Bank of America posts third-quarter profit drop due to $1.2 billion Treasury fine

Bank of America experienced a significant decline in third-quarter profit following a $1.2 billion penalty imposed by the U.S. Treasury Department.

Key financial metrics provided by the company include:

• Earnings per share: 91 cents, which falls short of the $1.10 estimate by LSEG.
• Revenue: $30.0 billion compared to the analyst estimate of $30.69 billion.

As a result of the penalty, the bank's profit decreased by 17% to $6.93 billion, or 91 cents per share. If not for the penalty, which reduced income by 17 cents, the earnings per share would have reached $1.08.

This regulatory incident is likely to raise concerns regarding CEO Brian Moynihan's oversight of risk management at the second-largest U.S. bank by assets.

Moynihan has been at the helm since 2010, during which he focused on rectifying issues related to mortgage practices stemming from the 2008 financial crisis. Current developments prompt fresh scrutiny regarding potential risk-management challenges that may still be in play.

The recent announcement from the Treasury Department adds unexpected tension to what was otherwise a standard week for bank earnings. On Tuesday, major financial institutions such as JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo released mixed results, with JPMorgan falling short of both earnings and revenue expectations for the first time in several years.