Bad loans hit more than just the bottom line last year they slashed the market capitalization of several of the largest U.S. banking companies.
Bank of America Corp.s slipped to fourth largest at the end of last year, down 12%, to $75.3 billion, according to American Bankers data. The decline came in the second half of the year and particularly in December, after the Charlotte, N.C., company warned of lower-than-expected fourth-quarter profits due to problem loans. On Dec. 6 alone the day of the warning Bank of America shed $8 billion of market cap. Its market cap continued to get a beating in January. Investors dumped Bank of America shares on Friday even though the company denied rumors that it had suffered huge losses from derivatives trades. (See story, back page.)