New York Times
Bank of America on Wednesday reported a sharp rise in third-quarter earnings, but the bank's mortgage operations faltered, underscoring that home loans remain a challenging business for the nation's biggest banks.
Bank of America said its quarterly profit rose to $2.5 billion, up from $340 million in the period a year earlier, which was weighed down by litigation expenses and other charges.
But the bank's large mortgage operations foundered. The division reported a loss of $1 billion in the third quarter, worse than the $857 million loss it reported a year earlier.
Revenue from making new mortgages totaled $465 million, half what it was a year earlier.
As interest rates have risen in recent months, mortgage refinancing has become less common. On Wednesday, Bank of America said that its mortgage pipeline, or the loans it is preparing to close on, declined 59 percent in the third quarter, compared with the same period a year earlier.
Excluding a type of financial charge that investors often ignore, the bank reported $22.2 billion in revenue in the third quarter, a slight drop from $22.5 billion a year earlier. Other large banks have also reported a decline in their top lines, an indication that, five years after the financial crisis, they are still struggling to expand their businesses.
One question looming over the bank is whether investors will continue to tolerate some of its waning businesses. Bank of America shares have risen 50 percent over the past 12 months, as investors have come to believe that the worst is behind the bank. The bank's shares rose 32 cents, or almost 2.3 percent, to $14.56 on Wednesday.
Bank of America's wealth management operations, which contain Merrill Lynch, were a source of strength, posting $719 million of net income, a 26 percent jump from a year earlier.