Bank of America Corporation (NYSE: BAC) has reported its earnings and the headline numbers may look like a disappointment at $0.03 EPS from its $653 million in earnings.  Revenue was $22.5 billion net of interest expense.  It was difficult to compare apples to apples here, but the consensus target from Thomson Reuters was $0.12 EPS and revenues were expected to be $22.51 billion.  So far shares are responding positively too what may be ‘items’ keeping its earnings from shining and a large discount to its tangible book value.

The bank talked about negative valuation adjustments related to changes in the company’s credit spreads of $4.8 billion pretax, or $0.28 per share.  BofA also claims that its total net exposure is only $9.8 billion to Greece, Italy, Ireland, Portugal, and Spain.

A year ago the bank reported earnings of $2.0 billion, or $0.17 per share on revenue of $27.1 billion. The bank reported that if you were to exclude the valuation adjustments from both periods, revenue would have been down by about 3% to $27.3 billion in the first quarter.

Bank of America noted that it increased its Tier 1 common equity ratio by 92 basis points from the prior quarter and that its liquidity is at record levels. The bank’s Tier 1 Capital Ratio was 13.37% and its Tier 1 Common Equity Ratio was 10.78% at the end of the first quarter. The improvement in credit spreads results in a negative adjustment to earnings this quarter.

Today’s earnings results are difficult to measure by any real benchmark compared to other bank reports because of the items.  Still, the bank is talking about positive momentum being seen in its operations.  CEO Brian Moynihan said, “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.”

Bank of America reported that its stated book value is $19.83 per share, and its tangible book value was $12.87 per share.  The bank previously said that its tangible book value per share was $12.95 at December 31, 2011, compared to $12.98 at December 31, 2010. The stated book value per share was $20.09 at December 31, 2011, compared to $20.99 at December 31, 2010.

Bank of America shares are actually trading up over 5% at $9.17 or so in active pre-market trading this morning after closing at $8.92 on Wednesday.

The move is also lifting shares of the rival challenged money center bank of Citigroup, Inc. (NYSE: C) is up by 1.5%.  Even the wild and leveraged Direxion Daily Financial Bull 3X Shares (NYSE: FAS) is getting a boost.

JON C. OGG

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