Morning Commentary: Preferred stock market subdued as banks start to report quarterly results

By Stephanie N. Rotondo

Seattle, Jan. 13 – Bank earnings season kicked off on Friday, with Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. all reporting fourth-quarter results.

However, the news was doing little to spur activity in the preferred stock space.

“People were expecting good earnings,” a trader said. “BofA is the only one that kind of disappointed. Wells and JPMorgan did well.”

BofA posted earnings per share of 40 cents on revenue of $20.22 billion. EPS was better than analysts’ projections of 38 cents, though revenue was lower than the $20.76 billion forecast.

Though the trader said Wells Fargo outperformed BofA in its earnings report, analysts polled by Thomson Reuters disagreed. The San Francisco-based bank posted EPS of 96 cents, versus estimates of $1.00. Revenue came in at $21.58 billion, compared to expectations of $22.45 billion.

As for JPMorgan, adjusted EPS was $1.58. Analysts polled by Thomson Reuters had predicted EPS of $1.44.

Total revenue was up 2.5% at $24.33 billion, versus forecasts of $23.95 billion.

But while the market had been looking forward to the earnings, there was little reaction in the banks’ preferreds.

BofA, for its part, was mostly weaker, as was JPMorgan. Wells Fargo’s preferred issues, however, were mostly better, though its most active issue – the 5.5% series X class A noncumulative preferreds (NYSE: WFCPrX) – declined 3 cents to $24.07.

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