Bank of America Corp. said Friday it lost $1.6 billion for common shareholders in the fourth quarter, as it continued to absorb charges related to its troubled mortgage unit. Brian Moynihan, completing his first year as chief executive, said he was disappointed by the results but that the bank is tying up old problems and moving ahead.
The Charlotte-based bank had already indicated that this quarter would be dismal, announcing earlier this month that it would pay billions to settle disputes with government-controlled Fannie Mae and Freddie Mac, who wanted Bank of America to buy back soured mortgages they sold to the agencies. But analysts today raised questions about another problem on the horizon: the disputes with private investors that are still remaining. Finance chief Chuck Noski said the reserves for mortgage-repurchase disputes, currently at about $5.4 billion, could rise by as much as $10 billion because of claims from private investors.
Friday's earnings are another reminder of the high costs of Bank of America's 2008 decision to buy Countrywide Financial, a California-based lender known for exotic mortgages. Though the purchase cemented Bank of America's role as a mortgage giant, it has also brought quarterly losses, legal settlements and an ongoing investigation of foreclosure practices. The mortgage unit, which hasn't turned a profit since 2007, lost nearly $5 billion this quarter, a big increase from its $994 million loss a year ago.
The bank's new finance chief, Chuck Noski, reiterated that Bank of America isn't looking to be the biggest - a departure from the thinking of former CEO Ken Lewis. "Frankly, we're not driving for market share in this business," Noski told analysts, referring to the mortgage unit. "We're driving for solid risk management and profitable performance."
The bank's shares fell 1 percent by lunchtime, to about $14.39.
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