Bank of America (BAC) said Wednesday that it lost $276 million in the first quarter of 2014, compared with net income of $1.5 billion a year ago. Revenue (net of interest expense) declined 3% year over year to $22.8 billion.
The company notes that these results include $6.0 billion in litigation expense related to a settlement with the Federal Housing Finance Agency (FHFA) and additional reserves tied to legacy mortgage-related matters.
“The cost of resolving more of our mortgage issues hurt our earnings this quarter,” said CEO Brian Moynihan, in a press release. “But the earnings power of our business and customer strategy generated solid results, and we continued to return excess capital to our shareholders.”
BofA’s Global Wealth and Investment Management unit, which includes Merrill Lynch and U.S. Trust advisors, had revenues of $4.55 billion, up about 3% from the year-ago quarter and a 1.6% improvement from the fourth quarter.
Net income was $729 million, up 1% from a year earlier and down 6% from the earlier quarter. The unit’s return on average allocated capital in the period was 24.74, down from 29.41 a year ago and 30.99 in Q4’13. Its pretax profit margin was 25.6%, down from the prior quarter’s 26.6%.
BofA says asset management fees rose 18% year over year to $1.9 billion. Client balances grew about 1% from the prior quarter and 7% from last year — by about $29 billion — to $2.4 trillion, reflecting about $12 billion in flows and $16 billion in market improvements.
Long-term asset flows for Q1 totaled $17.4 billion versus $9.4 billion a year ago and $20.4 billion in Q4. The level of loan balances, including margin loans, grew 10% year over year to $120 billion, excluding migration.