No Thrills in Bank of America Earnings

October 16, 2013 by Paul Ausick

Bank of America
Source: Brian Katt / Wikimedia Commons / GNU Free Documentation License
Bank of America Corp. (NYSE: BAC) reported third-quarter 2013 results before markets opened Wednesday morning. The investment bank and financial services giant posted quarterly diluted earnings per share (EPS) of $0.20 on revenue of $22.19 billion. In the same period a year ago, the bank reported EPS of zero on revenue of $22.53 billion. Third-quarter results also compare to the consensus estimates for EPS of $0.18 on revenue of $22.03 billion.

Bank of America’s revenues do not include a negative $292 million debit valuation adjustment (DVA) or a fair value option (FVO) loss of $152 million in the third quarter. Total revenues net of interest came in at $21.74 billion for the third quarter, up from $20.66 billion in the same period a year ago and up from $22.95 billion in the second quarter.

The bank’s interest income rose slipped from $10.77 billion in the second quarter to $10.48 billion in the third, and the net interest margin rose from 2.32% a year ago to 2.44%, unchanged sequentially.

Noninterest income rose by $774 million year-over-year and noninterest expenses fell by about $1.2 billion on lower litigation expenses. The company has reduced its employee count by more than 24,000 since the third quarter of 2012.

The bank’s CFO said:

This quarter, we saw good loan growth, improved credit quality and record deposit balances. Our customers and clients continue to do more business with us. The economy and business climate will improve even more quickly as conditions normalize, and we are well positioned to benefit from that.

Bank of America’s Basel I Tier 1 common capital ratio rose to 11.08%, up sequentially from 10.83% at the end of the second quarter.

Tangible book value per share rose from $13.32 at the end of the second quarter to $13.62, and book value also rose slightly from $20.18 to $20.50.

No outlook for the fourth quarter was provided, but the consensus estimates call for EPS of $0.28 on revenues of $22.03 billion. For the full year, the consensus EPS estimate is $0.89 on revenues of $90.07 billion.

Shares are trading about 0.3% higher in the premarket this morning, at $14.27 in a 52-week range of $8.92 to $15.03. The 52-week high was set Tuesday. Thomson Reuters had a consensus analyst price target of around $15.10 before the results were announced.