One-Time Adjustment Propels Bank of America to Q3 Profit (BAC)

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Embattled banking giant Bank of America Corp ( BAC ) on Tuesday said it swung to a third quarter profit, driven by a huge one-time gain tied to revaluation of its own debt.

The Charlotte, NC-based company reported third quarter net income of $5.89 billion, or 56 cents per share, compared with a net loss of $7.65 billion or -77 cents per share, in the year-ago period.

The company's latest results were littered with one-time adjustments and gains, and thus were not comparable with Wall Street analysts' average estimate for a 20 cent per-share profit.

BAC noted the following one-time items in its report:

  • A $4.5 billion gain for positive fair value adjustments on structured debt,
  • A $3.6 billion pretax gain from the recent sale of its stake in China Construction Bank,
  • A $1.7 billion pretax gain in trading Debit Valuation Adjustments ( DVA ), and
  • A $2.2 billion pretax loss of stemming from private equity and strategic investments.

Total revenues, net of interest expenses, rose 6.5% from last year to $28.45 billion, while analysts had expected $25.95 billion in revenue for the quarter.

Bank of America shares rose 12 cents, or +2%, in premarket trading Tuesday.

The Bottom Line
Shares of Bank Of America ( BAC ) have a .66% dividend yield, based on last night's closing stock price of $6.03. The stock has technical support in the $5 price area. If the shares can firm up, we see overhead resistance around the $8 price level.

Bank of America Corp ( BAC ) is not recommended at this time, holding a DARS™ Rating of 2.6 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 .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: BAC , DVA

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