This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Big Four Bank Earnings: What to Expect

Bank of America

Shares of Bank of America have gained more than 20% in the past year, but have underperformed the KBW Bank Index in 2013. BAC Total Return Price Chart BAC Total Return Price data by YCharts

Among the big themes for the second largest bank in the first quarter will be its efforts to reduce operating expenses. Bank of America has been restructuring its businesses over the last couple of years, shedding non-core assets and laying off employees, but those measures have been offset by high mortgage servicing expenses and elevated legal expenses.

The bank continues to deal with mortgage-related litigation. On Wednesday, it was slapped with a fresh lawsuit from Prudential Financial (PRU) alleging that the bank and its Merrill Lynch unit engaged in racketeering in connection with a mortgage-backed securities sale.

"While the company's earnings leverage is primarily centered on lower legacy mortgage-related costs and ongoing credit improvement, future earnings are not without risk given the challenging economic backdrop and past track record of generating sustainable EPS growth," Sterne Agee analyst Todd Hagerman wrote in a report Wednesday. "In particular, we remain concerned with BAC's potential litigation and outstanding mortgage repurchase risk. Litigation appears to have only accelerated over the last twelve months as private investors, correspondents and various government agencies/reps continue to pursue legal claims against the largest banks."

Hagerman believes the stock is fairly valued. The analyst expects the bank to report an earnings per share of 22 cents in the first quarter.

Analysts polled by Thomson Reuters expect the bank to earn 23 cents per share on revenues of $23.46 billion.

Bank of America is poised to return more capital this year. The bank passed the Federal Reserve's stress test and said it has the authorization to purchase upto $5 billion in stock and redeem $5.5 billion in preferred stock. It continues to maintain its dividend at a penny a share.

The stock currently trades at about 92% of its tangible book value of $13.15 and at 11.4 times expected 2013 earnings per share.

Bank of America reports April 17.
3 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.14 -1.50%
C $44.79 -1.70%
JPM $61.70 -1.40%
WFC $49.08 -1.80%
AAPL $93.53 -1.70%


Chart of I:DJI
DOW 17,667.98 +16.72 0.09%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs