Back to the Banks
The KBW Bank Index (I:BKX) rose 1% to close at 53.90, with all but three of the 24 index components showing gains for the session. Shares of Bank of America (BAC - Get Report) were up 2% to close at $11.35, reversing their 5% slide during the previous two sessions. The company on Thursday reported meager fourth-quarter earnings of three cents a share, springing from its large mortgage putback settlement with Fannie Mae (FNMA) and its portion of the $8.5 billion foreclosure settlement between federal regulators and the largest mortgage loan servicers.
Regions Financial of Birmingham, Ala., reported adjusted fourth-quarter operating earnings of $311 million, or 22 cents a share, beating the consensus estimate 21 cents. The adjusted earnings excluded roughly $42 million in pretax costs for the termination of a third-party investment in a REIT subsidiary. Fourth-quarter GAAP earnings available to common shareholders were $261 million, or 18 cents a share, compared to $312 million, or 21 cents a share, in the third quarter, and a net loss to common shareholders of $135 million, or 48 cents a share, in the fourth quarter of 2011. Fourth-quarter net interest income was $818 million, increasing slightly from $817 million the previous quarter, but declining from $849 million a year earlier. The net interest margin -- the spread between the average yield on loans and investments and the average cost for deposits and borrowings -- was a tax-adjusted 3.10% in the fourth quarter, widening from 3.08%, both in the third quarter and in the fourth-quarter of 2011. While the company's average total loans declined 1% sequentially and 5% year-over-year to $74.622 billion in the fourth quarter as commercial real estate and residential mortgage loans continued to decline, average commercial and industrial loans grew 1% quarter-over-quarter and 9% year-over-year, to $26.414 billion. Meanwhile, average indirect auto loans grew by 7% sequentially and 26% year-over-year, to $2.295 billion in the fourth quarter.