BofA reports $6.2 billion profit in 3Q
Bank of America (BAC) reported income of $6.2 billion, or 56 cents a share, for the third quarter, up from a loss of $7.3 billion one year ago. Revenue totaled $28.7 billion for the quarter, up 6% from one year ago. The bank, like Citigroup (C) on Monday, benefited from a $4.5 billion gain from fair value adjustments on structured liabilities. The bank said the accounting move reflected a widening of its credit spreads. BofA also found revenue from its sale of several businesses during the quarter. It gained $3.6 billion from the sale of some of its shares in China Construction Bank. Chief Financial Officer Bruce Thompson said BofA reduced its balance sheet by $42 billion from the previous quarter. "This quarter's results reflect several actions we took that highlight our ongoing transformation toward becoming a leaner, more focused company," said BofA CEO Brian Moynihan. Provisions for credit losses totaled $1 billion, down roughly $2 billion from one year ago. The bank extended $33 billion in mortgages during the quarter. More than half were refinances. Origination totals were less than half the $71.9 billion written in the third quarter of last year and down from $40.4 billion in the second quarter, according to the bank's financial supplement. Net losses on the real estate division widened to $1.1 billion in the third quarter from a $392 million loss last year. Revenue dropped 22% from $2.8 billion, driven by a drop in income from its sale of Balboa Insurance in the previous quarter. Lower demand, the bank said, pushed overall originations down as well. The legacy asset division at BofA completed installing a single-point of contact system for its troubled mortgage borrowers. More than 6,500 employees were hired and trained during the third quarter. More than 42,000 employees now work in the bank's legacy servicing division. The division completed 52,000 modifications during the third quarter, down from 69,000 in the same quarter last year. BofA was able to lower its provisions for representation and warranty claims to $278 million in the third quarter from $872 million. In the previous quarter, the bank had set aside $14 billion in rep and warranty reserves. Write to Jon Prior. Follow him on Twitter @JonAPrior.