News

Bank of America loses $2.2 billion in third quarter

Bank of America announced Friday that it lost $2.2 billion from July through September -- its second quarterly loss in the past year.

The bad news wasn't a huge surprise, as analysts had predicted the bank would lose money in the third quarter. But it's probably not what chief executive Ken Lewis wanted for his last earnings report at the bank. The $2.2 billion figure includes the payments the bank must make on its government loans.

Despite the loss, Lewis offered two main points of comfort: He said consumer losses were likely to peak by year end, though he expects them to remain high in 2010. He also noted that the quarterly loss was partly caused by “non-core” expenses, such as a $402 million government fee, that didn't affect the bank's fundamentals.

"There are several things this quarter that indicate that there are better days ahead," Lewis said.

Executives didn't provide a specific timeframe for repaying the $45 billion it holds in federal loans, but they're eager to get out from under the government's thumb. As long as it holds the loans, the government will have broad authority over its operations and will charge hefty interest rates on the loans.

Also overhanging Friday's earnings report was the uncertainty about who will succeed Lewis, who announced Sept. 30 that he would retire at year's end. Lewis, 62, is under fire for his Jan. 1 purchase of Merrill Lynch.

But Merrill has fueled the bank's revenue all year, including this latest quarter. As consumer banking remains weak, Merrill's investment banking, trading and brokerage have performed well and provided the bank with alternative paths for making money. The bank said that its integration of Merrill is on track, and that cost savings should be higher than first predicted.

Some analysts expressed concern about being overly reliant on investment banking, an area where returns are highly volatile. The bank's shares fell 4.6 percent to $17.26, on a down day for the markets.

Read more at CharlotteObserver.com

  Comments