9:33 Still listening to hold music. It’s very jazzy, kind of like the SNL intro music.
9:34 Keep waiting for them to say… and your host. Keeeen Lewis!
9:35 Starting now… Ken Lewis. Going through the numbers Revenue and earnings “Both were easily record levels.” Had benefits from mortgage banking, trading conditions and certain share sales.
9:36 Offsetting the good things were significant deterioration in credit quality and lower consumer spending. Lewis says it’s ironic that the two controversial acquisitions, Countrywide and Merrill were the strongest parts. (Indeed).
9:38 Talking about increasing deposits. Says they gained share even excluding acquisitions.
On the current environment “Credit market is bad, and we think it’s going to get worse before it improves.” Might improve in 2010.
9:41 Positive GDP growth could come by Q4 and unemployment won’t peak until sometime next year, but at this point they don’t see unemployment peaking beyond 10%. (we can hope).
9:42 CFO Joe Price now taking over going through numbers.
9:44 Going through credit card numbers on slide 10. Ugly.
9:46 Price says BofA doing fine retaining financial advisers. 95% of high-performers have been retained. Of the ones who left, 50% were trainees. (Slide 12)
9:54 Price discussing Credit quality (slide 19). “While we’re seeing an improvement in consumer delinquencies in many consumer products, this is attributed to seasonal changes.” Very little good to show here. Added $1.2 billion to loan losses for small business and commercial real estate.
9:58 More details on the portfolio. Talking home equity and residential mortgages.
10:00 Community Reinvestment Act portfolio is 7% of the total book, but 24% of the losses. Interesting bit of red meat for people who focus on that act as a contributor to the crisis.
10:07 Discussing capital levels (slide 32). Ratios are slightly lower than previously predicted due to still wrapping up government insurance guarantees. “While we expect credit losses to trend higher, we expect the level of our reserves and profits to allow us to maintain capital levels.”
10:10 Q&A time.
Q: Will you sell off any business lines?
A: Lewis: “You know we’ve got First Republic in the process as we speak… we don’t comment on any others before we put it up for sale. But anytime you do an acquisition such as Merrill Lynch, you step back and look across all your business lines… that’s a natural process given any large acquisition.”
Q: Any other writeups?
A: $1.5 billion across derivatives book.
Q: PPIP question.
A: At this point, it’s not been finalised… any program that adds to price discovery in the marketplace will be helpful. Our inclination would be to give it a small trial run.
Q: Second quarter at Countrywide.
A: On the production side, still doing good inflows. That would continue until there’s a chance in rates.
Q: Meredith Whitney question: It looks like losses are starting to spread out, not just California and Florida anymore. Looking for more colour regionally. And what’s up with subprime in California and Florida.
A: I guess on a regional basis, it’s too early to call stability in this cycle… California feels a little bit better. Florida still crappy.
And that’s the call.
Original post: Follow along with us starting at 9:30 AM as Bank of America (BAC) defends its Q1 results.
Our writeup of the report is here, and we noted, the bank showed a profit largely due to one-time gains. The underlying business is still very weak. You can listen to the call here. The slides are embedded here.