In this anything-goes market, investors -- particularly in bank stocks -- have all but forgotten about return on their money. The main concern is return of their money, especially after the demises of Indy Mac and Washington Mutual brought the phrase "run on the bank" back into the mainstream for the first time since the Great Depression.
Thankfully, Bank of America
Bank of America earned $1.18 billion, or $0.15 per share, on revenue of $19.9 billion, compared with the $3.70 billion, or $0.82 per share, earned in the same period last year -- when the industry wasn't melting down, mind you. Here's how a few numbers looked compared with last year:
|
Metric |
Q3 2008 |
Q3 2007 |
|---|---|---|
|
Total Revenue |
$19.90 billion |
$16.47 billion |
|
Net Income Per Share |
$0.15 |
$0.82 |
|
Nonperforming Assets |
1.42% |
0.43% |
|
Net Charge-offs |
1.84% |
0.80% |
|
Tier-1 Capital |
7.50% |
8.22% |
|
Total Assets |
$1.83 trillion |
$1.60 trillion |
|
Deposits |
$586 billion |
$702 billion |
On top of the earnings, Bank of America announced it was cutting its quarterly dividend in half and planning to raise $10 billion in new capital to see it through the storm. Bad news? I certainly don't think so. Slashing the dividend could save the company $5.6 billion per year -- money that it can use to reload its coffers, put aside for future losses, and otherwise hoard to ensure it doesn't become the next credit-crisis victim. Remember, Bear Stearns, Freddie Mac
What happens now? With Wells Fargo
Sure, Merrill is a top-notch franchise with one of the best brokerage units in the world, but the question becomes whether the strength of that brokerage was built on the mother of all financial bubbles. With the future of financial markets as murky as it is now, it's just too hard to tell if it paid a good price for Merrill.
Bank of America has earned three stars in our Motley Fool CAPS rating service. Care to throw in your two cents? Go to CAPS and tell us what you think.
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