BofA Swings to Loss on High Credit Costs

Updated to add information about the performance of individual units.

CHARLOTTE, N.C. (TheStreet -- Bank of America(BAC) Friday said it swung to a loss during the third quarter because of high credit costs and preferred dividend payments.

The Charlotte, N.C.-based bank lost $2.2 billion, or 26 cents per share, in the three months ended Sept. 30, down from a $704 million profit in the year-ago period. Excluding preferred dividend payments -- a large portion of which went to the U.S. government -- the bank would have lost a more moderate $1 billion.

The average analyst estimate was for a loss of 21 cents per share, according to Thomson Reuters. The range of estimates was wide, however, with the most bearish predicting a loss of 42 cents per share, and the most bullish predicting a penny profit per share.

BofA's large core business of lending wasn't faring well. Credit costs climbed with net charge-offs reaching $9.6 billion, while nonperforming loans rose to 3.72% of the bank's loan book, from 3.31% the previous quarter and 1.45% a year ago. BofA also added $2.1 billion to loan reserves, bringing the total put aside for future losses to $35.8 billion. The company attributed the higher credit costs to continued weakness in the U.S. and global economies and "stress on the consumer."

Lewis, however, did strike a more positive note at times than executives from JPMorgan Chase(JPM), Citigroup(C) and Goldman Sachs(GS) executives earlier in the week, all of whom indicated that the banking industry is not out of the woods yet. He said revenue continued to "hold up well" in the quarter, although the future of delinquencies and defaults is unclear with unemployment still on the rise.