Author Topic: What to Expect From Bank of America $BAC Earnings This Week  (Read 917 times)

ThePitBoss

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Bank of America (BAC) along with the other money center major banks ]JPMorgan Chase (JPM) and Wells Fargo (WFC) kick off 2017 earnings season on Friday. Since Donald Trump won on Election Day there has been a huge run higher on BAC and the other bank stocks. .

Bank of America (BAC) Consensus Forecast

Thomson Reuters consensus estimates are calling for earnings per share (EPS) of $0.38 and $20.96 billion revenue. The same period of last year was $0.27 in EPS on revenue of $19.56 billion. BAC is valued at 0.95 times book value and 14 times forward earnings expectations.
 

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

BAC shares closed at $22.68 on Friday and the 52-week range is $10.99 to $23.39.

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ThePitBoss

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FDIC Sues Bank Of America For Over $542 Million In Deposit Insurance

The Federal Deposit Insurance Corp FDIC sued in federal court in Washington over payments in the last three quarters of 2013 and all of 2014. The total dating to 2011 exceeds $1 billion, according to the FDIC, which said it may revise its complaint.

In a statement BAC said it complied with FDIC rules.

Quote
"The amount in question, derived from a technical disagreement about a calculation from several years ago regarding a rule that has had changing provisions over time, comprises a fraction of what we annually pay to the FDIC,"

In its complaint the FDIC said the total Deposit Insurance Fund was just under $81 billion through Sept. 30, instead of just under $82 billion, because of the Bank of America underpayment. The bank's domestic deposits were $1.2 trillion through Sept. 30, according to the complaint.

The agency changed its rules in 2011 to require banks to report counterparty exposure at the consolidated company level. The bank failed to follow this rule in calculating its exposure to its largest counterparty, which wasn't identified in the complaint, according to the FDIC.

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For almost two years, the bank understated the amount of insurance protection it owed in connection with its 20 biggest counterparties because it didn't properly add up all of the exposure its parent-level company faces, the FDIC claimed.

Failing to consolidate the exposure to its single largest counterparty resulted in miscalculating what it owed the fund by $542 million, according to the suit. The FDIC said the lender also excluded six of its top-20 counterparties in the second quarter of 2013 and again in the fourth quarter of 2014.

On Dec. 1, Bank of America gave the FDIC the correct data on its counterparty exposures. That led the agency to conclude that its underpayment for the seven quarters identified in the lawsuit was $542 million, according to the complaint.

"The FDIC made significant changes in the relevant regulation in 2014, and now is claiming that what it added in 2014 is actually what the rule said all along," the bank's lawyer, Eugene Scalia, said in a statement. "Our position is that the new words gave the regulation new meaning."

THE FDIC said of the nine largest banks, only Bank of America failed to follow the rule in the complaint.

Source: BBG
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Bank of America missed on revenue but topped on earnings

BAC posted a 46.75% increase in 4Q16 earnings helped by higher revenue, expense management and creation of operating leverage. Net income for the quarter rose 46.75% to $4.33Bil or $0.40 per share from $2.95Bil or $0.27 per share a year ago. Total revenue grew 2.51% to $19.99Bil from $19.5Bil.

EPS of 40 cents on revenue of $19.99 billion.
Trading revenue climbed 11% to $2.91 billion.
Expenses fell 6.1% to $13.16 billion.

Estimates were:31% EPS jump to 38 cents on a 7% revenue increase to $20.851 billion.



Charts: https://alphastreet.com/app#/company/BAC

4Q16 return on average assets was 0.85%, return on average common equity was 7% and return on average tangible common equity was 9.9%. The company’s overall credit quality remained strong, with improvements in both consumer and commercial portfolios.

Total loans and leases for 4Q16-end increased to $906.7Bil from $897Bil in the year ago quarter. Total assets rose marginally to $2.18 trillion from $2.14 trillion and total deposits grew to $1.26 trillion from $1.19 trillion. Also, $BAC repurchased $5.1Bil in common stock and paid $2.6Bil in common stock dividends in 2016.




Buyback: Planned first half repurchase raised to $4.3 billion from $2.5 billion.

Conference Call


In 2016 BAC's biggest earnings business, Consumer Banking, continued its strong performance and produced more than $7Bil in after tax earnings, growing 8%. The Global Wealth and Investment Management business improved earnings 8%, earning $2.8Bil, while Global Banking business generated $5.7Bil of earnings. Global Markets grew to $3.8Bil.

BAC's 4Q16 total net charge-offs of $880MM was down $264MM YoverY, while provision expense of $774MM fell $36MM from the year ago quarter.

$BAC said its active mobile users were up 16% YoverY in 2016 and the company grew active mobile users more than it did in 2015. The company added that mobile deposit transactions are now 19% of all deposit transactions.

Reaction: Bank of America Corp NYSE: BAC Jan 13, 11:09 AM EST 23.11 +0.19 +0.83%


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