View of a Bank of America branch in Washington on April 13, 2012. AFP PHOTO/Nicholas KAMM (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)
USA TODAY - Bank of America's fourth-quarter profit jumped as the nation's second-largest bank bounced back from a big legal settlement last year and beat analysts' profit forecasts by a penny per share.
Bank of America earned $3.4 billion, or 29 cents a share, up from $732 million, or 3 cents a share, in the last three months of 2012. Analysts had projected 28 cents a share in profit.
Revenue was $21.7 billion, up 15%, beating forecasts of $21.2 billion.
"We enter this year with one of the strongest balance sheets in our company's history," Chief Financial Officer Bruce Thompson said in a statement. "Capital and liquidity are at record levels, credit losses are at historic lows, our cost savings initiatives are on track and yielding significant savings, and our businesses are seeing good momentum."
The big numbers that changed from last year were the much smaller amount that the bank had to set aside for credit losses and its reduced legal expenses.
Bank of America reported pretax litigation expense of $2.3 billion, most of it related to fallout from mortgage lending before the 2008 financial crisis. However, even that number is still much lower than the $3.7 billion loss the company's mortgage business reported in the same quarter last year, when it reached a $10 billion settlement with Fannie Mae over loans sold to the mortgage financing giant.
At the same time, the bank's provision for credit losses dropped by $1.9 billion to $336 million. The change reflects customers' better payment record and the rising value of homes used to secure mortgages.
"Bank of America beat the Street on revenue,'' Raymond James analyst Anthony Polini said. "Excluding one-time unusual items, earnings per share were above the 29 cents reported. The highlights were margins, fee income, credit quality, and capital. The negative was loan growth. Residential mortgages were down and commercial growth decelerated.
Shares of the bank rose about 3% in early trading, up 47 cents to $17.24.
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