Bank of America shares jumped almost 2 percent overnight, up to over $17 a share, as the company announced better-than-expected profits in its fourth quarter.
The nation’s second-largest bank pulled in $3.4 billion in net income—almost five-times the profit over the same time last year. It continues a string of success for a bank that was trading at less than $6 a share two years ago.
Much of the profit came from reducing expenses by 6 percent. A key part of that strategy has been slashing staff and branches. Bank of America has cut about 40,000 jobs since 2011, when it had more than 288,000 full-time employees.
“We ended the quarter at 242,000 employees, a decline of more than 5,000 or 2.3 percent from the third quarter of ’13,” Bank of America chief financial officer Bruce Johnson said on the earnings call this morning.
Johnson said most of the layoffs were in mortgages and branch staff.
The bank also shed bad debt, which allowed it to cut in half the amount it spent on charge-offs—basically, assumed defaults by customers on their credit. And, since it is not anticipating as much bad credit, it held less money in reserve—$336 million for credit losses instead of $2.2 billion in the fourth quarter of 2012.
The company also continued to recover from the mortgage crisis and its disastrous purchase of mortgage lender Countrywide Financial. Last year, Bank of America lost nearly $4 billion on its consumer mortgage business—this year that number fell to just over $1 billion. The bank still has pending litigation over its mortgages.