Bank of America has registered a loss in the third quarter of this year

By posting a loss in the third quarter of 2009 the condition of the bank became all too apparent. It is weighed down by defaults in credit cards and mortgage loans. During the last six months the bank had showed the biggest gains.

In the third quarter it reported a loss of $1 billion. The loss will go up to $2.24 billion when dividends given to preferred share holders like the federal government would be calculated. Nevertheless the red balance sheet is pointing to its improvement in comparison to its financial status in 2008.

Bank of America took $2.6 billion to improve its credit sheets by engaging in write downs. It spent $400 million to bring to a close a dispute with the federal government over it acquisition of Merrill Lynch.

The bank suffered loss calculating to 26 cents per share from July to September. In the second quarter the profit was $3.2 billion or 33 cents. Analysts had expected loss to be 12 cents per share. In the same quarter one year ago the bank had gained $1.8 billion or 15 cents per share.

Kenneth D. Lewis the CEO of Bank of America said, “Obviously, credit costs remain high, and that is our major financial challenge going forward. However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card numbers.”

Defaults on loans are continuing to grow while civil suits continue to hound the bank. It performance put it behind other banks like Goldman Sachs and JPMorgan Chase. However it was one up over Citigroup that was still tied to government bailout.

The troubles in Bank of America reflect the condition of the American economy as a whole as it continues to grapple with foreclosures and unemployment.

In the third quarter the bank pumped in $2.1 billion into its reserves to make up for increasing credit failures due to surging unemployment and mortgage defaults. People failed to be current on their credit card dues also.

With talks about the recession fading the question arises who can pull up Bank of America to a higher platform? Recently Lewis announced that he would be stepping down and this would cause a vacuum. It would have to find a leader that would wipe out the scarred image of the bank and allow it to run without the crutches provided by the government. Bank of America has taken about $45 billion from the bailout funds.

bank foreclosures

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