EmailStory Stocks®
Archive
Last Update: 17-Jan-13 07:48 ET
Bank of America shares down 1% following miss on revenues
Bank of America (BAC $11.69 -0.09) reported fourth quarter earnings of $0.03 per share, $0.01 better than the Capital IQ consensus of $0.02. The company reported rev -25% YoY to $18.9 bln, while rev -26% YoY to $19.6 billion ex-credit and debit valuation adjustments; the Capital IQ consensus of $20.72 bln appears to include CVA/DVA. One Time Items Representations and Warranties, Compensatory Fees Settlements with Fannie Mae, $2.7 Billion or $0.16 EPS Provision for Independent Foreclosure Review Acceleration Agreement, $1.1 Billion or $0.06 EPS Total Litigation Expense, $0.9 Billion or $0.05 EPS Negative Valuation Adjustments for Improved Credit Spreads, $0.7 Billion or $0.04 EPS Provision for Obligations Related to Mortgage Insurance Rescissions, $0.5 Billion or $0.03 EPS Gain on Sale of Japan Brokerage Joint Venture, $0.4 Billion or $0.02 EPS Positive MSR Valuation Adjustment Related to Servicing Sales, $0.3 Billion or $0.02 EPS Net Tax Benefit Primarily From Recognition of Foreign Tax Credits of Certain Non-U.S. Subsidiaries, $1.3 Billion or $0.12 EPS Capital Basel 1 Tier 1 Common Capital Ratio of 11.06 Percent at December 31, 2012. Estimated Basel 3 Tier 1 Common Capital Ratio of 9.25 Percent at December 31, 2012.
Tangible book value per share increased to $13.36 at December 31, 2012, compared to $12.95 at December 31, 2011D. Book value per share was $20.24 at December 31, 2012, compared to $20.09 at December 31, 2011. Expenses Fourth-quarter 2012 noninterest expense declined 6 percent from the year-ago quarter, reflecting a decrease in personnel expense as the company continued to streamline processes and achieve cost savings. Net Interest Income Q4 Net Interest Income (FTE basis) increased to $10.6 bln from $10.2 bln in prior year. Net interest margin was 2.35 percent in the fourth quarter of 2012, compared to 2.32 percent in the third quarter of 2012 and 2.45 percent in the fourth quarter of 2011. Deposits Total Average Deposit Balances up $28 Billion, or 11 Percent. Average deposit balances increased $26.6 billion from the year-ago quarter, driven by growth in liquid products in a low-rate environment. The average rate paid on deposits declined 5 basis points to 16 basis points in the fourth quarter of 2012 from the year-ago quarter due to pricing discipline and a shift in the mix of deposits. Mortgage Segment First-lien Mortgage production increased 6% q/q. excluding $3.0 billion of provisions for representations and warranties and obligations related to mortgage insurance rescissions related to settlement agreements with the Federal National Mortgage Association (Fannie Mae) revenue net of interest expense, on an FTE basis, was $22.6 billion. Consumer Real Estate Services reported a net loss of $3.7 billion for the fourth quarter of 2012, compared to a net loss of $1.4 billion for the same period in 2011 primarily due to mortgage banking losses driven by the Fannie Mae settlements and higher expenses, partially offset by lower provision for credit losses. Revenue decreased $2.8 billion from the fourth quarter of 2011 to $468 million in the fourth quarter of 2012, due largely to higher representations and warranties provision and lower servicing income, driven by less favorable MSR results, net of hedges. This was partially offset by higher core production income.
The MSR results, net of hedges, included the previously described MSR valuation adjustment related to MSR sales. Excluding the impact of correspondent channel originations, CRES direct originations increased 42 percent and core production revenue increased $472 million in the fourth quarter of 2012 from the year-ago quarter primarily due to higher margins on increased volume of direct originations. Representations and warranties provision was $3.0 billion in the fourth quarter of 2012, compared to $264 million in the fourth quarter of 2011, an increase of $2.7 billion. The fourth-quarter provision included $2.5 billion for representations and warranties and provision of $0.5 billion for obligations related to mortgage insurance rescissions related to the Fannie Mae settlements. Global Banking Segment Global Banking net income of $1.4 billion was up $95 million from the year-ago quarter, as higher revenue and a decline in noninterest expense were partially offset by an increase in provision expense. Revenue of $4.3 billion was up 8 percent from the year-ago quarter, primarily due to higher investment banking fees and net interest income. Firmwide investment banking fees of $1.6 billion, excluding self-led deals, increased $587 million, or 58 percent from the year-ago quarter, mainly due to a 84 percent increase in debt underwriting fees. Global Banking investment banking fees, excluding self-led deals, were $842 million in the fourth quarter of 2012 compared to $629 million in the year-ago quarter. Global Corporate Banking revenue of $1.4 billion and Global Commercial Banking revenue of $2.0 billion remained relatively unchanged compared to the year-ago quarter. Business Lending revenue of $1.8 billion and Treasury Services revenue of $1.6 billion remained in line with the year-ago quarter.
Tangible book value per share increased to $13.36 at December 31, 2012, compared to $12.95 at December 31, 2011D. Book value per share was $20.24 at December 31, 2012, compared to $20.09 at December 31, 2011. Expenses Fourth-quarter 2012 noninterest expense declined 6 percent from the year-ago quarter, reflecting a decrease in personnel expense as the company continued to streamline processes and achieve cost savings. Net Interest Income Q4 Net Interest Income (FTE basis) increased to $10.6 bln from $10.2 bln in prior year. Net interest margin was 2.35 percent in the fourth quarter of 2012, compared to 2.32 percent in the third quarter of 2012 and 2.45 percent in the fourth quarter of 2011. Deposits Total Average Deposit Balances up $28 Billion, or 11 Percent. Average deposit balances increased $26.6 billion from the year-ago quarter, driven by growth in liquid products in a low-rate environment. The average rate paid on deposits declined 5 basis points to 16 basis points in the fourth quarter of 2012 from the year-ago quarter due to pricing discipline and a shift in the mix of deposits. Mortgage Segment First-lien Mortgage production increased 6% q/q. excluding $3.0 billion of provisions for representations and warranties and obligations related to mortgage insurance rescissions related to settlement agreements with the Federal National Mortgage Association (Fannie Mae) revenue net of interest expense, on an FTE basis, was $22.6 billion. Consumer Real Estate Services reported a net loss of $3.7 billion for the fourth quarter of 2012, compared to a net loss of $1.4 billion for the same period in 2011 primarily due to mortgage banking losses driven by the Fannie Mae settlements and higher expenses, partially offset by lower provision for credit losses. Revenue decreased $2.8 billion from the fourth quarter of 2011 to $468 million in the fourth quarter of 2012, due largely to higher representations and warranties provision and lower servicing income, driven by less favorable MSR results, net of hedges. This was partially offset by higher core production income.
The MSR results, net of hedges, included the previously described MSR valuation adjustment related to MSR sales. Excluding the impact of correspondent channel originations, CRES direct originations increased 42 percent and core production revenue increased $472 million in the fourth quarter of 2012 from the year-ago quarter primarily due to higher margins on increased volume of direct originations. Representations and warranties provision was $3.0 billion in the fourth quarter of 2012, compared to $264 million in the fourth quarter of 2011, an increase of $2.7 billion. The fourth-quarter provision included $2.5 billion for representations and warranties and provision of $0.5 billion for obligations related to mortgage insurance rescissions related to the Fannie Mae settlements. Global Banking Segment Global Banking net income of $1.4 billion was up $95 million from the year-ago quarter, as higher revenue and a decline in noninterest expense were partially offset by an increase in provision expense. Revenue of $4.3 billion was up 8 percent from the year-ago quarter, primarily due to higher investment banking fees and net interest income. Firmwide investment banking fees of $1.6 billion, excluding self-led deals, increased $587 million, or 58 percent from the year-ago quarter, mainly due to a 84 percent increase in debt underwriting fees. Global Banking investment banking fees, excluding self-led deals, were $842 million in the fourth quarter of 2012 compared to $629 million in the year-ago quarter. Global Corporate Banking revenue of $1.4 billion and Global Commercial Banking revenue of $2.0 billion remained relatively unchanged compared to the year-ago quarter. Business Lending revenue of $1.8 billion and Treasury Services revenue of $1.6 billion remained in line with the year-ago quarter.
