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Last Update: 17-Apr-13 07:52 ET
Bank of America shares fall 3% following miss on earnings
Bank of America (BAC $11.90 -0.38) reproted first quarter earnings of $0.20 per share, $0.02 worse than the Capital IQ consensus of $0.22, while revenues rose 5.4% year/year to $23.71 billion ($23.85 bln Ex- DVA) versus the $23.51 billion consensus.
Bank of America Corporation today reported net income of $2.6 billion, or $0.20 per diluted share, for the first quarter of 2013, compared to $653 million, or $0.03 per diluted share, in the first quarter of 2012. Revenue, net of interest expense, on a fully taxable-equivalent (FTE) basis rose 5 percent to $23.7 billion from $22.5 billion a year ago. <BR><BR>Capital Plan Actions Expected to Begin in Q2-13; Approved Actions Include $5.5 Billion of Preferred Stock Redemptions and $5 Billion of Common Stock Repurchases. Revenue, net of interest expense, on an FTE basis rose $1.2 billion, or 5 percent, from the first quarter of 2012, to $23.7 billion, led by higher noninterest income. Net interest income, on an FTE basis, totaled $10.9 billion in the first quarter of 2013, compared to $10.6 billion in the fourth quarter of 2012 and $11.1 billion in the first quarter of 2012B. The decline in net interest income from the year-ago quarter was due to the impact of lower consumer loan balances as well as lower asset yields driven by the low rate environment, partially offset by reductions in long-term debt balances and lower rates paid on deposits. Net interest margin was 2.43 percent in the first quarter of 2013, compared to 2.35 percent in the fourth quarter of 2012 and 2.51 percent in the first quarter of 2012. Noninterest expense decreased $1.0 billion compared to the year-ago quarter to $18.2 billion, driven primarily by Project New BAC initiatives to streamline processes and the company's ongoing focus to reduce costs to service delinquent mortgage loans.
Excluding litigation costs, noninterest expense in Legacy Assets and Servicing was $2.6 billion in the first quarter of 2013. This compares with $3.1 billion in the prior quarter, which also excludes a $1.1 billion provision for the Independent Foreclosure Review acceleration agreement, and $2.7 billion in the first quarter of 2012. As previously announced, Bank of America expects total cost savings from Project New BAC to reach $8.0 billion per year, or $2.0 billion per quarter, by mid-2015. The company expects to achieve approximately $1.5 billion in cost savings, per quarter, by the fourth quarter of 2013, representing 75 percent of the quarterly target. Litigation expense was $881 million in the first quarter of 2013, compared to $916 million in the fourth quarter of 2012 and $793 million in the first quarter of 2012. Consumer and Business Banking Average deposit balances of $502.5 billion increased $38.5 billion, or 8 percent, from the same period a year ago. The increase was driven by growth in liquid products in a low-rate environment and a $7 billion average impact of migration of deposits from Global Wealth and Investment Management. Consumer and Business Banking reported net income of $1.4 billion, down $63 million, or 4 percent, from the year-ago quarter, due to lower net interest income, partially offset by lower noninterest expense. Consumer Real Estate Services reported a net loss of $1.3 billion for the first quarter of 2013, compared to a net loss of $1.1 billion for the same period in 2012. Revenue declined $352 million to $2.3 billion. Noninterest income was $1.6 billion, a decrease of $327 million from the year-ago quarter, driven by lower mortgage banking income due primarily to lower servicing income. Representations and warranties provision was $250 million in the first quarter of 2013, compared to $282 million in the first quarter of 2012. The provision for credit losses decreased $172 million from the same period a year ago to $335 million, driven by continued improvements in portfolio trends.
Global Wealth & Investment Mgmt Net income was $720 mln compared to $576 mln in Q4 and $550 mln in prior year period. Asset management fees of $1.6 billion, up 9 percent from the year-ago quarter. Revenue increased 7 percent from the year-ago quarter to $4.4 billion, driven by higher asset management fees related to higher market levels and long-term AUM flows, higher transactional revenue and higher net interest income. Global Markets Global Markets reported net income of $1.4 billion in the first quarter of 2013, compared to $828 million in the year-ago quarter. Excluding DVA losses, net income was $1.4 billion in the first quarter of 2013, compared to $1.7 billion in the year-ago quarter. Global Markets revenue increased $761 million from the year-ago quarter to $5.2 billion. Excluding DVA, revenue decreased $618 million to $5.2 billion driven by lower sales and trading revenue partially offset by an increase in debt issuance activity. DVA losses were $55 million, compared to $1.4 billion in the year-ago quarter. <BR><BR>Fixed Income, Currency and Commodities sales and trading revenue, excluding DVA, was $3.3 billion in the first quarter of 2013, a decrease of $829 million from the year-ago quarter, driven by a large gain in the year-ago period in mortgage products, significantly lower spreads, particularly in credit-related products, and less favorable markets in commodities. Equities sales and trading revenue, excluding DVA, was $1.1 billion, an increase of $90 million, or 8 percent, from the year-ago quarter primarily due to increased client balances in financing businesses.
Including the Market Risk Final Rule, the Tier 1 common capital ratio under Basel 1 was 10.58 percent at March 31, 2013, compared with a pro forma Tier 1 common capital ratio of 10.38 percent at December 31, 2012. As of March 31, 2013, the company's Tier 1 common capital ratio on a Basel 3 fully phased-in basis was estimated at 9.42 percent, up from 9.25 percent at December 31, 2012. Tangible book value per shareG increased to $13.46 at March 31, 2013, compared to $13.36 at December 31, 2012 and $12.87 at March 31, 2012. Book value per share was $20.30 at March 31, 2013, compared to $20.24 at December 31, 2012 and $19.83 at March 31, 2012.
Bank of America Corporation today reported net income of $2.6 billion, or $0.20 per diluted share, for the first quarter of 2013, compared to $653 million, or $0.03 per diluted share, in the first quarter of 2012. Revenue, net of interest expense, on a fully taxable-equivalent (FTE) basis rose 5 percent to $23.7 billion from $22.5 billion a year ago. <BR><BR>Capital Plan Actions Expected to Begin in Q2-13; Approved Actions Include $5.5 Billion of Preferred Stock Redemptions and $5 Billion of Common Stock Repurchases. Revenue, net of interest expense, on an FTE basis rose $1.2 billion, or 5 percent, from the first quarter of 2012, to $23.7 billion, led by higher noninterest income. Net interest income, on an FTE basis, totaled $10.9 billion in the first quarter of 2013, compared to $10.6 billion in the fourth quarter of 2012 and $11.1 billion in the first quarter of 2012B. The decline in net interest income from the year-ago quarter was due to the impact of lower consumer loan balances as well as lower asset yields driven by the low rate environment, partially offset by reductions in long-term debt balances and lower rates paid on deposits. Net interest margin was 2.43 percent in the first quarter of 2013, compared to 2.35 percent in the fourth quarter of 2012 and 2.51 percent in the first quarter of 2012. Noninterest expense decreased $1.0 billion compared to the year-ago quarter to $18.2 billion, driven primarily by Project New BAC initiatives to streamline processes and the company's ongoing focus to reduce costs to service delinquent mortgage loans.
Excluding litigation costs, noninterest expense in Legacy Assets and Servicing was $2.6 billion in the first quarter of 2013. This compares with $3.1 billion in the prior quarter, which also excludes a $1.1 billion provision for the Independent Foreclosure Review acceleration agreement, and $2.7 billion in the first quarter of 2012. As previously announced, Bank of America expects total cost savings from Project New BAC to reach $8.0 billion per year, or $2.0 billion per quarter, by mid-2015. The company expects to achieve approximately $1.5 billion in cost savings, per quarter, by the fourth quarter of 2013, representing 75 percent of the quarterly target. Litigation expense was $881 million in the first quarter of 2013, compared to $916 million in the fourth quarter of 2012 and $793 million in the first quarter of 2012. Consumer and Business Banking Average deposit balances of $502.5 billion increased $38.5 billion, or 8 percent, from the same period a year ago. The increase was driven by growth in liquid products in a low-rate environment and a $7 billion average impact of migration of deposits from Global Wealth and Investment Management. Consumer and Business Banking reported net income of $1.4 billion, down $63 million, or 4 percent, from the year-ago quarter, due to lower net interest income, partially offset by lower noninterest expense. Consumer Real Estate Services reported a net loss of $1.3 billion for the first quarter of 2013, compared to a net loss of $1.1 billion for the same period in 2012. Revenue declined $352 million to $2.3 billion. Noninterest income was $1.6 billion, a decrease of $327 million from the year-ago quarter, driven by lower mortgage banking income due primarily to lower servicing income. Representations and warranties provision was $250 million in the first quarter of 2013, compared to $282 million in the first quarter of 2012. The provision for credit losses decreased $172 million from the same period a year ago to $335 million, driven by continued improvements in portfolio trends.
Global Wealth & Investment Mgmt Net income was $720 mln compared to $576 mln in Q4 and $550 mln in prior year period. Asset management fees of $1.6 billion, up 9 percent from the year-ago quarter. Revenue increased 7 percent from the year-ago quarter to $4.4 billion, driven by higher asset management fees related to higher market levels and long-term AUM flows, higher transactional revenue and higher net interest income. Global Markets Global Markets reported net income of $1.4 billion in the first quarter of 2013, compared to $828 million in the year-ago quarter. Excluding DVA losses, net income was $1.4 billion in the first quarter of 2013, compared to $1.7 billion in the year-ago quarter. Global Markets revenue increased $761 million from the year-ago quarter to $5.2 billion. Excluding DVA, revenue decreased $618 million to $5.2 billion driven by lower sales and trading revenue partially offset by an increase in debt issuance activity. DVA losses were $55 million, compared to $1.4 billion in the year-ago quarter. <BR><BR>Fixed Income, Currency and Commodities sales and trading revenue, excluding DVA, was $3.3 billion in the first quarter of 2013, a decrease of $829 million from the year-ago quarter, driven by a large gain in the year-ago period in mortgage products, significantly lower spreads, particularly in credit-related products, and less favorable markets in commodities. Equities sales and trading revenue, excluding DVA, was $1.1 billion, an increase of $90 million, or 8 percent, from the year-ago quarter primarily due to increased client balances in financing businesses.
Including the Market Risk Final Rule, the Tier 1 common capital ratio under Basel 1 was 10.58 percent at March 31, 2013, compared with a pro forma Tier 1 common capital ratio of 10.38 percent at December 31, 2012. As of March 31, 2013, the company's Tier 1 common capital ratio on a Basel 3 fully phased-in basis was estimated at 9.42 percent, up from 9.25 percent at December 31, 2012. Tangible book value per shareG increased to $13.46 at March 31, 2013, compared to $13.36 at December 31, 2012 and $12.87 at March 31, 2012. Book value per share was $20.30 at March 31, 2013, compared to $20.24 at December 31, 2012 and $19.83 at March 31, 2012.
