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BankAmerica Quarterly Profit Declines 20 Percent
Reuters
CHARLOTTE — 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 investment banking.

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.

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