BankAmerica, the nation's
biggest bank, said on Tuesday its fourth-quarter profit fell 20
percent and missed Wall Street estimates due partly to
merger-related costs and lower revenues from trading and
BankAmerica said it earned $1.16 billion, or 66 cents a
diluted share, which was down from $1.46 billion, or 81 cents a
diluted share, a year earlier. Excluding one time items, which
included expenses related to its merger with NationsBank and its
acquisition of Barnett Banks Inc., the company earned 91 cents a
share, which was below the 93 cents a share estimated by Wall
Street analysts surveyed by First Call Corp.
The bank said its ties to trading firm D.E. Shaw, which
caused unexpected and disappointing losses in the third quarter,
created $201 million in pre-tax losses in the fourth quarter.
BankAmerica said the $20 billion bond portfolio it bought from
D.E. Shaw in the third quarter had $43 million in
trading-related losses in the fourth quarter, and it also marked
down its investment in the firm by $158 million.
But BankAmerica said it had substantially reduced its
exposure to D.E. Shaw in the fourth quarter, after problems in
the third quarter, and more than $13 billion of the $20 billion
portfolio had been liquidated. Its investment in D.E. Shaw,
originally on its books as a loan, was now valued at $770
million, down from about $1 billion at the end of September.
The bank also realized $404 million in securities gains in
the fourth quarter, up from $111 million a year earlier, given
strong demand for U.S. Treasury securities.
As for its core businesses, non-interest income fell 18
percent in the quarter to $2.66 billion as turbulence in
financial markets hurt the bank's capital markets business. The
bank also said net interest income rose 1 percent to $4.65
billion as loan and deposit growth offset asset securitizations
and loan sales as well as margin pressure.