Bank of America Corp. said Friday it lost more than $2.2 billion in the third quarter as loan losses kept rising, providing more evidence that consumers are still struggling to pay their bills.
The nation's second-largest bank said it wrote down loans on its books by almost $10 billion during the July-September period, up almost $1 billion from the second quarter.
The Charlotte bank, South Carolina's second largest, also added $2.1 billion to its reserves to cover bad loans, bringing its provision for credit losses to $11.7 billion. The bank's total allowance for loan and lease losses now totals $35.83 billion.
Bank of America's results were aided by profit from its wealth management business, which includes the bank's Merrill Lynch division.
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While the Jan. 1 acquisition of Merrill Lynch has brought widespread criticism and legal problems for Bank of America, the deal was paying off during the third quarter, when Merrill Lynch's revenue and profit more than doubled from a year ago.
The bank's earnings follow the pattern set earlier this week by Citigroup Inc. and JPMorgan Chase & Co., which also reported more loan losses during the third quarter as consumers struggled to keep up with their credit card and mortgage payments.
And on Friday, General Electric Co. reported that its GE Capital business, which includes credit cards, saw an 87 percent drop in profits, although it was also weighed down by commercial real estate losses.
Together, the reports depict a financial industry that is still deeply troubled, although the trading operations at companies like Bank of America, JPMorgan and Goldman Sachs Group Inc. mitigated some of the bad news.
Banks have predicted for some time that their loan losses would keep rising. And Bank of America's CEO Ken Lewis, joining his counterparts at JPMorgan and Chase, confirmed that this trend will continue into the near future as unemployment rises and consumers keep struggling.
The Securities and Exchange Commission and the New York attorney general's office have been looking into whether Bank of America officials misled shareholders about Merrill Lynch's losses and the billions of dollars in bonuses it awarded before the acquisition closed on Jan. 1.
Lewis is believed to have decided to retire at this time because of the strife that has surrounded BofA since the Merrill Lynch deal closed.
On the analyst call, Lewis said that "there's an appropriate sense of urgency" about his succession.
"It's the most important decision (the) board can make. So I am assured that there's an appropriate balance in getting it right and doing it with a sense of urgency but I can't give you a date," he said.
Later, he added, "I felt like it was an appropriate time" to retire.
Lewis, who is retiring at year's end, has agreed to give up his salary and other compensation for 2009 at the suggestion of Kenneth Feinberg, the U.S. Treasury Department's special master for compensation. Lewis still stands to collect a $53.2 million pension, which will fall under Feinberg's purview.