Below here is a reconciliation of the 4Q 2012 and 4Q 2011 Pretax Income (Loss) with the Core Adjusted Pretax Income in the same periods:
| Increase | % | |||
| 4Q 2012 | 4Q 2011 | (Decrease) | Increase | |
| mils of $s | mils of $s | mils of $s | (Decrease) | |
| Pretax Income (Loss) As Reported | (1,904) | 2,432 | (4,336) | -178% |
| Adjustments | ||||
| Goodwill Impairment | 581 | |||
| Merger & Restructuring Charges | 101 | |||
| Compensatory Fees Settlement with Fannie Mae | 2,700 | |||
| Provision for Independent Foreclosure Acceleration Agreement | 1,100 | |||
| Provision for Obligations Related to Mortgage Insurance Rescissions | 500 | |||
| Total Litigation Expense | 916 | 1,800 | ||
| Derivative Valuation Loss | 719 | 1,288 | ||
| Gain on Sale of Japan Brokerage | (400) | |||
| Mortgage Service Rights Valuation Gain | (300) | |||
| Gain on Sale of Portion of Investment in China Construction Bank | (2,900) | |||
| Gain on Sale of Debt Securities | (171) | (1,192) | ||
| Gain on Exchange of Trust Preferred Securities | (1,200) | |||
| Adjusted Core Pretax Income | 3,160 | 910 | 2,250 | 247% |
As you can see from the above earnings reconciliation, there was much noise in the earnings in both periods.
And below here is a detailed analysis of the $2,250 mil of Core Pretax Income increase in the 4Q 2012 as compared with the 4Q 2011:
| Explanation of $2,250 mil Increase in 4Q 2012 Adjusted Core Pretax Earnings | mils of $s |
| Lower Net Interest Income, Net (Net Interest Margin 2.35% in 4Q 2012 vs 2.45% in 4Q 2011) | (377) |
| Higher Non-Interest Income | |
| Investment Banking Income | 587 |
| Trading Account Profits | 512 |
| Investment & Brokerage Services | 195 |
| Lower Provision For Credit Losses | 730 |
| Non-Interest Expenses | |
| Lower Personnel Expenses | 461 |
| Other Net | 142 |
| Increase in 4Q 2012 Core Adjusted Pretax Earnings over 4Q 2011 | 2,250 |
