Results tagged “Bank of America” from Economic Alert
STEPHEN BERNARD
AP Business Writer
NEW YORK (AP) -- Bank of America Corp. has officially dropped the Countrywide Home Loans name as part of its integration of the mortgage lender, which was acquired last year.
Charlotte, N.C.-based Bank of America on Monday renamed its mortgage and home equity lending operations Bank of America Home Loans. The division incorporates Bank of America's previous lending businesses with those of Countrywide.
The rebranding is being completed Monday to coincide with the beginning of what is traditionally the busiest season for home buying and follows other back-office integration between the lending units, said Barbara Desoer, president of Bank of America Home Loans.
At the height of the housing market, Countrywide was the nation's largest lender and was heavily involved in subprime lending -- loans given to customers with poor credit history. The housing market began to unravel in 2007 as subprime mortgage borrowers increasingly started to default, helping to spawn the credit crisis.
Loan losses have piled up for the company and lending volume is slowing, similar to what many lenders are facing during the ongoing recession and housing market downturn.
During the first quarter, the combined Bank of America and Countrywide mortgage operations funded $89 billion in mortgages and home equity loans. The pair combined to originate $315.33 billion in 2008 and $598.33 billion in 2007.
The new Bank of America Home Loans division will be based in Calabasas, Calif., which was home to Countrywide Financial Corp.
Bank of America agreed to acquire Countrywide in January 2008 in an all-stock deal worth about $4 billion at that time. The deal was valued at about $2.5 billion when the deal closed July 1 because of a drop in Bank of America's share price.
IEVA M. AUGSTUMS
AP Business Writer
CHARLOTTE, N.C. (AP) -- Bank of America Corp. posted strong first quarter results Monday, as higher revenue from the purchase of Merrill Lynch & Co. help offset a surge in credit costs.
The results surpassed analysts' expectations, and provide further evidence the banking sector might be improving.
But the bank also took a hefty $13.4 billion provision for credit losses and its shares fell 80 cents, or 7.5 percent, to $9.80 in premarket trading.
The Charlotte, N.C.-based company earned $2.81 billion after paying preferred dividends, or 44 cents per share, compared with a profit of $1.02 billion, 23 cents per share, in the year ago period. Analysts surveyed by Thomson Reuters expected profit of 4 cents per share.
The higher-than-expected earnings could take some heat off Chief Executive Ken Lewis who has faced calls from shareholders to either give up his job as chairman or be ousted.
Lewis has been up against intense pressure this year over the Merrill purchase, which closed Jan. 1. Shareholders approved the deal before learning of big losses at the New York-based investment and reports surfaced that Merrill Chief Executive John Thain rushed out billions of dollars in bonuses to Merrill employees in his final days as CEO even as Bank of America was begging the government for aid to complete the deal.
The first quarter results include revenue from the company's acquisitions of Merrill and Countrywide Financial Corp., which Bank of America did not own last year.
During the quarter, revenue more than doubled to $35.76 billion, mainly from the addition of Merrill. Analysts expected revenue of $27.13 billion.
However, Bank of America recorded a $13.4 billion provision for credit losses in the first quarter, showing that it is not immune from deteriorating credit quality and growing unemployment. The bank set aside $6.4 billion as additional reserves to cover future losses.
"We understand that we continue to face extremely difficult challenges," Lewis said in a statement.
Bank of America's better-than-expected profit is the latest in a string of bank earnings that have beat expectations, including JPMorgan Chase & Co. and Citigroup Inc.
Bank of America has received $45 billion in government funds as part of the Treasury Department's $700 billion financial rescue package.
Business Editor Kevin Smith chronicles this week's economic turbulence in a story today - Lehman Brothers declares bankruptcy, Bank of America to buy Merrill Lynch, American International Group fights for life and the Dow drops 500 points.
Rep. Adam Schiff, D-Pasadena, is quoted high with a sentiment shared by many:
In that vein, a smattering of good (or at least better) news today:
Rep. Adam Schiff, D-Pasadena, is quoted high with a sentiment shared by many:
"I never saw anything like this in my lifetime," he said. "During a more typical financial crisis you might lose one major institution and maybe one smaller bank, but to see several financial giants who have been around for so long start to fold up their tents ..."
"I'm hoping that the earthquake has hit and this is not a pre-shock for bigger things to come," Schiff said.In that vein, a smattering of good (or at least better) news today:
- The Dow rallied, gaining 141 points to close above 11,000.
- The Labor Department reports consumer prices went down for the first time in two years in July (sure, it's only by .01 percent, but down is better than up, right), leading experts to anticipate further "price moderation" in coming months, especially if energy prices continue to decline.
- Shares of WaMu and Wachovia bounced as AIG secured enough funding to keep fighting.
About this blog
Economic Alert is a daily blog on business and the economy in the San Gabriel Valley and beyond, featuring updates and observations from the staff of the San Gabriel Valley Newspaper Group. SGVN includes the San Gabriel Valley Tribune, Pasadena Star-News and Whittier Daily News.
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Kevin Smith is business editor for the San Gabriel Valley Newspaper Group. Over the past 15 years, Smith has covered development, housing, employment, technology and financial trends for a variety of newspapers.
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Ryan Carter covers business and the economy for the San Gabriel Valley Newspaper Group.
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Your hosts:
Kevin Smith is business editor for the San Gabriel Valley Newspaper Group. Over the past 15 years, Smith has covered development, housing, employment, technology and financial trends for a variety of newspapers.
Ryan Carter covers business and the economy for the San Gabriel Valley Newspaper Group.
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