Bank of America’s (BAC) first-quarter 2011 earnings came in substantially lower than the Zacks Consensus Estimate. Lower top line and higher non-interest expense were primarily responsible for lower-than-expected results. Reduced mortgage banking income and higher litigation expenses were also among the negatives.
The Federal Reserve’s objection to the company’s proposed capital deployment in the second half of 2011 remains a major headwind at this point. After reviewing the results, we are maintaining our Underperform recommendation on the shares.
We are also concerned about Bank of America’s elevated cost structure. Non-interest expense rose significantly during the last two quarters of 2010. As the company is in the process of addressing legacy issues and continues to invest in its franchise, expenses are expected to remain high through 2011.
BANK OF AMER CP (BAC): Free Stock Analysis Report
Zacks Investment Research
