Financial services major Bank of America Corp. (BAC) reported Wednesday a marginal loss for the third quarter compared to a profit last year, reflecting higher loan loss provisions and a increase in expenses amid higher mortgage-related litigation expense.
However, the company generated a small profit, before deducting dividends on preferred shares, as four of five businesses reported higher profits. The company's loss per share came in narrower than analysts' expectations, while quarterly revenues missed their estimates.
"We saw solid customer and client activity and improved profitability in most of our businesses relative to the year-ago quarter," CEO Brian Moynihan said in a statement.
The Charlotte, North Carolina-based company reported a net loss applicable to common shareholders of $70 million or $0.01 per share for the third quarter, compared to net profit of $2.22 billion or $0.20 per share in the prior-year quarter.
On average, 20 analysts polled by Thomson Reuters expected the company to report a loss of $0.09 per share for the quarter. Analysts' estimates typically exclude special items.
The results include the previously announced charge of $0.43 per share related to the $16.65 billion settlement of probes by the Justice Department and several states into the company's sale of mortgage-backed bonds in the run-up to the 2008 financial crisis.
The company said its total revenue, net of interest expense, for the quarter edged down to $21.21 billion from $21.53 billion in the same quarter last year, and missed twenty Wall Street analysts' consensus estimate of $21.36 billion.
Net interest income edged down to $10.22 billion from $10.27 billion, and non-interest income was $10.99 billion, lower than $11.26 billion last year.
Non-interest expense increased to $19.74 billion from $16.39 billion in the year-ago quarter, driven by higher mortgage-related litigation expense, partially offset by reduced personnel expense.
Profit for the global wealth & investment management rose 13 percent to a record $813 million, consumer & business banking profit grew 4 percent to $1.86 billion, and global banking profit was up 24 percent to $1.41 billion from last year. Global markets also posted a profit of $769 million, compared to a loss of $875 million a year ago.
Meanwhile, the consumer real estate services division reported a $5.18 billion loss, sharply wider than $990 million loss last year, driven largely by the impact of the DoJ Settlement.
Bank of America's total provision for credit losses for the third quarter grew to $636 million from last year's $296 million, driven by $400 million in incremental credit costs associated with the consumer relief portion of the DoJ Settlement.
The company noted that credit quality continued to improve with net charge-offs declining 38 percent from last year. Total net charge-offs were the lowest in a decade of $1.04 billion or 0.46 percent, lower than last year's $1.69 billion or 0.73 percent.
"We remain focused on streamlining and simplifying our company and connecting customers and clients with the real economy, an approach that is paying dividends for them and for our shareholders," Moynihan added.
BAC closed Tuesday's regular trading session at $16.52, up $0.01 on a volume of 97.23 million shares. In the past 52-week period, the stock has been trading in a range of $13.80 to $18.03.
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