Quantcast
Get breaking news alerts via email

Click here to manage your alerts
FILE - This Tuesday, Jan. 14, 2014 file photo shows a Bank of America sign in Philadelphia. Bank of America Corp. reports quarterly financial results on Wednesday, July 16, 2014. (AP Photo/Matt Rourke, File)
Bank of America takes $4 billion litigation hit
Earnings » Quarterly income fell by 43 percent from a year ago, but still totaled $2 billion.
First Published Jul 16 2014 09:01 am • Last Updated Jul 16 2014 01:01 pm

New York • Bank of America said Wednesday that its second-quarter earnings were hit by higher litigation expenses.

The Charlotte, N.C.-based bank earned $2 billion in the second quarter after payments to preferred shareholders, compared with $3.6 billion in the same period a year earlier, a decline of 43 percent.

Join the Discussion
Post a Comment

Revenue fell 4 percent to $21.9 billion from $22.9 billion.

Per share, the bank’s earnings worked out to 19 cents, compared with 32 cents a year ago.

The bank’s litigation costs of $4 billion crimped earnings by 22 cents a share.

Bank of America also said that it had reached a $650 million settlement Tuesday with American International Group Inc. to resolve all outstanding residential mortgage-backed securities litigation between the two companies.

The bank said that "substantially all" of the litigation expenses incurred in the second quarter of the year were related to existing mortgage issues that have been previously disclosed.

Like its competitors, Bank of America is still dealing with the fallout from the financial crisis that began in 2007 and the subsequent collapse of the housing market. For example, the bank said in March that it will spend $9.33 billion to resolve a dispute over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.

However, unlike JPMorgan and Citigroup, Bank of America has yet to settle a federal investigation into its handling of risky subprime mortgages. Citigroup said on Monday that it had agreed to a $7 billion settlement with the Department of Justice, while JPMorgan reached a $13 billion settlement in November.

"We feel like we’ve gotten a large chunk of this behind us ... Clearly, the DOJ is the most significant matter that’s out there remaining," Chief Financial Officer Bruce Thompson said on a call with reporters.


story continues below
story continues below

Bank of America’s lawyers met with Justice Department officials Tuesday, but the two parties were unable to reach an agreement, according to a person familiar with the meeting. The Wall Street Journal reported that Bank of America had offered to pay $13 billion in both cash and consumer relief in the meeting, while the department asked for "billions more." Jerome Dubrowski, a spokesman for Bank of America, said he couldn’t comment on the discussions.

In April, Bank of America was forced to shelve plans to increase its dividend and stock buyback program. The bank said the move came after it realized that it had incorrectly valued securities that it had obtained through its acquisition of Merrill Lynch in 2009. As a consequence, the lender said it needed to hold a higher level of capital.

Bank of America had intended to buy $4 billion of its own stock and raise its dividend from a penny per share to 5 cents per share. The plan had been approved by the Federal Reserve. The bank said May 27 that it had resubmitted its capital plan to the Federal Reserve.

Thompson told reporters Wednesday he couldn’t comment on "supervisory matters."



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.