Bank of America 4Q Profit Falls
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The quarter included results from LaSalle Bank, which Bank of America purchased on Oct. 1. Analysts expected earnings of 18 cents per share on revenue of $13.24 billion, according to a poll by Thomson Financial. The earnings estimates typically exclude one-time items. In premarket trading, Bank of America shares were down $1.92 at $34.05. Crosstown rival Wachovia said its fourth-quarter earnings tumbled to $51 million, or 3 cents per share, from $2.3 billion, or $1.20 per share, during the same period the previous year. Excluding merger-related expenses, Wachovia earned $160 million, or 8 cents per share, during the fourth quarter. Analysts polled by Thomson Financial, on average, forecast earnings of 33 cents per share for the quarter. Wachovia, the nation’s fourth-largest bank, took a $1.7 billion write-down during the quarter due to weakening credit markets. Wachovia shares were down $1.10 at $29.70 in premarket trading. Results at Bank of America reflected $5.44 billion of trading losses, compared with profits of $460 million a year earlier. This reflected a $5.28 billion write-down related to collateralized debt obligations, which the bank said reduced trading profit by $4.5 billion and other income by about $750 million. CDOs are complex investments that combine slices of different kind of risk and often are backed in part by subprime mortgages — loans given to customers with poor credit history — as well as other loans. Bank of America said it also set aside $3.31 billion for possible future credit losses. “We certainly are not pleased with our performance,” Chief Executive Ken Lewis said in a statement. “We are cautiously optimistic about 2008, though we believe economic growth will be anemic at best in the first half.” The news was the latest in a series of earnings declines among the largest U.S. banks as the nation’s housing crisis and a slowing economy have forced many consumers to fall behind on their bills. For the year, Bank of America reported earnings of $14.98 billion, or $3.30 per share, compared with $21.13 billion, or $4.59 cents per share, in 2006. Revenue fell to $66.32 billion from $72.58 billion a year earlier.
Tags: chief executive, earnings
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