Bank of America profit jumps to $2.5 billion as its expenses shrink

NEW YORK -- Bank of America Corp.’s profit surged to $2.5 billion in the third quarter as it continued its years-long downsizing and grappled with declining mortgage income.

BofA said it earned $2.5 billion, or 20 cents a share, in the third quarter, up from $340 million, or zero cents, a year earlier.

The North Carolina-based financial giant’s shares rose 2% in early trading Wednesday as financial stocks rallied on optimism for a debt-limit deal. BofA gained 29 cents to $14.53 shortly after the opening bell on Wall Street.

QUIZ: Test your knowledge about the debt limit

The bank’s results were boosted by loan growth, improved credit quality and expense reductions. Those were offset by declines in mortgage income and trading revenue due to “concerns around monetary policy as well as political uncertainty domestically and abroad.”

The earnings beat Wall Street estimates of 18 cents a share, according to analysts polled by Thomson Reuters.

“This quarter, we saw good loan growth, improved credit quality and record deposit balances. Our customers and clients continue to do more business with us,” Chief Executive Brian Moynihan said in a statement. “The economy and business climate will improve even more quickly as conditions normalize, and we are well positioned to benefit from that.”

BofA slashed expenses by 6% to $16.4 billion in the third quarter. The bank reported lower litigation expenses, lower costs related to legacy assets, and a smaller head count.

The bank had about 248,000 full-time employees at the end of the third quarter, nearly 25,000 fewer than it had the same period a year ago.

ALSO:

California insurance exchange reports 94,500 application starts

Daredevil’s record leap captured in California Science Center exhibit

Meade Instruments sold to Chinese telescope company for $5.9 million