Bank of America Shares Dip on Q1 Loss
Kevin McCoy, USA TODAY 8:09 a.m. EDT April 16, 2014
Bank of America swung to a $276 million first-quarter loss Wednesday as revenue declined while the bank continued to grapple with legal costs stemming from the financial crisis.
Shares of the nation's second-largest bank dropped sharply in pre-market trading immediately after the 7 a.m. EDT news, but were down less than 1% at $16.27 roughly an hour later.
The Charlotte, N.C.-based bank said revenue for the quarter slipped to $22.76 billion — edging the $22.33 billion forecast of Wall Street analysts surveyed by Thomson Financial Network.
The bank said it lost 5 cents a share. A year ago in the same period, it earned 10 cents a share or $1.5 billion.
Bank of America's adjusted earnings, not counting one-time charges, were 35 cents a share. That topped the 27-cent-per share projection of financial analysts surveyed by FactSet.
The financial results included a pre-tax expense of $6 billion, or approximately 40 cents a share after tax, to cover litigation costs as the bank moved to resolve mortgage-related litigation fallout from the financial crisis that began in 2007 and other issues.
"The cost of resolving more of our mortgage issues hurt our earnings this quarter," said CEO Brian Moynihan in a statement issued with the earnings results.
Bank of America in March agreed to pay $9.3 billion to settle claims it marketed risky mortgages to Fannie Mae and Freddie Mac. At the same time, the bank reached a $15 million settlement with the New York State Attorney General's office over its 2009 purchase of Merrill Lynch.
And on April 9, the bank also agreed to pay $772 million in refunds and fines to settle Consumer Financial Protection Bureau allegations that it had illegally bilked millions of customers with deceptive credit card practices. The agreement was "in line with what we expected," bank spokesman Tony Allen said last week.
Excluding litigation expenses, expenses in the bank's legacy mortgage-servicing division dropped by $1 billion compared with the first quarter of 2013.
CFO Bruce Thompson said liquidity and capital ratios "improved to record levels," while credit quality also improved.
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| Detroit demonstration organized by Moratorium NOW! demanding the cancellation of municipal debts said to be owed to Bank of America. The demonstration was held on May 9, 2012. |
Bank of America swung to a $276 million first-quarter loss Wednesday as revenue declined while the bank continued to grapple with legal costs stemming from the financial crisis.
Shares of the nation's second-largest bank dropped sharply in pre-market trading immediately after the 7 a.m. EDT news, but were down less than 1% at $16.27 roughly an hour later.
The Charlotte, N.C.-based bank said revenue for the quarter slipped to $22.76 billion — edging the $22.33 billion forecast of Wall Street analysts surveyed by Thomson Financial Network.
The bank said it lost 5 cents a share. A year ago in the same period, it earned 10 cents a share or $1.5 billion.
Bank of America's adjusted earnings, not counting one-time charges, were 35 cents a share. That topped the 27-cent-per share projection of financial analysts surveyed by FactSet.
The financial results included a pre-tax expense of $6 billion, or approximately 40 cents a share after tax, to cover litigation costs as the bank moved to resolve mortgage-related litigation fallout from the financial crisis that began in 2007 and other issues.
"The cost of resolving more of our mortgage issues hurt our earnings this quarter," said CEO Brian Moynihan in a statement issued with the earnings results.
Bank of America in March agreed to pay $9.3 billion to settle claims it marketed risky mortgages to Fannie Mae and Freddie Mac. At the same time, the bank reached a $15 million settlement with the New York State Attorney General's office over its 2009 purchase of Merrill Lynch.
And on April 9, the bank also agreed to pay $772 million in refunds and fines to settle Consumer Financial Protection Bureau allegations that it had illegally bilked millions of customers with deceptive credit card practices. The agreement was "in line with what we expected," bank spokesman Tony Allen said last week.
Excluding litigation expenses, expenses in the bank's legacy mortgage-servicing division dropped by $1 billion compared with the first quarter of 2013.
CFO Bruce Thompson said liquidity and capital ratios "improved to record levels," while credit quality also improved.
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