BofA Shares Fall 3 Percent as Credit-Card Writedown Doubles

Tuesday, 22 Feb 2011 02:35 PM

 

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Bank of America Corp. shares declined 3 percent in midday trading on Tuesday, a day after the largest U.S. bank said it was writing down goodwill for a credit card unit by $20 billion, double the previously announced amount.

BofA shares declined 3.39 percent to $14.25 on the New York Stock Exchange, ahead of a 3 percent decline in the KBW Bank Index.

Analysts and investors said the surprise writedown — despite not causing the entire bank to restate earnings or affect its capital ratios — spooked investors.

"This was unexpected and should have been handled better," said Matt McCormick, a portfolio manager with Cincinnati-based Bahl & Gaynor Investment Counsel.

McCormick does not own shares in U.S. banks, but does own shares in Canadian banks.

BofA reported on Monday that it would restate 2009 and 2010 financial reports filed with bank regulators for a subsidiary, FIA Card Services, to include a $20.3 billion goodwill writedown. The bank had previously taken a $10 billion writedown.

The Charlotte, North Carolina-based bank said on Monday the charge was related to deteriorating credit quality and the affects of The CARD Act on its operations in 2009.

The card unit is a bank-chartered subsidiary that includes BofA's credit card operations, and is part of the bank's larger card services unit.

© 2014 Thomson/Reuters. All rights reserved.

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