loans that were consolidated in the quarter as a result of new accounting guidance. These increases were partially offset by lower reserve additions on the Countrywide home equity purchased credit-impaired portfolio, compared with the year-ago period.

Noninterest expense rose to $3.3 billion mostly due to expenses related to increased litigation costs, default management staff, vendor expenses and loss mitigation efforts.

Effective January 1, 2010, Bank of America realigned the Global Banking and Global Markets business segments. The segments are now referred to as Global Commercial Banking and Global Banking and Markets. Prior period amounts have been reclassified to conform to current period presentation.

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