Bank of America Corp, the largest US bank by assets, posted its first loss since 1991 and cut the dividend after receiving emergency funds from the government to support the acquisition of Merrill Lynch & Co.
The fourth-quarter loss of $1.79 billion, or 48 cents a share, compared with net income of $268 million, or 5 cents, a year earlier, the Charlotte, North Carolina-based company said in a statement on Friday. Results didn't include a $15.3 billion loss at Merrill, acquired this month. The 32-cent dividend was slashed to a penny. Citigroup Inc analyst Keith Horowitz estimated on January 11 that the bank had a $3.6 billion loss.
The losses, coupled with the government lifeline of $138 billion, raise doubts about the future of Chief Executive Officer Kenneth D Lewis, who engineered takeovers of unprofitable New York-based brokerage Merrill and ailing mortgage lender Countrywide Financial Corp during the worst market slump since the Great Depression. Bank of America plummeted 75 per cent in New York trading through on Thursday since the Merrill deal was announced in September.
“This thing is unraveling so fast Lewis may know his job is lost,” said Paul Miller, an analyst at Friedman Billings Ramsey Group Inc in Arlington, Virginia, who has an “underperform” rating on Bank of America. The management team has “lost credibility,” he said before results were announced.
The bank rose 63 cents, or 7.6 per cent, to $8.95 in early trading at 6:21 am in New York.
