Banking giant Bank of America (NYSE: BAC) has become the latest victim of the financial sector's recent meltdown. The Charlotte, N.C.-based bank posted fourth-quarter net income of just $0.05 per share, down, oh, 95% from the previous year.

The results came amid a $5.3 billion writedown as the bank continued to struggle with subprime-related toxic debt. The company's corporate and investment banking units took the brunt of it, with those particular divisions coughing up a $2.7 billion loss on the quarter.

Nonetheless, the declines came across a wide swath of the bank's segments. Everything from small-business lending to wealth management posted significant pull-backs compared to a year ago.

While still ugly at best, B of A's performance for the quarter ranks near the top of its peers. In recent weeks, banking giants such as Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), and Washington Mutual (NYSE: WM) have posted staggering losses in net income on top of their writedowns, not to mention a frantic race to raise equity to shore up their balance sheets. The fact that Bank of America has been able to stay profitable during this challenging period is a feat of its own.

On top of the troubling times, Bank of America recently agreed to purchase mortgage giant Countrywide Financial (NYSE: CFC). Investors will no doubt keep a close eye on the integration in the coming year as the current real estate market continues to flounder. If B of A gets the go-ahead from regulators, it would become the nation's largest mortgage lender by far -- which could end up being a windfall if and when the real estate market rebounds, or a nightmare if mortgage-backed debt continues to sour.

Furthermore, Bank of America announced this morning it would cut its prime rate -- or the rate charged to clients with the highest credit quality -- from 7.25% to 6.50%. The cut came after the Federal Reserve lowered interest rates unexpectedly by three-quarters of a point, its largest one-time cut in several years. Lower interest rates make it more affordable for consumers and corporations to borrow money and finance growth.

Going forward, investors will likely look toward the financial sector for guidance on the state of the economy. As the financial sector purges out bad debt caused by the real estate boom, only time will tell when banks can get back on their feet and resume business as usual, fueling the pockets of consumers and corporations around the world.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. He appreciates your questions, comments, and complaints. The Fool's disclosure policy is all about investors writing for investors.