Podcast Center
Video Center
Webcasts
Resource Center
Events
October 18, 2011 at 07:22 AM
NEW YORK (AP) — Bank of America earned $6.2 billion in the third quarter on accounting gains and the sale of a stake in a Chinese bank, which offset lower revenue and income in its credit card, real estate and investment banking businesses.
Bank of America is also no longer the largest bank in the nation by assets, which fell to $2.21 trillion in the quarter. The Charlotte, N.C. bank ceded the bragging rights to rival JPMorgan Chase & Co. which reported total assets of $2.28 trillion.
The slimming down reflects Bank of America’s strategy of cutting costs and selling off businesses that don’t fit into its simpler banking model. CEO Brian Moynihan said in a conference call with analysts Tuesday he had begun the process of a “strategic transformation of the company.”
Bank of America earned 56 cents per share, following a loss of $7.3 billion, or 77 cents a share in the same quarter last year. Analysts surveyed by FactSet forecast the bank would earn 28 cents per share.
Bank of America Corp.’s stock rose 3 percent to $6.21 at 10 a.m. Tuesday.
The income included accounting gains of $4.5 billion and $1.7 billion, both related to drops in the value of its debt. When the price of the bank’s debt falls, the bank could theoretically buy it back at a lower cost. Accounting rules require that an income gain be recorded when that happens.
Bank of America gained $3.6 billion from selling its stake in China Construction Bank and recorded a loss in its private equity business of $2.2 billion as the value of its investments fell.
The sale of its stake in the Chinese bank was part of the bank’s effort to focus the company and shed non-core businesses. During the quarter Moynihan realigned the business and reshuffled top management. He got rid of two of the bank’s top executives — head of wealth management Sallie Krawcheck and head of consumer banking Joe Price. Moynihan replaced them with two chief operating officers — David Darnell to head all consumer businesses and Tom Montag to oversee all commercial relationships.
