|Bank of America CEO Brian Moynihan|
Deposits SegmentBank 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 ServicesBank 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.
Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn. To submit a news tip, send an email to: firstname.lastname@example.org.