Bank of America Corp. (NYSE: BAC), the largest US bank by assets, is scheduled to release second quarter earnings before the opening bell on Friday, July 16, 2010. Analysts, on average, expect the company to report earnings of 20 cents per share on revenue of $29.69 billion. In the year-ago period, Bank of America reported earnings of 33 cents per share on revenue of $32.77 billion.
Bank of America Corporation, a financial holding company, provides a range of banking and nonbanking financial services and products in the United States and internationally.
In the preceding first quarter, the Charlotte, North Carolina-based bank reported better-than-expected first-quarter earnings, thanks to lower provision for bad loans. Net income fell to $3.2 billion, or 28 cents a share before preferred dividends, compared to $4.2 billion, or 44 cents a share, in the prior-year quarter. Revenue declined 11% to $32 billion. After preferred dividends, the company earned $2.8 billion or 28 cents per diluted share in the first quarter. Analysts, on average, expect the company to report earnings of 9 cents per share on revenue of $27.90 billion.
Last month, Bank of America reported that its 30-day delinquency rate for credit cards fell to their lowest levels this year. The company's delinquencies fell to 6.39 percent in May from 6.73 percent in April, but net charge-offs rose to 13.33 percent from 12.71 percent in April.
Industry experts expect Bank of America to report softer investment banking and trading revenues compared to the first quarter, reflecting the impact of volatile capital markets. However, the bank is expected to benefit from lower credit costs and improving net interest margins.
Late in June, House and Senate lawmakers reached landmark agreement on overhauling financial regulation, easing investors' anxiety over the bill. The approval of the historic financial regulation eliminated some of the uncertainty surrounding the financial industry. Although the lawmakers softened Obama administration's proposal to ban banks from proprietary trading, the exact impact of the legislation remains difficult to quantify. According to analysts at Goldman Sachs, new financial regulations could chop Bank of America's future earnings per share by as much as 25 percent.
Among other developments, Bank of America in June launched a new online brokerage called Merrill Edge to lure less affluent investors who trade through discount firms like Charles Schwab or E*Trade. Also, the company agreed to sell its 24.9% stake in Grupo Financiero Santander, also known as Banco Santander Mexico to Spanish banking giant Banco Santander (NYSE: STD) for $2.5 billion. In 2003, Bank of America acquired this same 24.9% stake from Santander for $1.6 billion.
Recently, Bank of America Corp. said in a regulatory filing that it wrongly classified up to $10.7 billion of short-term repurchase and lending transactions as sales from 2007 - 2009 when they should have been reported as debt. The bank said that the misclassifications were "not related to any fraud or deliberate error." It added that the accounting mistake was immaterial to its financial results and had no effect on its earnings.
In terms of stock performance, Bank of America shares have gained nearly 3.5 percent since the beginning of the year. Shares of the company rose 2.76% to $15.63 in mid-day trading on Tuesday.
Disclosure: Author doesn't own any of the stocks discussed here.
