About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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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.

Related Pages: Bank of America

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  |     |   Comment #1
Can't stand B of A, never have, never will. A bunch of cutthroat whiners with deceptive practices.
  |     |   Comment #2
All of B of A numbers posted for the public are bogus. They have 3 sets of books running in parallel and guess which one we are reading from. The other two sets are forbidden from the public view. I know someone who has seen these two hidden ledgers.
  |     |   Comment #3
To #2, you are right, I know that Chase, Citi and Well Fargo have also 3 sets of books, one for the public, one for the IRS (taxes) and one real one that only the top management has access to it.

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.
  |     |   Comment #4
For REAL INSIDE INFO READ A 100 YEAR OLD BOOK Frenzied Finance by Grover Lawson.  It gives the inside info on what really went on at Citibank's former name of National Cit6y Bank and the Rockefeller

group.  It's going on today, I guess.  Your eyes will really open.
  |     |   Comment #5
If anyone believes the B of A numbers issued for the public, you must also believe in Fairy Tales and Santa Claus. Banks are allowed to manipulate earnings, profits, expenses, time of     occurrences or non existent transfers, investments, gains, losses,....should I go on and on...I guess not, you got the picture of the numbers posted, they are there to mislead the public and stock holders and the naive readers.
  |     |   Comment #6
To #3 - Do you have any facts, or other reasonable basis at all, for your assertion of the three sets of books? If you have definitave proof, then tell us. If not, your apology would be in order. Baseless comments, such as yours, are of no value whatsoever to this forum. 
  |     |   Comment #7
To #3 - Do you have any facts, or other reasonable basis at all, for your assertion of the three sets of books?

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."
  |     |   Comment #8
Here we go....my dysfunctional politicians are better than your dysfunctional politicians. 
  |     |   Comment #9
actually it is legal for corporations to have at least 2 sets of books, as long as nothing is illegally withheld from the one reported to the government
  |     |   Comment #10
To #6 and $7, you must be going after the messenger instead of the bad guys.

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.
  |     |   Comment #11
Betchu, if servers at restaurants kept three sets of books on the tips they made, the IRS and Big Brother would be on them so fast.....well, you get the idea! What about bell hops in the big cities, taxi drivers, anyone working who count on tips as a large part of their income kept books.....what does that say about the priorities for the big businesses versus the low income earners? Thought so....
  |     |   Comment #12
To poster #11, don't forget that big corps. have tonnes of attorneys on their payroll and nobody dares to challenge their books, it will take years of lawsuits and millions of Dollars to challenge even single entry in the books and by that time the numbers will change to mislead anyone challenges the accuracy of the numbers.

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.
  |     |   Comment #13
I remember before Sept 15 2008 the term of "off the book transactions" being used in the same sentence with Bank of America.  I believe these were derivative trades.  I remember I had not retired yet and one my co-workers was heavily invested in Bank of America. I bought the "breaking news" article to him.  I remember talking with him about those terms. He went white. Lost a bundle.
  |     |   Comment #14
To poster(s) #6 and #7, you are the only unbeliever(s) of double or triple ledger standards at the banks and the other big Corps. The banks have been doing that for decades and now they are doing it with help from the Congress, go read about the poison assets deals and the FEDs and the treasury supposedly secret deals with the banks. Most of the quarterly reporting is make believe numbers thrown around just to please the stock holders, none of those numbers are real.
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.
  |     |   Comment #15
Well said Anonymous - #14, remember also this :

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.
  |     |   Comment #16
To #6 and #7, this is a proof you ask of how the big Corps. avoid taxes and report what ever they feel like with double or triple ledger books entries.

"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.
  |     |   Comment #17
12a, 12b, year end statements, stock holders forward looking numbers are all ficticious and are there to fool the readers. No bank on earth will ever tell you what the real numbers are and what is the present balance and conditions at the bank. Read it just for fun and to kill some time. Double and triple ledger entries are norm these days. Congress actually encourages  such entries to prop up the standings of the banks.
  |     |   Comment #18


READ this and weep.  I just got my Bank of America statement, Savings Account interest was now .09%  Taking my money elsewhere... pronto.




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