Things getting brighter for B of A
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Renita Jablonski: The last few months have been a tight rope act for banks. Many are reporting steep third quarter losses. Bank of America reported its bleak results a few weeks ago. But maybe it should have waited. The government bank rescue plan may brighten its future. Marketplace’s Janet Babin reports from North Carolina Public Radio.
Janet Babin: With the financial crisis in full swing, Bank of America decided to announce its bad news early. Third quarter net income dropped by more than $2 billion from the year before. The company cut its dividend in half, and its stock price has taken a hit.
But portfolio manager Anton Schutz at Bernham Financial Services says Bank of America is in better shape now than when it announced earnings in early October:
Anton Schutz: As much as we’re in this insane market that swings around, Bank of America’s a much safer investment today, and obviously it’s cheaper. So that combination of the two makes it something that, you know, I’m willing to own.
Schutz says the $25 billion government rescue plan gives the bank access to more capital, at just 5 percent interest.
Bank of America does still have to integrate the two purchases that might have ensured its survival — it bought investment bank Merrill Lynch last month and mortgage giant Countrywide earlier this year.
I’m Janet Babin for Marketplace.