Bank of America a 'Buy'?
Bank of America Corp. (NYSE:BAC) shares are trading down 1.5% on weak Q4 results, but could the glass be more half-full than empty for would-be investors? Both Citigroup (NYSE:C) and Goldman Sachs (NYSE:GS) didn't impress the Street this week, but BofA is a different consumer lender animal.
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Why I’m Still Buying Bank of America After Earnings - Believe it or not, consumer lending is improving
(Jeff Reeves, Editor, InvestorPlace.com) Bank of America (BAC) reported earnings before the bell today that weren’t exactly earnings at all. Bank of America tallied a loss of $1.6 billion in the fourth quarter of 2010 as bad mortgages continued to eat away at profits. The shortfall for BAC equaled -16 cents a share, and the financial stock’s revenue rolled back to $22.4 billion from $25.1 in the same quarter of the previous year.
The news is certainly disappointing — and not just to me personally, since I bought Bank of America at $13.30 on Dec. 30 and have been gleefully watching shares rally for the past few weeks. Financials looked to be on the mend, but banks have been missing the last few days. BofA peer Citigroup (NYSE: C) missed earnings expectations on weak trading numbers and Goldman Sachs (NYSE: GS) was also held back by prop trading shortfalls. JPMorgan Chase (NYSE: JPM) posted “record” profits but largely because $2 billion in reserves were added back to the balance sheet. It seems like there has been a steady drumbeat of bad news in the financial sector all week.
But Bank of America certainly gets the prize for the worst news of the bunch. Topping the poor earnings is news that BAC also kept aside more than $4 billion for bad loans it may have to buy back from Fannie and Freddie. That’s after a deal just a few weeks ago to purchase $2.6 billion in troubled loans thanks to disputes over documentation.