October 20, 2009
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News: BofA Posts Third Qtr Losses
For the second time this year, Bank of America Corp (BofA) posted losses for the quarter. The nation's second largest credit card company reported third quarter losses of $1.04 billion a significant increase from the $167 million the company reported for same time last year. Chief Executive Officer Kenneth D. Lewis stated the company expects credit card losses to continue to grow and is not expected to peak until the unemployment rate is under control. Paul Miller, analyst with FBR Capital Markets Corp. also noted that Bank of America is not unique in the experiencing these difficulties; but that the company's primary competitors like JPMorgan Chase are also struggling with record breaking credit card and loan defaults.
Bank of America, the Charlotte, North Carolina based bank, also reported that credit card defaults for September were 14.25 percent. Although card delinquencies of 30 days or more rose to 7.53 percent for September, third quarter overall delinquencies declined. Card delinquencies are significant because these numbers predict future credit card defaults. Lewis wasn't able to predict when BofA would begin showing a profit; however, he did indicate that the company is taking a thorough look at all its business to determine what if any changes should be made. Changes that he says would involve "both the infrastructure and other ways we can make money."
Bank of America displayed the poorest performance for third quarter among the top six U.S. credit card companies including JPMorgan who reported $700 million in losses. In spite of the company's recent report on a significant climb in profits for third quarter, JPMorgan expects their card defaults to reach nearly $1 billion for 2010 first and second quarter. Analysts have been predicting that card losses for the U.S. could reach as high as $82 billion with a default rate of nearly 20 percent. The nation's card defaults hit a record breaking high of 11.49 percent in August.