BankAmerica: $529M In Losses
BankAmerica shares lost 10 percent of their value Wednesday morning after a $529 million trading loss and other problems cut third-quarter profits to about half of their year-ago level.
All told, the factors helped drive BankAmerica's (BAC) net income for the autumn quarter to $374 million, or 21 cents a share, compared with $1.73 billion, or 96 cents a share, a year ago.
Without the NationsBank-related merger charge, the bank reported operating earnings of $893 million, or 50 cents a share, against $1.77 billion, or 99 cents, a year ago.
The gloomy report triggered at least one downgrade from the analysts; Warburg Dillon Read cut the stock to "reduce" from a "strong buy."BankAmerica's stock sank 5 7/8 to 48 1/16 on the news. Overall, banks were off 1.9 percent at the open Wednesday, as measured by the S&P Bank Index.
BankAmerica said its provision for credit losses in the third quarter totaled $1.4 billion. The charge-offs included a $372 million "writedown of a credit to a trading and investment firm."
 |
| The Secret World Of Hedge Funds |
After the $372 million charge, BankAmerica said it still has a $1 billion investment with the firm, and that it's "restructuring to purchase approximately $20 billion of fixed-income securities along with the related hedged positions."
Moreover, the bank said it has some $400 million in hedge fund exposure "which is substantially collateralized." It gave no further details ahead of a conference call with analysts.
Written By Emily Church