Bank of America's CEO Kenneth Lewis said the bank would halve its
dividend and raise additional
capital through a
$10 billion common stock offering to recover from the loss.
In
the third quarter of 2008, Bank of America's net income was down $1.18
billion from $3.70 billion a year earlier. The bank blamed its lower
earnings on expenses, a rise in credit costs and the acquisition of
Countrywide
Financial Corp. on July 1. The Charlotte, N.C., bank recently announced that it will
spend $8.4 billion to provide relief to 400,000 Countrywide customers as a settlement of lawsuits in 11 states including
California, Illinois and Florida.
In its
press release,
Lewis said, "We believe it is prudent to raise capital to very substantial levels
in this uncertain environment. ... We now believe it is important to be
at or near our 8% Tier 1 capital ratio target given the
recessionary conditions and outlook for still weaker economic
performance which we expect to drive higher credit losses and depress
earnings."
- Maria Woehr
The U.S. banking industry took another blow as Bank of America Corp. announced that quarterly earnings dropped 68% Monday, causing the company's shares to slip 9.3% to $29.25 before the market opened on Tuesday.
