Financial services major Bank of America Corp. (BAC: Quote) reported Thursday a profit for the fourth quarter that plummeted from last year, hurt by hefty provisions related to mortgage settlements, primarily with Fannie Mae. This, despite a 25 percent lower provision for credit losses. However, the company’s earnings per share topped analysts’ expectations by a penny, while quarterly revenues missed their estimates.
The company reported net income of $732 million or $0.03 per share for the fourth quarter, sharply lower than $1.99 billion or $0.15 per share in the comparable quarter a year ago.
The Charlotte, North Carolina-based second-largest bank reported net income applicable to common shareholders of $367 million or $0.03 per share, sharply down from prior-year quarter’s net income of $1.58 billion or $0.15 per share. In the fourth quarter, the company reported a net loss applicable to common shareholders of $33 million or breakeven per share.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.02 per share for the fourth quarter. Analysts’ estimates typically exclude special items.
As previously announced, the latest fourth-quarter results primarily includes a $2.7 billion provision related to the settlements with Fannie Mae, and other provision items of $2.5 billion, partially offset by mainly 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.
The company said its total revenue, net of interest expense, for the quarter declined to $18.66 billion from $24.89 billion in the same quarter last year, and missed twenty-one Wall Street analysts’ consensus estimate of $21.03 billion.
Net interest income declined to $10.32 billion from $10.70 billion in the year-ago quarter, and noninterest income was $8.34 billion, sharply lower than $14.19 billion in the prior-year quarter.
Non-interest expense declined from the year-ago quarter, driven primarily by cost savings achieved through Project New BAC initiatives over the course of 2012.
The consumer real estate services division reported a $3.72 billion loss, sharply wider than the $1.44 billion loss last year amid mortgage banking losses. Global markets posted a profit of $152 million, compared to a loss of $768 million a year ago.
Meanwhile, profit for the global wealth & investment management rose to $578 million from $272 million, global banking profit was up at $1.43 billion compared to $1.34 billion, and consumer & business banking profit grew 15 percent to $1.43 billion from last year.
Bank of America’s total provision for credit losses for the fourth quarter declined 25 percent to $2.20 billion from last year’s $2.93 billion, reflecting improved credit quality across most major consumer and commercial portfolios and the benefit of underwriting changes.
The company noted that credit costs continued to drop with net charge-offs declining. Total net charge-offs were $3.10 billion or 1.40 percent, lower than last year’s $4.05 billion or 1.74 percent.
At December 31, 2012, the company’s Basel 1 Tier 1 common capital ratio was 11.06 percent, and estimated Basel 3 Tier 1 common capital ratio was 9.25 percent.
For fiscal 2012, the company reported net income applicable to common shareholders of $2.76 billion or $0.25 per share, sharply higher than $85 million or $0.01 per share in the prior year. Analysts expected the company to report earnings of $0.24 per share for fiscal 2012.
Net income was $4.2 billion or $0.25 per share, up from $1.4 billion, or $0.01 per share in 2011.
Total revenue, net of interest expense, for the full year declined to $83.33 billion from $93.45 billion in the previous year. Street was looking for full-year 2012 revenues of $86.88 billion.
BAC closed Tuesday’s regular trading session at $11.78, up $0.20 on a volume of 164.08 million shares. In the past 52-week period, the stock has been trading in a range of $6.72 to $12.20.
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by RTT Staff Writer
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