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BoA Faces High Bar Post Countrywide Buy

07-21-2008

Bank of America Corp., the biggest U.S. home lender after buying Countrywide Financial Corp., reports earnings next week amid concern the acquisition has added to losses on credit-card and home-equity loans, Bloomberg News reports.

Bank of America is likely to say on July 21 that second- quarter per-share profit fell 59%, according to estimates of 21 analysts compiled by Bloomberg. A year earlier, the Charlotte, North Carolina-based bank earned $5.76 billion, the best quarter in the company's history.

Impressing investors may be tougher after Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. reported better-than expected quarterly results. Citigroup posted a smaller-than- estimated loss of $2.5 billion today and JPMorgan's decline beat analysts' predictions. Wells Fargo's July 16 earnings, which also exceeded estimates, sparked a two-day buying frenzy that boosted Standard & Poor's 500 Banks Index more than 30 %.

``I still wouldn't put Bank of America in the same camp as JPMorgan or Wells Fargo,'' Chris Hagedorn, a portfolio manager at Fifth Third Asset Management in Cincinnati told BN. ``The biggest concern for me is that, of the major diversified financials, they have the lowest reserve levels.''

The lender may need to raise $10 billion to boost its capital because of rising losses on loans acquired in the Countrywide transaction, KBW Inc. analyst

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