So Goes California…

Bank of America recently posted earnings for the quarter ending March 31 of $4.25 billion or .44 cents per share – far outstripping the .04 cents per share predicted by the market.

Net earnings for the company during all four quarters of 2008 totaled $4 billion.

However, most of the gabbling on the ticker-tape cable channels was whether the earnings, on record income of $36 billion, stemmed from the giant corporation’s fiscal health or continued sickness.

The company, which availed itself of $25 billion in federal bank bailout funds in 2008, also bought both Merrill Lynch and Countrywide mortgage.

Bank of America’s 2008 annual report — whose 192 pages offer no shouldering of any managerial culpability in the bank’s stratospheric stock decline – lists credit losses of $27 billion, up from $8.4 billion in 2007.

The first quarter earnings report, which is the first to include Merrill Lynch and Countrywide revenue – or lack thereof, adds $13.4 billion in provisions for credit losses.

A big part of the problem is California.

On Pages 64 and 65 of the annual report, there are two charts. On Page 64, the chart shows concentration, by state, of residential mortgages held by the bank.

Of the $238 billion in outstanding mortgages nationwide, $85 billion are in California, more than 35 percent of the bank’s portfolio of same. Of the $7 billion in “non-performing” mortgages, to use the bank’s term, $2 billion are in California, almost 29 percent.

Of the $925 million charge-offs the bank took for the losses, $411 million came from California, 44.4 percent of the total.

Similarly, of the $138 billion in home equity loans nationwide, $38 billion worth, 27.5 percent are in California. As with residential mortgages, Florida is a distant second at $18 billion or 13 percent.

The chart on Page 65 shows that of the $2.7 billion “non-performing” home equity loans nationwide, 32 percent — $857 million worth – are in California. Forty-two percent of the bank’s $3.5 billion in charge-offs stemmed from California.

Nor do these figures take into account $18.1 billion in “discontinued real estate” Bank of America acquired through its purchase of Countrywide.

The annual report says this portfolio consists of  “pay-option and sub prime loans.”

Of the $18.1 billion, California represents 55.2 percent – approximately $10 billion. The next closest is Florida at 10 percent, $1.8 billion.

There are also another $1.9 billion of discontinued real estate loans not gained through the Countrywide acquisition. California represented 31 percent of that portfolio when the books closed on December 31 and 22 percent of the non-performing loans.

“The Los Angeles-Long Beach-Santa Ana (area) within California made up 14 percent of outstanding discontinued real estate loans,” it notes on Page 65.

So goes California; so goes the country – and Countrywide. And, now, BofA.

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