Charlotte, North Carolina-based Bank of America, the second largest U.S. bank, announced third-quarter earnings moments ago. BofA delivered a $340 million third-quarter profit, or $0.00 per diluted share, compared to $6.2 billion, or $0.56 per diluted share in the third quarter of 2011, the bank said in a release.
Bank of America’s earnings were impacted by litigation expenses and an accounting charge.
“Total revenue, net of interest expense, on a GAAP basis was $20.4 billion, $22.0 billion and $28.5 billion for the three months ended September 30, 2012, June 30, 2012 and September 30, 2011,” BofA said in its release.
Analysts polled by Bloomerg were expecting BofA to post 16 cents adjusted EPS on revenue of $21.73 billion.
Shares of Bank of America were trading slightly higher in the pre-market.
Here’s part of the release (emphasis ours):
Bank of America Corporation today reported net income of $340 million, or $0.00 per diluted share, for the third quarter of 2012, compared to $6.2 billion, or $0.56 per diluted share, in the third quarter of 2011.
As previously reported, the third quarter of 2012 was negatively impacted by $1.9 billion of debit valuation adjustments (DVA) and fair value option (FVO) adjustments related to the improvement in the company’s credit spreads, $1.6 billion for total litigation expense, including a charge for the previously announced settlement of the Merrill Lynch class action litigation, and a charge of $0.8 billion related to the repricing of certain deferred tax assets due to a reduction in the U.K. corporate tax rate. Together, these three items totaled a negative $0.28 per share.
The year-ago quarter included $6.2 billion in positive DVA and FVO adjustments, $0.6 billion in total litigation expense and $0.8 billion related to the repricing of certain deferred tax assets due to a reduction in the U.K.corporate tax rate. Together, these three items totaled a positive $0.27 per share in the third quarter of 2011. In addition, the year-ago quarter included, among other significant items, a $3.6 billion pretax gain on the sale of a portion of the company’s investment in China Construction Bank (CCB), partially offset by $2.2 billion of net losses related to equity and strategic investments other than CCB.
Relative to the year-ago quarter, the results for the third quarter of 2012 were driven by improved credit quality across most major portfolios, increased sales and trading revenue (excluding impact of DVA), higher mortgage banking income and increased investment banking income.
“We are doing more business with our customers and clients: Deposits are up; mortgage originations are up; we surpassed 11 million in mobile customers; small business lending is up 27 per cent year over year; loans to our commercial clients rose for the seventh consecutive quarter; and our corporate clients made us the second-ranked global investment banking firm,” said Brian Moynihan, chief executive officer. “Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues.”
“Our focus on strengthening the balance sheet continued this quarter,” said Chief Financial Officer Bruce Thompson. “We ended the quarter with record Tier 1 common capital ratio of 11.41 per cent and an estimatedBasel 3 Tier 1 common capital ratio of 8.97 per cent, up from 7.95 per cent as of the second quarter of 20121. With these gains, we have turned our attention to driving core earnings.”