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Bank Of America Corp (NYSE:BAC) 3Q Results To Be Impacted By Settlements With Justice Department

Bank Of America

Boston, MA 10/14/2014 (wallstreetpr) – Bank of America Corp (NYSE:BAC) is predicted to run into losses in the third quarter as a result of its comprehensive settlement with the Justice Department on resolving mortgage-related investigations and litigation. The company is scheduled to announce its financial results on October 15.

Expectations Dropped

Ever since Bank Of America Corp (NYSE:BAC) said that its third quarter results would be unfavorably affected by the settlement, Wall Street analysts’ have reduced their expectations of earnings for the third quarter. The company indicated $5.3 billion pre-tax earnings or 43 cents a share unfavorable impact due to its settlement with the Justice Department.

As a result, Street analysts’ currently expect Bank of America to incur a loss of nine cents a share during the third quarter. Three months back, analysts were projecting 32 cents a share, which was reduced by one cent a share to 31 cents a share two months ago.

This apart, Street is predicting the company to record 80 basis points fall in revenue to $21.35 billion from $21.53 billion generated in the year-ago quarter.

Bank Of America Corp (NYSE:BAC)’s earnings also failed to meet the Street expectations in the last two quarters of the current year. However, in the preceding two quarters, its earnings came in above the expectations.

Weak Client Activity

The Bank would likely to have witnessed weak client activity in the September quarter adding to its woes. Report suggests that it would have faced soft trading volume with a modest rise was witnessed only during the month of September, which would not be enough.

As a result of weaker than expected trading and mortgage-banking activities, Bank Of America Corp (NYSE:BAC)’s non-interest income would likely to have faced pressures. However, its continued strength in the IPO and M&A activities should offset the weakness partly.

Bank Of America Corp (NYSE:BAC) is likely to gain from its continued efforts to reduce its costs. It has been engaged in consolidated its branches besides closing down or divesting unprofitable businesses. It would likely result in the reduction of operating costs. However, will these favorable factors compensate the weaknesses remained to be seen.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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