The Value of Bank of America?

Your someone is probably referring to this: NEW YORK (Dow Jones)--Bank of America Corp. (BAC) is hustling to raise more than $10 billion in new capital before other banks, including Citigroup Inc. (C) and Wells Fargo & Co. (WFC), look to raise billions themselves.

On Monday, Bank of America abruptly announced its third-quarter earnings results and simultaneously said it would raise at least $10 billion in new capital. The Charlotte bank said it would use the capital not only to support its pending acquisition of Merrill Lynch & Co. Inc. (MER), but also to buttress its balance sheet against rising losses, especially among mortgage and credit-card loans.

What's the rush? There may be only a limited appetite for new bank investments, and Bank of America wants to be sure it can raise the capital it seeks. The punishment investors have taken since earlier rounds of capital raising, the fragile credit markets on which banks depend, and the continued downturn in the economy make it likely that investors won't flock to bank offerings.

Bank of America disclosed its third-quarter earnings two weeks ahead of schedule, earning 15 cents per share, which badly missed analysts' estimates.

Investors - many of whom consider the bank's earnings a bellwether for the rest of the industry - sold off Bank of America shares on Tuesday, pushing its shares down 23% to $24.80 in mid-day trading.

The bank's chief executive, Ken Lewis, said that other large banks' plans to raise billions in capital pushed BofA to release its earnings early - in order to enter the market for new capital ahead of them.

Lewis cited during a conference call with analysts on Monday "the possibility of Wells, Citi, and others getting out into the marketplace as well."

"We just thought it was prudent to get out there sooner rather than later," he said.

Frank Barkocy, director of research at Mendon Capital Advisors Corp., which invests in bank shares, said: "The time to raise capital is when you have the opportunity to do so...because I think those markets will eventually dry up."

Wells Fargo and Citigroup are currently locked in a legal tussle to resolve their competing claims to purchase Wachovia Corp. (WB), the troubled Charlotte bank. There is a possibility that Citi and Wells will agree to each purchase a portion of Wachovia, and any such scenario would likely lead both banks to raise new capital as they absorb Wachovia's troubled books of mortgages.

Both banks signed deals last week to purchase Wachovia. Citi said it would raise more than $10 billion to support its purchase, and Wells said it would raise up to $20 billion to support its own deal to buy Wachovia.

Additionally, in recent weeks three large companies - General Electric Co. (GE), Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM) - have raised about $25 bilion in new capital.

"There has been clutter" in the market for new capital, Lewis said, citing those recent capital raises.

With Wells and Citi looking to raise as much as $30 billion more, analysts largely praised Bank of America's decision to go to the market as soon as possible.

"We believe a 'sooner is better' mentality will prevail as far as capital raises," said Meredith Whitney, an analyst at Oppenheimer & Co. Inc., in a note to investors. She said those banks' ability to draw fresh infusions from investors will "distinguish survivors and the more challenged among banks."

Bank of America was expected to release terms of its common-stock offering on Monday morning, but a spokesperson for Merrill Lynch, who is handling the offering, said BofA would announce the price of its offering on Tuesday evening.

Regardless of the delay, many investors said they expected that Bank of America would be able to raise the capital.

"Despite its problems," said Barkocy, "Bank of America should be viewed as one of the stronger names in the industry."

-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306; [email protected]

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