Bank of America reported better-than-expected results for the second quarter on Wednesday, thanks in large part to a familiar theme at the Charlotte-based bank: cost-cutting.
The second-largest U.S. bank by assets posted a profit of $5.3 billion in the quarter, up from $2.3billion in profit a year ago. Its earnings per share of 45 cents exceeded analysts’ expectations for 36 cents a share and surpassed the 19 cents a share a year ago.
Here are four numbers that stand out in the results:
That’s how much the bank’s profit rose compared with the same period last year.
In CEO Brian Moynihan’s words, the results were “our strongest earnings in several years.”
The increase came as the bank cut expenses, including legal costs. It also posted higher revenue compared with the second quarter last year.
The bank’s total revenue rose about 1.8 percent to $22.3 billion, from $21.9 billion a year earlier. Trading revenue and investment banking fees declined.
It was still a better revenue performance than rival banks Wells Fargo, where revenue rose about 1.2 percent, and JPMorgan Chase & Co., which posted a 3.2 percent drop in revenue.
Contributing to the revenue gains were a year-over-year increase in average deposit balances, and in the dollar value of mortgage originations.
But analysts also pointed to “one-time” items that lifted the bank’s second-quarter results, such as the freeing up of $204million in reserves the lender had established to cover investor claims to repurchase mortgages.
That’s how much the bank reduced its noninterest expenses, a category that includes salaries, legal costs and other operating expenses.
A big driver in that decline was a substantial drop in legal costs.
In the second quarter of last year, the bank reported $4 billion in legal costs as it beefed up its litigation reserves ahead of a $16.65 billion mortgage settlement it reached in August with the U.S. Department of Justice.
In the second quarter of this year, its legal costs dropped to $175 million.
Under Moynihan, who became CEO in 2010, the bank has been pushing to lower costs across the board.
Last year, the bank announced it had reached a goal of reducing expenses by $2 billion per quarter ahead of schedule. Those cuts came under a Moynihan program known as “Project New BAC,” which has resulted in reductions in jobs and branches.
According to the bank’s executives, the focus on controlling expenses is not over. Moynihan said Wednesday an ongoing program called “Simplify and Improve ” is designed to manage costs as the bank’s revenues and the economy continue to recover.
“We continue to work expenses,” he said.
That’s how many fewer employees Bank of America had at the end of the second quarter compared with the end of the same quarter a year ago.
Its employment is now 216,679, down about 25 percent from the 288,000 it reported at the end of 2010.
In recent years, the bank has been cutting jobs nationwide, including in Charlotte and in a variety of areas, including mortgage servicing and technology and operations.
Speaking to reporters on a conference call Wednesday, Chief Financial Officer Bruce Thompson said further employment reductions are expected, but he did not give a figure.
In some areas of the bank, the lender is adding “client-facing personnel,” such as financial advisers, he said.
That’s the number of branches Bank of America has cut over the past year, as more customers conduct transactions on mobile phones and other devices rather than inside branches.
Its 4,789 branches are down from as many as 6,100 at the end of 2008.
Moynihan declined to say how many more branch closings are ahead. He did say the bank has to be careful when making the closures.
“If you push too hard, you’ll upset the clients,” he said.
On Wednesday, independent bank analyst Nancy Bush told Moynihan she hears “persistent gripes about service quality,” particularly about the bank’s mortgage operation. She also asked him about the quality of its service at branches.
Moynihan pointed to the bank’s favorable rankings on national mortgage surveys. Also, the bank’s overall customer scores have been improving over the past three to four years and continue to rise “almost on a monthly basis,” he said.
“We’re not perfect, and we’ll always get better.”
The bank’s shares closed at $17.68 Wednesday, up 3.2 percent.