Bank of America Corp., the fifth-ranked U.S. mortgage lender by total volume, today reported its first profit decline in more than four years, citing consumer bankruptcies driving up loan losses and a weak trading quarter as causes.

Net income for the fourth quarter of 2005 fell 2 percent to $3.77 billion, or 93 cents per share, from $3.85 billion, or 94 cents, a year earlier.

Home equity production volume, one of the bright spots in the earnings report, increased 27 percent to a record $72 billion in 2005, the company said. Bank of America is one of the nation’s leading home equity loan providers as measured by outstanding balances, according to the company.

The earnings decline, the first since the third quarter of 2001, also resulted in part from narrower lending margins.

Rising short-term rates drove up the bank’s borrowing costs, but long-term rates were little changed, making it more difficult to charge more on lending. Bank of America’s lending margin fell to 2.82 percent from 3.18 percent a year earlier.

Excluding merger and restructuring charges, profit was 94 cents per share, missing the average forecast of $1.02 from analysts polled by Reuters Estimates. Revenue rose 3 percent to $14.12 billion, below forecasts of $14.59 billion.

Shares of Charlotte, N.C.-based Bank of America were down 24 cents, or 0.5 percent, at $43.95 in the New York Stock Exchange trade this afternoon.

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