Bank of America quarterly earnings drop, miss projections | VailDaily.com
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Bank of America quarterly earnings drop, miss projections

Daily Staff Report

CHARLOTTE, N.C. – Bank of America Corp. posted its first profit decline in years on Monday, missing Wall Street’s expectations as consumer bankruptcies and weaker trading results cut into its fourth-quarter earnings.Shares of the nation’s second-largest bank slipped after the results were announced.In afternoon trading, Bank of America’s shares dropped 35 cents, or 0.8 percent, to $43.84 on the New York Stock Exchange.The Charlotte-based bank said net income for the quarter totaled $3.77 billion, or 93 cents per share, down from $3.85 billion, or 94 cents per share, a year earlier.Excluding merger and restructuring charges of $59 million before taxes from its acquisition of credit card company MBNA Corp., Bank of America would have earned 94 cents a share in the latest quarter.Analysts polled by Thomson Financial had forecast earnings of $1.02 a share.”The fourth quarter was the first one in a long time when we failed to meet our own expectations,” Chief Financial Officer Alvaro de Molina told industry analysts in a conference call. “It’s fair to say we fell short of yours as well.”Revenue during the fourth quarter grew to $14.12 billion from $13.71 billion last year – also below Wall Street projections of $14.52 billion.By missing its earnings target, Bank of America joined Citigroup Inc., the nation’s largest financial institution, which reported last week that its earnings were 2 cents below analysts’ expectations on weakness in its retail bank operations. Investors sent its shares down sharply.The nation’s third-largest bank, JPMorgan Chase & Co., beat estimates but acknowledged weakness in its trading operations.Ken Lewis, Bank of America’s chairman and chief executive, blamed the fourth quarter’s lackluster performance on the need to set aside more assets for bad loans and lower trading results – factors that also influenced earnings at other banks during the final quarter of 2005.”The impact of the change in bankruptcy laws and changes in our practices for overdraft charge-offs and over-limit credit card fees reduced pretax results by about $320 million,” Lewis said in a statement. “In addition, we had a weak trading quarter that was well under our performance in recent quarters.”During the quarter, thousands of Americans rushed to file for bankruptcy ahead of the Oct. 17 change in the nation’s bankruptcy law, which made it harder for them to discharge their debts.Lewis noted this was a one-time event, saying: “The bankruptcy issue will not recur and should actually benefit us going forward as we expect a reduced level of bankruptcy filings under the new law.”Bank of America reported its provision for credit losses was $1.4 billion in the October-December period, up from $706 million a year earlier.Consumer and middle-market business loan growth and higher deposits helped net interest income jump to $8.1 billion from $7.95 billion. Noninterest income rose 5 percent to $6.26 billion from $5.97 billion, helped by higher mortgage banking income and equity investment gains.For the year, Bank of America earned profits of $16.89 billion, or $4.15 a share, up from $14.14 billion, or $3.69 a share in 2004. Revenue for the year totaled $56.77 billion, up from $48.88 billion in 2004.—Eds: AP Business Writer Joe Bel Bruno contributed to this report from New York.—On the Net:www.bankofamerica.com


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