Bank of America (BAC) Stock Jumps on Improved Earnings
Bank of America (NYSE: BAC) stock is up 6.3% in pre-market trading this morning after the bank reported earnings of $2 billion, or 15 cents a share, in the fourth quarter. That was a vast improvement from the same quarter a year ago, when the Charlotte, North Carolina-based bank lost money to the tune of 16 cents a share.
Bank of America turned a profit in part by reducing its debt. The bank’s long-term debt declined $27 billion to $372 billion from the previous quarter. Importantly, the bank reduced its exposure to sovereign debt in Portugal, Italy, Ireland, Spain and Greece by a combined $4.4 billion – 9% less exposure than it had a year ago.
It wasn’t all good news for Bank of America, however. Like most other big banks last quarter, its investment banking business declined due to the volatility in the market. The bank also cut 7,000 employees in the fourth quarter on the way to meeting its goal of shedding 30,000 employees, or 10% of the company’s staff.
“A full recovery to what we would call normal may take some time,” said CEO Brian Moynihan.
Overall, 2011 was a year in which Bank of America returned to profitability. For the year, the bank generated $1.4 billion in net income. The bank lost $2.2 billion in 2010.
While full-year revenue dropped 15% to $94 billion from 2010, the bank’s fourth-quarter revenue of $25.1 billion was up 11% from the same quarter a year ago and beat analyst expectations of $24 billion.
