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Bank Of America Reports Fourth-Quarter 2012 Net Income Of $0.7 Billion, Or $0.03 Per Diluted Share

The year-ago quarter included $1.3 billion of negative DVA and FVO adjustments, $1.8 billion of total litigation expense and a $0.6 billion goodwill impairment charge in the European consumer card business. In addition, the year-ago quarter included, among other significant items, a $2.9 billion pretax gain on the sale of a portion of the company's investment in China Construction Bank (CCB), a $1.2 billion gain on the exchange of trust preferred securities, and a $1.2 billion gain on the sale of debt securities.

Relative to the year-ago quarter, the results for the fourth quarter of 2012 were driven by improved credit quality across most major portfolios, increased sales and trading revenue (excluding the impact of DVA E), increased investment and brokerage income, higher investment banking fees, partially offset by an increase in consumer real estate losses, reflecting the Fannie Mae settlements and the provision for the IFR acceleration agreement. In addition, noninterest expense declined from the year-ago quarter, driven primarily by cost savings achieved through Project New BAC initiatives over the course of 2012.

"We addressed significant legacy issues in 2012 and our strengths are coming through," said Chief Financial Officer Bruce Thompson. "Capital and liquidity remain strong and credit continues to improve. Our primary focus this year is to grow revenue, manage expenses and drive core earnings growth."

Selected Financial Highlights
    Three Months Ended   Year Ended
(Dollars in millions, except per share data)     December 31 2012   December 312011   December 31 2012   December 312011
Net interest income, FTE basis 1 $ 10,555   $ 10,959 $ 41,557   $ 45,588
Noninterest income 8,336 14,187 42,678 48,838
Total revenue, net of interest expense, FTE basis 18,891 25,146 84,235 94,426
Total revenue, net of interest expense, FTE basis, excluding DVA and FVO 2 19,610 26,434 91,819 90,106
Provision for credit losses 2,204 2,934 8,169 13,410
Noninterest expense 3 18,360 18,941 72,093 77,090
Goodwill impairment charges 581 3,184
Net income $ 732 $ 1,991 $ 4,188 $ 1,446
Diluted earnings per common share     $ 0.03     $ 0.15     $ 0.25     $ 0.01

1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 25-28 of this press release. Net interest income on a GAAP basis was $10.3 billion and $10.7 billion for the three months ended December 31, 2012 and 2011, and $40.7 billion and $44.6 billion for the years ended December 31, 2012 and 2011. Total revenue, net of interest expense, on a GAAP basis was $18.7 billion and $24.9 billion for the three months ended December 31, 2012 and 2011, and $83.3 billion and $93.5 billion for the years ended December 31, 2012 and 2011.

2 Total revenue, net of interest expense, on an FTE basis excluding DVA and FVO adjustments is a non-GAAP financial measure. DVA gains (losses) were $(277) million and $(474) million for the three months ended December 31, 2012 and 2011, and $(2.5) billion and $1.0 billion for the years ended December 31, 2012 and 2011. Valuation gains (losses) related to FVO were $(442) million and $(814) million for the three months ended December 31, 2012 and 2011, and $(5.1) billion and $3.3 billion for the years ended December 31, 2012 and 2011.

3 Excludes goodwill impairment charges of $581 million in the three months ended December 31, 2011, and $3.2 billion for the year ended December 31, 2011. Noninterest expense, excluding goodwill impairment charges, is a non-GAAP financial measure.

Key Business Highlights

The company made significant progress in 2012 in line with its operating principles, including the following developments:

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