Is Bank of America Picking Up Where Wells Fargo Let Down?

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Bank of America Corp. (NYSE: BAC) reported its most recent quarterly results before the markets opened on Wednesday. So far this report seems to be the biggest success story among the major banks for this quarter. And while Wells Fargo & Co. (NYSE: WFC) is floundering, Bank of America seems to be hitting its stride.

Bank of America said that it had a record $0.70 in earnings per share (EPS) and $22.7 billion in revenue. That compares with consensus estimates of $0.63 in EPS and revenue of $22.45 billion, as well as the $0.48 per share and $21.59 billion posted in the same period of last year.

During the quarter, average loan and lease balances in business segments rose $25 billion, or 3%, to $881 billion. Average deposit balances rose $51 billion, or 4%, to $1.3 trillion.

Overall credit quality remained strong across both the consumer and commercial portfolios, with the provision for credit losses at $905 million, down from $1.00 billion last year.

In terms of its segments, the bank reported:

  • Consumer Banking saw its total revenues increase 10.3% to $9.88 billion year over year.
  • Global Wealth and Investment Management total revenues increased 6.6% to $4.99 billion.
  • Global Banking revenues increased 0.6% to $5.05 billion.
  • Global Markets revenue decreased 5.5% to $3.21 billion.

Book value per share was $25.13 at the end of the quarter, while tangible book value per common share was $17.91.

Brian Moynihan, board chair and chief executive, commented:

Our teammates worked for our customers and delivered solid loan and deposit growth, and other activity, while managing risk well. Operating leverage based on disciplined expense management while investing in our future, solid asset quality, and loan and deposit growth drove this quarter’s results. In addition to lending and investing activities, we shared success in many ways: returning nearly $26 billion in capital to our shareholders; a second bonus since U.S. tax reform passed last year, impacting 95% of our teammates, to share success from our performance and the benefits of tax reduction; and more than $200 million of philanthropic giving to our communities.

Shares of Bank of America closed Tuesday at $26.55, in a 52-week range of $22.66 to $33.05. The stock has a consensus analyst price target of $32.00. Following the announcement, the stock was up about 5% at $27.85 in early trading indications Wednesday.

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