The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Bank Results Season: BofA makes it 4/4 on below expectations

English: Bank of America at LA Pride 2011 (Jun...

English: Bank of America at LA Pride 2011 (June 12) (Photo credit: Wikipedia)

Of course, after Bank of America’s $2.5 Bln 20 cents a share run in the low mortgage quarter finds investors chary of the mortgage producers US Bank and Signature Bank may not be able to hold interest for too long and Goldman Sachs alongwith shadow banks Blackrock (reported today) and Morgan Stanley (almost there) may provide relief to the sector

Meanwhile debt limit worries have taken the 30 day Bills to a 0.40% yield

Bank of America proved $1.9 Bln in buybacks for the 57% odd increase in the share price in the trailing twelve months an asset quality surged as loan reserves dwindled on the disappearing legacy portfolio, the bank ahead of Citi by a year or more in disposing the much larger portfolio as strategy

Net Interest and Non Interest Revenues were comparable at $10.5 Bln and $11.3 Bln with Operating expenses at $16.4 Bln and a Gross profit of $5.1 Bln. Repurchases may not extend the available $3.1 Bln budget after a long run at the top

Basel 3 Tier I is already 9.94% but looks likely it will take an extreme it as RWA rationalisation is still underway However the Bank has already brought leverage mandated by Basel and the Fed down below 20X and 16X levels (inluding other Tier I instruments not counted in the 20X minimum). RoTA and RoE trail below Citi at 0.47% and 6.15% levels(Tangible Common Equity)

Time to required Long term funding using liquidity hit a low of 29 mo and is now in two quarters improved to 35 mo

Loan yields are stable at 2.44% ( incl loan specific charges) while Litigation expenses are up to $3.3 Bln and will likely repeat in Q4

CRES was finally rationalised (Consumer Real Estate Servies) resulting in FTE count reducing by 9.3K to 247k compared to 293K at JP Morgan

Consumer and SME segment revenues were flat at $7.5 Bln and Operating Expenses at $3.98 Bln. Depoits hold the higher levels achieved sequentially and while Brokerage assets increased nearly10%, Debit and Credit Card volums are flat and net charge offs still double of JP Morgan at 3.47 but return on allocated caital with branch rationalisation is now comparable at 23.7%

First lien mrtgages were $2 Bln though the pipeline is 60% weaker and this number is 11% down sequentially

Wealth business accounted for $4.4 Bln while Cororate institutional anking split currently between Global Banking and Global Markets is almost $7.7 Bln. Trading business is a pitiful $3 Bln while IB Fees at $1.3 Bln has brought it into the Top 4 again esp leading in the Americas ( 11% share according to BofA methodologies)

The bank now has a Residential Mortgage Asset value of $144 Bln excluding the questionable marked loans that were primarily bought with Countrywide

Analyst Q&A transcrits are worth your while at seekingalpha/morningstar later as the call confernce continues. The analyst  call seems to b the same for media, live blogged at marketwatch.

 

 

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