Bank of America’s Profits Decline 43% Due to Legal Costs

A Bank of America branch in New York. (Credit: Spencer Platt/Getty Images)
A Bank of America branch in New York. (Credit: Spencer Platt/Getty Images)

Bank of America said on Wednesday that its second-quarter profit plunged 43 percent, dragged down by a large legal expense that overshadowed some otherwise positive results.

The bank reported profit of $2.3 billion, or 19 cents a share, on revenue of $22 billion, failing to meet Wall Street analysts’ expectations of 29 cents a share, but exceeding revenue estimates of about $21.6 billion.

Bank of America’s chief executive, Brian T. Moynihan, struck an optimistic tone about consumer spending and the bank’s ability to generate revenue from investment banking.

“The economy continues to strengthen, and our customers and clients are doing more business with us,” Mr. Moynihan said in a statement. “Among other positive indicators, 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.”

Bank of America’s $4 billion legal expense in the quarter wiped out a substantial amount of its profit.

The bank said it had reached a $650 million agreement with the American International Group in the quarter to settle mortgage securities litigation. At the time it filed the lawsuit in 2011, A.I.G. had been seeking to recover $10 billion in losses, making it one of the largest single mortgage securities claims ever filed by a single investor.

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SOURCE:  MICHAEL CORKERY 
New York Times

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