Bank of America 2012 Annual Report Download - page 33

Bank of America 2012 31
Supplemental Financial Data
We view net interest income and related ratios and analyses on a
FTE basis, which when presented on a consolidated basis, are
non-GAAP financial measures. We believe managing the business
with net interest income on a FTE basis provides a more accurate
picture of the interest margin for comparative purposes. To derive
the FTE basis, net interest income is adjusted to reflect tax-exempt
income on an equivalent before-tax basis with a corresponding
increase in income tax expense. For purposes of this calculation,
we use the federal statutory tax rate of 35 percent. This measure
ensures comparability of net interest income arising from taxable
and tax-exempt sources.
Certain performance measures including the efficiency ratio
and net interest yield utilize net interest income (and thus total
revenue) on a FTE basis. The efficiency ratio measures the costs
expended to generate a dollar of revenue, and net interest yield
measures the bps we earn over the cost of funds.
We also evaluate our business based on certain ratios that
utilize tangible equity, a non-GAAP financial measure. Tangible
equity represents an adjusted shareholders’ equity or common
shareholders’ equity amount which has been reduced by goodwill
and intangible assets (excluding MSRs), net of related deferred
tax liabilities. These measures are used to evaluate our use of
equity. In addition, profitability, relationship and investment models
all use return on average tangible shareholders’ equity (ROTE) as
key measures to support our overall growth goals. These ratios
are as follows:
Return on average tangible common shareholders’ equity
measures our earnings contribution as a percentage of adjusted
common shareholders’ equity. The tangible common equity ratio
represents adjusted common shareholders’ equity divided by
total assets less goodwill and intangible assets (excluding
MSRs), net of related deferred tax liabilities.
ROTE measures our earnings contribution as a percentage of
adjusted average total shareholders’ equity. The tangible equity
ratio represents adjusted total shareholders’ equity divided by
total assets less goodwill and intangible assets (excluding
MSRs), net of related deferred tax liabilities.
Tangible book value per common share represents adjusted
ending common shareholders’ equity divided by ending common
shares outstanding.
The aforementioned supplemental data and performance
measures are presented in Table 7 and Statistical Table XII. In
addition, in Table 8 and Statistical Table XIV, we have excluded the
impact of goodwill impairment charges of $3.2 billion and $12.4
billion recorded in 2011 and 2010 when presenting certain of
these metrics. Accordingly, these are non-GAAP financial
measures.
In addition, we evaluate our business segment results based
on measures that utilize return on average economic capital, a
non-GAAP financial measure, including the following:
Return on average economic capital for the segments is
calculated as net income, adjusted for cost of funds and
earnings credits and certain expenses related to intangibles,
divided by average economic capital.
Economic capital represents allocated equity less goodwill and
a percentage of intangible assets (excluding MSRs).
In 2009, Common Equivalent Securities (CES) were reflected
in our reconciliations given the expectation that the underlying
Common Equivalent Junior Preferred Stock, Series S would convert
into common stock following shareholder approval of additional
authorized shares. Shareholders approved the increase in the
number of authorized shares of common stock and the Common
Equivalent Stock converted into common stock on February 24,
2010.
Statistical Tables XV, XVI and XVII on pages 141, 142 and 144
provide reconciliations of these non-GAAP financial measures with
GAAP financial measures. We believe the use of these non-GAAP
financial measures provides additional clarity in assessing the
results of the Corporation and our segments. Other companies
may define or calculate these measures and ratios differently.
Table 8 Five Year Supplemental Financial Data
(Dollars in millions, except per share information) 2012 2011 2010 2009 2008
Fully taxable-equivalent basis data
Net interest income $ 41,557 $ 45,588 $ 52,693 $ 48,410 $ 46,554
Total revenue, net of interest expense 84,235 94,426 111,390 120,944 73,976
Net interest yield 2.35%2.48% 2.78% 2.65% 2.98%
Efficiency ratio 85.59 85.01 74.61 55.16 56.14
Performance ratios, excluding goodwill impairment charges (1)
Per common share information
Earnings $ 0.32 $ 0.87
Diluted earnings 0.32 0.86
Efficiency ratio (FTE basis) 81.64% 63.48%
Return on average assets 0.20 0.42
Return on average common shareholders’ equity 1.54 4.14
Return on average tangible common shareholders’ equity 2.46 7.03
Return on average tangible shareholders’ equity 3.08 7.11
(1) Performance ratios are calculated excluding the impact of goodwill impairment charges of $3.2 billion and $12.4 billion recorded during 2011 and 2010.