Bank of America's Adjusted Earnings Seen Rising -- Earnings Preview

Bank of America Corp. is expected to report its fourth-quarter results before the market opens Wednesday. Here's what you need to know.

Adjusted Profits Move Higher

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Analysts are expecting Bank of America to post adjusted per-share earnings of 44 cents for the quarter, according to Thomson Reuters, compared with 40 cents in the year-earlier period. On a reported basis, or under generally accepted accounting principles, earnings per share are expected at 14 cents, reflecting one-time effects related to the tax law.

Revenue Climbs

Revenue of $21.53 billion is forecast, compared with the $19.99 billion reported in the year-earlier quarter.

Tax Hit

Bank of America is expected to take a hit of roughly $3 billion to earnings this quarter from the recently passed tax bill. It comes largely from writing down its "deferred tax assets." These are created by losses, in many cases huge ones racked up during the financial crisis, and act as IOUs that can be used to offset future tax bills. These assets lost value because of the tax changes. Investors have shrugged off the charges at other banks because the write-downs have been anticipated and are expected to be outweighed by the benefits of corporate tax cuts that start this year.

Recovery Milestone

Excluding major one-time charges like the tax hit, the bank's profit for 2017 is expected to hit $19.3 billion. That would be the bank's second-highest ever and a milestone for the bank's chairman and chief executive, Brian Moynihan. The only time BofA's net income surpassed that level was in 2006, before a litany of crisis-era problems set in.

Deposit Rates

Bank of America has benefited from the Federal Reserve's short-term interest-rate increases because it hasn't passed higher rates onto many deposit customers. That started to shift a bit in the second half of 2017, so keep an eye on the average rate paid to depositors and any commentary from executives on deposit-rate increases going forward.

Write to Rachel Louise Ensign at rachel.ensign@wsj.com

(END) Dow Jones Newswires

January 16, 2018 12:14 ET (17:14 GMT)