Bank of America’s shares slumped on Thursday after the Charlotte-based bank reported a lower-than-expected fourth-quarter profit as its mortgage and trading businesses slumped.
The No. 2 U.S. bank assets said it made $3.1 billion in the quarter, down 11 percent from a year ago. That came as it reported tax-equivalent revenue of $18.9 billion, down 13 percent from a year ago.
On a per-share basis, the bank had earnings of 25 cents, less than the 31 cents analysts were expecting.
In mid-morning trading, the bank’s shares were down about 3 percent to $15.57. The bank’s shares are down more than 13 percent this year, after jumping 15 percent last year.
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For all of 2014, the bank posted a profit of $4.8 billion, which was down 58 percent from 2013. That was less than Wells Fargo, the most profitable U.S. bank, made in just the fourth quarter.
Bank of America’s earnings last year were weighed down by a $16.65 billion settlement reached with the U.S. government and various states in August. The bank has said the accord, which settled claims over soured mortgage bonds and other matters, resolved its largest outstanding legal challenge resulting from the financial crisis.
“Settling these issues obviously came at a cost and drove a decline in year-over-year net income,” CEO Brian Moynihan said on a conference call with analysts Thursday.
The bank saw profits fall in its consumer banking business and posted a wider loss in its global markets business on lower sales and trading revenue. Mortgage originations fell slightly, with the bank making $11.6 billion in residential mortgage loans in the quarter.
Attention now shifts to the bank’s expenses in its Legacy Assets and Servicing operation, which handles mortgages that borrowers are struggling to pay. Costs in the unit have been a drag on earnings.
In the conference call with analysts, Chief Financial Officer Bruce Thompson said the bank is seeking to lower quarterly costs in the LAS unit, excluding litigation expenses, to $800 million by the end of this year from $1.1 billion in the fourth quarter of 2014.
Bank of America reported its fourth-quarter results after big-bank peers Wells Fargo and JPMorgan released their results for the quarter on Wednesday.
San Francisco-based Wells, which maintains its largest employment hub in Charlotte, reported earning $5.71 billion, up 2 percent from a year earlier.
New York-based JPMorgan, the biggest U.S. bank by assets, said it earned $4.93 billion, down 7 percent as the lender was hit by legal costs and a drop in trading revenue.