BofA Profit of $2.18 Billion Paces Year-Ago 3rd Quarter
Bank of America Corp. said Monday its third-quarter profit was virtually stagnant as the largest U.S. bank lost money on auto leases and cut costs by firing employees.
Profit from operations edged up to $2.18 billion, or $1.31 a share, from $2.15 billion, or $1.23, a year earlier.
The company also said it expects nonperforming assets--or loans with possible repayment problems--to increase over the next several quarters. Loan quality is a source of concern on Wall Street after a run-up in U.S. interest rates.
Though the earnings beat analyst expectations of $1.29 a share, the loan problems and auto leasing trouble helped send Bank of America’s stock down $1.38 to close at $45.19 on the New York Stock Exchange.
The latest results exclude a $346-million charge to pay severance costs and a $257-million reserve to guard against possible auto lease losses. Bank of America said in July it plans to cut up to 10,000 jobs, or around 7% of its work force, to scale back costs. The tactic paid off, with non-interest expense falling 2.6% to $4.41 billion.
Profit got a lift as consumer investment and brokerage fees rose 13% to $471 million and corporate investment banking income rose 4% to $376 million.
Net interest income on a taxable-equivalent basis rose just 1.5% to $4.67 billion, squeezed by higher interest rates.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
TECHNOLOGY:
* Altera Corp. said third-quarter profit more than doubled to $118 million, or 28 cents a share, from $55.6 million, or 13 cents, meeting forecasts. The maker of programmable logic chips said revenue climbed 84% to $395.4 million.
* Electronics for Imaging Inc. said third-quarter net income fell 31% to $20 million, or 37 cents a share, meeting forecasts, as revenue fell 3% to $153 million. The software company warned that fourth-quarter earnings will be well below analyst expectations because of weak demand for its products.
* Network Associates Inc. said third-quarter profit more than doubled to $39.8 million, or 27 cents a share, from $20.26 million, or 13 cents, a year ago, beating forecasts of 24 cents. Sales grew 22% to $238.7 million.
* Novellus Systems Inc. said third-quarter profit rose almost fourfold to $85.3 million, or 62 cents a share, from $21.8 million, or 18 cents, boosted by new products. The results matched analyst expectations. Sales more than doubled to $359.1 million from $154.9 million.
OTHER INDUSTRIES:
* Bank of New York said its third-quarter profit rose 16% to $363 million, or 49 cents a share, in line with estimates, aided by fees from keeping securities in safekeeping.
* Continental Airlines Inc. said third-quarter profit jumped 32% to $137 million, or $2.24 a share, beating forecasts of $2.19, as revenue rose 16% to $2.62 billion.
* San Marino-based East West Bancorp, the parent of East West Bank, reported higher third-quarter net income of $8.8 million, or 38 cents per share, compared with $7.0 million, or 31 cents, a year ago. Net interest income rose to $22.6 million from $18.6 million.
* Downey Financial Corp. reported a 59% jump in third-quarter profit to $26.3 million, or 93 cents a share, as its loan portfolio grew and expenses fell. Net interest income rose 32% to $67.2 million. The Newport Beach-based company said its assets at the end of the quarter totaled $10.4 billion, up 22% from a year ago.
* Eaton Corp., maker of truck transmissions, said that third-quarter profit fell 6.5% to $101 million, or $1.40 a share, beating revised forecasts of $1.34 a share, as sales fell 1.6% to $2.19 billion. Analysts had expected earnings of $1.58 before Eaton warned last month that a decline in demand for trucks would hurt its profit.
* Fifth Third Bancorp’s net income rose 17% to $228 million, or 48 cents a share, with help from growth in data processing revenue.
* IBP Inc., the world’s largest meat packer, said earnings in the latest quarter fell 24% to $83.9 million or 79 cents a share, due to relatively high prices for live hogs, but the results beat analyst forecasts of 75 cents. Sales rose 10% to $4.15 billion.
* IDEC Pharmaceuticals Corp. said earnings jumped 50% in the third quarter to $16.1 million, or 30 cents a share, a penny better than forecasts. Revenue jumped 36% to $41.2 million, led by strong sales of its cancer drug Rituxan.
* Northern Trust posted an 18% rise in third-quarter profit to $123.3 million, or 53 cents a share, lifted by foreign exchange trading profit as well as trust services income.
* Polaroid Corp. said third-quarter profit fell 16% to $18.4 million, or 40 cents a share, well below analyst expectations of 54 cents, sending the company’s shares down 20%. The world’s largest instant-photography company was hurt by lower-than-forecast sales of film, its major source of profit. Polaroid also cited a weaker euro for the results. Shares of Polaroid fell $2.31 to close at $9.25 on the NYSE.
* Universal Health Services Inc. said third-quarter profit more than doubled to $22.3 million, or 72 cents a share, from $10.8 million, or 34 cents a share, a year ago, as admissions to its acute-care and psychiatric hospitals increased. The results beat estimates of 68 cents. Revenue rose 15% to $562 million, boosted by the acquisition of 14 hospitals.
