The debt-accounting charges are a reversal from last year’s third quarter, when Bank of America booked more than $6 billion in gains as its credit deteriorated and concern swirled that its capital might not be adequate.
The bank’s stock plunged almost 60 percent in 2011, dipping below $5 in December for the first time since 2009. The shares have led the Dow Jones Industrial Average this year with a gain that reached 70 percent this week as Moynihan boosted capital and the U.S. recovery strengthened.
Moynihan has vowed to cut $8 billion in annual expenses and more than 30,000 jobs. The bank shrank the number of full-time employees 5.6 percent to 272,594 in 12 months.
The CEO sold more than $50 billion in assets since taking over in 2010 from Kenneth D. Lewis, who announced his retirement after clashing with investors and regulators over the Merrill Lynch deal, which threatened the firm’s stability.
JPMorgan Chase & Co. and Wells Fargo & Co., ranked No. 1 and No. 4 by assets, said record third-quarter earnings were aided by a rise in mortgage fees. JPMorgan’s profit climbed 34 percent to $5.71 billion, while Wells Fargo’s rose 22 percent to $4.94 billion.
Bank of America scaled back its mortgage business after the 2008 takeover of Countrywide saddled it with more than $40 billion in costs from faulty mortgages and foreclosures. The bank became the biggest U.S. mortgage lender after the acquisition, then slipped to No. 4 and had about 4.4 percent of the U.S. market this year, compared with 33 percent for Wells Fargo and 11 percent for JPMorgan, according to industry newsletter Inside Mortgage Finance.
Banks face tougher rules on how to account for home-equity mortgages to troubled customers. Thomas Curry, who took over the U.S. Office of the Comptroller of the Currency in March, is pushing lenders for write-offs when borrowers go bankrupt, even if payments on the home loans are current.
The new guidance cost JPMorgan, Citigroup Inc. and Wells Fargo about $2 billion of write-offs in their third-quarter earnings reports. Bankers including Moynihan and Wells Fargo CEO John Stumpf, 59, have said borrowers tend to keep paying as long as they are able, even if home prices drop.
Bank of America, which rescued Countrywide in 2008, had $118 billion in home-equity loans at June 30, with 1.1 percent at least 30 days overdue.