It hasn’t been a good year for Bank of America’s Brian Moynihan.
The Wall Street chieftain couldn’t please investors on Wednesday as falling revenue, a potential $17 billion mortgage fine and persistent legal costs overshadowed some growth areas for the bank in the latest quarter.
The Charlotte, NC-based bank reported second-quarter profit of $2.3 billion, or 19 cents per share, down nearly 43 percent from the same period in 2013. Revenue topped $21.6 billion.
The firm’s $4 billion legal bill in the quarter wiped out a big chunk of profit.
“The litigation expense from our legacy mortgage issues continues to affect our earnings this quarter,” Moynihan said Wednesday during its quarterly earnings call.
Bruce Thompson, the bank’s chief financial officer, said most of the $4 billion was racked up in the course of its dealings with the Department of Justice to resolve a host of mortgage-related woes.
That was on top of the $6 billion it spent during the first quarter to cover legal costs.
The bank is reportedly facing as much as $17 billion in fines for soured mortgage bonds that played a major role in the financial crisis that felled banks like Lehman Brothers and sent housing prices reeling for years.
The residential mortgage-backed securities, as the bonds are known, were sold by Countrywide Financial, which BofA bought in 2008.
“They’re completely sick of it,” Schorr said. “It’s definitely something that’s weighing on people and their patience with big financials.”
Investors sent the stock down 1.9 percent, or 30 cents, to $15.51.
BofA’s earnings break a streak of better-than-expected earnings from Wall Street’s biggest banks, including JPMorgan, Goldman Sachs and Citigroup.
BofA’s poor showing comes after Moynihan had to break a promise to shareholders to raise the dividend this year after the bank botched its accounting by about $4 billion.
Aside from its legal woes, there was plenty to be positive about for those bullish on Moynihan, according to Glenn Schorr, a bank analyst at International Strategy & Investment Group.
“There’s a bunch of things that you look at it and say, ‘Hey that’s not bad,’” Schorr said, referring to lower expenses and better-than-expected returns in investment banking.