Earnings Reports for Jan. 16

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Bad Loans Drive Down Earnings at Bank of America

Fourth quarter profit fell 27 percent atBank of America and the company blamed the decline on high loan losses and reduced capital markets business due to a slowingeconomy.

Quarterly profit dropped from $1.9 billion, or $1.10 a share, to$1.39 billion this year, or 85 cents a share.

Bank of America's 12-month earnings were 4 cents higher pershare, from $4.48 to $4.52, but total net earnings dropped from$7.88 billion in 1999 to $7.52 billion last year.

The company said last month that its fourth quarter wouldn't bein line with previous periods. The 1999 fourth-quarter earningsincluded a $213 million after-tax charge to cover costs associatedwith the merger of NationsBank and BankAmerica corporations.

Last year, Bank of America's net income was $7.52 billion, or$4.52 per share, compared to $7.88 billion, or $4.48 per share, in1999. Results in 2000 and 1999 included after-tax chargesassociated with growth initiatives and mergers of $346 million and$358 million, respectively.

A report released last week by New York investment banking firmSalomon Smith Barney said Bank of America has $4.244 billion incorporate loans that could default in 2001 — more than any otherbank in the country.

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Bank of America is a participant in three of five of the largestsyndicated loans, including:

Owens-Illinois, a Toledo, Ohio-based packaging company, for$4.5 billion,

Finova, a financial-services company in Scottsdale, Ariz., for$4.7 billion, and

J.C. Penney, the retail chain based in Plano, Texas, for $6billion.

Bank spokesman Bob Stickler said last week Bank of America isone of the most aggressive commercial lenders in the country,meaning it will have more bad loans than more consumer-orientedbanks.

While Stickler wouldn't confirm the amount of the loans, he saidthat $4.244 billion represents 1 percent of the bank's $400 billionloan portfolio.

"As the company projected late last year, loan losses andnonperforming assets increased significantly in the fourth quarteras the economy slowed," Bank of America said in its earningsstatement. "Higher provision expense accounted for the majority ofthe decline in net income."