BofA reports $9.1 billion loss in 2Q on settlement

By PALLAVI GOGOI | July 19, 2011 | 8:14 AM EDT

FILE - In this Jan. 20, 2011 file photo, Bank of America's corporate headquarters is shown in Charlotte, N.C. Bank of America reported a loss available to common shareholders of $9.1billion during the second quarter due to a previously-announced $8.5 billion settlement with investors who claimed the bank had sold them poor-quality mortgage backed bonds. (AP Photo/Chuck Burton, file)

NEW YORK (AP) — Things keep getting worse for Bank of America.

The nation's largest bank reported a loss of $9.1billion during the second quarter, partly due to an $8.5 billion settlement with investors. That agreement, reached in June, settled claims that the bank had sold the investors poor-quality mortgage bonds.

The Charlotte, N.C. bank has been hamstrung by litigation and demands from investors who want Bank of America to buy back the bonds that it sold years ago. In the quarter, the bank set aside an additional $1.9 billion to fight litigation bringing the total mortgage-related charges in the second quarter to $20.7 billion. The bank does not disclose the total amount reserved for litigation costs.

The reported loss available to common shareholders was 90 cents per share, wider than the 85 cents a share loss expected by analysts surveyed by FactSet. Excluding charges related to investor settlements, Bank of America Corp. earned $3.7 billion, or 33 cents per share. That compares with net income of $3.1 billion, or 27 cents a share, in the same quarter last year. The bank's revenue declined 54 percent to $13.2 billion from $29.1 billion in the same period last year.

While several of the bank's businesses reported positive earnings, almost all of them saw declines in revenue. Loan losses in its consumer businesses dropped for the fifth consecutive quarter. More of the bank's customers paid on time, which led to a 60 percent decline in the amount the bank puts aside for credit losses from last year.

Bank of America's credit card division reported income of $2 billion, up $1.2 billion from the year-ago quarter, as customers paid on time. However, revenue declined by $1.4 billion.

Commercial banking was another bright spot, reporting net income of $1.4 billion, up $566 million from a year ago. But revenue in the division decreased $73 million from a year ago.

Its Merrill Lynch investment banking unit reported fees of $1.6 billion, a 28 percent increase from a year ago.

Bank of America shares were up less than 1 percent in pre-market trading to $9.77.