By Ben Eisen 

Bank of America Corp.'s earnings fell 22% in the fourth quarter.

The second-largest bank in the U.S. said Tuesday that its profit totaled $5.47 billion in the final three months of the year, versus $6.99 billion a year earlier. Per-share earnings of 59 cents topped analyst estimates of 55 cents a share.

Bank of America released $828 million of its reserves, a sign that its executives believe there may not be as much consumer and business distress as initially thought. JPMorgan Chase & Co. and Citigroup Inc. said Friday they were releasing some of their reserves, reflecting an improving economic outlook.

The largest banks spent the first part of last year building up reserves to prepare for a wave of loan defaults.

The Federal Reserve, which had restricted banks' returns to shareholders last year, told them last month they could once again buy back their own stock, with limits. Bank of America said Tuesday that its board authorized a $2.9 billion repurchase plan for the first quarter.

While the continued spread of Covid-19 has put millions out of work and left many unable to pay their bills, consumers overall have continued to spend. Chief Executive Brian Moynihan said, "we continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers, and strong markets and investing activity."

The bank's revenue totaled $20.1 billion in the fourth quarter, down 10% from the fourth quarter of 2019. Analysts polled by FactSet had expected revenue of $20.58 billion.

Shares in Bank of America rose 0.8% in premarket trading. Bank stocks started the year strong, in part on the prospect of rising interest rates, though they fell sharply Friday along with the broader markets. The KBW Nasdaq Bank Index has climbed 9.2% this year, versus a 0.3% rise in the S&P 500.

Write to Ben Eisen at ben.eisen@wsj.com

 

(END) Dow Jones Newswires

January 19, 2021 07:22 ET (12:22 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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