BofA Selling Stock, Cutting Dividend (Update)

Lewis said it was important for the company to be at or near the 8% Tier 1 capital ratio level "given the recessionary conditions and outlook for still weaker economic performance, which we expect to drive higher credit losses and depress earnings."

The company attributed its year-over-year earnings decline to a significant increase in its loss-provision expenses. That was partly offset by advances in certain income streams, largely coming from the acquisitions of Countrywide Financial and LaSalle Bank.

Revenue in the third quarter rose 21% to $19.90 billion from $16.47 billion a year earlier.

Net interest income was up 33% to $11.92 billion, thanks to the purchases of LaSalle and Countrywide, loan and deposit growth, and the effects of rate movements. However, those deals contributed heavily to driving up noninterest expenses by 34% to $11.66 billion.

Bank of America has another big acquisition in the works, this time for Merrill Lynch (MER Quote), which it said last month it would buy.

Noninterest income in the quarter advanced 7% to $7.98 billion. The company also recorded a $630 million charge for providing money to various cash funds and losses of $313 million related to auction-rate securities.

Retail deposits grew by $56 billion to $586 billion from June 30 to Sept. 30, including the addition of $35 billion from Countrywide. The consumer credit card business experienced a decrease in purchase volumes, slowing repayments and higher delinquencies during the quarter. Credit-card net chargeoffs increased to $1.24 billion, representing a charge-off rate of 6.14%. Credit-card managed net credit losses rose to $3 billion, for a loss rate of 6.40%.