Bank of America reports 3Q profit down 68%

Bank of America's profit fell 68 percent in the third quarter, driven primarily by higher credit costs and writedowns on Fannie Mae and Freddie Mac preferred stock.

The Charlotte, N.C.-based bank reported quarterly results Oct. 6. Net income was $1.18 billion, or 15 cents per share, down 68 percent from $3.7 billion, or 82 cents per share, in third-quarter 2007.

The decline was driven by a significant increase in credit-loss provision expense - at $6.45 billion for the quarter, compared to $2.03 billion a year ago - as credit costs continued to rise. Equity investment income, in particular, was hit hard because of $320 million in writedowns on preferred Fannie Mae and Freddie Mac stock.

Net interest income rose 33 percent to $11.92 billion due to the acquisitions of Countrywide Financial Corp., which added $259 million in operating earnings this quarter, and LaSalle Bank. Noninterest income increased 7 percent to $7.98 billion, and noninterest expense rose 34 percent to $11.66 billion.

The company also announced that it plans to sell common stock to raise about $10 billion. The bank also declared a 32-cent quarterly dividend, payable Dec. 26 to shareholders of record Dec. 5. The dividend is half of the 64 cents paid in recent quarters, and the reduction is expected to add more than $1.4 billion in quarterly capital.

Shares (NYSE: BAC) closed Monday at $20.53, compared to a 52-week range of $18.44 to $48.58.[[In-content Ad]]