The largest U.S. bank, which has worried some investors over the past year with big ticket takeovers of mortgage lender Countrywide Financial Corp and investment bank Merrill Lynch, also said quarterly earnings slid a steeper-than-expected 68 percent.
Bank of America, whose shares were down nearly 9 percent in extended trading after the surprise announcement, had been seen as one of the industry's pillars of strength but the results and accompanying moves to bolster its capital, showed that it too, is struggling with the credit crisis.
"These are the most difficult times for financial institutions that I have experienced in my 39 years in banking," said Kenneth Lewis, its chairman and chief executive officer, in a statement.
Bank of America warned that credit quality continued to weaken during the quarter, and Lewis said he expected higher credit losses and depressed earnings ahead.
Third-quarter net income dropped to $1.18 billion, or 15 cents a share, from $3.70 billion, or 82 cents a share, a year ago.