Bank of America beats estimates, preferreds rise; BB&T, Goldman firm ahead of earnings

By Stephanie N. Rotondo

Phoenix, April 16 - Trading in the preferred stock space was again on the quiet side Wednesday, even as more bank earnings were rolling out.

The Wells Fargo Hybrid and Preferred Securities index was up 7 basis points as of mid-morning. At the bell, it was up 6 bps.

Bank of America Corp. reported its first-quarter results ahead of the open, showing a $276 million loss due to legal costs associated with the financial meltdown of 2007.

Revenues were meantime $22.76 billion, beating analysts' forecasts of $22.33 billion.

On an adjusted basis, the Charlotte, N.C.-based bank posted a profit of 35 cents per share. Analysts polled by FactSet were expecting 27 cents per share.

Post-earnings, the bank's preferreds were edging higher.

The 6.204% series D noncumulative preferreds (NYSE: BACPD) were up 7.1 cents at midday at $24.881. The shares finished the session up 6 cents at $24.87.

The floating rate series E noncumulative preferreds (NYSE: BACPE) meantime put on 17 cents, closing at $22.41.

The earnings reflected a pre-tax expense of $6 billion to cover litigation costs associated with mortgage-related issues stemming from the 2007 crisis. In addition to announcing the earnings, the bank also said that it had reached a $584 million settlement with the Financial Guaranty Insurance Co. in regards to nine residential mortgage-backed securities sponsored by BofA's Countrywide Financial Corp. unit and insured by FGIC.

First Republic Bank also put out numbers on Wednesday showing a decline in profit despite a gain in revenues.

The 7% series E noncumulative (NYSE: FRCPE) paper traded down 22 cents to $26.25.

Net income was $100.82 million, or 73 cents per share. That compared to income of $114.78 million, or 85 cents per share, the year before.

On an adjusted basis, profit was 67 cents per share versus 72 cents per share for the same quarter of 2013.

Analysts polled by Thomson Reuters were expecting 72 cents per share.

Still, revenues were higher, though they came in below analysts' forecasts. Total revenue increased 3.1% to $381.7 million. Analysts had predicted revenues of $395.92 million.

Meanwhile, BB&T Corp.'s preferreds were moderately active and mostly higher as investors prepare for the firm's numbers, which come out Thursday.

The 5.85% series D noncumulative perpetual preferreds (NYSE: BBTPD) were 5 cents higher at $23.92. The 5.625% series E noncumulative perpetual preferreds (NYSE: BBTPE) were holding steady at $22.74.

Goldman Sachs & Co. is also slated to release results on Thursday. Its preferreds were firming ahead of the announcement.

The 5.95% series I noncumulative preferreds (NYSE: GSPI) gained 8 cents, finishing the day at $23.38. The 5.5% series J fixed-to-floating rate noncumulative preferreds (NYSE: GSPJ) earned 3 cents, ending at $24.02.

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