Bank of America Reports Q3 Loss on Legal Charge
Bank of America reported a Q3/14 net loss of $70 million after deducting dividends on preferred shares. The results included a previously announced pretax charge of $5.3 billion for the settlement with the Department of Justice, certain federal agencies and six states. Earnings in the same year-ago period, after preferred stock dividends, were $2.2 billion.
“We saw solid customer and client activity and improved profitability in most of our businesses relative to the year-ago quarter,” said CEO Brian Moynihan. “We remain focused on streamlining and simplifying our company and connecting customers and clients with the real economy, an approach that is paying dividends for them and for our shareholders.”
The bank said the provision for credit losses increased $340 million from the third quarter of 2013 to $636 million, driven by $400 million in incremental credit costs associated with the consumer relief portion of the DoJ Settlement. Net charge-offs declined 38% from the third quarter of 2013 to $1.0 billion, with the net charge-off ratio falling to 0.46 percent in the third quarter of 2014 from 0.73 percent in the year-ago quarter. BofA noted that the net charge-off ratio of 0.46% was the lowest in a decade.
Including the incremental credit costs associated with the DoJ Settlement, the reserve release was $407 million in the third quarter of 2014, compared to a reserve release of $1.4 billion in the third quarter of 2013.
To read the Bank of America news release, click here.