Posted on 03/24/2008 4:50:09 PM PDT by BGHater
Bank of America Corp (BAC.N: Quote, Profile, Research), the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst.
Richard Bove of Punk Ziegel & Co also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit.
He said actual losses in the portfolios should be "somewhat less" than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends.
"I do not foresee the economy plunging to a level that will substantiate this reserve build," wrote Bove, who has a "buy" rating on the bank, in a report dated March 24. "It is my impression that the management has made a decision to try to take, upfront, the potential losses that it believes may be nascent."
Bove cut his profit per share forecast to $2.98 from $3.81 for 2008, to $3.96 from $4.30 for 2009, and to $4.78 from $4.93 for 2010. He sees first-quarter profit of 37 cents per share.
Bank of America was not immediately available for comment.
In January, Chief Executive Kenneth Lewis said he expected full-year profit would top $4 per share. He predicted credit costs would rise by more than 20 percent, largely in consumer portfolios, but that such an increase would be manageable.
The Charlotte, North Carolina-based bank set aside $3.31 billion for credit losses in the fourth quarter, and $8.39 billion for all of 2007, up 67 percent from a year earlier.
Bank of America agreed in January to buy Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, in a transaction now valued at about $4.4 billion.
The all-stock transaction values Countrywide at $7.63 per share, which is 32 percent above Countrywide's Thursday closing price of $5.78. The gap reflects some investors' expectations that Bank of America might at least try to renegotiate the merger terms because the housing market has weakened.
Bank of America shares closed Thursday at $41.86 on the New York Stock Exchange. They rose 17 percent last week, a strong week for bank stocks, and are up a little more than 1 percent this year.
I’m glad I owe BOA an assload of money instead of having an assload of money on deposit with them.....
ML/NJ
How did those loans to illegals work out for you :)
I am glad I closed all of my accounts a couple of years ago when we found out they were giving loans to illegals....
Soooo glad I steered away from investing with those fools at BOA.
I bailed out of Sovereign a few years ago after they took over my little local area bank.
Hopefully my little Credit Union will be able to withstand the hurricaine that is coming.
Read the small print in your note. It probably says “callable at any time” or something similar...
Right on!
I did the same thing- Let em sink!
On second thought- let Mexico bail them out...
Bump
The Bank of Amigo’s chickens come home to roost.
THATS WHAT THEY GET FOR LENDING MONEY TO ILLEGAL ALIENS AND GIVING THESE LEACHES CREDIT CARDS!...YES I AM YELLING, TALK ABOUT S T U P I D.
It does, but I could pay it off if that happens.
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