Bank of America's Third Quarter Earnings Report from a Depositor Point of View
Bank of America came out with its third quarter earnings report. For those interested in the financial details, this Bloomberg article has a good overview of the report along with the recent issues on its foreclosure process. The title of the article "Bank of America Posts $7.3 Billion Loss on Cost of New Rules" makes it sound like Bank of America is hurting. However, this loss was due to a one-time goodwill impairment charge of $10.4B which BofA claims to be "a result of recent legislation and expected impact on debit card business." According to Bloomberg, "Excluding one-time gains and costs, the bank earned $3.1 billion, or 27 cents a share. The average estimate of 26 analysts surveyed by Bloomberg was 14 cents."
Instead of focusing on the financial aspects of the Q3 earnings report, I looked at it from a depositor point of view. I found a few interesting items in Bank of America's Earnings Results Presentation that I thought would be worthwhile to discuss:
Debit Card and Overdrafts
The big news for Bank of America's Q3 earnings report was the goodwill impairment charge of $10.4B. On page 14 of the presentation it stated that the "charge is a result of recent legislation and expected impact on debit card business." Below that statement it states that "some mitigation activities will benefit other business segments, mainly Deposits." That sounds like mitigation activities could include higher fees on deposit accounts.
Page 9 of the presentation had more details on overdrafts. It showed that 58% of fee-generating overdraft transactions came from point of sale debit. That is shown to be going away due to Regulation E. However, at the bottom of page 9 it stated that "nearly 40% of accounts now have overdraft protection." Regulation E required banks to request customer permission for overdraft protection. Apparently, 40% of BofA customers opted in. If that many customers opted in, will BofA really be impacted as much as it claims?
Low Deposit Rates
Deposit rates at Bank of America have always been low, and now they are especially low. An example is BofA's Featured 12-month CD which currently has a 0.60% APY. On page 17 of the presentation, you can see BofA's large interest rate spread (the difference between its loan rate and deposit rate). It shows the average rates paid on total deposits fell from 0.42% to 0.39% from Q2 to Q3. The average consumer loan yield in Q3 was 5.98%, and the average commercial loan yield in Q3 was 4.01%.
Consumer Banking Changes
On page 8 which is titled "Steady Progress on Customer-Focused Franchise", it gave the following bullet:
Introduced e-banking account, ATM emergency cash, and moving forward on new consumer account structure
I reported on the eBanking checking account that BofA rolled out in July. However, I haven't seen any mention of ATM emergency cash. A few more details were included on page 14 under the title "Continuing rollout of new initiatives to drive consumer revenue." On a positive note, it mentioned that Image ATMs are fully deployed. It also suggested that we should see fewer fees: "Recognizing and encouraging other methods of payment from customers in lieu of fees."
If Bank of America's eBanking Checking is a sign of what to expect at Bank of America, fees may only go down for customers who are willing to bank differently. For the case of the eBanking checking, you will have to avoid teller-assisted deposits or withdrawals if you want to avoid a $8.95 monthly fee.
I guess that GE, IBM, HP and many others have also multi sets of books. There is nothing illegal about it, except the deception is there to mislead the public and to manipulate the stock reporting.
group. It's going on today, I guess. Your eyes will really open.
UN troops in black helicopters following stickers on the back of highway signs...and Glenn Beck ranting that anyone to the left of Rand Paul is a "radical Marxist communist fascist socialist progressive."
Yes, most banks and the big corporations have multiple sets of books, and yes, they are allowed to manipulate the books. Go investigate first before bashing #3.
I agree with #3, he/she said it right.
For a single individual like you mention it, there is no comparison to the big wolves, they will be eaten by IRS at no time, since the private person can not hide behind a corporate Vail and IRS has access to any bank account you own.
Nobody knows where the money goes at the big banks. They exchange billions of money over night between them and foreign banks, not counting the daily sweeps into other securities and the profit that is created and from what and how. We are on their mercy to either accept or reject their money statements. Who would challenge the ledger entries and how do you prove it.
Every international Corp has additional sets of books of the operations abroad and who on earth will challenge those numbers and how?
Poster #2 and #3 are correct on their viewpoints also.
Yes, triple invoicing is a standard at most big Corps. no doubt about it, IRS knows it, Congressmen know that, most informed persons know it and yes #2 and #3 are right about it.
Income is not income until recognized and reported as such.
Loss is not a loss until recognized and written off.
The dates, amounts, time, expenses, circumstances can be manipulated at will, postponed, accelerated, carry over and number of other accounting tricks can be applied to look that a Corp. is in great shape, while it is rutting underneath.
Triple ledger is a norm today at most big Corps. B of A numbers are ficticious.
"After three years of negotiations, Google received approval from the IRS in 2006 for its transfer pricing arrangement, according to filings with the Securities and Exchange Commission.
The IRS gave its consent in a secret pact known as an advanced pricing agreement. Google wouldn’t discuss the price set under the arrangement, which licensed the rights to its search and advertising technology and other intangible property for Europe, the Middle East and Africa to a unit called Google Ireland Holdings, according to a person familiar with the matter."
Google paid only 2.4% tax Rate and cheated USA taxpayers of $60 Billions. All of the USA income was shifted through creative ledger entries and made all of the income liabiliry to disapear. All of the major banks are doing the same. B of A reporting is 100% false.
#######################################READ this and weep. I just got my Bank of America statement, Savings Account interest was now .09% Taking my money elsewhere... pronto.