Bank of America Swings to Profit in Third Quarter

CHARLOTTE, N.C. (The Charlotte Observer/TNS) -

Bank of America said Wednesday it made $4.5 billion in profit in the third quarter, compared with a loss a year ago when a massive Justice Department settlement weighed on its results.

The Charlotte-based bank recorded losing $232 million in the third quarter last year, a period in which the lender was hammered by legal costs from the $16.65 billion settlement. The bank views the settlement as a milestone, because it resolved its most substantial mortgage-related legal matter remaining from the financial crisis.

“Most of our legacy issues have been addressed,” Chief Financial Officer Paul Donofrio told reporters on a conference call Wednesday.

Investors hoping for an increase in revenue did not see any on Wednesday, as the lender reported revenue of $20.7 billion, down from $21.2 billion a year ago.

Bank of America blamed the decline largely on adjustments it made because of a drop in long-term interest rates. The bank’s revenues also fell as it posted a decline in trading activity, a trend that affected other lenders in the third quarter.

Bank of America executives on Wednesday noted accomplishments the lender made in the quarter. Those include growing its total deposits, the number of new consumer credit cards it issued and the value in home loans it originated – which all rose from a year ago.

The bank’s earnings of 37 cents per share exceeded the 33 cents expected by analysts. Bank of America lost 4 cents a share a year ago, when it recorded $6 billion in legal costs.

CEO Brian Moynihan called it a “solid quarter” but noted that the bank faces challenges to growing its revenues, including ongoing low interest rates and an industry-wide slump in trading business.