Banks suffer through tough fourth quarter

Financial giant Bank of America Corp. and two regional banks suffered through a difficult fourth quarter, last week posting either dramatically smaller profits or losses in the wake of volatility in the financial markets and a deteriorated credit environment.
Both Philadelphia-based Sovereign Bancorp Inc. and Waterbury, Conn.-based Webster Financial Corp. reported losses for the three-month period – Webster said it lost $8.7 million and Sovereign said it lost $1.6 billion.
Meanwhile, Bank of America’s fourth-quarter earnings declined by 95 percent compared with the same period in 2006 due to write-offs for the subprime credit problems and big trading losses.
Bank of America reported that its fourth-quarter profit was $268 million, on $13.32 billion in revenue, compared to the $5.26 billion in earnings for the same period in 2006.
For the year net income declined 29 percent to $14.98 billion on $68.07 billion in revenue.
Sovereign’s $1.6 billion fourth-quarter loss on $619 million in revenue followed a larger-than-expected write-down for consumer credit losses. Sovereign had lost $129 million in the fourth quarter of 2006. The bank said it would cancel its dividend, which will reportedly allow Sovereign to keep $160 million in its coffers.
For the year, Sovereign said it lost $1.3 billion on $2.39 billion in revenue, compared with a profit of $137 million on $2.42 billion in revenue in 2006.
“Although disappointing, we believe that the majority of the losses are non-cash charges that will not impact future performance or existing tangible capital levels,” said Joseph Campanelli, Sovereign’s president and CEO.
Meanwhile, Webster Bank’s loss of $8.7 million in the fourth quarter was due in part to a $40 million charge for credit losses for the bank’s discontinued residential construction and home-equity portfolios. Fourth-quarter revenue totaled $296.57 million, down from $313.13 million in same period in 2006.
For the year, Webster posted a net income of $110.7 million on $1.2 billion in revenue, compared with $122.7 million on $1.2 billion in revenue for all of 2006. &#8226