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Bank Results season: BofA manages a $28 bln topline without mortgage business (Q3 2011 $0.56 EPS $13 TBVPS)

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America’s heritage bank opened earnings day with a large $28.7 bln topline, that includes among others, $3.6 bln from its sale of 5% of CCB, a trading DVA adjustment ( value of trading book marked to market turned in the “profit” ) of $1.7 bln, a $4.5 bln from its bet on its own credit spreads and structured credit and a $300 mln loss on its card unit sale in Ireland, Credit book counterparty losses of $600 mln, additional litigation and waivers costs of $1,200 mln incl warranties and a $800 mln loss on the UK tax changes.

Net revenues of $23.7 bln more or less remained unchanged from Q2 2011 except for the big $14.1 bln lead on its real estate “revenue” of Q2 where almost all the mortgage losses were booked in the previous quarter

The bank reported profits of $6.2 bln after a $1.1 bln loss in mortgages and CRES

Project New BAC

Non interest Expenses were a high $17.6 bln and tier I common improved 42 basis points to a high 8.65% after booking the gains on the CCB transaction. Net Interest Income was a mere $10.739 bln with the Net interest yield was down to a low 2.32%. Project New BAC targets $5 bln added to the Income before Interest and Taxes from cost savings in the $17 bln costs of this quarter. Till March 2012 Project New BAC would be focussed on the remaining businesses apart from Retail not considered in Phase I

Non Operating expense decreased $5.3 bln QOQ. This excludes any terminated employees as 2K are serving as FTEs in the banks total roster of 288,739 Net Charge offs were $1.6 bln lower year on year abnnd $687 MM lower from Q2 Also the $5.3 bln figure includes lowere incentives as GBM repoorted $1.5 bln lower revenues

Consumer Real Estate ( incl Mortgages portfolio analysis) 

New mortgages incl refinancing added $33 bln in funds in mortgages and the CRES unit booked a top line of $2.8 bln The bank also added PPI reserves for UK of $300 mln, $500 mln provisions for litigation and other amounts for assessments and waivers

Non Performing Loans reduced: Fresh delinquencies (<180 DPD) wee limited to $4.6 bln for fresh mortgages and $1.6 Bln on Home Equity Loan portfolios Non Performin gloans and leaes decreased 9% from June in Commercial Credit

Global Banking and Markets

Trading and investment Banking revenues were down $1.5 bln from Q2 at $5.2 bln. The unit also absorbed a Deferred tax asset charge from UK to report a small $302 MM loss despite a $1.7 bln DVA. With negligible Debit adjustments in 2Q the Investment Banking unit had reported a $1.5 bln profit in Q2 Legacy6 exosures are down 28% year to date The bank avers to be #2 in Global Investment Banking Fees year to date

Card Services

The Card assets increased to $122 bln after quitting the Canada and Ireland units, sold to local businesses Card Services Profits were the most significant chunk of Core Profits followed by Global Commercial Banking 30+ delinquents are an amazingly low 3.1%. The Card Services numbers do not include any of its International Card operations. Domestic US cards are up 17% from 2Q 2011 even as non core charge offs on its jettisoned portfolios continue to pain the bottom line of the segment by as much as $1.1 bln. The unit ended down 33% from Q2 2011 in Net income at $1.3 bln

Global Wealth and Investment Management

The Wealth team scored an even $1.4 bln in Net Interest Income and $2.8 bln in Non interest Income even as lower markets took down client balances 6.3% and maintained inflows despite the challenging market environment. Sallie Krawcheck left the unit this quarter with a $6 mln severance but net addition of Wealth Advisors increased staffing by almost 500

Consumer Banking & Global Commercial Banking

Average Deposits increased to $422 bln, a 2% increase from last year despite deposit rates almost halved to 0.25%. Auto Loans increased by $1.2 bln while Commercial Real Estate origination was down $2.4 bln Treasury and Credit revenue remained strong at $1.4 bln and $1.2 bln

 

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