Bank of America surprises the Street - CNN

FORTUNE -- Bank of America's (BAC) bottom line is springing back to life. Now it just needs its actual business to follow.

The bank, the nation's second largest by assets, said it earned $653 million in the second quarter. That was down 68% from a year ago. But after factoring out non-operating accounting adjustments, the company's earnings more than doubled from a year ago to $5.4 billion, which was far better than analysts had been expecting. On a per share basis, the company's adjusted earnings were $0.31. Analysts had predicted the company would earn $0.12 a share. Revenue, even after the adjustment, was down 3% from a year ago to $27.3 billion.

The strong operating results seemed to justify the company's huge rise in its stock price this year, which is up 60%. B of A has been one of the best performing stocks in the market this year.

MORE: Bank of America faces hurdles in rentals

Like other banks, B of A was helped by its home loan division, where sales rose 30%. The bank said it made $16 billion in mortgages and home equity loans in the quarter, driven by lower interest rates. The company said 84% of its home loans were to customers were who refinancing. Losses in the division, which is still being hit by foreclosures and defaults, were half of what they were a year ago. The company was also boosted by its Wall Street operations where bond trading was up significantly. Revenue from bond trading more than tripled in the quarter to $4.1 billion from the last three months of the year. The company cut 3,000 full time employees during the quarter, lowering expenses.

Nonetheless, many of Bank of America's other businesses were down or flat for the quarter. Revenue from its consumer and business banking operations fell $1 billion. The company's average deposits were about the same as a year ago. The company overall lending was down from a year ago.

What's more, biggest help to B of A's bottom came not from its own operations, but from an improving ability of its customers to pay their loans, and a rising belief that the bank is on sounder financial footing. The company charged off a third fewer loans than a year ago. What's more, the difference between what the bank had to pay to borrow versus Treasury bond yields dropped dramatically. That drop, called a credit value adjustment, lead to the bank's huge accounting adjustment in the quarter, causing bottom line earnings to fall. Those adjustments had added to earnings in past quarters.

MORE: Goldman Sachs' profit problems

And B of A is still feeling the affects of the housing downturn. The company said it lost $400 million from servicing mortgage loans. What's more, the company added $1.9 billion home equity loans to its tally on loans it expects won't get paid back. Regulators have eyed these loans as a coming problem for banks.

"Our strategy is paying off," said chief executive Brian Moynihan. "With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year."

Bank of America's stock initially jumped on the earnings news in pre-market trading. But shortly after the market opened, much of those gains disappeared. Recently, Bank of America's shares stood at $9, up less than 1% since the marketed opened on Thursday.

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Bank of America, Morgan Stanley profits plunge but beat estimate - Los Angeles Times

Bank of America reported falling profit, but excluding a one-time accounting charge, its earnings beat estimates. (David Paul Morris / Bloomberg / April 19, 2012)

Income at both Bank of America Corp. and Morgan Stanleytook a tumble in the first quarter, but excluding one-time accounting charges, both banks’ earnings managed to beat analyst expectations.

Both stocks are now trading up. Bank of America roared out of the gate before settling a bit in morning trading, where it is now up 1.3%, or 12 cents, to $9.04 a share. Morgan Stanley also deflated a bit after starting strong, but is still trading up 3.2%, or 57 cents, at $18.23.

Bank of America said its net income fell to $653 million, or 3 cents a share, from $2 billion, or 17 cents a share a year earlier.

But the bank attributed much of the slide to a $4.8-billion charge related to narrower credit spreads. Without the hit, BofA said its profit is up 40% to $3.7 billion, or 31 cents, from $2.6 billion, or 23 cents last year.

Revenue fell 17% to $22.5 billion from $27.1 billion.

PHOTOS: Bank of America voted second worst company in America

But “improving global markets sentiment as the European debt crisis stabilized coupled with favorable news regarding the U.S. economic environment” helped boost BofA’s revenue for its fixed income, currency and commodities (FICC) arm by $432 million.

Overall global trading income spiked to $798 million from a $768-million loss in the fourth quarter, though the amount still trailed last year’s first-quarter $1.39-billion profit.

With credit quality improving, the bank's bad-loan provisions fell 37% to their lowest level since mid-2007, the bank said.

The bank said it extended $102 billion in credit during the quarter, including $66.6 billion in commercial non-real estate loans, $15.2 billion in residential mortgages (84% for refinances) and $4.4 billion in cards for U.S.-based consumers and small businesses.

New credit card accounts were up 19%.

“Our strategy is paying off:?With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year,” Chief Executive Brian Moynihan said in a statement.

Morgan Stanley, meanwhile, reported revenue dropping to $6.9 billion from $7.6 billion during the same quarter a year earlier due to a similar $2-billion credit spread-related accounting charge.

But without the charge, revenue was up 14% to $8.9 billion from $7.8 billion. Revenue from Morgan Stanley’s investment banking operations soared 33% to $5 billion.

The bank slumped to a loss of $78 million, or 5 cents a share, after earning $984 million, or 51 cents a share a year ago from continuing operations. Profit without the charge was $1.4 billion, or 71 cents a share.

Like Bank of America, Morgan Stanley also said that trading revenue was lifting even though its asset-management business was weak.

"This quarter is further evidence that Morgan Stanley has rebounded from the financial crisis of 2008 and is in a significantly stronger position,” Chief Executive James P. Gorman said in a statement.

Morgan Stanley also said it set aside $4.4 billion for employee compensation and benefits, a 3% increase from last year – including severance for the workers it laid off in January. Each of its more than 62,000 employees gets an average of about $74,000.

Goldman Sachs Group Inc. paid out roughly the same amount – a 16% smaller purse than last year. Each of its more than 32,000 workers will earn an average of $135,000. JP Morgan Chase & Co.’s allowance shrank 12% to $2.9 billion, giving each of its nearly 26,000 workers about $113,000 each.

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GLOBAL MARKETS-Stocks falter on Spain, US data; bonds gain - Reuters

* Stocks ease after tepid U.S. economy data, Treasuries rise

* Oil futures gain on initial reaction to Spain's debt sale

By Herbert Lash

NEW YORK, April 19 (Reuters) - Global stocks fell and government debt rose on Thursday despite solid demand for Spanish bonds as investors remained skeptical about the fiscal soundness of the euro zone and softer-than-expected U.S. economic data damped sentiment.

The pace of factory activity in the U.S. mid-Atlantic region waned in April for the first time in five months, as gauged by the Philadelphia Federal Reserve. The government said the number of Americans claiming unemployment benefits for the first time fell only slightly last week, dampening hopes for a stronger economy.

"We have had a pretty poor round of economic data here. Philly Fed is the second major manufacturing data that has slipped, which is potentially an ominous sign for manufacturing," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

The Dow Jones industrial average was down 30.66 points, or 0.24 percent, at 13,002.09. The Standard & Poor's 500 Index was down 1.81 points, or 0.13 percent, at 1,383.33. The Nasdaq Composite Index was up 7.47 points, or 0.25 percent, at 3,038.92.

In Europe, equity markets extended losses after the weaker-than-expected U.S. economic data.

The pan-European FTSEurofirst 300 was down 0.2 percent at 1,043.97 points. The euro zone-only Euro STOXX 50 fell 1.5 percent to 2,292.95.

The euro tracked a rise in credit default swaps and a widening of yield spreads between safe-haven German bunds and debt issued by weaker countries like Spain and Italy in the euro zone. The yield gap suggested growing nervousness about liquidity in the financial system and sustainability of the region's debt.

"This is all emblematic of the fact that the market remains very nervous about the state of credit in the euro zone," said Boris Schlossberg, director of FX research at GFT Forex in Jersey City.

"Despite the fact that we had a decent Spanish bond auction, there is just basic skepticism not only about the sovereign debt market but also the health of the overall banking system, particularly in Spain."

Spain's Treasury issued 2.5 billion euros in two- and 10-year bonds, at the top end of the targeted amount. Yields on the key 10-year bond were higher, however, reflecting fears that Spain may miss budget deficit targets and about its banking sector.

The euro rebounded after ealier declines, gaining 0.2 percent to $1.314. The dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index down 0.05 percent at 79.499.

New claims for unemployment benefits in the United States fell last week, but from an upwardly revised number a week earlier, the U.S. government said on Thursday, leaving new claims at 386,000, above the Reuters consensus forecast of 370,000.

The data could dim hopes of a pick-up in job creation in April after last month's slowdown, but employment growth is unlikely to sharply retreat like last year, said Alan Levenson, chief economist at T. Rowe Price in Baltimore.

"We're seeing a step-wise improvement even if we do get some similarities in the pattern between last year and this year, the pullback in employment growth is going to be more gentle," said Levenson. "We've not sustained the shocks this year that would prompt the kind of prolonged deceleration we had last year."

U.S. Treasuries' prices rose on after the higher-than-forecast new U.S. jobless claims appeared to fortify prospects for accommodative monetary policy in the months ahead.

The benchmark 10-year note rose 5/32 on the news, its yield easing to 1.96 percent.

Crude oil bounced off a two-month low set the previous session after the Spanish bond auction.

Brent June crude gained 63 cents to $118.60 a barrel.

U.S. May crude fell 20 cents to $102.47 a barrel.

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Home sales fall in March, mortgage rates remain low - USA TODAY

WASHINGTON – Americans bought fewer previously owned homes in March, a sober reminder that the housing market remains weak despite mortgage rates that continue to hover near record lows.

By Jae C. Hong, AP

A for-sale sign stands in front of a bank-owned home in Las Vegas (file photo).

By Jae C. Hong, AP

A for-sale sign stands in front of a bank-owned home in Las Vegas (file photo).

The National Association of Realtors said Thursday that home sales fell 2.6% last month to a seasonally adjusted annual rate of 4.48 million. That followed a revised 4.6 million sold in February.

Meantime, the average rate on the 30-year fixed mortgage stayed near its lowest level on record, keeping home-buying and refinancing affordable.

A mild winter may have encouraged more people to buy earlier, essentially stealing sales from March.

Sales fell across most of the country. They were unchanged on a seasonal basis in the Midwest but fell by 1.1% in the South, 1.7% in the Northeast and 7.4% in the West.

The first three months of 2012 made up the best winter for sales in five years. The increase offers some encouragement ahead of the spring-buying season. Still, sales remain far below the 6 million per year that economists equate with healthy markets.

First-time buyers, who are critical to a housing recovery, rose to 33% of all purchases last month. In healthy markets, they make up at least 40%.

The supply of homes on the market fell 1.3% last month to 2.37 million, which could help drive up prices further in the coming months.

One reason is that home foreclosures declined, although they are still high. Homes at risk of foreclosure made up 29% of sales, down from 34% in February. In healthier markets, foreclosures make up less than 10% of sales.

There have been other signs in recent months that the housing market is slowly improving.

Builders are laying plans to construct more homes in 2012 than at any other point in the past 3 1/2 years. More jobs and a better outlook among buyers could also make 2012 the first year since 2008 that construction adds to the U.S. economy.

The unemployment rate has fallen from 9.1% in August to 8.2% last month. Employers added an average of 212,000 jobs a month from January through March.

Mortgage rates are hovering just above record lows. And the median sales price of homes rose for the second straight month in March, to $163,800.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan rose last week to 3.9% from 3.88%. The rate touched 3.87% in February, which was the lowest since long-term mortgages began in the 1950s.

The 30-year loan is the most common financing option for home buyers.

The 15-year mortgage, which is popular with those refinancing, rose to 3.13% from 3.11%, an all-time low.

Cheaper mortgages have done little to boost home sales. Americans bought 2.6% fewer homes in March, according to a separate report released by the National Association of Realtors.

Some would-be buyers are skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled some home contracts. And many Americans are struggling with damaged credit and unstable finances.

To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7. The fee for the 15-year loan was unchanged at 0.7.

For the five-year adjustable loan, the average rate fell to 2.78% from 2.85%. The average fee for the loan was unchanged at 0.7.

The average fee on the one-year adjustable loan ticked up to 2.81% from 2.80%. The average fee was unchanged at 0.6.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.For more information about reprints & permissions, visit our FAQ's. To report corrections and clarifications, contact Standards Editor Brent Jones. For publication consideration in the newspaper, send comments to letters@usatoday.com. Include name, phone number, city and state for verification. To view our corrections, go to corrections.usatoday.com.
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Nokia takes big loss, presses ahead with restructuring - AFP

Nokia takes big loss, presses ahead with restructuringBy Rebecca Libermann (AFP) – 5 hours ago?

HELSINKI — Nokia, the world's biggest mobile phone maker, reported a much worse-than-expected first quarter loss Thursday as it presses ahead with an extensive restructuring of its faltering business.

Nokia issued a profit warning last week but the net loss of 929 million euros ($1.2 billion) in the first quarter of the year was far beyond the loss of 554 million euros expected by analysts polled by Dow Jones Newswires.

Sales fell 30 percent on a 12-month comparison to 7.35 billion euros but this figure was in line with analyst forecasts.

"We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly," Nokia chief executive Stephen Elop said.

"Over the last year we have made progress on our new strategy but we have faced greater than expected competitive challenges," he said.

The Finnish company is undergoing a major restructuring, phasing out its Symbian smartphones in favour of a partnership with Microsoft that has produced a first line of Lumia smartphones.

Nokia is counting on the new phones to help maintain its ranking as the world's number one but it is operating in a rapidly changing landscape with RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform taking growing bites out of its market share.

Elop said sales of Lumia smartphones in the United States had exceeded expectations but had been disappointing in other markets such as Britain.

In the quarter, Nokia posted an operating loss of 1.34 billion euros, almost double the loss of 731 million euros expected by analysts.

Nokia shares fell a sharp 3.7 percent in late afternoon trade while the broader Helsinki market was up 0.9 percent.

Despite the pressure on Nokia smartphone sales, analyst Ari Hakkarainen at Andalys consultancy said that the early signs of success in the United States were a reason for optimism.

"If they succeed this year with Lumia in the US, it will have a very positive effect, also outside the United States," the analyst said.

But with overall sales still flagging, Nokia announced in a separate statement that Colin Giles, executive vice president of sales and a member of the Nokia leadership team, would leave the company effective June 30.

Nokia said it was restructuring the sales team by removing a layer of management "to ensure greater customer focus" and provide senior executives a "greater visibility into market dynamics."

Pohjola Bank analyst Hannu Rauhala said Nokia had little choice than to stick with its turnaround plan.

"Nokia has chosen this Windows strategy and smart phone so they have got to stay with it to the end ... They are now executing this strategy. It's not complete yet. So we have to wait till the end of this year," Rauhala said.

Nokia said Thursday it was launching the top-of-the-line Lumia 610 in Asia next week in what is to be a crucial test.

On Monday, international ratings agency Moody's downgraded its ratings for Nokia owing to poor prospects for sales.

Copyright ? 2012 AFP. All rights reserved. More ?

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US Stocks Higher Despite Weak Jobs, Housing Data; DJIA Rises 39 - Wall Street Journal

--Stocks trading higher although jobless claims, existing home sales worse than expected

--Europe mostly down; Spain falls on mixed reading of debt auction

--Bank of America, EBay rise on results

NEW YORK (Dow Jones)--U.S. stocks traded higher after a handful of upbeat earnings reports, as investors shrugged off disappointing readings on the domestic jobs and housing markets.

The Dow Jones Industrial Average added 39 points, or 0.3%, to 13072 in mid-morning trade. Standard & Poor's 500-stock index gained 4 points, or 0.3%, to 1389 and the Nasdaq Composite tacked on 25 points, or 0.8% to 3057.

Among the Dow components ...

--Stocks trading higher although jobless claims, existing home sales worse than expected

--Europe mostly down; Spain falls on mixed reading of debt auction

--Bank of America, EBay rise on results

NEW YORK (Dow Jones)--U.S. stocks traded higher after a handful of upbeat earnings reports, as investors shrugged off disappointing readings on the domestic jobs and housing markets.

The Dow Jones Industrial Average added 39 points, or 0.3%, to 13072 in mid-morning trade. Standard & Poor's 500-stock index gained 4 points, or 0.3%, to 1389 and the Nasdaq Composite tacked on 25 points, or 0.8% to 3057.

Among the Dow components ...

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Unemployment-aid requests at 4-month high - MarketWatch

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The number of Americans who filed requests for unemployment insurance last week hovered near a four-month high, defying expectations that applications would begin to recede after a recent spike.

Weekly jobless claims totaled 386,000, seasonally adjusted, in the week ended April 14, the U.S. Labor Department reported Thursday.

Jeannette Neumann and David Weidner talk with Paul Vigna about weekly initial jobless claims slipping by only 2,000. Photo: AP

Claims from two weeks ago were revised up to 388,000 from an initial reading of 380,000. It was the second straight time claims were revised higher by an unusually large amount.

The higher level of claims, along with report showing slower growth among manufacturers, undercut U.S. stocks in Thursday trades. The Dow Jones industrial average was down almost 30 points in recent action.

Economists surveyed by MarketWatch had projected claims would fall to 374,000 in the latest week. The level of claims is a rough gauge of whether layoffs are rising or falling.

The weekly claims data is often hard to decipher in April because of the Easter holiday and spring break, when many school workers such as bus drivers and cafeteria workers are eligible to receive temporary benefits.

Yet the uptick in claims, which touched a four-year low in mid-February, is sharp enough to spark concerns about whether the labor market is losing steam again.

“Initial claims have been appreciably above our forecasts for two weeks and a failure over the next couple of weeks of initial claims to move back toward levels seen earlier this year would make us a little uneasy about our expectations for continued labor market improvement,” said John Ryding of RDQ Economics.

Most economists expect claims to resume a downward drift in upcoming months, but they are watching to see if slower growth in China and a European downturn start to take a bite out of U.S. hiring. A disappointing March employment report has put Wall Street on guard.

Some economists also question the accuracy of the government’s method for seasonally adjusting the data, which is supplied to the Labor Department by the individual states

The average of new claims over the past four weeks, meanwhile, rose by 5,500 to 374,750 — the highest level since late January. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends,

Also Thursday, the Labor Department said continuing claims increased by 26,000 to a seasonally adjusted 3.3 million in the week ended April 7. It was the first increase in six weeks.

Continuing claims, which reflect people already receiving benefits, are handled by the states and typically last six months.

About 6.77 million people received some kind of state or federal benefit in the week ended March 31, down 187,807 from the prior week. Total claims are reported with a two-week lag.

In a separate report Thursday, the Philadelphia Federal Reserve said its survey of manufacturing executives fell to 8.5 in April from 12.5 in March. Although readings above zero indicate growth, not contraction, it was the first decline in six months. Read report on Philly Fed.

Another report showed a decline in the sale of existing homes in March, though the leading economic index rose. Read about home sales here and leading indicators here .

Jeffry Bartash is a reporter for MarketWatch in Washington.

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