Bank of America Corporation (
BAC)
Q3 2009 Earnings Call Transcript
October 16, 2009 9:30 a.m. ET
Executives
Kevin Stitt - Investor Relations
Kenneth D. Lewis - President and Chief Executive Officer
Joe L. Price - Chief Financial Officer
Analysts
Christopher Kotowski - Oppenheimer & Co.
Betsy Graseck - Morgan Stanley
Matthew D. O’Connor - Deutsche Bank North America
Paul J. Miller - FBR Capital Markets & Co.
Edward R. Najarian - ISI Group
John McDonald - Sanford C. Bernstein & Co
Nancy A. Bush - NAB Research LLC
Jefferson Harralson - Keefe, Bruyette & Woods, Inc.
Mike Daniels - CLSA
Jeffery Harte - Sandler O’Neill & Partners L.P.
Presentation
Operator
Welcome to the teleconference. At this time, all participants are in listen-only mode. You may register to ask a question anytime during today’s call by pressing the star and one on your touchtone phone. We’ll take questions in turn following the presentation. Please note that today’s call is recorded.
It’s now my pleasure to turn the program over to Kevin Stitt. Please begin, sir.
Kevin Stitt
Good morning. Before Ken Lewis and Joe Price begin their comments, let me remind you that this presentation does contain some forward-looking statements regarding both our financial condition and financial results, and that these statements involve certain risks that may cause actual results in the future to be different from our current expectations. These factors include among other things, changes in economic conditions, changes in interest rate, competitive pressures within the financial services industry, and legislative or regulatory requirements that may affect our businesses. For additional factors, please see our press release and SEC documents.
And with that, let me turn it over to Ken.
Kenneth D. Lewis
Thanks, Kevin. Good morning. And thanks for joining our earnings review. But before we get started, I want to say a couple of things to the investment community. This is the first time I have addressed you since my announcement to retire. I just wanted to say thank you for the support you’ve shown me during my time with you as well as the support you have shown the company. It’s been a pleasure to lead Bank of America and to interact with all of you.
As I’ve said before, we have a vast amount of talent in the company and we have market leading positions in geographies, businesses and distribution capabilities that are the envy of the industry. I have no doubt that Bank of America will thrive, in my absence will not slow the momentum that is starting once again to move this company forward.
Okay. While it’s never easy to talk about earnings when you are reporting a loss, there’s several things this quarter that indicate that there are better days ahead. Frankly, earnings this quarter were fairly consistent with the expectations we discussed three month ago.
We indicated in July that profitability would be tougher in the second half of the year versus the first half due to the absence of several unusual positive items that helped first half earnings, as well as, due to the normal seasonal drop in revenue that occurs in the second half.
We did experience the seasonal impact and although revenue overall dropped in the third quarter results were better in some businesses than the normal seasonal pattern. Overall, the pace of deterioration and credit quality slowed and was somewhat better than expected in several portfolios.
On the negative side, earnings reflected the impact of the charge for terminating the government asset guarantee term sheet, associated with the Merrill acquisition, as well as, the negative accounting impact associated with the improvement in our credit spreads. But as I said last quarter, I’d rather see the operating improvements and take the accounting loss that come with our company’s improving spreads.
For the third quarter of 2009, Bank of America had a net loss of $1 billion before preferred dividends or a loss of $0.26 per diluted share after deducting preferred dividends of $1.24 billion, including almost $900 million related to the government TARP.
