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NEW YORK — Bank of America Corp.'s first-quarter income fell 39 percent on higher costs related to its mortgage business and higher litigation expenses. The bank also settled a claim over faulty mortgage investments and set aside less money to cover soured loans.
The Charlotte, N.C. bank on Friday said it earned $1.7 billion, or 17 cents per share, compared with $2.8 billion, or 28 cents a share in the first quarter of last year. The earnings fell short of the 28 cents a share estimated by analysts surveyed by FactSet.
Revenue fell to $26.9 billion from $32 billion in the same period last year.
The nation's largest bank by assets also announced that the bank's chief risk officer, Bruce Thompson, will become chief financial officer, replacing Chuck Noski, who was named vice chairman. Noski couldn't relocate to Charlotte to fulfill his CFO duties because of an illness of a close family member, the bank said in a statement.
Bank of America continued to fight losses, lawsuits and higher costs related to its mortgage businesses. Its real estate services business reported a loss of $2.4 billion compared to loss of $2.1 billion for the same period in 2010.
The bank is fighting lawsuits from investors and insurers who say they were duped into buying mortgage loans that were based on fraudulent documents. Bank of America set aside a $1 billion in the first quarter to repurchase those mortgages. That's on top of $4.1 billion that the bank had already set aside in the fourth quarter of 2010 and $526 million in the first quarter of last year.
Litigation expenses related mostly to mortgages were up $352 million from the first quarter of 2010.
Separately, the bank paid $1.1 billion in cash to Assured Guarantee, an insurer that had also said the bank should repurchase shoddy mortgages. The bank also entered into an agreement worth $470 million to share losses on additional mortgages.
Much of Bank of America'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.
Bank of America's mortgage issues overshadowed better performance at its other divisions. Its Merrill Lynch division set records for revenue, asset management fees and brokerage income.
As the largest U.S. bank serving about half of the nation's households, Bank of America also provides a snapshot for the health of the American consumer and the overall economy. The bank said the number of customers who were late on their credit card payments by 30 days or more fell to all-time lows in the first quarter. It was the sixth straight quarterly decline.
The bank set aside a total of $3.8 billion to cover losses from loans in the quarter, down sharply from $9.8 billion in the same period a year ago. That reflects an improving economy and fewer BofA customers falling behind on their debts.
The company's shares rose 8 cents to $13.22 in pre-market trading.
