Nomura Breaks-Down Bank of America's (BAC) Q1 Results, 'Nothing in This Quarter to Motivate New Buyers'
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Price: $64.49 +0.62%
Rating Summary:
26 Buy, 18 Hold, 2 Sell
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
26 Buy, 18 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities bank analyst Glenn Schorr gave a great break-down on Bank of America (NYSE: BAC) just reported first quarter results.
"Noisy quarter as revenues were mostly in line and credit improved according to plan, but higher legal, mortgage and comp related expenses produced the drag on earnings and $1.6 bn in equity and debt gains were a big contributor," Schorr stated. "Eyebrow-raising events include CFO replacement after less than a year, $1.6 bn AGO settlement and another $1 bn in reps & warrantee expense (half for the GSEs). On a brighter note, Ibanking & wealth mgmt were strong, trading bounced back, credit is improving, deposits keep growing and capital and book grew a bit."
He noted positives for the quarter were:
1. Credit quality continued to improve, NCO rate -26 bps to 2.61%, NPLS -$1.1bn to $31.6bn
2. $2bn in reserve releases, added $1.6 billion to PCI reserves
3. T1C +4 bps to 8.6% (27 bps hit from DTA allowance), & excess liquidity +$50bn q/q to $386bn
4. average deposits +4% y/y
5. ok trading -25% y/y, ex DVA and investment banking flat from healthy 4Q.
He noted issues in the quarter were:
1. Card revs -50% annualized q/q
2. NIM -2 bps q/q to 2.67%
3. added $1.6 billion to Countrywide PCI reserves
4. litigation, rep/warrant & GSE foreclosure expenses $2.3bn
5. Loans declined $8.0 bn q/q, biggest drop in cards -$6.7bn q/q,
6. expenses +8% q/q,
7. mortgage origination revs -57% q/q
Schorr notes the stock is cheap based on tangible book, however "nothing in this quarter to motivate new buyers."
The firm maintained their Neutral rating and $15 price target.
For more ratings news on Bank of America click here and for the rating history of Bank of America click here.
Shares of Bank of America closed at $13.13 yesterday.
"Noisy quarter as revenues were mostly in line and credit improved according to plan, but higher legal, mortgage and comp related expenses produced the drag on earnings and $1.6 bn in equity and debt gains were a big contributor," Schorr stated. "Eyebrow-raising events include CFO replacement after less than a year, $1.6 bn AGO settlement and another $1 bn in reps & warrantee expense (half for the GSEs). On a brighter note, Ibanking & wealth mgmt were strong, trading bounced back, credit is improving, deposits keep growing and capital and book grew a bit."
He noted positives for the quarter were:
1. Credit quality continued to improve, NCO rate -26 bps to 2.61%, NPLS -$1.1bn to $31.6bn
2. $2bn in reserve releases, added $1.6 billion to PCI reserves
3. T1C +4 bps to 8.6% (27 bps hit from DTA allowance), & excess liquidity +$50bn q/q to $386bn
4. average deposits +4% y/y
5. ok trading -25% y/y, ex DVA and investment banking flat from healthy 4Q.
He noted issues in the quarter were:
1. Card revs -50% annualized q/q
2. NIM -2 bps q/q to 2.67%
3. added $1.6 billion to Countrywide PCI reserves
4. litigation, rep/warrant & GSE foreclosure expenses $2.3bn
5. Loans declined $8.0 bn q/q, biggest drop in cards -$6.7bn q/q,
6. expenses +8% q/q,
7. mortgage origination revs -57% q/q
Schorr notes the stock is cheap based on tangible book, however "nothing in this quarter to motivate new buyers."
The firm maintained their Neutral rating and $15 price target.
For more ratings news on Bank of America click here and for the rating history of Bank of America click here.
Shares of Bank of America closed at $13.13 yesterday.
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