6 takeaways from Bank of America's 1Q earnings

Bank of America reported first-quarter financial results Wednesday, becoming the fourth major U.S. bank to do so.

The Charlotte-based bank lost $276 million, or 5 cents per share, as $6 billion in legal expenses weighed on its earnings. In the first quarter of last year, it reported  profit of $1.5 billion.

Below are six key takeaways from its quarterly results and conference call.

1. LEGAL COSTS STILL AN ISSUE.

The bank continues to grapple with legal expenses nearly six years after the financial crisis.

In the first quarter, the bank reached a $9.3 billion settlement with the Federal Housing Finance Agency over alleged violations of securities laws in connection with residential mortgage-backed securities. On a call with reporters, Chief Financial Officer Bruce Thompson said the settlement contributed $3.6 billion of the $6 billion in legal costs the bank reported in the quarter.

Later in the morning, during a call with analysts, Thompson said future litigation costs for the bank will be "very hard to predict.”

Also Wednesday, the bank announced a settlement of up to $950 million with bond insurer Financial Guaranty Insurance Co., as well as separate settlements with Bank of New York Mellon Corp., over mortgage-backed securities that FGIC insured.

2. BANK VAGUE ON LEGAL RESERVES

On the call, analysts wanted to know why the bank increased its reserves -- the funds it puts aside to cover legal expenses -- by $2.4 billion, a figure that surprised some analysts. The amount is what made up the balance of the bank's $6 billion in legal costs for the quarter.

But the bank's executives declined to go into detail.

Thompson described the bump in reserves as necessary to cover "previously disclosed legacy mortgage-related matters," but he really didn't say much beyond that.

3. HEADCOUNT STILL SHRINKING

Bank of America disclosed Wednesday that its employment fell to 238,560 in the first quarter, down 9 percent, or 24,252 full-time equivalents, from a year ago.

The majority of those cuts have stemmed from the bank reducing staff that handled its troubled-loan portfolio, which the bank has continued to shrink. Many of those loans came from its 2008 acquisition of subprime lender Countrywide Financial Corp. Some of those job cuts have affected Charlotte.

4. BRANCH AND ATM NUMBERS SHRINKING, TOO

Bank of America’s branch count has fallen by 605 since 2011, when it announced a massive cost-cutting plan called Project New BAC. It has shed 1,586 automated teller machines over the same period.

That leaves the bank with 5,095 branches and 16,214 ATMs.

Moynihan indicated Wednesday that the branch count could come down further.

"We will adjust," he said in response to an analyst who asked whether more cuts are coming.

5. MOBILE BANKING ON THE RISE

While the number of branches and ATMs is falling, the bank's number of mobile-banking customers keeps rising. Such customers grew 19 percent in the first quarter from a year ago to 15 million, the bank said.

The bank said about 10 percent of the deposits its customers make are done via mobile devices. Thanks to smartphones, Moynihan said, "people effectively carry a branch in their pocket."

6. MORTGAGE BUSINESS DOWN BUT MIGHT BE POISED FOR PICKUP

It came as no surprise that the bank's mortgage business was down dramatically from a year ago, as other banks have also seen mortgage declines thanks to less refinancing activity. Demand to refinance has waned as mortgage rates have risen in the past year. That has sent some banks scurrying to find replacement revenue.

Bank of America's mortgage business earned $412 million in the first quarter, down 67.4 percent from $1.26 billion a year ago. In some good news, its so-called "pipeline" of new mortgages rose 23 percent in the quarter from the fourth quarter of last year.

The uptick is not all that surprising, as home sales tend to rise in the spring.