Third-quarter earnings for Bank of America showed a hefty rise, suggesting that the country’s leading financial institutions are continuing to pull out of the recent recession, although slowly. The bank’s quarterly profits rose to $2.5 billion – 20 cents a share – over the same period a year earlier. The earlier year was affected by litigation costs and other charges.
Analysts had anticipated a 19-cents-per-share increase in this quarter, but were happy to be making even more progress “in an environment that did have its challenges,” according to Bruce Thompson, Bank of America’s chief financial officer.
The company’s wealth management operations, which include Merrill Lynch, contributed to the quarterly good news, with a 26 percent increase over the previous year. But not all of the banking giant’s components did as well. Large mortgage operations reported a $1 billion loss in the third quarter, worse even than the same quarter last year. Mortgage refinancing has slowed with increasing interest rates. Although there are signs that the American housing situation is improving, it will take a big jump to regain stability.
One bright spot in the report was a 36 percent increase in net income for the unit that does traditional branch bank lending to consumers and small companies. Strong revenue and lower expenses in the unit contributed to the jump.
Overall, there was a slight drop in quarterly total revenues, from $22.5 billion last year to $22.2 billion this year.
This disparity among the company’s businesses is a cause for concern. Whether investors will continue to settle for uneven progress, with some elements waning and others regaining their equilibrium, is a question.
Looking ahead, Bank of America financial gurus predict continuing progress in the fourth quarter. The bank is not alone in its struggle to climb out of the recession abyss. Most of the country’s large financial institutions are fighting the same battles against a flaccid market.