Friday, April 15, 2011

Bank of America Earnings: Analysts React (BAC; C; JPM; GS; WFC)

The stock is trading down 9/10% at $12.99.
From Deal Journal:
Wall Street scribblers are feeling “meh” about Bank of America’s first-quarter earnings report this morning. On the one hand, the bank posted “negative loan growth” and 14% higher expenses. On the other hand, BofA promised to slash costs and is slowly building its cushion of capital.

Bank of America shares are a fraction higher in early trading (UPDATE: Now they’re lower). Shares of Citigroup and Wells Fargo, which report first-quarter financials next week, also are up a fraction.

Here is a quick look at what the analysts are saying out of the gate. BofA’s conference call just ended, so expect more reaction later today:
Deutsche Bank: Is BAC making progress–yes, but ever so slowly in our view. Since Jan, BAC announced a settlement with the GSEs over mortgage repurchases, settled with a monoline insurer today, showcased the longer-term potential of the co at March’s investor day and continues to show improving credit and mostly in line capital markets trends. However, more GSE putback hits were incl in 1Q results, mortgage hits going forward will likely remain very high for a prolonged period and other expense efforts won’t be meaningful until 2H12 (per mgmt).

Evercore: Overall, results mixed with solid asset quality improvement and greater  reserve release than expected (w/caveat of higher lifetime losses on certain PCI loans, reflecting more negative outlook for home prices) and better-than-expected trading results. Other positives include NIM relatively stable linked qtr and spread revenue down only about $300m (vs est’d down $600m), and signs of improvement in comm’l lending (as seeing elsewhere). Negatives include still lingering mortgage-related issues and elevated expenses (though not unique to BAC), deposit service fees light, high reliance on markets-related fees this qtr (trading, private equity, etc), and still lackluster loan growth, with total loans down 2% on average…MORE
Goldman Sachs: We’re Going ‘Neutral’ on Financials, Here’s Why… (BAC; C; GS; JPM; MS; WFC; XLF)
JPM Results Could Forecast Write-Downs for Citi, Bank of America (BAC; C; XLF)