Legal Bills Hurt Bank Of America Again In Q2
Bank of America announced its second quarter earnings Wednesday morning. The nation’s second-largest bank returned to earning a profit, but missed analysts’ expectations, as it still feels the effect of bad mortgages.
BofA reports a net income for the quarter of about $2 billion, up from a $276 million loss from last quarter.
“You can see that the revenue is showing stability in most of the core businesses,” CEO Brian Moynihan told investors on an earnings call. “You can also see obviously that the litigation expense from our legacy mortgage issues continue to affect our earnings this quarter.”
The bank set aside $4 billion for legal expenses, twice as much as it earned. That follows $6 billion for legal expenses last quarter, which drove it into the red.
The Justice Department is suing the bank for bad loans made by Countrywide Financial, bought in 2008.
Bloomberg reports the federal government has proposed a $17 billion settlement, and the sides are still far apart.
Bank of America also won approval for settlement of a private sector suit earlier this year, for $8.5 billion. It announced today that it has reached an agreement with the biggest barrier to that settlement—a holdout from insurer AIG. The bank will pay AIG $650 million.
Meanwhile, the bank’s team dealing with delinquent loans, again predominantly from the financial crisis, cost $1.6 billion.
BofA’s stock dropped about 35 cents to $15.48 at the time of this report.