NEW YORK (AP) -- Bank of America Corp. said Wednesday that its fourth-quarter profit jumped from a year earlier, as the loans on the bank's balance sheet continued to improve.
The nation's second-largest bank earned $3.44 billion in the October to December period, up from $732 million a year earlier. On a per-share basis, the bank earned 29 cents, beating the 26 cents expected by financial analysts. Fourth-quarter revenue rose to $22.32 billion from $19.6 billion, exceeding analysts' forecasts of $21.2 billion.
FEWER BAD LOANS: The bank's profits got a big boost because Bank of America was able to significantly reduce the amount of money it holds on its balance sheet to protect itself from bad loans. The bank's provision for credit losses fell to $336 million from $2.2 billion in the same period a year earlier. Even BofA's mortgage division, which took huge losses after the housing bubble popped, improved. The number of mortgages that were delinquent 60 days or more fell 58 percent from a year ago. "We enter this year with one of the strongest balance sheets in our company's history," Bank of America Chief Financial Officer Bruce Thompson said in a prepared statement.
MORTGAGE DEMAND SLOWS: Like JPMorgan Chase and Wells Fargo, Bank of America saw a slowing in its mortgage origination business last year. Mortgage-originations fell by 46 percent in the fourth quarter from a year ago. Over the summer, mortgage rates started to rise, which stopped consumers from refinancing their home loans. Mortgage giant Freddie Mac said last week that the average 30-year fixed rate mortgage had an interest rate of 4.51 percent, compared to 3.35 percent in May of 2013.
STABILITY IN MOST BUSINESSES: Most of Bank of America's businesses saw profits improve or remain flat during the quarter. Its consumer and business banking division, by far BofA's biggest business, earned $1.97 billion in the fourth quarter, up from $1.45 billion in 2012.
MORE COST CUTTING: Since the financial crisis, Bank of America has been slimming itself down, cutting businesses and reducing headcount. The number of bank employees fell to 242,100 in the fourth quarter, from 267,200 employees in the same period a year ago.
SHARES RISE: Bank of America rose 60 cents, or 3.6 percent, to $17.37 in early trading Wednesday. The stock is up roughly 11 percent so far this year.