| Balance Sheet/Credit Quality/Capital Structure
In 1Q11, average loans were $938.97 billion versus $991.62 billion in 1Q10.
On the funding side, Bank of America’s average deposits increased from $981.01 million in 1Q10 to $1,023.14 billion in 1Q11. Average securities were $335.84 million in 1Q11 versus $311.14 million in 1Q10.
Credit Quality
According to the firms, credit quality continued to improve during the reported quarter, with net charge-offs continuing to decline in most consumer portfolios. Though still high, credit costs declined for the seventh consecutive quarter, reflecting continued improvement in relatively weak global economic conditions.
Net charge-offs (NCOs) were $6.0 billion in 1Q11 versus $10.8 billion in 1Q10 and $6.8 billion in 4Q10, reflecting improvement in both the consumer and commercial portfolios. The q/q decrease was primarily due to the impact of a continued decline in delinquencies and bankruptcies across the U.S. Global Card Services loan portfolios as well as fewer and less severe charge-offs across the core commercial portfolio owing to the continuing economic recovery.
The allowance for loan and lease losses to annualized net charge-off coverage ratio improved in 1Q11 to 1.63% from 1.07% in 1Q10 and 1.56% in 4Q10.
Improved delinquencies and bankruptcies in the U.S. credit card, small business, and consumer lending businesses in 1Q11 led to a decline in the allowance for loan and lease losses. Additionally, stable portfolio performance, including lower delinquencies, within the non-purchased credit-impaired consumer real estate portfolios and the impact of continuing improvement in economic conditions on the core commercial portfolio resulted in further reserve reductions. These were partially offset by life of loan reserve additions of $1.6 billion related to consumer purchased credit-impaired portfolios obtained in prior periods through acquisitions, reflecting a more negative outlook for home prices.
Nonperforming loans, leases and foreclosed properties declined to $31.6 billion as of March 31, 2011, from $35.9 billion as of March 31, 2010 and $32.7 billion as of December 31, 2010.
Capital Structure
The company's liquidity position strengthened during the quarter as customers continued to reduce debt. The company's total global excess liquidity sources increased more than $50 billion from 4Q10 to $386 billion as of March 31, 2011.
Total shareholders' equity was $230.9 billion as of March 31, 2011 versus $229.8 million as of March 31, 2010.
Tier 1 common ratio was 8.64% at the quarter end, up from 7.60% at March 31, 2010, and 8.60% at December 31, 2010. Tier 1 capital ratio was 11.32% versus 10.23% at March 31, 2010 and 11.24% at December 31, 2010.
Tangible common equity ratio was 6.10%, up from 5.22% as of March 31, 2010 and 5.99% as of December 31, 2010. Tangible book value per share of common stock was $13.21 compared with $11.70 as of March 31, 2010 and $12.98 as of December 31, 2010.
Period-end common shares issued and outstanding were 10.13 billion versus 10.09 billion in 1Q10 and 10.03 billion in 4Q10. The y/y increase in outstanding shares was driven primarily by issuance of common stock under employee plans during the year.
Dividend Update
On May 2, 2011, Bank of America paid a regular quarterly dividend of $18.125 per share on the 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L to shareholders of record as of April 1, 2011.
On April 25, 2011, Bank of America paid a regular quarterly cash dividend of $1.75 on the 7% Cumulative Redeemable Preferred Stock, Series B to shareholders of record as of April 11, 2011.
On March 23, 2011, Bank of America's plan to boost its dividend in the 2H11 was rejected by the Federal Reserve, as per a company filing. This came as a shock for Bank of America, particularly after many big banks got the much-awaited green signal from the Fed to hike dividends, following the release of stress test results on March 18. The company needs to show the Fed even more financial strength, lest it needs to combat another financial crisis. The Fed wants the company to be at least as strong as its rivals that got the approval to deploy capital. The Fed has given the company another chance to submit a revised capital plan for its consideration. The company has said that it would resubmit its plan, requesting the Fed to allow a modest dividend increase in 2H11.
On March 25, 2011, Bank of America paid a regular quarterly cash dividend of $0.01 per share to shareholders of record as of March 4, 2011.
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