Bank of America net sinks 95 percent

By Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp said on Tuesday quarterly profit sank 95 percent, hurt by more than $7 billion of losses tied to write-downs, poor trading decisions and mounting credit woes.

Fourth-quarter net income for the second-largest U.S. bank fell to $268 million, or 5 cents per share, from $5.26 billion, or $1.16, a year earlier.

Analysts' average forecast was a profit of 19 cents per share, according to Reuters Estimates.

Bank of America shares fell $2.46, or 6.8 percent, to $33.51 in pre-market trading.

"This is a weak set of results, (and) rather disappointing if you look at the core numbers, especially credit quality deterioration," wrote Ed Najarian, an analyst at Merrill Lynch & Co in New York.

Results reflected $5.44 billion of trading losses, compared with a year-earlier profit of $460 million. This reflected a $5.28 billion write-down related to collateralized debt obligations, which the bank said reduced trading profit by $4.5 billion and other income by about $750 million.

Charlotte, North Carolina-based Bank of America also set aside $1.74 billion for credit losses, including a $1.33 billion addition to reserves. It also incurred $800 million of losses and write-downs to help some money market mutual funds exposed to risky debt maintain the $1 per share net asset value that all such funds try to keep.

The bank's Tier-1 capital ratio, a measure of its ability to cover losses, fell to 6.87 percent in the fourth quarter from 8.22 percent in the third quarter. Regulators say a 6 percent ratio reflects a "well-capitalized" bank.