Zacks Analyst Interview Highlights: Countrywide, Bank of America, National City, Comerica and Commerce Bancshares

Business Wire, Jan 30, 2008

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Neena Mishra, who discusses Countrywide (NYSE: CFC), Bank of America (NYSE: BAC), National City Corp. (NYSE: NCC), Comerica (NYSE: CMA) and Commerce Bancshares (Nasdaq: CBSH).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Countrywide reported earnings on Tuesday. They were bad, as expected, but the company's stock is still doing OK. What is your explanation here?

Countrywide (NYSE: CFC) shares had been trading below the implied deal price for the last two weeks, since there was a possibility of renegotiation of the deal if the CFC results were much below expectation and if the mortgage crisis continued to worsen.

However, today the shares received some support despite bad results, mainly due to the statement from the Bank of America (NYSE: BAC) CEO that the items driving the loss were consistent with the due diligence and transaction price, and that the acquisition of Countrywide was on track. We anticipate that both federal regulators and CFC shareholders would be more than willing to approve the deal and BAC expects the deal to close in the third quarter.

Have any of your financial companies reported fourth quarter earnings yet? Do all of these companies have big write downs to make in this quarter? Will anyone be spared?

Yes, many of the banks that I cover have already reported their fourth quarter earnings while many of the Insurance companies and specialty finance companies will be reporting this and the next week. As expected, most of the banks had to take large charges for the bad loans. In some cases, the amount was worse than estimates. Deterioration in the mortgage, home equity and residential real estate loans as well as the inability of the banks to sell these risky loans in the secondary market, are among the primary factors contributing to the problem.

We were in particular disappointed by the results of National City Corp. (NYSE: NCC) and Comerica (NYSE: CMA). NCC, which was affected by the subprime loans in its portfolio, had to cut its dividend, announce large scale layoffs and now plans to raise capital this quarter through the issuance of new securities. Somewhat similar was the situation with CMA, which had to suffer due to heavy exposure to the Commercial Real Estate loans (Residential Construction loans) in the difficult markets of California, Michigan and Florida. On the other hands, banks like Commerce Bancshares (Nasdaq: CBSH), which have a lower exposure to housing and real estate loans compared to their peers, reported the earnings more or less in-line with estimates.

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