By Sital S. Patel 
 

Bank of America Corp. (BAC) is scheduled to release third-quarter results before the bell on Wednesday. Here's what you need to know:

EARNINGS FORECAST: The second-biggest U.S. bank by assets is expected to report a third-quarter loss of 9 cents a share, compared to a profit of 20 cents a share in the same quarter the year before, according to analysts surveyed by FactSet. The loss includes an expected charge of 43 cents a share tied to the bank's $16 billion mortgage settlement with the government in August.

REVENUE FORECAST: The bank is expected to report a decline in revenue. The consensus estimate is for revenue of $21.34 billion for the quarter, compared to $21.53 billion a year ago.

STOCK REACTION: Shares have gained nearly 5.5% so far in 2014 through Monday, but are 9% below their 52-week high of $18.03 a share. Shares have beaten the Financial Select Sector SPDR Fund, which tracks financial stocks in the S&P 500, and is up 2.4% year-to-date. Analysts have an average price target on the stock of $17.85, according to analysts surveyed by FactSet.

WHAT TO WATCH:

--LAW AND ORDER: The Charlotte, N.C.-based bank paid $16 billion in a settlement with the Justice Department and some individual states in August over its handling of bad mortgage securities related to the financial crisis. This latest settlement should put most of the bank's legal troubles behind it, with CFO Bruce Thompson calling it an important milestone for the bank. Investors will be closely watching for any comments from management regarding any remaining legal issues.

--CAPITAL PLANNING: Bank of America resubmitted its capital plan to the Federal Reserve in May, after it announced a capital error of $4 billion because of an accounting issue. The bank originally had requested a dividend payout of 5 cents a share, but it did not include a share repurchase plan in the resubmitted plan. Analysts are expecting a share repurchase request to appear in the next submission, which is coming up in January, and they will pay attention to any comments from management on use of capital.

--LOANS AND JOBS: Analysts are expecting the bank to continue to grow its loan book and to improve net interest income. They also are expecting more of the bank's loan-loss reserves to be released. In addition, they expect an update on the bank's cost-cutting plans, after it shed 31,000 full-time jobs in the past few years and announced planned cuts of $1 billion for each quarter of 2014 and $500 million per quarter of 2015.

-Sital S. Patel; @Sital; AskNewswires@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Bank of America (NYSE:BAC)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Bank of America Charts.
Bank of America (NYSE:BAC)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Bank of America Charts.