Bank of America's 4Q Reverses Year-Earlier Loss

(REUTERS) -- Bank of America Corp reported a fourth-quarter profit, reversing a year-earlier loss, boosted by one-time items and lower expenses for bad loans.

The second-largest U.S. bank by assets on Thursday said net income applicable to common shareholders was $1.58 billion, or 15 cents per share, compared with a loss of $1.6 billion, or 16 cents per share, a year earlier.

Like other large banks, Bank of America reported a decline in investment banking and sales and trading revenue.

The Charlotte, North Carolina-based bank benefited from pretax gains of $5.3 billion from the sale of China Construction Bank Corp shares, and gains from the exchange of trust preferred securities and the sale of debt securities.

Results were also boosted by a lower provision for bad loans. The bank set aside $2.9 billion in the fourth quarter for loan losses, down from $5.1 billion a year ago.

Bank of America, which is working to shed risky assets, said its total loans decreased to $926 billion from $932 billion in the third quarter. Big bank peers Wells Fargo & Co and JPMorgan Chase & Co, as well as some regional banks, reported loan growth in the fourth quarter, potentially boding well for the U.S. economy.

Sales and trading revenue in Bank of America's banking and markets unit increased to $1.9 billion, excluding an accounting charge, from $1.1 billion in the third quarter but was down from $2.4 billion a year ago. Investment banking fees were flat from the third quarter at $1 billion but down from $1.6 billion a year ago.

In December, Chief Executive Officer Brian Moynihan said the bank had seen better results in this business in the fourth quarter after a weak third quarter.

JPMorgan Chase & Co, Citigroup and Goldman Sachs Group Inc reported lackluster trading revenue in the fourth quarter as clients shunned markets roiled by the European debt crisis. Bank of America bulked up its investment banking business with the 2009 purchase of Merrill Lynch.

"We enter 2012 stronger and more efficient after two years of simplifying and streamlining our company," Moynihan said in a statement. "We built our capital ratios to record levels during 2011 on the strength of our core businesses and by shedding those that are not core to serving customers and clients."

Moynihan is under pressure to show Bank of America, saddled with losses tied to the 2008 purchase of Countrywide Financial, has enough capital to absorb mortgage-related losses and to meet new international capital standards. Over the past two years, he has been shedding noncore businesses in an effort to boost capital levels and streamline the company.

The bank's shares plunged 58 percent in 2011, partly on investor worries about capital. But through Wednesday the shares were up 22 percent this year to $6.80.