The writedown is tied to the redemption of $2 billion of trust preferred securities related to its Merrill Lynch acquisition.
As a result of the company's Merrill Lynch merger in 2009, it has recorded a discount to par value as purchase accounting adjustments associated with the securities, according to a statement.
The non-cash charge to net interest income and pretax income mirrors the remaining discount to par value.
Bank of America expects that redeeming the trust preferred securities will create cash savings from lower funding costs, though the company did not specify any numbers.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate BANK OF AMERICA CORP as a Buy with a ratings score of B+. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, good cash flow from operations, impressive record of earnings per share growth and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 2043.1% when compared to the same quarter one year prior, rising from -$232.00 million to $4,508.00 million.
- Net operating cash flow has significantly increased by 7856.00% to $34,902.00 million when compared to the same quarter last year. In addition, BANK OF AMERICA CORP has also vastly surpassed the industry average cash flow growth rate of 302.97%.
- BANK OF AMERICA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BANK OF AMERICA CORP reported lower earnings of $0.35 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $0.35).
- The gross profit margin for BANK OF AMERICA CORP is currently very high, coming in at 85.75%. Regardless of BAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.44% trails the industry average.
- You can view the full analysis from the report here: BAC