NEW YORK: Bank of America Wednesday reported a third-quarter loss due to a large mortgage-securities settlement, even as the financial giant scored gains in four of five operating divisions.
The second-largest US bank by assets notched a net loss of $70 million due to a previously announced $5.3 billion charge following a record mortgage-securities settlement with the US Department of Justice in August.
BofA's results translated into a loss of one cent per share, well below the average analyst estimate of nine cents.
But non-legal expenses fell by $1.2 billion, due in part to a smaller workforce.
And better results in most operating divisions drew positive commentary from analysts.
"Behind the noise, it appears to be a solid quarter for BofA with stabilizing revenues and continued progress on expense initiatives," said RBC Capital Markets.
Consumer and business banking profits rose on higher credit card issuance, larger deposits and a lower provision in case of credit losses.
Profits in global markets came in at $769 million compared with a loss of $875 million last year. BofA cited increased trading activity due to greater volatility in the foreign-exchange market.
Profits in global banking and global wealth also rose compared with the year-ago period.
Total loans fell 2.7 percent from a year ago to $899.2 billion. But BofA chief financial officer Bruce Thompson said loans in key consumer categories, such as wealth management and global banking, rose compared with last year.
The bank has seen US growth "grinding forward in the two-to-three percent area" and still holds this outlook, Thompson told reporters on a conference call.
But he added that the bank is aware of rising caution in markets over a range of issues, including the slowdown in overseas economies.
The third-quarter loss followed BofA's massive $16.7 billion agreement with the Justice Department to settle claims it sold risky mortgage securities as safe investments ahead of the 2008 financial crisis.
Thompson said BofA still faces some mortgage-related litigation, but that the settlement was an "extraordinarily significant matter" to put behind it.
BofA also reported a $276 million loss in the first quarter of 2014 following huge mortgage litigation costs.
Much of the litigation concerns securities and mortgages prepared by Countrywide Financial and Merrill Lynch, which BofA took over during the financial crisis.
BofA said its third-quarter results were in the black when preferred dividends were excluded. Excluding these payouts, BofA earned $168 million.
Revenues dipped to $21.43 billion from $21.74 billion a year ago, slightly above the $21.36 billion projected by analysts.
BofA shares plunged 4.1 percent to $15.84 in opening trade.
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