Loan losses punish Bank of America's bottom line
Filed under: Company News, Earnings, Bank of America
Bank of America Corp. (BAC) said Friday it lost more than $2 billion in the third quarter as loan losses kept rising, providing further evidence that consumers are still struggling to pay their bills.The nation's second-largest bank, which lost $2.24 billion after accounting for preferred dividends, said its losses for failed loans came to almost $10 billion during the July-September period, up almost $1 billion from the second quarter. The bank also added $11.7 billion to its reserves to cover bad loans.
Bank of America's results were aided by profit from investment bank Merrill Lynch, including income from bond, stock and currency trading.
Its earnings follow the pattern set this week by Citigroup Inc. and JPMorgan Chase & Co., which also reported more loan losses during the third quarter as consumers struggled to keep up with their credit card and mortgage payments. Both JPMorgan Chase and Goldman Sachs Group Inc. reported big gains from their trading operations.
Bank of America said it lost $2.24 billion, or 26 cents per share, after accounting for the preferred dividends of $1.24 billion. That compared with earnings of nearly $3 billion, or 39 cents per share, a year earlier.
The loss was 5 cents more per share than the 21 cents forecast by analysts surveyed by Thomson Reuters Inc. Investors sent Bank of America shares down 59 cents, or 3.3 percent, to $17.51 in premarket trading. Shares closed Wednesday at $18.10.
"Obviously, credit costs remain high, and that is our major financial challenge going forward," CEO Ken Lewis said in a statement accompanying the earnings report. "However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card numbers."
The bank, which being investigated by federal authorities for its Merrill acquisition, has received $45 billion in bailout funds as part of the Treasury Departments $700 billion financial rescue package. It's not known when it will repay the government.
Lewis, who is retiring at year's end, has agreed to give up his salary and other compensation for 2009.



























Reader Comments (Page 1 of 2)
10-16-2009 @ 8:47AM
Sue said...
It is a VERY good thing that Mr. Lewis is retiring as HE only cares about himself. HE does not help those who have accounts at BOA. I had several issues with my account and when I could not get the issues solved by another employee at BOA I tried to contact him but he is never available. HE ignores us who have accounts at BOA. HE does not deserve his salary for the past 5 years. A Happy Good-bye!
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10-16-2009 @ 9:10AM
Chicago said...
B of A is making people JUMP thru hoops to get home loans.
My sister wanted to buy and investment property, for cash.
B of A had attached 47 pages of stipulations to the sale.
My sister walked away from the deal.
Screw B of A, they don't want to sell properties!
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10-16-2009 @ 9:38AM
THogue7464 said...
I have been involved with two home loans with BOA in the last six months. They appear to try to find a reason to reject a loan even with perfect credit.
The problem is BOA is TOO BIG.
No one wants to make a decision and their decision makers are in different states.
I submitted over 200 pieces of paperwork on one application,
(with a credit score 0f 793) and they kept asking for more and more paperwork.
They finally grudgingly approved the loan after two month after I had bought the house and paid cash.
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10-16-2009 @ 9:51AM
layers5252 said...
apparently you have ur life and fianaces in order for u to be able to buy the house for cash, but what i dont understand is what do people someposedly educated people keep usung the same banks that have made the headlines for the past yr. GO TO UR LOCAL BANK OR CREDIT UNION, u would have been approved in 30mins or less... there still is thing of home town service...
10-16-2009 @ 9:59AM
steve said...
you could see the writing on the wall. why would the CEO resign or get fired in the middle of all this turbulance? that would only add more. wait and see there will be some criminal charges bought there. I cant see why else they would get rid of a long term CEO if there wasnt any hidden mess there
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10-16-2009 @ 11:05AM
Tech said...
Where's the sheriff??? We've been hoodwinked and robbed!!! Tired of seeing these gangster con artists thinking they can just invent schemes to fleece honest hard working Americans out of everything then throw them out of their homes, jobs, and send their kids to Iraqistan so they can prop up the sinking dollar occupying the oil fields and sell the Caspian gas to India. Sure they control the media and installed a police stateto keep the people under control while they steal everything and sell us out but if America is going to survive people have got to wake up! Ron Paul tries and Kennedy tried, but if enough people really wake up we can just say NO! Don't do business with these loan sharks, end "lobbying" in DC, end the "bailout" baloney, vote every graft sucking bum out of DC and don't buy the main news media. Barter as much as you can, buy gold, silver, use credit unions, garden, stockpile food, supplies, and yes guns and ammo and having a good dog around makes for sane company too. We're now in a Great depression and everything these crooks say is a flat out lie.
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10-16-2009 @ 11:10AM
Elizabeth said...
I'm just awed why CEOs earn their profits too, especially after earning billions in salaries. Why do corporations overpay them in the first place? Poor dollar managements. We can hire a CEO for free or get one for low pay overseas. Duh?
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10-16-2009 @ 11:12AM
sexybeagle said...
News like this just makes my day . When BoA loses money I don't have any pity for them , when I think all the people who lost their homes . But check this video out by you tube . Debtors Revolt Begins Now . an uprising against BoA . also check out www.my3cents.com a web site dedicated to consumers
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10-16-2009 @ 11:26AM
pooky 43 said...
Even with the federal bail out money TARP . BoA can't get their act together . A dream come true if BoA fails and goes under . I'll be throwing a party . Check out this video by you tube "Debtors Revolt Begins Now " a up rising against BoA
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10-16-2009 @ 11:41AM
Consiglieri said...
Although I think that the credit markets certainly reflect an overreaction to the current crisis (which the government has so far failed to address), I have to ask why at this point, BOA or any other lender would make a loan without having a borrower jump through hoops?
Look how many of their customers borrowed money, spent it and now are not repaying what they borrowed? Why should they extend credit when their recent experience is that they will not collect what they loaned, or that they will not be able to collect late charges if the loan is not repaid according to the terms that the borrower agreed to?
Doesn't anyone wonder whether maybe the American consumer should bear some blame for the current problems? Is any politician willing to take a break from bank-bashing to suggest that the government bears some
blame for wholeheartedly encouraging the extension of credit to marginal credit risks? Has "they should never have lent me the money" begun to bother anyone?
These recent BOA results show BOA struggling with what are the burdens of what I think are subsidies that it is now forced to bear: they pay billions of dollars annually to the government in preferred dividends for the TARP funds (they had no choice but to accept these terms); and have had to "write off" tens of billions of dollars that they extended to the American citizens that was spent, enjoyed and
which, much to the delight of the government, kept our economy humming and growing for an extended period of time.
So what - the government lent BOA $45 Billion. If they didn't, by most accounts, we would be in an even worse way than we are now. But at the end of the day, BOA will have rewarded our government and "subsidized" Main Street far in excess of that amount. I'll bet BOA would be pleased to pay back the $45 Billion today knowing that the
government would use that money to directly subsidize the people that owe BOA but are not paying them.
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10-16-2009 @ 1:09PM
WTF said...
You must be a bank attorney, bitch. BOA or Chase, no different,,thieving bastards all. Join a credit union people...put the banks down.
10-16-2009 @ 12:35PM
Rock Fossil said...
There is a latin idiom, "Divide et Impera", literally translated means Divide and Rule, the tool of wealthy corporatists and elitist politicians.There is a weapon however; "Vox Populi, Vox Dei", translation: The Voice of the People is the Voice of God coupled with "E Pluribus Unum"...out of Many come One. This is the true strength of "We the People" to stay focused for our own self interests and know the truth. I will begin by presenting the basis of all truths and how it relates to the abysmal situation we find our country, our economy and our world in today. I promise you, you will not find this information anywhere in today's diluted, scripted Media outlets be it on TV, Radio or in newspaper print
G. Edward Griffin is a sheer genius! Why pay $100 for a financial seminar to tell you a lie. Wall street is a casino, Banks are the cash cages and you and I are the dummies pulling the handles.....take 42minutes and 15 seconds to educate yourself in a way that even bankers aren't schooled in. Take this viral folks.....send it to 10 people you love enough to wake them up to the truth of how we have been taken in a very large way! It won't cost you dime and if you think this is part of a conspiracy, just look around you and see how what you will watch is exactly what you are seeing taking place in real time.
Click on the link or copy and paste:
http://video.google.com/videoplay?docid=6507136891691870450#
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10-16-2009 @ 12:45PM
Donovan said...
The only way to stop these banks from ripping consumers off.
Is to stop paying them. Until such time as the American people take a stand, and stop the ongoing extortion tactics of these banks. Nothing will change. The American consumers can stop these practices, much faster then our Government can. We don't pay. The banks/lenders will collapse. Its time we control the banks. As opposed to the banks controlling, threating and dictating the American people.
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10-16-2009 @ 12:57PM
andy said...
ok,we have been robbed. stop doing business with the banks. pay cash,live like your grandparents did in the day.they will die without our money so give up the interest,give up the stock dividend, for a year and watch them fold and put us back in charge of the economy.baby steps for now.
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10-16-2009 @ 1:00PM
petroni912 said...
So much for Dow 10,000. Heads up for commercial real estate, the next monkey under the carpet. Bad commercial loans brought down almost the entire New England banking industry in 1990-92 and looks to be even worse this time around.
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10-16-2009 @ 5:16PM
Eben said...
Totally agree with petroni912, commercial real estate is the next to collapse, and Bank of America has a big exposure there. Question still remains, are they too big too fail?
Maybe some nostalgia for the good ol' days, here's a Flickr slideshow featuring some vintage B of A commercials:
http://www.flickr.com/photos/kapitall_screenshots/sets/72157622473334029/
10-16-2009 @ 1:51PM
WTF said...
Thanks Jim, great advice. Check out Bounce.com,,,"show me the paper" campaign is building a head of steam.
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10-16-2009 @ 1:31PM
Twig said...
The Banks are getting greedy again !! now with the credit cards even if you have always paid on time !! now they are just raising the rates from 12% to 29% making it harder to make your payment and have the bal go down !! we are struggling now and they want more even though our tax dollars have bailed them out !! Now people are getting mad and say why pay anymore !!! this will be the next round the banks will go through out of greed !! funny too if you stop paying and ruin your credit they will offer to lower your rate !!!
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10-16-2009 @ 6:00PM
Teresa said...
You are right on. I have 4 credit cards that almost doubled my interest rate and I have always paid them in full and I have no balance on them. It should be illegal what they are doing. They are adding to the troubled economy by making it more difficult for the people who are paying their bills to continue paying. And the only reason they are doing it is GREED. The prime interest rate is lower than it has been in years, so how do they justify the raising of rates? Their profits have gone down due to people not paying their bills and now they are going to put the rest of the people in the same situation of not being able to continue paying their bills. Why doesn't the government do something to stop them?
10-16-2009 @ 3:32PM
LAREL said...
I'm not surprised BOA is suffering from bad loans. I became disgusted with them when they made the decision to go out of their way to court illegal aliens. What goes around, comes around. You want to do business with law breakers you can't be too surprised when you get stuck with bad loans.
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