Bank of America reverses loss and earns $2 billion

NEW YORK — Bank of America made $2 billion in the last three
months of last year, reversing a loss from a year earlier. It
sold debt and its stake in a Chinese bank, offsetting losses in
its investment banking business and higher legal expenses over
mortgages.

The bank said Thursday that it made 15 cents per share in the
fourth quarter, falling short of the 22 cents expected by
analysts surveyed by FactSet, a provider of financial data.

For the year, the bank made $1.4 billion. It lost $2.2 billion in
2010.

Bank of America has been raising cash by selling pieces of itself
that don’t fit into its basic banking model. The strategy was
also a way to prepare for a Federal Reserve stress test, which is
under way, and meet international regulatory standards.

“We enter 2012 stronger and more efficient after two years of
simplifying and streamlining our company,” CEO Brian Moynihan
said.

Bank of America’s results are considered a gauge of the health of
the American consumer. The bank serves about half of American
households. The results showed that housing continues to remain a
concern in the economy.

Bank of America’s real estate business lost $1.5 billion after a
74 percent decline in new home loans. The bank lost some market
share and closed a division that helped third-party home lenders.

But Americans seemed to be getting their financial houses in
order by paying off more debt on time.

Bank of America, one of the largest credit card issuers, said
customers who paid bills a month late declined for the 11th
consecutive quarter. New credit card accounts also grew 53
percent, and the division posted a profit of $1 billion.

The $2 billion net income for the fourth quarter compared with a
$1.2 billion loss in the same quarter a year ago.

The bank made $2.9 billion by selling its stake in China
Construction Bank and $2.4 billion more selling debt and
exchanging its higher-cost preferred stock for common stock.

It set aside $1.5 billion for litigation expenses, mostly related
to fighting lawsuits from mortgage loans.

Bank of America’s investment banking business reported a loss of
$433 million due to lower investment banking fees and lower sales
and trading driven by the rocky stock and bond markets in the
last three months of the year.

Bank of America shares gained 7.5 percent in pre-market trading
to $7.31.