The largest US bank by balance sheet size, Bank of America Corp. has posted a loss of $1.24 billion for the fourth quarter in 2010. The bank attributed the losses to increased provisions due to faulty loans, litigations and mortgage write downs.
According to a statement issued by the bank, the loss per share works out to be 16 Cents and represents a substantial drop from a loss of $5.2 billion, recorded same period, last year. However, last year’s loss included a one time charge of $4 billion towards the governments Troubled Asset Relief Program (TARP).
The bank booked an impairment of $12 billion on its credit card and mortgage businesses. The purchase of Countrywide in 2008 – the biggest loan originator then in the US, has burdened the bank with numerous litigations and bad loan buyback claims.
BofA had earlier agreed the to pay the Government Sponsored Entities (GSEs) – Freddie Mac and Fannie Mae about $2.8 billion, to settle mortgage claims and triggering the bank to make provisions of $3 billion for Q4, 2010. The provision was revised upwards to $4.1 billion on account of outstanding and future mortgage buyback claims, the bank said today.
Brian Moynihan, who took over as CEO last year, said: “Last year was a necessary repair and rebuilding year. Our results reflect the progress we are making at putting legacy – primarily mortgage related issues behind us.”
The bank has advised that its goodwill in the mortgage business has suffered an impairment of $2 billion, because of foreclosures and litigations in the fourth quarter.