Bank of America’s Q4 Profits Plunge After Charges for Regulatory Settlements are Booked (BAC)

Before the bell on Thursday financial services giant Bank of America Corp (BAC) posted its fourth quarter earnings report showing a dramatic drop in profits due to mortgage-related charges.

The Charlotte, North Carolina-based company reported fourth quarter earnings of $700 million, or 3 cents per share, down -65% from the $2 billion, or 15 cents per share, earned in the same period a year earlier. According to Thomson Reuters this adjusted profit was a slight beat to Wall Street expectations, as analysts were estimating the company would earn 2 cents per share.

Bank of American’s quarterly report included a number of one-time items that contributed to the fall in profits. Included in these items were about $5 billion in charges to use for its share of settlements with government regulatory agencies in response to mortgage and foreclosure controversies.

Profits were helped by a bit by lower provision for bad loans, an +58% increase in investment banking fees, and a broad cost-cutting plan enacted in 2011.

Revenue for the quarter dropped -25% to $18.66 billion. Analysts were expecting revenue of $21.03 billion.

Chief Executive Brian Moynihan said Thursday that the bank has entered 2013 “strong and well positioned for further growth.”

Shares of Bank of America were down 17 cents, or -1.44%, during premarket trading on Thursday. The stock is up +78.21% over the past year.

The Bottom Line
Shares of Bank of America (BAC) have a .34% dividend yield, based on last night’s closing stock price of $11.78. The stock has technical support in the $10-$10.50 price area. If the shares can firm up, we see overhead resistance around the $12-$13.50 price levels.

Bank of America Corp (BAC) is not recommended at this time, holding a DARS™ Rating of 3.1 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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