Daily News: April 16, 2015

BofA Swings to Profit on Lower Litigation Costs

Bank of America reported Q1/15 net income of $3.4 billion compared to a loss of $276 million in the year-ago period. The bank noted that noninterest expense in 2014 included litigation costs of $6.0 billion in Q1/14 versus $370 million in Q1/15.

Revenue, net of interest expense, on an FTE basis, declined $1.3 billion from the first quarter of 2014 to $21.4 billion. The bank said nearly $1 billion of this decline was related to a $757 million reduction in equity investment income as the prior year included a gain on sale of a portion of an equity investment, and $211 million was related to additional market-related adjustments on the company’s debt securities portfolio due to the impact of lower long-term interest rates.

“Continuing the trend from last quarter, we saw core loan and deposit growth, higher mortgage originations, and increased wealth management client balances,” said chief executive officer Brian Moynihan. “We retained a top position in investment banking as our team generated the highest advisory fees since the Merrill Lynch merger. We see continued encouraging signs in customer and client activity, with consumer spending increasing and utilization of credit by our commercial customers rising. This should bode well for the near-term economic outlook.

The following highlights were excerpted from Bank of America’s news release:

  • Net interest income was $9.7 billion in Q1/15, down $616 million from the year-ago quarter. The decline was driven partially by lower long-term debt balances and yields.
  • The provision for credit losses declined $244 million from Q1/14 to
    $765 million. Net charge-offs declined 28% from Q1/14 to $1.0 billion with the net charge-off ratio falling to 0.47% in Q1/15 from 0.62% in the year-ago quarter.
  • Period-end deposit balances increased to record $1.15 trillion.

To read the entire Bank of America news release, click here.