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» VISIT US ONLINE @ DSNEWS.COM 17 BANK OF AMERICA'S NET INCOME MORE THAN DOUBLES IN Q2; U.S. BANK, PNC PROFITABLE Bank of America reported a net income of $5.3 billion for Q2, more than twice the bank's net income from the same quarter in 2014, according to the bank's Q2 2015 earnings statement released in mid-July. U.S. Bancorp and PNC also posted solid growth in Q2 with net incomes of $1.48 billion and $1.0 billion, respectively, in their earnings statements released in mid-July. A reduction in expenses was one of the drivers of the substantial increase in net income for Bank of America, which saw its income jump from $2.3 billion in Q2 2014 (and from $3.35 billion in Q1 2015) up to $5.3 billion in Q2 2015. Noninterest expense, excluding litigation, declined by 6 percent down to $13.6 billion, according to the bank's statement. e diluted share price also more than doubled year-over- year in Q2, from $0.19 up to $0.45. Also for Bank of America, consumer banking deposits increased year-over-year by $33 billion (6 percent) up to $547 billion, and residential mortgage and home loan equity loan originations increased over the year in Q2 by 40 percent, up to $19.2 billion. e bank's number of 60-plus days delinquent first mortgage loans serviced by legacy assets and servicing fell to 132,000 in Q2, a year-over-year decline of 50 percent, while adjusted net charge-offs also declined year-over-year by 26 percent down to $929 million. "Solid core growth, higher mortgage originations, and the lowest expenses since 2008 contributed to our strongest earnings in several years, as we continued to build broader and deeper relationships with our customers and clients," Bank of America CEO Brian Moynihan said. "We also benefited from the improvement in the U.S. economy, where we are particularly well-positioned." U.S. Bancorp's Q2 net income of $1.483 billion was virtually unchanged from the same quarter in 2014, when the bank reported a net income of $1.495 billion. e price per diluted common share climbed by 2 cents year-over-year in Q2 from $0.78 up to $0.80. Average total loans grew by 4 percent year-over-year, and average total deposits rose by 8.9 percent over the same period. Slowly improving economic conditions resulted in an improvement in non-performing assets for U.S. Bancorp. Net charge-offs, though they increased quarter-over-quarter in Q2, declined by $53 million year-over-year in Q2 down to $296 million, a decline of 15 percent. "U.S. Bancorp once again demonstrated the effectiveness of its business model as we delivered solid second quarter financial results in a challenging operating environment for financial institutions," U.S. Bancorp chairman, president, and CEO, Richard K. Davis said. "We achieved net income of $1.48 billion, or $0.80 per diluted common share and continue to realize industry-leading performance measures, with a return on average assets (ROA) of 1.46 percent, return on average common equity (ROE) of 14.3 percent, and an efficiency ratio of 53.2 percent. As we pursue our vision for the future, we must continue to balance the investments we make in our highest return initiatives with prudent financial discipline– that's the nature of navigating through this low interest rate environment. Furthermore, because of the overall strength and consistency of our results, we returned 76 percent of our earnings to shareholders through dividends and share buybacks in the second quarter." For PNC, Q2's net income of $1.0 billion held steady from the previous quarter and decreased from $1.1 billion year-over-year. Even with the slight decline in net income, PNC's price per diluted common share increased year- over-year by 3 cents (from $1.85 in Q2 2014 up to $1.88 in Q2 2015). PNC's credit quality improved in Q2 compared with Q1, as nonperforming assets declined by 6 percent down to $2.6 billion and net charge-offs fell from $103 million down to $67 million. "PNC had a successful second quarter," said William S. Demchak, chairman, president, and CEO of PNC. "We grew fee income on higher client activity, made positive progress on our strategic priorities and managed our expenses well despite low interest rates that continue to pressure net interest income industrywide." MORGAN STANLEY'S Q2 NET REVENUES REACH $9.7 BILLION Net revenues for Morgan Stanley reached $9.7 billion for the second quartercompared with $9.9 billion in the first quarter and $8.6 billion a year ago, according to the company's second- quarter earnings statement released in July. Morgan Stanley noted its revenues for the second quarter reflected robust performance in equity sales and trading, strong results in investment banking, and continued progress in fixed income and commodities sales and trading. According to the statement, net income for Morgan Stanley was $1.8 billion, or $0.85 per diluted share for the current quarter, compared with net income of $1.9 billion, or $0.92 per diluted share for the same period a year ago. e earnings for the second quarter of the prior year included a net discrete tax benefit of $609 million or $0.31 per diluted share, principally related to the re-measurement of reserves and related interest. "We delivered a strong quarter across each of our businesses, through client-focused execution, expense discipline, and prudent risk management," said James P. Gorman, chairman and CEO of Morgan Stanley. "We remain focused on delivering the long-term value of this franchise." Excluding DVA, net revenues for the current quarter were $9.6 billion compared with $8.5 billion a year ago, Morgan Stanley reported. Excluding DVA and the net discrete tax benefit in the Q2 2014 net income applicable to Morgan Stanley was $1.7 billion, or $0.79 per diluted share, compared with net income of $1.2 billion, or $0.58 per diluted share in the prior year. Institutional securities reported pre-tax income from continuing operations of $1.6 billion compared with pre-tax income of $960 million in the second quarter of last year, according to the earnings statement. Net revenues for the current quarter were $5.2 billion compared with $4.2 billion a year ago. Excluding DVA, net revenues for the current quarter of $5 billion, compared with $4.2 billion a year ago. Wealth management reported pre-tax income from continuing operations of $885 million compared with $763 million in the second quarter of last year. e quarter's pre-tax margin was 23 percent. Net revenues for the current quarter were $3.9 billion compared with $3.7 billion a year ago. Investment management reported pre-tax income from continuing operations of $220 million compared with pretax income of $209 million in the second quarter of last year.

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