CHARLOTTE, N.C. ( TheStreet) -- Bank of America ( BAC - Get Report) reported third-quarter revenue declines in its Deposits and Global Card Services segments, and like its major competitors, will see even more pressure on deposits segment revenue in the fourth quarter.

The nation's largest bank holding company beat analysts' estimates for third-quarter earnings, with $4.5 billion in fair value adjustments, following similar earnings-padding adjustments by JPMorgan Chase ( JPM - Get Report) and Citigroup ( C - Get Report).
Bank of America CEO Brian Moynihan

Deposits Segment

Bank of America reported third-quarter net income of $276 million for its Deposits segment, declining sharply from $424 million in the second quarter, but increasing from $198 million in the third quarter of 2010. Tax-adjusted third-quarter top-line revenue for the segment was $3.12 billion, declining from $3.30 billion in the second quarter and $3.15 billion in the third quarter of 2010.

Year-over-year revenue for the segment was down slightly despite an $11.2 billion increase in average deposit balances, "driven by growth in liquid products in a low rate environment."

The year-over-year increase in segment net income reflected a decline in the "cost per dollar of deposits improved by 21 basis points to 2.47 percent from the year-ago quarter, highlighting the company's continued efficiency and competitive edge in maintaining a low-cost distribution channel."

Third-quarter noninterest income for the Deposits segment was $1.07 billion, increasing from $965 million the previous quarter, but declining from $1.14 billion a year earlier.

The Federal Reserve's final rules to limit the interchange fees banks charge merchants to process debit card purchases -- as required by the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act -- went into effect on October 1. Bank of America said in its second-quarter 10-Q filing with the Securities and Exchange Commission that "the new interchange fee will result in a reduction of debit card revenue in the fourth quarter of 2011 of approximately $475 million."

The company reported that the segment's return on equity for the third quarter was 4.61%, declining from 7.20% in the second quarter, but rising from 3.23% in the third quarter of 2010.

Card Services

Bank of America announced in August that it would completely exit its international credit card business, with an agreement to sell the company's $8.6 billion Canadian credit card portfolio to TD Bank Group ( TD - Get Report), in a transaction expected to be completed during the fourth quarter.

The TD Bank deal followed Bank of America's sale of its $200 million business card portfolio in the United Kingdom to Barclays PLC ( BCS), and agreed in August to sell its card business in Spain to Apollo Capital Management.

The company also sold a $1.2 billion Regions-branded card portfolio to Regions Financial ( RF - Get Report), in June.

With all figures excluding the international card business that the company is leaving, Bank of America reported third-quarter net income for the Card Services of $1.3 billion, declining from $1.9 billion in the second quarter and a loss of $9.8 billion in the third quarter of 2010, when the segment took a goodwill impairment charge of $10.4 billion.

The year-over-year bottom-line improvement also reflected the lower delinquencies and charge-offs for the card portfolio, with a third-quarter provision for credit losses of $1 billion, which declined from $3.1 billion in the third quarter of 2010. However, the third-quarter provision increased from $302 million in the second quarter.

Bank of America reported that "credit quality continued to improve with the 30+ days delinquency rate declining for the 10th consecutive quarter."

Third-quarter net revenue for the Card Services segment was $4.5 billion, declining from $4.9 billion in the second quarter, and $5.4 billion in the third quarter of 2010. The revenue decline reflected "a decrease in net interest income from lower average loans and yields as well as lower noninterest income."

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.