Bank Of America: Diamonds Are Forever
Fairlight Capital • 107 Comments
Fairlight Capital • 107 Comments
Mar. 11, 2015, 5:24 PM
- There's no boosted capital return at Bank of America (NYSE:BAC), which holds its quarterly dividend at a nickel per share and the annual buyback pace at $4B after the Fed's CCAR.
- The bank will need to submit an additional capital plan by the end of September to address the Fed's concerns over certain weaknesses in its capital planning processes.
- Shares -1.4% after hours.
- Previously: BofA must resubmit capital plan; Deutsche and Santander rejected (March 11)
Mar. 11, 2015, 4:36 PM
- Bank of America (NYSE:BAC) has deficiencies including loss and revenue modeling practices in its internal controls, says the Fed, requiring the bank to resubmit its capital plan before winning approval for boosted shareholder returns. The lender has until the end of September to address the Fed's concerns.
- Santander (NYSE:SAN) has "widespread and critical deficiencies," and Deutsche Bank (NYSE:DB) has "numerous and significant deficiencies." We're talking about the U.S. units here, and the capital returns in question are back to the parents, not to shareholders.
- CCAR results
- BAC -1.25%, DB -1.2%, SAN -1% after hours
Mar. 5, 2015, 4:57 PM
- Investors are buying back some of the Bank of America (NYSE:BAC) they sold last week amid some nervousness about the lender not passing the Fed's stress test.
- Previously: Selloff in BofA continues; down another 2% at the open (Feb. 27)
- The bank showed a 7.1% CET1 ratio under the severe adverse scenario vs. the 5% minimum required. Whether this is enough to ensure a sizable increase in capital returns is another story, and one might bet the bank did not get terribly aggressive with its dividend and buyback requests. The CCAR results are due after the close on Wednesday.
- Previously: Citigroup and Zions pass stress test, but not by a lot (March 5)
- Previously: All 31 lenders pass the stress test (March 5)
Feb. 27, 2015, 9:54 AM
- Nervousness grows ahead of the stress test and CCAR results, with UBS downgrading Bank of America (BAC -2%) to Neutral from Buy, saying disclosures in the just-released 10-K increase the risk of a qualified failure in the CCAR.
- Even should the bank pass the CCAR, says UBS, its regulatory capital ratios are below those of peers, meaning lower capital returns.
- A note published yesterday from Evercore ISI makes a similar argument.
- Previously: Bank of America falls 3% ahead of stress test results (Feb. 26)
Feb. 26, 2015, 3:51 PM
- WIth the major averages little-changed, and the rest of the money-center banks in the green, Bank of America (BAC -3%) is a serious outlier to the downside on no apparent news.
- Stress test results are slated for release after the close next Thursday, with the CCAR results (the Fed's thumbs up/thumbs down on capital return plans) due six days later.
- A year ago Bank of America's capital return plans were initially approved, but then embarrassingly rescinded after discovery of a calculation error (they were approved again after redoing the numbers). The Fed will no doubt be doubly sure all "T's" are crossed and "I's" dotted before anything is greenlighted this year.
Feb. 18, 2015, 2:49 PM
- The financial sector had begun to turn around a dismal start to the year as February brought forth a string of hawkish Fed heads suggesting a June rate hike, but the XLF is lower by 0.8% after just-released FOMC minutes suggest markets and the hawks are getting ahead of themselves. KBE -1.7%, KRE -2%
- The TBTFs: BofA (BAC -2.2%), JPMorgan (JPM -1.4%), Wells Fargo (WFC -1.6%), Ciitgroup (C -0.8%)
- The regionals: Regions Financial (RF -1.6%), KeyCorp (KEY -1.6%), PNC Financial (PNC -1.3%), BB&T (BBT -1.5%), Fifth Third (FITB -1.6%), SunTrust (STI -1.7%), First Niagara (FNFG -2.1%), M&T (MTB -1.9%), U.S. Bancorp (USB -1.3%), First Horizon (FHN -2.7%).
- Online brokerage: Schwab (SCHW -2.3%), E*Trade (ETFC -1.7%), Ameritrade (AMTD -1.1%), Interactive Brokers (IBKR -0.9%).
- Previously: FOMC minutes: June rate hike not a slam dunk yet (Feb. 18)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KCE, KRU, RWW, KBWR, RYF, KBWC, FINZ, KRS
Feb. 6, 2015, 9:50 AM
- Financials have been mercilessly pounded in 2015 as hopes for higher interest rates looked like they might be dashed yet again, but today's blowout jobs number - firmly putting a June rate hike on the table - has brought in the dip-buyers.
- The major averages are flat, but the XLF is up 1.4%. The Regional Bank ETF (KRE +2%) and the Bank ETF (KBE +2.1%) are doing even better.
- Among the yield-starved banking names: Bank of America (BAC +3.1%), JPMorgan (JPM +2.6%), Citigroup (C +2%), Regions Financial (RF +4%), KeyCorp (KEY +3%), PNC Financial (PNC +2.9%), SunTrust (STI +2.3%), Zions (ZION +3.6%), Synovus (SNV +2.3%).
- Insurers: MetLife (MET +2%), Prudential (PRU +3.2%), Lincoln National (LNC +4.6%). AIG (AIG +1.5%).
- Trust banks: BNY Mellon (BK +2.7%) State Street (STT +1.9%), Northern Trust (NTRS +2.3%).
- Online brokers (currently getting killed on money-market fee rebates): Schwab (SCHW +4.5%), TD Ameritrade (AMTD +3.5%), E*Trade (ETFC +2.1%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, KIE, IAT, IAI, SEF, IYG, IAK, FXO, FNCL, KBWB, QABA, FINU, KRU, RWW, KBWR, RYF, KBWP, KBWI, PSCF, FINZ, KRS
Jan. 29, 2015, 1:16 PM
- Bank of America (BAC +1.2%) continues to pare back its branch network, selling 18 locations in North Florida and South Georgia to Moultrie-based Ameris Bancorp (ABCB +8.1%).
- Ameris, meanwhile, has a big gain following this morning's earnings miss, and the report also included the BofA acquisitions along with an agreement for $50M to buy Merchants & Southern Banks of Florida, with another 12 branches, assets of $473M, loans of $214M, and deposits of $336M.
- Previously: Ameris Bancorp misses by $0.05, misses on revenue (Jan. 29)
Jan. 22, 2015, 12:35 PM
- Mercilessly sold since the year turned, banks are putting in a rare session of outperformance, helped along by some earnings beats from regional lenders and the return of animal spirits in M&A with RBC's purchase of City National (CYN +18.6%) for $5.4B.
- The XLF +1.4% vs. the S&P's 0.6% gain today, and the regional bank ETF (NYSEARCA:KRE) is higher by 3.1%.
- Among today's reporters putting in big gains are KeyCorp (KEY +5.5%), BB&T (BBT +2.4%), and Huntington Bancshares (HBAN +2.6%), though Flagstar Bancorp (FBC -4.8%) missed estimates.
- Others: Regions Financial (RF +3.9%), PNC Financial (PNC +1.6%), Synovus (SNV +3.2%), M&T Bank (MTB +3%), Hudson City (HCBK +3.1%), First Horizon (FHN +2.7%), and First Republic (FRC +4.9%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KRU, RWW, KBWR, RYF, PSCF, FINZ, KRS
- Among the TBTFs, Citigroup (C +2.7%) and Bank of America (BAC +2.5%) are leading the way.
Jan. 15, 2015, 9:51 AM
- With Bank of America (BAC -3.1%) getting battered again (now off 13.8% YTD) after this morning's mixed earnings report, let's get a bull's take:
- EPS was about inline despite the revenue miss, says Evercore ISI's Glen Schorr, and the bank still has a good story to tell on expenses (off 8%, ex-litigation), capital, leverage, and credit. Consumer & business banking, wealth management, and global banking are all performing well and are why investors will be patient on BAC as a U.S. economy/higher interest rate play.
- "Our gut is investors will be bummed about the revenue decline but stick with the stock as story hasn’t changed and valuation is a lot more palatable post the recent drop.”
- Previously: BofA earnings call: There's good volatility and bad volatility (Jan. 15)
- Previously: BofA off 2% after Q4 results (Jan. 15)
Jan. 15, 2015, 9:19 AM
- "FICC trading tends to do best in a rising rate environment when activity levels rise as rates rise," says Bank of America (NYSE:BAC) CFO Bruce Thompson on the earnings call. In other words, volatility for its own sake isn't necessarily good for FICC as new issuance slips when credit markets back off. "That's what I would characterize as bad volatility."
- Webcast and presenation
- Earlier, the bank reported FICC revenue of $1.5B in Q4, down from $1.9B from last year's already weak level.
- In the meantime, Bank of America remains a cost-cutting play, and CEO Brian Moynihan's "New BAC" had the bank cutting another 300 branches in 2014 to 4,855, and another 18.4K employees to 223.7K. Helping is mobile, with the number of mobile customers up 15% Y/Y, and 12% of deposits done with mobile vs. 9% a year ago.
- Shares -2.9% premarket and now off nearly 15% YTD.
- Previously: BofA off 2% after Q4 results (Jan. 15)
- Previously: Bank of America EPS of $0.25 (Jan. 15)
Dec. 11, 2014, 9:20 AM
- SolarCity (NASDAQ:SCTY) has partnered with BofA Merrill Lynch (NYSE:BAC) to form a new investment program for financing an estimated $400M in solar power projects in 2014 and 2015.
- The new residential program follows BofA Merrill's prior commitment to finance more than $200M in commercial solar power projects with SolarCity, and is part of BofA's current 10-year, $50B environmental business goal to advance lower-carbon economic solutions.
- SCTY +0.5%, BAC +0.6% premarket
Dec. 9, 2014, 8:47 AM
- Already under pressure amid a sizable global selloff, Bank of America (NYSE:BAC) is now lower by 2.7% premarket after CEO Brian Moynihan, presenting at the Goldman Sachs financial services conference - warns Q4 trading revenue will fall both from Q3 and versus one year ago.
- There's been a lot of talk about higher interest rates, but they remain low, and Moynihan reminds of that negative impact to NII.
- Presentation slides
Dec. 5, 2014, 10:06 AM
- Among those counting on higher interest rates to boost profits are banks, insurers, and online brokers, and all are outliers to the upside in today's session after a strong November jobs report has rate hike expectations on the rise. The XLF is up 1%.
- TBTFs: Bank of America (BAC +2.1%), Citigroup (C +1.8%), JPMorgan (JPM +2.2%), Wells Fargo (WFC +1.2%)
- Regionals (KRE +1.9%): Regions Financial (RF +2.6%), KeyCorp (KEY +2.3%), Huntington (HBAN +1.5%), BB&T (BBT +1.6%), Zions (ZION +4%)
- Custodials: BNY Mellon (BNY), State Street (STT +1.6%), Northern Trust (NTRS +1.8%)
- Life insurers: MetLife (MET +2.1%), Prudential (PRU +2.5%), Lincoln National (LNC +2.3%)
- Online brokers: Schwab (SCHW +3.8%), E*Trade (ETFC +3%), Ameritrade (AMTD +2.7%)
- Previously: Short end of yield curve on the move after jobs number (Dec. 5, 2014)
- Previously: Bonds and dollar higher, gold slumps after strong jobs report (Dec. 5, 2014)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, KIE, IAT, IAI, SEF, IYG, IAK, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, KBWP, KBWI, PSCF, FINZ, KRS
Oct. 16, 2014, 7:08 AM
- "Given drastically reduced litigation expenses going forward, we think the core earnings power of the company should begin to accrete to existing shareholders, allowing book value growth at a company that has struggled to grow TBV since the crisis," says FBR's Paul Miller, upgrading Bank of America (NYSE:BAC) to Outperform, with price target lifted to $20 from $18.
- On target cost savings, he says, has proven management's ability to execute its strategy to improve shareholder returns, and he sees the possibility for 2015 EPS to exceed his $1.60 estimate.
- Previous earnings coverage
- Shares -1.8% premarket as broad markets are set for another tough day.
Oct. 15, 2014, 7:22 AM
- Net income of $168M includes a $5.3B or $0.43 per share pre-tax legal charge for global mortgage settlement. Earnings one year ago were $2.5B, or $0.20 per share.
- Net interest income of $10.4B flat from a year ago.
- Noninterest income gained 2% Y/Y, when excluding DVA adjustments. Net charge-offs of $1B fell 38%. Net charge-off ratio of 0.46 compares to 0.73 one year ago.
- Noninterest expense of $19.7B vs. $16.4B a year ago. Excluding litigation expense, noninterest expense of $14.2B fell 7% Y/Y, thanks to sizable personnel cutbacks (mostly in legacy mortgage).
- Consumer and Business Banking net income of $1.856B vs. $1.787B a year ago. Average deposit balances up 4%. Mobile banking customers up 15% to 16.1M - 11% of deposits were made via mobile vs. 8% a year ago.
- Consumer Real Estate Services net loss of $5.184B vs. loss of $990M a year ago, thanks to the mortgage settlement. $11.7B of mortgages originated and $3.2B of home-equity loans vs. $22.6B and $1.8B a year ago.
- Global Wealth and Investment Management net income of $813M vs. $720M a year ago.
- Global Banking net income of $1.414B vs. $1.137B a year ago.
- Global Markets net income of $769M vs. a loss of $875M a year ago. FICC revenue of $2.2B gains 11% Y/Y, driven by currencies as volatility returned late in the quarter.
- Tangible book value per share of $14.13 vs. $13.62 one year ago.
- Conference call at 8:30 ET
- Previously: Bank of America beats by $0.08, beats on revenue
- BAC +1.2% premarket
Bank of America Corp. operates as a bank holding company, which provides banking and nonbanking financial services and products through its banking and various nonbanking subsidiaries throughout the U. S. and in certain international markets. It operates through five segments: Consumer and... More
Industry: Regional - Mid-Atlantic Banks
Country: United States
Other News & PR