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Bank of America reports loss greater than consensus

On Wednesday January 20, 2010 Bank of America (BAC) reported a wider than expected loss of $0.60 per share, including dividends on preferred stock and the one-time $4.0 bln negative impact associated with repaying TARP. This is $0.07 worse than the First Call consensus of ($0.53). BAC reported revenues that rose 58.7% year over year to $25.4 bln vs the $26.84 bln consensus.

In the fourth quarter of 2009, the company's net loss narrowed to $194 mln from a loss of $1.8 bln a year earlier. Results in the fourth quarter reflected continued elevated credit costs, although lower than in the third quarter of 2009. While net interest income declined from the year-ago quarter as a result of lower asset liability management portfolio levels and reduced loan demand, noninterest income was up sharply due to an improvement in trading and significantly higher income from investment and brokerage services, equity investments and investment banking.

Even though there was a loss the company feels that there were positives to the quarter. First, they repaid the American taxpayer, with interest, for the TARP investment. Second, they have taken steps to strengthen the balance sheet through successful securities offerings. And third, all of the non-credit businesses recorded positive contributions to their results.

BAC has mixed outlook going forward. They said, “As we look at 2010, we are encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer businesses. That said, economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth"
Gregory Menges is a founder of Boston Independent Advisors. Greg is a seasoned financial advisor with more than 15 years experience serving individuals, families, business owners, and company sponsored retirement plans. All securities offered through Investors Capital Corp., Member FINRA/SIPC -- Advisory Services offered through Investors Capital Advisory.
100 Franklin Street, Suite 604, Boston, MA 02110, (877) 338-1330 x201


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