Bank Of Scamerica (BAC) Earnings MISS


The market, thus far, doesn’t seem to care much….

Fourth-Quarter Net Loss of $1.2 Billion, or $0.16 per Diluted Share, Includes Goodwill Impairment Charge of $2.0 Billion

Excluding Goodwill Impairment Charge, Fourth-Quarter Net Income Was $756 Million, or $0.04 per Diluted Share1

2010 Net Loss of $2.2 Billion, or $0.37 per Diluted Share, Includes Goodwill Impairment Charges of $12.4 Billion

Excluding Goodwill Impairment Charges, 2010 Net Income Was $10.2 Billion, or $0.86 per Diluted Share1

Ya, ok.  Goodwill impairment charges eh?  You mean writing off worthless “goodwill” – one of the best scams out there in the accounting world, by the way – the “value” you pay in excess of actual value, otherwise known as “speculative premium” or “that other bastard got us to overpay for that acquisition” (but never called that) is being written down pretty aggressively.

That is known among honest people as “we’re never going to recognize anything of value from that, and the auditors won’t let us get away with it any more.”

Oh yeah, Revs missed too.

Why?  Well the bank blames…..

The revenue decline was driven by the impact of Regulation E (Reg E), which was effective in the third quarter of 2010 and the overdraft policy changes implemented in the fourth quarter of 2009.



Oh, you mean the “we’ll steal everything that isn’t nailed down that our customers might have had” policy that got short-cut to some degree by The Fed and Congress?  Uh, yeah.  Overdraft “policy.”  Like stacking transactions to generate the largest overdraft charge possible, right?

I’m impressed that BAC managed to actually increase deposits by 1%.  There are actually people who still do business with this institution?  Certainly you jest….. oh wait, you’re not kidding.  Ok, the American people really are stupid.

Oh yeah, they’re claiming credit improvement which means lower reserves – except for putbacks and litigation expense, which, well……  This is really quite funny – all the banks are doing this, and some are cranking open the credit card available line numbers again.  This is nothing short of amazing, given the leverage picture on balance in the economy and the lack of employment improvement.  Indeed, the only place we’ve seen any sort of “balance sheet fixing” among consumers is in credit cards – everywhere else it’s been terrible, and the “expansion” has all been in student loans, which are now Federal things.

Finally, go through their voluminous (and what looks to be intentionally obscure) releases and pay particular attention to their available cash and cash equivalents…… and what has happened to them this last quarter….. then ask yourself – where did it go?

No matter how you slice and dice it, an 11% revenue decline is a monstrous miss, and a loss compared to analyst expectations of 14 cents in earnings?  Well that’s a chocolate bar in the punchbowl too.

Again, the bottom line for any business is “show me how you make money.”  When the answer is “we find ways to screw customers” I’m not interested – eventually those games blow up in your face, and neither I or anyone else is good enough to know exactly when it will happen.

The Market-Ticker