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Bank Of America Earnings Appear To Be Stronger Than Expected, But There's A Lot Of Noise

Jan 17, 2013, 17:31 IST

Bank of America's earnings are out.

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Q4 adjusted revenue came in at $19.6 billion, which was below analysts' forecast for $21.0 billion.

It earned $0.03 per share, which was a tad higher than the $0.02 forecast by analysts.

The stock is trading up 1 percent right now.

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It should be noted that bank earnings announcements tend to be very noisy, so the reported EPS may not be comparable to the consensus EPS.

Here's all of that noise:

As previously announced, financial results in the fourth quarter of 2012 were negatively impacted by a provision of $2.7 billion related to the settlements with Fannie Mae with respect to representations and warranties and compensatory fees; other provision items of $2.5 billion which included a $1.1 billion provision for the Independent Foreclosure Review (IFR) acceleration agreement, total litigation expense of $0.9 billion and a $0.5 billion provision for obligations related to mortgage insurance rescissions; and $0.7 billion of negative debit valuation adjustments (DVA) and fair value option (FVO) adjustments due to improvement in the company's credit spreads. These items were partially offset by a net income tax benefit of $1.3 billion primarily due to the recognition of foreign tax credits of certain non-U.S. subsidiaries; a gain of $0.4 billion on the previously announced sale of the company's 49-percent stake in Mitsubishi UFJ Merrill Lynch PB Securities; and a positive valuation adjustment on mortgage servicing rights (MSR) of $0.3 billion related to the previously announced servicing sales.

Here are some notable items:

  • Net Interest Income Increased to $10.6 Billion From $10.2 Billion in Prior Quarter
  • Total Average Deposit Balances up $28 Billion, or 11 Percent (Annualized) From Prior Quarter
  • First-lien Mortgage Production Increased 6 Percent From Prior Quarter
  • Global Wealth and Investment Management Posts Record Quarterly Earnings
  • Period-end Commercial Loans and Leases in the Global Banking Segment, Including Real Estate Loans, Grew 7 Percent From Prior Quarter to $252 Billion
  • Investment Banking Fees; Fees Up 20 Percent From Prior Quarter and 58 Percent From the Year-ago Quarter

Read the whole earnings announcement here.

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SEE ALSO: 10 Countries Hoarding Enormous Piles Of Gold >

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