Litigation costs hit BoA Q2 profit

WASHINGTN, July 16 (Reuters): Bank of America (BoA) Corp, the second-largest US bank by assets, reported a 43 per cent drop in second-quarter profit as mortgage revenue fell and litigation costs soared.

Earnings attributable to shareholders fell to US$2.04 billion, or 19 cents per share, in the three months ended June 30 from $3.58 billion, or 32 cents per share, a year earlier.

Analysts on average had expected earnings of 29 cents per share, according Thomson Reuters I/B/E/S. It was not immediately clear if the estimate was comparable to the reported figure.

Bank of America's shares, which have barely moved this year, fell slightly to $15.68 in premarket trading on Wednesday.

Litigation expenses surged to $4 billion in the latest quarter from $471 million a year earlier.

The bank, which has already agreed to pay more than $50 billion to settle disputes stemming from the financial crisis, has been negotiating a multibillion dollar settlement with the Department of Justice to resolve investigations into the sale of mortgage-backed bonds.

Bank of America has offered to settle for about $12 billion, while the Justice Department has suggested $17 billion, sources familiar with the matter have said.

Excluding accounting adjustments, the bank's revenue fell to $21.7 billion from $22.7 billion in the same period of 2013. Operating expenses rose to $18.54 billion from $16.1 billion.

Still, Chief Executive Brian Moynihan struck an upbeat note.

"The economy continues to strengthen...," he said in a statement. "... Consumers are spending more, brokerage assets are up by double digits and our corporate clients are increasingly turning to us to help finance business expansion and merger activity."