CHARLOTTE, N.C. — Ken Lewis bought himself some time.
The question is whether the chief executive of Bank of America Corp. can pull off the biggest test of his storied career and save the idea of financial supermarket, a once ballyhooed concept that is increasingly discredited.
And he won't be starting in a position of strength.
Escalating credit costs forced the nation's No. 2 bank by assets to report on Friday a $2.39 billion loss for the three months ended in December. That came just hours after the U.S. Treasury agreed to provide a $20 billion lifeline to Bank of America to help it survive the losses surrounding its recent acquisition of Merrill Lynch & Co.
Now, Lewis must put together all the pieces of a sprawling financial empire that includes everything from retail banking operations, credit cards, mortgages and investment banking during the most serious banking crisis since the Depression.
"This is the defining moment in his career," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "What happens in the next two years will determine his legacy."
Although they gained up to $1 early in the trading session, Bank of America shares fell $1.14, or 13.7 percent, to close at $7.18 on Friday. The stock is down more than 49 percent since the beginning of the year, and has dropped to its lowest level in 18 years.
Lewis, a 60-year-old CEO known for his tough, keen business sense, will need to convince shareholders that BofA can survive as a one-stop financial shop, transforming the bank into a business befitting its name.
A strong investment bank has been the only missing piece for Bank of America, which has struggled to build from within. A series of bad bets in the investment banking unit over the past year have sunk companywide profits.
But it has seen success in its retail branches, a network expanded through deals such as its purchase of FleetBoston Financial Corp. in 2004, and expanding into credit cards after buying MBNA Corp. in 2005.
In 2007, BofA waded into the fight between Europe's biggest banks for ABN Amro NV and emerged with Chicago-based LaSalle Bank Corp. And last year, the bank purchased Countrywide Financial Corp., making it the nation's biggest mortgage lender and loan servicer.
But fears grew Friday that Lewis' behemoth company would soon mirror the once giant, now faltering, Citigroup Inc.
On Friday, Citi _ after suffering a loss of $8.29 billion _ said it is separating its traditional banking business from its riskier operations. Earlier in the week, Citi agreed to sell a majority stake in its brokerage operations to Morgan Stanley.
The moves reveal Citi's growing focus on back-to-basics lending and deposit-gathering, and dismantles the "financial supermarket" created a decade ago.
After admitting he saw deepening fourth-quarter losses, Lewis on Friday defended his Merrill Lynch merger decision, highlighting the importance of closing the transaction for BofA's sake and warned of the consequences for the country's overall financial system.
"The Treasury and the Federal Reserve gave us assurances in December that we should close the deal and that the government would provide the assistance we've been talking about," Lewis said during a conference call with investors.
The new $20 billion infusion is in addition to $25 billion in TARP rescue funds the bank has already received. It also means BofA has now taken $45 billion of government aid, the same amount as Citi.
In connection with the package, BofA slashed its quarterly dividend to a mere penny from 32 cents, agreed to further limit executive pay and work more intensively to modify the mortgages of distressed homeowners.
For the fourth quarter of 2008, Bank of America posted a loss after paying preferred dividends of $2.39 billion, or 48 cents per share, down sharply from net income of $215 million, or 5 cents per share, a year earlier. BofA cited rising credit costs, significant write-downs and trading losses in its capital markets businesses amid the deepening economic recession.
Meanwhile, Merrill Lynch posted a loss of $15.31 billion, or $9.62 per share, for the period _ underscoring BofA's assertion that it needed extra aid in order to absorb the investment bank's bad mortgage bets.
For the full year, BofA's earnings after preferred dividends totaled $2.56 billion, or 55 cents per share, down from $14.80 billion, or $3.30 per share, in fiscal 2007.