Saturday, January 22, 2011

Bank of America posts earnings loss

Bank of America just posted a big loss.

Bank of America, among many other things the #2 residential mortgage lender and #1 servicer, reported a second straight quarterly loss, driven by write-downs in the value of its mortgage business.

The bank lost $1.57 billion, or 16 cents a share, compared with a loss of $5.2 billion, or 60 cents a share, a year earlier. Last year's results included a one-time TARP charge of $4 billion. Without the mortgage business write-down, the bank earned $756 million, or 4 cents per share.**

See also my broker Jay Thompson, a.k.a. The Phoenix Real Estate Guy, wrote a blog post the other day, grouching about Chase’s earnings for the 4th Quarter. Chase earned a whopping $52 million per day in profit in the 4th quarter of 2010.

Meanwhile, I’ve been thinking about Bank of America’s new billboard advertising campaign. Have you seen these? The basic message is “we’re everywhere” with billboards like these:

Where you live. Where you work. Where you play.

So many ATMs it’s like they’re following me. (with a pretty, smiling woman in the picture)

More ATMs than anyone else in the history of the world.

OK, I made that last one up. But the point is, they’ve spent a busload of money to remind us how big they are.

2008: BofA spent $319 million in U.S. advertising (source, BankInvestmentConsultant.com)

June 2009: B of A spent $125 million on U.S. advertising to date. (source, BrandWeekc.om)

January 2010: B of A plans to spend between $15 million and $20 million on a new marketing campaign aimed at the IRA rollover market. (source, BankInvestmentConsultant.com)

What happened to “too big to fail”? Did we all forget that saying already? It’s only been about a year and a half since we realized that some U.S. banks were so ginormous that if they failed the world would explode.

And now, Bank of America’s entire billboard ad campaign is centered on the idea of “we’re so huge, you can’t escape us.” Doesn’t that make them too big to fail, by definition?

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**As an aside, I love how we all let corporations get away with spinning their earnings reports. BofA gets to say “without that loss of 3/4 of a billion dollars, we had positive earnings.”   I’d like to be able to say to my creditors, “well, without that pesky mortgage of mine that’s underwater by $100,000, I’m fine. Really. Give me some more credit, I think I need to take a vacation this month.”

When pigs fly.