Bank Of America (BAC) Posts Q2 EPS of $0.19; Enters Settlement with AIG
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(Updated - July 16, 2014 7:05 AM EDT)
Bank Of America Corp. (NYSE: BAC) reported Q2 EPS of $0.19, which may not compare with the analyst estimate of $0.30. Revenue for the quarter came in at $21.96 billion versus the consensus estimate of $21.69 billion.
Results include litigation expense of $4.0 million (Pretax) or approximately $0.22 per share (After Tax).
"The economy continues to strengthen, and our customers and clients are doing more business with us," said Chief Executive Officer Brian Moynihan. "Among other positive indicators, consumers are spending more, brokerage assets are up by double digits and our corporate clients are increasingly turning to us to help finance business expansion and merger activity. We are well positioned for further progress."
"During the quarter, our Basel 3 capital ratios improved and credit losses remained near historical lows," said Chief Financial Officer Bruce Thompson. "In addition, we did a good job managing expenses. Although litigation expenses were higher than the year-ago quarter, total noninterest expense, excluding litigation, declined 6 percent from the second quarter of 2013."(
AIG Settlement
On July 15, 2014, Bank of America executed a definitive settlement agreement with AIG (NYSE: AIG) to resolve all outstanding residential mortgage-backed securities (RMBS) litigation between the parties. Under the terms of the settlement, AIG will file notices of dismissal in its securities lawsuits against Bank of America and its affiliates pending in California and New York federal courts. Also, AIG has agreed to withdraw its objection to the Bank of New York Mellon private-label securities settlement (Article 77 Proceeding).
The AIG settlement amount of $650 million was covered by litigation reserves as of June 30, 2014. Bank of America has now resolved approximately 95 percent of the unpaid principal balance of all RMBS as to which RMBS securities litigation has been filed or threatened for all Bank of America-related entities.
In addition, the parties agreed to settle three actions brought by Bank of America seeking to collect mortgage insurance proceeds due from AIG’s United Guaranty mortgage insurance subsidiaries on legacy Bank of America originated and serviced loans.
Q2 Selected Financial Highlights
Three Months Ended | |||||||||||
(Dollars in millions, except per share data) | June 30 2014 | March 312014 | June 302013 | ||||||||
Net interest income, FTE basis1 | $ | 10,226 | $ | 10,286 | $ | 10,771 | |||||
Noninterest income | 11,734 | 12,481 | 12,178 | ||||||||
Total revenue, net of interest expense, FTE basis1 | 21,960 | 22,767 | 22,949 | ||||||||
Provision for credit losses | 411 | 1,009 | 1,211 | ||||||||
Noninterest expense2 | 18,541 | 22,238 | 16,018 | ||||||||
Net income (loss) | $ | 2,291 | $ | (276 | ) | $ | 4,012 | ||||
Diluted earnings (loss) per common share | $ | 0.19 | $ | (0.05 | ) | $ | 0.32 |
1 Fully taxable-equivalent (FTE) basis is a non-GAAP financial measure. For reconciliations to GAAP financial measures, refer to pages 22-24 of this press release. Net interest income on a GAAP basis was $10.0 billion, $10.1 billion and $10.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively. Total revenue, net of interest expense, on a GAAP basis was $21.7 billion, $22.6 billion and $22.7 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
2 Noninterest expense includes litigation expense of $4.0 billion, $6.0 billion and $0.5 billion for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
For earnings history and earnings-related data on Bank Of America Corp. (BAC) click here.
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