And the Best Capitalized Bank Is…?
Bank of America’s (NYSE:BAC) third quarter earnings report, released on Wednesday, showed that it is now the best capitalized bank, beating out JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C).
As Forbes reported, it has been quite some time since the words “best-capitalized bank” were applied to Bank of America, but “that’s exactly what the bank can call itself today.” Before the 2008 financial crisis, it had the worst capital levels of all the big banks, but a large drop in risk-weighted assets this quarter improved capital levels by 102 basis points from last quarter.
According to Basel III regulatory standards, which were developed following the crisis, the bank reported capital levels of 8.97 percent. In comparison, Citigroup had levels of 8.6 percent in the last quarter, JPMorgan had 8.4 percent, and Wells Fargo had 8.02 percent. Many analysts, said Forbes, have doubted whether Bank of America could meet the stricter capital rules that Basel III dictates, which will go into effect in 2013. Now, that is no longer an applicable question.
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The improvement came as a great success for CEO Brian Moynihan, who received a lot of criticism last year when the bank’s stock fell 60 percent. With these third quarter results, Moynihan’s Project New BAC has shown to be, at least moderately, successful.
“He’s been delivering on that steadily over the last year as evidenced by the bank’s stock performance this year: up nearly 70% through 2012,” said Forbes.
On the banks earnings conference call, a Goldman Sachs analyst said that the bank was “the best-capitalized money center bank.”
For the third quarter, the bank reported a profit of $340 million and break-even earnings per share. The results were better than the 7-cent-per-share loss analysts expected. However, the results are down from last quarter, when the bank reported a 19 cent per share profit. Bank of America’s profits this quarter were hurt by several “one-time” items, including the settlement of litigation over the 2008 acquisition of Merrill Lynch, but that was expected.
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