Credit losses cut into Bank of America’s 4Q profits

Quarterly net income was $268 million, or 5 cents per share, compared to $5.26 billion, or $1.16 per share, a year ago. The quarter included results from LaSalle Bank, which Bank of America purchased Oct. 1.

Primary drivers of the decrease, according to a company news release, were $5.44 billion in trading account losses compared to $460 million in profits a year earlier; $5.28 billion in collateralized debt obligation write-downs and weaker trading results; and a $1.74 billion increase in provision expense due to a $1.33 billion addition to the credit losses reserve.

“Our fourth-quarter results were severely impacted by ongoing dislocations in capital markets and the slowing economy,” CEO and chairman Kenneth D. Lewis said in the release. “Even given that environment, we certainly are not pleased with our performance. However, we are cautiously optimistic about 2008, though we believe economic growth will be anemic at best in the first half.”

Net interest income for the quarter rose 10 percent to $9.81 billion, from $8.96 billion in the same period a year earlier. Meanwhile, noninterest income declined 65 percent to $3.51 billion, from $9.89 billion, because of trading account losses, lower equity investment income and losses related to the support of certain cash funds and subsequent write-downs related to securities purchased from the funds at fair value, according to the release. That loss was partly offset by a $1.5 billion gain on the sale of its Marsico asset management unit.

Noninterest expense for the quarter rose 13 percent to $10.28 billion, from $9.09 billion a year earlier.

For the year, the Charlotte, N.C.-based bank’s net income fell 29 percent to $14.98 billion, compared to $21.13 billion in 2006. Earnings per share in 2007 dropped 28 percent to $3.30 from $4.59 a year earlier.

Shares (NYSE: BAC) closed Tuesday at $37.39 and were trading up at $39.72 as of 10 this morning. The 52-week range is $33.12 to $54.21.