Bank of America Corporation (BofA) slumped to a loss in the first quarter due to a multi-billion-dollar litigation expense, according to an earnings report released Wednesday.
The United States' second largest banking group reported a net loss of 276 million dollars, or 5 cents per diluted share, compared to net income of 1.5 billion dollars, or 10 cents per diluted share, in the year-ago period.
In addition, BofA's total revenue excluding interest expense on a fully taxable-equivalent basis declined 3 percent year-on-year to 22.8 billion dollars. ' The quarterly results included 6 billion dollars in litigation expenses related to the previously announced settlement with the Federal Housing Finance Agency (FHFA), and additional reserves primarily for previously disclosed legacy mortgage-related matters, the bank said.
"The cost of resolving more of our mortgage issues hurt our earnings this quarter," Chief Executive Officer Brian Moynihan said. "But the earnings power of our business and customer strategy generated solid results and we continued to return excess capital to our shareholders."
In March, BofA agreed to pay about 9.5 billion dollars to settle all litigation by the FHFA over mortgage-backed securities sold to mortgage giants Fannie Mae and Freddie Mac.
However, the bank's capital and liquidity remained strong for the first quarter.
"During the quarter, our Basel 3 standardized capital ratios and our liquidity improved to record levels and credit quality also improved," Chief Financial Officer Bruce Thompson said.
According to its earnings report, BofA's provision for credit losses declined 41 percent from the first quarter of 2013 to 1 billion dollars, driven by improved credit quality.
The bank's shares fell 3.36 percent to trade at 15.84 dollars in the morning trading session on Tuesday.