Bank of America Corp. quadrupled its first-quarter profit, reducing expenses and loan losses and reporting better brokerage and investment banking results, but continued to be bogged down by its mortgage operations, disappointing investors.
Trying to regain forward momentum after two years of downsizing, the nation’s second-largest bank said Wednesday its revenue fell 8% from last year to $23.9 billion.
That was better than the $23.4 billion Wall Street had expected, in contrast with rival megabanks Wells Fargo & Co. and JPMorgan & Co., which missed analysts’ estimates for revenue when they reported results last week.
Bank of America, based in Charlotte, N.C., reported net income of $2.6 billion, 20 cents per share, compared to $653 million, 3 cents per share, during the first quarter of 2013.
Analysts had expected 22 cents a share, and BofA stock was down 60 cents, nearly 5%, at $11.68 in morning trading.
“We are balanced, focused and moving forward,” said the bank’s chief executive, Brian Moynihan, citing increased lending to small businesses, higher earnings from wealth management and “another quarter near the top in investment banking fees.”
Moynihan also noted that BofA’s mortgage originations have grown for four straight quarters. Nearly all that lending came from refinancing its customers into lower-interest loans, however, not from financing purchases of homes.
The extremely low interest rates that have created a refinance boom also have cut into the profits bank make on lending.
BofA said its net interest income declined from $11.1 billion a year earlier to $10.9 billion in the first quarter, with its profit margin on lending at 2.43% compared to 2.51% a year earlier.
BofA said it would pay $500 million to settle certain investors’ claims over soured mortgage-backed securities issued at the tail end of the housing boom by Countrywide Financial Corp., the Calabasas home lender BofA acquired in 2008.
The bank, which has paid tens of billions of dollars in Countrywide-related legal settlements, said its consumer real estate division lost $1.31 billion during the quarter, up from $1.14 billion a year earlier.