Apr. 16, 2014, 7:23 AM
- Adjusted EPS of $0.35 compares to estimates of $0.27, with the $6B settlement weighing on the headline EPS loss of $0.05.
- Net interest income of $10.3B fell 5% Y/Y, with NIM of 2.36% up six basis points. Noninterest income of $12.5B is flat from last year, with lower mortgage banking income and trading profits offset by increases in investment and brokerage income, equity investment income and gains on the sale of debt securities.
- Provision for credit losses of $1B is down 41%. Net charge-offs of $1.4B down 45%, with net charge-off ratio of 0.62% comparing to 1.14% a year ago. Reserve release of $379M vs. $804M a year ago.
- Noninterest expense of $22.2B is up from $19.5B a year ago, with higher mortgage litigation costs ($6B vs. $2.2B) partly offset by cuts in Legacy Assets and Servicing (LAS). Excluding litigation, expenses fell $1.2B Y/Y.
- Other highlights: Mobile banking customers up 19% to 15M - more than 10% of deposits now done through mobile; first mortgage originations fell 65% Y/Y, with production revenue of $273M comparing to $815M a year ago; Wealth Management net income of $729M vs. $721M a year ago.
- Basel III Common equity ratio of 11.8% up from 11.7% at 2013's end. Tangible book value per share of $13.81 up $0.02 from year's end and from $13.36 one year ago.
- CC live on Seeking Alpha at 8:30
- Press release, Q1 results
- BAC flat premarket in active action
Mar. 24, 2014, 2:54 PM
- Noting Bank of America's (BAC -0.9%) capital ratio in the Fed stress test was the lowest of any bank which passed, Atlantic Equities pulls its Overweight rating on the stock, and cuts the price target to $18.50 from $20. The stress test, says analyst Richard Staite, shows BofA with a $13B buffer over the minimum requirement, meaning maybe just $5B in buybacks and $2.5B dividends this year, "although we are somewhat nervous that it or another bank could be failed on a qualitative basis."
- Still, Staite expects a boost in the quarterly payout to $0.06 per share from a penny.
- Staite and team upgrade U.S. Bancorp (USB +0.7%) and Wells Fargo (WFC -0.4%) to Neutral from Underweight, citing the large margins by which they passed the stress test.
- In other financial sector moves, Sterne Agee boosts First Interstate BancSystem (FIBK +6%) to a Buy, citing the benefits of its impending merger with Mountain West Financial. The team also lifts EverBank Financial (EVER +2.4%) to a Buy from Neutral.
Mar. 20, 2014, 10:54 AM
- Much of the financial sector is lit up bright green, continuing to outperform following yesterday's suggestion by the FOMC and Janet Yellen that rate hikes could come sooner than expected. XLF +1.1%, KBE +1.6%, KRE +1.6%.
- At new 52-week or even multi-year highs are JPMorgan (JPM +2.3%), Wells Fargo (WFC +1.7%), Morgan Stanley (MS +1.4%), and Bank of America (BAC +1.6%).
- Regional lenders: U.S. Bancorp (USB +1%), Huntington (HBAN +1.5%), PNC (PNC +1.3%), BB&T (BBT +1.5%), Fifth Third (FITB +1.8%), First Niagara (FNFG +2.1%).
- Leading among the life insurers are Lincoln National (LNC +1.9%), Protective Life (PL +1.6%), Manulife (MFC +1.2%), and Sun Life (SLF +1.1%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, KIE, IAT, SEF, IYG, IAK, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KBWI, KBWP, KRS, FINZ
Mar. 19, 2014, 3:13 PM
- A check of sectors following the FOMC statement and updated projections suggesting a quickened pace of rate hikes in the future finds the banks and life insurers notably moving higher. Both groups have struggled earning a spread amid ZIRP and are positively levered to higher rates.
- Lenders: Bank of America (BAC +1%), Citigroup (C +1%), JPMorgan (JPM), Regions (RF +1.7%), KeyCorp (KEY +0.9%), SunTrust (STI +0.7%).
- Life insurers: MetLife (MET +1%), Prudential (PRU +0.7%), Lincoln National (LNC +1%).
- Related ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, KIE, SEF, IYG, IAK, FXO, PFI, KBWB, FNCL, FINU, RWW, RYF, PSCF, KBWP, KBWI, FINZ, KBE, KRE
- Not necessarily positively levered to higher rates are the mortgage REITs (REM -1.6%): Annaly (NLY -1.8%), American Capital (AGNC -1.7%), (MTGE -1.9%), Armour (ARR -1.3%), Two Harbors (TWO -2%) CYS Investments (CYS -3.3%), Capstead (CMO -1.3%), MFA (MFA -1.8%).
- Related ETFs: MORT, MORL
Mar. 5, 2014, 3:42 PM
- Buying the rumor? On a flattish day for the major averages, the Too Big To Fail banks are ignoring a continued slowdown in markets revenue this quarter, and instead partying ahead of what may be the imminent release of the Fed's stress test results (perhaps Friday). About one week later will be CCAR results at which the Fed gives the thumbs up or thumbs down on the banks' capital return plans.
- Word is the tests are tougher this year, but bank capital levels are also improved.
- Leading today is Bank of America (BAC +3%) - now within about one percent of a 4-year high. Others: Morgan Stanley (MS +2.8%), Goldman Sachs (GS +1.8%), Ciitgroup (C +1%), JPMorgan (JPM +1.5%), and Wells Fargo (WFC +0.6%).
- Also subject to the stress tests are a number of regional lenders, not to mention credit card players - they're mixed in today's action.
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAI, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KCE, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ, KBWC
Jan. 31, 2014, 12:14 PM
Jan. 15, 2014, 9:03 AM
- "We still have not approached the true earnings potential of Bank of America (BAC)," says CEO Brian Moynihan, leading off the earnings call. The bank reported EPS of $0.29, beating estimates for $0.26, but adjusting for DVA, litigation, and the artificially low tax rate brings core EPS up to $0.42, notes Hedgeye's Josh Steiner.
- CC webcast and presentation slides
- Declining to answer a question about the Fed stress tests and BofA's capital return plans (will the nominal $0.01 dividend be hiked this year), CFO Bruce Thompson notes the bank's Tier 1 common capital ratio is around 9%, higher than the proposed 8.5% minimum which doesn't take effect until 2019.
- The bank cut 5,826 jobs in Q4 - with the cuts coming in branches and mortgage servicing/origination.
- Goldman Sachs (GS) and Morgan Stanley (MS) investors take note: BofA's FICC revenue of $2.1B jumped 16% Y/Y. JPMorgan yesterday reported a 1% Y/Y gain vs. expectations for an 11% decline. The Street expects Goldman to report a 23% decline (after Q3's 44% tumble) and Morgan Stanley an 8% increase. Is a positive surprise looming?
- BAC +2.9% premarket to $17.25, the highest price in nearly 4 years.
Jan. 15, 2014, 7:21 AM
- Net interest income of $11B, up 4% Y/Y, with net interest margin growing to 2.56% from 2.35% a year ago.
- Noninterest income of $10.7B, up 28% Y/Y, thanks to lower provisions for reps and warranties, and improvement in investment banking and brokerage income (global wealth management income of $777M, up 35%). Credit loss provisions of $336M are $1.9B lower than a year ago. Net charge offs of $1.6B in the Q compare to $3.1B a year ago.
- Expense cutting remains on track: Noninterest expense of $17.3B is down 6% Y/Y, thanks to job cuts in Legacy Assets and Servicing (LAS). Full-time equivalent employees fall 9% in 2013 to 242K. This was offset by litigation expenses rising to $2.3B in Q4 from $1.1B in Q3 and $916M a year ago.
- Like with Wells Fargo and JPMorgan, mortgage business continues to disappear, with first-mortgage originations falling 46% Y/Y and core production revenue falling to $403M from $986M. The difference - at least as far as with Wells Fargo - is the mortgage business makes up for a far smaller chunk of BAC's business.
- CC at 8:30 ET
- Press release, Q4 results
- BAC +2% premarket
Jan. 3, 2014, 10:16 AM
- Bank of America (BAC +2.2%) tacks more onto yesterday 3.4% move, touching its highest level in nearly three years.
- Yesterday's catalyst looked to be an upgrade from Citi, but that report added little to the widely-known bull case on BofA. Perhaps a favorable ruling on the bank's Article 77 hearing - in which a judge can uphold or throw out BofA's $8.5B mortgage settlement with investors - is at hand.
- The Bank of America Tarp Warrants (A-series) - struck at $13.30 and expiring in January 2019 - are higher by 2.9% to $6.90.
Jan. 2, 2014, 10:47 AM
- Trading at 1.2x tangible book value, the stocks of Goldman Sachs (GS +0.1%) and Morgan Stanley (MS -0.7%) look to have mostly priced in management's ability to drive returns above cost of capital, says analyst Keith Horowitz, who nevertheless raises Goldman's PT to $195 and Morgan's to $35.
- Bank of America's (BAC +2.2%) new price target of $19 "reflects a cost of equity more in line with history and no longer impacted by legacy issues."
- Lazard (LAZ -0.5%) - which had a big 2013 - may do little more than tread water this year, says Horowitz, as weak M&A activity weighs on earnings.
- Previous coverage of CIti's BofA upgrade
Jan. 2, 2014, 7:01 AM
- Bank of America (BAC) should be able to boost earnings with cost cuts and investors might look to the lender's stock as a play on an improving economy, says Citigroup, upgrading to Buy with price target raised to $19 from $16.
- Already a Buy, JPMorgan (JPM) has its price target upped to $72 from $66.
- BAC +1% premarket
Dec. 5, 2013, 12:01 PM
- The Too Big To Fail banks lead to the downside amid a report the set-to-be-voted on Volcker rule will not contain language allowing portfolio hedging - trades supposedly designed to protect against losses in a broad portfolio of assets.
- Banks can thank JPMorgan's (JPM -1.7%) London Whale fiasco for this as the Whale's trades were ostensibly set up for this portfolio hedging, but ended up costing the bank $6B.
- The move is a big blow to the banks which had sent their big lobbying guns in to try and prevent the disallowing of this practice. Banks often hedge to offset risks from trading with clients, but often there is no great hedge, and this is where portfolio hedging comes in ... or used to.
- "Volcker has morphed a bit, thanks to the Whale," says UBS' Brennan Hawken. "Now a big component of it has become about hedging. What can you hedge, and what can't you? It's really unclear." The CFTC and SEC are each set to vote on the rule on Dec. 10.
- Citigroup (C -1.9%), Bank of America (BAC -1.2%), Goldman Sachs (GS -1%), Morgan Stanley (MS -2.2%).
Nov. 21, 2013, 4:05 PM
- It's a milestone of sorts for Bank of America (BAC +2.9%) and its CEO as the stock for the third session in a row trades above the level it was at the day before Brian Moynihan took over on January 1, 2010.
- Unlike some other bank bosses (Jamie DImon) Moynihan pursued a strategy of getting lawsuits out of the way and not speaking out against waves of new bank regulations (word is, it's Moynihan, not Dimon, who gets to sit next to the President now at occasional banker/WH get-togethers).
- Following Moynihan taking over in 2011, the stock rose to near $20 per share before closing the year closer to $5. Today's close: $15.56.
- The TARP warrants (A-series) closed the session up 3.8% at $6.54.
Nov. 8, 2013, 10:41 AM
- Up sharply as interest rates fly higher (the 10-year is up 15 basis points to 2.75%) are the life insurers - all of whom have had their investment returns more than a little constrained by puny yields. IAK +2.4%
- MetLife (MET +5.9%), Prudential (PRU +4.5%), Lincoln National (LNC +6.8%), Hartford (HIG +3.1%).
- Also set to benefit from a steeper yield curve (if we're to believe their models) are the banks, and they're leading the S&P 500 higher. The TBTFs: Bank of America (BAC +3.3%), JPMorgan (JPM +3.1%), CItigroup (C +3.3%), Wells Fargo (WFC +2.6%). The regionals (KRE +3.4%): Huntington (HBAN +2.6%), Regions (RF +4.2%), PNC (PNC +2.8%), FIfth Third (FITB +3.4%), First Niagara (FNFG +2%), Keycorp (KEY +3.5%), Zions (ZION +4.1%), Comerica (CMA +3.1%).
- The XLF +1.9%.
- FInancial sector ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, KIE, SEF, IAT, IAI, IYG, IAK, FXO, PFI, KBWB, RKH, QABA, RWW, FINU, RYF, KRU, KBWR, PSCF, KBWP, KBWI, KRS, FINZ, FNCL
Sep. 23, 2013, 7:36 AM
- Citigroup (C) slips 1% in the premarket after its weekend "pre-announcement" of a big fall in FICC revenue in Q3. The bank had been hoping to get bailed out by a big September, but the Fed's non-taper last week squelched the chance of major portfolio moves by clients.
- Anybody paying attention surely noticed last week's evaporation of profit at Jefferies (now owned by Leucadia) as fixed-income trading revenue essentially disappeared.
- Deutshce Bank (DB) is expected to soon be out with a warning similar to Citibank's. Barclays (BCS) and Credit Suisse (CS) have already waved their own red flags over this issue.
- Not yet heard from are Goldman (GS), Morgan Stanley (MS), JPMorgan (JPM), and BofA (BAC), but Goldman is also off nearly 1% premarket.
Sep. 12, 2013, 5:37 PM
BAC vs. ETF Alternatives
Bank of America Corporation is a bank holding and a financial holding company. Through its subsidiaries, it provides banking and non-banking financial services and products throughout the United States and in selected international markets.
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