Bank of America Corp. (BAC) posted a record net income of $3.4 billion, or $0.29 per share, for the fourth quarter of 2013, compared to $732 million, or $0.03 per share, in the fourth quarter of 2012. Revenue on an FTE basis rose 15% from the fourth quarter of 2012 to $21.7 billion.
The strong profit beat industry estimates of 26 cents.
For the year ending December 31, 2013, net income increased to $11.4 billion, or $0.90 per share, from $4.2 billion, or $0.25 per share, in 2012, below industry estimates. Revenue on an FTE basis rose 7% to $89.8 billion.
"We enter this year with one of the strongest balance sheets in our company’s history," said CFO Bruce Thompson. "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."
Bank of America funded $13.5 billion in residential home loans and home equity loans during the fourth quarter of 2013, serving nearly 50,000 homeowners through refis or new home purchases. This included nearly 4,200 first-time homebuyer mortgages and more than 17,000 mortgages to low- and moderate-income borrowers.
Approximately 68% of funded first mortgages were refinances and 32% were for home purchases.
Bank of America has been paying through the nose to deal with mortgages and related legal problems, taking the short-term pain to get that behind them. Legal costs are a key item in the bank’s balance.
The bank saw higher litigation expense reflecting continued evaluation of legacy exposures largely related to residential mortgage-backed securities litigation. Litigation expense rose to $2.3 billion in the fourth quarter of 2013 from $1.1 billion in the third quarter of 2013 and $916 million in the fourth quarter of 2012.
The number of 60+ days delinquent first-mortgage loans serviced by LAS declined 18% during the fourth quarter of 2013 to 325,000 loans from 398,000 loans at the end of the third quarter of 2013, and declined 58% from 773,000 loans at the end of the fourth quarter of 2012.
Revenue increased $1.2 billion from the fourth quarter of 2012 to $1.7 billion due to a $2.9 billion reduction in representations and warranties provision, partially offset by a $1.1 billion decline in servicing revenue reflecting lower Mortgage Servicing Rights net-of-hedge performance and a smaller servicing portfolio, as well as a decline in core production revenue.