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Bank of America Earnings: Solid, But Not Stellar (BAC)

By U.S. News & World Report

Bank of America Corp. (ticker: BAC), one of the three largest U.S. banks by assets, reported second quarter earnings on Monday morning, and all in all, the results were largely as expected.

The Charlotte, North Carolina-based bank did deliver an earnings beat, posting earnings per share of 36 cents, 3 cents higher than analysts anticipated. Profits, however, were down 20 percent from a year ago.

Revenue was more or less in line with analyst expectations at $20.4 billion, but even that was down more than 7 percent from the same period last year.

Counterintuitively, “BAC benefited from higher bond trading revenue as a result of Brexit, boosting their trading income,” says Jerry Braakman, chief investment officer of First American Trust in California. “Expenses were reduced over 3 percent (from a year ago).”

[Read: Bank Stocks Will Suffer After Brexit Vote.]

Bank of America is also making concerted efforts to get higher-quality loans on its books, and it’s on the right track. “BAC has made progress in improving its balance sheet as non-performing loans came in at 0.93 percent of assets versus 1.2 percent in last year’s quarter,” Braakman says.

A tough environment. K.C. Ma, professor of finance at Stetson University, thinks it’s important to remember when interpreting Bank of America’s second-quarter that financial stocks are facing an uphill battle. “Clearly, the negative performance of the entire banking sector has been totally driven by nothing other than the persistent lower interest rate environment and sluggish global economy,” Ma says.

Low interest rates make it very difficult for BAC and its peers to magically produce higher earnings. When rates rise, net interest margins should expand, meaning the difference between the interest rates paid on deposits and the interest they earn on their assets increases.

[See: 10 Ways to Play in the Asia-Pacific Stocks Pool.]

But that hasn’t happened yet, and while Bank of America stock was trading as much as 2 percent higher in early trading Monday, those gains are tenuous and two of its peers, Wells Fargo & Co. (WFC) and Citigroup (C) both fell on Friday after announcing second-quarter results. Citigroup was up for much of the day before ending Friday in the red.

How Wells Fargo and Citigroup fared. Wells Fargo fell about 3 percent on Friday after its report, even as revenue rose 4 percent from last year. Earnings per share were in line with expectations at $1.01, but revenue was also pretty pedestrian, matching consensus forecasts at $22.2 billion.

As for Citigroup, its stock was basically unchanged even after posting slightly higher-than-expected revenue of $17.52 billion and earnings per share that crushed expectations, with EPS coming in at $1.24 versus the $1.10 analysts expected.

Overall though, Citigroup’s revenue still fell about 10 percent from the same quarter a year ago. And while EPS beat expectations, it still fell nearly 15 percent from the same quarter a year ago, when it clocked in at $1.45.

[Read: 10 Banking Trends for 2016.]

Bank of America’s earnings on Monday seem to confirm that for big bank stocks, soaring profits just aren’t in the cards right now.

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Bank of America Earnings: Solid, But Not Stellar (BAC) originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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