Bank of America Corp., the second-biggest U.S. lender by assets, posted a $3.36 billion first-quarter profit that beat analysts' estimates, as legal costs tumbled.
Net income was 27 cents a share, compared with a loss of $276 million, or 5 cents, a year earlier, according to a statement Wednesday from the Charlotte, North Carolina-based firm. Adjusted earnings were 36 cents a share, surpassing the 29-cent average estimate of 31 analysts surveyed by Bloomberg.
Chief Executive Officer Brian T. Moynihan, 55, is seeking to boost revenue after spending the first five years of his tenure settling legal disputes, mostly tied to the 2008 acquisition of Countrywide Financial Corp. The firm's litigation costs were $370 million for the first quarter, compared with $6 billion a year earlier.
"At a time of continued low interest rates, we had good expense control as we focus on responsible growth with a balanced platform," Moynihan said in the statement.
Last year's legal costs were tied to mortgage disputes, triggering the fourth quarterly loss under Moynihan's tenure. His predecessor's purchase of Countrywide left Bank of America responsible for thousands of bad home loans, contributing to more than $50 billion of expenses.
Noninterest expenses in the first quarter plunged 29 percent to $15.7 billion, driven by the drop in legal costs.
Revenue declined 5.5 percent to $21.4 billion, partly because of a $757 million reduction in equity investment income and $211 million in adjustments to the firm's debt holdings. Excluding those items and accounting charges tied to debt, revenue dropped 1 percent to $21.9 billion.
Bank of America slid 0.7 percent to $15.71 at 7:08 a.m. in New York. The firm's shares have dropped 12 percent this year, the worst performance in the 24-company KBW Bank Index.
Global markets, the bank's trading operations overseen by Chief Operating Officer Thomas K. Montag, posted a 28 percent drop in profit to $945 million on declines in fixed-income trading revenue. The division's revenue fell 7 percent to $4.6 billion.
Revenue in the fixed-income, currency and commodities sales and trading division decreased 7 percent to $2.75 billion on declines in credit and mortgages. That trailed JPMorgan Chase & Co.'s 5 percent increase, and compared with estimates of $3 billion from Nomura Holdings Inc.'s Steven Chubak and $2.63 billion from Matt Burnell at Wells Fargo & Co.
Foreign-exchange sales and trading revenue was the highest since Bank of America acquired Merrill Lynch in 2009, doubling from the first quarter of last year on increased volatility, the firm said.
Consumer-banking profit was almost unchanged at $1.48 billion as lower expenses were offset by a decline in net interest income, the company said.
Profit at the wealth-management division, which includes the Merrill Lynch brokerage, declined 11 percent to $651 million.
Bank of America, which scrapped plans to buy back shares last year after an accounting error, won conditional Federal Reserve approval last month to repurchase $4 billion in stock. The lender must resubmit revenue and loss models and improve internal controls by Sept. 30, the Fed said in releasing the results of its annual stress tests.
The firm said it's keeping its quarterly dividend unchanged, disappointing analysts who had expected an increase to 8 cents a share from 5 cents, according to data compiled by Bloomberg.
JPMorgan said yesterday that first-quarter profit rose 12 percent to $5.91 billion on a rebound in fixed-income and equity trading. Wells Fargo & Co., the biggest home lender, said net income dropped 1.5 percent to $5.8 billion.