Bank of America swings to profit in 4Q as mortgages fall
Bank of America (BAC) reported net income of $2 billion, or 15 cents per share, in the fourth quarter, up from a $1.2 billion loss one year ago. The bank totaled $1.4 billion in profit for 2011, down 36% from the $2.2 billion earned the year before. Total revenue increased to $25.1 billion in the fourth quarter, up 11% from the same period last year. However, revenue for the year dropped 15% to $94.4 billion. BofA's entire mortgage department reported a net loss of $1.5 billion in the fourth quarter, narrowing from a $4.9 billion loss the same quarter one year ago. Total first mortgage originations plummeted to $21.6 billion in the fourth quarter, down from $84.7 billion in the same period last year. Home loan production for the year was cut in half, totaling $151.7 billion new mortgages in 2011, down from $298 billion in first mortgages originated the year before. The bank said the closing of its correspondent lending channel and a declining market share cut it into its production earnings. BofA continued to chip away at its legacy mortgage problems. The portfolio for its new servicing division formed early in 2011 to handle delinquent and discontinued mortgages shrank to 1.1 million loans by the end of the year, down from 1.4 million. The division also sorts through repurchase claims from investors. BofA's provision, cash marked specifically and only for repurchase claims, actually shrank, to $263 million at the end of the fourth quarter, down from $4.1 billion held in provisions at the end of 2010. The bank said the decrease in provisions was tied to previous settlement agreements with Fannie Mae and Freddie Mac. Write to Jon Prior. Follow him on Twitter @JonAPrior.