Bank Of America Q2 2014 Conference Call Highlights
Bank of America (NYSE: BAC) released its Q2 2014 conference call Wednesday following its earnings.
The call consisted of short-term guidance and revenue breakdown for each of Bank of America's banking segments. Before the call, the bank reported EPS for the quarter of $4.89 compared to consensus EPS of $4.43. Revenue surpassed analyst expectations of $2.71 billion, as Bank of America reported revenue of $2.78 billion for the quarter.
Highlights From The Call:
- Purchase mortgage volume increase, increase mobile customers after rollout of a new advanced mobile banking platform in an earlier quarter.
- Banks total assets increased by $20.7 billion from its previous quarter, driven by more repo activity and an increase in securities balances.
- Bank of America reported $0.19 per diluted shares for Q2 2014.
- Litigation expense of $3.8 billion contribute to reserves.
- Settlement amount of $650 million including AIG to be an objector in litigation dispute.
- Mortgage rev offset by seasonal mortgage expected revenue.
- Expenses improve by six percent, expenses decline.
- Net income for the quarter has benefit from the sale of 2.01 billion in residential mortgage loans.
- Commercial loans had positive result, delinquencies continue to improve for the quarter.
- Tangible book value increased by three percent from Q1 2014.
- Series-T preferred shares stock issuance of $1.5 billion at favorable rate.
- Common equity tier 1 capital (CET1) came out to 12.0 percent, increasing by $7 billion from Q1 2014.
- Long-term debt increased from $2.3 billion from the bank's first quarter. Long-term debt yields declined by 0.12 percent from Q1 2014, mainly due to lower new issuance spreads.
- Lower consumer loan balances and lower loan yields due to rates decreasing within the quarter.
- Non-interest expense of $18.5 billion, decreasing by $3.7 billion from Q1 2014, included 4 billion in litigation, down $2 billion from Q1 2014. Litigation expense contribute to build bank reserves.
- Goal to reduce cost by optimizing network.
- Rates on deposits reported at an all-time low of six basis points.
- Bank of America announced the reduction of 72 new banking sales locations.
- Issued over 1.1 million in new total consumer credit cards domestically, 65 percent to existing customers.
- Consumer real estate services (CRES) increased net income by nearly $700 million. Improve mortgage origination in the banks CRES division increased by 25 percent from the previous first quarter result.
- Home loans saw better leverage as banking improved.
- In the bank's Global Market segment, average loans and leases of $271.4 billion, six percent for the quarter, increasing from Q2 2013 by $50 million, due to growth in Commercial & Industrial, Commercial Real Estate and Leasing.
- Consumer and Business Banking increased earnings by 29 percent from Q2 2013.
- FICC revenue increased by $117MM (5 Percent) from Q3 2014 due to better volume in mortgages and munis influencing a decline in foreign exchange and commodities revenues decreased in the second quarter by $576 million or 20 percent from Q1 2014 due to seasonality.
Equities revenue declined by $162 million (14 percent) compared to Q2 2013 and $121 million (11 percent) compared to Q1 2014 as low volatility depressed secondary market volumes and client activity
Tax rate lower, expects a 31 percent tax rate by the second half of 2015.
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