NEW YORK (AP) -- Bank of America says its fourth-quarter earnings shrank as it cleaned up old problems from its mortgage unit.
The bank made $367 million in the last three months of 2012 after paying preferred dividends, down from $1.6 billion in the same period a year ago. The earnings were equivalent to 3 cents per share.
The bank had warned that it expected earnings to be only "modestly positive." It took big charges related to a settlement with the government-backed mortgage lender Fannie Mae and a separate agreement in which it and other banks settled government accusations of wrongful foreclosure practices.
The earnings were slightly better than the 2 cents per share estimate of financial analysts polled by FactSet.
Revenue was dragged down by the Fannie Mae settlement. It fell to $19.6 billion after stripping out an accounting charge, down from $26.4 billion in the same period a year ago.
Analysts called it another quarter of sacrificed earnings as the bank works through its troubled mortgage division. A long string of regulatory fines and lawsuits for the unit have made earnings unpredictable for several years.
Bank of America's stock fell 15 cents to $11.63 in pre-market trading.
In a call with reporters, Chief Financial Officer Bruce Thompson said the bank is much better positioned than it was a year ago. He emphasized a jump in deposits, higher fees from investment banking, and shrinking debt.
As for future litigation in the mortgage unit, Thompson said he couldn't be sure what might come. "I can't tell you exactly what else could be out there," Thompson said, "but what I can tell you is that we put a lot of risk behind us in 2012."
Mortgages, which were a big revenue source for Wells Fargo and JPMorgan Chase in the fourth quarter, were also up at Bank of America, which funded 42 percent more mortgages over the year.
Bank of America has been struggling to figure out its identity as a mortgage maker. It catapulted to a top spot in mortgage banking in summer 2008, when it gobbled up Countrywide a few months before the financial crisis imploded. Countrywide was a California-based mortgage lender known for exotic loans, and Bank of America hailed the purchase as a triumph.
But the purchase has brought enormous headaches for Bank of America, including regulatory investigations, shareholder lawsuits and quarterly losses.
That's influenced Brian Moynihan, who became CEO a year and a half after the Countrywide purchase, to retreat from mortgages and sell off related units. Bank of America now controls about 4 percent of the U.S. mortgage market, compared to 22 percent shortly after it combined with Countrywide, according to the trade publication Inside Mortgage Finance. That puts it behind No. 1 Wells Fargo, with 30 percent, as well as JPMorgan and U.S. Bank.
Thompson said the bank expects to expand the mortgage unit, focusing on borrowers who are already bank customers. He declined to comment on the bank's shrunken market share.
"What we're focused on is doing more with our consumers, continuing to grow this, and if we do that well, where we are with our peers will take care of itself," Thompson said.