Bank of America Corporation reported net income of $3.1 billion, or $0.25 per diluted share, for the fourth quarter of 2014, compared to $3.4 billion, or $0.29 per diluted share in the year-ago period.
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Revenue, net of interest expense, on an FTE basis was $19.0 billion, compared to $21.7 billion in the fourth quarter of 2013.
Results for the most recent quarter include three adjustments that, in aggregate, reduced revenue in the fourth quarter of 2014 by $1.2 billion (pretax) and lowered earnings per share by $0.07.
These adjustments were a $578 million negative market-related net interest income (NII) adjustment, driven by the acceleration of bond premium amortization on the company's debt securities portfolio due to lower long-term interest rates; a one-time transitional charge of $497 million related to the adoption of funding valuation adjustments on uncollateralized derivatives in the company's Global Markets business; and $129 million in net DVA losses related to a tightening of the company's credit spreads.
This compares with $210 million in positive market-related NII adjustments and $618 million in net DVA losses in the year-ago quarter. Excluding the impact of FVA in the current period and the net DVA and market-related NII adjustments in both periods, revenue was $20.2 billion in the fourth quarter of 2014 compared to $22.1 billion in the year-ago quarter.
Approximately $720 million of the decline from the fourth quarter of 2013 was due to lower gains from the sales of debt securities and equity investment income, and the remainder was attributable to lower mortgage banking income and lower trading account profits.
Noninterest expense declined from $17.3 billion in the fourth quarter of 2013 to $14.2 billion in the fourth quarter of 2014, the lowest quarterly expense reported by the company since the Merrill Lynch merger.
Credit quality also continued to improve, with the provision for credit losses declining from $336 million in the fourth quarter of 2013 to $219 million in the fourth quarter of 2014, while the charge-off ratio was the lowest in a decade.
For the full year, net income was $4.8 billion, or $0.36 per diluted share, compared to $11.4 billion, or $0.90 per diluted share in 2013. Revenue, net of interest expense, on an FTE basis was $85.1 billion in 2014, compared to $89.8 billion in 2013.
Noninterest expense was $75.1 billion, compared to $69.2 billion in 2013. Excluding litigation expense of $16.4 billion in 2014 and $6.1 billion in 2013, noninterest expense was $58.7 billion in 2014, down $4.4 billion, or 7 percent, from 2013. ■