Socked by mortgage-related legal expenses, Bank of America Corp. lost $276 million during the first quarter, sending its stock down sharply.
The quarterly loss, its first in 2½ years, came despite lower loan losses and better than expected results in fixed-income trading, a slowing business that hurt rival JPMorgan Chase & Co. during the quarter.
The results included $6 billion in litigation expense, much of it related to toxic bonds backed by housing-boom mortgages from Countrywide Financial Corp., the aggressive Calabasas lender that nearly collapsed before being acquired by Bank of America in 2008.
"The cost of resolving more of our mortgage issues hurt our earnings this quarter,” Chief Executive Brian Moynihan said in announcing the results Wednesday morning.
The loss at the Charlotte, N.C., bank amounted to 5 cents a share, in contrast to a profit of $1.48 billion, 10 cents a share, in the first quarter of 2013. Revenue fell nearly 3%, to $22.7 billion.
Bank of America shares were down 55 cents at $15.84 in morning trading, a 3.4% decline.
A major impact on the earnings was a $9.5-billion settlement related to faulty mortgage securities that had been purchased by home finance giants Fannie Mae and Freddie Mac. The deal was struck last month with Fannie and Freddie's regulator, the Federal Housing Finance Agency.
That accounted for $3.4 billion of the $6 billion in litigation expense, the bank said. The rest was from additional, previously announced mortgage issues, said Moynihan, now in his fifth years as head of Bank of America.
Moynihan has spent much of his tenure as CEO slogging through liabilities inherited from Countrywide, acquired by his predecessor, Ken Lewis. The deal has cost Bank of America more than $50 billion in loan losses and legal costs.
Bank earnings have been a mixed bag this quarter, with Wells Fargo & Co. and Citigroup Inc. beating analyst estimates and JPMorgan Chase & Co. coming up short. Wall Street heavyweights Goldman Sachs Group Inc. and Morgan Stanley are to release their financial results Thursday.
Copyright © 2015, Los Angeles Times