Saturday January 17, 2009
Navivest

Bank of America Corporation (BAC) yesterday reported that for fiscal year 2008, revenue on a fully taxable-equivalent basis, climbed by 8% to $73.98 billion from $68.58 billion a year ago.

BofA also reported that net interest income, which is the difference between the interest income that a bank earns from its loans and investments on funds collected from depositors and the interest paid to those depositors, increased to $46.55 billion from $36.19 billion in 2007, on higher market-based income, consumer and commercial loan growth, the favorable rate environment and the addition of Countrywide and LaSalle.

The bank’s net interest yield grew by 38 basis points to 2.98%, on what it terms a “more favorable interest rate environment and product mix.”

BofA reported that its full-year 2008 net income was $4.01 billion compared with net income of $14.98 billion a year earlier.

Earnings after preferred dividends were $2.56 billion, or $0.55 per diluted share, down from $14.80 billion, or $3.30 per share.

Analysts were looking for full year revenues of $77.73 billion and EPS of $1.07.

Non-interest income fell 15% to $27.42 billion from $32.39 billion in 2007 and non-interest expense increased 11% to $41.53 billion from $37.52 billion a year ago. This rise was mostly attributable to the acquisition of Countrywide.

For the fourth quarter 2008, revenue net of interest expense on a fully taxable-equivalent basis, rose 19% to $15.98 billion from $13.45 billion a year earlier.

Net loss for the fourth quarter was $1.79 billion compared with a net income of $268 million in Q4 2007. The net loss applicable to common shareholders was $2.39 billion, or $0.48 per diluted share, down from Q4 2007’s net income of $215 million, or $0.05 per share. The results took into account, the financial performance of Countrywide Financial, which Bank of America purchased on July 1, but not Merrill Lynch & Co., Inc., which BofA acquired on January 1, 2009.

Q4 net interest income on a fully taxable-equivalent basis rose 37% to $13.41 billion from $9.82 billion in the fourth quarter of 2007 on higher market-based income, the favorable rate environment, loan growth and the acquisition of Countrywide. The net interest yield improved 70 basis points to 3.31%.

Non-interest income declined 29% to $2.57 billion from $3.64 billion a year earlier. The bank did realize increases in mortgage banking income, gains on sales of debt securities, insurance premiums and service charges. However, those gains were more than offset by sales and trading losses in the Capital Markets and Advisory Services business.

For the quarter, analysts had been looking for revenues to come in at $20.60 billion, with net income of $0.02 per share.

The bank’s Q4 provision for credit losses rose to $8.54 billion from $3.31 billion in the fourth quarter of 2007.

Preliminary results are indicating a Q4 2008 net loss of $15.31 billion, or $9.62 per diluted share, in the company’s newly acquired Merrill Lynch division.

Because of the Merrill Lynch losses, the government made a further $20 billion purchase of preferred shares in Bank of America and also agreed to provide protection against losses on $118 billion of assets that BofA now has on its books from the Merrill Lynch acquisition.

While it is now a widely accepted theory that Bank of America bough Merrill Lynch, not because it wanted to, but because they were prodded by Treasury Secretary Henry Paulson, analysts are wondering why the purchase was made, since being that it was only four months ago that they made the purchase, there’s no way that they would have missed these pending losses, with probably more to come, if they had carried out any sort of due diligence.

In addition to the earnings announcement, Bank of America yesterday, also announced that it will cut its quarterly dividend to $0.01 per share from $0.32.

The stock fell $1.14 or 13.70%, to $7.18 in regular session trading on Friday.

Tags: Bank of America  Earnings  Merrill Lynch Countrywide