Rounding out a collection of US bank results on Friday was Bank of America, with the first of the week’s earnings misses.
The bank reported a diluted loss per share of $0.26 and a net loss of $1bn on revenue of $26.4bn. Analysts had expected a loss per share of 21 cents and $27.71bn in revenue.
Here’s the statement, with our highlights:
Bank of America Corporation (NYSE: BAC) today reported a third-quarter 2009 net loss of $1.0 billion. After deducting preferred dividends of $1.2 billion, including $893 million related to dividends paid to the U.S. government, the diluted loss per share was $0.26.
Those results compared with net income of $1.2 billion, or diluted earnings per share of $0.15, during the year-ago period.
Through the first nine months of the year, the company had net income of $6.5 billion, or $0.39 per share after preferred dividends, compared with $5.8 billion, or $1.09 per share a year earlier.
Results were negatively impacted by continued weakness in the U.S. and global economies and stress on the consumer, which continues to result in high credit costs. Earnings in the quarter were affected by $2.6 billion in pretax mark-to-market and credit valuation adjustments on certain liabilities, including the Merrill Lynch structured notes, and a $402 million pretax charge to pay the U.S. government to terminate its asset guarantee term sheet. Despite the loss in the period, the company strengthened its reserves, capital position and liquidity through efficient balance sheet and capital management.
“The company’s core performance was impacted by a number of non-core items,” said Chief Executive Officer and President Kenneth D. Lewis. “The market’s improved view of Bank of America’s credit cost the company due to non-cash marks on liabilities.
“Excluding those items, our revenue continued to hold up well,” Lewis said. “Obviously, credit costs remain high, and that is our major financial challenge going forward. However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card customers.”
And here’s a bit more detail on those credit costs:
Deterioration in credit quality slowed compared with the prior quarter, however, credit costs remained high as most economies around the world remained weak. Consumers continued to be under stress as unemployment and underemployment rose and individuals spent longer periods without work. However, the increases in losses slowed in almost all consumer portfolios from the prior quarter.
Declining home and commercial property values and reduced spending by consumers and businesses negatively impacted the commercial portfolios resulting in broad-based increases in criticized and nonperforming loans. The rate of the increases, however, was below the levels experienced in recent quarters. Commercial losses rose from the prior quarter driven primarily by higher charge-offs in the non-homebuilder portion of the commercial real estate portfolio. Higher losses in the commercial domestic portfolio occurred across a broad range of borrowers and industries.
The provision for credit losses was $11.7 billion, $1.7 billion lower than the second quarter and $5.3 billion higher than the same period last year. The addition of $2.1 billion to the reserve for credit losses was lower than the second quarter as delinquencies improved in the unsecured consumer portfolios. This was partially offset by higher reserve additions on the impaired consumer portfolios obtained through acquisitions. Net charge-offs were $923 million higher than the prior quarter, though the pace of the increase slowed. Nonperforming assets were $33.8 billion compared with $31.0 billion at June 30, 2009, reflecting a slower rate of increase than in recent quarters. The 2008 coverage ratios and amounts shown in the following table do not include Merrill Lynch.
And here are the non-performing assets, from the financial supplement, click to enlarge:
That $33.8bn number, incidentally, does not include $6.2bn in non-performing loans under the held-for-sale accounting option.
Related links:
JP Morgan reports Q3 EPS of $0.82, net income of $3.6bn – FT Alphaville
Goldman reports Q3 EPS of $5.25, net income of $3.19bn – FT Alphaville
Citi reports Q3 loss per share of $0.27, net income of $101m – FT Alphaville