ADVERTISEMENT
News » Money
Apr 16, 1:54 PM EDT

Bank of America swings to loss from profit, hurt by legal charges

Business Video

Latest News
Seeking to reduce debt by $1.2B, Genco Shipping files for Chapter 11 bankruptcy protection

Bank of America swings to loss from profit, hurt by legal charges

Yellen says rules might need to be strengthened further to bolster largest banks

Buy AP Photo Reprints

CHARLOTTE, N.C. (AP) -- Bank of America said Wednesday that it swung to a loss in the first quarter, hurt by $6 billion in legal charges.

A LOSS: The Charlotte, N.C., bank reported a loss applicable to common shareholders of $514 million, compared with a profit of $1.11 billion a year earlier. The loss amounted to 5 cents a share. A year earlier, the bank earned 10 cents a share.

STUNG BY LEGAL EXPENSES: BofA's results were lowered by $6 billion, or 40 cents a share, in legal charges, with $3.6 billion of that amount from a previously announced settlement with the Federal Housing Finance Agency, and $2.4 billion from an addition to the bank's legal reserves for other mortgage-related matters. The bank also said it reached a settlement with the Financial Guaranty Insurance Company, as well as separate settlements with The Bank of New York Mellon, over residential mortgage-backed securities.

THE QUOTE: "The cost of resolving more of our mortgage issues hurt our earnings this quarter," said BofA CEO Brian Moynihan in a prepared statement.

BALANCE SHEET: The amount of bad loans and mortgages on Bank of America's balance sheet continued to improve in the first quarter. The bank had $1.4 billion in net charge offs, or loans that the bank considers unlikely to be repaid, down from $2.5 billion a year earlier. Loans that were more than 30 days past due fell to $5.6 billion from $7.9 billion a year earlier.

SLIMMING DOWN: The bank continues to slim down as a result of the financial crisis. The bank had 238,600 full-time employees this quarter, down from 262,800 employees a year earlier. It reduced the number of branches to 5,095, or 5 percent less than a year earlier.

HOUSING MARKET SLOWNESS: Like its peers, Bank of America has seen a sharp decline in its mortgage business. The bank did $8.9 billion in mortgage originations in the first quarter this year, down from $23.9 billion in the same period a year ago. Interest rates are up from last spring, so the demand to refinance home mortgages has fallen.

BACK TO BASICS: Bank of America's consumer and business banking division, the company's core business, reported a profit of $1.66 billion, up from a profit of $1.45 billion a year earlier. Bank deposits and brokerage account assets all rose, as well as the number of credit card accounts. Credit card net charge-off fell to 3.25 percent from 4.2 percent.

STOCK REACTION: Bank of America shares fell 42 cents, or 2.5 percent, to $15.98 in afternoon Wednesday trading.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

 
ADVERTISEMENT