Arab Today, arab today bank of america reports loss on huge legal charges
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Arab Today, arab today
Arab Today, arab today

Bank of America reports loss on huge legal charges

Arab Today, arab today

Arab Today, arab today Bank of America reports loss on huge legal charges

New York - AFP

The legal legacy of the housing bust weighed on Bank of America earnings Wednesday, resulting in a quarterly loss even as some operating units posted solid results. The US banking giant lost $276 million for the first quarter, with the biggest drag coming from $6 billion to settle a pile of lawsuits dealing mostly with BofA's sale of mortgage-backed securities. The loss was its first since the second quarter of 2011. "The cost of resolving more of our mortgage issues hurt our earnings this quarter," said chief executive Brian Moynihan. "But the earnings power of our business and customer strategy generated solid results, and we continued to return excess capital to our shareholders." BofA's results translated to a loss of five cents per share, compared with analyst projections for a five cent per share profit. Giant banks have been digging out from a backlog of lawsuits over their packaging of subprime loans and other housing assets into ostensibly quality securities that tanked during the housing bust. In March, BofA announced it would pay $9.5 billion to settle US charges that it sold bad mortgage-backed securities to housing finance giants Freddie Mac and Fannie Mae ahead of the housing market collapse. BofA said the Fannie-Freddie settlement accounted for $3.6 billion in expenses in the first quarter The remainder of the large legal charge was also primarily involved legacy mortgage-related matters previously disclosed, the bank said. On Wednesday BofA announced it had reached an agreement with Financial Guarantee Insurance Co. to resolve litigation over mortgage-backed securities for which FGIC provided financial guarantee insurance. BofA paid $584 million to FGIC and has agreed on additional payments to trustees of investment vehicles associated with the case, FGIC said in a statement. These other payments are expected to come to $355 million for a total of $939 million. In its operating businesses, BofA's consumer real estate services division was hit in the first quarter by lower mortgage refinancings, producing a decline of $548 million in mortgage servicing revenues and mirroring an industry-wide trend. But results in consumer and business banking rose from year-ago levels, helped by a jump of 19 percent in mobile banking customers. Earnings from global wealth and investment management also edged higher. Profits in global markets rose 16.4 percent from a year earlier to $1.3 billion, which was marred by a $450 million write-down. BofA continued to benefit from improving credit quality. It set aside $1 billion in provisions for credit losses, down from $1.7 billion a year ago. Revenues for the quarter fell from $23.4 billion a year ago to $22.8 billion. Analysts had expected revenues of $22.3 billion. Analysts at Citigroup said while Bank of America's earnings overall came in short of expectations, the performance of its core business "remains on track." Shares fell 2.9 percent to $15.91 in early trade.

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