New York: Bank of America Corp, the largest US bank by assets, reported a $1.24 billion (Dh4.55 billion) fourth-quarter loss as costs mounted for refunds, writedowns and litigation tied to faulty mortgages.
The loss of 16 cents a share widened from $194 million a year earlier, according to a statement today from the Charlotte, North Carolina-based bank.
The lender increased the amount set aside to cover mortgage disputes for the second time in less than a month and added $1.5 billion for legal expenses.
Brian T. Moynihan, 51, who started as chief executive officer a year ago, booked $12.4 billion in 2010 impairments on credit-card and mortgage units purchased by predecessor Kenneth D. Lewis. The 2008 acquisition of Countrywide Financial Corp, then the largest US mortgage originator, has saddled the bank with lawsuits and demands to repurchase bad loans.
"It's a kitchen-sink quarter for their Countrywide issues," said Jason Tyler, who helps oversee $5.5 billion at Chicago-based Ariel Investments LLC.
"It's typical for a new CEO to report a lot of big charges to lower the bar for themselves. You have a small window to do this and not get blamed for it."
Buyback demands
The bank said earlier this month it agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle or preclude disputes over mortgages, triggering a $3 billion fourth-quarter provision. The sum was expanded to $4.1 billion, Bank of America said yesterday, citing outstanding and future mortgage buyback claims.
"Last year was a necessary repair and rebuilding year," Moynihan said in the statement.
"Our results reflect the progress we are making at putting legacy — primarily mortgage-related issues behind us."
Bank of America's shares fell 26 cents, or 1.8 per cent, to $14.28 at 9:33am in New York Stock Exchange composite trading. The stock slid 11.4 per cent in 2010, the second-worst performance in the 24-company KBW Bank Index; only People's United Financial Inc declined more.
In an interview on Bloomberg Television, Moynihan said there was more work to do on resolving mortgage claims and trading revenue was weak. Positive signs included a rebound in credit-card profit, and loan losses were easing as the economy strengthens, Moynihan said.
