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Earnings attributable to shareholders fell to
$2.04 billion, or 19 cents per share, in the three months ended
June 30 from $3.58 billion, or 32 cents per share, a year
earlier.
Analysts on average had expected earnings of 29 cents per share,
according Thomson Reuters I/B/E/S. It was not immediately clear
if the estimate was comparable to the reported figure.
Bank of America's shares, which have barely moved this year,
fell slightly to $15.68 in premarket trading on Wednesday.
Litigation expenses surged to $4 billion in the latest quarter
from $471 million a year earlier.
The bank, which has already agreed to pay more than $50 billion
to settle disputes stemming from the financial crisis, has been
negotiating a multibillion dollar settlement with the Department
of Justice to resolve investigations into the sale of
mortgage-backed bonds.
Bank of America has offered to settle for about $12 billion,
while the Justice Department has suggested $17 billion, sources
familiar with the matter have said.
Excluding accounting adjustments, the bank's revenue fell to
$21.7 billion from $22.7 billion in the same period of 2013.
Operating expenses rose to $18.54 billion from $16.1 billion.
Still, Chief Executive Brian Moynihan struck an upbeat note.
"The economy continues to strengthen...," he said in a
statement. "... Consumers are spending more, brokerage assets
are up by double digits and our corporate clients are
increasingly turning to us to help finance business expansion
and merger activity."
The bank posted a loss of $2.8 billion in its consumer real
estate services business, up from a loss of $930 million a year
earlier, largely due to a rise in litigation expenses.
Bank of America made $13.7 billion in home loans and home equity
loans in the quarter, a drop of 49 percent from the year-earlier
quarter. First-mortgage originations declined 59 percent as
refinancing demand weakened.
Bank of America released $662 million from funds set aside to
cover bad loans, compared with $900 million a year earlier.
Compared with the year-earlier quarter, bond trading revenue
rose 5 percent to $2.4 billion, excluding an accounting
adjustment, outperforming rivals.
On Tuesday, JPMorgan Chase & Co reported a 15 percent drop in
profit from fixed-income markets in the quarter.
Citigroup Inc <C.N>, which reported on Monday, reported a 12
percent decline.
Investors have been refraining from trading fixed-income
securities in the absence of a strong indication of when
interest rates will rise. New rules aimed at making the
financial system safer have also reduced volatility, reducing
opportunities to trade.
(Reporting by Tanya Agrawal and Peter Rudegeair; Editing by Ted
Kerr)
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