Saturday, March 8, 2014
The Charlotte Observer
CHARLOTTE, N.C. - For the first time in a year, Bank of America's earnings report Wednesday was all about the numbers. And those, as it turned out, were pretty good.
Without the legal settlements that have dragged down profits for the past nine months, Bank of America Corp. earned $3.6 billion for shareholders in the second quarter. That's up 70 percent from the year before, and at 32 cents per share is the highest it's been since fall 2011.
Like its peers, Bank of America had a particularly strong quarter in its equity trading business. At the same time, the bank set aside less on bad loans and was able to shed nearly a quarter of its delinquent home loans.
"We feel we had a very strong quarter, and it's reflective of the earnings power of Bank of America as we continue to work through and put the legacy issues behind us," Chief Financial Officer Bruce Thompson said.
Bank of America shares are up almost 25 percent so far this year.
But the bank still has a good deal of work ahead of it, analysts said.
The bank's mortgage unit is still losing money as it digs out from the housing crisis. While revenue increased 3 percent from last year, it was still down from the first quarter.
To keep up, Bank of America is still slashing its workforce and expenses, and investors are looking for more cost cuts.
"I think it's the first really good quarter they've had in quite some time," said Jim Sinegal, an analyst for Morningstar. But, he said, "We're not getting too excited yet."
Nearly two years into a massive cost-cutting program known as Project New BAC, after the bank's ticker symbol, Bank of America continues to shed jobs at a rapid clip.
The bank's employee head count fell another 2 percent in the second quarter, hitting just more than 257,000, according to Wednesday's report.
The quarter pushed the bank past the 30,000 total job cuts that executives targeted when they started the process.
Bank of America had about 288,000 employees when the plan was announced.
Thompson said that the company-wide head count numbers will continue to fall as the bank shutters branches and reduces the number of delinquent loans it manages.
He said the company is not trying to reach a specific target.
"We have areas where we need to take expenses out," Thompson said. "As some of those came out, they will result in people no longer doing that activity."