Business Momentum Continues

Deposit Balances up 4 Percent Companywide From Q2-12 to $1.1 Trillion
First-lien Mortgage Production up 40 Percent From Q2-12 to $25 Billion
Global Wealth and Investment Management Reports Record Revenue, Pretax Margin, Net Income, Asset Management Fees and Loan Balances
Commercial Loan Balances up 20 Percent From Q2-12 to $381 Billion
Global Investment Banking Fees up 36 Percent From Q2-12 to $1.6 Billion; Maintained No. 2 Ranking in Global Investment Banking Fees
Total Noninterest Expense of $16 Billion, Down $1 Billion From Q2-12
Credit Quality Continued to Improve With Net Credit Loss Rates Below 1 Percent for the First Time Since Second Quarter of 2006
Capital and Liquidity Remain Strong

Basel 1 Tier 1 Common Capital Ratio of 10.83 Percent, up From 10.49 Percent in Prior Quarter
Estimated Basel 3 Tier 1 Common Capital Ratio of 9.60 Percent, up From 9.52 Percent in Prior QuarterB
Long-term Debt Down $39 Billion From Year-ago Quarter, Driven by Maturities and Liability Management Actions
Parent Company Liquidity Remained Strong With Time-to-required Funding at 32 Months
Bank of America Corporation (NYSE: BAC) today reported that second-quarter 2013 net income rose 63 percent to $4.0 billion from $2.5 billion in the second quarter of 2012. Earnings per diluted share increased to $0.32 from $0.19 in the second quarter of 2012. Revenue, net of interest expense, on a fully taxable-equivalent (FTE)A basis rose 3 percent to $22.9 billion from $22.2 billion a year ago.

Bank of America Corporation (NYSE: BAC) today reported that second-quarter 2013 net income rose 63 percent to $4.0 billion from $2.5 billion in the second quarter of 2012. Earnings per diluted share increased to $0.32 from $0.19 in the second quarter of 2012. Revenue, net of interest expense, on a fully taxable-equivalent (FTE)A basis rose 3 percent to $22.9 billion from $22.2 billion a year ago.

The results for the second quarter of 2013 were driven by year-over-year improvements in net interest income, investment and brokerage income, investment banking fees, sales and trading revenue, equity investment income and credit quality as well as expense reductions. These items were partially offset by the absence of year-ago gains related to liability management actions and lower mortgage banking income.

"We are doing more business with our customers and clients, and gaining momentum across every customer group we serve," said Chief Executive Officer Brian Moynihan. "We must keep improving, but with the consumer recovering and businesses strong, we have lots of opportunity ahead.”

"At the beginning of the year, we said we would focus on three things – revenue stability, strengthening the balance sheet and managing costs," said Chief Financial Officer Bruce Thompson. "This quarter, we delivered on all three. Revenue increased 3 percent, we continued to build capital ratios, despite the negative impact of higher interest rates on our bond portfolio, and we reduced expenses related to servicing delinquent mortgage loans at a faster rate than we originally expected."

Selected Financial Highlights


Three Months Ended
(Dollars in millions, except per share data) June 30/2013 March 31/2013 June 30/
2012
Net interest income, FTE basis1 $ 10,771 $ 10,875 $9,782
Noninterest income 12,178 12,533 12,420
Total revenue, net of interest expense, FTE basis 22,949 23,408 22,202
Provision for credit losses 1,211 1,713 1,773
Noninterest expense 16,018 19,500 17,048
Net income $4,012 $1,483 $ 2,463
Diluted earnings per common share $0.32 $0.10 $0.19
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliations to GAAP financial measures, refer to pages 22-24 of this press release. Net interest income on a GAAP basis was $10.5 billion, $10.7 billion and $9.5 billion for the three months ended June 30, 2013, March 31, 2013 and June 30, 2012, respectively. Total revenue, net of interest expense, on a GAAP basis was $22.7 billion, $23.2 billion and $22.0 billion for the three months ended June 30, 2013, March 31, 2013 and June 30, 2012, respectively.

Revenue, net of interest expense, on an FTE basisA rose $747 million, or 3 percent, from the second quarter of 2012, to $22.9 billion, led by higher net interest income.

Net interest income, on an FTE basis, totaled $10.8 billion in the second quarter of 2013, compared to $10.9 billion in the first quarter of 2013 and $9.8 billion in the second quarter of 2012A. The improvement from the year-ago quarter was driven by favorable market-related impacts of $850 million from lower premium amortization and hedge ineffectiveness, reductions in long-term debt balances, lower rates paid on deposits and higher commercial loan balances, partially offset by lower consumer loan balances as well as lower asset yields. Net interest margin was 2.44 percent in the second quarter of 2013, compared to 2.43 percent in the first quarter of 2013 and 2.21 percent in the second quarter of 2012.

Noninterest income decreased $242 million from the year-ago quarter, as increases in investment banking fees, equity investment income and investment and brokerage income were more than offset by a decline in other income, as the year-ago quarter included gains related to liability management actions, and lower mortgage banking income

Noninterest expense decreased $1.0 billion compared to the year-ago quarter to $16.0 billion, driven primarily by lower litigation expense, reduced expenses in Legacy Assets and Servicing (LAS) and lower personnel expense as the company continued to streamline processes and achieve cost savings.

Previously, Bank of America stated that by the end of 2013, noninterest expense in LAS, excluding litigation expenses, was expected to decline to $2.1 billion a quarter and the number of 60+ days delinquent mortgage loans would decline to 400,000. Based on the progress in the first half of 2013, the company now expects that by the fourth quarter of 2013, noninterest expense in LAS, excluding litigation costs will be below $2.0 billion and that the number of 60+ days delinquent mortgage loans will decline below 375,000.

Litigation expense was $471 million in the second quarter of 2013, compared to $2.2 billion in the first quarter of 2013 and $963 million in the second quarter of 2012.

Income tax expense for the second quarter of 2013 was $1.5 billion on $5.5 billion of pretax income, resulting in a 27 percent effective tax rate. This compares to income tax expense of $684 million on $3.1 billion of pretax income resulting in a 22 percent effective tax rate in the year-ago quarter.

At June 30, 2013, the company had 257,158 full-time employees, down from 262,812 at March 31, 2013 and 275,460 at June 30, 2012.

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