Preferreds inch higher; Bank of America rises on earnings beat; recent deals trade off

By Stephanie N. Rotondo

Seattle, July 18 – The preferred stock market ended with a firmer tone on Monday, though off of the day’s highs.

The Wells Fargo Hybrid and Preferred Securities index closed up 9 basis points. That was down from a gain of as much as 12 bps in afternoon trading.

The index was unchanged from Friday levels as of mid-morning.

Bank of America Corp.’s 6% series EE noncumulative preferreds (NYSE: BACPA) were trending higher after the company reported earnings that beat expectations.

The preferreds finished 15 cents better at $25.765.

The Charlotte, N.C.-based bank said that bond trading revenue helped its bottom line, though the results were lower than those seen in the previous year.

BofA posted a profit of $4.23 billion, or 36 cents per share. That compared to a profit of $5.13 billion, or 45 cents per share, the year before.

Revenue declined 7.1% to $20.4 billion. Adjusted revenue was $20.6 billion.

Analysts polled by Thomson Reuters had forecast EPS of 33 cents on adjusted revenue of $20.41 billion.

Trading revenue was the standout of the results, as that figure rose 12% to $3.7 billion, excluding an accounting adjustment.

BofA followed in JPMorgan Chase & Co. and Citigroup Inc.’s footsteps, as those banks saw their trading revenues improve by 23% and 15%, respectively.

The bank also touted its cost-cutting efforts, which reduced expenses by 3.3%.

While trading revenue was improved – despite concerns about the Brexit and its implications – one thing that continues to weigh on BofA is the low-interest rate environment. That resulted in a 12% decline in net interest income, which came to $9.21 billion.

Public Storage, Stifel slip

As for the primary space, a trader said he had not heard “of any new deals coming this week.”

“But I would be surprised if we didn’t see a few deals with bank earnings,” he noted.

As for deals from the previous week, Public Storage’s $300 million of 4.95% series D cumulative preferreds – a deal priced Wednesday – were continuing to trade around par, according to a trader.

At the close, the issue was seen off 2 cents at $24.92.

Meanwhile, Stifel Financial Corp.’s $150 million of 6.25% series A noncumulative perpetual preferreds – a deal priced July 11 – were seen bid at $25.90. The paper closed at that level, which was down a nickel.

Both issues are trading under temporary symbols, “PBSDP” for Public Storage and “STIFP” for Stifel.

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