Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (37471)	11/14/2000 6:47:14 PM
From: robnhood	Read Replies (1) \| Respond to of 436258

I covered my PVN a couple of days ago, but have you been watching that act. Terrific earnings and a split coming no less. I think it's telegraphing something.

To: pater tenebrarum who wrote (37471)	11/14/2000 6:58:03 PM
From: Gary M. Reed	Read Replies (2) \| Respond to of 436258

Speaking of trouble in big bank land, this just in from TheStreet.com on BAC: thestreet.com Bank of America's Credit-Quality Chickens Come Home to Roost By Peter Eavis Senior Columnist 11/14/00 6:23 PM ET The chickens have come home to roost at Bank of America (BAC:NYSE - news - boards), which Tuesday made a public filing that said its bad-loan problems are worse than the bank had expected. Skeptics have long predicted a deterioration in credit quality at the nation's second-largest bank. Charlotte-based Bank of America's Securities and Exchange Commission filing, made after the close Tuesday, says the bank "expects credit quality to continue to deteriorate, which will affect both nonperforming loans and net charge-off levels." Charge-offs are bad loans that the bank thinks it will take a loss on. The term nonperforming loans refers to credits that are past due, usually by more than 90 days. Long November The filing states that in November one large commercial credit in the consumer services industry, which the bank declined to name, was classified as nonperforming. There's a fair chance the debtor could be struggling Sunbeam (SOC:NYSE - news - boards), which didn't have a representative available to comment. Bank of American participated in a $1.7 billion loan to the company in 1998, just before Sunbeam's mounting problems caused the stock to plunge from over $50 to 81 cents at Tuesday's close. The bank adds that this problem loan and deterioration in other credits will cause nonperforming loans to grow in the fourth quarter by more than 13%, the rate at which they increased from the second to third quarters. Nonperforming loans totaled $4.2 billion in the third quarter, up nearly 50% from the year-ago period. The bank also says that charge-offs could exceed its guidance to investors. In October, the bank said it expected charge-offs in 2000 to be between 0.45% and 0.55% of total loans. Now, it is says they could total 0.6% of loans. The filing says Bank of America is raising its bad-loan guidance to take into account the possible need to charge off the aforementioned problem credit, and because it's adopting new tougher regulations for classifying consumer bad loans . The bank also noted the slowdown of U.S. economic growth in recent months, which it said is hurting credit quality. The new regulations could add $100 million to charge-offs, the bank says. Big Bite Charge-offs were $435 million in the third quarter, equivalent to 0.43% of loans. The bank now says fourth-quarter charge-offs could double from third-quarter levels, which could mean more than $800 million. Consequently, fourth-quarter earnings will be hit hard, as money is taken out of profits to build up the bad-loan provision. In fact, the filing says that the bank "anticipates recording a provision for loan losses in an amount at least equal to its net charge-offs in the fourth quarter." Therefore, a provision of over $800 million in the fourth quarter is possible. That's equivalent to a stunning 43% of third-quarter net income. That's not all. The bank said it didn't include $63 million of nonperforming loans in its third-quarter total. The reason? These nonperformers were included among $864 million of domestic commercial loans that were slated to be sold, and therefore weren't added to credit-quality totals. Concerns about credit quality have long pressured Bank of America's stock, causing it to lag behind its rivals. The underperformance now appears entirely justified. Get ready for a wobbly Wednesday.