NEW YORK – Bank of America Corp., the second-biggest U.S. lender, said fourth-quarter profit more than quadrupled as the company quelled claims tied to defective mortgages. The results beat Wall Street estimates, and the stock rose 2.6 percent in New York.
Net income of $3.44 billion, or 29 cents a diluted share, rose from $732 million, or 3 cents, a year earlier, according to a statement today from the Charlotte, N.C.-based firm. The average estimate of 27 analysts surveyed by Bloomberg was 27 cents, adjusted for one-time items. For the full year, profit more than doubled to $11.4 billion.
CEO Brian T. Moynihan, 54, has spent his four years atop Bank of America resolving disputes tied to shoddy home loans and foreclosures, mostly from his predecessor’s 2008 takeover of Countrywide Financial Corp. He signaled in November that attention is shifting from the mortgage cleanup to improving performance at operating units, calling his firm a “huge battleship” that is gaining speed.
“They’re looking considerably better than a year ago,” said Marty Mosby, a bank analyst at Guggenheim Securities LLC with a neutral rating on the stock. “The Street now believes their story, which is that remaining mortgage costs will be manageable.”
Bank of America advanced to $17.21 at 8:49 a.m. in New York. The lender rose 34 percent last year, just under the 35 percent gain of the 24-company KBW Bank Index. The shares added 7.7 percent this year through yesterday as analysts including Citigroup Inc.’s Keith Horowitz upgraded the firm to a buy in anticipation that costs will recede.
The bank showed improvements in various performance gauges as revenue in the quarter rose 14 percent to $22.3 billion, excluding accounting charges. Adjusted net interest income increased 4 percent, according to the bank, and non-interest income jumped 28 percent as costs eased for refunds to investors on defective mortgages.
The net interest margin, the difference between what a bank pays for funds and what it earns on loans and investments, improved to 2.56 percent from the 2.44 percent reported in the third quarter and 2.35 percent a year earlier.