Bank of America, the second-largest U.S. bank, said on Tuesday fourth-quarter profit sank 95 percent, hurt by more than $7 billion of losses tied to poor trading decisions and mounting credit woes.

Net income for the Charlotte, North Carolina-based company fell to $268 million, or 5 cents per share, from $5.26 billion, or $1.16, a year earlier.

Analysts on average expected a profit of 19 cents per share, according to Reuters Estimates.

Results reflected $5.44 billion of trading losses, compared with a year-earlier $460 million profit. This reflected a $5.28 billion write-down related to collateralized debt obligations, which the bank said reduced trading profit by $4.5 billion and other income by about $750 million.

Bank of America also set aside $1.74 billion for credit losses, including a $1.33 billion addition to reserves.

We certainly are not pleased with our performance, Chief Executive Kenneth Lewis said in a statement. We are cautiously optimistic about 2008, though we believe economic growth will be anemic at best in the first half.

It was the latest in a series of earnings declines among the largest U.S. banks as the nation's housing crisis and a slowing economy lead to a growing number of consumers falling behind on their bills.

Bank of America shares closed Friday at $35.97 on the New York Stock Exchange. Through Friday, they had fallen 33 percent in the last year, compared with a 34 percent drop in the Philadelphia KBW Bank Index.

(Reporting by Jonathan Stempel; Editing by John Wallace)