Earnings Preview: Bank of America

Bank of America (BAC) is slated to report Q1 earnings before the market open on Monday, April 20 with a conference call scheduled for 9:30 am ET.

Guidance

Analysts are looking for a profit of 5c on revenue of $27.13B. The consensus range is (22c)-26c for EPS, and $22.40B-$30.87B for revenue, according to First Call.

Analyst Views

Bank of America Chairman and CEO Kenneth Lewis told CNBC last month that March was not as lucrative for the bank as January and February had been. Investors will attempt to determine on Monday if the bank expects that downward trend to continue. In mid-March, Lewis told the Charlotte Observer that he expected the bank to report a profit for 2009. Meanwhile, there have been some indications in recent weeks that Lewis' role at Bank of America could change. The Wall Street Journal reported today that Proxy Governance, a major proxy advisory firm, urged Bank of America shareholders to push Lewis to give up the chairman title. Lewis recently suggested, in an interview with The New York Times, that he wouldn't mind stepping down as chairman while retaining his CEO title.

Bank of America investors may be more optimistic about the bank's results after Wells Fargo (WFC), Goldman Sachs (GS), and JPMorgan (JPM) all announced better than expected results. Conversely , analysts in recent weeks have had mixed but mostly pessimistic outlooks on banks' earnings.

Morgan Stanley believes that Wells Fargo's results are not a good indicator for the sector, and the firm warned that the sector's stocks could retreat. Oppenheimer predicts that banks' core results will be "reasonably stable." The firm predicts that banks will continue to have markdowns, but it forecasts that writedowns should drop compared with 4Q08. However, the firm also predicts that Bank of America will have to raise capital by issuing 4.9B new shares in 2009. CLSA analyst Mike Mayo initiated Bank of America and the entire banking sector with Underperform ratings. Mayo, citing an increase in the amount of problematic loans as the main reason for his ratings, believes banks' loan losses may exceed Great Depression levels.

Comments

[Rigged]

Why are reporters/posters like you only quotes analysts that predicted that the banks earnings are not sustainable or points to a worser case scenario. Why not quote any of the analysts (like Bove) who indicate that banks stocks are a good deal now. The "negative" analysts have been wrong for the past 6 weeks.... if one have listened to them, one could not ride BAC from $3 to the high $10s today. Could it be that these analysts (like Mayo) may have missed the boat and are just plain late to the "short' party?

2009 Apr 17 04:56 PM

[jakins]

I may be wrong.But my understanding is that Ken Lewis had declined the first round of Bailout Money but under the policy in force at the time he had no choice but to take it.I also read that He was backing out of the Merrill Lynch deal.The government put pressure on him to go ahead with it.This left bofa cash poor so thy needed more of the bail out Dollars.From that point on everyone has been beating up on Ken Lewis and BofA.Now some of the share holders are trying to replace him.Ken Lewis is the best person for the job he has and if People will leave him alone he will get bofa through this down turn.So far Ken Lewis and bofa have helped the Government save Countrywide and Merrill Lynch from bankrupcy.This is more than any other person or business has contributed.Stock analysts seem to control the market as thy wish so why not throw a few bones bofa's way instead of keeping it down.

2009 Apr 17 08:14 PM

[User 324064]

I agree with jakins completly. Seems to me that all these "analysts" have BAC shorted, and are trying to save there skins. Lets just see what BAC reports Monday, I think a lot of folks will want to keep Lewis in the job.

2009 Apr 17 09:48 PM

[Warm_Paw]

The analysts have it right.
This rally appears to be based on deceiving accounting changes made for these financial institutions.
If mark to market is to apply to capital only and not earnings, who can trust the earnings?
I realize Obama needs to energize markets to mitigate the destruction, but his entire mantra has been on transparency.
The FASB rules are sleight of hand.
And why is it only coming out now, after six weeks of bullishness?

finance.yahoo.com/news...

2009 Apr 17 11:49 PM

[Warm_Paw]

finance.yahoo.com/news...

This article on mark to market needs to be read carefully.
It has many twists and turns which the careful reader will find seem to backtrack or be twisted out of context.
When this happens, it is done for a reason.
Articles are written to inform.
This article gives insight while covering it's backside.

2009 Apr 17 11:56 PM

[Etched in Stone]

Changing the "mark to market" accounting rules to make our financial institutions look good temprorarily, only prolongs the innevitable. That is pump the bubble up, and when it bursts, as it must, then goverment will have to take over completely. Lets face it, cooking the books may give a temporary boost of confidence but it will never change the laws of maths. Payment must eventually be paid by sweat and blood.

2009 Apr 18 12:23 AM

[A calm voice]

The changes in Nov of 07 in regards to mark to market accounting were part of the problem that got us into this mess in the first place. All it took was the idiots from countywide to get the ball rolling. The pressure that "mark to market" applied to certain asset classes damaged the preception of the level of stability in an institution which in turn allowed/forced the ratings agency to authenticate that preception ( we all know they didn't want to be seen as late to the party). This put Capitol positions in question forcing hoarding and a tightening of the credit system. It is not only a matter of making the banks "Look good" it is a matter of unwinding the crap around us all. No one wants the Government running the banks, Everyone knows the scariest words in business are " I'm From The Government And I'm Here To Help"
The only way we get out of this is if PRECEPTIONS are changed. Payment has already been made just ask all the people living on the streets because of this mess, It's about time to focus on growth and rebuilding.


On Apr 18 12:23 AM Etched in Stone wrote:

> Changing the "mark to market" accounting rules to make our financial
> institutions look good temprorarily, only prolongs the innevitable.
> That is pump the bubble up, and when it bursts, as it must, then
> goverment will have to take over completely. Lets face it, cooking
> the books may give a temporary boost of confidence but it will never
> change the laws of maths. Payment must eventually be paid by sweat
> and blood.

2009 Apr 18 02:05 AM

[Dave Wrixon]

Its like plaster over cracks on an Earthquake damaged structure and calling it a refurbishment.

It is about time the US invested in a Bulldozer. Everyone wants to see recovery, but creating the perception of improvement by systemically lying to investors is probably not the best strategy.

2009 Apr 18 03:39 AM

[Dave Wrixon]

Its like plaster over cracks on an Earthquake damaged structure and calling it a refurbishment.

It is about time the US invested in a Bulldozer. Everyone wants to see recovery, but creating the perception of improvement by systemically lying to investors is probably not the best strategy.

2009 Apr 18 03:39 AM

[MCS]

The author of this article assignment was to write a article. There is nothing new here and the analysis lacks any understanding of what has happened to our financial system. Time to move on folks.

2009 Apr 18 06:49 AM

[Rohan C. Pease]

JP Morgan CEO Jamie Dimon said the changes in mark to market did not provide any difference, and were insignificant.

2009 Apr 18 01:42 PM

[icandoitdon]

well, that makes me feel a whole lot better. the rules changes the entire industry was screaming for don't really matter.

what's wrong with this picture?

i worked for a fortune 50 company once that created revenue out of thing air, knowing, they would have to reverse it later, because they need a penny to meet estimates for the quarter and "by god, we're going to meet estimates." i objected in the strongest terms possible but my objections were overruled with the argument that the additional penny "was not material." i told the dumb ass that if it wasn't material he wouldn't be doing it. i left the company months later.


On Apr 18 01:42 PM Rohan C. Pease wrote:

> JP Morgan CEO Jamie Dimon said the changes in mark to market did
> not provide any difference, and were insignificant.

2009 Apr 18 08:12 PM

[Dave Wrixon]

Well, he could hardly say it was Industry wide plan to con more investors out their hard earned capital, could he?

The deception doesn't work if everyone knows its a deception!


On Apr 18 01:42 PM Rohan C. Pease wrote:

> JP Morgan CEO Jamie Dimon said the changes in mark to market did
> not provide any difference, and were insignificant.

2009 Apr 19 03:07 AM