NEW YORK (CNNMoney.com) -- Bank of America reported a steep decline in earnings Monday that fell far short of analysts expectations. The banking giant also slashed its dividend in half and revealed plans to raise $10 billion through a stock sale.

The Charlotte, N.C.-based bank said its third-quarter net income fell to $1.18 billion, or 15 cents a share, down 68% from $3.7 billion, or 82 cents a share, a year ago.

That was far worse than what Wall Street's consensus forecasts of a net profit of $3.22 billion, or 62 cents a share.

Bank of America (BAC, Fortune 500) shares, which fell 6.5% during regular trading Monday, tumbled an additional 7% after the closing bell.

Fresh off its recent acquisition of Merrill Lynch, Bank of America also said it planned to raise $10 billion in capital through a common stock sale and that it will cut its dividend to 32 cents from 64 cents in recent quarters.

Kenneth Lewis, Bank of America's chairman and chief executive officer, called the move "prudent" given the current market climate, which has resulted in the disappearance of several major financial institutions in recent weeks.

"These are the most difficult times for financial institutions that I have experienced in my 39 years in banking," Lewis said in a statement.

In addition to Bank of America's purchase of Merrill Lynch, Lehman Brothers has filed for bankruptcy, JPMorgan Chase (JPM, Fortune 500) acquired failed savings and loan Washington Mutual and Wachovia (WB, Fortune 500) is in the process of being bought by either Citigroup (C, Fortune 500) or Wells Fargo (WFC, Fortune 500). Those two banks are battling in court over the rights to buy Wachovia.

http://money.cnn.com/2008/10/06/news/companies/bank_of_america/index.htm?postversion=2008100616