Bank of America beats analysts' estimates, but sees credit woes ahead
Filed under: Company News, Earnings
Bank of America (BAC) reported Friday morning that profit in the second quarter slipped slightly but exceeded analysts' expectations -- yet mounting credit woes may dampen that superficially good news.Net income of Bank of America fell 6 percent to $3.2 billion, or 33 cents a share, after removing the effect of paying some $805 million in dividends on preferred stock, the lion's share of which was held by the U.S. Government. That's compared with a $3.4 billion profit a year ago. Analysts had estimated the company would earn 18 cents a share.
Meanwhile, more of the company's borrowers fell behind on payments. Bank of America said it had $31 billion in non-performing assets on its books at the end of the second quarter, an increase of nearly 69 percent over last year. The percentage of loans charged off as uncollectable also surged, from 1.13 percent a year ago to 3.31 percent now.
To cushion future credit losses, Bank of America set aside $4.7 billion in the quarter, it said.
"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010," said CEO Ken Lewis.
Bank of America is under intense government scrutiny. Regulators' stress tests, completed during the quarter, found it needed to raise an additional $33.9 billion in capital to withstand the recession. And, as The Wall Street Journal reported, it has been operating under a secret agreement with Washington that mandated an overhaul of its board, among other things.
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Reader Comments (Page 1 of 3)
7-17-2009 @ 8:21AM
LewisErmer said...
Screw BANK OF TRAITORS....LET THEM GO UNDER...THIS IS THE MOST UN-AMERICAN BANK ..BANK OF AMERICA THEY SAY, BANK OF SCREWING AMERICANS, THEY SHOULD BE HUNG
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7-17-2009 @ 10:56AM
Jeffrey G said...
I agree!!!!! Bank of America should change it's name whereas they do not support nor listen to AMERICA. I've had so many issues with this bank and when I call customer service--THEY ARE IN INDIA. Bank of America, my ass.
7-17-2009 @ 8:40AM
richard said...
Bank of America should take the profits and repay the government the money they have received from the bailouts. There should be no dividend payments or bonuses until the federal money is repaid in full with interest.
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7-17-2009 @ 2:01PM
snackpshr said...
You might need to spend some time on collecting facts before you comment! B of A has paid back a large portion of TART money. 2 Weeks after recieving TART money it paid back 471M. For those of you that feel B of A sucks, change banks!!!!
7-17-2009 @ 8:49AM
steve said...
BOA sucks.....they forced insurance on me that I don't need...I'm refinancing my home and I didn't give them a shot at it.....
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7-17-2009 @ 9:14AM
Richard said...
"A non performing asset"...they have $31 billion worth. Excuse me but that are loans that are not being repaid over a period of 90 days.
If You owe Me money and are not paying me back then that is a LIABILITY. In the small business I own and operate, I wonder what my accountant would say about that.
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7-17-2009 @ 3:59PM
Paul said...
The assets are the mortgage contracts. If you have a mortgage on your home your home is not your asset it is a liability. The mortgaged home is the banks asset.
7-17-2009 @ 9:30AM
Donovan said...
Is it possible that thousands of account holders have been put into a very financially stressful situation, due to BofA and other credit card issuers raising account holders APR interest rates to excessively high levels.
Levels that in fact have caused an increase in account holders monthly payments, and more then 1/2 of the payment is interest alone.
And they wonder why consumers are defaulting on payments.
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7-17-2009 @ 9:43AM
RUSS said...
I have gotten the big BOA to modify loans for some people and then others they just ignore! visit www.prpservices.net
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7-17-2009 @ 9:44AM
Arizona said...
CREDIT UNIONS !
CREDIT UNIONS !
CREDIT UNIONS !
To HELL with B of A and MORGAN STANLEY and CITI and all the rest of the SPECULATING, MONEY GRUBBNG, "BANKS" who have placed us on the verge of RUIN.
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7-17-2009 @ 11:12AM
crystal said...
YES!!!!! They have put us in the same situation! We are Veterans and this is the thanks we get for serving our country...They can go to hell!
7-18-2009 @ 1:06PM
AJP said...
I've used a credit union since I Shut down my business in 2005. 3% percent interest on my checking account and the co-op network of atms means no more BOA charges and poor customer service. Funny thing is a lot of people would call my LAPFCU a socialist run commie bank. I say let them keep making these companies rich. I will never pay my money to another bank again!
7-17-2009 @ 10:30AM
Cathy said...
Want to know what the real problem is today; And it's not so much the banks as it is all these corporations outsourcing all our jobs off shore and people loosing their jobs left and right.
So if we think it all ends there, guess again, these same corporations keep bringing over here to this country millions upon millions of these H1B Vias monkeys only here to steal jobs away from our own high technology workers. Want to see the truth in your face, well you come on out and take a good look for yourself at what you see in Silicon Valley..You're going to think you've landed in Mumbai.
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7-17-2009 @ 2:19PM
neilyeager said...
Shame on Ken Lewis for ruining BofA(really Nationsbank since that company bought BofA before but they had such a bad reputation they kept BofA name instead. Now, BofA might make a name change due to all the bad things the bank has done to consumers/workers. Ken Lewis wanted Merrill Lynch so badly and has the nerve to say Paulson/Bernanke pressured him into buying Merill Lynch.
Certain executives and high level workers are getting huge bonuses and pay raises while the poorer workers get little.
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7-17-2009 @ 11:12AM
CRYSTAL said...
We have tried to do a bank short sale on our home since March. After a VA appraisal, which by the way was 97k less than what we paid, was done and we had a dollar amount from BofA of what they would accept, got an offer $500 more. BofA changed their story and said that "oh no, you did not include the escrow amount", which I might add is paid for by the bank in these cases. What are we supposed to do? We have done everything they have asked us to do. We are VA, and therfore there is no money for us since we are considered Ginnie Mae. What can we do excet walk away and let the bank have this home back?
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7-17-2009 @ 1:45PM
what said...
maybe if BofA didn't unjustly raise interest rated on good customers..they are causing good customers to default...
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7-17-2009 @ 11:01AM
ajgorm said...
Revenues will be down way down for years to come but our debt wont be down it will grow out of proportion the balance will be put on the tax payers table to pay back. CUTS CUT backs will continue at the state level and at the local levels dont count on the endless cash flo we had during the housing boom to ever come back to sustain the growth we had. From appliances that went into the homes to the furnishings, No more equity loans to finance these items as credit freezes up. In fact the price of real estate sinking will cause States to do what they are doing furloughs from work cut hours and layoffs how else is it suppose to work. Blame it on the idiot that got the loan HAHAHAHA if you understood what deregulation is you would know it was not the irresponsible home buyer that bought to much and made us all what we are today. Now we pay it back. Give a dog a bone he will chew it till it is gone give a poor man a loan he will know who the fool is spending it before he has to pay it back too good to be true syndrome and it was. They did what most of us did human nature to spend today instead of tomorrow especiaaly when you get rich quick something has got to be wrong dont ask dont tell..
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7-17-2009 @ 11:05AM
ajgorm said...
Besides it is better to be wealthy for a couple of years than to never be wealthy again take it while you can. If it is to good to believe then it is now you pay it back for them with your taxes while they go back towhom they were. Clinton wanted to help the poor help themselves with your money figure it out Bush wanted to get money for war it all back fired.
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7-17-2009 @ 11:12AM
thirdpartyvote said...
Didn't B of A purchase MBNA (Joe Biden's pals)?
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7-17-2009 @ 11:15AM
ajgorm said...
B of A is an icon of oppression with disconnect from the American people. They all crafted this iconic plan together put the blame where it lies on these crooks that knew exactly what this would cause. There ideology thinking was forget the consequences we will deal with it when the time comes. This may hopefully shed some light on future problems. You must not allow banks to run government and business you are in for a rude awakening we will need to seperate these powers if they wont do it themselves you will need to wake up and do it for our own childrens futures do you get the drift.
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