Bank of America: Financial Winners & Losers - TheStreet



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Bank of America

(BAC) - Get Report

was among the winners of the financial sector Wednesday after the bank reported fourth-quarter results that show credit costs may be peaking.

Bank of America

reported a fourth-quarter loss of $5.2 billion, or 60 cents a share, disappointing analysts who had forecasted a loss of 52 cents a share in the quarter. Excluding the one-time $4 billion cost of paying back TARP funds, and dividends on preferred stock, its loss narrowed to just $194 million.

On the positive side, Bank of America said loan charge-offs totaled $8.4 billion, down $1.2 billion from the previous quarter. Additionally, Bank of America said it added $1.7 billion to its loan-loss reserves, a smaller increase when compared to the $2.1 billion added during the third quarter.

Bank of America shares were lately rising by 5 cents, or 0.3%, to $18.37.

Bank of America wasn't alone in reporting earnings results early Wednesday.

Wells Fargo

(WFC) - Get Report

swung to a surprise fourth-quarter profit of $394 million, or 8 cents a share, compared with a year-ago loss of 84 cents a share. The Thomson Reuters consensus estimate was for a loss of a penny a share. Earnings took a 47-cent-a-share hit from the bank's repayment of $25 billion to the government.

Wells Fargo said the allowance for credit losses totaled $25 billion at the end of the fourth quarter, up $500 million from the end of the third quarter. Meanwhile, fourth-quarter net charge-offs rose to 2.71% of average loans, up from 2.5% in the prior quarter.

Wells Fargo shares initially opened higher but were lately down 0.6% to $28.10.

Morgan Stanley

(MS) - Get Report

was also out with earnings Wednesday morning, saying it earned 29 cents a share on $6.8 billion in revenue in the fourth quarter. That's below the Thomson Reuters average estimate for a profit of 36 cents a share on revenue of $7.8 billion.

Morgan Stanley said trading revenue in the fourth quarter totaled $1.7 billion, a decline of 54% from $3.9 billion in the third quarter. Morgan Stanley shares were lately down 1.3% to $30.77.


U.S. Bancorp

(USB) - Get Report

saw its fourth-quarter profit nearly double from a year ago, rising to $580 million, or 30 cents a share. Results were a penny ahead of the Thomson Reuters average estimate. The bank recorded $278 million of provision for credit losses in excess of net charge-offs, it said.

U.S. Bancorp also recorded $158 million of net securities losses, including $179 million of impairments, partially offset by $21 million of net gains on sale of securities. Shares were climbing 2.8% to $25.18.

Bank of New York Mellon

(BK) - Get Report

posted a fourth-quarter profit of $594 million, or 49 cents a share, rising sharply from a profit of 2 cents a share in the year-ago quarter. Excluding one-time items, the bank earned 60 cents a share in the quarter, better than the Thomson Reuters average estimate for a profit of 51 cents a share. The stock was lately up 3.3% to $30.50.

State Street

(STT) - Get Report

posted a fourth-quarter profit of $1 a share, rising from earnings of 66 cents a share in the year-ago quarter and better than the 97 cents a share analysts were expecting. Revenue fell nearly 15% from a year ago to $2.28 billion but was also better than consensus.

Also on the positive side, State Street said Tier 1 Capital reached 17.5% in the quarter, up from 15.3% in third quarter. Shares were rallying 6.1% to $45.83.

Northern Trust

(NTRS) - Get Report

was also rising, adding 6.1% to $55.64, after reporting earnings of 82 cents a share, which was down from a year ago but well ahead of the Thomson Reuters average estimate.

Hudson City Bancorp


, meanwhile, slipped 1.5% to $13.54 after the bank reported fourth-quarter earnings of 28 cents a share, matching the consensus estimate of analysts polled by Thomson Reuters.

Away from earnings releases, Rochdale Securities analyst Dick Bove upgraded


(C) - Get Report

to neutral from sell, despite weaker than expected earnings. Bove argued that the bank recorded a number of one-time charges that caused the meaningful loss. The sum of the charges was 32 cents on a fully taxed basis, he said, which suggests operating results were a loss of a penny a share.

Bove also adjusted his earnings targets for Citigroup going forward, cutting his 2010 estimate to a profit of 3 cents a share from 14 cents and his 2011 estimate to 28 cents from 38 cents a share. He also established a 2012 estimate of 56 cents a share.

Morgan Stanley analysts also cut estimates for Citigroup through 2011, arguing that the bank is seeing lower sales and will be hurt by the proposed bank fee by the Obama administration. Meanwhile, UBS upped its stock target for Citigroup to $3.75, saying the bank is making incremental progress.

Citigroup was lately down 2% to $3.47.

-- Written by Robert Holmes in Boston


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