Bank of America Corp.'s fourth-quarter mortgage revenue almost doubled to $519 million from a year earlier.
It was also more than double analysts' estimates for this segment. Barclays' Jason Goldberg had expected the bank to generate $252 million from mortgage banking as fewer consumers take out residential loans, while Macquarie Group's David Konrad estimated $218 million.
Total mortgage production was $21.9 billion, up from $17 billion in the fourth quarter of 2015.
B of A also dissolved a business segment created in 2011 to house delinquent mortgages.
The company's fourth-quarter revenue that missed analysts' estimates as a 12% increase in bond trading fell short of predictions. Profit surged as Chief Executive Officer Brian Moynihan cut expenses.
"Things tapered off at the end of the year," Chief Financial Officer Paul Donofrio said Friday in a conference call with journalists. Fixed-income trading "did very well in the first two months of the quarter," he said.
Moynihan has been cutting costs for years while contending with persistently low interest rates. That's starting to pay off as Wall Street firms benefit from a rebound in fixed-income trading and the company moves beyond epic legal claims over mortgages that soured in the financial crisis. Last year, the bank set a target of $53 billion in annual expenses by the end of 2018, or about 8% less than 2015.
Fixed-income trading revenue climbed to $1.96 billion, short of analysts' $2.1 billion average estimate, the Charlotte, N.C.-based company said in a statement. Equity trading rose 11% to $948 million, in line with their predictions. Total revenue rose 2.1% to $20 billion, missing estimates of $20.8 billion. Expenses fell 6%, more than expected, to $13.2 billion as compensation costs dropped 2.6%.
Net income rose to $4.7 billion, or 40 cents a share, from $3.28 billion, or 27 cents, a year earlier. That beat the 38-cent average estimate of 29 analysts surveyed by Bloomberg.
The lender revised earnings for recent years on Oct. 4 to reflect a change in the way it accounts for certain securities held in its investment portfolio. The move brings it in line with other Wall Street firms and may reduce swings in quarterly earnings, the bank said.
Net interest income rose 6.3% to $10.3 billion, falling short of the $10.6 billion average estimate of 11 analysts surveyed by Bloomberg. Net interest margin, the difference between what a bank charges for loans and pays for deposits, was unchanged from three months earlier at 2.23%, and up from 2.14% a year earlier. The Federal Reserve's quarter-point rate hike in December is expected to boost lending margins, with Bank of America among the most sensitive to interest-rate changes.
Investment-banking revenue, which includes deal-making and underwriting securities in the business run by Christian Meissner, slid 3.9% to $1.22 billion, the company said. That beat the $1.14 billion average estimate of seven analysts surveyed by Bloomberg. Last month, Moynihan said he expected those activities would generate $1 billion to $1.2 billion in the fourth quarter.
Consumer-banking profit rose 11% to $1.92 billion, while income from credit cards fell 1.8% to $1.29 billion from a year earlier.