Bank of America managed a small profit in the third quarter, the company said Wednesday, coming in above analysts’ expectations despite large legal charges. Here’s what else you need to know about the bank’s results.
1. The big number
Bank of America (BAC) reported a loss of 1 cent a share, excluding preferred dividends, on $168 million of net income.
2. What you need to know
The penny loss is good news. Analysts and bank-watchers rejoiced, since earnings per share were significantly better than the 9-cent loss many had anticipated, according to Bloomberg data. Bank of America took a record $16.7 billion hit in August when the bank settled government mortgage investigations. The extent to which the fine would affect results was weighing on analyst estimates, and many breathed a sign of relief to see its effects were muted.
3. What you might have missed
Now that the bank has recovered from its last major legal hurdle related to its mortgage business, CEO Brian Moynihan said the company’s underlying earnings power will become apparent. The Department of Justice settlement brought down profits per share by 43 cents.
“We saw solid customer and client activity and improved profitability in most of our businesses relative to the year-ago quarter,” Moynihan said in a statement.
That’s especially true for the bank’s investment bank, which reported record revenue and record earnings. Net income for the unit hit $813 million, up nearly 13% compared to the year earlier period.
Moynihan has notched more than $70 billion in costs tied to the bank’s purchases of Countrywide Financial and Merrill Lynch, which were taken over by his predecessor Chad Holliday. Moynihan is confident that the costs and fines are “pretty well done,” as he told analysts earlier this year, which many hope bodes well for future quarterly earnings.