BofA’s profit beats some estimates as capital levels improve

Bank of America Corp. reported third-quarter results that were better than some analysts predicted as capital levels improved, and the shares edged higher in New York trading.

Net income fell 95 percent to $340 million, breaking even on a per-share basis, from $6.2 billion, or 56 cents, a year earlier, according to a company statement today. Analysts including David Trone of JMP Securities LLC and Ed Najarian of International Strategy & Investment Group Inc. said operating results beat their estimates.

Chief Executive Officer Brian T. Moynihan, who took over in 2010, has approved more than $28 billion for settlements of legal and regulatory claims tied to his predecessor’s takeovers of Countrywide Financial Corp. and Merrill Lynch & Co. Last month, he agreed to pay $2.4 billion to investors who said management hid Merrill losses ahead of the 2009 deal.

“If you could clean up the litigation, it’s actually a good story,” said Chris Whalen, a senior managing director at Tangent Capital Partners LLC, on Bloomberg Television. “They would be very competitive with Wells Fargo.”

Revenue at the Charlotte, North Carolina-based firm dropped 28 percent to $20.4 billion before adjustments, and was little changed after excluding accounting changes tied to debt. The quarter’s results were aided by a 48 percent drop in provisions for credit losses to $1.77 billion from a year earlier.

Dividend Outlook

“Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues,” Moynihan, 53, said in today’s statement. The stock rose 1.1 percent to $9.56 at 10:06 a.m. in New York.

The firm continued to improve capital levels ahead of stricter international rules. The lender’s Tier 1 common capital ratio reached almost 9 percent at Sept. 30, from about 8 percent at June 30, Bank of America said.

That’s enough to run the company and support growth, and the bank will soon begin preparing its next capital plan for regulators, Moynihan said today when asked about the dividend outlook during a conference call with analysts. The capital plan helps determine whether a lender gets permission to boost dividends or stock buybacks.

Bank of America cut its quarterly payout to 1 cent during the financial crisis when it received a $45 billion U.S. bailout, which was repaid almost three years ago, and investors have been pressing Moynihan for an increase.

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