Make us your home page
Instagram

Bank of America still stung by mortgage troubles

NEW YORK — Bank of America is still trying to shake off troubles arising from mortgages written during the housing bubble.

Higher fees from battling lawsuits and costs related to its mortgage business led to a 39 percent decline in B of A's first-quarter earnings, the bank announced Friday. It wasn't what investors wanted to hear, since just three months ago the bank announced several big charges and settlements that seemed to resolve many of its mortgage problems.

The Charlotte, N.C., bank earned $1.7 billion, compared with $2.8 billion in the first quarter of last year. Revenue fell to $26.9 billion from $32 billion in the same period last year.

"It seems like some of the mortgage-related issues that they said were behind them are actually not behind them yet," said Paul Miller, a bank analyst at FBR Capital Markets.

The bank is fighting lawsuits from investors and insurers who say that during the housing bubble they were duped into buying loans that were based on fraudulent documents. Bank of America set aside $1 billion to repurchase those mortgages and also added $352 million to its legal expenses in the first quarter.

"The numbers are getting worse, and nobody seems to have a handle on how bad this could be," Miller said.

B of A's stock fell 2.4 percent to $12.82. Bank of America has lost 34 percent of its value over the past year, making it the laggard among major banks.

Along with the 19 largest banks in the country, Bank of America was subjected to a "stress test" by the Federal Reserve to see if it was strong enough to stand up to another economic downturn. Only banks that passed the test were allowed to increase dividends. The Fed has asked the bank to submit a revised plan.

Brian Moynihan, chief executive of Bank of America, tried to cast his bank's results in a positive light. "All the businesses have moved back to profitability except our mortgage business," he said in a conference call with analysts. B of A's Merrill Lynch division set records for revenue, asset management fees and brokerage income.

On Wednesday, Bank of America was among 16 of the nation's largest mortgage lenders that were directed by the Federal Reserve and other federal banking regulators to reimburse home­owners who were improperly foreclosed upon. The Fed warned of more fines in the future.

Much of B of A's mortgage-related woes stem from its 2008 acquisition of Countrywide Financial Corp., once the largest U.S. mortgage lender, which was facing bankruptcy after payment defaults and foreclosures.

Last month, Bank of America suffered another setback when it became the only one of the four largest U.S. banks that wasn't allowed by the Federal Reserve to increase its dividends.

Bank of America still stung by mortgage troubles 04/15/11 [Last modified: Friday, April 15, 2011 9:32pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Pinellas construction licensing board needs to be fixed. But how?

    Local Government

    LARGO –– Everyone agrees that the Pinellas County Construction Licensing Board needs to be reformed. But no one agrees on how to do it.

    Rodney Fischer, former executive director of the Pinellas County Construction Licensing Board Rodney, at a February meeting. His management of the agency was criticized by an inspector general's report. [SCOTT KEELER   |   Times]

  2. New owners take over downtown St. Petersburg's Hofbräuhaus

    Retail

    ST. PETERSBURG — The downtown German beer-hall Hofbräuhaus St. Petersburg has been bought by a partnership led by former Checkers Drive-In Restaurants president Keith Sirois.

    The Hofbrauhaus, St. Petersburg, located in the former historic Tramor Cafeteria, St. Petersburg, is under new ownership.
[SCOTT KEELER  |  TIMES]

  3. Boho Hunter will target fashions in Hyde Park

    Business

    Boho Hunter, a boutique based in Miami's Wynwood District, will expand into Tampa with its very first franchise.

    Palma Canaria bags will be among the featured items at Boho Hunter when it opens in October. Photo courtesy of Boho Hunter.
  4. Gallery now bringing useful art to Hyde Park customers

    Business

    HYDE PARK — In 1998, Mike and Sue Shapiro opened a gallery in St. Petersburg along Central Ave., with a majority of the space dedicated to Sue's clay studio.

     As Sue Shapiro continued to work on her pottery in St. Petersburg, her retail space grew and her studio shrunk. Now Shapiro's is bringing wares like these to Hyde Park Village. Photo courtesy of Shapiro's.
  5. Appointments at Raymond James Bank and Saint Leo University highlight this week's Tampa Bay business Movers & Shakers

    Business

    Banking

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. Jackson will oversee all of Raymond James Bank's operational business elements, risk management and strategic planning functions. Kackson joins Raymond James Bank after senior …

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. [Company handout]