Bank Of America Earnings

January 20, 2012 by staff 

Bank Of America EarningsBank Of America Earnings, Bank of America’s fourth-quarter earnings weren’t very good. But the earnings were beside the point, as some investors took solace in Bank of America’s success in building its rainy day capital.

BofA shares are climbing 4.4% in recent trading — a bit of a retreat from a stronger stock climb earlier.

Here is what Wall Street is saying about Bank of America’s earnings. You can see that BofA’s messy results, which included several billions dollars of one-time gains or losses, have confused even the experts.

Citigroup: “Once again there is a ton of ‘specials’ in the numbers, but overall it seems to roughly net to our estimates, and was not a driver of the miss. Main issue for the stock has been concerns about capital, and stock is going to react positively to higher Basel 3 pro forma guidance. With increased confidence on capital, market attention will shift to core earnings power…and 4Q numbers were weak again on that front, but we are still sifting thru the detail.”

Wells Fargo: “We peg ‘core’ EPS at $0.07 compared to our $0.16 estimate. …. Despite weak core results, BAC likely to outperform today given improving capital metrics, positive NIM trends, and low P/TBV valuation, pending mortgage commentary on call.”

CLSA: “Bank of America reported GAAP EPS of $0.15 and estimated operating EPS of $0.07 excluding eight one-time items in the press release (below consensus of $0.22) and as low as negative $0.09 depending on the treatment of a low tax rate ($0.02), MSR fair-value markup ($0.07) and reserve releases ($0.07). The stock is up 6% in early trading today, aided by capital ratios that increased by 40-120bps and better-than-expected core trading (almost doubled QoQ though down materially YoY). Yet, operating results were weak with estimated core revenue down 6% and core expenses up 11%; for the year, we estimate core expenses up $4bn and revenue down $14bn; new guidance that Bank of America will exceed $1bn of savings in 2012 pales in comparison to this negative revenue gap.”

Stifel Nicolaus: “The company’s Basel I Tier 1common capital ratio came in at 9.86%, up from 8.65% in 3Q11 due toseveral actions and asset sales that took place in the quarter…. investors will focus on this number, as they should given the capital issues that have been an overhang for the shares….Unfortunately, the higher capital ratios may be somewhat offset by the fact the company is demonstrating very little earnings power. The company earned $2.0 billion in net income in 4Q11. If we back out the slew of one-time gains and losses, the company’s net income would have been break even.”

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