Bank of America posted an $8.8 billion second-quarter loss as the biggest U.S. bank by assets tries to put its disastrous acquisition of Countrywide in the rearview mirror.
The Charlotte-based bank lost 90 cents a share in the quarter, reversing the year-ago profit of $3.1 billion, or 27 cents a share. Revenue, hit by $13 billion in mortgage litigation costs, plunged 54% from a year earlier to $13.5 billion.
Excluding the mortgage costs – including the $8.5 billion agreement BofA (BAC) reached last month to settle some mortgage-putback claims by big investors led by Pimco and BlackRock – BofA made $3.7 billion, or 33 cents a share, on revenue of $26.5 billion.
BofA's big mortgage business, which became the nation's biggest when then CEO Ken Lewis bought the notorious subprime mill Countrywide at a 2008 fire sale, posted a $14.5 billion loss in the latest quarter.
BofA gamely pointed out that this means the rest of its businesses made almost $6 billion in the latest quarter. But the figure is inflated by asset sale gains and debt sales, and it's not news that's likely to be all that well received by investors who have shown every sign of doubting current chief Brian Moynihan's leadership.
BofA shares fell below $10 Monday for the first time since the spring of 2009, when the stock market traded for half its current price and BofA was widely viewed as a candidate for a government takeover.
"Obviously, the solid performance in our underlying businesses continues to be clouded by the costs we are absorbing from our legacy mortgage issues," Moynihan said in a press release. "We intend to continue our efforts to put the mortgage uncertainty behind us, build capital through the strength of the franchise, and deliver the returns for shareholders that we owe them."
That statement is noteworthy because as recently as this spring, Moynihan was claiming BofA would be able to resume paying a modest dividend – a plan that was shot down by a Federal Reserve deeply concerned about the bank's financial strength. If anything those concerns have increased now that Europe is in free fall and the U.S. economy appears to be stalling.
But Moynihan has changed his stripes before, notably in the mortgage lawsuit mess in which he swung from a fighting stance last fall to a let's settle this one this summer. Like Ben Bernanke and his exit plan, Moynihan has had to make concessions to a grim reality that, for all his efforts, doesn't look likely to improve any time soon.
Are taxpayers getting the shaft in Bank of America's big mortgage putback settlement?
Rep. Brad Miller, a North Carolina Democrat who is a longtime critic of the big banks' mortgage lending misdeeds, contends they might be. He wants a top federal regulator, the Federal Housing Finance Agency, to join investors who are trying block the megadeal BofA (BAC) unveiled late last month, according to a letter he sent the FHFA this month.
BofA said MOREColin Barr - Jul 11, 2011 4:23 PM ET
With its damaged reputation and huge mortgage losses, Bank of America is still reeling from the financial crisis. But CEO Brian Moynihan may be the right guy to turn things around.
FORTUNE -- It's hard to think of a company that emerged from the financial crisis more despised than Bank of America. Sure, Goldman Sachs gets pilloried as a symbol of Wall Street greed and excess. But when you count up MOREShawn Tully, senior editor-at-large - Jul 7, 2011 5:00 AM ET
July 4 is coming right up, which makes it the perfect time to honor heroic Americans such as George Washington, Abraham Lincoln and Ken Lewis.
You may not immediately associate Lewis, the monomaniacal former CEO of Bank of America (BAC), with love of country. But value investor Bruce Berkowitz – who runs BofA's 12th biggest shareholder, the Fairholme funds – begs to differ.
A bet that isn't paying off
BofA has many problems, MOREColin Barr - Jun 10, 2011 6:23 AM ET
With all due respect to Mark Twain, history seems to be repeating itself pretty much line for line in the U.S. economy right now.
Bank of America cut its U.S. growth forecasts again Friday, citing high energy prices, softening global growth and tightening government purse strings. A run of "dreary data" means weak economic performance won't be limited to the disappointing first quarter, the bank warns.
"As the data continue to weaken, MOREColin Barr - May 27, 2011 10:10 AM ET
Summer is a month away yet, but the financials are already wilting. If we're lucky, this trend is just getting started.
Bank stocks fell for the second straight day Monday, as Bank of America (BAC) and Morgan Stanley (MS) sank within 5% of their 52-week lows. Another big trading bank, Goldman Sachs (GS), rose modestly but remains just 6% above its low of the past year.
The selloff is the latest sign MOREColin Barr - May 23, 2011 11:41 AM ET
BofA chief Brian Moynihan isn't making many people happy lately, but he made Wilbur Ross' day Friday.
Shares of Assured Guaranty (AGO), the Bermuda-based bond insurer that the billionaire vulture investor (right) bought into three years ago, surged as much as 30% after Bank of America (BAC) agreed to pay it $1.1 billion to close out policies backing 29 residential mortgage securities.
The deal, which eliminates any risk that Assured Guaranty will have MOREColin Barr - Apr 15, 2011 12:27 PM ET
Another day, another executive suite shakeup at foundering Bank of America.
The biggest U.S. bank said Friday it hired Gary Lynch, a former Securities and Exchange Commission enforcement chief, to oversee legal and regulatory relations. It is a big job, as BofA's (BAC) legal costs are soaring and its relationships with its regulators are in tatters, as evidenced by the bank's painful scrape with the Fed over its dividend plans.
Lynch was MOREColin Barr - Apr 15, 2011 8:27 AM ET
America's most delusional bank is back in black, but not as much as Wall Street would like.
Bank of America (BAC) posted a first-quarter profit Friday, reversing the loss it unexpectedly suffered at the end of 2010. But the bottom line was smaller than analysts were expecting, which will only add to questions about CEO Brian Moynihan's leadership following last month's humiliating dividend smackdown at the hands of normally somnolent bank regulators.
The Charlotte, N.C., bank MOREColin Barr - Apr 15, 2011 7:11 AM ET
Well, so much for the U.S. economy getting off to a fast start for 2011.
Economists at Bank of America cut their first-quarter growth forecast to 1.5% Monday, saying rising commodity prices and flat wages are overwhelming the latest stimulus plan and squeezing consumer spending. BofA joins Goldman Sachs in saying the economy is softening in spite of the well publicized March job gains.
The downgrade is only the latest by BofA, MOREColin Barr - Apr 4, 2011 10:40 AM ET
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