BAC...# Stock
m*n
1 楼
Bank of America reported a quarterly loss of $514 million, after $6 billion
in legal costs.
The mortgage crisis-related legal costs might become a recurring problem in
the upcoming quarters.
The developments in core banking units also do not present a bright future
for the stock.
I do not expect the stock to outperform the market over the next 12 months.
Bank of America (BAC) reported an unexpected first-quarter loss last month,
after taking a $6 billion charge to cover litigation expenses, a figure that
far exceeded the legal settlements the bank had announced. Revenue
remarkably improved in two of the bank's major businesses, including GWIM (
Global Wealth & Investment Management) and Global Markets. However, the
results were overshadowed by higher-than-expected legal costs. The extra
litigation expenses came from setting aside money to cover future legal
settlements tied to previously disclosed mortgage-related matters.
In March, the bank agreed to a $9.3 billion settlement to resolve claims
that Countrywide and other Bank of America entities overstated the quality
of the mortgages they sold to Freddie Mac (OTCQB:FMCC) and Fannie Mae (OTCQB
:FNMA). The disastrous acquisition of Countrywide Financial Corp. has been
the key factor in the more than $50 billion of legal expenses the bank has
logged since the financial crisis. Also, the funds that the bank had set
aside for covering all of the settlement were severely criticized by some
analysts and followed by substantial downgrades in earnings estimates. What
is worse, the bank has still some home loan issues to resolve in the future.
in legal costs.
The mortgage crisis-related legal costs might become a recurring problem in
the upcoming quarters.
The developments in core banking units also do not present a bright future
for the stock.
I do not expect the stock to outperform the market over the next 12 months.
Bank of America (BAC) reported an unexpected first-quarter loss last month,
after taking a $6 billion charge to cover litigation expenses, a figure that
far exceeded the legal settlements the bank had announced. Revenue
remarkably improved in two of the bank's major businesses, including GWIM (
Global Wealth & Investment Management) and Global Markets. However, the
results were overshadowed by higher-than-expected legal costs. The extra
litigation expenses came from setting aside money to cover future legal
settlements tied to previously disclosed mortgage-related matters.
In March, the bank agreed to a $9.3 billion settlement to resolve claims
that Countrywide and other Bank of America entities overstated the quality
of the mortgages they sold to Freddie Mac (OTCQB:FMCC) and Fannie Mae (OTCQB
:FNMA). The disastrous acquisition of Countrywide Financial Corp. has been
the key factor in the more than $50 billion of legal expenses the bank has
logged since the financial crisis. Also, the funds that the bank had set
aside for covering all of the settlement were severely criticized by some
analysts and followed by substantial downgrades in earnings estimates. What
is worse, the bank has still some home loan issues to resolve in the future.
