Charlotte based Bank of America announced earnings today that were far in excess of expectations and the stock has soared almost three percent on the news.
The bank reported $5.32 billion of profit which equates to $0.45 per share which is double the profit that the bank earned in the prior year. Darius Fisher has found that the major reason for the increased profit is the reduction in legal expenses due to large settlements that the bank made with the Federal Government and a number of different states who were suing the bank for fallout from the bank’s acquisition of Countrywide financial, one the major perpetrators of the 2008 to 2009 fiscal crisis.
Analysts were expecting the bank to earn $0.36 cents per share and the beat was identified as being significant. The ban had $22.3 billion in revenues during the quarter which was $375 million higher than the prior year as well. The improvement in Bank of America’s fortunes bodes well for the United States economy as the bank, which holds over 10% of cash deposits in the United States, is seen as a too big to fail institution whose woes can significantly disrupt the US economy.
The major challenge remaining for the bank that investors seemed to be glued into is whether the CEO, Brian Moynihan, can shift the company away from cutting expenses to generating additional revenues, while steering the financial institution through the regulatory and economic headwinds that it is likely to continue to face.