Bank of America's 4Q income plummets 95%

Jan 22, 2008

nk of America Corp. says increased credit losses contributed to a 95 percent drop in fourth-quarter net income. Earnings for the full-year 2007 fell 29 percent.

In the fourth quarter, the Charlotte-based bank earned $268 million, or 5 cents per diluted share, down from $5.26 billion, or $1.16 per diluted share, in the year-ago period. The latest quarter includes results from LaSalle Bank Corp., which BofA bought in October.

"Our fourth-quarter results were severely impacted by ongoing dislocations in capital markets and the slowing economy," says Ken Lewis, chief executive. "Even given that environment, we certainly are not pleased with our performance. However, we are cautiously optimistic about 2008, though we believe economic growth will be anemic at best in the first half."

In the fourth quarter, BofA's net interest income rose 10 percent to $9.81 billion from $8.96 billion in the fourth quarter of 2006.

Noninterest income dropped 65 percent to $3.51 billion from $9.89 billion.

Trading-account losses totaled $5.44 billion in the latest quarter. In the same period in 2006, trading-account gains were $460 million.

Provision expenses increased $1.74 billion in the latest quarter, largely because of a $1.33 billion addition to BofA's reserve for credit losses. BofA's provision for credit losses was $3.31 billion, up from $1.57 billion in the fourth quarter of 2006.

Write-downs on collateralized debt obligations totaled $5.28 billion in the latest quarter, which BofA says reduced its trading profit by $4.5 billion and other income by about $750 million.

For the full year, BofA earned $14.98 billion, or $3.30 per diluted share last year. That's down from earnings of $21.13 billion, or $4.59 per diluted share, in 2006.

Net interest income for the full year increased to $36.18 billion from $35.82 billion in 2006. Noninterest income fell 16 percent to $31.89 billion from $37.99 billion in 2006.

BofA (NYSE:BAC) is one of the world's largest financial institutions, marketing to individual consumers, small- and middle-market businesses and large corporations. The bank operates more than 6,100 retail branches and nearly 19,000 ATMs.


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