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Bank of America Posts Big Earnings Miss

By IEVA M. AUGSTUMS,

Posted: 2007-12-02 13:13:00

Filed Under: Earnings

CHARLOTTE, N.C. (Oct. 18) - Bank of America Corp., the nation's second-largest bank, said Thursday its profit fell 32 percent in the third quarter as trading losses and write-downs on a wide variety of loans offset solid revenue growth in most businesses.

Net income declined to $3.7 billion, or 82 cents per share, in the three months ended Sept. 30 from $5.42 billion, or $1.18 per share, a year ago.

The Charlotte-based bank's revenue fell 12 percent to $16.3 billion from $18.49 billion last year.

Analysts expected earnings of $1.06 per share on revenue of $18.3 billion, according to a poll by Thomson Financial. The earnings estimates typically exclude one-time items.

Its shares fell $1.63, or 3.3 percent, to $48.40 in premarket trading.

Earnings from its global corporate and investment bank fell by $1.33 billion, or 93 percent, as a result of the disruption in the financial markets during the quarter.

Its expense provision for the unit increased $865 million due to consumer and small business credit costs rising from post bankruptcy reform lows, growth and seasoning in various portfolios and stress in several portfolios driven by the weakened U.S. housing market.

"While the significant dislocations in the capital markets have hurt most participants, we are still very disappointed in our third-quarter performance," Chairman and Chief Executive Kenneth D. Lewis said in a statement. Nonetheless, he added "the majority of our businesses experienced solid revenue growth as sales momentum continued, demonstrating the value of our diverse business mix."

In the bank's largest consumer unit, which includes America's biggest credit-card business and bank-branch network, net income dropped 16 percent to $2.45 billion. Bank of America became the biggest U.S. credit card lender when it bough MBNA Corp. last year. Earnings were hurt this quarter by higher managed credit costs, the bank said.

Wealth-management revenue increased 24 percent to $2.2 billion, as profits grew 17 percent to $599 million. The business was aided by the company's $3.3 billion acquisition of U.S. Trust from Charles Schwab Corp. earlier this year, which contributed about 10 percent to revenue and 5 percent to net income.

Investment banking revenue fell 44 percent from a year ago as sales and trading-revenue declined.

For the first nine months of the year, net income was $14.7 billion, or $3.25 a share, down from $15.88 billion, or $3.44 a share in 2006. Revenue was $53.65 billion, down from $54.1 billion in 2006.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.

2007-10-18 07:27:47

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24 comments

lw9488 06:53:26 PM Oct 18 2007

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they have always cold insensitive to consumer, they capitulate to big business, e.g. after 6 calls a month to check your balance ,they want 50cent pre call. no other bank has a limit on checking your balance. they are a low life outfit.

Philschellenger 06:48:23 PM Oct 18 2007

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dumb the stock,the ceo is a jerk.

nupraxisllc 03:31:01 PM Oct 18 2007

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What kind of idiot would not expect BoA earnings and stock price to drop! The subprime mortgage mess is the banking industry's "Enron" brought on by greed. BoA is just another casualty!

orbit7777 03:01:44 PM Oct 18 2007

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AOL AND THEIR AP WRITERS KNOW ABOUT AS MUCH ABOUT THE MARKET AND THE ECONOMY AS A MONKEY IN A ZOO. THEY ARE TOTALLY CLUELESS AND ALWAYS HAVE BEEN. THIS LITTLE GLITCH IS NOTHING MORE THAN A LITTLE BUMP IN THE ROAD FOR BANK OF AMERICA. ABOUT LIKE YOU LOSING A FIVE OUT OF YOUR POCKET. I DOUBT THAT YOU CAN EVEN GET YOUR MIND AROUND FOURTEEN BILLION DOLLARS.

jnaylor284 02:29:00 PM Oct 18 2007

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Should we be surprised that BOA and Citi have had lousy 3rd quarters? Of course not in this environment. Most Wall Street analysts are urging investors to buy "financials" now...but don't buy just yet....it is too soon!

utig1 02:08:15 PM Oct 18 2007

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Are we in a recession ? Does any know the definition of a recession ? It IS 3 consecutive quarters of negative economic growth....and we've had so far NONE !!!!
Why are people giving opinions on something that they NOTHING about ?
We are NOT in a recession..its PROVEN !!!

chamatt 01:27:19 PM Oct 18 2007

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Recently, I had some CD's mature and it took 2 weeks for me to receive the principal from some of the CD's. During this fiasco, they paid off a CD that was not maturing until March of 2008, and handled it as if I HAD REQUESTED THE EARLY WITHDRAWAL, by deducting over $80.00 from my principal. They told me to return the check but didn't explain what would happen to MY interest in the CD. I chose not to return the check, since my experience with BANK OF AMERICA had been so distasteful, in this instance. I can easily understand why they are having fprofitl problems if they are treating other customers like they treated my wife and me. Consider Enron and the Automotive Industry for a few. No entity is too large to fall.

Philschellenger 12:16:24 PM Oct 18 2007

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as long as you have that ceo the stocks a loser.

orbit7777 12:01:16 PM Oct 18 2007

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YOU GOT IT WRONG ABOUT THE ILLEGALS. MOST OF THEM WILL PAY OFF EVERY DIME OF THOSE LOANS. WHERE IS YOUR BRAIN? THEY WILL FIND WORK, AND THEY KNOW HOW TO LIVE ON PRACTICALLY NOTHING.

orbit7777 11:57:48 AM Oct 18 2007

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FOURTEEN BILLION INCOME FOR NINE MONTHS DOESN'T SOUND LIKE A CRASH TO ME.

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24 comments