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Bank of America reports $2B loss
Loan losses hurt Q3 results; wealth-management unit a plus
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Published: October 17, 2009
CHARLOTTE
Bank of America Corp. said yesterday that it lost more than $2.2 billion in the third quarter as loan losses kept rising, providing more evidence that consumers are still struggling to pay their bills.
The bank, the nation's second-largest, said it wrote down loans on its books by almost $10 billion during the July-September period, up almost $1 billion from the second quarter. It also added $2.1 billion to its reserves to cover bad loans, bringing its provision for credit losses to $11.7 billion. The bank's total allowance for loan and lease losses now totals $35.83 billion.
Bank of America's results were aided by profit from its wealth-management business, which includes the bank's Merrill Lynch division. While the Jan. 1 acquisition of Merrill Lynch has brought widespread criticism and legal problems for Bank of America, the deal was paying off during the third quarter, when Merrill Lynch's revenue and profit more than doubled from a year ago.
Banks have predicted for some time that their loan losses would keep rising. And Ken Lewis, Bank of America's chief executive, said that the trend will continue into the near future as unemployment rises and consumers keep struggling.
Bank of America said it lost $2.24 billion, or 26 cents a share, after accounting for the preferred dividends of $1.24 billion. That compared with earnings of $704 million, or 15 cents a share, a year earlier.
Revenue in the quarter increased 33 percent to $26.04 billion.
The loss was 5 cents more a share than the 21 cents forecast by analysts surveyed by Thomson Reuters Inc. Investors sent Bank of America shares down 84 cents, or 4.6 percent, to $17.26.
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