Bank of America 2012 Annual Report Download - page 22

20 Bank of America 2012
agencies, it would likely lead to an increase in the Corporation’s risk-
weighted assets, which in some cases could be significant; that the
Market Risk Final Rule and the Basel 3 Advanced Approach, if
adopted as proposed, are expected to substantially increase the
Corporation’s capital requirements; that results from using stress
scenario assumptions provided by the Federal Reserve will be
received from the Federal Reserve on March 14, 2013; that funding
trading activities in broker/dealer subsidiaries is more cost-efficient
and less sensitive to changes in credit ratings than unsecured
financing; that VaR model results will be supplemented if risks
associated with positions that are illiquid and/or unobservable are
material; the cost and availability of unsecured funding; the
Corporation’s belief that it can quickly obtain cash for certain
securities even in stressed market conditions, through repurchase
agreements or outright sales; the Corporation’s belief that a portion
of structured liability obligations will remain outstanding beyond the
earliest put or redemption date; the Corporation’s anticipation that
debt levels will continue to decline, primarily due to maturities,
through 2013; that, of the loans in the pay option portfolio at
December 31, 2012 that have not already experienced a payment
reset, one percent are expected to reset in 2013 and approximately
23 percent thereafter, and that seven percent are expected to
prepay and 69 percent are expected to default prior to being reset,
most of which were severely delinquent as of December 31, 2012;
effects of the ongoing debt crisis in Europe, including the expectation
of continued volatility as long as challenges remain, the expectation
that the Corporation will continue to support client activities in the
region and that exposures may vary over time as the Corporation
monitors the situation and manages its risk profile; the expectation
that, absent unexpected deterioration in the economy, reductions
in the allowance for loan and lease losses, excluding the valuation
allowance for PCI loans, will continue in the near term, though at a
slower pace than in 2012; the goal of mitigating market risk
exposures by using techniques that encompass a variety of financial
instruments in both the cash and derivatives markets; the accuracy
of forward-looking forecasts of net interest income used in interest
rate risk management; and other matters relating to the Corporation
and the securities that it may offer from time to time. The foregoing
is not an exclusive list of all forward-looking statements the
Corporation makes. These statements are not guarantees of future
results or performance and involve certain risks, uncertainties and
assumptions that are difficult to predict and are often beyond the
Corporation’s control. Actual outcomes and results may differ
materially from those expressed in, or implied by, any of these
forward-looking statements.
You should not place undue reliance on any forward-looking
statement and should consider the following uncertainties and risks,
as well as the risks and uncertainties more fully discussed elsewhere
in this report, under Item 1A. Risk Factors of this Annual Report on
Form 10-K, and in any of the Corporation’s subsequent Securities
and Exchange Commission filings: the Corporation’s ability to resolve
representations and warranties repurchase claims made by
monolines and private-label and other investors, including as a result
of any adverse court rulings, and the chance that the Corporation
could face related servicing, securities, fraud, indemnity or other
claims from one or more of the monolines or private-label and other
investors; the Corporation’s resolution of remaining differences with
the government-sponsored enterprises regarding representations
and warranties repurchase claims, including in some cases with
respect to mortgage insurance rescissions and foreclosure delays
if future representations and warranties losses occur in excess of
the Corporation’s recorded liability and estimated range of possible
loss for its representations and warranties exposures; uncertainties
about the financial stability of several countries in the EU, the
increasing risk that those countries may default on their sovereign
debt or exit the EU and related stresses on financial markets, the
Euro and the EU and the Corporation’s exposures to such risks,
including direct, indirect and operational; the uncertainty regarding
the timing and final substance of any capital or liquidity standards,
including the final Basel 3 requirements and their implementation
for U.S. banks through rulemaking by the Federal Reserve, including
anticipated requirements to hold higher levels of regulatory capital,
liquidity and meet higher regulatory capital ratios as a result of final
Basel 3 or other capital or liquidity standards; the negative impact
of the Financial Reform Act on the Corporation’s businesses and
earnings, including as a result of additional regulatory interpretation
and rulemaking and the success of the Corporation’s actions to
mitigate such impacts; the Corporation’s satisfaction of its borrower
assistance programs under the National Mortgage Settlement with
federal agencies and state Attorneys General and under the
acceleration agreement with the OCC and the Federal Reserve;
adverse changes to the Corporation’s credit ratings from the major
credit rating agencies; estimates of the fair value of certain of the
Corporation’s assets and liabilities; unexpected claims, damages
and fines resulting from pending or future litigation and regulatory
proceedings; the Corporation’s ability to fully realize the cost savings
and other anticipated benefits from Project New BAC, including in
accordance with currently anticipated timeframes; and other similar
matters.
Forward-looking statements speak only as of the date they are
made, and the Corporation undertakes no obligation to update any
forward-looking statement to reflect the impact of circumstances or
events that arise after the date the forward-looking statement was
made.
Notes to the Consolidated Financial Statements referred to in
the Management’s Discussion and Analysis of Financial Condition
and Results of Operations (MD&A) are incorporated by reference
into the MD&A. Certain prior period amounts have been
reclassified to conform to current period presentation. Throughout
the MD&A, the Corporation uses certain acronyms and
abbreviations which are defined in the Glossary.