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Bank of America reports $1.6B loss in 4th quarter
Question of the Day
NEW YORK (AP) — Bank of America on Friday reported a loss of $1.6 billion in the fourth quarter of 2010 after its costs related to soured home loans increased.
The quarter's results were a clean-up effort by the bank in an endeavor to start 2011 with a clean slate. The deep slump in the real estate market has continued to hamper Bank of America more than its competitors because of its 2008 purchase of Countrywide Financial, the country's largest mortgage company at the time.
"Last year was a necessary repair and rebuilding year," said CEO Brian Moynihan.
Bank of America Corp.'s loss available to shareholders after paying out dividends was 16 cents per share. Analysts surveyed by FactSet had forecast the bank would earn 18 cents a share. Excluding a charge of $2 billion related to the home loans, the bank would have earned 4 cents a share.
A year earlier, Bank of America had reported a loss of $5.2 billion after it repaid $4 billion related to its bailout during the financial crisis.
The bank reported revenue of $22.4 billion for the quarter, down from $25.1 billion in the previous year.
Bank of America also kept aside an additional $4.1 billion for bad home loans that it could be forced to buy back from Freddie Mac and Fannie Mae and other investors, and another $1.5 billion for litigation expenses.
Investors say that the bank should take back the bad home loans because they were sold on improper documentation. Besides buying back bad loans, several banks were stung by accusations in the fourth quarter that they failed to properly review documents used in foreclosures. Attorneys general from all 50 states are conducting an investigation.
The results of the largest U.S. consumer lender stand as a proxy for the health of the people's finances. And Bank of America's results echoed what other banks have been reporting earlier in the week that the fiscal health of the American people is improving.
For the sixth consecutive quarter, there were fewer people that were late meeting monthly payments. The bank's losses from lending in its credit card and home loan business declined $414 million from the third quarter of 2010, because of a drop in delinquencies and bankruptcies.
For the full year 2010, the bank reported a loss of $3.6 billion, compared to a loss of $2.2 billion in 2009.
Bank of America's shares were down 27 cents, or 1.9 percent, in pre-market trading Friday.
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