Bank of America Corporation (BAC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report
Putting an end to the concerns surrounding Bank of America's third-quarter 2014 earnings following its huge mortgage settlement, the company came out with a year-over-year improvement in adjusted (restated) earnings. Well-controlled expenses and better-than-expected top line growth supported the results. However, a rise in provision for credit losses as well as lower mortgage banking and equity investment income were the dampeners. We expect measures like balance-sheet restructuring, expense-reduction and branch consolidation to bolster the company's growth prospects. Further, the company has been witnessing improvement in asset quality and strong capital ratios. Nevertheless, persistent pressure on the top line, prevailing low-rate environment and various regulatory and litigation issues will continue to impact the company's near-term performance.
Headquartered in Charlotte, NC, Bank of America Corporation is a financial holding company. Its banking and non-banking subsidiaries across the U.S. and in other international markets provide a diverse range of banking and non-banking financial services and products.
In Oct 2014, Bank of America completed the merger of its subsidiary FIA Card Services, National Association (FIA) into Bank of America, National Association (BANA), in sync with its plan to streamline and simplify the legal entity.
Bank of America conducts its operations through the following segments:
The Consumer and Business Banking (CBB) segment, comprising Deposits and Consumer Lending businesses, provides a wide range of credit, banking and investment products and services to consumers and businesses.
The Consumer Real Estate Services (CRES) segment includes Home Loans and Legacy Assets & Servicing. The segment originates first and second-lien mortgage loans. The first-lien mortgage loans are generally sold into the secondary mortgage market or to Corporate Investments in the All Other segment while retaining servicing and the customer relationship. Second-lien mortgages are retained on the segment's balance sheet. The segment services mortgage loans including those it owns, loans owned by other segments as well as those owned by outside investors.
The Global Banking segment, which includes Global Corporate and Global Commercial Banking, as well as Investment Banking, offers a diversified range of lending-related products and services, integrated working capital management and treasury solutions to clients through the network of offices and client relationship teams along with various product partners. Lending products and services include commercial loans and commitment facilities, real estate lending, asset-based lending and indirect consumer loans.
The Global Markets segment offers sales and trading services, including research, to institutional clients across fixed-income, credit, currency, commodity and equity businesses. The segment provides market-making, financing, securities clearing, settlement and custody services globally to the institutional investor clients in support of their investing and trading activities. It also works with commercial and corporate clients to provide risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income and mortgage-related products.
The Global Wealth & Investment Management (GWIM) segment comprises two main businesses Merrill Lynch Global Wealth Management and U.S. Trust, Bank of America Private Wealth Management. The segment offers investment and brokerage services, estate management, financial planning services, fiduciary management, credit and banking expertise, as well as diversified asset management products to institutional clients and also to affluent and high-net-worth individuals.
The All Other segment consists of two broad groups, Equity Investments and Other. Equity Investments includes Global Principal Investments, strategic and other investments. Other comprises liquidating businesses, merger and restructuring charges, ALM functions and related activities and the impact of certain allocation methodologies. Other also includes certain residential mortgage and discontinued real estate products that are managed by Legacy Assets and Servicing within CRES segment.
Bank of America operates in 50 states, the District of Columbia and in more than 40 countries. It has approximately 4,947 retail banking centers, about 15,675 automated teller machines (ATMs), nationwide call centers as well as online and mobile banking platforms.
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