Bank of America ekes out a profit
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Bank of America Corp eked out a third-quarter profit even after taking $1.6 billion of litigation charges, as the second-largest U.S. bank set aside less money to cover bad loans.
The bank posted a big jump in bond trading revenue, excluding accounting adjustments, and its mortgage banking revenue rose 25 percent.
But it earned just $340 million during the quarter, down 95 percent from the same period last year, when it sold assets and recorded an accounting benefit.
The results show Chief Executive Brian Moynihan is still haunted by acquisitions forged during the financial crisis. The bank last month agreed to pay $2.4 billion to settle claims that it hid crucial information from shareholders when it bought investment bank Merrill Lynch & Co at the height of the crisis.
Bank of America said last month that the settlement, a UK tax charge and an accounting charge related to the value of its debt would reduce third-quarter earnings by 28 cents per share.
Adding to its woes, investors who bought mortgage-backed securities from the bank years ago demanded the bank buy back another $4.98 billion of the securities. In last year's third quarter, new buyback requests amounted to $3.8 billion.
To boost profits, the bank launched a broad cost-cutting program in 2011 that aims to eliminate $8 billion in annual expenses and 30,000 jobs.
But even with that project, called New BAC, noninterest expenses rose nearly 1 percent in the latest quarter to $17.54 billion. The bank attributed the increase to additional legal expenses.
Still, Thompson said the bank was well ahead of its year-end goal to produce 20 percent of the $5 billion in annual savings called for in the first phase of New BAC.
Excluding the unit that handles troubled loans, the bank's work force is down by about 21,000 from a year ago, to 230,900. Head count in Legacy Asset Servicing, however, is up nearly 5,000 to 41,700. The bank has another 17,000 contractors on the job.
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