3 Reasons to Fear Bank of America

Today, analyst Anand Chokkavelu reports that Bank of America was able to turn in a profitable quarter, though just barely, at an EPS of $0.00. But here are three things to fear from the release:

1. The company notes an 18% increase in its mortgage business. That equates to extra loans of $3 billion to 4 billion. Compare that with the $15.9 billion in loans it lost versus last year by shuttering its correspondent lending business, and it doesn't seem that impressive
2. Total loans were down versus last year. Although many of these moves are good (correspondent lending), B of A, along with Citigroup, is distracted while Wells Fargo and JPMorgan Chase are crushing it on mortgages.
3. Another $1.6 billion of litigation expenses is a big cloud over B of A that continues to keep shares cheap.
Overall, Anand remains bullish on Bank of America, even despite these concerns.

To learn more about why, check out our in-depth company report on Bank of America. The report details Bank of America's prospects, including three reasons to buy and three reasons to sell. Just click here to get access.

Anand Chokkavelu, CFA, owns shares of Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo. Fool contributor Matt Koppenheffer owns shares of Bank of America. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On October 21, 2012, at 12:23 AM, kthor wrote:

    Go BAC !

  • Report this Comment On October 21, 2012, at 2:01 AM, phexac wrote:

    Fear or not, there seems to be a lot to like about BAC at current valuation. It helps that I was in at $5.20 and $5.80.

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